AR16
Future plc
Annual Report
and Accounts
2016
01
Future plc
Group overview
Future plc is an international media group listed on the London
Stock Exchange (symbol: FUTR). These highlights refer to the
Group’s annual results for the year ended 30 September 2016.
Strategic Report
01 Group overview
02 Chairman’s statement
03 Chief Executive’s review
05 Strategic overview
07 What we do
09 Risks and uncertainties
11 Corporate responsibility
Financial Review
13 Financial review
Corporate Governance
17 Board of Directors
19 Directors’ report
23 Corporate Governance report
29 Directors’ remuneration report
41
Independent auditors’ report
Financial Statements
43 Financial statements
79 Notice of Annual General Meeting
84
Investor information
Continuing Revenue
Net Cash
£59.0m
2015: £59.8m
£0.5m
2015: Net Debt £(1.8)m
Continuing EBITDAE
Continuing Exceptional items
£4.7m
2015: £3.6m
£(16.5)m
2015: £(2.5)m
Continuing EBITE
Continuing Loss Before Tax
£2.3m
2015: £0.8m
£(14.9)m
2015: £(2.3)m
Continuing Digital Advertising
Unique Users
78%
of total continuing advertising
revenues (2015: 77%)
45.2m
a month (Q4 up 14% on Q3)
Continuing Recurring Revenues
£15.0m
2015: £12.9m
• EBITDAE represents
earnings before interest,
tax, depreciation,
amortisation, impairment
and exceptional items.
• EBITE represents
earnings before
interest, tax, impairment
and exceptional items.
• Recurring revenues
encompass e-commerce
and subscriptions.
• Exceptional items for
2016 above includes
impairment of intangible
assets of £13.0m.
Annual Report and Accounts 2016
Chairman’s
statement
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A diversified content business
with data at its heart
This year the Group has gained significant momentum; by
moving to a new divisional structure, Future is benefiting
from greater operational efficiency. The high-growth Media
division is developing new revenue streams in e-commerce
and events, backed up by significant digital advertising
revenue and the Magazine division has increased operational
efficiency through a strengthened magazine portfolio.
“ Future continues to
produce innovative
content through expert
insight into what its
customers need.”
Peter Allen
Chairman
This has been an extremely good year for
Future; operating profit before exceptional
items has grown by 188% year-on-year
led by increasing revenues in the Media
division, including material and fast-growing
e-commerce and events revenue streams.
Future continues to produce innovative
content through expert insight into what its
customers need and monetises this through
a diversified business model including digital
advertising, events and magazines.
After a number of challenging years, the team
is now building a track record of delivery
and the clear strategy to deliver a content
platform business, where we bring audiences
and businesses together through the use of
content, is working.
We have also completed a number of
acquisitions, which have strengthened the
portfolio and will result in economies of scale
and enhanced operational profitability. The
last of these, Imagine, in October 2016, will
have a material impact on revenue and profits.
The integration of Imagine is well on track.
The Group is committed to being brilliant at
the basics, including proprietary, scalable
technology, which has resulted in a leaner and
simpler business and increased operational
efficiency. In addition the Group has adopted
a disciplined approach to investment and a
focus on cash generation.
The Group continues to develop its brands,
creating truly global, market-leading
franchises of its digital and events assets and
producing a record-breaking year for user
reach, with digital users reaching 53 million.
In November 2015 the Group was reorganised
into two new divisions, Media and Magazine,
to position it for growth. This new divisional
structure has resulted in a more efficient
operating model which better reflects the
divisions’ different market dynamics.
Additionally during the latter part of the year,
a new Media Services division has been
established which capitalises on opportunities
to exploit the Group’s capabilities as a content
platform, focusing on growing revenues in
third party relationships, particularly licensing,
franchising and syndication of its brands,
content and technology.
On behalf of the Board, I would like to thank
all our employees for their hard work and
commitment this year.
Peter Allen
Chairman
03
Future plc
Chief
Executive’s
review
Strategic report
Future’s strategy to create a leading global specialist media platform
with data at its heart, monetised through diversified revenue streams,
has delivered extremely positive results with Media division revenue
growth of 14% year-on-year. The Group is also benefiting from its
operational leverage and the acquisitions Future has made this year
have further strengthened the portfolio.
“ We focus on content that
connects with our substantial
audience base and monetises
their needs through
increasingly diversified
revenue streams.”
Zillah Byng-Thorne
Chief Executive
up 43% year-on-year, through strengthened
relationships with hardware providers.
Our online audience has never been stronger,
with our global websites breaking our own
records. During our peak season pre-
Christmas we reached 53m online users.
We have strong engagement with our users
through our large social media following,
reaching 45m people across Facebook,
Twitter and YouTube and generating 10m
sessions to our websites from social media.
We continue to innovate in our Magazine
division, including new magazine launches and
updates to existing titles.
Data-led content strategy
Diversified revenue
The Group made significant progress in the
last financial year, both operationally and
financially.
Future is a global content platform for
specialist media with scalable, diversified
brands that has data at its heart. Data drives
Future’s strategy by helping the Group
understand its audience’s needs and
particularly the path to purchase, which allows
it to provide value for its partners, clients and
itself. This creates loyal communities. This
has been most evident in the Group’s
fast-growing e-commerce business, where
revenue is up 187% year-on-year.
Our data-led content strategy underpins our
move to a diverse revenue business, with
e-commerce and events showing notable
rates of growth. Additionally, a major
re-alignment of the cost base and tight
management of the decline of the print
business have resulted in further growth in
operating profit. During the year we completed
the re-organisation of the business into two
distinct divisions; Media, which is focused on
global scalable brands, and Magazine, which
is focused on market-leading specialist
content.
In October 2016, we established a new
division, Media Services, which is focused on
delivering high margin revenues through
monetising our IP franchise, licensing and
contract publishing deals.
We are expanding our global reach through
organic growth, acquisitions and strategic
partnerships. The global media brands in our
Media division have performed strongly this
year; two of our leading brands, techradar.com
and PCGamer.com, have shown significant
growth. Techradar revenue was up 49%
year-on-year, a result of leveraging content to
harness e-commerce, and PC Gamer revenue
We understand the value of diversified revenues
within media and continue to concentrate
on developing material, recurring new cash
generative products in order to take advantage
of a fast changing media landscape. We have
clearly diversified revenue streams in digital
advertising, e-commerce, events, licensing,
retail, subscriptions, contract publishing and
third party sales.
Our e-commerce business goes from strength
to strength; enriching users’ experience and
providing price comparison and purchase
options. We have our own proprietary price
comparison technology, “Hawk”, which provides
us with a powerful position in the UK online
technology market compared to many other
large consumer technology websites. Our
acquisition of Next Commerce in August 2016
further builds on the range of our product
categories, introducing a significantly improved
taxonomy, while also expanding our reach into
Australia and South East Asia.
We have a strong digital advertising revenue
stream, advertising targeted at individuals based
on behavioural segmentation and a technology
stack that capitalises on the growth in
programmatic while maximising digital yield. We
provide access to unique audiences, focusing
on strategic relationships and creative solutions.
Our events business has taken significant
strides forward in the year, including the hosting
of five new events. We have built on our global
brands by producing our creative and design
conference, Generate, in four locations: New
York, Sydney, London and San Francisco.
The acquisitions of Noble House Media and
assets from Blaze Publishing have significantly
strengthened the events portfolio with shows
including The London Acoustic Show, The
London Drum Show and the Mobile
Industry Awards.
Additionally, our award winning event, The
Photography Show, generated over £2m of
revenue and attracted 30,000 visitors this year.
We continue to innovate in the Magazine
division with a number of launches during the
year, including introducing new brands into the
kids category, while we continue to focus on
strengthening the performance of our existing
magazines through targeted re-launches.
Divisions
In November 2015 the Group was reorganised
into two new divisions, Media and Magazine,
to enable a more efficient operating model to
be employed in each division, reflecting their
different market dynamics.
The Media division, underpinned by leading
global brands, is focused on building fast-
growing digital and diversified revenues.
Future has invested in the rapidly growing
revenue streams of e-commerce and
events and continues to innovate in digital
advertising.
The Media division focuses on being at the
forefront of digital innovation, in particular the
high-growth technology and games markets.
It has a number of leading brands including
techradar, PC Gamer, GamesRadar+, The
Photography Show, Generate and Golden
Joysticks.
The Magazine division is specialist and
brand-led. It has over 80 magazines and
bookazines and is the number one digital
consumer magazine publisher in the UK.
The division is focused on creating the best
content in the market in an efficient operation
and continues to tightly manage the portfolio.
In addition, we have made a number of
acquisitions this year within existing and new
verticals, which strengthen our portfolio and
provide synergistic benefits.
In October 2016, we established a new
division, Media Services, in order to bring
focus and resources on higher margin
revenues. The Media Services division is
centred around offering our content expertise
to third party customers, encompassing
our licensing and content publishing
businesses and focusing on growing our
licensing revenues for both digital and print
brands. In addition, this division is exploring
opportunities in non-core markets to franchise
our events. We are also reinvigorating our
focus on Fusion, our contract publishing
business, with a clear aim of partnering with
other businesses in their content solutions.
Annual Report and Accounts 2016
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We reach 45.2m users
through our websites
We reach 45.4m
people through
social media
We sell 739,000
magazines and
bookazines per month
Over 38,000 people
attended our events
Acquisitions
Fund raising
The Group raised net proceeds of £3.1m
in November 2015 via an equity placing,
to accelerate growth and profit generation,
particularly in the Media division. These
funds have provided working capital for, and
enabled investment in, the Group’s high growth
revenue streams, e-commerce and events, in
addition to investment in the restructuring of
the business.
Current trading and outlook
The Group has a clear strategy, which is
resulting in improved financial and operational
performance, particularly increased EBITDAE
margins and cash conversion.
Future has substantially increased its portfolio
and overall scale, both from organic growth
across the business and targeted acquisitions.
The continued focus on operational
improvements and the increased size of the
business is resulting in economies of scale
within the business and enhanced operational
profitability.
Recurring revenue streams now represent 25%
of total revenue, compared to 22% in the last
financial year. These are a mix of subscription
revenues and highly predictable e-commerce
income.
The Board expects these trends to continue
into the current financial year which, at this
early stage, is performing in line with our
expectations.
Zillah Byng-Thorne
Chief Executive
The Group has strengthened its portfolio over
the year with key bolt-on acquisitions. Adding
portfolio enhancing brands means that we
can achieve economies of scale through our
core UK publishing operations and enhance
operational profitability.
These acquisitions have allowed us to take
advantage of a fragmented market. They
have provided the Group with a number of
complementary titles to our existing portfolio
and added the new portfolio of field sports and
also a step toward the high value B2B market
with the mobile category.
In April 2016, Future acquired Noble House
Media, a multi-platform publisher specialising
in technology and the mobile industry. The
acquisition added expertise in the mobile
industry and further strengthened Future’s
technology portfolio, including adding leading
magazine brands Mobile Choice, Wireless
and Mobile and the prestigious Mobile Choice
Awards and Mobile Industry Awards.
In May 2016, Future acquired assets from
Blaze Publishing, a magazine publisher and
event organiser, in the music and field sports
sectors. This acquisition strengthens Future’s
position as the market leader in music
publishing in the UK, in line with our strategy
to take leadership positions.
In August 2016, we acquired Next Commerce,
a digital shopping comparison business with
operations in Australia and across South East
Asia. Next Commerce operates
Getprice.com.au and Pricepanda.com and
has websites in six countries listing over 19.5
million products. In line with our strategy this
strengthens our presence in e-commerce
through their market-leading technology
and practices for retailers, publishers and
consumers in the region, while at the same
time providing a far greater taxonomy that can
be migrated into the Future Hawk software.
In June 2016, Future agreed terms to
acquire Imagine Publishing. The transaction
completed in October 2016. Imagine has
a portfolio of 18 periodical magazines and
publishes over 300 bookazines across the
knowledge, history, science, games, tech
and creative verticals. It also has a strong
licensing, web and digital edition business.
The Imagine acquisition brings significant cost
synergy opportunities and cash generation,
which can be deployed into the core growth
areas of the business. The integration of
Imagine into the Group is proceeding to plan
and, while only one month in, we are confident
of delivering the estimated annualised cost
synergies of £3.0m.
Key details of the acquisitions we have made in 2016 are included below:
Acquisition
Revenue*
Deferred Consideration
Next Commerce
Noble House Media
Assets of Blaze Publishing
£3.3m
£0.9m
£3.1m
Imagine Publishing
£16.4m
Deferred consideration of up to £550k payable
in Future plc shares at end of January 2017 if
revenue targets exceeded
None
Up to £320k payable against achievement of gross
contribution targets
None
*Revenue figures obtained from most recent annual financial information or in the case of Blaze, financial information relating to the
acquired assets
05
Future plc
Strategic
overview
A global platform
for specialist media
Future’s purpose is simple; changing people’s lives through
sharing our knowledge and expertise with others to make it
easier and more fun for them to do what they want.
Our content is powered by our communities
and we base everything we do around
clusters of like-minded enthusiasts who are
passionate about their interests. From video
games to technology we provide content and
experiences that inform, entertain and unite
these communities.
We understand what is important and valuable
to our passionate audiences and as a result
we are positioned to develop new profitable
revenue models to fulfil their needs. We do this
by innovating with scalable technology, unique
and relevant content and a low cost operating
model.
Our strategy centres on leveraging the
connection we have with our audience to
monetise the consumer’s need.
Media
Future is a platform business with a data-
led content strategy. The content creates a
connection with the audience, providing value
for our clients, from our affiliate partners to our
advertisers and also for our own business.
Our strategy means that we understand the
customer path to purchase, making our platform
the place where content, code and commerce
connect.
Through our data insights we understand what
our audience want and where they want it which
enables us to produce content specialised and
tailored to them through buying guides, reviews
and how-to’s.
We have strong digital advertising and content
solutions revenues created through the
meaningful relationships we have with our
strategic partners.
The Media division’s strategy is based around
its global and market-leading brands and
the consumer need that each fulfils, as well
as a data-led content strategy. The division
is focused on building fast-growing digital
and diversified revenues, most notably in
e-commerce and events.
Discover
Our editorial expertise and SEO leadership
help surface content that informs the purchase
decisions of influential consumers. Our
proficiency in aiding consumer discoverability is
a key feature of our business. Techradar is an
excellent example of this; where we believe 85%
of the audience arrive on the site as part of the
research phase for technology goods and 26%
go on to buy.
We are experts in SEO; techradar ranked
number one on Google search for iPhone 7
when it launched, representing techradar as a
world-renowned brand and resulting in the site
having its fourth biggest day of all time with 1.7
million sessions. Millions of people rely on us for
leading content trends; Pokémon Go launched
in July 2016 and by the end of the month our
Pokémon Go content had been viewed 6.2
million times.
Our online audience has never been stronger.
At the end of 2015 a number of our sites broke
their own records, when PCGamer.com reached
10 million users, up 37% year-on-year, and
techradar reached 22 million users, up 14%
year-on-year. In December 2015, GamesRadar+
reached 11 million users and 103 million page
views, the largest ever with users up 29% year-
on-year.
We are market leaders, holding the number one
market positions in the UK in online consumer
technology, online creative & design and the
global number one position in PC gaming.
Engage
We are experts at engaging with our audience
by connecting through credible content and
meaningful experiences and we empower our
audience to share and engage with us and our
community.
Future has significant reach on social media
with our gaming brands having 12.3 million
Facebook fans – far larger than our two biggest
competitors, making us a market-leading
gaming social media community.
Our coverage of Fallout 4 in November 2015
was GamesRadar+’s biggest social media
success, creating one million referrals – more
than double a normal weekday. Additionally
our YouTube video views for Fallout 4 reached
120,000 in a single day.
We are committed to fulfilling consumer need
by delivering the right experience. We have
developed our events business using the
connection we create with our audience through
content to attract them to attend our events.
Award-winning The Photography Show took
place again in March 2016, increasing its net
contribution 17% year-on-year. The Golden
Joysticks in October 2015 was the most
successful yet resulting in 9 million votes, 13.5
million page views and 770,000 users.
Purchase
We are the new storefront directly driving the
purchase of technology products, gaming
hardware and software through our “Hawk”
engine, our unique proprietary price comparison
database. Hawk has now achieved significant
scale generating over £107 million of gross
revenue for our customers in the last 12
months, up 199% year-on-year. We exist to help
our readers make the most informed buying
decision, serve them the best deals on the
products they desire and offer guidance on
how to best take advantage of their gear once
it arrives.
Hawk was developed in-house to be scalable
across multiple brands and robust at a high
volume of transactions. Future serves up the
product and pricing information based on an
algorithm that determines the best matching
product from its database. Using the Group’s
tested and proven methodology it has improved
volumes and conversion to create a material
new revenue stream.
Future is well placed to benefit from Black
Friday and Cyber Monday by targeting deals in
the technology sector. In November 2015 we
ranked number one on Google for Black Friday
search terms, throughout the build-up and
into the days themselves. In November 2015
45% of traffic went from techradar straight to a
shopping and classified website, compared to
Annual Report and Accounts 2016
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The Future Values
We have developed a single proprietary
platform to manage our websites and have
migrated all core brands onto this platform,
allowing scalable development of template
changes and new ad formats. We have
also rolled out a proprietary built content
management system across the division, which
is fast and efficient and is designed to support
multi-media editorial content and supports 24
hour global editorial coverage. The combination
of these two developments means that the
significant amount of content published is swiftly
and efficiently managed, while the operation
as a whole can be easily scaled without any
additional operating costs.
Additionally, we have upgraded our internal
systems in finance and advertising sales.
Media Services
Our new division, Media Services, which we
established in October 2016, strengthens our
focus on content publishing, licensing and other
new opportunities to franchise our digital brands
and events in non-core markets.
We leverage our expertise in creating premium
and authoritative content to work with leading
brands to elevate their conversation with
consumers. We already have an established
licensing revenue stream, licensing our
magazine content to 31 countries, with 68%
of revenue on annual contracts, as well as
publishing techradar India via a franchise
contract.
26% in March 2016. Hawk provides real-time
pricing information on over 222 million product
offerings covering the majority of consumer
products in North America and Western Europe.
Magazine
We are one of the most significant specialist
magazine and bookazine publishers in the UK
with a portfolio covering nine different sectors
and titles available in print and digital formats.
Future is a market leader for bookazines in
the UK, a position further strengthened by our
acquisition of Imagine Publishing. Additionally,
we are the largest publisher of digital magazines
in the UK.
The Magazine division’s strategy is to
increase the Group’s efficiency by launching
new propositions whilst tightly managing the
cost base. It is also taking advantage of a
fragmented market through acquisitions, which
enable the business to benefit from economies
of scale.
This innovation continues with a number of
magazine launches and re-launches, including
launching Professional Photography in October
2015 to reinforce Future’s market-leading
position in photography.
Re-launches included Comic Heroes in October
2015 and re-designs of MacFormat in January
2016, Official Xbox in April 2016 and Total
Film in June 2016. The re-launch of Total Film
magazine saw copy sales increase by 36%.
We continue to closely manage the decline
in revenue of the magazine portfolio. In line
with tightly managing the cost base the Group
also completed a comprehensive review of its
procurement processes. As expected, this has
identified around £0.6 million of savings.
Leaner, simpler
We pride ourselves on being brilliant at the
basics and keeping our business lean and
simple, from producing market-leading and
award-winning brands to tightly managing
our cost base and using simple but scalable
technology.
We are part of the
audience and their
community
Our passion for our products
makes us part of the
community we engage with
We are proud of our
past and excited about
our future
We are one team, one
company with big ambitions
We all row the boat
We move faster when
everyone pulls in the same
direction
Let’s do this!
Take the best decisions we
can in the face of uncertainty
– then go for it!
Results matter, success
feels good
We restlessly look to improve,
be creative and unashamedly
commercial in our ventures
It’s the people in the
boat that matter
Having the right team in the
boat is mission critical
07
Future plc
What we do
Our divisions
Future plc is an international media business organised into two
divisions, Media and Magazine.
Media brands
Our Media division consists of a number of
global online brands and events notably in
the technology, games, entertainment and
photography sectors.
Our influential technology websites make
Future a leading authority on all things tech.
We cover everything from lifestyle gadgets
to auto-tech, bringing our audience the latest
developments in phones, computing, tablets,
wearables and more.
Our flagship technology website, techradar, is
the number one consumer technology website
in the UK. Our technology brands reach over
25 million users as well as 4 million across
Facebook, Twitter and YouTube. 85% of
techradar’s audience is generated from traffic
from search engines. Techradar generated
£15 million worth of sales across Black Friday
weekend 2015.
Future’s iconic gaming brands are a voice
of authority for gamers worldwide. We reach
15 million users across our online gaming
brands and 35 million across our social
media channels making us a global market-
leading social community of gamers. Future’s
renowned gaming portfolio is the voice of
authority for gamers worldwide and has
influenced gaming culture for over 30 years.
We hold a unique position in the global games
media market, combining the strongest games
industry partnerships with an innovative
multichannel approach. GamesRadar+ blends
gaming, TV and movie entertainment,
PC Gamer is the number one PC games
website on the planet and the Golden
Joystick Awards is one of the world’s biggest
consumer-voted gaming awards event.
The Media division is also home to the UK’s
largest event for enthusiast and professional
photographers; the award-winning and
phenomenally successful The Photography
Show.
CreativeBloq is the number one creative &
design content website in the UK and the
US, reaching over 4 million web designers,
developers, graphic designers and 3D
artists each month. We also host the highly
successful Generate conferences, the global
event for web designers and developers,
which take place in New York, Sydney,
London and San Francisco.
This year saw the second PC Gaming Show
at E3 in June. The show was a massive
success resulting in 449,000 views of the
event on Twitch and 2.1 million users viewing
E3 content on our websites. E3 also had a
positive impact with increased (news-focused)
traffic to PC Gamer, which brought with it a
healthy increase in commission revenue (28%
on PC Gamer).
In March we launched the PC Gamer
Weekender in London which was successful
in terms of visitors and sponsors.
This year’s T3 Awards were a phenomenal
success with attendee will.i.am declaring
“three years from now the T3 Awards will be
the Grammys and the Brits on steroids”.
