==========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 2 to
SCHEDULE 14D-1
Tender Offer Statement Pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934
and
AMENDMENT NO. 3 to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-----------------------------------------
The Petersen Companies, Inc.
(Name of Subject Company)
EMAP Acquisition Corp.
EMAP plc
(Bidders)
--------------------
Class A Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
--------------------
716335 10 4
(CUSIP Number of Class of Securities)
--------------------
Derek Walmsley
EMAP Acquisition Corp.
c/o EMAP plc
1 Lincoln Court
Lincoln Road
Peterborough PE1 2RF
England
(01733) 568900
Derek Walmsley
EMAP plc
1 Lincoln Court
Lincoln Road
Peterborough PE1 2RF
England
(01733) 568900
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Bidders)
------------------------------
Copy to:
Richard Hall, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
--------------------
January 12, 1999
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<PAGE>
This statement amends and supplements the combined Tender Offer
Statement on Schedule 14D-1, as amended by Amendment No. 1 thereto, and
Statement on Schedule 13D, as amended by Amendment Nos. 1 and 2 thereto,
originally filed with the Securities and Exchange Commission on December
16, 1998 (collectively and as amended, the "Schedule 14D-1 & Schedule
13D"), by EMAP plc, an English public limited company ("Parent"), and EMAP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent (the "Purchaser"), in connection with the offer to purchase all the
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Class A Shares"), and all the outstanding shares of Class B Common Stock,
par value $0.01 per share (the "Class B Shares" and, together with the
Class A Shares, the "Shares"), of The Petersen Companies, Inc., a Delaware
corporation (the "Company"), at $34 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase dated December 16, 1998 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer").
Capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Offer to Purchase and the Schedule 14D-1 &
Schedule 13D.
Item 9. Certain Information Concerning the Purchaser and Parent.
Item 9 of the Schedule 14D-1 & Schedule 13D is hereby amended and
supplemented by adding thereto the information filed herewith as Exhibits
13.1, 13.2 and 13.3.
Item 11. Material to be Filed as Exhibits.
Item 11 of the Schedule 14D-1 & Schedule 13D is hereby amended
and supplemented by adding the following exhibits:
13.1 Audited Financial Statements of Parent for the financial
year ended March 31, 1998.
13.2 1998 Interim Report of Parent (unaudited).
13.3 Summary of significant differences between UK GAAP and US
GAAP as they relate to Parent.
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: January 12, 1999
EMAP ACQUISITION CORP.,
By: /s/ Christopher R. Innis
----------------------------
Name: Christopher R. Innis
Title: President, Secretary and Treasurer
EMAP PLC,
By: /s/ Christopher R. Innis
----------------------------
Name: Christopher R. Innis
Title: Director of Corporate Strategy
3
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Name Page No.
*(a)(1) Offer to Purchase.......................................
*(a)(2) Letter of Transmittal...................................
*(a)(3) Notice Of Guaranteed Delivery...........................
*(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees..........................................
*(a)(5) Letter to Clients for use by Brokers, Dealers, Banks,
Trust Companies and Other Nominees......................
*(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9............
*(a)(7) Form of Summary Advertisement dated December 16, 1998...
*(a)(8) Text of Press Release dated December 15, 1998, issued
by Parent...............................................
*(a)(9) Text of Press Release dated January 4, 1999, issued by
Parent..................................................
*(b)(1) Loan Agreement dated as of December 15, 1998, among
Parent and the Lenders party
thereto.................................................
*(b)(2) Bridge Loan Agreement dated as of December 15, 1998,
among Parent and the Lenders party thereto..............
*(c)(1) Agreement and Plan of Merger dated as of December 15,
1998, among Parent, the Purchaser and the Company.......
*(c)(2) Stockholders' Agreement dated as of December 15, 1998,
among Parent, the Purchaser and certain stockholders
of the Company..........................................
(d) None....................................................
(e) Not applicable..........................................
(f) None....................................................
13.1 Audited Financial Statements of Parent for the
financial year ended March 31, 1998.....................
13.2 1998 Interim Report of Parent (unaudited)...............
13.3 Summary of significant differences between UK GAAP and
US GAAP as they relate to Parent........................
*(24) Power of Attorney from Parent to Christopher R. Innis,
dated as of December 14, 1998, evidencing such
person's authority to sign on behalf of Parent..........
- --------------------
*Previously filed.
4
EXHIBIT 13.1
Auditors' report Auditors' report
To the Board of Directors of EMAP plc To the members of EMAP plc
on corporate governance matters
In addition to our audit of We have audited the financial statement
the financial statements we on pages 32 to 63 (including the
have reviewed your statements additional disclosures on pages 24 to 27
on page 30 concerning the relating to the renumeration of the
Group's compliance with the Directors specified for our review by
paragraphs of the Cadbury Code the London Stock Exchange), which have
of Best Practice specified for been prepared under the historical cost
our review by the London Stock convention and the accounting policies
Exchange and the adoption of set out on pages 37 and 38.
the going concern basis in
preparing the financial Respective responsibilities of Directors
statements. The objective of and Auditors
our review is to draw As described on page 28, the Company's
attention to non-compliance Directors are responsible for the
with Listing Rules 12.43(j) preparation of the financial statements.
and 12.43(v), if not otherwise It is our responsibility to form an
disclosed. independent opinion, based on our audit
on those statements and to report our
Basis of opinion opinion to you.
We carried out our review
having regard to guidance Basis of opinion
issued by the Auditing We conducted our audit in accordance
Practices Board. That guidance with auditing standards issued by the
does not require us to perform Auditing Practices Board. An audit
the additional work necessary includes examination, on a test basis,
to, and we do not, express any of evidence relevant to the amounts and
opinion on the effectiveness disclosures in the financial statements.
of either the Group's system It also includes an assessment of the
of internal financial control significant estimates and judgments made
or corporate governance by the Directors in the preparation of
procedures nor on the ability the financial statements and of whether
of the Group to continue in the accounting policies are appropriate
operational existence. to the Company's circumstances,
consistently applied and adequately
Opinion disclosed.
In our opinion, your We planned and performed our audit so
statements on internal as to obtain all the information and
financial controls and on explanations which we considered
going concern on page 30 have necessary in order to provide us with
provided the disclosures sufficient evidence to give reasonable
required by the Listing Rules assurance that the financial statements
referred to above, and are are free from material misstatement,
consistent with the whether caused by fraud or other
information which came to our irregularity or error. In forming our
attention as a result of our opinion we also evaluated the overall
audit work on the financial adequacy of the presentation of
statements. In our opinion, information in the financial statements.
based on enquiry of certain
directors and officers of the Opinion
Company and examination of In our opinion the financial statements
relevant documents, your give a true and fair view of the state
statement on page 30 of affairs of the Company and of the
appropriately reflects the Group as at 31 March 1998 and of the
Group's compliance with the profit and cash flows of the Group for
other aspects of the Code the year then ended and have been
specified for our review by properly prepared in accordance with the
Listing Rule 12.43(j). Companies Act 1985.
Price Waterhouse Price Waterhouse
Chartered Accountants Chartered Accountants and Registered
London 1 June 1998 Auditors
London 1 June 1998
<PAGE>
Group profit and loss account
For the financial year ended 31 March 1998
1998 1997
(pound)m (pound)m Notes
Turnover 772.6 768.2 1
Net operating costs (630.1) (642.4) 2
Operating profit 142.5 125.8 3
Profit on business disposals -- 113.5
Profit on ordinary activities before interest
and investment income 142.5 239.3
Income from investments and associated
undertakings 2.7 3.9 7
Net interest (3.5) (8.6) 8
Profit on ordinary activities before taxation 141.7 234.6
Tax on profit on ordinary activities (42.5) (64.0) 9
Profit on ordinary activities after taxation 99.2 170.6
Minority interests (all equity) (4.1) (4.4)
Profit attributable to shareholders 95.1 166.2 10
Dividends (including non-equity) (31.3) (27.0)
Retained profit for the financial year 63.8 139.2
Earnings per share 45.7p 80.4p 11
Adjusted earnings per share 45.7p 38.9p 11
Dividends per share 15.0p 13.0p
An analysis of the movement on reserves can be found in Note 25 to the
accounts on page 56. All of the 1998 turnover and operating profit relates
to continuing operations. The impact of discounted operations, being
Newspapers and Newspaper printing, on 1997 turnover and operating profit
was (pound)26.6m and (pound)3.8m respectively as shown on page 33. 1997
turnover and operating profit from continuing operations were therefore
(pound)741.6m and (pound)122.0m respectively.
Dividends 1988 1997
(pound)m (pound)m
Preference* - paid 3.50p (1997 - 3.50p) -- --
Ordinary - interim paid 4.95p
(1997 - 4.30p) 10.4 8.8
Ordinary - final proposed + 10.05p
(1997-8.70p) 20.9 18.2
31.3 27.0
* The preference dividend (non-equity) paid amounted to(pound)6,000
(1997 -(pound)6,000).
+ The final proposed dividend has been calculated as payable on 209m
Ordinary Shares anticipated to be in issue and ranking for dividend as
at 19 June 1998.
<PAGE>
Group activity analysis
For the financial year ended 31 March 1998
1998 1997
(pound)m % (pound)m %
Turnover by category
Advertising 318.8 41 312.3 41
Circulation 344.8 45 350.4 46
Events 55.9 7 46.7 6
Other 53.1 7 55.2 7
Newspaper printing -- -- 3.6 --
-----------------------------
772.6 100 768.2 100
-----------------------------
Turnover by division
Consumer Magazines UK 271.9 35 235.0 31
Consumer Magazines France 225.0 29 252.1 33
Business Communications 196.7 26 189.1 25
Radio 70.3 9 64.2 8
International/New Media 8.7 1 1.2 --
Newspapers and Newspaper Printing -- -- 26.6 3
-----------------------------
772.6 100 768.2 100
-----------------------------
Operating profit by division
Consumer Magazines UK 56.1 38 44.8 34
Consumer Magazines France 35.1 24 33.2 25
Business Communications 35.6 24 30.6 23
Radio 22.7 15 20.9 16
International/New Media (1.7) (1) (0.8) (1)
Newspapers and Newspaper Printing -- -- 3.8 3
-----------------------------
147.8 100 132.5 100
--- ---
Corporate and other (5.3) (6.0)
Reorganisation costs* (1.5) (3.6)
Exchange gains+ 1.5 2.9
-----------------------------
Operating profit 142.5 125.8
-----------------------------
The above analysis excludes inter-divisional turnover of (pound)39.9m (1997
- - (pound)44.5m) most of which arises in Consumer Magazines UK. A
geographical analysis of turnover and operating profit is given in Note 1
to the accounts on page 39.
* Reorganisation costs of (pound)1.4m arose in Business Communications,
following the acquisitions of Macmillian Healthcare Services titles
and (pound)0.1m in International/New Media (1997 - (pound)3.6m in
Consumer Magazines France).
+ The exchange gains arise on the translation to sterling of surplus
funds in local currencies in France and Germany which were lent to the
UK during the year.
<PAGE>
<TABLE>
Group cash flow statement
For the financial year ended 31 March 1998
<CAPTION>
1998 1997
(pound)m (pound)m Notes
<S> <C> <C> <C>
Cash flow from operating activities 143.2 135.9 12(a)
Returns on investments and servicing of finance
Interest received 9.8 2.0
Interest paid (13.2) (10.9)
Dividends received from fixed asset investments and associated
undertakings 0.5 0.8
Dividends paid to minorities (2.0) (2.6)
Cash outflow from returns on investments and servicing of finance (4.9) (10.7)
Taxation
Corporation Tax paid (including Advance Corporation Tax) (63.3) (24.7)
Tax paid (63.3) (24.7)
Capital expenditure
Purchase of tangible fixed assets (17.6) (16.3)
Sale of tangible fixed assets 1.1 2.0
Cash outflow from capital expenditure (16.5) (14.3)
Acquisitions and disposals
Businesses and investments acquired (123.5) (95.0) 12(b)
Movement in associated undertakings (3.8) (6.1)
Disposal of businesses and associated undertakings 14.0 217.8 12(b)
Disposal of investments 2.0 1.8
Costs of business closures and reorganisations (0.3) (0.6)
Cash (outflow)/inflow from acquisitions and disposals (111.6) 117.9
Equity dividends paid (28.6) (24.3)
Cash (outflow)/inflow before financing (81.7) 179.8
Financing
Issue of Ordinary Share capital 3.3 4.8 24(a)
Gain on rollover of currency swaps* 13.1 1.3
Increase/(decrease) in borrowings including deferred consideration 90.1 (196.0) 12(c)
Repayment of loan notes (11.3) (24.2) 12(c)
Cash inflow/(outflow) from financing 95.2 (214.1)
Increase/(decrease) in cash 13.5 (34.3) 12(c)
</TABLE>
* The gain arises on the rollover of currency swaps which hedge overseas
investments and has been dealt with in reserves, see Note 25.
<PAGE>
<TABLE>
Group balance sheet
At 31 March 1998
<CAPTION>
1998 1997
(pound)m (pound)m Notes
<S> <C> <C> <C>
Fixed assets
Intangible assets 469.8 401.4 13
Tangible assets 34.0 29.1 14
Investments 10.7 11.7 15
514.5 442.2
Current assets
Stocks 11.3 11.4 16
Debtors - amounts falling due within one year 240.3 204.9 17
Debtors - amounts falling due after more than one year 37.6 31.0 17
Investments -- 0.7 18
Cash at bank 24.1 14.4
313.3 262.4
Creditors - amounts falling due within one year
Borrowings (124.5) (43.9) 12(d)
Other creditors (331.6) (327.3) 19
(456.1) (371.2)
Net current liabilities (142.8) (108.8)
Total assets less current liabilities 371.7 333.4
Creditors - amounts falling due after more than one year
Borrowings (48.5) (59.6) 12(d)
Other creditors (8.6) (10.0) 20
Provisions for liabilities and charges (5.4) (11.6) 21
309.2 252.2
Minority interests (all equity) (6.3) (3.4)
Net assets 302.9 248.8
Capital and reserves
Called-up share capital 52.6 52.3 24
Share premium account 200.3 195.1 25
Profit and loss account 358.8 305.9 25
Goodwill reserve (308.8) (304.5) 25
Shareholder's funds 302.9 248.8
Equity 302.7 248.6
Non-equity 0.2 0.2
A balance sheet of the Company together with supporting notes is given on
pages 59 to 62. A reconciliation of the movement on shareholders' funds is
given on page 36.
