Cabal Communications Ltd

COMPANIES & FINANCE UK & IRELAND: Highbury pays £10m for men's title publisher
By Carlos Grande
Financial Times; Mar 18, 2003

Highbury House, owner of Fast Car magazine, is to acquire Front, the racy men's monthly, and its publisher, Cabal, in a £10m deal.

Highbury House, which was reporting final results yesterday, plans to fund the purchase via a mix of cash, a new share issue and unsecured debt.

The price, payable in two instalments, is 8.6 times Cabal's forecast pre-tax profits of £1.16m in the year to June 30.

In addition to Front, the fifth biggest selling men's monthly, Cabal owns The Real Homes magazine, cycling titles and has one of the biggest contract publishing clients, Ikea. It was founded in 1998 by Sally O'Sullivan, the long-time magazine editor.

Ian Fletcher, executive chairman of Highbury House, conceded that the men's magazine sector was highly competitive, but said the acquisition would further the company's strategy of targeting younger men. It would be earnings enhancing in its first full year.

The Cabal acquisition underlines the company's focus on consumer publishing to offset the continued downturn in other sectors such as fishing, horticulture and retail.

In the year to December 31, Highbury's turnover fell from £100.5m to £94.2m. Like-for-like sales decreased 5 per cent, with rising circulation revenue undermined by an 11 per cent fall in advertising revenues.

The contrast in fortunes at its consumer and trade publications was stark: like-for-like consumer profits rose by 37 per cent after a strong second half pick-up, while business profits almost halved.

Mr Fletcher said Highbury House did not forecast any business advertising recovery this year, though revenues had bottomed out and there were some encouraging signs of spending.

After cost-cutting measures, overall pre-tax profits were relatively flat at £6.8m, against £6.9m last time. An increased tax charge was reflected in lower earnings per share before amortisation and exceptionals of 2.3p (2.5p).

The company proposed a final dividend of 0.5p, making a 2002 total of 0.75p, a 25 per cent increase on 2001. The shares rose 12.5 per cent to 13½p.

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