Technology and photography brands
include:
techradar
T3
Gizmodo UK
Lifehacker UK
ITProPortal
The Photography Show
Mobile Choice Consumer Awards
Games & entertainment brands include:
GamesRadar+
PC Gamer
Kotaku UK
Golden Joysticks
PC Gaming Show at E3
PC Gamer Weekender
Creative & design brands include:
CreativeBloq
Generate conferences
Music brands include:
MusicRadar
The London Acoustic Show
The London Bass Guitar Show
The London Drum Show
Magazine
The Magazine division publishes a number of
special interest magazines and bookazines
in both print and digital format in the games,
entertainment, technology, photography, music
and field sports sectors.
Our gaming print titles cover everyone from
dedicated industry professionals to passionate
console gamers, including the official
PlayStation magazine and global print PC
gaming brand, PC Gamer.
Our dynamic, market-leading specialist
technology magazines provide in-depth insight
such as MacFormat and Maximum PC. The
Group’s acquisition of Noble House Media
saw Future enter the technology B2B sector,
with top brands including consumer mobile
magazine, Mobile Choice, as well as trade
magazines Wireless and Mobile.
Future’s film magazines connect with film and
TV lovers worldwide. Our portfolio includes the
iconic movie magazine Total Film, the equally
renowned and best-selling science fiction title
SFX, and the genre-specific brands Crime
Scene and Comic Heroes. Our combination
of authority and access ensures that our
audience stays on top of the latest movie,
TV and fiction news. In June 2016 Total Film
re-launched with a new tagline “The Smarter
Movie Magazine” and a larger size that
reflects the passionate modern film consumer
and gives greater depth of coverage to the
latest films. As a result Total Film has seen
a remarkable spike in sales following the re-
launch with a 36% increase issue-on-issue.
Future is the UK’s leading publisher of
magazines about photography. Our magazines
offer practical advice and inspiration to
photographers of all skill levels.
Annual Report and Accounts 2016
Business
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The market-leading Digital Camera magazine
covers D-SLR and CSC hobbyists, Canon fans
turn to PhotoPlus, N-Photo is 100% Nikon-
focused, while Professional Photography
meets the needs of the working professional.
Field sports brands include:
Airgun Shooter
Sporting Rifle
Bow International
Our music portfolio informs and inspires music-
makers to be even greater at the thing they
love; we’ve got it covered on guitars, drums
and hi-tech.
We produce market-leading creative and
design print magazines including net,
ImagineFX, 3D World and Computer Arts.
Our acquisition of assets from Blaze Publishing
has entered us into a new vertical, field sports.
Through our acquisition of Imagine Publishing,
we have gained magazines within the history,
knowledge and science sectors.
Media Services
Our new Media Services division, which we
established in October 2016, encompasses our
content publishing business Future Fusion and
our licensing business.
Future Fusion is our in-house creative
service agency. We create content for global
audiences across our media network and
beyond. Our clients are some of the world’s
biggest brands within our sectors and we also
operate in non-core sectors such as travel and
motoring providing own-branded content for
our clients.
We license and syndicate our easily
transferable content to 31 overseas markets
and we continue to be the number one
licensing partner in our specialist sectors for
media around the world, with market-leading
content delivery systems and efficient business
processes.
Additionally, the division has dedicated
resource to focus on areas in our business that
have good growth prospects, which include
opportunities in non-core markets to franchise
our digital brands and events as well as driving
growth in licensing and Future Fusion.
Technology and photography brands
include:
T3
MacFormat
Maximum PC
Mobile Choice
Digital Camera
N-Photo
Photo Plus
Games & entertainment brands include:
Official PlayStation
PC Gamer
SFX
Total Film
Creative & design brands include:
3D World
Computer Arts
net
Music brands include:
Guitarist
Rhythm
Computer Music
Acoustic Magazine
Business review
Key Performance Indicators
The key performance indicators are presented on a continuing basis.
Corporate KPIs
EBITDAE (£m):
EBITE (£m):
Media Division KPIs
2016
2015
4.7
2.3
3.6
0.8
Number of users visiting our websites (monthly)
45.2m 48.5m
Number of event attendees (thousands)
Number of e-commerce transactions (thousands)
Magazine Division KPIs
Number of copies sold per month (thousands)
Subscriber base (thousands)
Copies sold as a percentage of copies printed
(including subscriptions)
38.3
1,128
739
399
32.0
563
818
466
45%
50%
09
Future plc
Risks and
uncertainties
Risks and uncertainties
Like all businesses, our business faces risks and uncertainties
that could impact the Group’s achievement of its objectives.
Risk is accepted as being a part of operating any business
and we have therefore established a continuous process of
identifying, evaluating and managing risk.
Risk management
Risks
Description
Mitigation
Operating environment
The structural change in our operating environment and the pace of the transition from print
remain a real risk. There is a risk that print circulation volumes and print advertising revenues
decline at a faster rate than anticipated and digital revenues do not grow at a rate to offset
the decline.
Future continues to innovate, making available its special-interest content to consumers in
print, where we have had a number of successful launches. We create best-in-class content
to create an emotional connection with our audiences of engaged enthusiasts, who represent
an attractive audience for advertisers. We have become an integral part of the purchase cycle
which can be monetised via affiliates and e-commerce.
Debt financing
Intellectual property
Future had a bank facility totalling £5.0m at 30 September 2016. Failure to comply with the
financial covenants of the facility could result in additional finance costs and the possible
withdrawal of the facility.
Future continually monitors its cash flows and covenants and has operated within all its
covenants throughout the year. Following the acquisition of Imagine, the Group secured new
facilities totalling £14.0m which expire in June 2021.
Future uses, and grants licences to its licensees allowing them to use, various types of third-
party content including music, audiovisual material, photos, images and text. As a publisher,
Future is responsible for any intellectual property or other infringement relating to the same and
as licensor, Future is responsible to its licensees.
Future produces guidance and in-house training to educate its staff on the importance of
obtaining appropriate rights or licences and has a dedicated in-house rights management team.
Future’s legal team reviews all significant licences relating to third-party content and, where
appropriate, seeks warranties and indemnities relating to the same. Future licenses content to
third parties based on standard contracts which seek to limit Future’s liability.
Financial
The long lag time for reporting on sales of exported printed copies continues to be an area of
forecasting uncertainty.
On printed product, in particular bookazines, a more conservative initial view on sales estimates
continues with emerging trends becoming more apparent.
Forecasting remains difficult in all consumer markets. As we continue to diversify our revenue
streams, new activities are inherently more difficult to forecast accurately.
Future’s forecasting in respect of innovative products will become easier as those products
develop a more consistent customer base and stable business models.
Advertising pipelines can be subject to slippage, with the risk that resulting revenue is pushed
into later accounting periods.
The Group is exposed to interest rate risk and foreign exchange risk.
The significant issues considered in relation to the financial statements for the year ended
30 September 2016 are set out in the Audit Committee section of the Corporate Governance
report on page 27.
Careful monitoring of the pipeline and bookings to close the gap in the event of any shortfall.
The Directors consider Future’s exposure to interest rate and foreign exchange risk to be low
and therefore there are no hedges in place (see note 22 to the financial statements for more
detail).
Review by Audit Committee with external auditor.
IT
The business is increasingly dependent on technology.
In the event of a total network or server failure, or data loss, there would be a major impact on the
production of magazines, operation of websites and the operational effectiveness of the business.
Future’s network has at least two diverse routes for all key offices and business-critical data
is held on three highly resilient storage devices in different locations. In addition, all core
switches are duplicated in different buildings so there are no single points of failure. Servers
are distributed across two main data centre locations and several controlled server rooms
in different buildings in Bath and San Francisco. Future can switch services from one server
to another within a few hours. In addition, all mission-critical services have more than one
server so there is no single point of failure. Further investment in the IT infrastructure has
been made in 2016 and more is already underway in 2017.
Staff
Personal data
and cyber fraud
The Group’s strong reputation as a leading content provider makes its staff potentially attractive
to competitors. There is a risk that key staff will move elsewhere if offered significant increases
in remuneration with which Future is unable to compete.
Future employs people who are passionate about their subject. Future offers a number of staff
benefits and incentive programmes to attract and retain key staff, and steps are taken to ensure
that the Group is not excessively reliant upon any one employee.
A loss of personal data or a cyber attack would trigger the need to notify users and the
Information Commissioner’s Office (ICO) and Future may suffer reputational risk, as well as a
significant financial penalty, if it is responsible for the breach.
Future seeks to ensure all of its systems comply with best practice as regards to security
and has in place a plan to mitigate the effects of any hack. The Group is continually investing
and upgrading its IT systems and processes to ensure that they are sufficiently robust and
appropriate for the digital age.
No attacks were suffered in 2016.
Annual Report and Accounts 2016
10
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Risk management
Operating environment
Debt financing
Intellectual property
Risks
Description
Mitigation
The structural change in our operating environment and the pace of the transition from print
remain a real risk. There is a risk that print circulation volumes and print advertising revenues
decline at a faster rate than anticipated and digital revenues do not grow at a rate to offset
the decline.
Future continues to innovate, making available its special-interest content to consumers in
print, where we have had a number of successful launches. We create best-in-class content
to create an emotional connection with our audiences of engaged enthusiasts, who represent
an attractive audience for advertisers. We have become an integral part of the purchase cycle
which can be monetised via affiliates and e-commerce.
Future had a bank facility totalling £5.0m at 30 September 2016. Failure to comply with the
financial covenants of the facility could result in additional finance costs and the possible
withdrawal of the facility.
Future continually monitors its cash flows and covenants and has operated within all its
covenants throughout the year. Following the acquisition of Imagine, the Group secured new
facilities totalling £14.0m which expire in June 2021.
Future uses, and grants licences to its licensees allowing them to use, various types of third-
party content including music, audiovisual material, photos, images and text. As a publisher,
Future is responsible for any intellectual property or other infringement relating to the same and
as licensor, Future is responsible to its licensees.
Future produces guidance and in-house training to educate its staff on the importance of
obtaining appropriate rights or licences and has a dedicated in-house rights management team.
Future’s legal team reviews all significant licences relating to third-party content and, where
appropriate, seeks warranties and indemnities relating to the same. Future licenses content to
third parties based on standard contracts which seek to limit Future’s liability.
There are a number of general
business risks to which Future is
naturally exposed in the UK and US. In
addition, the range of industry-specific
risks faced by Future continues to
increase, due to the increasingly
digital focus of the media landscape
and the increasing number of evolving
business models.
Our internal controls seek to minimise the
impact of risks, as explained in our Corporate
Governance report on page 25, and during
the year we have continued to develop those
controls in response to the wider range of
risks.
Financial
The long lag time for reporting on sales of exported printed copies continues to be an area of
forecasting uncertainty.
On printed product, in particular bookazines, a more conservative initial view on sales estimates
continues with emerging trends becoming more apparent.
1. ID E N
0
Forecasting remains difficult in all consumer markets. As we continue to diversify our revenue
streams, new activities are inherently more difficult to forecast accurately.
Future’s forecasting in respect of innovative products will become easier as those products
develop a more consistent customer base and stable business models.
Advertising pipelines can be subject to slippage, with the risk that resulting revenue is pushed
Careful monitoring of the pipeline and bookings to close the gap in the event of any shortfall.
into later accounting periods.
The Group is exposed to interest rate risk and foreign exchange risk.
The significant issues considered in relation to the financial statements for the year ended
30 September 2016 are set out in the Audit Committee section of the Corporate Governance
report on page 27.
IT
The business is increasingly dependent on technology.
In the event of a total network or server failure, or data loss, there would be a major impact on the
production of magazines, operation of websites and the operational effectiveness of the business.
The Directors consider Future’s exposure to interest rate and foreign exchange risk to be low
and therefore there are no hedges in place (see note 22 to the financial statements for more
detail).
Review by Audit Committee with external auditor.
Future’s network has at least two diverse routes for all key offices and business-critical data
is held on three highly resilient storage devices in different locations. In addition, all core
switches are duplicated in different buildings so there are no single points of failure. Servers
are distributed across two main data centre locations and several controlled server rooms
in different buildings in Bath and San Francisco. Future can switch services from one server
to another within a few hours. In addition, all mission-critical services have more than one
server so there is no single point of failure. Further investment in the IT infrastructure has
been made in 2016 and more is already underway in 2017.
Staff
Personal data
and cyber fraud
The Group’s strong reputation as a leading content provider makes its staff potentially attractive
to competitors. There is a risk that key staff will move elsewhere if offered significant increases
in remuneration with which Future is unable to compete.
Future employs people who are passionate about their subject. Future offers a number of staff
benefits and incentive programmes to attract and retain key staff, and steps are taken to ensure
that the Group is not excessively reliant upon any one employee.
A loss of personal data or a cyber attack would trigger the need to notify users and the
Information Commissioner’s Office (ICO) and Future may suffer reputational risk, as well as a
significant financial penalty, if it is responsible for the breach.
Future seeks to ensure all of its systems comply with best practice as regards to security
and has in place a plan to mitigate the effects of any hack. The Group is continually investing
and upgrading its IT systems and processes to ensure that they are sufficiently robust and
appropriate for the digital age.
No attacks were suffered in 2016.
T I F y
02. E
V
Future’s
assessment
of risks
A
L
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E
T
R
O
P
E
04. R
03. A
C
T
01 Identification of risks
02 Evaluation of level of risks
and controls in place to
manage those risks
03 Action taken to manage risks
04 Risks reported and monitored
11
Future plc
Corporate
responsibility
Responsible business
Corporate responsibility is integral to the way Future conducts
its business. We focus our efforts around three key areas
where we think we can make a difference.
1. The environment
A responsible approach to the environment is
essential to ensure the future sustainability of
our business.
Sourcing paper
Paper is the largest raw material we use as
a Group. We work hard to make sure that
whatever we consume, we do in a way that
is ethically responsible and environmentally
sustainable. In 2016, 100% of our paper across
the Group was sourced from either recycled
fibre or sustainable forests where at least one
tree is planted for every tree felled. In the UK,
Future holds the FSC (Forestry Stewardship
Council) Chain of Custody certification. This
recognises Future’s commitment to sourcing
paper supplies from sustainable forests.
In 2016, over 90% of the paper we used in the
UK was FSC certified. We actively encourage
our suppliers to work towards FSC certification
or one of the other internationally recognised
and independently audited certification
schemes for environmental care in forest
management and conservation.
Future in the UK holds
FSC Chain of Custody
certification. This
recognises Future’s
commitment to sourcing
paper supplies from well
managed forestry.
We work in partnership
with Bath-based charitable
foundation, Quartet.
We are members of the
Professional Publishers
Association (PPA) and
support its initiative
encouraging readers to
recycle their magazines
after use. We incorporate
the recycle logo in all our
UK magazines.
Recycling and waste
The Group is strongly incentivised to minimise
the number of unsold magazines and we
employ sophisticated techniques to help
achieve this. In the UK, Future’s unsold
magazines are recycled. We also support
the PPA’s initiative encouraging readers to
recycle their magazines after use and we
incorporate the WRAP recycle logo in all our
magazines. We comply with our obligations
under the Producer Responsibility Obligations
(Packaging Waste) Regulations. The disposal
of waste materials is also included in our print
supplier audit.
Supplier audits
We undertake environmental and ethical
audits on our main suppliers which include
aspects such as the processing and disposal of
effluents, emissions and waste materials, and
the use of labour.
2. Our people
Future’s employees are our most important
assets; they are the driving force behind our
success as a business.
Health and safety
The health and safety of all employees is a
key priority for the Group. Future is largely
an office-based environment. All companies
across the Group comply with relevant
legislation and we communicate our health
and safety policy to all employees. In the UK,
during the year to 30 September 2016, there
were no fatalities, no reportable (RIDDOR)
injuries, and no minor injuries. There were
no fatalities or injuries in the US or Australia
during this year.
Policy on disability
The Group aims to ensure that when
considering recruitment, training, career
development, promotion or any other aspect
of employment, no employee or job applicant
is discriminated against, either directly or
indirectly, on the grounds of disability.
If an employee became disabled while in
employment and as a result was unable to
perform their duties, we would make every
effort to offer suitable alternative employment
and assistance with retraining.
Internal communication
Future has policies on employee
communication, acceptable use of IT, health
and safety and whistle-blowing, and we have
a commitment to diversity and opportunity.
We hold regular town hall sessions for all
employees, and extended leadership team
meetings where we discuss key strategic
initiatives and the performance of the business.
In the UK we held an all company conference
in October 2016. These initiatives ensure
that communication is constantly improving
across the business, reinforce the building
of a positive working environment where we
celebrate successes and also help to ensure
there is alignment across the business. Our
environment is one where we encourage
employees to freely give their views and
contribute to initiatives, as this continuously
develops and improves our offering for the
benefit of our consumers and clients.
3. The community
Giving something back
In the UK the Group has worked in partnership
with Bath-based charitable foundation Quartet,
who make donations to local charities on our
behalf.
Future in the wider community
Future people have been actively involved
in the year with a number of national
organisations including the Professional
Publishers Association, European Magazine
Media Association, Association of Online
Publishers, NABS, European & Leisure
Software Publishers Association, the IPA,
the Marketing Society and the International
Federation of the Periodical Press.
Employment data across the Group
Split of female:male employees as at 30 September 2016
Split of female:male Directors of the Company as at 30 September 2016
Split of female:male members of the Executive Committee as at 30 September 2016
Earnings meet at least legal minimum or minimum set by industry
Cases of reported and proven discrimination or harassment
Consultation and communication procedures in place for all areas of the business
Code of conduct circulated to all existing and new employees
Employment of young people under the age of 15
2016
32%:68%
3:2
1:5
yes
None
yes
yes
None
Annual Report and Accounts 2016
Statement of Greenhouse Gas (GHG) Emissions for the Group
Global GHG emissions in tonnes of CO2 equivalent:
Emissions from
2013 (base year)
The combustion of fuel: gas for heating and fuel;
for vehicles (Scope 1)
The purchase of electricity: heat, steam or cooling
by the Group for its own use (Scope 2)
Total Emissions (CO2e Tonnes)
Total Revenue
Intensity Ratio (CO2e Tonnes per £1m)
UK
US
Total
UK
US
Total
Total
470
102
572
1,310
376
1,686
2,258
£112.3m
20.1
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2016
Total
131
-
131
493
8
501
632
£59.0m
10.7
We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.
The emissions sources fall within our financial statements. We do not have responsibility for any emission sources that are not included in our financial
statements.
Methodology:
We have used the UK Government’s Environmental Reporting Guidance. We have applied the 2016 DEFRA GHG Conversion Factor Repository to
calculate the CO2e. As a Group with only office-based activities and no manufacturing activities, under the GHG Protocol Corporate Standard, our
emissions fall under Scope 1 (the combustion of fuel) and Scope 2 (the purchase of electricity).
Notes:
• Scope 1 – Time periods for combustion of gas for heating – figures for all offices are for the financial year. All figures are estimates based on %
share of office space within leased buildings except for UK Bath offices which are actual consumption where whole buildings or floors within
buildings have their own meters.
• Scope 1 – Time periods for combustion of fuel in vehicles – only the UK operates leased vehicles and figures for the consumption of fuel are based
on averaged annual mileage.
• Scope 2 – Time periods for consumption of electricity – figures for the UK and US offices are for the financial year. Figures for the Australian office
are pro-rated from typical (August 2016) monthly consumption. All figures are estimates based on % share of office space within leased buildings
except for the US office in 2016 and UK Bath offices which are actual consumption where whole buildings or floors within buildings have their
own meters.
• Scope 2 – Electricity Sources – No electricity was purchased from owned or controlled sources.
• Fugitive Emissions – the Group benefits from air conditioning in some of its leasehold buildings. The scale of emissions from leaks is very small
(estimated to be less than 0.5% of total emissions) and is deemed to be immaterial to overall reporting and trends.
• Base Year - Financial year 2013 is our baseline year.
•
Intensity Ratio - we are using ‘Tonnes per £1 million revenue’.
• We have maintained our focus on other environmental impacts, particularly initiatives to reduce waste and to continue sourcing all our magazine
paper from sustainable forestry.
13
Future plc
Financial
review
Optimisation
The financial results demonstrate that the Group is progressing
well with the Optimisation phase of its strategy, with exciting
times ahead following the acquisition of Imagine.
“ Operating profit
pre-exceptional
items has grown
188% year-on-year
to £2.3m, reflecting
improvements
in operational
efficiency.”
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Financial summary
The financial review is based primarily on a comparison of continuing results for the year ended
30 September 2016 with those for the year ended 30 September 2015. Unless otherwise stated,
change percentages relate to a comparison of these two periods.
Continuing operations
Revenue
EBITDAE
Depreciation charge
Amortisation of intangible assets
Operating profit pre-exceptional items
Exceptional items
Impairment
Operating loss
Net finance costs
Loss before tax
Loss per share (p)
Adjusted earnings per share (p)
Revenue
2016
£m
59.0
4.7
(0.4)
(2.0)
2.3
(3.5)
(13.0)
(14.2)
(0.7)
(14.9)
(4.0)
0.4
2015
£m
59.8
3.6
(0.5)
(2.3)
0.8
(2.5)
-
(1.7)
(0.6)
(2.3)
(0.6)
0.0
Group revenue was £59.0m (2015: £59.8m) reflecting the continued change in the business with the
new revenue streams growing strongly whilst the print revenues, as expected, continue to decline.
UK revenue was £44.7m (2015: £47.3m) and in the US £15.2m (2015: £13.4m).
The Group’s focus is on building recurring revenue streams, which have annuity like qualities. These
encompass e-commerce and subscriptions, and now represent 25% of the Group’s total revenue
(2015: 22%).
Media
Media revenue has increased by 14% to £23.9m (2015: £20.9m), driven by the Group’s fast growing
revenue streams, e-commerce and events.
In the UK, Media revenues increased by 8% to £14.1m (2015: £13.1m), driven by the new revenue
streams of e-commerce and events. In only its third year, The Photography Show at Birmingham’s
NEC generated revenue growth of 12% year-on-year. Digital advertising in the UK now represents
69% (2015: 72%) of UK advertising revenues.
The US also delivered strong growth, up 24% year-on-year to £10.4m (2015: £8.4m), with revenue
from affiliates being the biggest driver of this growth. Digital advertising in the US now represents
88% (2015: 85%) of US advertising revenues.