Approved by the Board of Directors on 1 June 1998.
RW Miller D J Grigson
</TABLE>
<PAGE>
<TABLE>
Statement of total recognised gains and losses
For the financial year ended 31 March 1998
<CAPTION>
1998 1997
(pound)m (pound)m
<S> <C> <C>
Profit attributable to shareholders 95.1 166.2
Currency translation difference (2.9) 0.4
Total recognised gains and losses relating to the financial year 92.2 166.6
</TABLE>
<TABLE>
Reconciliation of movement on shareholders' funds
For the financial year ended 31 March 1998
<CAPTION>
1998 1997
(pound)m (pound)m Notes
<S> <C> <C> <C>
Profit attributable to shareholders 95.1 166.2
Dividends (31.3) (27.0)
Retained profit for the financial year 63.8 139.2
Currency translation difference (2.9) 0.4 25
Shares issued 3.3 4.8 24(a)
Goodwill on acquisition of businesses (16.7) (19.3) 25
Goodwill recognised through the profit and loss account in respect of
disposals 6.6 11.4 25
Net addition to shareholders' funds 54.1 136.5
Opening shareholders' funds 248.8 112.3
Closing shareholders' funds 302.9 248.8
</TABLE>
<PAGE>
Accounting policies
Accounting convention
The accounts have been prepared on the historical cost basis.
The accounts comply with applicable UK accounting standards. A summary of
the principal accounting policies adopted by the Directors is set out
below.
Basis of consolidation of subsidiary undertakings
The Group's accounts consolidate the results of the Company and its
subsidiary undertakings for the year ended 31 March 1998.
The results of subsidiaries acquired or sold are included in the profit and
loss account from, or up to, the date control passes. Where the Group has
an interest in a joint venture, or other entity, over which it exercises
dominant influence in the management decision-making process, it is treated
as a subsidiary.
Investments and investments in Group undertakings
Fixed asset investments (other than those investments which are equity
accounted for in the consolidated financial statements) and investments in
Group undertakings are stated at cost less provisions for permanent
diminution in value.
Associated undertakings
Where the Group has an interest of 50% or less in the share capital of an
entity, and a significant amount of managerial influence exists, the
interest is treated as an associated undertaking, and the Group's share of
the associate's results and net assets are included in the consolidated
results and balance sheet.
Goodwill
The excess of the purchase consideration of subsidiaries, associates and
other businesses over the fair value of the net assets acquired is set off
against consolidated reserves in the year of acquisition.
On the disposal or closure of subsidiaries, associates or other businesses,
any goodwill previously set off against reserves is recognised through the
profit and loss account.
Intangible fixed assets
Acquired publishing rights, titles and exhibitions which are not considered
to have a finite life are included in the balance sheet and recorded at
cost. Their value is reviewed annually by the Directors and provision is
made, where appropriate, for any permanent diminution in value.
Internally developed intangible assets are not capitalised.
Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes. Provision
is only made for deferred tax if it is probable that a liability or asset
will crystallise in the foreseeable future.
Recoverable Advance Corporation Tax is deducted from the deferred taxation
balance. Any remaining amount is carried as a debtor to the extent that it
is considered recoverable in the future.
Foreign currencies - Company
Transactions in foreign currencies are recorded at the rate ruling at the
date of the transaction or at the contracted rate if a transaction is
covered by a forward foreign exchange contract. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the rate
of exchange ruling at the balance sheet date. All differences are taken to
the profit and loss account.
Foreign currencies - Group
The profit and loss accounts of oversees subsidiaries and associates are
translated into sterling at average rates; the balance sheets are
translated into sterling at the rates ruling at the balance sheet date. All
exchange differences arising from the retranslation at year end rates of
the opening balance sheets and results for the year are taken directly to
reserves. All other translation differences are taken to the profit and
loss account with the exception of differences on foreign currency
borrowings and currency swaps, to the extent that they are used to finance
or provide a hedge against Group equity investments in foreign enterprises,
which are taken directly to reserves. Where the functional currency of the
oversees operation is sterling then translations are translated at the rate
of exchange ruling at the date of the transaction.
<PAGE>
Depreciation
The cost of tangible fixed assets (other than freehold land) less estimated
residual value on disposal is written down evenly over their expected
useful lives as follows:
Freehold buildings - maximum period 50 years
Leasehold property - over the period of the lease to a
maximum of 50 years
Machinery, equipment and vehicles - 3 to 15 years
Exhibition income and costs
Income and direct costs arising in the year relating to future events as
deferred until those events have taken place, but only to the extent that
the costs are expected to be recoverable.
Stocks
Stocks and work in progress are stated at the lower of cost and estimated
net realisable value. Cost represents purchase cost, including attributable
overheads.
Leasing
Rentals paid under operating leases are charged to the profit and loss
account on a straight line basis over the term of the lease.
Retirement benefits
The cost of providing pensions under the Group's defined benefit scheme is
charged against profits on a systematic basis with pension surpluses and
deficits arising allocated over the expected remaining service lives of the
current members.
The cost of providing pensions under the defined contribution scheme is
charged to the profit and loss account as it becomes payable.
Differences between the amounts charged in the profit and loss account and
payments made to the pension funds are treated as assets or liabilities.
Share plans
The expected costs of the Long-Term Share Plan and Senior Executive Share
Plan are spread over the three year lives of the plans. The expected cost
of the Executive Share Plan is charged in the financial year to which the
share allocation relates.
<PAGE>
Notes to the Accounts
1 Geographical analysis of turnover and operating profit
Turnover represents sales, excluding inter-divisional transactions, net of
Value Added Taxes.
<TABLE>
Analysis by origin
<CAPTION>
Operating Operating
Turnover Turnover profit profit
1998 1997 1998 1997
(pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
UK 561.8 508.3 110.1 98.0
France 228.2 254.5 35.1 29.6
Germany 14.4 18.5 1.1 1.2
Rest of Europe 2.9 3.4 (0.1) 0.1
Other 5.2 28.0 0.1 --
812.5 812.7 146.3 128.9
Inter-dividional turnover (39.9) (44.5) -- --
Corporate and other -- -- (3.8) (3.1)
772.6 768.2 142.5 125.8
The geographical analysis of turnover by destination is not
materially different from the analysis by origin shown above.
</TABLE>
<TABLE>
2 Net operating costs
<CAPTION>
1998 1997
(pound)m (pound)m
<S> <C> <C>
Cost of sales 472.5 482.0
Distribution costs 62.1 59.0
Administrative expenses 96.0 101.8
Other operating income (0.5) (0.4)
630.1 642.4
Gross profit amounted to (pound)300.1m (1997 - (pound)286.2m)
3 Operating profit
1998 1997
(pound)m (pound)m
This is stated after charging/(crediting):
Depreciation 10.4 10.2
Net profit on sale of fixed assets (0.2) (0.1)
Net profit on disposal of titles (See Note 27) (1.6) --
Lease rentals: land and buildings 9.6 10.2
Lease rentals: plant and equipment 3.2 4.7
</TABLE>
Charged in the operating profit are (pound)13.5m (1997-(pound)8.4m) of
losses incurred in relation to development activities in magazines, events
and new media. Development activities are launches between the years 1995
and 1998 (1994 and 1997) which have not yet reached profitability.
<PAGE>
<TABLE>
4 Fees paid to Auditors
<CAPTION>
1998 1997
(pound)m (pound)m
<S> <C> <C>
Statutory audit 0.7 0.7
Acquisition support 0.1 --
Taxation and other services 0.6 0.6
1.4 1.3
The audit fee for the Company included within the Group was (pound)0.1m
(1997-(pound)0.1m).
5 Directors' remuneration and interests
(a) Emoluments
</TABLE>
<TABLE>
1998 1997
(pound)000 (pound)000
<S> <C> <C>
Non-Executive Directors(1) 222 234
Executive Directors
Basic salary payments (including benefits in kind) 960 1,251
Performance-related cash bonuses
Senior Management Incentive Scheme 15 23
Long Term Incentive Scheme (2) -- 428
Other cash bonuses -- 40
Emoluments before share bonuses and pension contributions 1,197 1,976
Performance-related share bonuses
Long Term Share Plan (3) 1,144 467
Pension contributions - money purchase scheme (4) 97 69
Emoluments for the financial year 2,438 2,512
Payments to former Directors
Compensation for loss of office (including pension
contribution) (5) -- 298
Pension enhancement on resignation from office (6) -- 815
2,438 3,625
Gains made on exercise of share options (7) 2,541 111
</TABLE>
(1) Included in this amount is (pound)25,606 (1997 - (pound)24,533) paid
to third parties for Directors' services.
(2) The final award under this incentive scheme was made in 1997.
(3) Funding cost for the year in respect of this Plan.
(4) See Note 5(c) for details.
(5) Included in this amount in the prior year is a pension augmentation
of(pound)44,000, which increased Peter Strong's deferred pension at
age 60 from(pound)60,900 to(pound)65,300.
(6) The ex-gratia pension enhancement in the prior year increased David
Arculus' deferred pension from (pound)108,400 per annum at age 60,
subject to discount for earlier payment, to (pound)122,800, without
discount.
(7) See Note 5(d) for details.
<PAGE>
<TABLE>
5 Directors' remuneration and interests continued
(a) Emoluments continued
The emoluments of the Directors of EMAP plc for the financial
year ended 31 March 1998 were as follows:
<CAPTION>
Performance
related cash Taxable 1998
Salary Fees bonuses (1) benefits Total 1997
(pound)000 (pound)000 (pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C> <C> <C>
Non-Executive Directors
Sir John Hoskyns (Chairman) -- 87 -- -- 87 80
Martin Boase -- 36 -- -- 36 35
Adam Broadbent (appointed 4 November 1997) -- 10 -- -- 10 --
Karen Jones (appointed 29 May 1997) -- 21 -- -- 21 --
Brendan O'Neill -- 26 -- -- 26 25
Henry Staunton -- 31 -- -- 31 30
Joe Cooke (removed by shareholders 2 December -- -- -- -- -- 18
1996)
Professor Ken Simmonds (removed by shareholders -- -- -- -- -- 18
2 December 1996)
Richard Winfrey (retired 17 July 1997) -- 11 -- -- 11 28
Executive Directors
Robin Miller (2) 267 -- -- 1 268 399
David Grigson 193 -- -- 5 198 292
Kevin Hand (3) 228 -- -- 8 236 220
Tom Moloney (4) 188 -- 15 10 213 256
David Arculus (resigned 27 March 1997) -- -- -- -- -- 357
Peter Strong (resigned 31 October 1996) -- -- -- -- -- 102
Tony Tillin (resigned 9 July 1997) (5) 58 -- -- 2 60 116
934 222 15 26 1,197 1,976
1997 1,208 234 491 43
</TABLE>
(1) Senior Management Incentive Scheme
(2) Highest paid Director. The gain on his exercise of Executive Share
Options during the year is disclosed in Note 5(d). Pension information
is shown in Note 5(c).
(3) Kevin Hand worked primarily in France during the financial year. He
was reimbursed for his additional accommodation and living expenses.
In 1997/98, these totalled (pound)106,617 (1997-(pound)119,832). In
addition, a tax equalisation payment of (pound)124,500 (1997 -
(pound)137,000) was made by the Company for the higher French tax
liabilities arising. During the year Mr. Hand waived his 1996/97
performance-related bonuses totalling (pound)105,000 (1997 -
(pound)93,750).
(4) Following the lapse of 42,116 Executive Share Options awarded in 1987
at (pound)1,575 per share, Tom Moloney was provisionally allocated
27,546 shares in the 1998/2001 Executive Share Plan. If these shares
had been distributable at 29 May 1998 they would have had a value
before tax of (pound)356,170. The provisional allocation has not been
included in the table of emoluments since it replaced the gain which
would have been made on a historical share option grant and therefore
does not represent a bonus in respect of current year performance.
(5) Tony Tillin received (pound)3,985 (1997 - (pound)6,500) in addition to
the emoluments above to compensate him for his pension arrangements on
joining the Company.
<PAGE>
5 Director' remuneration and interests continued
(b) Incentive schemes
An explanation of the operation of the Company's performance-related
incentive schemes for Directors is given in the Remuneration Committee
report on page 27.
(i) Long-Term Share Plan
Notional allocations outstanding for each plan period are summarised on
page 25. The movement on notional allocations under this plan during the
year was as follows:
<TABLE>
<CAPTION>
Robin David Kevin Tom
Miller Grigson Hand Moloney
<S> <C> <C> <C> <C>
At 1 April 1997 54,589 38,700 29,169 20,156
Allocation in respect of the 1997/2000 plan period 21,293 15,268 12,710 10,110
At 31 March 1998 75,882 53,968 41,879 30,266
</TABLE>
The first share bonuses under this plan will be paid in June 1998. Details
are given on pages 25 and 26. Shares for the plan are acquired in the
market by the EMAP Staff Share Trust. The cost of the shares is charged
against profits over the plan period based on annual assessments of the
likely expected outcome over the three year period. The comparator group
for the plan period 1995/98 was amended on 26 September 1996 following the
disposal of the Newspaper and Newspaper Printing Division when Midland
Independent Newspapers plc was replaced by GWR plc, a radio group, and with
effect from the date of the acquisition of Blenheim plc by United News and
Media plc (25 November 1996) when Blenheim was replaced by Mirror Group
plc. The average daily prices for each stock for the 12 months prior to the
change were used as "buying" and "selling" prices.
(ii) Senior Management Incentive Scheme
Bonuses earned by Directors of EMAP plc under this scheme were
(pound)48,548 (1997 - (pound)62,350). Kevin Hand has notified the Company
of his intention to waive his bonus of (pound)33,938 (1997 -
(pound)39,600). For an explanation of the scheme see page 27.