Magazine
Magazine revenue declined in line with expectations to £35.1m (2015: £38.9m), reflecting the
market’s overall structural decline. A focus on subscription revenues, however, has increased the mix
of recurring revenues in this division to 30% from 29% in 2015. The division is constantly looking for
ways to innovate and launched five new magazines in the year.
Annual Report and Accounts 2016
14
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EBITDAE
The Group’s EBITDAE was up 31% to £4.7m (2015: £3.6m), of which £2.8m (2015: £3.3m) was
UK and £1.9m (2015: £0.3m) was US. The swing in profit margins between the UK and US is in
large part a reflection of the strategy to create operational centres of excellence in lower cost
environments, with all of the back office costs for the Group now located in the UK. During
the course of the year, global functions were introduced for most operational teams, allowing
resources to be located in the most financially and operationally effective locations. This has
helped to improve the overall Group profitability through greater operational gearing and allowed
the US operations to grow from strength to strength.
Future’s headcount was further reduced from 521 to 449 employees and rationalisation of the
Group’s overhead base continued with a focus on process re-engineering. All websites have now
been migrated onto the Group’s proprietary platform and a global content management system
migration (CMS); the final CMS migration will be completed in Q1. This puts the Group in a strong
position to benefit from economies of scale as the number of brands increases. All acquisitions
made during FY16 have been fully integrated into the Group’s operations and systems.
Exceptional items and impairment
Exceptional costs were £3.5m (2015: £2.5m). Restructuring costs of £1.8m include headcount
reduction and transformation expenses. A credit of £0.5m was recognised as dilapidation costs for
legacy offices were lower than originally expected.
The balance of exceptional costs principally comprise acquisition related costs in respect of the
acquisition of Miura (Holdings) Limited, the ultimate parent company of Imagine Publishing Limited,
which was completed on 21 October 2016.
A non-cash impairment charge of £13.0m has been recognised against goodwill attributable to the
UK business. This reflects a shift in the underlying profitability and cash flows of the Group and the
continued decline of print.
1
2
Group revenue 2016
1: Media 41%
2: Magazine 59%
1
2
Net finance costs
Net finance costs were £0.7m (2015: £0.6m) with the increase representing a small foreign
exchange loss (profit in 2015) reflecting the volatility of currency markets.
The Group pre-tax loss was £14.9m (2015: £2.3m).
Group revenue 2015
1: Media 35%
2: Magazine 65%
Taxation
The tax credit for the year amounted to £0.5m (2015: £0.3m), comprising a current tax charge of
£1.3m (2015: credit of £0.3m) and a deferred tax credit of £1.8m (2015: £nil) predominantly related
to the recognition of a portion of US losses. The current tax charge arises in the UK where the
standard rate of corporation tax is 20%.
Overall the effective rate for the Group when applied to the loss before tax was 3% (2015: 13%).
The Group continues to focus on compliance with tax authorities in all territories in which it
operates.
15
Future plc
Financial
review
(Loss)/earnings per share
Basic loss per share (p)
Adjusted earnings per share (p)
2016
(4.0)
0.4
2015
(0.6)
0.0
Adjusted earnings per share is based on the loss after taxation which is then adjusted to exclude
exceptional items, impairment and related tax effects. The continuing adjusted profit after tax
amounted to £1.5m (2015: £0.1m) and the weighted average number of shares in issue was 362m
(2015: 333m).
Dividend
The Board is not recommending a final dividend for the year (2015: £nil).
Cash flow and net debt
Net cash at 30 September 2016 was £0.5m (2015: net debt £1.8m), an improvement of £2.3m in the
year.
Following the acquisition of Imagine, the Group refinanced Imagine’s existing debt and settled
outstanding fees and other deal related costs, totalling £7.4m.
During the year, there was a cash inflow from operations before exceptional items of £6.5m (2015:
£2.3m outflow) arising from an improvement in working capital and trading performance.
This was offset by £3.4m (2015: £5.2m) of exceptional restructuring payments made in the year,
£1.9m (2015: £2.0m) of capital expenditure, net proceeds from a share placing of £3.1m and
payments of £0.9m to fund acquisitions (net of cash acquired). Foreign exchange and other
movements accounted for the balance of cash flows.
Credit facility and covenants
The Group had available facilities of up to £5.0m at 30 September 2016. Following the
acquisition of Imagine the Group secured new debt facilities totalling £14.0m expiring in June
2021. Further details of these new facilities are included within note 19.
Going concern
After due consideration, the Directors have concluded that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable
future. For these reasons the Directors continue to adopt the going concern basis in preparing the
consolidated financial statements for the year ended 30 September 2016.
Post balance sheet event
On 21 October 2016 the Group announced the completion of the acquisition of Miura (Holdings)
Limited, the holding company and ultimate parent company of Imagine Publishing Limited, for
equity consideration of £15.3m.
3
1
2
Annual Report and Accounts 2016
16
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Key performance indicators (KPIs)
Management uses a number of KPIs to measure the Group’s operational and financial
performance, the most important of these KPIs are set out on page 8.
Conclusion
The Group has moved into a period of optimisation, with the acquisition of Imagine providing
additional scale and cash generation and presenting a number of exciting opportunities. The
Group is well placed to achieve its ambitions for 2017 and beyond.
The Strategic Report (which comprises the Group overview, Chairman’s statement, Chief
Executive’s review, Strategic overview, What we do, Risks and uncertainties and Corporate
responsibility sections) and the Financial Review are approved by the Board of Directors and
signed on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
13 December 2016
17
Future plc
Board of
Directors
Strong leadership
Peter Allen
Independent non-executive Chairman
James Hanbury
Deputy Chairman
Zillah Byng-Thorne
Chief Executive
Penny Ladkin-Brand
Chief Financial Officer and
Company Secretary
Manjit Wolstenholme
Senior independent
non-executive
Hugo Drayton
Independent non-executive
Annual Report and Accounts 2016
18
Peter Allen
Chairman
sln
James Hanbury
Deputy Chairman
sl
Zillah Byng-Thorne
Chief Executive
Peter was named Chairman in August 2011. He
was Chief Financial Officer of Celltech Group
plc between 1992 and 2004. In 2003 he was
also appointed Deputy Chief Executive Officer
of Celltech until the company was sold in 2004.
He was Chief Financial Officer of the electronics
company Abacus Group plc from 2005 until the
company was sold to Avnet Inc in January 2009.
Peter is currently Chairman of Clinigen plc,
Advanced Medical Solutions Group plc, Oxford
Nanopore Technologies Limited and Diurnal
Limited.
James was appointed Deputy Chairman
in October 2016 as the representative of
Disruptive Capital Investments Limited. Prior to
his appointment he was Chairman of Imagine
Publishing, which was acquired by Future
in October 2016. James joined the Board
of Imagine in March 2014 soon after leaving
Incisive Media, a publishing business he
co-founded in 1994. He has also previously
chaired the Business Media Council of the PPA.
James also acts as an adviser to a number
of VC backed businesses, is a trustee for a
charitable trust and has set up and chairs
WARpaint, a fundraising organisation for several
armed forces charities.
Zillah was appointed as Chief Executive on
1 April 2014. She joined Future in November
2013 as Chief Financial Officer and Company
Secretary. Prior to her appointment to the
Future plc Board, she was CFO of Trader
Media Group – owner of Auto Trader – from
2009 to 2012, and interim CEO of Trader
Media from 2012 to 2013. Before this, Zillah
was Commercial Director and CFO at Fitness
First Limited and Chief Financial Officer of the
Thresher Group. Zillah is currently a non-
executive Director of Paddy Power Betfair plc
and Gocompare.com Group plc. Zillah is a
qualified accountant and corporate treasurer.
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Manjit Wolstenholme
Senior independent non-executive
sln
Penny was appointed as Chief Financial Officer
and Company Secretary on 3 August 2015,
having joined the business as interim Chief
Financial Officer in June 2015. Prior to this she
was Commercial Director at AutoTrader Group
plc. Penny is a chartered accountant with a
background in digital media and expertise in
digital monetisation models.
Manjit joined Future as the senior non-
executive Director in February 2011. She
is Chairman of Provident Financial plc and
CALA Group, and a non-executive Director of
Unite Group plc and CMC Markets plc. After
qualifying as a chartered accountant in 1988
with PricewaterhouseCoopers, Manjit spent
13 years with Dresdner Kleinwort, latterly as
co-head of investment banking including more
than a decade specialising in the media sector.
She was a partner at Gleacher Shacklock from
2004 to 2006.
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Hugo Drayton
Independent non-executive
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Hugo joined Future on 1 December 2014. He
is CEO of the advertising technology business,
InSkin Media. Prior to ISM, he spent two years
as CEO of behavioural targeting specialist,
Phorm, following two years as European
Managing Director of Advertising.com. He
spent 10 years at The Telegraph Group, as
Group Managing Director, and previously as
Marketing & New Media Director. Hugo is a
Trustee of the British Skin Foundation, chaired
the British Internet Publishers’ Alliance, and
is a regular contributor to trade press and
publishing conferences.
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19
Future plc
Directors’
report
For the year ended
30 September 2016
Directors’ report
The information presented in this Directors’ report relates to
Future plc and its subsidiaries. The Chairman’s statement,
Chief Executive’s review, Financial review and Corporate
responsibility statement are each incorporated by reference
into, and form part of, this Directors’ report.
Principal activity
The principal activity of the Company and
its subsidiaries (the ‘Group’) as a whole is
the publishing of special-interest consumer
magazines, apps and websites, and the
operation of events notably in the areas of:
Technology; Games and Entertainment;
Photography; Creative and Field Sports.
The Company is incorporated and domiciled in
the UK and has subsidiaries operating in the
UK, the US and Australia.
Business review
available at the date of preparation of this
Annual Report and the Company undertakes
no obligation to update those forward-looking
statements.
Result of 2016 Annual General Meeting
All resolutions put to the Annual General
Meeting held on 3 February 2016 were
passed unanimously on a show of hands.
Shareholders holding more than 80% of all
issued shares submitted proxy votes and of
these, more than 87% were cast in favour of all
resolutions.
The purpose of the Annual Report is to provide
information to the shareholders of the Company.
Reported financial results
The audited financial statements for the
year ended 30 September 2016 are set out
on pages 43 to 78. Details of the Group’s
results are set out in the consolidated income
statement on page 44 and in the notes to the
financial statements on pages 54 to 78.
Dividends
The Board’s policy is that dividends should be
covered at least twice by adjusted earnings per
share. The Company’s Employee Benefit Trust
(EBT) waives its entitlement to any dividends.
Reviews of the Group’s activities during
the year, the position at the year-end and
developments since then are set out in the
Chairman’s statement, Chief Executive’s
review, the Corporate Governance report and
the Financial review. The Financial review and
Strategic report explain financial performance,
KPIs, the position at the year-end, any post
balance sheet events, any likely future
developments and a description of the principal
risks and uncertainties facing the Group and
how these are managed.
The Annual Report contains certain forward-
looking statements with respect to the
operations, performance and financial condition
of the Group. By their nature, these statements
involve uncertainty since future events and
circumstances can cause results to differ
from those anticipated. The forward-looking
statements reflect knowledge and information
Significant shareholdings
Share capital
The Company has a single class of share
capital which is divided into Ordinary shares
of one penny each. The rights and obligations
attaching to the Company’s Ordinary shares
and provisions governing the appointment and
replacement of, as well as the powers of, the
Directors, are set out in the Company’s
Articles of Association, copies of which can
be obtained from Companies House in the UK
or by writing to the Company Secretary. Save
for restrictions that may from time to time be
set out in the Company’s Articles of
Association or imposed by laws and
regulations (including the Listing Rules of the
Financial Conduct Authority), there are no
restrictions on the voting rights attaching to
the Ordinary shares or on the transfer of the
Ordinary shares. The Articles of Association
may be amended only by a special resolution
of the Company’s shareholders.
Details of all movements in share capital are
given in note 23 on page 72. As at 30
September 2016, the number of shares in
issue was 368.8 million. This represents an
increase of 10.3% compared with the number
of shares in issue as at 30 September 2015. In
November 2015, 33.4 million shares were
issued by way of a placing of O rdinary shares
in the Company. The balance of shares issued
during the year were issued in satisfaction of
employee share awards vesting or Share
Incentive Plan matching share awards during
the year.
At 13 December 2016, the Company had been notified of the following significant interests in its Ordinary shares:
Shareholder
Aberforth Partners LLP
Disruptive Capital Investments Limited
Schroders Plc
Henderson
Investec Asset Management Ltd
Herald Investment
Mr Damian Butt
Mr Steven Boyd
Mr Mark Kendrick
Directors’ holdings (see opposite)
Total of significant holdings
Total number of shares in issue
Number of shares
Percentage of
issued share capital
96,694,195
93,313,544
85,721,792
75,119,794
28,892,556
20,765,000
19,412,128
18,186,778
16,291,461
454,397,248
3,415,444
457,812,692
548,430,719
17.63%
17.01%
15.63%
13.70%
5.27%
3.79%
3.54%
3.32%
2.97%
82.86%
0.62%
83.48%
100%
Annual Report and Accounts 2016
20
Directors’ shareholdings (audited)
Directors in office at 30 September 2016
Executive
Zillah Byng-Thorne
Penny Ladkin-Brand
Non-executive
Peter Allen
Manjit Wolstenholme
Hugo Drayton
Total
Balance as at
30 September 2015
Purchases
during the year
Balance as at
30 September 2016
421,369
-
1,000,000
207,889
-
670,000
150,000
100,000
45,000
-
1,091,369
150,000
1,100,000
252,889
-
1,629,258
965,000
2,594,258
Notes:
1. All holdings are beneficial and include the Directors’ personal holdings and those of their spouses.
2. On 21 October 2016 James Hanbury received 470,040 shares as consideration for his shareholding in Miura (Holdings) Limited and on 25 November 2016 he purchased 110,000 shares, resulting in a
total holding of 580,040 shares.
3. On 2 December 2016, Penny Ladkin-Brand purchased 121,815 shares and she is also deemed to be interested in the 119,331 shares purchased by her husband on 5 December 2016, resulting in a
total holding of 391,146 shares.
4. Details of the share options and awards for executive Directors are set out on page 33. No such options or awards are granted to non-executive Directors.
Directors
Corporate governance
Annual General Meeting 2016
Biographical details of the Directors holding
office as at 13 December 2016 are set out on
page 18.
Directors’ shareholdings in the Company’s
share capital are set out above. No Director
has any interest in any other share capital of
the Company or any other Group company, nor
does any Director have a material interest in
any contract of significance to the Group.
Significant agreements
The provisions of the European Directive on
Takeover Bids (as implemented in the UK in
the Companies Act 2006) require the Company
to disclose any significant agreements which
take effect, alter or terminate upon a change of
control of the Company. In common with many
other companies, the Group’s bank facility
(details of which are set out in note 19 on page
67) is terminable upon change of control of the
Company. In common with market practice,
awards under certain of the Group’s long-
term incentive plans (details of which are set
out in the Directors’ remuneration report on
page 31 and note 24 on page 72) will vest or
potentially be exchangeable into awards over
a purchaser’s share capital upon change of
control of the Company. There is also a change
of control provision in the service agreements
of the two executive Directors, exercisable
within three months of a change of control by
the Company or on one month’s notice by the
executive to expire no later than three months
from the date of the change of control.
Financial instruments
Information in relation to the Group’s use of
financial instruments is set out in note 22 on
pages 68 to 71.
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The Board’s report on this subject is set out on
pages 23 to 28.
Political contributions
No political contributions were made during
either the current or prior years.
At the Company’s eighteenth Annual General
Meeting, which will be held on Wednesday 1
February 2017 at 10:30am at Future’s London
office at 1-10 Praed Mews, London, W2 1QY,
a number of resolutions will be proposed. The
resolutions are set out in the Notice of Annual
General Meeting on pages 79 to 80 and an
explanation of all proposed resolutions is
provided below.
Conflicts of interest
The Board has a set of procedures to ensure
that: (i) conflicts of interest are raised by
Directors (and any potential Directors prior
to appointment); (ii) appropriate guidelines are
followed before any conflict is authorised
(including ensuring that only Directors who
have no interest in the matter being
considered will be able to take the relevant
decision and in taking the decision the
Directors act in a way they consider, in good
faith, will be most likely to promote the
Company’s success); and (iii) records are kept
of conflicts of interest and authorisations. The
Directors are satisfied that the Board’s powers
of authorisation of conflicts are operating
effectively and that the procedures have been
followed. The procedures and any
authorisations will continue to be reviewed
annually.
Corporate responsibility
The Board considers that issues of corporate
responsibility are important. The Board’s
report, including the Group’s policies on
employee involvement and disability, and a
statement on Greenhouse Gas Emissions for
the Group, is set out on pages 11 and 12.
Ordinary resolution 1 – Financial
statements
Shareholders will be asked to approve the
financial statements of the Company for the
financial year ended 30 September 2016,
together with the reports of the Directors and
auditors. The audited financial statements
appear on pages 43 to 78.
Ordinary resolution 2 – Directors’
remuneration implementation report
Shareholders will be asked to approve the
Directors’ remuneration implementation report
for the financial year ended 30 September
2016, which is set out on pages 30 to 35.
Ordinary resolution 3 – Directors’
remuneration policy report
Shareholders will be asked to approve the
Directors’ remuneration policy for the three
year period commencing on 1 October 2016,
which is set out on pages 36 to 39.
21
Future plc
Directors’
report
For the year ended
30 September 2016
Ordinary resolutions 4 to 9 – Election
of James Hanbury and annual re-
election of other Directors
Following James Hanbury’s appointment to
the Board on 21 October 2016, he stands for
election to confirm his appointment.
Consistent with our policy since 2004, all
Directors are proposed for re-election.
Biographical details of all Directors are set out
on page 18.
Following a rigorous evaluation and taking into
account the need for progressive refreshing
of the Board, the Board confirms that the
performance of each executive and non-
executive Director of the Company continues
to be effective and demonstrates commitment
to the role. The Nomination Committee has
carefully considered the time commitments
required from and the contribution made
by each Director and both the Nomination
Committee and the Board unanimously
recommend that James Hanbury be elected
as a Director and each Director standing for
re-election be re-elected.
Ordinary resolutions 10 and 11 –
Auditors
A resolution proposing the reappointment of
PricewaterhouseCoopers LLP as auditors of
the Company and authorising the Directors to
determine their remuneration will be proposed
at the Annual General Meeting. An explanation
regarding the Board’s proposal to reappoint
PricewaterhouseCoopers LLP as auditors
can be found on page 28 in the Corporate
Governance report.
Ordinary resolution 12 – To authorise
the Directors to issue and allot new
Ordinary shares
Under the provisions of section 551 of the
Companies Act 2006 (the 2006 Act), the
Directors may allot and issue Ordinary
shares only if authorised to do so by the
Company’s Articles of Association or by
shareholders at a shareholders’ meeting.
Consistent with guidance issued by the
Investment Association this resolution will, if
passed, authorise the Directors to allot shares
up to a maximum nominal value of £3,656,200
as follows:
(a) in relation to a pre-emptive rights issue
only, equity securities (as defined by section
560 of the 2006 Act) up to a maximum nominal
amount of £3,656,200 which represents
approximately two thirds of the Company’s
issued Ordinary shares (excluding treasury
shares) as at 13 December 2016. This
maximum is reduced by the nominal amount
of any Relevant Securities allotted under
paragraph 12.2 of the Notice of AGM; and
(b) in any other case, Relevant Securities up
to a maximum nominal amount of £1,828,100
which represents just under one third of the
Company’s issued Ordinary shares as at 13
December 2016. This maximum is reduced by
the nominal amount of any equity securities
allotted under paragraph 12.1 of the Notice
of AGM in excess of £1,828,100. If granted,
this authority would replace all previous
authorities granted in this connection. The
authority granted by this resolution will expire
on 31 March 2018 or, if earlier, following the
conclusion of the next AGM of the Company.
If the Directors exercise the authority granted
under paragraph 12.1 of the Notice of AGM,
they will all stand for re-election at the following
AGM.
The Directors do not have any present
intention of exercising this authority other than
in connection with any exercises under share
option and other share incentive schemes,
but intend to seek this authority each year. In
addition, there may be circumstances
where it would be appropriate for the Company
to issue new Ordinary shares, such as an
acquisition where it might be appropriate for
the consideration to be settled in whole, or in
part, by the issue of new Ordinary shares. The
Company does not
hold any shares in treasury.
Ordinary resolution 13 – Approval of
political donations
It remains the policy of the Company not to
make political donations or to incur political
expenditure, as those expressions are normally
understood. However, following broader
definitions introduced by the 2006 Act, the
Directors continue to propose a resolution
designed to avoid inadvertent infringement of
these definitions.
The 2006 Act requires companies to obtain
shareholders’ authority for donations to
registered political parties and other political
organisations totalling more than £5,000 in
any 12-month period, and for any political
expenditure, subject to limited exceptions.
The definition of donation in this context is
very wide and extends to bodies such as those
concerned with policy review, law reform and
the representation of the business community.
It could also include special interest groups,
such as those involved with the environment,
which the Company and its subsidiaries might
wish to support, even though these activities
are not designed to support or to influence
support for any particular political party.
Ordinary resolution 14 – Share
Consolidation
The Board has been advised that the Company
is likely to benefit from a consolidation of
its share capital in terms of reduced share
price volatility and improved liquidity. This
resolution will effect a 15 for 1 consolidation of
the Company’s Ordinary share capital (“Share
Consolidation”).
If approved by shareholders at the AGM the
total number of issued Ordinary shares will
be reduced and the nominal value of the
Ordinary shares will change from 1 pence to
15 pence. All Ordinary shares in the capital
of the Company will be consolidated and
each shareholder’s percentage holding
in the total issued share capital of the
Company immediately before and after the
implementation of the Share Consolidation
will (save in respect of fractional entitlements)
remain unchanged.
The Share Consolidation is conditional on the
new Ordinary shares being admitted to the
standard listing segment of the Official List and
being admitted to trading on the London Stock
Exchange’s main market for listed securities.
The new Ordinary shares will rank equally
with one another and have the same rights,
including voting and dividend rights, as the
existing Ordinary shares.
Please refer to the Future plc: Share
Consolidation: Frequently Asked Questions (a
copy of which is available on the Company’s
website) for further information and details on
the Share Consolidation.
Special resolution 15 – Disapplication
of statutory pre-emption rights
Resolution 15 authorises the Directors in
certain circumstances to allot equity securities
for cash other than in accordance with the
statutory pre-emption rights (which require
a company to offer all allotments for cash
first to existing shareholders in proportion to
their holdings). The relevant circumstances
are either where the allotment takes place in
connection with a rights issue or the allotment
is limited to a maximum nominal amount of
£548,430, representing approximately 10%
of the nominal value of the issued ordinary
share capital of the Company as at 13
December 2016 being the latest practicable
date before publication of this notice. Unless
revoked, varied or extended, this authority
will expire at the conclusion of the next AGM
of the Company or 31 March 2018, whichever
is the earlier. The Board confirms that it will
only allot shares representing more than 5%
of the issued ordinary share capital of the
Company (excluding treasury shares) for
cash pursuant to the authority referred to in
paragraph (b) of resolution 15, where that
allotment is in connection with an acquisition
Annual Report and Accounts 2016
22
or specified capital investment (within the
meaning given in the Pre–Emption Group’s
Statement of Principles) which is announced
contemporaneously with the allotment, or
which has taken place in the preceding
six-month period and is disclosed in the
announcement of the allotment. In respect
of the authority referred to in paragraph (b)
of resolution 15, the Board also confirms
its intention to follow the provisions of the
Pre–Emption Group’s Statement of Principles
regarding cumulative usage of authorities
within a rolling three–year period where the
Principles provide that usage in excess of
7.5% of issued ordinary share capital of the
Company (excluding treasury shares) should
not take place without prior consultation with
shareholders, except in connection with an
acquisition or specified capital investment as
referred to above.
Special resolution 16 – General
meetings on 14 days’ notice
Notice periods for AGMs must give at least 21
days’ clear notice. For other general meetings,
the old minimum notice period of 14 days
was increased to 21 days by the Companies
(Shareholders’ Rights) Regulations 2009,
unless shareholders approve a shorter period
of at least 14 clear days. In the interests of
greater efficiency, resolution 16 seeks to renew
approval for notice periods of at least 14 clear
days.
30 January 2017. The return of the form of
proxy will not prevent you from attending the
Annual General Meeting and voting in person
if you wish to do so. Further information
about the AGM, including about electronic
appointment of proxies, is provided on pages
81 to 83.
Recommendations
The Board believes that each of the resolutions
to be proposed at the Annual General Meeting
is in the best interests of the Company and
its shareholders as a whole. Accordingly, the
Directors unanimously recommend that you
vote in favour of all of the resolutions proposed,
as they intend to do in respect of their own
beneficial holdings.
Annual General Meeting procedures
and result
As in previous years, the Company will: (a)
indicate the level of proxies lodged on each
resolution together with the balance for and
against each resolution and the number of
abstentions; (b) announce the results of voting
to the London Stock Exchange; and (c) post
the results of voting on our corporate website,
www.futureplc.com.
Disclosure of information to
the auditors
Special resolutions 17 and 18 –
Amendments to the Company’s Articles
of Association
The Directors confirm that they have complied
with the relevant provisions of the 2006 Act in
preparing the financial statements.
Resolutions 17 and 18 contain proposed
changes to the articles of association of the
Company. The change proposed in resolution
17, which is in line with current market practice,
allows the Directors to donate any small
amounts (less than £3.00) arising from a Share
Consolidation to charity. The change proposed
in resolution 18, if approved by shareholders
at the AGM, will allow the Board of Directors to
pass a Board resolution to change the name
of the Company. The Directors are currently
considering a rebranding project and this
flexibility will assist with the launch of the
new brand. Details of any change of name
will be announced in accordance with the
requirements of the Listing Rules.
Action to be taken
A form of proxy is included with this Annual
Report for use in connection with the Annual
General Meeting. Please complete and return
the form in accordance with the instructions
printed on it to Computershare Investor
Services plc, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY as soon as possible and, in
any event, no later than 10:30am on Monday
In addition, each of the Directors confirms that,
so far as they are aware, there is no relevant
audit information of which the auditors are
unaware. Each Director has taken all reasonable
steps to ensure that they are aware of any
relevant audit information and that the auditors
are aware of any relevant audit information.
Statement of Directors’ responsibilities
The Directors are responsible for preparing
the Annual Report, the Directors’ remuneration
report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared the
Group and Parent company financial statements
in accordance with International Financial
Reporting Standards (IFRSs) as adopted by
the European Union. Under company law
the Directors must not approve the financial
statements unless they are satisfied that they
give a true and fair view of the state of affairs of
the Group and the Company and of the profit or
loss of the Group for that period. In preparing
these financial statements, the Directors are
required to:
:: select suitable accounting policies and then
apply them consistently;
:: make judgements and accounting estimates
that are reasonable and prudent;
:: state whether applicable IFRSs as adopted
by the European Union have been followed,
subject to any material departures disclosed
and explained in the financial statements;
:: prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of
the Company and the Group and enable them
to ensure that the financial statements and the
Directors’ remuneration report comply with
the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the
IAS Regulation. They are also responsible for
safeguarding the assets of the Company and
the Group and hence for taking reasonable
steps for the prevention and detection of fraud
and other irregularities.
The Directors are responsible for the
maintenance and integrity of the Company’s
website. Legislation in the United Kingdom
governing the preparation and dissemination of
financial statements may differ from legislation
in other jurisdictions.
Each of the Directors, whose names and
functions are listed in the Board of Directors
section on pages 17 and 18, confirm that to the
best of their knowledge:
(a) the Group financial statements, which have
been prepared in accordance with IFRSs as
adopted by the EU, give a true and fair view of
the assets, liabilities, financial position and loss
of the Group; and
(b) the Strategic report and Financial review
include a fair review of the development and
performance of the business and the position
of the Group, together with a description of the
principal risks and uncertainties that it faces.
Approved by the Board of Directors and signed
on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
13 December 2016
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Future plc
Corporate
Governance
report
Good Practice
Effective corporate governance requires not just compliance
with legislative and regulatory requirements, but also applying
the principle of good governance in the boardroom and
throughout the business.
“ The non-executives play
a critical role on the
Board in overseeing and
scrutinising the running
of the business and in
ensuring that corporate
governance remains at
the top of the agenda.”
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Quick find contents
Board of Directors
Page 23
Audit Committee
Page 26
Nomination Committee
Page 28
Remuneration Committee
Page 28
Our approach to corporate
governance
In this report, we provide detail on the role
of the Board of Directors, followed by a more
detailed focus on the work of each of the three
key committees: the Audit Committee, the
Nomination Committee and the Remuneration
Committee. Together, these give a clear
insight into how we manage corporate
governance principles and processes within
the Group.
of Disruptive Capital Investments Limited,
the Company’s second largest shareholder
following completion of the Imagine acquisition,
which has the right to appoint a Director to
the Board until such time as its shareholding
in the Company falls below 10 per cent of the
issued share capital. Consequently, the Board
does not consider that James Hanbury meets
the relevant independence criteria. Manjit
Wolstenholme is the Senior independent non-
executive Director. There is a genuine mix of
views and insights, as well as experience.
As a Standard Listed entity the Group is not
required to comply with the requirements
of the UK Corporate Governance Code
(September 2014) (the “Code”) and therefore
the Group has not adopted the Code, however
the Directors continue to comply with the spirit
of the Code.
1. Board of Directors
Membership of the Board
The Board consists of two executive and
four non-executive Directors. Biographies
of Directors and details of their other time
commitments are set out on page 18.
Board changes during the year
Mark Wood served as a non-executive Director
until 3 February 2016 as he did not seek
re-election to the Board. There were no other
Board changes during the year ended 30
September 2016, however James Hanbury was
appointed to the Board as Deputy Chairman on
21 October 2016.
Role of the non-executive Directors
The non-executives play a critical role on the
Board in overseeing and scrutinising the running
of the business and in ensuring that corporate
governance remains at the top of the agenda.
The non-executive Directors all serve three-
year terms, terminable by either party on three
months’ notice at any time and subject to their
election and annual re-election or removal by
shareholders. Although annual re-election is
not a requirement for Future, we believe it is the
best way to ensure non-executives are directly
accountable to shareholders.
All of the non-executive Directors, with the
exception of James Hanbury, are considered to
be independent by the Board. James Hanbury
was appointed to the Board as a representative
Each non-executive Director is expected to
commit 20 days a year to their role to allow for
preparation for, and attendance at, Board and
Committee meetings and keeping in touch with
the senior management team, shareholders and
other stakeholders.
Roles of the Chairman and Chief Executive
The duties and responsibilities of the Board
are effectively divided so that the Chairman
leads the Board and the Chief Executive leads
the business.
Board meetings
The Board had eight scheduled meetings during
the financial year and attendance is summarised
opposite. The Board had one unscheduled
telephone meeting to discuss and approve
aspects of the Imagine acquisition, during which
the Chairman and Chief Executive were present.
All Directors are aware of the need to be
available and there is a clear contact process.
Board meetings are sometimes preceded by
an informal dinner where Board Directors can
meet with and discuss business issues with the
Group’s senior management team.
There is a regular and comprehensive exchange
of information between meetings to ensure
Board members are well informed to participate
effectively in meetings. Directors receive a
Board pack before each meeting with minutes
of the previous meeting, all papers for agenda
items, a report from the Company Secretary
summarising any key legal issues and providing
any regulatory/legislative updates, and a
summary of share ownership and recent share
dealing. Similar packs are provided for all
Committee meetings. Between meetings, the
Board receives a monthly Board report written
by the executive Directors which summarises
financial and operational performance and
provides updates on key programmes within
the business.
Annual Report and Accounts 2016
24
There is a written schedule of matters reserved
for the Board which sets out those matters
that require Board approval including setting
strategy, approving budgets and financial
statements and setting up policies. It was
noted that 41 matters had been considered
by the Board during the year. The schedule is
available on the Company’s website at www.
futureplc.com. The Board delegates day-to-
day operational matters to the Group’s senior
management team.
Attendance
(8 scheduled meetings)
The Board has a number of nominated
advisers (as listed on page 85). During the
last financial year meetings were regularly
held with key advisers to keep them aware
of issues, and PricewaterhouseCoopers LLP
attended Audit Committee meetings and
briefings with members of the executive and
senior finance teams.
Advice and support
All Directors have access to the Company
Secretary who can advise them on issues
of governance, best practice and any other
legislative or regulatory matters.
Director
Peter Allen
Zillah Byng-Thorne
Manjit Wolstenholme
Hugo Drayton
Penny Ladkin-Brand
Mark Wood
(resigned 3 February 2016)
8 of 8
8 of 8
8 of 8
7 of 8
8 of 8
2 of 2
The appointment and removal of the Company
Secretary is a Board decision. The Directors
may also take independent professional
advice at the Company’s expense provided
that they give notice to the Chairman. No
such advice was sought during 2016. The
Company maintains appropriate insurance for
its Directors.
Board decisions are made unanimously
whenever possible, but can be made by
majority. If Directors have concerns that
cannot be resolved about the running of the
Company or a proposed action, their concerns
are recorded in the minutes. No such concerns
arose in the year. The Board regularly appoints
a sub-committee consisting of at least two
Directors in order to finalise and approve those
matters that have been approved in principle
by the Board, subject to final amendments only.
A permanent sub-committee consisting of at
least two Directors exists to approve the issue
and allotment of new shares in satisfaction of
employee share schemes.
Effective Development
Training and induction
The Board’s training and development
policy requires that all new Directors should
receive appropriate induction on joining
the Board, both in respect of the Group’s
activities as a whole and of each operating
company individually. Ongoing training
for Directors is available as appropriate
whether by presentations to the Board by
senior management or more formally where
individual Directors request training on
specific issues. The training and development
needs of each individual Director are
assessed and discussed as part of the annual
Board performance evaluation process.
Summary of performance evaluation
Objectives for 2016
Steps taken during 2016
Ensure robust strategic growth plan
Strategy in place to deliver diversified revenues
through a mix of organic growth
and acquisitions.
Succession planning
Internal talent matrix developed to identify
future successors.
i
Terms of reference for the
Audit, Remuneration and
Nomination Committees
The terms of reference for all
Committees are available on
the Company’s website at
www.futureplc.com
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25
Future plc
Corporate
Governance
report
“ Good corporate
governance is essential
for the long-term
success of the
Company.”
Peter Allen
Chairman
The Board encourages appropriate training,
and regular updates and refresher sessions
are provided by the Company Secretary and
the Company’s legal advisers and auditors,
to inform the Board or relevant Committees of
important changes in legislation, regulation
and best practice.
Performance evaluation
The Directors completed a detailed Board
performance evaluation questionnaire as
part of the annual performance evaluation
process. Each questionnaire was analysed
and the results were presented to the Board
for discussion. The Chairman discussed
the Board’s performance during the year
and any specific requirements for training
and development with each Director. During
the process the Board also compared
its performance with the results and
recommendations from the prior year’s
performance evaluations and noted that
the Board had made significant progress
in dealing with the risks and challenges
identified for the year. The Board considers
this exercise to be of significant value in
ensuring a functional and effective Board and
Committees.
The Chairman also met with the non-
executive Directors during the year without
the executive Directors, in order to assess the
performance of the executive Directors.
Going concern
The Directors are required to make an
assessment of the Group’s ability to continue
to trade as a going concern.
The Directors have given this matter due
consideration and have concluded that it is
appropriate to prepare the Group financial
statements on a going concern basis. The
three main considerations were as follows:
a) Strength of the Group’s cash flow
Following completion of the transformation
project at the end of 2015, the Group
has generated increased profit (before
exceptional items) and has seen a
corresponding increase in the cash flow
from operations during the year.
b) Continued support of the Group’s bank
Following the completion of the acquisition
of Imagine Publishing, the Group negotiated
a new £14.0m bank facility with HSBC Bank
plc which replaced the previous £5.0m
facility with Santander plc. The new facility
expires on 23 June 2021 and is subject
to certain financial covenants. The Board
engages in regular dialogue with the bank to
keep it informed of the Group’s performance
on a monthly basis.
c) Acquisition of Imagine Publishing
The acquisition of Imagine, in October 2016,
has strengthened the portfolio and will
enable the Group to benefit from economies
of scale and enhanced operational
profitability. The Imagine business is
strongly cash generative, which will allow
the Group to invest further in core growth
areas. Furthermore, the acquisition offers
significant cost synergy opportunities and
the Board is confident that the estimated
annualised cost synergies of £3.0m will be
delivered.
Financial covenant compliance
Key covenants are tested quarterly. Due to
the change of bankers no covenant testing
was required at year-end, however the Group
was in full compliance with all covenants at
all testing dates during the year. Under the
new credit facility the Group has covenants in
respect of net debt/bank EBITDAE and bank
EBITDAE/interest. Further details are included
within note 19.
Risk management and internal controls
Details of the principal risks and the Group’s
approach to managing them are set out on
pages 9 and 10. The Board conducted an
annual review of financial, operational, legal
and compliance risks with the assistance of
members of the Group legal and finance teams
and the Executive Committee to ensure that
there is a sound system of internal controls in
place and that these are sufficient to manage
(rather than eliminate) those risks effectively.
No significant failings or weaknesses were
identified as part of this review.
The internal controls that are in place to ensure
effective risk management are structured to
ensure a timely flow of information within the
Group and a clear structure of delegated
authority and responsibility. The main features
of the Group’s internal control and risk
management systems are explained further in
the following paragraphs.
Annual Report and Accounts 2016
26
The Board approves a set of control documents
which specify:
Regulatory News Service of the London Stock
Exchange including the Company’s latest
annual and interim results.
(i) various financial and treasury policies to
be followed across the Group; and
(ii) the powers of delegated authority across
the Group.
The Group finance team manages the financial
reporting processes ensuring that there is
appropriate control and review of the financial
information including the production of the
consolidated financial statements. Group
finance is supported by commercial finance
directors throughout the Group who have the
responsibility and accountability to provide
information in accordance with our policies and
procedures.
The Executive Committee holds monthly
management meetings with combined UK and
US senior management in order to provide a
proper opportunity for financial results and
other business and operational issues to be
explored and addressed in a timely manner.
Internal audit
The Audit Committee and the Board have
again during 2016 reconsidered whether there
is a need for an internal audit function. It was
concluded that, whilst an independent internal
audit department with the necessary technical
skills is not currently justified, the Committee
should continue to review this subject each
year.
Whistle-blowing policy
As part of its internal controls, the Group has
a whistle-blowing policy which is updated
regularly and published on the Group’s intranet
to encourage employees to report, in good
faith, any genuine suspicions of fraud, bribery
or malpractice in order to identify any problems
within the Group at an early stage. The policy is
also designed to ensure that any employee who
raises a genuine concern is protected.
Relations with shareholders/
communication
We aim to have an open relationship with
our shareholders, and shareholders can find
up-to-date information on Group activities on
the Company’s website at www.futureplc.com.
There is a specific Investor Relations section
on that site which includes links to all of the
Group’s public announcements made via the
All Directors are available to meet shareholders
at the AGM or on request by contacting the
Chairman or Company Secretary. Because
more than 80% of the Company’s shares
are held by major institutions, the executive
Directors hold a series of meetings presenting
the interim and annual results to these
institutions in order to update them on the
progress of the business and gauge their
views following the analyst presentations of the
results.
In order that all Directors are aware of the views
of shareholders, Board packs include a note
of views as expressed by shareholders during
meetings held with Directors or as reported
to Directors through the Company’s brokers,
together with copies of analysts’ notes, press
articles and other relevant information.
2. Audit Committee
Member
Manjit Wolstenholme1
(Chairman)
Peter Allen
Attendance
(3 scheduled meetings)
3 of 3
3 of 3
1. The Chairman of the Committee, Manjit Wolstenholme, has
recent and relevant financial experience.
The Audit Committee’s primary objective is
to provide effective financial governance and
monitor the integrity of the Group’s financial
statements and internal controls.
The Audit Committee meets before the interim
and annual results announcements and
reviews the relevant financial results with the
executive management team and the external
auditors. The Audit Committee also meets
separately for the purposes of planning the
audit process, monitoring its effectiveness,
reviewing the Group’s relationship with the
external auditors and undertaking a detailed
review of the Group’s internal controls and risk
management systems. It considered whether
the 2016 Annual Report was fair, balanced and
understandable and advised the
Board accordingly.
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Re-election of Directors
We are not required to offer
all our Directors up for annual
election, however, all our
Directors take individual and
collective responsibility for
the decisions that the Board
makes and are happy to let
shareholders judge their
performance by standing for
annual re-election. We have
followed this practice since the
AGM in 2005.
27
Future plc
Corporate
Governance
report
“ The Audit Committee’s
primary objective is
to provide effective
financial governance.”
Manjit Wolstenholme
Chairman of the
Audit Committee
The Audit Committee carries out the functions
required by rule 7.1.3 of the Disclosure and
Transparency Rules.
Significant financial reporting judgements
The Audit Committee discussed the key risks
and judgements with management and the
auditors as part of the audit planning process in
July 2016. At the same time they discussed and
agreed upon appropriate levels of materiality
in the context of the anticipated results for the
year. As a result of those discussions an audit
plan was agreed and subsequently executed.
The significant judgements considered in
relation to the financial statements for the
year ended 30 September 2016, which were
originally identified and discussed as part of
the planning process referred to above, are set
out below and were addressed as follows:
1. Revenue recognition
The area of revenue which carries the most
judgement is newstrade revenue (both
domestic and export). Management has
carefully considered the estimates of returns
made in respect of newstrade revenues and
the recognition of revenues on the larger
advertising contracts and have concluded
that they are appropriate. The estimates and
judgements made have been discussed with
the auditors and the Audit Committee.
2. Carrying value of goodwill and long
lived assets.
IAS 36 requires an impairment test to be
performed for goodwill on an annual basis or
where there is an indication of impairment.
Management prepared a detailed
impairment assessment of the UK business
at 30 September 2016 and concluded that an
impairment of £13.0m was required.
The key assumptions made in that
assessment were as follows:
- Long term growth rate to perpetuity 2.0%
- EBITDAE margins assumed 2.4% to 3.7%
- Discount rate (post-tax) 8.2%
The Audit Committee agreed with
management’s conclusion that an
impairment of £13.0m was required in
order to reflect the value in use of the UK
business, reflecting a shift in the underlying
profitability and cash flows of the Group and
the continued decline of print.
3. Going concern
The Audit Committee has considered the
going concern assumption as set out on
page 25. Management prepared detailed
assessments of going concern that set out
all relevant considerations. These were
reviewed in depth by the Audit Committee,
who confirmed that these assessments
continued to support the position of the
Group as a going concern.
4. Exceptional items
Due to the restructuring of the business into
two divisions and continued transformational
activity there are a number of items
considered exceptional in nature. The
Audit Committee considered the items
and concluded that these items should be
presented as exceptional.
5. Tax
The Audit Committee has reviewed the tax
position of the Group with management and
the auditors. During the year, the Committee
has been actively involved in considering
any areas of judgement relating to tax
positions in the UK, US and Australia.
Audit fees
The Audit Committee has reviewed
the remuneration received by
PricewaterhouseCoopers LLP for non-audit
work conducted during the financial year. The
fees for non-audit work were higher than the
audit fee due to work performed in a reporting
accountant capacity, taxation services and
due diligence in respect of the Imagine
acquisition. For further details regarding fees
paid, see note 3 to the financial statements on
page 55.
Auditor independence
The Audit Committee monitors the Company’s
safeguards against compromising the
objectivity and independence of the external
auditors by performing an annual review of
non-audit services provided to the Group and
their cost, reviewing whether the auditors
believe there are any relationships that may
affect their independence and obtaining
written confirmation from the auditors that
they are independent. The Committee has
reviewed the Group’s audit independence
policy and is comfortable that it aligns to the
Financial Reporting Council’s latest guidance.
Annual Report and Accounts 2016
28
For the financial year ended 30 September
2016, the Audit Committee has conducted
its review of the auditors’ independence
and concluded that no conflict of interest
exists between PricewaterhouseCoopers
LLP audit and non-audit work, and that their
involvement in non-audit matters, which (as
noted opposite) mainly comprised advice
in respect of the Imagine acquisition and
taxation, was the most effective way of
conducting the Group’s business during the
year.
Auditor appointment policy
The Audit Committee has reviewed its policy
for appointing auditors and awarding
non-audit work.