(iii) Executive Share Plan
During the year 13,982 shares were provisionally allocated to Kevin Hand
within the Executive Share Plan. See Note 24(d).
(c) Directors' pension arrangements
EMAP's Directors are members either of the EMAP Earnings Related Pension
Plan, a funded Inland Revenue approved defined benefit pension scheme which
was closed to new members in 1988, or Flexiplan, the current EMAP Inland
Revenue approved defined contribution scheme.
The main features of the EMAP Earnings Related Pension Plan for
Directors are:
(i) a 6% contribution from the Director;
(ii) a normal retirement age of 60;
(iii) pension at normal retirement age of two-thirds of final pensionable
salary subject to completion of ten years' service;
(iv) life assurance cover of four times pensionable salary;
(v) pension payable in the event of ill health; and
(vi) spouses' pension on death.
The main features of Flexiplan for Directors are:
(i) contributions between 10.5% and 12% of plan pay from the Company with
a required 6% contribution from the Director;
(ii) a flexible retirement age;
(iii) life assurance cover of four times plan pay;
(iv) Permanent Health Insurance in the event of ill-health;
(v) a pension at retirement tailored to each Director's needs.
<PAGE>
5 Directors' remuneration and interests continued
(c) Directors' pension arrangements continued
The Company contributions to Flexiplan were as follows:
1998 1997
(pound)000 (pound)000
David Grigson 31 19
Kevin Hand 32 26
Tom Moloney 28 15
Tony Tillin 6 9
97 69
The amounts accruing to Robin Miller as a member of the EMAP Earnings
Related Pension Plan were as follows:
1998
(pound)000
Total accrued pension at 31 March 1998
(1997 -(pound)152,000) 165
Increase in accrued pension during the financial
year excluding any increase for inflation 7
Transfer value of the increase in accrued pension
during the financial year* 100
Contribution paid by director (1997 -(pound)15,000) 15
* Calculated on the basis of actuarial advice in accordance with
Actuarial Guidance Note GN11 and excludes the Director's
contribution.
At his retirement dated, 17 July 1997, Richard Winfrey had an accrued
pension benefit of (pound)49,290 per annum. There was no increase in the
transfer value of his accrued pension between 31 March 1997 and the date of
his retirement.
<PAGE>
<TABLE>
5 Directors' remuneration and interests continued
(d) Interests in share capital
(i) Options
<CAPTION>
Robin David Kevin Tom
Miller Grigson Hand Moloney Total
<S> <C> <C> <C> <C> <C>
At 1 April 1997 307,465 217,736 211,907 160,986 898,094
Granted in year (all Savings Related Share Options) -- -- 2,162 -- 2,162
Lapsed in the year -- -- -- (42,116) (42,116)
Exercised in year (297,172) -- (84,230) -- (381,402)
At 31 March 1998 10,293 217,736 129,839 118,870 476,738
Analysed as follows:
Savings Related Share Options 10,293 3,918 11,239 3,375 28,825
Executive Share Options -- 213,818 118,600 115,495 447,913
The gains made by Directors during the year on the exercise of
share options (all Executive Share Options) were as follows:
</TABLE>
<TABLE>
<CAPTION>
Robin David Kevin Tom
Miller Grigson Hand Moloney Total
(pound)000 (pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C> <C>
At 31 March 1998 1,828 -- 713 -- 2,541
</TABLE>
Exercises of Executive Options were at prices between 157.5p and 378.4p for
Robin Miller and 157.5p and 219.6p for Kevin Hand.
<TABLE>
The Following Executive Share Option Grants are outstanding:
<CAPTION>
Grant
Grant price Robin David Kevin Tom
date pence Miller Grigson Hand Moloney Total
<S> <C> <C> <C> <C> <C> <C> <C>
I 14 Dec 1998 191.8 -- -- -- 21,058 21,058
J 14 Dec 1989 219.6 -- -- -- 21,058 21,058
K 18 Dec 1991 229.7 -- 78,968 52,645 15,792 147,405
L 16 Dec 1992 317.9 -- 76,102 35,514 25,367 136,983
M* 16 Dec 1993 394.8 -- 44,748 30,441 15,220 90,409
N* 15 Dec 1994 378.4 -- 14,000 -- 17,000 31,000
-- 213,818 118,600 115,495 447,913
Value at 31 March 1998 ((pound))* -- 1,752,520 980,266 971,352
* Options under Grants M and N were issued on the condition that
they could only be exercised if Total Shareholder Return
performance of EMAP shares exceeded the value delivered by a
basket of other media stocks. The performance criteria for the
exercise of both Grants M and N have been satisfied and these
grants are now exercisable. All grants are exercisable between
the third and tenth anniversaries of the date of grant. The value
of options at 31 March 1998 represents the difference between the
exercise price of the options and the market price of the shares
at the balance sheet date ((pound)11.25) multiplied by the number
of options.
</TABLE>
<PAGE>
<TABLE>
5. Directors' remuneration and interests continued
(d) Interests in share capital continued
(ii) Shareholdings
The Directors at the year end and their interests in Ordinary Shares of the
Company at 31 March 1998 and at 1 April 1997, or date of appointment(*) if
later, recorded in the Register kept for the purposes of Section 325 of the
Companies Act 1985, were as follows:
<CAPTION>
Options Other
1997 exercised acquired Sold 1998
Number Number Number Number Number
<S> <C> <C> <C> <C> <C>
Beneficial
Sir John Hoskyns 13,400 -- -- -- 13,400
Robin Miller 325,987 297,172 2,257 (112,411) 513,005
Martin Boase 21,250 -- -- -- 21,250
Adam Boardbent (appointed 4 November 1997) --* -- -- -- --
David Grigson 28,884 -- 1,049 (4,664) 25,269
Kevin Hand 5,962 84,230 51 (37,092) 53,151
Karen Jones (appointed 29 May 1997) 379* -- 262 -- 641
Tom Moloney 15,940 -- 68 -- 16,008
Brendan O'Neill 4,502 -- 824 -- 5,326
Henry Staunton 10,000 -- -- -- 10,000
Total beneficial interests 426,304 381,402 4,511 (154,167) 658,050
Non-beneficial interests as Trustees
Sir John Hoskyns 590,326 535,954
David Grigson 590,326 535,954
Total non-beneficial interests 1,180,652 1,071,908
Total Directors' Interests 1,606,956 1,729,958
Less duplications (590,326) (535,954)
Net Directors' Interests 1,016,630 1,194,004
</TABLE>
Within the Directors' non-beneficial interests there is a duplication in
respect of Ordinary Shares which are held by the Trustees of the EMAP Share
Scheme and Contributory Plan. The market price of the Company's share at 31
March 1998 and range during the financial year is given on page 65. Shares
sold include sales to fund the cost of the options exercised.
(iii) Changes in Directors' interests
There have been no changes in Directors' interests between the end of the
financial year and 29 May 1998, being less than one month prior to the date
of the Notice of Annual General Meeting.
<PAGE>
6. Staff and their pay and benefits
1998 % 1997 %
Average weekly number of staff
Consumer Magazines UK 1,860 33 1,775 30
Consumer Magazines France 1,073 19 988 17
Business Communications 1,753 31 1,688 28
Radio 743 13 759 13
International/New Media 142 3 -- --
Newspapers and Newspaper Printing -- -- 659 11
Corporate and other 41 1 40 1
5,612 100 5,909 100
Staff at 31 March 5,472 5,273
1998 1997
(pound)m (pound)m
Pay and benefits
Wages and salaries 134.9 129.9
Social Security costs 20.9 20.3
Other pension benefits 3.2 4.2
Staff share bonus 1.4 1.6
160.4 156.0
(a) Pension benefits
The Group operates two UK pension schemes, one defined contribution, the
other defined benefit. In all cases the assets of the schemes are held by
independent custodians and are kept entirely separate from the assets of
the Group. No loans have been made by any scheme to any Group company and
no shareholdings of the schemes have been used as security for loans to any
Group company.
(i) Defined Contribution Pension Scheme
The pension charge for the year for the Defined Contribution Scheme
(Flexiplan) represents contributions due from the employer and amounted to
(pound)2.6m (1997 - (pound)2.8m) with (pound)nil (1997 - (pound)nil)
outstanding at the year end.
(ii) Defined Benefit Pension Scheme
The pension charge for the funded Defined Benefit Scheme of (pound)0.6m
(1997 - (pound)1.4m)(Earnings Related Pension Plan), represents
contributions paid net of a credit of (pound)nil (1997 - (pound)0.2m)
arising from the amortisation of a pension surplus. Contributions are
assessed by a qualified actuary using the Projected Unit Method and are
charged to the profit and loss account so as to spread the cost over
employees' estimated remaining service lives within the Group. The balance
sheet contains a net prepayment amounting to (pound)2.0m (1997 -
(pound)1.8m).
The most recent actuarial valuation of the Defined Benefit Scheme was
performed at 5 April 1994 by R. Watson & Sons. The main assumptions were a
return on new investments of 8.75% per annum, dividend growth of 4.75% per
annum, pay escalation of 6% per annum and pension increases of 4.5% per
annum. The market value of the assets at 5 April 1994 was (pound)47.3m and
the actuarial value of the assets was sufficient to cover 108% of the
benefits that had accrued to members after allowing for future increases in
pay. The scheme is funded on a more conservative basis than that used to
determine the pension charge. Employer contributions at a full normal rate,
up to 14.5%, resumed with effect from April 1995 after some years of
suspension.
A new valuation of the Defined Benefit Scheme as at 5 April 1997 is
currently being undertaken by Watson Wyatt Partners (formerly know as R.
Watson & Sons) but this cannot be finalized pending completion of a bulk
transfer from an old pension scheme within the Group which is in
winding-up. The provisional results indicate that the assets of the Defined
Benefit Scheme remain sufficient to meet the accrued liabilities.
(b) Staff share bonus This bonus is payable under the EMAP Share Scheme and
Contributory Plan. Under the scheme, all eligible staff will be able to
take up shares in the Company with a market value of (pound)200 (1997 -
(pound)250) without any contribution. In addition they will be invited to
make a contribution of (pound)50 (1997 - (pound)50) to be invested in EMAP
shares to obtain further shares in the Company with a market value of
(pound)300 (1997 - (pound)225). The shares provided by the Company can be
acquired tax-free by staff after three years.
<PAGE>
7 Income from investments and associated undertakings
1996 1997
(pound)m (pound)m
Listed -- 0.1
Unlisted 0.1 0.3
0.1 0.4
Share of profits of associated
undertakings 2.1 1.9
Profit on disposal of investments and
associated undertakings (1997 - net of
goodwill of(pound)0.2m) 0.5 1.6
2.7 3.9
Dividends received from associated undertakings amounted to (pound)0.6m
(1997 - (pound)0.6m), including tax-credits of (pound)0.1m (1997 -
(pound)0.1m).
8 Net interest
1998 1997
(pound)m (pound)m
Interest receivable
Bank accounts and short-term investments 0.4 1.9
Additional hedging instruments * 5.1 2.5
Other 0.4 0.1
5.9 4.5
Interest payable
US$ Senior notes wholly repayable within
five years, after the effect of
currency swaps * 1.7 2.2
Bank loans and overdrafts, wholly
repayable within five years 5.8 8.1
Loan notes wholly repayable within five
years 0.8 1.6
Other (including interest payable to joint
venture partners) 0.3 0.1
US$ Senior notes repayable after more than
five years, after the effect of
currency swaps* 0.8 1.1
9.4 13.1
Net Interest payable 3.5 8.6
*For explanation see Note 12(f). Interest payable on additional hedging
instruments of (pound)7.0m (1997 - (pound)3.8m) has been set off against
interest receivable of (pound)12.1m (1997 - (pound)6.3m).
9 Tax on profit on ordinary activities
1998 1997
(pound)m (pound)m
The charge for tax comprises
UK corporation tax on the taxable profit
for the year at 31% (1997 - 33%) 31.4 27.8
Tax charge on the disposal of the Newspapers
and Newspaper Printing Division -- 27.5
Overseas Taxation 10.4 4.0
Tax attributable to dividends received 0.2 0.1
Associated undertakings 0.4 0.3
Deferred tax charge 0.5 5.2
Adjustment relating to prior years (0.4) (1.0)
42.5 64.0
If full provision had been made for deferred taxation the tax charge for
the year would have been increased by (pound)0.1m (1997 - reduced by
(pound)1.8m).
The effective tax rate of 30% is lower than the standard tax rates
prevailing in the UK and European locations due in part to tax relief on
the amortisation of acquired intangible assets and the utilisation of prior
year acquisition provisions.
<PAGE>
10 Profit attributable to shareholders
1998 1997
(pound)m (pound)m
Net profit of subsidiary undertakings 111.8 152.4
Less: dividends to Parent Company and
minority interests (69.9) (57.4)
Retained by subsidiary undertakings 41.9 95.0
Retained by associated undertakings 1.2 1.1
Dealt with in the accounts of the
Parent Company* 52.0 70.1
95.1 166.2
*The Parent company has taken advantage of the exemption offered by Section
230 of the Companies Act 1985 not to present a profit and loss account.
11 Earnings per share
1998 1997
Earnings per share 45.7p 80.4p
Less profit on disposal of Newspapers
and Newspaper Printing Division -- (41.5p)
Adjusted earnings per share 45.7p 38.9p
Earnings per share is calculated on earnings of (pound)95.1m (1997 -
(pound)166.2m) and on 207.9m (1997 - 206.7m) Ordinary Shares, being the
weighted average number of Ordinary Shares in issue during the year. Those
shares held in trust under the Executive and Long-Term Share Plans, see
Note 24(d), whose dividend rights have been waived, have been excluded when
calculating the weighted average number of Ordinary Shares.
The 1997 adjusted earnings per share figure is calculated on earnings of
(pound)80.3m, adjusted to eliminate the distortion caused by including the
profit on business disposals of (pound)113.5m and the associated tax charge
of (pound)27.6m.