The Group has used PricewaterhouseCoopers
LLP for due diligence and reporting
accountant work on the acquisition of
Imagine. The Audit Committee considered
whether this constituted a threat to
independence and confirmed that it was
comfortable that there were appropriate
safeguards in place. Given the recent
changes in the Financial Reporting Council’s
audit independence guidelines the Committee
has confirmed that, from 1 October 2016, it
will no longer use PricewaterhouseCoopers
LLP for any tax compliance or advisory
services as long as they are the Group’s
auditor.
On the recommendation of the Audit
Committee, the Board has decided that it is in
the best interests of the Company to
put a resolution to shareholders that
PricewaterhouseCoopers LLP, who have been
the Company’s external auditor for
17 years, be reappointed as auditors for the
forthcoming year. The resolution to appoint
PricewaterhouseCoopers LLP will propose
that they hold office until the conclusion of the
next Annual General Meeting at which
accounts are laid before the Company, at a
level of remuneration to be determined by the
Directors.
3. Nomination Committee
Member
Peter Allen (Chairman)
Manjit Wolstenholme
Hugo Drayton
Attendance
(1 scheduled meeting)
1 of 1
1 of 1
0 of 1
Following discussion of the skills and
contribution of each Director, the Nomination
Committee supports the proposed re-election
of all Directors standing for re-election at the
2017 AGM and the election of James Hanbury
to confirm his appointment to the Board.
In line with best practice, each Committee
member seeking re-election was excluded
from approving the proposal for their re-
election.
4. Remuneration Committee
Attendance
(3 scheduled meetings)
i
Member
Manjit Wolstenholme
(Chairman)
Peter Allen
Hugo Drayton
3 of 3
3 of 3
2 of 3
There were three scheduled meetings during
the year.
The Remuneration Committee determines the
remuneration packages of executive Directors,
including performance-related awards and
share-based incentives, remuneration policy,
which includes the individual bonus targets
for executive Directors and performance
criteria attached to share-based incentives,
the remuneration of the Chairman,
recommendations of remuneration levels for
non-executive Directors and senior management
in line with industry remuneration packages and
the implementation of any new share-based
incentive scheme proposed to be implemented.
The Directors’ remuneration report is set out on
pages 29 to 39.
Approved by the Board of Directors and signed
on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
13 December 2016
Investor Relations
For copies of all of the Group’s
public announcements made
via the RNS and copies of
the Committees’ terms of
reference visit
www.futureplc.com/invest-in-future
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29
Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Annual statement
The remuneration philosophy is designed to ensure that reward for
performance is competitive and appropriate for the future development
of, and results delivered by, the Group. The remuneration policy
seeks to align remuneration with shareholder interests based on the
achievement of strategic objectives and financial performance.
Dear shareholders,
I am pleased to present the Directors’ remuneration report for the financial year ended 30
September 2016. This report has been prepared on behalf of the Future plc Board by the
Remuneration Committee, and has been approved by the Future plc Board.
As required under the Large and Medium-sized Companies and Groups (Accounts
and Reports) (Amendment) Regulations 2013 (Sl 2013/1981) Directors’ Remuneration
Regulations, this report is split into three sections: this letter, an Implementation report,
setting out details of Directors’ remuneration for the financial year ended 30 September
2016, and a Remuneration policy report, setting out the Group’s forward looking
remuneration policy (“Policy”) for executive and non-executive Directors for the three-year
period from 1 October 2016.
The key challenges faced by the Remuneration Committee during the year were
determining and setting incentives for the new additions to the senior management team
which has evolved over the past year, ensuring alignment with the executive Directors, and
setting appropriate performance targets for short-term and long-term incentives for both
executive Directors and senior management during this period of significant change for the
Group.
The Policy will be subject to a binding shareholder vote at the Company’s AGM on 1
February 2017 and will take effect immediately thereafter.
During the year to 30 September 2016, the Committee has considered the level and make-
up of the executive Directors’ remuneration packages, including the grant of share-based
incentive awards and the basis of performance-related bonuses, details of which are set
out in the Implementation report and the Policy. The Committee, in particular, focused its
efforts at the beginning of the financial year on updating the performance targets of the
Performance Share Plan (PSP) to better align to the interests of shareholders, as well as
updating the rules of the Deferred Annual Bonus Scheme (DABS). The Committee has
commenced consultations with major shareholders in relation to certain changes to the
PSP, including: (i) increasing the maximum value of an award as a percentage of salary to
400% in relation to any employee share incentive schemes on an exceptional basis, and (ii)
the level of dilution for existing shareholders.
The remuneration philosophy is designed to ensure that reward for performance is
competitive and appropriate for the transformational phase that the Group has undergone
and to attract and retain the talent required to deliver the growth ambitions of the Group.
The remuneration policy seeks to align remuneration with shareholder interests based
on the achievement of strategic objectives and financial performance. As a result,
remuneration levels are designed to reflect the relative performance of the business for the
relevant period.
We believe that the Policy will incentivise the executive team to deliver growth in the short,
medium and long term and hope to receive your continued support at the Company’s 2017
AGM.
Quick find contents
Implementation report
Page 30
Remuneration policy
report
Page 36
Manjit Wolstenholme
13 December 2016
Annual Report and Accounts 2016
30
Implementation report
The following report provides details of Directors’ remuneration
for the year ended 30 September 2016. In setting remuneration
for the year, the Committee applied the principles set out in the
Remuneration policy report.
Remuneration Committee
Three independent non-executive Directors
served on the Remuneration Committee during
the year to 30 September 2016: Manjit
Wolstenholme chairs the Committee and both
Peter Allen and Hugo Drayton served
throughout the year. Penny Ladkin-Brand acted
as Secretary to the Committee throughout the
year.
It is the Board that is responsible for
determining the remuneration of non-executive
Directors following the recommendation of the
Committee as set out on page 32.
No Director is involved in deciding his or her
own remuneration. As explained on page 24,
the terms of reference of the Remuneration
Committee, reviewed annually, are available on
the Company’s website.
provided that the total potential maximum
bonus payable for any year shall not exceed
150% of salary and the bonus shall only be
payable for over performance. The potential
maximum performance-related bonus payable
under the Annual Bonus Scheme during 2016
was 120% of basic annual salary to Zillah
Byng-Thorne as Chief Executive and 50% of
basic annual salary to Penny Ladkin-Brand as
Chief Financial Officer.
The Committee is responsible for determining
the basic annual salaries, incentive
arrangements and terms of employment
of executive Directors, for making
recommendations regarding non-executive
Directors’ fees, the level and make-up of the
remuneration packages of senior managers,
including bonus schemes and share-based
incentives, and ensuring that remuneration
policies and practices do not encourage
excessive risk-taking. The Committee is also
responsible for fixing the Chairman’s
remuneration and approving the terms of any
new share-based incentive scheme for any
employees of the Group, subject, where
appropriate, to shareholder approval.
Performance-related bonus (Annual
Bonus Scheme)
Operation of the scheme
The performance-related bonus is subject to
both profit related and subjective individual
performance criteria, with 20% of the
potential maximum performance-related
bonus payable being subject to subjective
individual performance criteria determined by
the Committee, although the Committee has
discretion to vary the potential total maximum
bonus, the weighting of the variable elements
and the stretch of the targets in order to
incentivise or recruit executive Directors,
Payment of any performance-related bonus
under the Annual Bonus Scheme is usually
made in December, following announcement
of the preliminary results and conclusion of the
audit in respect of the preceding financial year.
Payment of any performance-related bonus
is also subject to the executive Director being
in the Company’s employment at the time of
payment of such performance-related bonus
and not having given or received notice of
termination of employment and certain other
events not having occurred.
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Single Total Figure of Remuneration (audited)
The remuneration of the Directors is set out below:
Salary/fees
Benefits1
Annual bonus2
PSP2
Pension
Total
2016
£’000
2015
£’000
2016
£’000
2015
£’000
2016
£’000
2015
£’000
2016
£’000
2015
£’000
2016
£’000
2015
£’000
2016
£’000
2015
£’000
Executive Directors in office as
at 30 September 2016
Zillah Byng-Thorne3
Penny Ladkin-Brand
Total for executive Directors
Non-executive Directors in office as
at 30 September 2016
Peter Allen
Manjit Wolstenholme
Hugo Drayton
Total for non-executive Directors
Former non-executive Director
Mark Wood
Total
300
178
478
101
50
40
191
296
29
325
120
49
33
202
13
20
10
-
10
10
-
10
-
-
-
-
-
-
-
-
-
-
682
547
10
10
-
-
-
-
-
-
-
-
-
128
15
143
-
-
-
-
-
143
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37
8
45
37
-
37
-
-
-
-
-
-
-
-
-
-
347
186
533
101
50
40
191
471
44
515
120
49
33
202
13
20
45
37
737
737
Notes:
1. Benefits for executive Directors comprise principally car allowance, private health insurance and life assurance. There were no taxable expenses paid to any Director in the year.
2. Details relating to the Annual Bonus Scheme and the Performance Share Plan (“PSP”) are set out on pages 30 to 32.
3. With effect from 1 July 2016, Zillah Byng-Thorne received a cash supplement in lieu of pension contribution. This additional cash payment is not included in determining her entitlement to any bonus,
share-based incentive or pension entitlement.
4. James Hanbury was appointed to the Board on 21 October 2016 and consequently no remuneration is included in the table above.
31
Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Performance targets
The profit criteria for payment of the
performance-related bonus set for 2016 was
in a range from 90% to 110% target EBITDAE,
as follows:
:: If EBITDAE is more than 10% below target
EBITDAE, no profit-related bonus will be
payable.
:: If EBITDAE is 10% below target EBITDAE,
20% of the potential maximum of the profit-
related bonus will be payable in the event that
the Committee determines, in its absolute
discretion, that such payment is merited by the
individual.
:: If EBITDAE is 5% below target EBITDAE,
35% of the potential maximum of the profit-
related bonus will be payable in the event that
the Committee determines, in its absolute
discretion, that such payment is merited by the
individual.
:: If EBITDAE target is achieved, 50% of the
potential maximum of the profit-related bonus
will be payable.
:: If EBITDAE target is exceeded by 5%,
75% of the potential maximum of the profit-
related bonus will be payable in the event that
the Committee determines, in its absolute
discretion, that such payment is merited by the
individual.
:: If EBITDAE target is exceeded by 10% or
more, 100% of the potential maximum of the
profit-related bonus will be payable.
:: If EBITDAE falls in between any of the above
levels, a percentage of the potential maximum
profit-related bonus will be payable, on a pro
rata basis to the levels expressed above, in
the event that the Committee determines, in
its absolute discretion, that such payment is
merited by the individual.
The EBITDAE target is not disclosed as this
is believed to be a commercially sensitive
number but it is set by the Committee to be
challenging and is set by reference to the
budget for the relevant financial year. The
individual performance criteria set by the
Committee were designed to reward the
successful implementation of specific elements
of the Group’s financial and operational
strategy.
Payment of any part of the individual
performance-related bonus is subject to the
90% EBITDAE floor being achieved.
Actual performance against targets
for the year
Based on EBITDAE performance achieved for
2016, and on individual performance measures,
the Chief Executive was eligible for a bonus of
60% of salary and the Chief Financial Officer
was eligible for a bonus of 25% of salary. These
awards were waived by the executive Directors
in lieu of a transaction bonus paid following
the successful completion of the acquisition of
Imagine Publishing in October 2016.
2005 Performance Share Plan (PSP)
Operation of the scheme
The PSP has been in operation since 2005
and is designed to reward performance over a
three-year period in the context of performance
targets which are designed to align the
interests of the executive Directors with those
of the shareholders. Those targets are set out
below and opposite. The maximum amount
of an award in any financial year is normally
100% of basic annual salary. However, in
exceptional circumstances, where it is felt
necessary to provide further incentive to the
executive Directors, awards of up to 200%
of basic annual salary may be approved.
Awards under this scheme are granted to
executive Directors and key senior executive
management. The PSP expires in January
2025, following its renewal in January 2015 for
a further 10 years.
Subject to the executive Directors remaining
in employment at the vesting date, awards
granted shall vest subject to the following
performance criteria having been met at the
end of the relevant three-year measurement
period.
Performance criteria in respect of awards
granted between 30 November 2015 and
30 September 2016
Earnings Per Share (50% of award)
Net Cash Flow (50% of award)
Net Cash Flow for the last financial year of the
performance period of at least £(0.25)m for this
part of the award to vest (at this level the vested
amount is 25% of this part of the award), with full
vesting at £0.75m and on a straight-line basis
between these amounts.
Performance criteria in respect of awards
granted between 4 February 2015 and 29
November 2015
In February 2016, the Remuneration
Committee exercised its discretion to change
the performance criteria in respect of 50% of
awards granted between 4 February 2015 and
29 November 2015 from TSR performance
to net cash flow in order to better align the
interests of participants and shareholders.
There was no change to the EPS performance
criteria in respect of the remaining 50% of
these awards. The revised performance criteria
are as follows:
Earnings Per Share (50% of award)
EPS for the last financial year of the
performance period of at least 1.0p for this part
of the award to vest (at this level the vested
amount is 25% of this part of the award), with
full vesting at 1.4p and on a straight-line basis
between these amounts.
Net Cash Flow (50% of award)
Net Cash Flow for the last financial year of the
performance period of at least £0.25m for this
part of the award to vest (at this level the vested
amount is 25% of this part of the award), with full
vesting at £1.25m and on a straight-line basis
between these amounts.
Performance criteria in respect of awards
granted prior to 4 February 2015
Earnings Per Share (50% of award)
Growth in EPS over the three years of at least
annual Retail Price Index (RPI) + 3% for this
part of the award to vest (at this level the vested
amount is zero) with full vesting at annual RPI +
8% and on a straight-line basis between the two.
EPS for the last financial year of the
performance period of at least 1.2p for this part
of the award to vest (at this level the vested
amount is 25% of this part of the award), with
full vesting at 1.5p and on a straight-line basis
between these amounts.
Total Shareholder Return (50% of award)
The Company’s TSR performance is compared
against a basket of comparator companies
comprising at all times a minimum of 15
companies.
Annual Report and Accounts 2016
32
If the Company’s TSR performance places it
below median ranking, none of the part of the
award dependent on TSR performance will
vest. If the TSR performance places it in median
ranking, 25% of this part of the award will vest
through to 100% if the Company is ranked in the
upper quintile, i.e. top 20%. Between median
and upper quintile, this part of the award will vest
on a pro rata straight-line basis.
In respect of the TSR performance for awards
granted from 16 December 2013 to 3 February
2015, the Company’s TSR performance was
measured against the following basket of
comparator companies:
Bloomsbury Publishing
Centaur Media
Ebiquity
Haynes Publishing
Huntsworth
ITE Group
Johnston Press
M&C Saatchi
Pearson
Quarto Group
STV Group
Ten Alps
Trinity Mirror
Wilmington Group
youGov
period was -33% for the total Group and
TSR performance placed the Company 13th
within the group of 16 comparator companies.
Consequently, the PSP award granted to Zillah
Byng-Thorne and the remainder of the PSP
award granted to Mark Wood on 16 December
2013 will lapse in their entirety on 16 December
2016.
Performance against targets in respect of
the 16 July 2014 award
The movement in EPS for the relevant
measurement period was -33% for the
total Group and TSR performance placed
the Company 13th within the group of 16
comparator companies. Consequently, the PSP
award granted to Zillah Byng-Thorne on 16 July
2014 will lapse in its entirety on 16 July 2017.
Non-executive Directors’ remuneration
Non-executive Directors do not participate
in any of the Company’s share incentive
arrangements, nor do they receive any benefits.
Their fees are reviewed every three years. The
Chairman’s fees are set by the Committee, and
those for the non-executive Directors are set by
the Board as a whole. The Chairman’s fee was
reduced from £120,000 to £95,000 with effect
from 1 January 2016.
Performance against targets in respect of
the 17 December 2012 awards
Pension entitlements (audited)
The Committee exercised its discretion to
waive the requirement for Mark Wood to remain
employed within the Group at the vesting date
and to allow the award to vest on a pro rata
basis in December 2015, subject to the relevant
performance criteria having been met. The
movement in EPS for the relevant measurement
period was -82% for the total Group and
TSR performance placed the Company 16th
within the group of 18 comparator companies.
Consequently, the remainder of the PSP award
granted to Mark Wood on 17 December 2012
lapsed in its entirety on 17 December 2015.
The only element of remuneration that is
pensionable is basic annual salary, excluding
performance-related bonuses and benefits in
kind. Employer’s pension contributions are
payable for the executive Directors at a rate of
12.5% for the Chief Executive and up to 6% for
the Chief Financial Officer. With effect from 1
July 2016, Zillah Byng-Thorne receives her
entitlement to employer’s pension contributions
in cash as a salary supplement. This additional
cash payment is not included in determining
her entitlement to any performance-related
bonus, share-based incentive or pension.
Performance against targets in respect of
the 16 December 2013 awards
The Committee exercised its discretion to
waive the requirement for Mark Wood to remain
employed within the Group at the vesting date
and to allow the award to vest on a pro rata
basis in December 2016, subject to the relevant
performance criteria having been met. The
movement in EPS for the relevant measurement
The liability of the Company in respect of the
executive Directors’ pensions amounts to £744
as at 30 September 2016. Normal retirement
age under the scheme rules is 75.
Payments to past Directors (audited)
No payments were made to any past
Directors during the financial year ended 30
September 2016.
Payments for loss of office (audited)
During the financial year to 30 September 2016
no payments in respect of loss of office were
made.
Statement of Directors’ shareholding
and share interests (audited)
The Company has a policy on share ownership
by executive Directors which requires that any
such Director should accumulate a holding in
shares over a five year period from appointment
where the value of those shares represents at
least one times salary.
In respect of Zillah Byng-Thorne, the relevant
five year period commenced on 1 November
2013 and will end on 31 October 2018. As
at 13 December 2016, Zillah Byng-Thorne
has a holding of 1,091,369 shares, of which
191,738 were purchased at a price of 7.75p
on 16 July 2014, 185,018 were purchased at a
price of 7.99p on 21 November 2014, 44,613
were purchased at a price of 11.13p on 18
May 2015 and 670,000 were purchased at a
price of 10.00p on 27 November 2015 then on
4 December 2015 the 670,000 shares were
transferred to Zillah Byng-Thorne’s personal
SIPP by way of an on-market sale and purchase
at a price of 11.00p.
In respect of Penny Ladkin-Brand, the period
commenced on 3 August 2015 and will end
on 2 August 2020. As at 13 December 2016,
Penny Ladkin-Brand has a holding of 391,146
shares, of which 150,000 were purchased at a
price of 10.00p on 27 November 2015, 121,815
shares were purchased at a price of 12.21p on
2 December 2016 and 119,331 shares were
purchased by her husband at a price of 12.61p
on 5 December 2016.
Details of Directors’ shareholdings are set out
on page 20 of the Directors’ report.
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33
Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Company performance
The performance graph opposite shows the
TSR on a holding of shares in the Company
compared with the FTSE All Share Media
Index (UK companies).
The following is a list of the companies
currently included in the FTSE All Share Media
Index (UK companies):
4 Imprint Group
Ascential
Auto Trader Group
Bloomsbury Publishing
Entertainment One (DI)
Euromoney Instl. Investor
Gocompare.com
Informa
ITE Group
ITV
Moneysupermarket.com GP
Share incentives awarded during the year (audited)
PSP Grants
Pearson
RELX
Rightmove
STV Group
Sky
Tarsus Group
Trinity Mirror
UBM
WPP
Zoopla Property Group
Date of award
% salary
Value (£)
% vesting at
min performance
No. shares
awarded
Zillah Byng-Thorne
30 November 2015
91%
£272,000
25%
2,500,000
Penny Ladkin-Brand
30 November 2015
78%
£136,000
25%
1,250,000
Performance period
1 October 2015 – 30
September 2018
1 October 2015 – 30
September 2018
Notes:
1. The value of the PSP awards is calculated using the share price at the date of grant, which was 10.88p per share.
2. The PSP awards are exercisable at nil value.
3. The performance conditions attached to the grant of the above awards are the same as set out on page 31.
4. The percentage vesting at minimum performance represents the 25% vesting of the Net Cash Flow element and the 25% vesting of the EPS element of the award.
Directors’ interests in share schemes (audited)
Details of options and other share incentives held by executive Directors and movements during the year are set out below, including details of the
awards made during the year.
Price
paid
for
grant
Earliest
exercise date
Expiry
date
Exercise
price per
share
(p)
Balance at
1 Oct
2015
Granted
during the
year3
Vested
during the
year
Lapsed
unexercised
during
the year
Balance at
30 Sept
2016
PSP1
Mark Wood 4
Date of grant
17 Dec 2012
16 Dec 2013
Zillah Byng-Thorne
16 Dec 2013
16 Jul 2014
30 Nov 2015
Penny Ladkin-Brand
3 Aug 2015
30 Nov 2015
Nil
Nil
Nil
Nil
Nil
Nil
Nil
17 Dec 2015
16 Dec 2016
16 Dec 2016
16 July 2017
30 Nov 2018
3 Aug 2018
30 Nov 2018
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
Nil
Nil
Nil
Nil
678,159
156,022
2,000,000
2,500,000
-
-
-
-
-
2,500,000
1,647,834
-
-
1,250,000
Sharesave2
Zillah Byng-Thorne
13 Dec 2013
Nil
1 Feb 2017
1 Aug 2017
13.0
69,230
-
-
-
-
-
-
-
-
-
(678,159)
-
-
-
-
-
-
-
-
156,022
2,000,000
2,500,000
2,500,000
1,647,834
1,250,000
69,230
Notes:
1. The performance criteria which apply to awards granted under the PSP scheme are set out on pages 31 and 32.
2. Details of the Sharesave scheme, which has no performance conditions, are set out in note 24 on page 74.
3. The market price at the time of grant of the PSP award on 30 November 15 was 10.88p.
4. Following the termination of Mark Wood’s appointment as Chief Executive with effect from 1 April 2014, the Committee exercised its discretion to waive the requirement for Mark Wood to remain in
employment on the vesting date of the PSP awards granted to him during his appointment as Chief Executive and to allow a portion of the PSP awards granted to him on 18 January 2012, 17
December 2012 and 16 December 2013 to vest as normal on 18 January 2015, 17 December 2015 and 16 December 2016 respectively on a pro rata basis (subject to the relevant performance criteria
being met). The remaining 2,564,325 options granted on 18 January 2012 lapsed on 18 January 2015 and the remaining 678,159 options granted on 17 December 2012 lapsed on 17 December 2015
since the relevant performance criteria had not been met. The 156,022 options granted on 16 December 2013 will lapse on 16 December 2016, since the relevant performance criteria have not
been met.
Annual Report and Accounts 2016
34
Graph: Past eight financial years ended 30 September 2016
Total Shareholder Return: Rebased to Future plc as of 1 October 2008
400
350
300
250
200
150
100
50
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2008
2009
2010
2011
2012
2013
2014
2015
2016
Future (rebased to 100)
FTSE All-Share Media Index (UK companies) (rebased to 100)
Chief Executive pay during last eight years
year
2009 (Stevie Spring)
2010 (Stevie Spring)
2011 (Stevie Spring)
2012 (Mark Wood)
2013 (Mark Wood)
2014 (Zillah Byng-Thorne)
2015 (Zillah Byng-Thorne)
2016 (Zillah Byng-Thorne)
Chief Executive
single figure
£’000
Bonus paid as %
of maximum
Share based incentives
vesting as % of maximum
£423
£746
£546
£430
£331
£3066
£471
£347
0%
40%
0%
50%
0%
20%
36%
0%
100%1
48%2
100%3
0%4
0%4
0%5
0%5
0%5
Notes:
1. This represents shares which were granted as part of an exceptional one-off award intended to aid recruitment and retention. The award was not subject to performance criteria.
2. This represents the first tranche of a deferred bonus share award which was not subject to performance criteria and the PSP award granted in December 2006 which partially vested in December 2009
following the partial satisfaction of TSR performance criteria.
3. This represents the second tranche of a deferred bonus share award which was not subject to performance criteria. The PSP award granted in December 2007 lapsed in December 2010.
4. The first awards granted to Mark Wood under the PSP were granted in January 2012 and lapsed on 18 January 2015, since the relevant performance criteria were not met.
5. The first awards granted to Zillah Byng-Thorne under the PSP were granted in December 2013 and will lapse on 16 December 2016, since the relevant performance criteria were not met.
6. The single figure for Zillah Byng-Thorne for 2014 includes five months of her Chief Financial Officer salary and six months of her salary as Chief Executive.
Percentage change in remuneration of Chief Executive
Salary
Benefits (inc pension)
Bonus
2016
2015
% change
2016
2015
% change
2016
2015
% change
Chief Executive
All employees
£300,000
£300,000
-
£47,000
£47,000
-
£38,491
£39,621
-2.9%
£3,022
£2,931
+3.1%
-
-
£127,980
£285
-100%
-100%
35
Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Relative importance of spend on pay
The relative importance of the spend on pay for the business is shown in the table below.
Group pay
Group operating costs excluding Group pay & exceptional costs
Capital expenditure
Dividends
2016
£m
24.0
34.3
1.9
-
2015
£m
26.6
33.3
2.0
-
The table shows the actual expenditure of the Group, and change between the current and previous years, on remuneration paid to all employees
compared to the total operating costs for the Group excluding exceptional costs and remuneration, and investment in capital expenditure and dividends.
Shareholder voting
At the last Annual General Meeting, votes on the Directors’ remuneration report for the year ended 30 September 2015 were cast as follows:
Approval of Directors’ remuneration report for 2015
295,309,192
99.93
28,498
0.01
177,997
0.06
For
%
Discretionary
%
Against
%
Abstain
2,200
Implementation of remuneration policy in the year to 30 September 2017
The Remuneration Committee proposes the following changes to the implementaton of the remuneration policy for 2017, as outlined in the
Remuneration policy report on pages 36 to 39, subject to shareholder approval at the Company’s AGM on 1 February 2017.
Element
Operation of element
Max. potential value
Base salary
No change
Zillah Byng-Thorne’s salary as Chief Executive
increased to £350,000 with effect from 21
October 2016. Penny Ladkin-Brand’s salary as
Chief Financial Officer increased to £250,000
with effect from 1 October 2016.
Benefits
No change
No change
Annual Bonus
No change
No change1
PSP
No change
The Committee recommends an increase
in the maximum value of a one-off award in
exceptional circumstances from 200% to 400%
of basic annual salary.
Performance,
weighting & time
No change
No change
A ‘profit pool’ style bonus is proposed for 2017,
with a maximum of 45% of salary for both the
Chief Executive and the Chief Financial Officer
subject to the achievement of certain financial
targets.
The Committee intends to amend the
performance targets for awards made in 2017,
in consultation with major shareholders. The
Committee proposes retaining the weighting but
changing the performance metrics to 50% based
on profit performance and 50% based on share
price performance.
Pension
No change
No change
No change
Notes:
1. Performance targets for the Annual Bonus for 2017 are not disclosed due to their commercial sensitivity.
Advisers to the Remuneration Committee
Ernst and Young LLP was appointed during 2016 by the HR director, with the consent of the Committee, to advise the Committee in respect of various
share incentive issues.
Compliance with the UK Corporate Governance Code
The Board has complied fully with the provisions of Section D of the UK Corporate Governance Code in relation to Directors’ remuneration policy and
practice, and has followed Schedule A to the Code in relation to performance-related remuneration policy. Further information regarding the Company’s
approach to corporate governance is set out on pages 23 to 28.
Annual Report and Accounts 2016
36
Remuneration policy report
The policy set out below is intended to apply for all financial years
beginning on or after 1 October 2016 to 30 September 2019, subject
to shareholder approval at the Company’s Annual General Meeting on
1 February 2017 and shall take effect following the conclusion of the
2017 AGM.
The Committee considers the remuneration
policy annually to ensure that it remains
aligned with the Group’s business needs
and is appropriately positioned relative to
the market. However, there is no intention
to put the policy forward to shareholders for
approval more frequently than every three
years unless an amendment is proposed.
Approach to recruitment
remuneration for executive and
non-executive Directors
The Committee’s objective at the time of
an appointment to a new role is to weight
executive Directors’ remuneration packages
towards performance-related pay, with
performance-related targets linked to financial
performance of the Group against budget and
the Group’s performance against business
objectives and its stated strategy.
Any new executive Director’s remuneration
package would include the same elements as
those of the existing executive Directors, as
shown in the next column.
Element of remuneration
Maximum % of salary
Salary
Benefits
Pension
Not higher than
market value
Dependent on
circumstances
12.5% of basic
annual salary
Performance-
related bonus2
Share incentive
schemes1
150%
100%
Notes:
1. PSP scheme rules provide for awards of up to 100% of basic
annual salary, save in exceptional circumstances where the
Committee is allowed discretion to award up to 400% of basic
annual salary.
2. The Committee retains discretion to make one-off sign on
payments or to grant awards under the share-based incentive
scheme of up to 200% of basic annual salary to the extent
that it is necessary to recruit a high calibre individual, or to
compensate the individual for loss of bonus or other incentive
awards granted by the previous employer.
3. In the event of an internal promotion, any commitments made
by the Company to an internal candidate shall be honoured
even if it would otherwise be inconsistent with the policy.
4. If the Director is required to relocate then the policy is to
provide reasonable relocation, travel and subsistence
payments at the discretion of the Committee.
In determining the level and make-up of executive
Directors’ remuneration, the Committee carefully
considers the following issues:
(a) Remuneration packages offered to executive
Directors should be competitive with those
available for comparable roles in companies
operating in similar markets and on a similar
scale. They should be sufficiently desirable so
as to attract, retain and motivate high calibre
Directors to perform at the highest levels, whilst
at the same time ensuring that recruitment and
remuneration expenditure is not excessive and
does not encourage excessive risk-taking.
(b) The interests of executive Directors should be
aligned with those of shareholders by ensuring
that a significant proportion of remuneration is
linked to Group performance.
(c) Remuneration packages and employment
conditions of executive Directors are
considered in conjunction with both those of
key senior managers (keeping succession
planning in mind) and all employees in
the Group in order to achieve a consistent
remuneration policy across the Group. The
Committee has given particular attention to
ensuring that the remuneration packages of
the key senior managers recruited during the
year are aligned with those of the executive
Directors.
(d) Bonus potential and share scheme awards that
are capped at a percentage of salary are
restricted if salaries are low.
(e) Subjective criteria are applied to an element
of the performance-related bonus of the Chief
Executive and Chief Financial Officer (with a
financial underpin) in order to ensure that the
Committee retains discretion and to
ensure no performance- related bonus is
unjustly received.
Service contracts and payments for loss of office
Executive Directors
Contract provision
Notice periods
Compensation for loss of office
Treatment of share incentives
on termination
Change of control
Non-executive Directors
Notice periods
Policy
Details
Director or Company shall be entitled to serve
6 months’ notice (in Penny Ladkin-Brand’s case)
or 12 months’ notice (in Zillah Byng-Thorne’s case).
A Director may be required to work during their
notice period or be put on garden leave.
Director shall be entitled to receive 6 months’ salary
(in Penny Ladkin-Brand’s case) or 12 months’
salary (in Zillah Byng-Thorne’s case) and benefits
during any unexpired notice period.
While service agreements allow for monthly
payments during notice period which are subject
to mitigation, the Committee retains discretion to
make payments in such manner as is deemed
appropriate, particularly by reference to the
circumstances of the loss of office.
Incentives will lapse or vest at the Committee’s
discretion, subject to performance criteria being
met and the rules of the scheme.
The Committee has discretion to allow awards
to vest partially or in full on termination, or to
preserve awards.
In the event of a change of control, a Director
may terminate their appointment on serving no
less than 1 month’s notice.
In the event of termination by either the
Director or the Company, the Director will be
entitled to receive 6 months’ salary.
3 months’ notice from either Company
or Director.
Appointed for a three year term, subject to
annual re-election by shareholders at the
Company’s AGM.
Copies of Directors’ service agreements and letters of appointment are available for inspection on request at the Company’s registered office.
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37
Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Remuneration table
Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Changes for 2017
Basic annual salary
Basic annual salary is paid in 12 equal monthly instalments during the year and is reviewed annually.
When assessing the level of basic annual salary, the Committee takes into account performance, market
conditions, remuneration of equivalent roles within comparable companies, the size and scale of the
business and pay in the Group as a whole.
To recruit, retain and motivate individuals of high calibre,
and reflect the skills, experience and contribution of the
relevant Director.
Benefits
Pension
The Committee retains discretion to pay a salary supplement to an executive Director for fulfilling the role
of another higher paid executive Director when that executive Director leaves the Company.
Current benefits available to executive Directors are car allowance, permanent health insurance,
healthcare and life assurance. Additional benefits may be offered if applicable and subject to the
maximum value of all benefits not exceeding the maximum potential value set by the Committee.
To ensure broad competitiveness with market practice.
The Company shall continue to provide benefits to executive
Not applicable.
The Company shall make a contribution up to a maximum percentage of basic annual
salary (currently 12.5% for the Chief Executive and 6% for the Chief Financial Officer).
To ensure broad competitiveness with market practice.
Total cost annually shall not exceed 15% of basic annual salary.
Not applicable.
Current basic annual salary of Chief Executive is £350,000 and Chief
Not applicable.
Financial Officer is £250,000.
Salary increases shall generally reflect market conditions,
performance of the individual, new challenges or a new strategic
direction for the business. Similarly, the Committee may approve a
higher basic annual salary for a newly appointed Director than the
outgoing Director received where it considers it necessary in order to
recruit an individual of sufficient calibre for the role.
Directors at similar levels; where insurance cover is provided by the
Company, that cover shall be maintained at a similar level and the
Company shall pay the then current market rates for such cover.
Performance-
related bonus1
Targets are set annually by the Committee, based on (i) financial performance against budget and, at
the Committee’s discretion, (ii) individual subjective performance targets which are determined for each
executive Director.
Designed to reward delivery of shareholder value and
implementation of the Group’s strategy.
The Committee retains discretion to set the financial targets based on the performance during the
previous financial year and the budget for the forthcoming year, and performance of the individual
against their specific subjective performance targets.
For both the Chief Executive and Chief Financial Officer the
The performance measures, relative weightings and targets are set annually by
No change.
Committee retains discretion to vary the potential total maximum
the Committee. Details of the measures and their relative weightings are disclosed
bonus, the weighting of the variable elements and the stretch of
annually in the Directors’ remuneration report with the targets disclosed provided
the targets in order to incentivise or recruit executive Directors,
they are not deemed to be commercially sensitive. The Committee retains discretion
provided that the total maximum potential bonus for any one
to adjust the targets if events occur which lead it to conclude that they are no longer
year shall not exceed 150% of basic annual salary and that the
appropriate.
maximum bonus shall only be payable for over performance.
The Committee also retains discretion to adjust the outcome of the performance-
related bonus for any performance measure if it considers that to be appropriate.
Long term
share-based
incentive2
Annual awards to executive Directors of up to a maximum of 1x basic annual salary, with discretion to
award up to a maximum of 4x basic annual salary in exceptional circumstances, e.g. recruitment of a
Director or to “buy out” awards granted by prior employer.
Designed to reward delivery of shareholder value in the
medium-to-long term.
The scheme rules allow the Committee discretion to change the performance targets and the
Committee shall be entitled to exercise its discretion to change performance criteria to the extent that
it reflects market practice and/or the Committee considers alternative performance targets to be more
appropriate to the business.
Value of grant as a maximum percentage of salary is 100% of basic
The performance targets are set annually by the Committee and disclosed annually in
A higher maximum for the value of one-off
annual salary, however in exceptional circumstances the Committee
the Directors’ remuneration report provided they are not deemed to be commercially
awards in exceptional circumstances under
retains discretion to grant one-off awards of a value up to 400% of
sensitive.
basic annual salary.
Awards vest at the end of the three-year performance period, when the Committee will
assess performance against the targets set and determine, in its absolute discretion,
The Committee intends to make a one-off
the overall level of vesting of the award.
All-employee share plans
The Company operates a Share Incentive Plan (“SIP”) in the UK which qualifies for tax benefits.
To encourage share ownership by employees and align their
interests with those of the shareholders.
The maximum participation levels for all-employee share plans will
Not applicable.
be the limits set out in UK tax legislation.
The Committee retains discretion to allow executive Directors to participate in the SIP on the same
terms as other employees.
Notes to the table
1. Performance-related bonus targets: The performance targets are determined annually by the Committee and are designed to align executive Directors’ interests with those of the Company’s
shareholders and to reward good performance by the Company. Financial targets are set by reference to the Company’s budget for the relevant financial year, and individual performance targets are
set by reference to the Company’s strategy and goals for the relevant financial year. The targets for the financial year to 30 September 2017 are not disclosed here due to their commercial sensitivity.
2. PSP performance targets: additional details of the performance criteria attaching to PSP awards granted to date are set out on page 31.
Non-executive Directors
Element
Fees1
Operation
Non-executive Directors’ fees are reviewed every three years and paid in 12 monthly instalments.
Current fees were set in 2011.
Objective & link to strategy
Reflects the time commitment and responsibilities of the roles.
Performance measures
Not applicable.
Changes for 2017
No change, since Peter Allen’s fee as
Chairman remains at £95,000.
Max. potential value
Chairman: £120,000
Deputy Chairman: £65,000
Other non-executive Directors: £40,000
Additional fees payable:
Chairman of Committee: £5,000
Senior independent Director: £5,000
Member of Committee: Nil
Notes to the table
1. Fees are paid at a standard annual rate to reflect the time, commitment and responsibilities of the roles, with additional fees paid to those who chair Board Committees to reflect their additional
responsibilities. Separately, the Board sets the fee payable to the Chairman of the Board. Additional fees for chairing a Committee apply only once, regardless of the number of Committees of which a
non-executive Director is Chairman. Non-executive Directors are not included in any performance-related bonus, share incentive schemes or pension arrangements.
Basic annual salary for Zillah Byng-Thorne
increased to £350,000 with effect from 21
October 2016 (being the completion date of
the acquisition of Imagine Publishing) and for
Penny Ladkin-Brand increased to £250,000 with
effect from 1 October 2016 as a result of market
benchmarking.
No change.
No change.
the Plan of 400% of basic annual salary is
proposed.
award, in two tranches, to the executive
Directors at a value of 400% of basic annual
salary, subject to shareholder approval of
the policy at the 2017 AGM. The first tranche,
at a value of 200% of salary, was awarded
in November 2016 with the second tranche
of a further 200% of salary to be awarded
following the AGM in February 2017.
No change.
Annual Report and Accounts 2016
38
Remuneration table
Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Basic annual salary
Basic annual salary is paid in 12 equal monthly instalments during the year and is reviewed annually.
To recruit, retain and motivate individuals of high calibre,
When assessing the level of basic annual salary, the Committee takes into account performance, market
and reflect the skills, experience and contribution of the
conditions, remuneration of equivalent roles within comparable companies, the size and scale of the
relevant Director.
business and pay in the Group as a whole.
The Committee retains discretion to pay a salary supplement to an executive Director for fulfilling the role
of another higher paid executive Director when that executive Director leaves the Company.
Current basic annual salary of Chief Executive is £350,000 and Chief
Financial Officer is £250,000.
Salary increases shall generally reflect market conditions,
performance of the individual, new challenges or a new strategic
direction for the business. Similarly, the Committee may approve a
higher basic annual salary for a newly appointed Director than the
outgoing Director received where it considers it necessary in order to
recruit an individual of sufficient calibre for the role.
Performance measures
Not applicable.
Benefits
Current benefits available to executive Directors are car allowance, permanent health insurance,
To ensure broad competitiveness with market practice.
healthcare and life assurance. Additional benefits may be offered if applicable and subject to the
maximum value of all benefits not exceeding the maximum potential value set by the Committee.
The Company shall continue to provide benefits to executive
Directors at similar levels; where insurance cover is provided by the
Company, that cover shall be maintained at a similar level and the
Company shall pay the then current market rates for such cover.
Not applicable.
Pension
The Company shall make a contribution up to a maximum percentage of basic annual
salary (currently 12.5% for the Chief Executive and 6% for the Chief Financial Officer).
To ensure broad competitiveness with market practice.
Total cost annually shall not exceed 15% of basic annual salary.
Not applicable.
Performance-
related bonus1
Targets are set annually by the Committee, based on (i) financial performance against budget and, at
Designed to reward delivery of shareholder value and
the Committee’s discretion, (ii) individual subjective performance targets which are determined for each
implementation of the Group’s strategy.
executive Director.
The Committee retains discretion to set the financial targets based on the performance during the
previous financial year and the budget for the forthcoming year, and performance of the individual
against their specific subjective performance targets.
Long term
share-based
incentive2
Annual awards to executive Directors of up to a maximum of 1x basic annual salary, with discretion to
Designed to reward delivery of shareholder value in the
award up to a maximum of 4x basic annual salary in exceptional circumstances, e.g. recruitment of a
medium-to-long term.
Director or to “buy out” awards granted by prior employer.
The scheme rules allow the Committee discretion to change the performance targets and the
Committee shall be entitled to exercise its discretion to change performance criteria to the extent that
it reflects market practice and/or the Committee considers alternative performance targets to be more
appropriate to the business.
For both the Chief Executive and Chief Financial Officer the
Committee retains discretion to vary the potential total maximum
bonus, the weighting of the variable elements and the stretch of
the targets in order to incentivise or recruit executive Directors,
provided that the total maximum potential bonus for any one
year shall not exceed 150% of basic annual salary and that the
maximum bonus shall only be payable for over performance.
Value of grant as a maximum percentage of salary is 100% of basic
annual salary, however in exceptional circumstances the Committee
retains discretion to grant one-off awards of a value up to 400% of
basic annual salary.
The performance measures, relative weightings and targets are set annually by
the Committee. Details of the measures and their relative weightings are disclosed
annually in the Directors’ remuneration report with the targets disclosed provided
they are not deemed to be commercially sensitive. The Committee retains discretion
to adjust the targets if events occur which lead it to conclude that they are no longer
appropriate.
The Committee also retains discretion to adjust the outcome of the performance-
related bonus for any performance measure if it considers that to be appropriate.
The performance targets are set annually by the Committee and disclosed annually in
the Directors’ remuneration report provided they are not deemed to be commercially
sensitive.
Awards vest at the end of the three-year performance period, when the Committee will
assess performance against the targets set and determine, in its absolute discretion,
the overall level of vesting of the award.
All-employee share plans
The Company operates a Share Incentive Plan (“SIP”) in the UK which qualifies for tax benefits.
To encourage share ownership by employees and align their
interests with those of the shareholders.
The maximum participation levels for all-employee share plans will
be the limits set out in UK tax legislation.
Not applicable.
The Committee retains discretion to allow executive Directors to participate in the SIP on the same
terms as other employees.
Changes for 2017
Basic annual salary for Zillah Byng-Thorne
increased to £350,000 with effect from 21
October 2016 (being the completion date of
the acquisition of Imagine Publishing) and for
Penny Ladkin-Brand increased to £250,000 with
effect from 1 October 2016 as a result of market
benchmarking.
No change.
No change.
No change.
A higher maximum for the value of one-off
awards in exceptional circumstances under
the Plan of 400% of basic annual salary is
proposed.
The Committee intends to make a one-off
award, in two tranches, to the executive
Directors at a value of 400% of basic annual
salary, subject to shareholder approval of
the policy at the 2017 AGM. The first tranche,
at a value of 200% of salary, was awarded
in November 2016 with the second tranche
of a further 200% of salary to be awarded
following the AGM in February 2017.
No change.
Non-executive Directors
Element
Fees1
Operation
Current fees were set in 2011.
Non-executive Directors’ fees are reviewed every three years and paid in 12 monthly instalments.
Reflects the time commitment and responsibilities of the roles.
Objective & link to strategy
Notes to the table
1. Fees are paid at a standard annual rate to reflect the time, commitment and responsibilities of the roles, with additional fees paid to those who chair Board Committees to reflect their additional
responsibilities. Separately, the Board sets the fee payable to the Chairman of the Board. Additional fees for chairing a Committee apply only once, regardless of the number of Committees of which a
non-executive Director is Chairman. Non-executive Directors are not included in any performance-related bonus, share incentive schemes or pension arrangements.
3. All employees of the Group receive a basic annual salary, benefits, pension and annual bonus (subject to financial performance). The maximum value of remuneration packages is based on the
seniority and responsibilities of the relevant role. Discretionary share incentives are not awarded to employees other than executive Directors and senior managers, however the Company introduced
a Share Incentive Plan in 2015 in order to encourage active employee share ownership.