12 Cash flow and treasury information
(a) Reconciliation of operating profit to net cash inflow from operating
activities
1996 1997
(pound)m (pound)m
Operating profit 142.5 125.8
Depreciation of tangible fixed assets 10.4 10.2
Net profit on sale of fixed assets (0.2) (0.1)
Net profit on disposal of titles (1.6) --
Net increase in property and reorganisation
provisions 1.5 3.2
Acquisition restructuring costs spent (5.4) (4.4)
(Increase)decrease in stocks (0.4) 7.5
Increase in debtors (28.7) (8.5)
Increase in creditors 25.6 4.7
Other, including exchange gains and losses (0.5) (2.5)
Net cash inflow from operating activities 143.2 135.9
<PAGE>
12 Cash flow and treasury information continued
(a) Reconciliation of operating profit to net cash inflow from operating
activities continued
The Group uses operating cash flows excluding the effects of acquisition
restructuring expenditure, fixed asset expenditure and estimated working
capital injections following acquisitions, as its key cash management
measure.
1996 1997
(pound)m (pound)m
Net cash inflow from operating activities 143.2 135.9
Reorganisation costs spent 5.4 4.4
Capital expenditure (16.5) (14.3)
Working capital injections into businesses
acquired during the year 2.1 -
Adjusted operating cash flow 134.2 126.0
Operating profit before acquisition
restructuring costs 142.5 125.8
Operating profits into cash 94% 100%
(b) Cash flow effect of acquisitions and disposals
During the year the Group has made a number of acquisitions. It acquired
the Parker's Price Guides in the Consumer Magazines UK Division, and
purchased Bounty Services Pty Ltd and the trade and assets of Mason Stewart
Publishing Pty Ltd in Australia. On 15 November 1997, the Business
Communications Division acquired the Health Services Division of Macmillan
Magazines for a cash consideration of (pound)85.5m. A further payment of up
to (pound)17.3m, which is held in escrow, will be payable in April 1999,
dependent upon the performance of the business. At 31 March 1998 this
amount is included in net debt. Further details of acquisitions are given
in Note 26.
(pound)m
Total consideration 120.8
Transaction costs associated with acquisitions 1.1
Purchase of investments 0.1
122.0
Payments against acquisition provisions 1.5
Total cash outflow on acquisitions 123.5
The Group made a number of small disposals during the year, further details
of which are given in Note 27.
(pound)m
Cash consideration 15.7
Less costs associated with the disposals (2.4)
Add overdrafts of disposed businesses 0.7
Total cash inflow on disposals 14.0
<TABLE>
(c) Movements in net debt during the year
<CAPTION>
At 1
April Exchange Net cash At 31 March
1997 differences movement 1998
(pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
Cash, short-term investments and overdrafts 11.6 (1.5) 13.5 23.6
Bank loans (29.8) 0.9 (72.8) (101.7)
Deferred consideration - - (17.3) (17.3)
US$ Senior notes (54.6) 6.1 - (48.5)
Loan notes (16.3) - 11.3 (5.0)
(89.1) 5.5 (65.3) (148.9)
</TABLE>
<PAGE>
12 Cash flow and treasury information continued
(d) Analysis of borrowings by maturity
1998 1997
(pound)m (pound)m
Amounts falling due within one year
Bank loans and overdrafts 119.5 32.6
Loan notes 5.0 11.3
124.5 43.9
Amounts falling due after more than one year
Between two and five years (not by
instalments)
Loan notes - 5.0
US$ Senior notes 24.3 27.4
After five years (not by instalments)
US$ Senior notes 24.2 27.2
48.5 59.6
Total borrowings 173.0 103.5
All borrowings are unsecured. Bank loans are classified according to the
maturity date of the respective individual drawings.
(e) Borrowing facilities
The Group's borrowing limit at 31 March 1998 calculated in accordance with
the Article of Association was (pound)1,050.6m (1997-(pound)934.4m).
1998 1997
(pound)m (pound)m
Undrawn committed revolving credit facilities
Expiring within one year 15.1 35.2
Expiring after more than one year 104.9 103.7
120.0 138.9
<TABLE>
(f) Currency profile of net assets and net
borrowings
<CAPTION>
Cash and
Net short-term Additional Adjusted
operating Borrowing investment hedging net
assets s s instruments borrowings
(pound)m (pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C> <C>
Sterling 302.4 (119.1) 17.7 148.4 47.0
French francs 163.5 (32.0) 1.9 (111.3) (141.4)
Deutschmarks 16.6 (16.4) 1.6 (6.5) (21.3)
Australian dollars 3.0 (5.1) 0.6 - (4.5)
Other 1.9 (0.4) 2.3 0.5 2.4
At 31 March 1998 487.4 (173.0) 24.1 31.1 (117.8)
Sterling 214.9 (45.3) 4.9 178.4 138.0
French francs 171.1 (36.3) 5.3 (143.6) (174.6)
Deutschmarks 19.3 (20.7) 2.1 (7.3) (25.9)
Australian dollars - - - - -
Other 2.0 (1.2) 2.1 - 0.9
At 31 March 1997 407.3 (103.5) 14.4 27.5 (61.6)
The weighted average interest rate on adjusted net borrowings at 31 March 1998 was 4.8%
</TABLE>
<PAGE>
12 Cash flow and treasury information continued
(f) Currency profile of net assets and net borrowings continued
The Group hedges translation exposures relating to key performance
indicators where it is practical and cost effective to do so. This is
achieved by broadly matching overseas net assets and goodwill written off
to reserves with currency denominated debt, currency swaps and internal
financing arrangements. The liability for the US$ Senior notes has been
swapped into French francs and Deutschmarks and is accounted for after the
effect of the currency swaps. In addition, the Group has entered into
further currency swaps in order to increase economic French franc and
Deutschmark debt by FRF1,325m and DEM20m respectively. These currency swaps
are included above as additional hedging instruments.
Cash generated by overseas activities, which is currently surplus to
operational requirements and not yet remitted in the form of dividends, is
either switched temporarily to sterling using fx swaps or invested for
periods of less than three months. As at 31 March 1998 FRF170m and US$0.9m
of fx swaps were outstanding and are included above as additional hedging
instruments.
<TABLE>
<CAPTION>
13 Intangible fixed assets 1998 1997
(pound)m (pound)m
<S> <C> <C>
Publishing rights, titles and exhibitions
At 1 April 401.4 479.7
Exchange movements (23.6) (43.0)
Additions (see Note 26) 100.3 14.1
Disposals (see Note 27) (8.3) (49.4)
At 31 March 469.8 401.4
</TABLE>
<TABLE>
<CAPTION>
14 Tangible fixed assets Machinery,
Long Short equipment
Freehold leasehold leasehold and
property property property vehicles Total
(pound)m (pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C> <C>
Cost
At 1 April 1997 2.0 2.5 3.4 38.5 46.4
Exchange movements - - - (1.7) (1.7)
Business acquired - - - 0.3 0.3
Business disposals - - (0.5) (1.7) (2.2)
Additions - - 2.4 15.2 17.6
Disposals - (0.2) (0.4) (4.7) (5.3)
Transfer - 0.3 (0.3) - -
At 31 March, 1998 2.0 2.6 4.6 45.9 55.1
Depreciation
At 1 April 1997 0.1 0.2 1.1 15.9 17.3
Exchange movements - - - (0.8) (0.8)
Business disposals - - (0.4) (1.0) (1.4)
Provided during the year 0.1 0.3 0.7 9.3 10.4
Disposals - (0.2) (0.4) (3.8) (4.4)
Transfer - 0.1 (0.1) - -
At 31 March 1998 0.2 0.4 0.9 19.6 21.1
Net book value at 31 March 1998 1.8 2.2 3.7 26.3 34.0
Net book value at 1 April 1997 1.9 2.3 2.3 22.6 29.1
The Directors have considered the value of the tangible fixed assets and
are satisfied that their value at 31 March 1998 was not less than the net
book value shown in the accounts.
</TABLE>
<PAGE>
<TABLE>
15 Fixed asset investments
<CAPTION>
Associated
undertakings
Other
Loans Cost Investments Total
(pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
Cost less goodwill
At 1 April 1997 1.1 7.5 1.0 9.6
Exchange movements (0.1) (0.9) - (1.0)
Additions - - 0.1 0.1
Disposals - - (0.1) (0.1)
Transfers - (0.6) 0.6 -
At 31 March 1998 1.0 6.0 1.6 8.6
Post acquisition reserves and provisions
At 1 April 1997 - 2.1 - 2.1
Retained by associated undertakings - 1.2 - 1.2
Goodwill written off by associated undertakings - (0.8) - (0.8)
Transfer from subsidiary undertakings - (0.4) - (0.4)
At 31 March 1998 - 2.1 - 2.1
Net book value at 31 March 1998 1.0 8.1 1.6 10.7
Net book value at 1 April 1997 1.1 9.6 1.0 11.7
</TABLE>
Associated undertakings
The principal companies in which the Group holds 20% or more of the equity
are set out below. Except where indicated all these companies are
registered in England and Wales, operate in the United Kingdom and all
holdings are of Ordinary Shares and are indirectly owned. The market value
of listed associate investments at 31 March 1998 was (pound)21.4m (1997 -
(pound)23.1m); these are included above at their net book value of
(pound)0.8m (1997 - (pound)1.3m).
<TABLE>
<CAPTION>
Name of company Proportion Nature of business
held*
<S> <C> <C>
Diana SA (France) 49%+ Holding company
L'Ami des Jardins SAS (France) 50% Consumer magazine publisher
Peche et Chasse SAS (France) 50% Consumer magazine publisher
Peche Pratique SNC (France) 50% Consumer magazine publisher
Revue Nationale de la Chasse SAS (France) 50% Consumer magazine publisher
La Peche et les Poissons SAS (France) 50% Consumer magazine publisher
Mason Stewart Publishing Pty Ltd (Australia) 50% Magazine publisher
Seymour Distribution Ltd 50% Marketing and circulation services
Seymour International Ltd 50% Importer/exporter of magazines and
periodicals
Metal Bulletin plc** 20%++ Business magazine publisher
* At 31 March 1998 rounded up to the nearest per cent. ** Listed on the London Stock Exchange
+ Parent Company of Le Chasseur Francais SA. ++ Investment directly owned by EMAP plc.
</TABLE>
All the above companies have been treated as associated undertakings during
the year ended 31 March 1998. Amounts owed by associated undertakings are
set out in Note 17, and amounts owed to associated undertakings are set out
in Note 19. Dividends received from associated undertakings are set out in
Note 7. Details of significant transactions are set out below.
The Group has a 50% interest in the equity of Seymour International Ltd, a
company which distributes UK Consumer Magazines overseas. During the year
this company distributed (pound)18.2m of EMAP's magazines, (pound)4.9m of
which was due to the Group at 31 March 1998.
Loans to associated undertakings comprise a (pound)1.0m loan to Diana SA at
31 March 1998. Interest receivable on this loan during the year amounted to
(pound)0.1m (1997 - (pound)0.1m).
<PAGE>
16 Stocks 1998 1997
(pound)m (pound)m
Raw materials and consumables 7.8 8.4
Work in progress 1.6 1.5
Goods for resale 1.9 1.5
11.3 11.4
17 Debtors 1998 1997
(pound)m (pound)m
Amounts falling due within one year
Trade debtors 133.0 117.4
Amounts owed by associated undertakings 7.6 2.4
Other debtors 27.3 22.9
Prepayments and accrued income 42.5 42.6
Unrealized gain on currency swaps 15.4 10.0
Taxation recoverable 14.5 9.6
240.3 204.9
Amounts falling due after more than
one year
Other debtors 8.2 4.0
pension prepayment 8.8 8.8
Unrealized gain on currency swaps 15.7 17.5
Advance Corporation Tax 4.9 0.7
37.6 31.0
277.9 235.9
18 Current asset investments 1998 1997
(pound)m (pound)m
Property held for resale - 0.7
19 Other creditors - amounts falling
due within one year 1998 1997
(pound)m (pound)m
Payments received on account 44.7 45.7
Trade creditors 80.3 80.5
Amounts owed to associated undertakings 0.4 1.2
Other creditors 5.1 1.3
Corporation Tax 57.2 69.1
Other taxes and social security costs 29.1 31.4
Accruals and deferred income 89.4 78.2
Proposed dividends 20.9 18.2
Provision for share schemes
(see Note 24(d)) 3.1 0.4
Staff share bonus 1.4 1.3
331.6 327.3
<PAGE>
20 Other creditors - amounts falling due after more than one year
1998 1997
(pound)m (pound)m
Other creditors 1.8 2.5
Corporation Tax - 0.5
Pension costs 6.8 7.0
8.6 10.0
21 Provisions Acquisition
and
reorganisation Property
provisions provisions Total
(pound)m (pound)m (pound)m
At 1 April 1997 7.9 3.7 11.6
Exchange movements (0.2) - (0.2)
Provided during the year 1.5 - 1.5
Utilised in the year* (7.2) (0.3) (7.5)
At 31 March 1998 2.0 3.4 5.4
*Provisions utilised in the year all related to the specific
purposes for which they were created.
22 Deferred taxation 1998 1997
(pound)m (pound)m
Analysis of movements in the year
At 1 April - (1.3)
Arising on acquisitions and disposals - (1.1)
Charge for the year
- - Ordinary activities 0.5 5.2
- - Adjustments relating to prior years (2.8) 1.0
(2.3) 3.8
Advance Corporation Tax movement 2.3 (3.8)
At 31 March - -
<TABLE>
<CAPTION>
Deferred taxation, including amounts for which provision has
not been made, is as follows: Provided Not Provided
1998 1997 1998 1997
(pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
Capital allowances in advance of depreciation
- - On machinery and equipment (0.9) (0.6) - (0.4)
- - On roll-over of gains - - 11.2 11.2
On short-term timing differences 2.4 4.4 (1.8) (1.5)
At 31 March 1.5 3.8 9.4 9.3
Advance Corporation Tax offset (1.5) (3.8) - -
- - 9.4 9.3
United Kingdom 1.5 2.9 9.4 9.3
Overseas - 0.9 - -
At 31 March 1.5 3.8 9.4 9.3
</TABLE>
No account has been taken in the table above for deferred taxation in
respect of earnings which are retained overseas.