Max. potential value
Chairman: £120,000
Deputy Chairman: £65,000
Other non-executive Directors: £40,000
Additional fees payable:
Chairman of Committee: £5,000
Senior independent Director: £5,000
Member of Committee: Nil
Performance measures
Not applicable.
Changes for 2017
No change, since Peter Allen’s fee as
Chairman remains at £95,000.
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Future plc
Directors’
remuneration
report
For the year ended
30 September 2016
Total remuneration scenarios
Zillah Byng-Thorne
Salary, pension
& benefits
Bonus
PSP
£912,000
Penny Ladkin-Brand
1,000
900
800
700
600
500
400
300
200
100
£833,000
£754,000
%
6
4
%
4
5
%
2
5
%
8
4
%
6
5
%
4
4
800
700
600
500
400
300
200
100
£557,000
%
0
2
%
3
3
%
7
4
£388,000
%
2
3
%
8
6
£727,000
%
1
3
%
3
3
%
6
3
Minimum
Target
Maximum
Minimum
Target
Maximum
Notes:
1. Annual salary is based on basic salary for the financial year ending 30 September 2017.
2. The value of pension is determined as a percentage of salary, based on salary for 2017. The value of benefits in kind is calculated on
the basis of the value for 2016.
3. The remuneration scenarios above include a transaction bonus, amounting to 100% of basic annual salary for the Chief Executive
and 50% of basic annual salary for the Chief Financial Officer, paid following the successful completion of the acquisition of Imagine
Publishing in October 2016.
4. On-target performance would deliver 50% of the maximum annual bonus for the Chief Executive and the Chief Financial Officer.
Maximum performance would result in the maximum annual bonus payment of 45% of basic annual salary for both the Chief
Executive and the Chief Financial Officer.
5. The final year of the performance period in respect of both EPS and Net Cash Flow targets for the PSP award granted to Penny
Ladkin-Brand in August 2015 is the year ending 30 September 2017. On-target performance assumes that 50% of the awards would
vest while maximum performance would result in 100% of the awards vesting. The value of the shares that would vest has been
calculated using a share price of 13.75p per share being the latest available share price.
Consideration of employee conditions
within the Group
The Committee takes into consideration the
pay and conditions of employees across the
Group when determining remuneration for
executive Directors.
All employees receive a basic annual salary,
benefits and an entitlement to receive a bonus,
subject to financial performance, under the
Group’s profit improvement scheme.
Discretionary share incentive awards are
granted to certain senior managers under the
PSP and DABS schemes, the details of which
are set out at note 24 on page 74. During 2015
the Group introduced a Share Incentive Plan
to replace the Sharesave scheme, in order to
encourage active employee share ownership.
Consideration of shareholder views
The Remuneration Committee considers
shareholder feedback received as part of any
discussions with shareholders and consults
with shareholders on specific matters as and
when appropriate.
Approved by the Board of Directors and signed
on its behalf by:
Manjit Wolstenholme
Chairman of the Remuneration Committee
13 December 2016
Annual Report and Accounts 2016
40
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Future plc
Independent
auditors’ report
Independent auditors’ report to
the members of Future plc
Report on the financial statements
Our opinion
In our opinion:
•
Future plc’s Group financial statements
and Company financial statements (the
“financial statements”) give a true and fair
view of the state of the Group’s and of the
Company’s affairs as at 30 September 2016
and of the Group’s loss and the Group’s
and the Company’s cash flows for the year
then ended;
• the Group financial statements have
been properly prepared in accordance with
International Financial Reporting Standards
(“IFRSs”) as adopted by the European
Union;
•
•
the Company financial statements have
been properly prepared in accordance with
IFRSs as adopted by the European Union
and as applied in accordance with the
provisions of the Companies Act 2006; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the
IAS Regulation.
What we have audited
The financial statements, included within the
Annual Report and Accounts (the “Annual
Report”), comprise:
• the Consolidated balance sheet and
Company balance sheet as at 30 September
2016;
• the Consolidated income statement and
Consolidated statement of comprehensive
income for the year then ended;
•
•
the Consolidated and Company cash flow
statements for the year then ended;
the Consolidated statement of changes in
equity and the Company statement of
changes in equity for the year then ended;
•
the Accounting policies; and
•
the Notes to the financial statements, which
include other explanatory information.
The financial reporting framework that has
been applied in the preparation of the financial
statements is IFRSs as adopted by the
European Union and, as regards the Company
financial statements, as applied in accordance
with the provisions of the Companies Act 2006,
and applicable law.
In applying the financial reporting framework,
the Directors have made a number of
subjective judgements, for example in respect
of significant accounting estimates. In making
such estimates, they have made assumptions
and considered future events.
Opinions on other
matters prescribed by the
Companies Act 2006
In our opinion:
•
•
the information given in the Strategic Report
and the Directors’ report for the financial
year for which the financial statements are
prepared is consistent with the financial
statements.
the part of the Directors’ remuneration
report to be audited has been properly
prepared in accordance with the
Companies Act 2006.
Other matters on which we
are required to report by
exception
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
•
we have not received all the information and
explanations we require for our audit; or
• adequate accounting records have not been
kept by the Company, or returns adequate
for our audit have not been received from
branches not visited by us; or
•
the Company financial statements and
the part of the Directors’ remuneration report
to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Annual Report and Accounts 2016
42
• whether the accounting policies are
appropriate to the Group’s and the
Company’s circumstances and have
been consistently applied and adequately
disclosed;
•
•
the reasonableness of significant accounting
estimates made by the Directors; and
the overall presentation of the financial
statements.
We primarily focus our work in these areas
by assessing the Directors’ judgements
against available evidence, forming our own
judgements, and evaluating the disclosures in
the financial statements.
We test and examine information, using
sampling and other auditing techniques, to
the extent we consider necessary to provide a
reasonable basis for us to draw conclusions.
We obtain audit evidence through testing
the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-
financial information in the Annual Report
to identify material inconsistencies with the
audited financial statements and to identify
any information that is apparently materially
incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the
course of performing the audit. If we become
aware of any apparent material misstatements
or inconsistencies we consider the implications
for our report.
Colin Bates (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
13 December 2016
Directors’ remuneration
Under the Companies Act 2006 we are required
to report to you if, in our opinion, certain
disclosures of Directors’ remuneration specified
by law are not made. We have no exceptions to
report arising from this responsibility.
Responsibilities for the
financial statements and
the audit
Our responsibilities and those of
the Directors
As explained more fully in the Statement of
Directors’ responsibilities set out on page 22,
the Directors are responsible for the preparation
of the financial statements and for being
satisfied that they give a true and fair view.
Our responsibility is to audit and express
an opinion on the financial statements
in accordance with applicable law and
International Standards on Auditing (UK
and Ireland) (“ISAs (UK & Ireland)”). Those
standards require us to comply with the
Auditing Practices Board’s Ethical Standards for
Auditors.
This report, including the opinions, has been
prepared for and only for the Company’s
members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for
no other purpose. We do not, in giving these
opinions, accept or assume responsibility for
any other purpose or to any other person to
whom this report is shown or into whose hands
it may come save where expressly agreed by
our prior consent in writing.
What an audit of financial statements
involves
We conducted our audit in accordance
with ISAs (UK & Ireland). An audit involves
obtaining evidence about the amounts
and disclosures in the financial statements
sufficient to give reasonable assurance that
the financial statements are free from material
misstatement, whether caused by fraud or
error. This includes an assessment of:
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Future plc
Financial
statements
Financial statements
Contents
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of
changes in equity
Company statement of
changes in equity
Consolidated balance sheet
Company balance sheet
Consolidated and Company
cash flow statements
Notes to the Consolidated and
Company cash flow statements
Accounting policies
Notes to the financial statements
44
44
45
45
46
47
48
49
50
54
Annual Report and Accounts 2016
44
Consolidated income statement
for the year ended 30 September 2016
Continuing operations
Revenue
Operating profit before depreciation, amortisation, exceptional items
and impairment of intangible assets
Depreciation
Amortisation
Exceptional items
Impairment of intangible assets
Operating loss
Finance costs
Net finance costs
Loss before tax
Tax on loss
Loss for the year from continuing operations
Discontinued operations
Profit for the year from discontinued operations
Loss for the year attributable to owners of the parent
Earnings per 1p Ordinary share
Basic loss per share – Total Group
Diluted loss per share – Total Group
Basic loss per share – Continuing operations
Diluted loss per share – Continuing operations
Note
1
1
11
12
4
2
2
6
6
1
7
10
Note
9
9
9
9
2016
£m
59.0
4.7
(0.4)
(2.0)
(3.5)
(13.0)
(14.2)
(0.7)
(0.7)
(14.9)
0.5
(14.4)
0.2
(14.2)
2016
pence
(3.9)
(3.9)
(4.0)
(4.0)
2015
£m
59.8
3.6
(0.5)
(2.3)
(2.5)
-
(1.7)
(0.6)
(0.6)
(2.3)
0.3
(2.0)
0.7
(1.3)
2015
pence
(0.4)
(0.4)
(0.6)
(0.6)
As permitted by the exemption under Section 408 of the Companies Act 2006 no Company income statement or statement of comprehensive income
is presented.
Consolidated statement of comprehensive income
for the year ended 30 September 2016
Loss for the year
Items that may be reclassified to the consolidated income statement
Continuing operations
Currency translation differences
Other comprehensive income for the year from continuing operations
Total comprehensive loss for the year attributable to continuing operations
Total comprehensive income for the year attributable to discontinued operations
Total comprehensive loss for the year attributable to owners of the parent
Items in the statement above are disclosed net of tax.
2016
£m
(14.2)
0.3
0.3
(14.1)
0.2
(13.9)
2015
£m
(1.3)
-
-
(2.0)
0.7
(1.3)
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Future plc
Financial
statements
Consolidated statement of changes in equity
for the year ended 30 September 2016
Group
Balance at 1 October 2014
Loss for the year
Currency translation differences
Other comprehensive income for the year
Total comprehensive loss for the year
Share schemes
- Value of employees’ services
Balance at 30 September 2015
Loss for the year
Currency translation differences
Other comprehensive income for the year
Total comprehensive loss for the year
Share capital issued during the year
Share schemes
- Value of employees’ services
Balance at 30 September 2016
Company statement of changes in equity
for the year ended 30 September 2016
Company
Balance at 1 October 2014
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Share schemes
- Value of employees’ services
Balance at 30 September 2015
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Share capital issued during the year
Share schemes
- Value of employees’ services
Balance at 30 September 2016
5
5
Note
Issued
share
capital
£m
3.3
Share
premium
account
£m
Merger
reserve
£m
Treasury
reserve
£m
Accumulated
losses
£m
24.8
109.0
(0.3)
(104.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3.3
24.8
109.0
Total
equity
£m
32.6
(1.3)
-
-
(1.3)
-
-
(1.3)
(1.3)
0.1
(105.4)
(14.2)
0.3
0.3
0.1
31.4
(14.2)
0.3
0.3
(13.9)
(13.9)
-
3.2
-
-
-
-
-
(0.3)
-
-
-
-
-
-
-
-
-
-
-
-
0.5
109.0
(0.3)
(118.8)
Issued
share
capital
£m
Share
premium
account
£m
3.3
24.8
-
-
-
-
-
-
-
-
3.3
24.8
-
-
-
0.4
-
3.7
-
-
-
2.8
-
27.6
Retained
earnings
£m
10.7
(0.9)
-
(0.9)
0.1
9.9
(6.4)
-
(6.4)
-
0.5
4.0
0.5
21.2
Total
equity
£m
38.8
(0.9)
-
(0.9)
0.1
38.0
(6.4)
-
(6.4)
3.2
0.5
35.3
-
-
-
-
0.4
-
3.7
-
-
-
-
2.8
-
27.6
Note
5
5
Annual Report and Accounts 2016
46
Consolidated balance sheet
as at 30 September 2016
Assets
Non-current assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - other
Deferred tax
Total non-current assets
Current assets
Inventories
Corporation tax recoverable
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Issued share capital
Share premium account
Merger reserve
Treasury reserve
Accumulated losses
Total equity
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings
Corporation tax payable
Deferred tax
Provisions
Other non-current liabilities
Total non-current liabilities
Current liabilities
Financial liabilities - interest-bearing loans and borrowings
Trade and other payables
Corporation tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
11
12
12
14
15
16
17
23
25
25
19
7
14
20
21
19
18
7
2016
£m
0.5
29.5
3.7
2.4
36.1
0.4
0.1
12.4
2.9
15.8
51.9
3.7
27.6
109.0
(0.3)
(118.8)
21.2
0.1
2.6
0.9
1.5
0.5
5.6
2.3
21.4
1.4
25.1
30.7
51.9
2015
£m
0.6
40.9
2.9
0.5
44.9
0.5
1.2
15.3
2.5
19.5
64.4
3.3
24.8
109.0
(0.3)
(105.4)
31.4
-
3.5
0.7
2.1
0.8
7.1
4.3
20.7
0.9
25.9
33.0
64.4
The financial statements on pages 43 to 78 were approved by the Board of Directors on 13 December 2016 and signed on its behalf by:
Peter Allen
Chairman
Penny Ladkin-Brand
Chief Financial Officer
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Future plc
Financial
statements
Company balance sheet
as at 30 September 2016
Assets
Non-current assets
Investment in Group undertakings
Total non-current assets
Current assets
Trade and other receivables
Total current assets
Total assets
Equity and liabilities
Equity
Issued share capital
Share premium account
Retained earnings
Total equity
Non-current liabilities
Corporation tax payable
Total non-current liabilities
Current liabilities
Financial liabilities - interest-bearing loans and borrowings
Financial liabilities - non-interest-bearing overdraft
Trade and other payables
Corporation tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
13
16
23
7
19
19
18
7
2016
£m
1.0
1.0
43.5
43.5
44.5
3.7
27.6
4.0
35.3
2.6
2.6
2.3
1.0
2.4
0.9
6.6
9.2
44.5
2015
£m
131.9
131.9
46.7
46.7
178.6
3.3
24.8
9.9
38.0
3.5
3.5
4.3
7.9
124.0
0.9
137.1
140.6
178.6
The financial statements on pages 43 to 78 were approved by the Board of Directors on 13 December 2016 and signed on its behalf by:
Peter Allen
Chairman
Penny Ladkin-Brand
Chief Financial Officer
Future plc
Company registration number: 3757874
Annual Report and Accounts 2016
48
Consolidated and Company cash flow statements
for the year ended 30 September 2016
Cash flows from operating activities
Cash generated from/(used in) operations
Tax received
Interest paid
Tax paid
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of computer software and website development
Purchase of magazine titles and events
Purchase of subsidiary undertakings, net of cash acquired
Disposal of property, plant and equipment
Disposal of magazine titles and trademarks
Net movement in amounts owed to/by subsidiaries
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of Ordinary share capital
Costs of share issue
Draw down of bank loans
Repayment of bank loans
Bank arrangement fees
Repayment of finance leases
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange adjustments
Cash and cash equivalents at end of year
Amount attributable to continuing operations
Group
2016
£m
Company
2016
£m
Group
2015
£m
Company
2015
£m
3.1
0.1
(0.4)
(0.8)
2.0
(0.2)
(1.7)
(0.6)
(0.3)
-
-
-
(2.8)
3.3
(0.2)
4.6
(5.7)
-
(0.1)
1.9
1.1
1.6
0.2
2.9
2.9
(1.4)
-
(0.4)
(0.7)
(2.5)
-
-
-
-
-
-
8.3
8.3
3.3
(0.2)
4.6
(5.7)
-
-
2.0
7.8
(8.8)
-
(1.0)
(1.0)
(7.5)
0.5
(0.6)
(1.0)
(8.6)
(0.2)
(1.8)
-
-
1.2
0.1
-
(0.7)
-
-
(0.5)
-
(0.5)
(0.7)
(1.7)
-
-
-
-
-
-
(1.8)
(1.8)
-
-
3.5
3.5
-
(0.2)
-
-
(0.2)
-
3.3
3.3
(6.0)
7.5
0.1
1.6
1.6
(0.2)
(8.6)
-
(8.8)
(8.8)
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Future plc
Financial
statements
Notes to the Consolidated and Company cash flow statements
for the year ended 30 September 2016
A. Cash used in operations
The reconciliation of (loss)/profit for the year to cash generated from/(used in) operations is set out below:
(Loss)/profit for the year – Continuing operations
– Discontinued operations
Loss for the year – Total Group
Adjustments for:
Depreciation charge
Amortisation of intangible assets
Impairment of intangible assets
Profit on disposal of magazine titles and trademarks
Profit on disposal of property, plant and equipment
Share schemes
- Value of employees’ services
Impairment of investment in Group undertakings
Dividend receivable from Group undertaking
Net finance costs
Tax (credit)/charge
Profit/(loss) before changes in working capital and provisions
Movement in provisions
Decrease in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Cash generated from/(used in) operations
B. Analysis of net (debt)/cash
Group
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net (debt)/cash
Company
Cash and cash equivalents
Debt due within one year
Net debt
C. Reconciliation of movement in net (debt)/cash
Net (debt)/cash at start of year
Increase/(decrease) in cash and cash equivalents
Movement in borrowings
Finance leases entered into
Other non-cash changes
Exchange movements
Net cash/(debt) at end of year
Group
2016
£m
(14.4)
0.2
(14.2)
0.4
2.0
13.0
(0.4)
-
0.5
-
-
0.7
(0.5)
1.5
(0.6)
0.1
3.8
(1.7)
3.1
Company
2016
£m
(6.4)
-
(6.4)
-
-
-
-
-
-
131.4
(130.9)
2.9
0.1
(2.9)
-
-
(0.1)
1.6
(1.4)
Group
2015
£m
(2.0)
0.7
(1.3)
0.5
2.3
-
(0.1)
(0.3)
0.1
-
-
0.6
(0.4)
1.4
(0.7)
0.1
(2.8)
(5.5)
(7.5)
Company
2015
£m
(0.9)
-
(0.9)
-
-
-
-
-
-
0.1
-
1.5
(1.2)
(0.5)
-
-
-
-
(0.5)
1 October
2015
£m
Cash flows
£m
Finance leases
entered into
£m
Exchange
movements
£m
30 September
2016
£m
1.6
(3.4)
-
(1.8)
1.1
1.2
-
2.3
-
(0.1)
(0.1)
(0.2)
0.2
-
-
0.2
2.9
(2.3)
(0.1)
0.5
1 October
2015
£m
Cash flows
£m
Other non-cash
changes
£m
30 September
2016
£m
(8.8)
(3.4)
(12.2)
Group
2016
£m
(1.8)
1.1
1.2
(0.2)
-
0.2
0.5
7.8
1.1
8.9
Company
2016
£m
(12.2)
7.8
1.1
-
-
-
(3.3)
-
-
-
Group
2015
£m
7.5
(6.0)
(3.5)
-
0.1
0.1
(1.8)
(1.0)
(2.3)
(3.3)
Company
2015
£m
(8.6)
(0.2)
(3.5)
-
0.1
-
(12.2)
Annual Report and Accounts 2016
50
Accounting policies
Basis of preparation
These financial statements have been prepared under the historical cost convention, except for derivative financial instruments and
share awards which are stated at fair value.
The principal accounting policies applied in the preparation of the consolidated financial statements published in this 2016 Annual
Report are set out on pages 50 to 53. These policies have been applied consistently to all years presented, unless otherwise stated.
The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS)
issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee’s
(IFRIC) interpretations as adopted by the European Union, applicable as at 30 September 2016, and those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
The going concern basis has been adopted in preparing these financial statements as stated by the Directors on page 25.
Discontinued operations and
non-current assets held for sale
During 2014 the Sport, Craft and Auto
portfolios were disposed of. In accordance
with IFRS 5 the results of these operations are
presented as discontinued operations in the
Consolidated income statement.
Where the Group expects to recover the
carrying amount of a group of assets through a
sale transaction rather than through continuing
use, the assets are available for immediate
sale in their present condition, management
is committed to the sale and a sale is highly
probable at the balance sheet date, the assets
are classified as held for sale.
After classification as held for sale, the assets
are measured at the lower of the carrying
amount and fair value less costs to sell. An
impairment loss is recognised in the income
statement for any write-down of the assets
to fair value less costs to sell. A gain for
any subsequent increase in fair value less
costs to sell is recognised in the income
statement to the extent that it does not exceed
the cumulative impairment loss previously
recognised. No depreciation or amortisation
is charged in respect of non-current assets
classified as held for sale.
If the group of assets constitutes a separate
major line of business it is classified as a
discontinued operation.
Basis of consolidation
The consolidated financial statements
incorporate the financial statements of
Future plc (the Company) and its subsidiary
undertakings. Subsidiaries are all entities
over which the Group has the power to
govern the financial and operating policies,
generally accompanying a shareholding of
more than one half of the voting rights. The
existence and effect of potential voting rights
that are currently exercisable or convertible
are considered when assessing whether the
Group controls another entity. Subsidiaries
are fully consolidated from the date on which
control is transferred to the Group. They are
deconsolidated from the date that control
ceases. The purchase method of accounting
is used to account for the acquisition of
subsidiaries by the Group.
The cost of an acquisition is measured as
the fair value of the assets given, equity
instruments issued and liabilities incurred or
assumed at the date of exchange, and includes
the fair value of any asset or liability resulting
from a contingent consideration arrangement.
Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in
a business combination are measured initially
at their fair values at the acquisition date. The
excess of the cost of acquisition over the fair
value of the Group’s share of the identifiable
net assets acquired is recorded as goodwill.
Inter-company transactions, balances and
unrealised gains on transactions between
Group companies are eliminated. Unrealised
losses are also eliminated but are considered
an impairment indicator of the asset
transferred. Accounting policies of subsidiaries
have been changed where necessary to
ensure consistency with the policies adopted
by the Group.
Segment reporting
The Group is organised and arranged
primarily by geographical segment. Operating
segments are reported in a manner consistent
with the internal reporting provided to the
Chief Operating Decision Makers who are
considered to be the executive Directors of
Future plc.
Revenue recognition
Revenue from the sale of goods is recognised
in the income statement when the significant
risks and rewards of ownership have been
transferred to the buyer. Revenue from
services rendered is recognised in the
income statement once the service has
been completed.