23 Net operating assets 1998 1997
(pound)m (pound)m
Analysis by division
Consumer Magazines UK 65.9 67.3
Consumer Magazines France 162.9 170.6
Business Communications 242.8 157.0
Radio 11.9 12.1
International/New Media 3.9 0.3
<PAGE>
Net operating assets 487.4 407.3
Unallocated net liabilities (178.2) (155.1)
Net assets 309.2 252.2
Unallocated net liabilities comprise bank loans, overdrafts and other
non-operating liabilities less properties held for disposal, other fixed
asset investments and cash at bank.
Analysis of net operating assets by geographical location is given in Note
12(f).
<TABLE>
<CAPTION>
24 Share capital 1998 1997 1998 1997
m m (pound)m (pound)m
<S> <C> <C> <C> <C>
Authorised
Ordinary Shares of 25p each 283.0 283.0 70.7 70.7
5% cumulative preference shares of Li.1 each (now 3.5% + tax credit) 0.3 0.3 0.3 0.3
283.3 283.3 71.0 71.0
Allotted, called-up and fully paid
Ordinary Shares of 25p each 209.8 208.6 52.4 52.1
5% cumulative preference shares of Li.1 each (now 3.5% + tax credit) 0.2 0.2 0.2 0.2
210.0 208.8 52.6 52.3
</TABLE>
The preference shares represent non-equity interests and carry a dividend
of 3.5% per annum, payable half-yearly in arrears on 30 June and 31
December. The dividend rights are cumulative. The preference shares carry
no votes at meetings unless the dividend thereon is six months or more in
arrears. On a winding up of the Company the preference shareholders have a
right to receive, in preference to payments to Ordinary Shareholders, Li.1
per share plus accrued dividends.
<TABLE>
<CAPTION>
(a) Changes in called-up share capital 1998 1998 1998 1997
Number of Nominal Total Total
shares value consideration consideration
m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
Reason for allotment of Ordinary Shares
French Staff Share Scheme - - - 0.3
Exercise of Savings Related Options 0.4 0.1 0.8 2.1
Exercise of Executive Options 0.8 0.2 2.5 2.4
1.2 0.3 3.3 4.8
</TABLE>
<TABLE>
<CAPTION>
24 Share capital continued
(b) Options outstanding over Ordinary Shares of 25p at 31 March 1998
<S> <C> <C> <C> <C> <C> <C>
Earliest Latest Number of
Date of Grant Option exercise exercise Ordinary
grant reference price* date date Shares
(i) Savings Related Share Options 19 Dec 1990 SAYE 6 183.1p 1 Mar 1996 1 Sep 1998 982
19 Dec 1991 SAYE 7 191.8p 1 Mar 1997 1 Sep 1999 42,688
23 Dec 1992 SAYE 8 228.0p 1 Mar 1998 1 Sep 2000 78,411
22 Dec 1993 SAYE 9 282.6p 1 Mar 1999 1 Sep 2001 307,381
21 Dec 1994 SAYE 10 316.3p 1 Mar 2000 1 Sep 2002 279,721
20 Dec 1995 SAYE 11 447.7p 1 Mar 2001 1 Sep 2003 433,948
11 Dec 1996 SAYE 12 603.7p 1 Mar 2000 1 Sep 2002 414,546
17 Dec 1997 SAYE 13 718.0p 1 Mar 2001 1 Sep 2003 513,421
2,071,098
(ii) Executive Share Options 14 Dec 1988 EXEC I 191.8p 14 Dec 1991 14 Dec 1998 42,116
14 Dec 1989 EXEC J 219.6p 14 Dec 1992 14 Dec 1999 62,643
18 Dec 1991 EXEC K 229.7p 18 Dec 1994 18 Dec 2001 272,687
16 Dec 1992 EXEC L 317.9p 16 Dec 1995 16 Dec 2002 373,396
16 Dec 1993 EXEC M+ 394.8p 16 Dec 1996 16 Dec 2003 459,936
15 Dec 1994 EXEC N+ 378.4p 15 Dec 1997 15 Dec 2004 358,000
1 Jan 1995 METRO B** 374.8p 1 Jan 1998 1 Jan 2005 21,596
1,590,374
Total options outstanding at 31 March 1998 3,661,472
</TABLE>
<PAGE>
*The prices have been adjusted to reflect the effect of rights issues.
+As explained in Note 5(d)(i) Executive Share Options EXEC M and EXEC N are
now exercisable as the relevant performance criteria have been met.
**On the acquisition of Metro Radio Group Plc options over shares in that
company were converted into options over EMAP plc shares
<TABLE>
<CAPTION>
(c) Options outstanding over Ordinary Shares of 25p at 29 May 1998 Number of
Ordinary
Shares
<S> <C>
Total options outstanding at 31 March 1998 3,661,472
Movements to 29 May 1998
Exercised (85,225)
Lapsed (58,901)
Total options outstanding at 29 May 1998 3,517,346
Savings Related Options 1,979,302
Executive Options 1,538,044
Maximum consideration receivable by the Company on exercise of all (pound)14.2m
options
</TABLE>
<PAGE>
24 Share capital continued
(d) Executive Share Plans
EMAP plc operates three share plans for senior staff, the Long-Term Share
Plan, the Senior Executive Share Plan and the Executive Share Plan.
(i) Long-Term Share Plan
All Executive Directors and ten other senior staff participate in the
Long-Term Share Plan. This scheme is described on page 27.
(ii) Senior Executive Share Plan
This scheme was set up in 1997 for senior staff. Each participant is
notionally allocated a number of shares. During the next three years
depending on each division's economic value added versus target, and
profits into cash performance, the members will receive between 50% and
200% of the notional allocation. Based on the performance against these
criteria, after two years, one-third of the shares receivable by the
members at that time will be distributed. This remainder will be
distributed at the end of the third year.
(iii) Executive Share Plan
Under this plan, staff who are chosen to participate are provisionally
allocated a number of shares. These shares are then held in the EMAP Staff
Share Trust (the Trust) for three years at the end of which time they can
be distributed to the staff to whom they were provisionally allocated
provided they continue to be employed by the Company. Dividends on the
shares held in the Trust have been waived. The amount that the Company will
make available to fund this scheme will depend on the performance of the
Group in each financial year.
The allocations made to date, provisions so far expensed to the profit and
loss account, and shares purchased by the Trust are as follows:
<TABLE>
<CAPTION>
Executive Share Plan Senior Executive Share Plan Long-Term Share Plan
Number Number Number
of shares of shares of shares
000 (pound)m 000 (pound)m 000 (pound)m
<S> <C> <C> <C> <C> <C> <C>
1994/1995 scheme allocation* (116) (0.5) - - - -
1995/1996 scheme allocation* (255) (1.5) - - (72) (0.7)
1996/1997 scheme allocation* (204) (1.3) - - (141) (0.8)
1997/1998 scheme allocation (57) (0.8) (163) (1.9) (185) (1.3)
Provision for funding the plans (632) (4.1) (163) (1.9) (398) (2.8)
Shares purchased by the Trust 630 3.9 - - 314 1.8
Net position on balance sheet as at 31 March 1998 (0.2) (1.9) (1.0)
Market value of shares purchased at 31 March 1998 7.1 - 3.5
*Allocations have been adjusted to reflect lapses, and the admission of Kevin Hand to the Executive Share Plan.
</TABLE>
25. Reserves Share Profit
premium and loss Goodwill
account account reserve
(pound)m (pound)m (pound)m
- ---------------------------------------------------------------------------
At 1 April 1997 195.1 305.9 (304.5)
Exchange movements* - (8.7) 5.8
Premium on issue of shares+ 5.2 (2.2) -
Goodwill on acquisition of - - (16.7)
businesses
Goodwill recognised through the - - 6.6
profit and loss account
in respect of disposals
Retained profit for the year - 63.8 -
- ---------------------------------------------------------------------------
At 31 March 1998 200.3 358.8 (308.8)
- --------------------------------------------------------------------------
*Exchange movements comprise: realised and unrealised gains on currency
swaps of Li.16.7m (1997 - Li.28.7m), and on borrowings of Li.7.0m (1997 -
Li.12.6m), offset by a loss of Li.26.6m (1997 - Li.40.9m) on overseas
assets.
- ---------------------------------------------------------------------------
+During the year EMAP plc received Li.5.5m on the issue of shares in
respect of the exercise of Savings Related and Executive Options. Employees
paid Li.3.3m to the Group for the issue of these shares, see Note 24(a),
and the balance of Li.2.2m comprised contributions to the qualifying
employee share ownership trust (QUEST) from the Company.
- -------------------------------------------------------------------
<PAGE>
26 Acquisitions
(a) Businesses acquired
Details of businesses acquired, all of which have been accounted for using
acquisition accounting principles, are given in Note 12(b). The impact of
all the acquisitions in the year on the consolidated balance sheet was:
Net book Fair value Fair
values adjustment value
(pound)m (pound)m to Group
(pound)m
- --------------------------------- ------------- --------------- ------------
Intangible fixed assets* 4.3 96.0 100.3
Tangible fixed assets 0.4 (0.1) 0.3
Current assets 8.0 (0.3) 7.7
Current liabilities (1.8) 0.2 (1.6)
Taxation (0.7) - (0.7)
- --------------------------------- ------------- --------------- ------------
10.2 95.8 106.0
- --------------------------------- ------------- --------------- ------------
Cost associated with the (1.1)
acquisitions
Goodwill 15.9
- --------------------------------- ------------- --------------- ------------
120.8
- --------------------------------- ------------- --------------- ------------
Discharged by:
Cash 103.5
Contingent deferred consideration 17.3
- --------------------------------- ------------- --------------- ------------
120.8
- --------------------------------- ------------- --------------- ------------
*Following the acquisitions, the Publishing Rights acquired were revalued
on a future discounted cash flow basis, and capitalised in accordance with
the Group's accounting policies.
All other fair value adjustments relate to revaluations.
(b) Acquisition of Macmillan Health Service Journals Limited
On 15 November 1997 the Group acquired Macmillian Health Service Journals
Limited for an initial consideration of (pound)85.5m with a further
(pound)17.3m payable in April 1999 dependent on certain sales targets being
achieved.
Net book Fair value Fair
values adjustment value
(pound)m (pound)m to Group
(pound)m
- --------------------------------- ------------- --------------- ------------
Intangible fixed assets 3.7 88.3 92.0
Tangible fixed assets 0.3 (0.1) 0.2
Current assets 3.7 (0.1) 3.6
Current liabilities (1.8) - (1.8)
Taxation (0.7) - (0.7)
- --------------------------------- ------------- --------------- ------------
5.2 88.1 93.3
- --------------------------------- ------------- --------------- ------------
Costs associated with
the acquisition (0.7)
Goodwill 10.2
- --------------------------------- ------------- --------------- ------------
102.8
- --------------------------------- ------------- --------------- ------------
Discharged by:
Cash 85.5
Contingent deferred consideration 17.3
- --------------------------------- ------------- --------------- ------------
102.8
- --------------------------------- ------------- --------------- ------------
In the previous financial year ended 31 December 1996 these titles
generated turnover of (pound)27.7m, an operating profit of (pound)8.4m and
profit before tax of (pound)8.5m. In the ten months prior to acquisition,
the titles generated turnover of $25.7m, an operating profit of (pound)8.3m
and profit before tax of (pound)8.5m. In the period after acquisition, the
titles generated turnover of (pound)10.9m and an operating profit of
(pound)2.5m, after reorganization costs of (pound)1.5m.
<PAGE>
27 Disposals
The impact of the disposals Business
in the year on the consolidated titles* Other Total
balance sheet was: (pound)m (pound)m (pound)m
- -------------------------------- ------------ ----------- ------------
Intangible fixed assets 6.4 1.9 8.3
Tangible fixed assets 0.2 0.6 0.8
Current assets 0.4 (0.4) -
Overdrafts - (0.7) (0.7)
Tax - 0.4 0.4
Minority interests - 0.2 0.2
Goodwill written back 4.6 2.0 6.6
- -------------------------------- ------------ ----------- ------------
11.6 4.0 15.6
Costs associated with disposal 1.0 1.4 2.4
Profit on disposal 1.4 0.2 1.6
- -------------------------------- ------------ ----------- ------------
14.0 5.6 19.6
- -------------------------------- ------------ ----------- ------------
Discharged by:
Cash 10.1 5.6 15.7
Loan note 3.9 - 3.9
14.0 5.6 19.6
- -------------------------------- ------------ ----------- ------------
*On 30 July 1997 the Group disposed of 14 business publication titles to
Quantum Publishing Ltd, an associated company at that date. Following the
subsequent recapitalisation of Quantum Publishing Ltd the Group's interest
in this company was reduced from 22% to 15%.
28 Commitments and contingencies
(a) Commitments for capital expenditure 1998 1997
(pound)m (pound)m
- -------------------------------- ------------ ----------- ------------
Contracted for 0.3 0.1
Authorised by the Directors,
but not yet contracted for 1.4 0.3
- -------------------------------- ------------ ----------- ------------
(b) Contingent liabilities
The Group and the Company have given a guarantee to bankers of (pound)3.8m
(1997 - (pound)4.3m) in respect to loans taken out by an associated
undertaking.
(c) Leasing commitments Land and buildings Other assets
The Group had annual
commitments under non-cancellable 1998 1997 1998 1997
operating leases at 31 March 1998 (pound)m (pound)m (pound)m (pound)m
as set out below:
- -------------------------------- --------------------------------------------
Leases expiring within one year 3.5 3.2 0.5 1.1
Leases expiring between two and
five years 6.8 0.9 3.0 2.6
Leases expiring after five years 2.8 4.4 - -
13.1 8.5 3.5 3.7
- -------------------------------- --------------------------------------------
(d) Other commitments
The Group's commitments under its pension schemes are described in Note
6(a). In addition, annual operating lease commitments of subsidiary
undertakings have been guaranteed by the Company, the maximum liability
under which amounted to approximately (pound)15.0m at 31 March 1998.
29 Post balance sheet events
On 7 May 1998, the Group announced the sale of Cardiff Broadcasting Company
(CBC) which broadcasts as Red Dragon FM and Touch AM in the Cardiff and
Newport areas. The proceeds from the sale were (pound)18.3m. The sale of
CBC was necessary to permit the Group to acquire Melody Radio. Following
receipt of Radio Authority Public Interest approval on 11 May, it is
expected that this acquisition will be completed by July. Consideration for
the purchase is(pound)25m.
<PAGE>
Company balance sheet
At 31 March 1998
1998 1997 Notes
(pound)m (pound)m
- ------------------------------------------------------------------------
Fixed assets
Tangible assets 0.3 0.4 30
Investments 508.7 513.5 31
- ------------------------------------------------------------------------
509.0 513.9
- ------------------------------------------------------------------------
Current assets
Debtors - amounts falling due within one year 371.9 512.9 32
Debtors - amounts falling due after more
than one year 32.8 29.6 32
Cash at bank 1.9 5.3
- ------------------------------------------------------------------------
406.6 547.8
- ------------------------------------------------------------------------
Creditors - amounts falling due within
one year
Loans (124.0) (42.3) 33
Other creditors (346.3) (589.2) 34
- ------------------------------------------------------------------------
(470.3) (631.5)
- ------------------------------------------------------------------------
Net current liabilities (63.7) (83.7)
- ------------------------------------------------------------------------
Total assets less current liabilities 445.3 430.2
Creditors - amounts falling due after
more than one year
Loans (48.5) (59.6) 33
Other creditors (6.4) (6.4) 35
Net assets 390.4 364.2
- ------------------------------------------------------------------------
Capital and reserves
Called-up share capital 52.6 52.3 24
Share premium account 200.3 195.1 37
Profit and loss account 111.5 90.8 37
Other reserves 26.0 26.0 37
Shareholders' funds 390.4 364.2
- ------------------------------------------------------------------------
Equity 390.2 364.0
Non-equity 0.2 0.2
- ------------------------------------------------------------------------
Approved by the Board of Directors on 1 June 1998
R. W. Miller D. J. Grigson
<PAGE>
Notes to the Company balance sheet
30 Tangible fixed assets Machinery
Short equipment
leasehold and
property vehicles Total
(pound)m (pound)m (pound)m
- ------------------------- ------------- -------------- ------------
Cost
At 1 April 1997 0.2 0.8 1.0
Additions - 0.1 0.1
At 31 March 1998 0.2 0.9 1.1
- ------------------------- ------------- -------------- ------------
Depreciation
At 1 April 1997 0.1 0.5 0.6
Provided during the year - 0.2 0.2
- ------------------------- ------------- -------------- ------------
At 31 March 1998 0.1 0.7 0.8
- ------------------------- ------------- -------------- ------------
Net book value at 31 March
1998 0.1 0.2 0.3
- ------------------------- ------------- -------------- ------------
Net book value at 1 April
1997 0.1 0.3 0.4
- ------------------------- ------------- -------------- ------------
31 Fixed asset investments Subsidiary
undertaking Associated Other
s undertakings
Investment
Shares Shares Loans s Total
(pound)m (pound)m (pound)m (pound)m (pound)m
- -------------------------------------------------------------------------------
Cost
At 1 April 1997 513.4 9.8 1.0 1.9 526.1
Exchange movements - - (0.1) - (0.1)
Additions - 0.1 - 0.1 0.2
Transfers - (0.5) - 0.5 -
Disposals (3.3) - - (1.6) (4.9)
At 31 March 1998 510.1 9.4 0.9 0.9 521.3
- -------------------------------------------------------------------------------
Provisions
At 1 April 1997 and at
31 March 1998 11.0 1.6 - - 12.6
Net book value at
31 March 1998 499.1 7.8 0.9 0.9 508.7
- -------------------------------------------------------------------------------
Net book value at
1 April 1997 502.4 8.2 1.0 1.9 513.5
- -------------------------------------------------------------------------------
Whilst the Company does not hold a majority of the voting rights in Choice
Publications Limited or Frontline Limited, these companies, together with
Hachette/EMAP Magazines Limited, EMAS SA and Groupe le Sport SA which are
owned indirectly by the Company, are included as subsidiary undertakings on
the basis that the Group exercises a dominant influence in that operating
and financial control is exercised on a day-to-day basis by EMAP staff.
<PAGE>
32 Debtors 1998 1997
(pound)m (pound)m
- --------------------------------------------- ------------- ----------
Amounts falling due within one year
Amounts owed by subsidiary undertakings 285.4 493.8
Dividends owed by subsidiary undertakings 55.0 0.3
Amounts owed by associated undertakings 0.2 0.2
Dividends owed by associated undertakings 0.3 0.3
Other debtors 0.9 4.6
Prepayment and accrued income 6.6 3.7
Unrealized gain on currency swaps 15.4 10.0
Taxation recoverable 8.1 -
- --------------------------------------------- ------------- ----------
371.9 512.9
- --------------------------------------------- ------------- ----------
Amounts falling due after more than one year
Other debtors 4.2 -
Pension prepayment 8.1 8.1
Unrealized gain on currency swaps 15.7 17.5
Advance Corporation Tax 4.8 4.0
- --------------------------------------------- ------------- ----------
32.8 29.6
- --------------------------------------------- ------------- ----------
404.7 542.5
- --------------------------------------------- ------------- ----------
33 Loans 1998 1997
(pound)m (pound)m
- --------------------------------------------- ------------- ----------
Amounts falling due within one year
Bank loans and overdrafts 119.0 31.0
Loan notes 5.0 11.3
- --------------------------------------------- ------------- ----------
124.0 42.3
Amounts falling due after more than one year
Between two and five years (not by instalments)
Loan notes - 5.0
US$ Senior notes 24.3 27.4
After five years (not by installments)
US$ Senior notes 24.2 27.2
48.5 59.6
- --------------------------------------------- ------------- ----------
Total borrowings 172.5 101.9
- --------------------------------------------- ------------- ----------
All borrowings are unsecured. Bank loans are classified according to the
maturity date of the respective individual drawings.
34 Other creditors - amounts falling due 1998 1997
within one year (pound)m (pound)m
- --------------------------------------------- ------------- ----------
Trade creditors 0.3 0.5
Amounts owed to subsidiary undertakings 306.9 544.3
Other creditors 7.8 4.0
Corporation Tax 7.8 15.3
Other taxes and social security costs 0.5 0.7
Accruals and deferred income 2.1 6.2
Proposed dividends 20.9 18.2
- --------------------------------------------- ------------- ----------
346.3 589.2
- --------------------------------------------- ------------- ----------
EXHIBIT 13.2
INTERIM RESULTS FOR THE HALF YEAR ENDED 30th SEPTEMBER, 1998
EMAP plc today announced its results for the half year ended 30th
September, 1998. The results reflect the implementation of the recently
issued UK Financial Reporting Standard 10 (FRS10), which requires the
capitalisation and amortisation of goodwill and intangible assets. Prior to
this charge, and on a basis consistent with last year, pre-tax profits rose
by 16 per cent. to (pound)75.0m ((pound)64.5m). Earnings per share adjusted
on a similar basis improved by 17 per cent. to 23.8p (20.4p).
The interim dividend declared is 5.70p per share, an increase of 15 per
cent. on last year's 4.95p.
The effect of applying the new accounting standard is to create a non-cash
charge of (pound)20.1m in this half year, with a corresponding charge for
last year of (pound)17.1m. Coupled with the profit on the sale of Red
Dragon Radio ((pound)11.5m), EMAP's reported pre-tax profit was
(pound)66.4m, an increase of 40 per cent. on the restated figure for last
half year ((pound)47.4m).
Due to the significant changes in the reporting of pre-tax profit brought
about by the introduction of FRS 10, and to further enhance disclosure for
shareholders, EMAP has decided to begin reporting earnings before interest,
tax, depreciation and amortisation (EBITDA). EBITDA is a performance
measure commonly used by companies, particularly in the USA., to focus
attention on the cash generating properties of the company. For the half
year, EBITDA was (pound)81.7m, an increase of 19 per cent. on last year
((pound)68.7m).
The half year was again characterised by strong organic growth, with
underlying pre-tax profits up 17 per cent. on revenues ahead 7 per cent.
Launch investment of (pound)9.8m again reached record levels although a
substantial element of this was on Telemax which was subsequently closed.
During the half year, the Group completed the acquisition of the radio
station Melody FM, the disposal of Red Dragon, the Cardiff based radio
station, and a number of smaller acquisitions and disposals in the Business
Communications and UK Consumer divisions.
Consumer Magazines - UK
1998/99 1997/98 Change Underlying
(pound)'m (pound)'m % %
Revenue.... 150.5 141.0 7 7
Profit..... 33.9 28.3 20 17
Margin..... 22.5% 20.1%
The UK Consumer Magazines division had another good half year with profits
up 20 per cent. to (pound)33.9m on revenues up 7 per cent. to
(pound)150.5m. Like-for-like profits increased by 17 per cent. on revenues
up 7 per cent.
For the half year, EMAP's magazines have enjoyed underlying advertising
revenue growth of 11 per cent. and an improvement in circulation revenue of
3 per cent., both in excess of the magazine market as a whole. Circulation
revenue growth continues to be driven by the strength of the men's market,
with FHM now selling in excess of 750,000 copies per month, confirming its
position as Britain's largest selling monthly magazine. Within other
sections of the portfolio performance was patchier. In particular, the
teenage market, traditionally the most volatile, experienced a reduction in
sales during
<PAGE>
this period, reflecting a substantial easing in general promotional
expenditure in this sector. Although resulting in lower sales, this has
significantly improved magazine profitability in the teenage market.
The change in emphasis in the division's launch strategy by concentrating
on fewer, larger launches resulted in the launch of the women's glossy
magazine Red last year. Red has enjoyed considerable success both with
advertisers and readers, with its first audited circulation figures in
excess of 190,000 copies per month. A major launch in the entertainment
sector will follow at the end of this year.
As widely anticipated, growth in the magazine market has slowed from the
very high levels experienced during the early part of this year. We are
continuing to enjoy healthy growth, particularly in advertising, although
we remain cautious about the outlook for 1999. EMAP has a strong portfolio
of market leaders in which it has invested substantially in recent years,
particularly in terms of marketing, editorial investment and new launches.
In the event of a downturn, the division has considerable scope for
mitigation.
Consumer Magazines - France
1998/99 1997/98 Change Underlying
(pound)'m (pound)'m % %
Revenue.... 112.1 111.3 1 4
Profit..... 13.8 16.9 (18) 14
Margin..... 12.3% 15.2%
In absolute terms, due to the impact of the costs associated with the
launch of Telemax, reported profits fell by 18 per cent. to (pound)13.8m on
turnover up 1 per cent. to (pound)112.1m. On an underlying basis, profits
rose by 14 per cent. on revenue up 4 per cent.
The French economy has seen a period of sustained growth during the period,
the benefit of which has been most evident in the growth of advertising
revenue (up 14 per cent. on an underlying basis). Although both the economy
and consumer confidence in France were rising during the period under
review it failed to have a beneficial effect on the underlying circulation
figures which remained 1 per cent. below last year.
EMAP's track record has demonstrated that new launches are the lifeblood of
future growth. Accordingly, three titles were launched at the end of last
year: Broadcast, Nintendo Magazine and Telemax. Of these three the first
two have performed well, and are currently performing ahead of
expectations. The third, and most significant launch, Telemax failed to
reach its sales objectives and was closed after 17 weeks. EMAP France
remains committed to its launch programme and further launches are
anticipated next year.
Although projections for the French economy suggest a moderation in the
rate of growth over the coming year, it is still forecast to grow at a
higher rate than the UK economy. With a low operating cost base, EMAP is
well positioned to benefit from this.
Business Communications
1998/99 1997/98 Change Underlying
(pound)'m (pound)'m % %
Revenue.... 101.8 87.7 16 8
Profit..... 18.4 11.1 66 11
Margin..... 18.1% 12.7%
EMAP Business Communications (EBC) saw revenue grow by 16 per cent. to
(pound)101.8m and profits rise 66 per cent. to 18.4m. Whilst a significant
element of this was attributable to the acquisition of the Healthcare
portfolio in November, 1997, underlying growth was also strong, with
revenues and profits rising by 8 per cent. and 11 per cent., respectively.
The acquisition of the high margin Healthcare titles, coupled with benefits
of the restructuring of the EBC portfolio last year, helped increase
margins from 12.7 per cent. to 18.1 per cent.
<PAGE>
EBC's results are traditionally skewed towards the second half, and this
remains the case in the current year. Of the major revenue streams,
exhibitions and other live events led the way, with the first simultaneous
running under EMAP ownership of the fashion shows Pure Womenswear, MXL and
40(LOGO). This proved to be a major success with record attendance for all
shows.
Advertising revenue growth was patchy - there were significant increases in
recruitment advertising, but improvements in other advertising revenue
sources were more moderate. Recruitment revenue in the Healthcare sector
(comprising approximately 65 per cent. of the division's recruitment
revenue) remains buoyant, driven as it is by the shortage of nurses rather
than economic factors.
Looking ahead, we expect advertising revenues to be more difficult to come
by. However exhibition revenue should continue to show good growth. For
example, the Birmingham Spring Fair which runs in March at the National
Exhibition Centre will be the largest exhibition ever staged in England
using the new halls added to the NEC and surpassing the record established
in 1851 by the Great Exhibition held at Crystal Palace.
Radio
1998/99 1997/98 Change Underlying
(pound)'m (pound)'m % %
Revenue.... 38.3 34.6 11 13
Profit..... 13.0 11.1 17 22
Margin..... 33.9% 32.1%
Profits for the division rose by 17 per cent. to (pound)13m on revenue
growth of 11 per cent. On an underlying basis revenue grew by 13 per cent.
and profits by 22 per cent. The division recorded a margin of 33.9 per
cent. for the half year, which was achieved through advertising price
increases for the Big City FM network, increased advertising volumes for
the Magic AM network and cost savings at all stations.
EMAP On Air, the division's national sales house launched in November last
year has now begun to deliver the revenue growth anticipated at the time of
its creation. On Air now handles regional advertising agency sales
previously undertaken by individual stations which, when combined with
national advertising, represent approximately 70 per cent. of the
division's revenue.
With the acquisition of Melody FM in London and the sale of Red Dragon in
Cardiff, the division significantly strengthened its portfolio. Melody FM
is being rebranded with the Magic format, and is already significantly
outperforming revenue and audience growth expectations. The most recent
RAJAR survey showed Melody increasing its total listeners by 12 per cent.
to over 1.1 million, the highest level in its history.
Radio has established itself as an important part of media schedules in the
UK. As a medium it has grown from under 2 per cent. of total UK advertising
expenditure in 1992 to over 5 per cent. currently. Radio is more valued by
media buyers than ever before, is better branded and more accountable to
its users. Of equal importance, as a slowdown in growth approaches, is its
reputation as a highly effective medium for selling products, a facility
that will be increasingly in demand. EMAP Radio has a strong and coherent
portfolio, which is now being marketed aggressively and effectively.
International
EMAP's fledgling International division has not escaped the turmoil in the
Far East, and the consequent weakness of the local currencies. Whilst the
business in Australia has suffered from the weakness of the Australian
Dollar, in operational terms it has been a highly successful period. The
recently launched FHM has gone straight to the top of the best seller lists
for men's monthly magazines and the relaunched Smash Hits has seen
extraordinary growth. A number of other titles have been relaunched, and a
new golf magazine will be launched in the coming months.
<PAGE>
In Singapore the withdrawal of the licence to publish FHM hurt the division
temporarily. With the reinstatement of this licence in November it is
anticipated that results should improve.
New Media
EMAP's New Media businesses comprise The Box and the Online publishing
activities. The Box had a relatively quiet six months with a period of
consolidation and development of the digital box prior to the launch of Sky
Digital of which The Box will be a component. Significant investment to
support this launch is anticipated in the second half.
EMAP Online continues to win awards for its innovation and expertise. The
business itself, although small, is an important area for EMAP to develop
its experience in on-line publishing and, more importantly e-commerce. EMAP
is increasingly linking these transactional skills to the powerful brands
and creative talents that exist in its magazine and radio divisions.
Prospects
In October, EMAP announced a series of new management roles and closer
co-ordination of its three consumer oriented media in the UK - consumer
magazines, radio and television. The effect of these will take time to be
reflected in profits, but they will ensure greater focus on the strategic
opportunities that will arise as advertisers demand more creative marketing
solutions; as broadcast media, particularly TV, begin to segment; and as
new ancillary revenue streams emerge.
In addition EMAP announced the formation of a fully resourced International
Development team which will enable EMAP to accelerate its overseas
expansion.
Revenue growth has begun to slow in our major UK markets. This will impact
our business throughout the rest of this year and into next although we are
still anticipating good growth, supported by our market-leading positions
and flexible cost base.
EMAP's balance sheet and cash generation are strong. Historically, the
group has taken advantage of periods of economic slowdown to expand, and it
is well positioned to do so again should suitable opportunities arise. We
look forward to the future with confidence.
<PAGE>
<TABLE>
<CAPTION>
EMAP plc
Group profit and loss account
For the half year ended 30th September, 1998 (unaudited)
<S> <C> <C> <C> <C>
Year* Half year Half year*
1997/98 1998/99 1997/98 Increase
(pound)'m (pound)'m (pound)'m %
Revenue............................... 772.6 410.2 376.1 9
===== ===== ===== =
EBITDA
(Earnings before interest, tax,
depreciation and amortisation)...... 152.9 81.7 68.7 19
Depreciation.......................... (10.4) (5.7) (4.7)
Amortisation of intangible assets..... (36.2) (20.1) (17.1)
----- ----- -----
Operating profit...................... 106.3 55.9 46.9 19
Profit on business disposal........... - 11.5 -
Income from investments............... 2.7 3.1 1.2
Net interest.......................... (3.5) (4.1) (0.7)
----- ----- -----
Profit on ordinary activities before
tax................................. 105.5 66.4 47.4 40
Tax on profit on ordinary activities
(Note 2)............................ (42.5) (20.2) (19.7)
----- ----- -----
Profit on ordinary activities after
tax................................. 63.0 46.2 27.7 67
Minority interests.................... (4.1) (2.4) (2.4)
----- ----- -----
Profit attributable to shareholders... 58.9 43.8 25.3 73
Dividends (Note 4).................... (31.3) (11.8) (10.4)
----- ----- -----
Retained profit....................... 27.6 32.0 14.9
==== ==== ====
Earnings per ordinary share........... 28.3p 21.0p 12.2p 72
Fully diluted earnings per ordinary
share (Note 3)...................... 27.9p 20.7p 12.0p 73
Adjusted earnings per ordinary
share (Note 3)...................... 45.7p 23.8p 20.4p 17
Dividend per ordinary share
(Note 4)............................ 15.00p 5.70p 4.95p 15
====== ===== ===== ==
</TABLE>
* Comparatives have been restated in accordance with Financial Reporting
Standard 10 "Goodwill and Intangible Assets".
<PAGE>
Statement of total recognised gains and losses
For the half year ended 30th September, 1998 (unaudited)
Year* Half year Half year*
1997/98 1998/99 1997/98
(pound)'m (pound)'m (pound)'m
Profit attributable to
shareholders.................. 58.9 43.8 25.3
Currency translation differences
as restated................... (5.5) 7.4 (0.3)
---- ---- -----
Total recognised gains and
losses for the period......... 53.4 51.2 25.0
==== ==== ====
* Comparatives have been restated in accordance with Financial Reporting
Standard 10 "Goodwill and Intangible Assets".
<TABLE>
<CAPTION>
EMAP plc
Group activity analysis
For the half year ended 30th September, 1998 (unaudited)
<S> <C> <C> <C> <C>
Year* Half year Half year* Increase/
1997/98 1998/99 1997/98 (Decrease)
(pound)'m (pound)'m (pound)'m %
Revenue by division
Consumer Magazines - UK........................... 271.9 150.5 141.0 7
Consumer Magazines - France....................... 225.0 112.1 111.3 1
Business Communications........................... 196.7 101.8 87.7 16
Radio............................................. 70.3 38.3 34.6 11
International/New Media........................... 8.7 7.5 1.5 -
---
772.6 410.2 376.1 9
===== ===== ====== =
Operating profit by division
Consumer Magazines - UK........................... 56.1 33.9 28.3 20
Consumer Magazines - France....................... 35.1 13.8 16.9 (18)
Business Communications........................... 35.6 18.4 11.1 66
Radio............................................. 22.7 13.0 11.1 17
International/New Media........................... (1.7) (1.0) (0.7) (43)
Corporate and other............................... (5.3) (2.1) (2.7) 22
----- ---- ---- --
142.5 76.0 64.0 19
Amortisation of intangible assets (Note 5)........ (36.2) (20.1) (17.1) --
------ ------ ------ --
106.3 55.9 46.9 19
===== ====== ====== ==
</TABLE>
* Comparatives have been restated in accordance with Financial Reporting
Standard 10 "Goodwill and Intangible Assets".
<PAGE>
<TABLE>
<CAPTION>
EMAP plc
Group cash flow statement (summarised)
For the half year ended 30th September, 1998 (unaudited)
<S> <C> <C> <C>
Year Half year Half Year
1997/98 1998/99 1997/98
(pound)'m (pound)'m (pound)'m
EBITDA
(Earnings before interest, tax, depreciation and
amortisation)............................................... 152.9 81.7 68.7
Increase in working capital and non-cash movements............ (9.7) (10.3) (5.2)
----- ------- ------
Cash flow from operating activities........................... 143.2 71.4 63.5
Returns on investments and servicing of finance............... (4.9) (4.8) (1.7)
Taxation...................................................... (63.3) (13.7) (16.9)
Capital expenditure........................................... (16.5) (5.1) (8.4)
Acquisitions and disposals
Businesses and investments acquired (Note 6).................. (123.5) (34.5) (16.8)
Movement in associated undertakings........................... (3.8) (3.0) (0.8)
Disposal of businesses and investments (Note 6)............... 16.0 18.0 10.8
Costs of business closures and reorganisations................ (0.3) -- (0.2)
----- ------ ------
Cash outflow from acquisitions and disposals.................. (111.6) (19.5) (7.0)
Equity dividends paid......................................... (28.6) (21.0) (18.2)
----- ------ ------
Cash inflow before financing.................................. (81.7) 7.3 11.3
Financing
Issue of ordinary share capital............................... 3.3 1.2 0.6
Gain on rollover of currency swaps (dealt with in
Reserves)................................................... 13.1 5.9 4.5
Decrease in borrowings........................................ 90.1 (26.1) (2.7)
Repayment of loan notes....................................... (11.3) (0.2) (2.8)
----- ------- -----
Cash (outflow)/ inflow from financing......................... 95.2 (19.2) (0.4)
----- ------- -----
(Decrease)/ increase in cash.................................. 13.5 (11.9) 10.9
==== ==== =====
</TABLE>
Reconciliation of movement on net debt
<TABLE>
<CAPTION>
<S>
Half Year
Year 1998/99
1997/98 Cash Borrowings Total
(pound)'m (pound)'m (pound)'m pound)'m
--------- --------- ---------- ---------
<C> <C> <C> <C>
Opening net debt.................. (89.1) 23.6 (172.5) (148.9)
Cash flows........................ (65.3) (11.9) 26.3 14.4
Currency translation differences 5.5 0.3 (3.3) (3.0)
--- --- ----- ----
Closing net debt.................. (148.9) 12.0 (149.5) (137.5)
======= ====== ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EMAP plc
Group balance sheet (summarised)
At 30th September, 1998 (unaudited)
<S> <C> <C> <C>
31st March* 30th Sept 30th Sept*
1998 1998 1997
(pound)'m (pound)'m (pound)'m
Intangible assets.................................. 648.4 677.0 585.2
Tangible assets.................................... 34.0 34.9 32.9
Investment......................................... 10.7 12.0 12.1
Working capital.................................... 7.7 2.5 (3.9)
Cash at bank, net of overdrafts.................... 23.6 12.0 22.5
Tax and dividends payable.......................... (58.7) (54.8) (70.5)
Borrowings......................................... (172.5) (149.5) (93.3)
Provisions for property and reorganisations (5.4) (6.0) (7.2)
------- ------ ------
487.8 528.1 477.8
Minority interests (all equity).................... (6.3) (6.0) (6.5)
------- ------ ------
Net assets......................................... 481.5 522.1 471.3
======= ====== ======
Capital and reserves
Called up share capital (Note 7)................... 52.6 52.7 52.4
Reserves........................................... 428.9 469.4 418.9
------- ------ ------
Shareholders' funds................................ 481.5 522.1 471.3
======= ====== ======
</TABLE>
Approved by the Board of Directors on 16th November, 1998
K L Hand D J Grigson
Reconciliation of movement on shareholders' funds
<TABLE>
<S> <C> <C> <C>
Year* Half Year Half Year*
1997/98 1998/99 1997/98
(pound)'m (pound)'m (pound)'m
Profit attributable to shareholders as previously
reported....................................................... 95.1 43.8 42.4
Prior year adjustment - implementation of FRS10
(Note 1)....................................................... (36.2) -- (17.1)
----- ------ -----
Profit attributable to shareholders as restated.................. 58.9 43.8 25.3
Dividends........................................................ (31.3) (11.8) (10.4)
----- ------ -----
Retained profit.................................................. 27.6 32.0 14.9
Currency translation differences as restated..................... (5.5) 7.4 (0.3)
Shares issued.................................................... 3.3 1.2 0.6
----- ------ ------
Net addition to shareholders' funds.............................. 25.4 40.6 15.2
Opening shareholders' funds as restated (Note 1)................. 456.1 481.5 456.1
----- ------ ------
Closing shareholders' funds...................................... 481.5 522.1 471.3
===== ====== ======
</TABLE>
* Comparatives have been restated in accordance with Financial Reporting
Standard 10 "Goodwill and Intangible Assets".
<PAGE>
EMAP plc
Notes on financial statements
For the half year ended 30th September, 1998 (unaudited)
1. The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's 1997/98 statutory accounts, as
amended for the adoption of FRS10 "Goodwill and Intangible Assets". All of
the turnover and operating profit are generated from continuing operations.
The preceding financial information does not constitute statutory accounts
as defined in Section 240 of the Companies Act 1985. The comparative
financial information is based on the statutory accounts for the financial
year ended 31st March, 1998, as restated for the adoption of FRS10. These
accounts, upon which the auditors have issued an unqualified opinion, have
been delivered to the Registrar of Companies.
The adoption of FRS10 "Goodwill and Intangible Assets" means that purchased
goodwill and intangible assets are capitalised and amortised through the
profit and loss account over a maximum period of 20 years, with
retrospective application. In prior years purchased goodwill was written
off directly to reserves on acquisition. Publishing rights, titles and
exhibitions were capitalised, and reviewed annually for impairment in
value.
Comparative financial information has been restated. Net assets at 31st
March, 1997 and 31st March, 1998 have been increased by (pound)207.3m and
(pound)178.6m respectively, being the reinstatement of purchased goodwill
previously written off, less cumulative amortisation from the date of
acquisition to the balance sheet date.
Operating profit for the half year ended 30th September, 1997, and the year
ended 31st March, 1998 have been reduced by (pound)17.1m and (pound)36.2m
respectively for the amortisation charge.
2. The effective rate of taxation excluding exceptional items and rollover
relief is 30.5 per cent. (30.5 per cent.). This rate is lower than the
standard tax rates prevailing in the UK and Overseas locations due in part
to overseas tax relief on the amortisation of acquired intangible assets
and the use of earlier trading losses.
The tax charge is calculated as follows:
<TABLE>
<S> <C> <C> <C>
Half
Year Half year year
1997/98 1998/99 1997/98
(pound)'m (pound)'m (pound)'m
Tax at 30.5% on profits excluding amortisation and
business disposal.......................................... 42.5 22.9 19.7
Tax on profit on business disposal........................... -- 5.4 --
Rollover relief on acquisitions.............................. -- (8.1) --
---- ---- ----
Tax on profit on ordinary activities......................... 42.5 20.2 19.7
==== ==== ====
</TABLE>
3. Adjusted earnings per ordinary share is profit after tax excluding
business disposals, amortisation of intangible assets and rollover relief
on acquisitions, divided by the weighted average number of shares in issue
and ranking for dividend at 30th September, 1998.
The adjusted earnings per ordinary share figures are calculated as follows:
<TABLE>
<S> <C> <C> <C>
Year Half year Half Year
1997/98 1998/99 1997/98
Earnings per ordinary share..................... 28.3p 21.0p 12.2p
Less: Profit on business disposals.............. -- (2.9p) --
Less: Rollover relief........................... (3.9p)
Add: Amortisation of intangible assets.......... 17.4p 9.6p 8.2p
----- ------ -----
Adjusted earnings per ordinary share............ 45.7p 23.8p 20.4p
===== ====== =====
</TABLE>
Fully diluted earnings per ordinary share is earnings divided by the
weighted average number of shares in issue and ranking for dividend at 30th
September, 1998 plus all outstanding relevant share options at that date.
<PAGE>
4. The interim dividend of 5.70p (4.95p) will be paid on 8th January, 1999
to shareholders on the Register on 4th December, 1998. The preference
dividend paid amounted to (pound)3,000 ((pound)3,000).
5. Amortisation of intangible assets is analysed by division as follows:
<TABLE>
<S> <C> <C> <C>
Year Half year Half Year
1997/98 1998/99 1997/98
(pound)'m (pound)'m (pound)'m
Consumer Magazines - UK............... 3.3 1.7 1.6
Consumer Magazines - France........... 11.9 5.9 6.0
Business Communications............... 12.2 7.8 5.2
Radio................................. 8.2 4.3 4.1
International/New Media............... 0.6 0.4 0.2
---- ---- ----
36.2 20.1 17.1
==== ==== =====
</TABLE>
6. During the period, the Group has made a number of acquisitions: Melody
FM in the Radio division, and in the Business Communications division;
Register Information Services, "Shots" and Automotive Management. Melody FM
was acquired in June for a total consideration of (pound)25m, all of which
was settled by cash. Register Information Services and "Shots" were
acquired in August for a total consideration of (pound)9m, and Automotive
Management in September. At the same time as agreeing to acquire Melody FM,
the Group announced the disposal of Red Dragon to Capital Radio for a total
consideration of (pound)18.3m. The transaction was completed in May and
resulted in a profit before tax of (pound)11.5m.
7. Included within share capital is (pound)0.2m of non-equity 5.0 per cent.
cumulative preference shares of (pound)1 each (now 3.5 per cent. + tax
credit).
8. Copies of the Interim Report will be sent to all shareholders on or
before 30th November, 1998, and will be available from the Company's
registered office, 1 Lincoln Court, Lincoln Road, Peterborough, PE1 2RF.
EXHIBIT 13.3
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK GAAP AND US GAAP
The consolidated financial statements of EMAP plc are prepared and
presented under the historical cost convention in accordance with United
Kingdom generally accepted accounting principles ("UK GAAP"). UK GAAP
differs in certain significant respects from United States generally
accepted accounting principles ("US GAAP"). Certain significant differences
between UK GAAP and US GAAP as they relate to the financial statements of
the Company are summarized below. Such summary should not be construed to
be exhaustive. Given the inherent differences between UK GAAP and US GAAP,
the financial statements presented under UK GAAP are not presented fairly,
in all material respects under US GAAP. The Company has not quantified
these differences, nor prepared consolidated financial statements under US
GAAP, nor undertaken a reconciliation of UK GAAP and US GAAP financial
statements. Had the Company undertaken any such qualification or
preparation or reconciliation, other potentially significant accounting and
disclosure differences may have come to their attention which are not
identified below. Accordingly, the Company can provide no assurance that
the identified differences in the summary below represent all the principal
differences relating to the Company and the Group. Further, no attempt has
been made to identify future differences between UK GAAP and US GAAP as the
result of prescribed changes in accounting standards. Professional bodies
that promulgate UK GAAP and US GAAP have significant projects that could
affect future comparisons such as this one. Finally, no attempt has been
made to identify all future differences between UK GAAP and US GAAP that
may affect the financial statements as a result of transactions or events
that may occur in the future.
Current assets and liabilities
Current assets under UK GAAP include amounts which fall due after more than
one year. Under US GAAP such assets would be reclassified as non-current
assets. Provisions for liabilities and charges under UK GAAP include
amounts due within one year which would be reclassified to current
liabilities under US GAAP.
Goodwill and other intangible assets
Prior to the Group's 30 September 1998 interim statement, under UK GAAP,
the Group had written off directly to reserves the cost of goodwill which
had arisen upon acquisitions. Goodwill has been calculated as the excess of
cost over the tangible assets acquired and liabilities assumed on the basis
of their fair value at the date of acquisition. Under UK GAAP, the cost of
an acquisition should include a reasonable estimate of the fair value of
contingent consideration, including consideration that is due based upon
the achievement of specified earnings levels. Publishing rights, titles and
exhibitions were capitalised, and reviewed annually for impairment in
value. Subsequent to the Group's 31 March 1998 full year financial
statements, UK GAAP was amended such that the adoption of the new Financial
Reporting Standard (FRS) 10 "Goodwill and Intangible Assets" means that
purchased goodwill and intangible assets are capitalised and
<PAGE>
amortised through the profit and loss account over a maximum period of 20
years, with retrospective application.
Under US GAAP, the cost of the investment should be assigned to tangible
and identified intangible assets acquired and liabilities assumed on the
basis of their fair value at the date of acquisition. Additional
consideration which is contingent on achieving specified earnings levels in
future periods is not recognized as a liability at the time of the
acquisition, and therefore is not included in the cost of the investment.
When the contingency has been resolved, the acquirer records the fair value
of the consideration issued as additional cost of the acquired company. Any
excess of cost over the fair value of the net assets acquired would be
capitalised and then amortised to profit and loss over their estimated
lives, not exceeding 40 years, except where management consider that there
has been a permanent diminution in the value of goodwill, whereupon this
element of the goodwill is charged to profit and loss immediately.
Identified intangible assets will be amortised to the profit and loss
account over their estimated useful economic life which may not exceed
forty years.
Under US GAAP deferred direct mail advertising costs are amortised over the
period over which a benefit is expected. Under UK GAAP, these costs are
expensed immediately.
Under US GAAP, costs associated with severance of employees and future
operating expenses may in certain circumstances be accrued at the time that
an acquisition is first recorded, and added to the cost of an acquisition
and hence goodwill. Under UK GAAP, these costs must be charged to the post
acquisition profit and loss account when they become payable.
Under US GAAP, purchase accounting rules permit the separate valuation of
an acquiree's workforce. Under UK GAAP, only intangibles that are separable
from the business may be valued as intangibles; consequently, it is
customary for the valuation attributed to the workforce to be subsumed
within goodwill. As the useful life of intangibles is assessed separately
from goodwill, varying amortisation periods may result.
License Revenues
Under UK GAAP it is usual to defer a portion of revenue and recognise it
over the term of the licensing agreements. Under US GAAP revenue may be
recognised immediately in respect of licensing agreements where the
licensor has no future obligations under the license agreement, and where
there are no conditions remaining to be fulfilled over the period covered
by the license agreement.
Reorganisation and restructuring costs
Included within restructuring costs are severance costs for employees.
Under UK GAAP, these costs may be accrued if there is a reasonable basis
for believing that a liability has been
<PAGE>
incurred, and management is committed to proceeding with the restructuring.
Under US GAAP, restructuring costs may be accrued if management has
committed the enterprise to the plan of restructuring. Additionally, it
would be expected that the restructuring plan would be carried out within a
one year period. Under US GAAP, severance costs may be accrued if the
following criteria are met: (i) a plan is in place and has been approved by
management, (ii) a communication has been made to employees regarding the
severance plan, (iii) the plan identifies the number of employees and their
job functions and (iv) the termination will occur within one year.
Under UK GAAP, costs of a fundamental reorganisation or restructuring
having a material effect on the nature and focus of the reporting entity's
operations are classified as exceptional items and shown separately on the
face of the profit and loss account after operating profit and before
interest. Under US GAAP, extraordinary items are events and transactions
that are distinguishable by their unusual nature and by the infrequency of
their occurrence. If they do not meet this criteria, exceptional costs as
classified under UK GAAP would be included within operating profit.
Deferred taxation
Under UK GAAP, deferred taxation is only accounted for the extent that it
is probable that a liability or asst will arise in the foreseeable future.
The calculation of deferred taxation is based upon timing differences
between taxable and accounting income. Under US GAAP, deferred taxation is
accounted for on all timing differences, and a valuation allowance is
established in respect of deferred taxation assets where it is more likely
than not that some portion will not be realised. Additionally, for US GAAP
purposes deferred taxes would be provided in respect of US GAAP adjustments
to the book basis of assets and liabilities.
Pensions
In respect of defined benefit pension obligations, US GAAP requires the use
of a discount rate which reflects current market conditions in determining
the provision for pension benefits. UK GAAP permits the use of longer term
discount rates. In addition to the difference in discount rates, the
amortisation procedure under US GAAP applies a corridor approach for
recognising gains and losses in the determination of periodic pension
expense. Under UK GAAP, actuarial gains and losses are amortised normally
over the expected remaining service lives without such corridor approach.
Additionally, for UK funding and accounting purposes it is satisfactory to
carry out actuarial valuation on a three year interval whereas annual
valuations are required under US GAAP.
Dividends
Under UK GAAP, ordinary dividend proposed are provided for in the year in
respect of which they are recommended by the Board of
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Directors. Under US GAAP, such dividends are provided for in the period
they are declared by the Board of Directors.
Cash flow statements
The definition of "cash flows" differs between UK GAAP and US GAAP. Cash
flows under UK GAAP represents increases or decreases in "cash", which is
comprised of cash in hand and repayable on demand and overdrafts. Under US
GAAP, cash flow represents increases or decreases in "cash and cash
equivalents", which include short term, highly liquid investments with
original maturities of less than 90 days, and exclude overdrafts.
There are also certain differences in classification of items within the
cash flow statement between UK GAAP and US GAAP. Under UK GAAP, cash flows
are presented in the following categories: (i) operating activities; (ii)
returns on investments and servicing of finance; (iii) taxation; (iv)
capital expenditure and financial investment; (v) acquisitions and
disposals; (vi) equity dividends paid; (vii) management of liquid
resources; and (viii) financing. Under US GAAP cash flows are segregated
into operating, investing and financing activities.
Cash flows from taxation, returns on investments and servicing of finance
would be, with the exception of any interest paid but capitalised, included
as operating activities under US GAAP. The payment of any dividends would
be included under financing activities and any capitalised interest would
be included under investing activities for US GAAP purposes. Additionally,
under US GAAP cash flows from the purchase and sale of tangible fixed
assets and the sale of debt and equity investments would be shown within
investing activities.
Financial instruments
Under UK GAAP, gains and losses on hedges are deferred and recognised in
income when they have crystallized. There are less detailed requirements
regarding the disclosure of information on financial instruments not
reflected on the balance sheet.
Under US GAAP, the applicable accounting practice for financial instruments
depends on management's intention for their disposition and may require
adjustments to their market or fair values. Under US GAAP, the following
conditions must be met for an item to be accounted for as a hedge: (i) the
item to be hedged must expose the company to price or interest rate risks;
(ii) it must be probable that the results of the futures contract will
substantially offset the effects of price or interest rate changes on the
hedged item; and (iii) the futures contract must be designated by
management as a hedge of the item. For future contracts that are accounted
for as a hedge of items reported at the lower of cost or market, gains and
losses on futures contracts are deferred and recognised in Income when
costs relating to the hedged item are recognised in income. Any unrealised
gains and losses at the balance sheet date are disclosed in the accounts,
along with applicable accounting policies, the end of the period
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fair value of the forward contract, and the face or contract or notional
principal amount.
Joint Ventures
Under UK GAAP the Company has reflected its interest in joint ventures on
the basis of proportional consolidation. Under US GAAP, investments in
joint ventures are generally recorded as a single line in accordance with
the principles of equity accounting.
Earnings per ordinary share
Under UK GAAP, a fully diluted calculation is provided only if materially
dilutive (five per cent) in relation to the undiluted amount. Under US
GAAP, the calculation of diluted earnings per share includes the effect of
the assumed exercise of all dilutive potential common shares (e.g.,
outstanding share options and warrants as well as convertible debt) that
were outstanding during the period, unless such exercise would prove to be
antidilutive. Both basic and fully diluted earnings per share must be
presented on the face of the income statement of public companies.
Compensation expense
Under UK GAAP, qualified Save As You Earn (SAYE) schemes which offer
employees up to a 20% discount on stock prices do not result in
compensation expense. Under US GAAP, if all other qualifications for a non
compensatory plan are met, but the plan offers a discount on the stock
price greater than 15%, the plan is considered compensatory, and
compensation expense is recognised.
Under UK GAAP, no compensation expense is recognised upon the issuance of
stock options if the exercise price for the option is equivalent to, or
above, the market price of the stock on the date of issue. Under US GAAP,
compensation expense is based upon the exercise price of the option in
comparison to the market price of the stock on the measurement date. The
measurement date is fixed only when both the number of shares to be issued
and the exercise price are fixed.
Disclosures
In general, disclosures required under US GAAP are more extensive than
those required under UK GAAP. For example, under US GAAP more detailed
disclosures would be required with respect to pension expense (actuarial
assumptions, components of pension expense, reconciliation of funded
status), financial instruments (fair value, terms, gains recognised), taxes
(details of the components of current and deferred income tax expenses and
deferred tax items, including valuation allowances), and equity (a
statement of changes in shareholders equity and associated rights).