Revenue comprises the fair value of the
consideration received or receivable for the
sale of goods and services in the ordinary
course of the Group’s activities. Revenue
is shown net of value-added tax, estimated
returns, rebates and discounts and after
eliminating sales within the Group. The
following recognition criteria also apply:
•
•
•
•
•
Magazine newsstand circulation and
advertising revenue is recognised according
to the date that the related publication goes
on sale.
Revenue from the sale of digital magazine
subscriptions is recognised uniformly over
the term of the subscription.
Event income is recognised when the event
has taken place.
Licensing revenue is recognised on the
supply of the licensed content.
Other revenue is recognised at the time of
sale or provision of service.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of
each of the Group’s entities are measured
using the currency of the primary economic
environment in which the entity operates
(‘the functional currency’). The consolidated
financial statements are presented in sterling,
which is the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange
rate prevailing at the date of the transaction.
Foreign exchange gains and losses resulting
from the settlement of such transactions
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Future plc
Financial
statements
and from the translation at balance sheet
exchange rates of monetary assets and
liabilities denominated in foreign currencies
are recognised in the income statement,
with exchange differences arising on trading
transactions being reported in operating
profit and with those arising on financing
transactions reported in net finance costs
unless, as a result of cash flow hedging, they
are reported in other comprehensive income.
(c) Group companies
The results and financial position of all the Group
entities that have a functional currency different
from the presentation currency are translated
into the presentation currency as follows:
(i) Assets and liabilities for each balance
sheet are translated at the closing rate at
the date of that balance sheet.
(ii) Income and expenses for each income
statement are translated at average
exchange rates.
(iii) All resulting exchange differences are
recognised as a separate component
of equity.
On consolidation, exchange differences
arising from the translation of the net investment
in foreign operations, and of borrowings and
other currency instruments designated as
hedges of such investments, are taken to
shareholders’ equity. When a foreign operation
is sold, exchange differences that were
recorded in equity are recognised in the income
statement as part of the gain or loss on sale.
Employee benefits
(a) Pension obligations
The Group has a number of defined contribution
plans. For defined contribution plans the Group
pays contributions into a privately administered
pension plan on a contractual or voluntary
basis. The Group has no further payment
obligations once the contributions have been
paid. Contributions are charged to the income
statement as they are incurred.
(b) Share-based compensation
The Group operates a number of equity-
settled, share-based compensation plans.
The fair value of the employee services
received in exchange for the grant of the
awards is recognised as an expense. The
total amount to be expensed over the
appropriate service period is determined by
reference to the fair value of the awards. The
calculation of fair value includes assumptions
regarding the number of cancellations and
excludes the impact of any non-market
vesting conditions (for example, earnings per
share). Non-market vesting conditions are
included in assumptions about the number
of awards that are expected to vest. At each
balance sheet date, the Group revises its
estimates of the number of awards that are
expected to vest. It recognises the impact of
the revision of original estimates, if any, in
the income statement, with a corresponding
adjustment to equity.
The grant by the Company of share awards
to the employees of subsidiary undertakings
is treated as a capital contribution. The
fair value of employee services received,
measured by reference to the grant date fair
value, is recognised over the vesting period
as an increase to investment in subsidiary
undertakings, with a corresponding credit to
equity in the Company’s financial statements.
Shares in the Company are held in trust to
satisfy the exercise of awards under certain
of the Group’s share-based compensation
plans and exceptional awards. The trust is
consolidated within the Group financial
statements. These shares are presented
in the consolidated balance sheet as a
deduction from equity at the market value
on the date of acquisition.
(c) Bonus plans
The Group recognises a liability and an expense
for bonuses taking into consideration the profit
attributable to the Company’s shareholders after
certain adjustments. The Group recognises a
provision where contractually obliged or where
there is a past practice that has created a
constructive obligation.
Leases
Leases in which the Group assumes
substantially all the risks and rewards of
ownership of the leased assets are classified
as finance leases. All other leases are classed
as operating leases.
Assets held under finance leases are included
either as property, plant and equipment or
intangible assets at the lower of their fair
value at inception or the present value of the
minimum lease payments and are depreciated
over their estimated economic lives or the
finance lease period, whichever is the shorter.
The corresponding liability is recorded within
borrowings. The interest element of the rental
costs is charged against profits over the period
of the lease using the actuarial method.
Payments made under operating leases (net
of any incentives received from the lessor) are
charged to the income statement on a straight-
line basis over the period of the lease.
Tax
Tax on the profit or loss for the year comprises
current tax and deferred tax. Tax is recognised
in the income statement except to the extent
that it relates to items recognised directly in
equity in which case it is recognised in equity.
Current tax is payable based on taxable
profits for the year, using tax rates that have
been enacted or substantively enacted
at the balance sheet date, along with any
adjustment relating to tax payable in previous
years. Management periodically evaluates
items detailed in tax returns where the tax
treatment is subject to interpretation. Taxable
profit differs from net profit in the income
statement in that income or expense items that
are taxable or deductible in other years are
excluded – as are items that are never taxable
or deductible. Current tax assets relate to
payments on account not offset against current
tax liabilities.
Deferred tax is provided in full, using the
liability method, on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amounts in the
consolidated financial statements. However,
deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a
transaction other than a business combination
that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred
tax is determined using tax rates (and laws) that
have been enacted or substantively enacted
by the balance sheet date and are expected
to apply when the related deferred tax asset is
realised or the deferred tax liability is settled in
the appropriate territory.
Deferred tax assets are recognised to the
extent that it is probable that future taxable
profits will be available against which the
temporary differences can be utilised.
Deferred tax is provided on temporary
differences arising on investments in
subsidiaries, except where the timing of
the reversal of the temporary difference is
controlled by the Group and it is probable
that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset
against each other where they relate to
the same jurisdiction and there is a legally
enforceable right to offset.
Dividends
All dividend distributions to the Company’s
shareholders are recognised as a liability in the
financial statements in the period in which they
are approved.
Property, plant and equipment
Property, plant and equipment is stated at
cost (or deemed cost) less accumulated
depreciation and impairment losses. Cost
includes expenditure that is directly attributable
to the acquisition of the items.
Depreciation
Depreciation is calculated using the straight-
line method to allocate the cost of property,
plant and equipment less residual value over
estimated useful lives, as follows:
•
•
•
Land and buildings – 50 years or period of
the lease if shorter.
Plant and machinery – between one and
five years.
Equipment, fixtures and fittings – between
one and five years.
The assets’ residual values and useful lives
are reviewed, and adjusted if appropriate,
Annual Report and Accounts 2016
52
at each balance sheet date. An asset’s
carrying amount is written down immediately
to its recoverable amount if the asset’s
carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined
by comparing proceeds with carrying amounts.
These are included in the income statement.
Intangible assets
(a) Goodwill
In respect of business combinations that have
occurred since 1 October 2004, goodwill
represents the difference between the cost
of the acquisition and the fair value of net
identifiable assets acquired. In respect of
business combinations prior to this date,
goodwill is included on the basis of its deemed
cost, which represents the amount recorded
under previous GAAP.
Goodwill is stated at cost less any
accumulated impairment losses. Goodwill
is allocated to appropriate cash generating
units (those expected to benefit from the
business combination) and it is not subject to
amortisation but is tested annually for
impairment.
(b) Titles, trademarks, customer lists,
advertising relationships, e-commerce
technology and other ‘magazine and
website related’ intangibles
Magazine-related intangible assets have a
finite useful life and are stated at cost less
accumulated amortisation. Assets acquired
as part of a business combination are initially
stated at fair value. Amortisation is calculated
using the straight-line method to allocate the
cost of these intangibles over their estimated
useful lives (between one and fifteen years).
Expenditure incurred on the launch of new
magazine titles is recognised as an expense
in the income statement as incurred.
(c) Computer software and website
development
Non-integral computer software purchases are
stated at cost less accumulated amortisation.
Costs incurred in the development of new
websites are capitalised only where the cost
can be directly attributed to developing the
website to operate in the manner intended
by management and only to the extent of the
future economic benefits expected from its use.
These costs are amortised on a straight-line
basis over their estimated useful lives (between
one and three years). Costs associated with
maintaining computer software or websites are
recognised as an expense as incurred.
Impairment tests and Cash-Generating
Units (CGUs)
A CGU is defined as the smallest identifiable
group of assets that generates cash inflows
that are largely independent of the cash inflows
from other assets or groups of assets.
Value in use is the present value of the
future cash flows expected to be derived
from the CGUs or group of CGUs. Cash
flow projections are based on economic
assumptions and forecast trading conditions
drawn up by the Group’s management,
as follows:
Goodwill is not amortised but tested for
impairment at least once a year or more
frequently when there is an indication that it
may be impaired. Therefore, the evolution of
general economic and financial trends as well
as actual economic performance compared
to market expectations represent external
indicators that are analysed by the Group,
together with internal performance indicators,
in order to assess whether an impairment test
should be performed more than once a year.
IAS 36 ‘Impairment of Assets’ requires these
tests to be performed at the level of each
CGU or group of CGUs likely to benefit from
acquisition-related synergies, within an
operating segment.
Any impairment of goodwill is recorded in the
income statement as a deduction from operating
profit and is never reversed subsequently.
Other intangible assets with a finite life are
amortised and are tested for impairment only
where there is an indication that an impairment
may have occurred.
Recoverable amount
To determine whether an impairment loss
should be recognised, the carrying value of
the assets and liabilities of the CGUs or
groups of CGUs is compared to their
recoverable amount.
•
•
•
cash flow projections are based on five-year
business plans;
cash flow projections beyond that time frame
are extrapolated by applying a 2.0% growth
rate to perpetuity; and
the cash flows obtained are discounted
using appropriate rates for the business and
the territories concerned.
If goodwill has been allocated to a CGU and
an operation within that CGU is disposed,
the goodwill associated with that operation is
included in the carrying amount of the operation
in determining the profit or loss on disposal. The
goodwill allocated to the disposal is measured
on the basis of the relative profitability of the
operation disposed and the operations retained.
Inventories
Inventories are stated at the lower of cost and
net realisable value. For raw materials, cost is
taken to be the purchase price on a first in, first
out basis. For work in progress and finished
goods, cost is calculated as the direct cost of
production. It excludes borrowing costs. Net
realisable value is the estimated selling price in
the ordinary course of business, less applicable
variable selling expenses.
Trade and other receivables
Carrying values of CGUs and groups of CGUs
tested include goodwill and assets with finite
useful lives (property, plant and equipment,
intangible assets and net working capital).
Trade and other receivables are initially
recognised at fair value and subsequently
measured at amortised cost using the effective
interest method, less a provision for impairment.
The recoverable amount of a CGU is the
higher of its fair value less costs to sell and
its value in use. Fair value less costs to sell
is the best estimate of the amount obtainable
from the sale of an asset in an arm’s length
transaction between knowledgeable, willing
parties, less the costs of disposal. This
estimate is determined, on 30 September, on
the basis of the discounted present value of
expected future cash flows plus a terminal
value and reflects general market sentiment
and conditions.
A provision for impairment of trade
receivables is made when there is objective
evidence that the Group will not be able to
collect all amounts due in accordance with
the original terms of the receivables.
Cash and cash equivalents
Cash and cash equivalents include cash in
hand, deposits held at call with banks and
bank overdrafts for the purpose of the cash
flow statement. Bank overdrafts are shown
within borrowings in current liabilities on the
balance sheet.
Trade and other payables
Trade and other payables are initially
recognised at fair value and subsequently
measured at amortised cost using the
effective interest method.
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Future plc
Financial
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Borrowings
Exceptional items
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings
are subsequently stated at amortised cost with
any difference between the proceeds (net of
transaction costs) and the redemption value
recognised in the income statement over the
period of the borrowings using the effective
interest method.
Borrowings are classified as current liabilities
unless the Group has an unconditional right to
defer settlement of the liability for at least 12
months after the balance sheet date.
Provisions
Provisions are recognised when the Group has
a present legal or constructive obligation as a
result of past events, and it is more likely than
not that an outflow of resources will be required
to settle the obligation.
Provisions are measured at the Directors’ best
estimate of the expenditure required to settle
the obligation at the balance sheet date, and
are discounted to present value where the
effect is material.
Derivative financial instruments and
hedging activities
The Group uses derivative financial
instruments to reduce exposure to foreign
exchange and interest rate risks and
recognises these at fair value in its balance
sheet. The Group applies cash flow hedge
accounting under IAS 39 in respect of certain
instruments held. For instruments for which
hedge accounting is applied, gains and losses
are taken to equity. Any changes to the fair
value of derivatives not hedge accounted for
are recognised in the income statement. Any
new instruments entered into by the Group
will be reviewed on a ‘case by case’ basis at
inception to determine whether they should
qualify as hedges and be accounted for
accordingly under IAS 39. In accordance with
its treasury policy, the Group does not hold or
issue any derivative financial instruments for
trading purposes.
Investments
The Company’s investments in subsidiary
undertakings are stated at the fair value
of consideration payable, including related
acquisition costs, less any provisions
for impairment.
The Group classifies transactions as
exceptional where they relate to an event
that falls outside the ordinary activities of
the business and where individually or in
aggregate they have a material impact on
the financial statements. This classification
excludes impairment charges made on the
carrying value of CGUs or groups of CGUs.
The separate reporting of exceptional items
helps provide a better picture of the Group’s
underlying performance.
Critical accounting assumptions,
judgements and estimates
The preparation of the financial statements
under IFRS requires the use of certain
critical accounting assumptions and requires
management to exercise its judgement and
to make estimates in the process of applying
the Group’s accounting policies. The areas
requiring a higher degree of judgement or
areas where assumptions and estimates are
significant to the financial statements are
discussed below:
(a) Carrying value of goodwill and
other intangibles
The Group uses forecast cash flow information
and estimates of future growth to assess
whether goodwill and other intangible assets
are impaired. If the results of an operation in
future years are adverse to the estimates used
for impairment testing, an impairment may be
triggered at that point, or a reduction in useful
economic life may be required. Further details
are included within note 12.
(b) Taxation
The Group is subject to tax in all territories,
and judgement and estimates of future
profitability are required to determine the
Group’s deferred tax position. If the final tax
outcome is different to that assumed, resulting
changes will be reflected in the income
statement or statement of changes in equity
as appropriate. The Group corporation tax
provision reflects management’s estimation of
the amount of tax payable for fiscal years with
open tax computations where liabilities remain
to be agreed with Her Majesty’s Revenue and
Customs and other tax authorities. Further
details are included within note 7.
(c) Revenue recognition
The Group makes a provision for sales returns
at the end of each month. The UK estimate is
calculated by looking at the forecast sales
projections for the following month of the
titles that were on sale at the year-end and
providing for any shortfall. The US estimate is
made based on a study of the historic levels
of returns.
New or revised accounting standards
and interpretations
Certain new standards, amendments and
interpretations to existing standards have been
published that are mandatory for accounting
periods beginning on or after 1 October 2016
or later periods but which the Group has
chosen not to adopt early. These include the
following standards which are relevant to the
Group:
•
•
•
•
Annual improvements to IFRSs 2012-
2014 Cycle.
Amendment to IAS 1 Presentation of
financial statements on the disclosure
initiative.
Amendment to IAS 16 and IAS 38
Clarification of acceptable methods of
depreciation and amortisation.
Amendment to IFRS 2 Share-based
payment to clarify the classification and
measurement of share-based payment
transactions.
•
IFRS 9 Financial instruments.
•
IFRS 15 Revenue from contracts
with customers.
•
IFRS 16 Leases.
Adoption of IFRS 16 Leases will result in the
recognition on the balance sheet of assets and
liabilities relating to leases which are currently
accounted for as operating leases. The Group
has not yet assessed the full impact of IFRS
16 which will be effective for the year ended 30
September 2020.
The Group does not expect that the other
standards and amendments issued but not yet
effective will have a material impact on results
or net assets.
Annual Report and Accounts 2016
54
Notes to the financial statements
1. Segmental reporting
The Group is organised and arranged primarily by reportable segment. The executive Directors consider the performance of the business from
a geographical perspective, namely the UK and the US. The Australian business is considered to be part of the UK segment and is not reported
separately due to its size.
(a) Reportable segment
(i) Segment revenue
UK
US
Revenue between segments
Total continuing operations
Transactions between segments are carried out at arm’s length.
(ii) Segment EBITDAE
UK
US
Total segment EBITDAE from continuing operations
2016
£m
44.7
15.2
(0.9)
59.0
2016
£m
2.8
1.9
4.7
EBITDAE is used by the executive Directors to assess the performance of each segment.
A reconciliation of total segment EBITDAE from continuing operations to loss before tax from continuing operations is provided as follows:
Total segment EBITDAE from continuing operations
Depreciation
Amortisation
Exceptional items
Impairment of intangible assets
Net finance costs
Loss before tax from continuing operations
(iii) Segment assets and liabilities
2016
£m
4.7
(0.4)
(2.0)
(3.5)
(13.0)
(0.7)
(14.9)
2015
£m
47.3
13.4
(0.9)
59.8
2015
£m
3.3
0.3
3.6
2015
£m
3.6
(0.5)
(2.3)
(2.5)
-
(0.6)
(2.3)
UK
US
Total
(iv) Other segment information
UK
US
Continuing operations
Discontinued operations
Total
Segment assets
Segment liabilities
Segment net assets
2016
£m
46.6
5.3
51.9
2015
£m
60.2
4.2
64.4
2016
£m
(26.5)
(4.2)
(30.7)
2015
£m
(29.0)
(4.0)
(33.0)
2016
£m
20.1
1.1
21.2
2015
£m
31.2
0.2
31.4
Additions to
non-current assets
Depreciation
and amortisation
Impairment charges
Exceptional items
2016
£m
4.6
-
4.6
-
4.6
2015
£m
1.7
0.3
2.0
-
2.0
2016
£m
1.9
0.5
2.4
-
2.4
2015
£m
1.9
0.9
2.8
-
2.8
2016
£m
13.0
-
13.0
-
13.0
2015
£m
-
-
-
-
-
2016
£m
2.8
0.7
3.5
(0.3)
3.2
2015
£m
2.1
0.4
2.5
(0.1)
2.4
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Other than the items disclosed above and a share-based payments charge of £0.5m (2015: £0.1m) there were no other significant non-cash expenses
during the year.
55
Future plc
Financial
statements
1. Segmental reporting (continued)
(b) Business segment
After geographical location, the Group was reorganised during the year into two new segments. The Media segment comprises websites and events
and the Magazine segment comprises magazines. An additional segment, Other, was retained to reflect unallocated salaries and other direct costs
which are not directly charged to the business segments for internal reporting purposes. The Group considers that the assets within each segment are
exposed to the same risks.
(i) Revenue by business segment
Media
Magazine
Revenue between segments
Total continuing operations
(ii) Gross profit by business segment
Media
Magazine
Other
Add back: distribution expenses
Total continuing operations
2. Operating loss from continuing operations
Revenue
Cost of sales
Gross profit
Distribution expenses
Administration expenses
Exceptional items
Impairment of intangible assets
Operating loss from continuing operations
3. Fees paid to auditors
Audit fees in respect of the audit of the financial statements of the Company and the consolidated financial statements
Audit related assurance services
Tax compliance services
Tax advisory services
Services relating to corporate finance transactions
Total fees
2016
£m
24.5
35.4
(0.9)
59.0
2016
£m
19.5
23.5
(24.8)
3.6
21.8
2016
£m
59.0
(37.2)
21.8
(3.6)
(15.9)
(3.5)
(13.0)
(14.2)
2016
£m
0.10
0.02
0.12
0.05
0.03
0.14
0.34
2015
£m
21.5
39.2
(0.9)
59.8
2015
£m
18.3
25.2
(27.8)
3.5
19.2
2015
£m
59.8
(40.6)
19.2
(3.5)
(14.9)
(2.5)
-
(1.7)
2015
£m
0.13
0.02
0.15
0.10
0.08
-
0.33
Annual Report and Accounts 2016
4. Exceptional items from continuing operations
Vacant property provision movements
Restructuring and redundancy costs
Acquisition-related costs
Profit on disposal of magazine titles and trademarks
Profit on disposal of property
Provision for bad debts
Total charge
56
2015
£m
0.4
2.8
-
-
(0.3)
(0.4)
2.5
2016
£m
(0.5)
1.8
2.3
(0.1)
-
-
3.5
The vacant property provision movement during the year relates to surplus office space in the UK and the US.
The restructuring and redundancy costs relate mainly to staff termination payments and other restructuring and transformation related activities.
The acquisition-related costs represent fees incurred in respect of the acquisition of Miura (Holdings) Limited, the ultimate parent company of Imagine
Publishing Limited, which was completed on 21 October 2016. Further details in respect of the acquisition are shown in note 31.
The profit on disposal of property in 2015 related to the sale of one of the Group’s UK properties for cash proceeds of £1.2m. The provision for bad
debts in 2015 represents the release of part of a provision made in 2014 in relation to amounts owed to the Group which were no longer considered
recoverable following the filing for bankruptcy of Source Home Entertainment LLC and its group companies, one of the Group’s distributors in the US.
5. Employees from continuing operations
Wages and salaries
Social security costs
Other pension costs
Share schemes
- Value of employees’ services
Total staff costs from continuing operations
Average monthly number of people for continuing operations (including Directors)
Production
Administration
Total
2016
£m
21.3
2.0
0.7
0.5
24.5
2016
No.
399
89
488
2015
£m
23.6
2.2
0.8
0.1
26.7
2015
No.
436
94
530
At 30 September 2016, the actual number of people employed by the Group was 449 (2015: 521). In respect of our reportable segments 390 (2015: 448)
were employed in the UK and 59 (2015: 73) were employed in the US.
Key management personnel compensation
Salaries and other short-term employee benefits
Share schemes
- Value of employees’ services
Total
Group
2016
£m
0.7
0.2
0.9
Company
2016
£m
0.2
-
0.2
Group
2015
£m
0.9
-
0.9
Company
2015
£m
0.2
-
0.2
Key management personnel are deemed to be the members of the Board of Future plc. It is this Board which has responsibility for planning, directing
and controlling the activities of the Group.
Zillah Byng-Thorne and Penny Ladkin-Brand were paid by Future Publishing Limited, a subsidiary company, for their services. In 2016 £0.3m (2015:
£0.1m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne and £0.2m (2015: £nil) was recharged in respect of
Penny Ladkin-Brand.
Further details on the Directors’ remuneration and interests are given in the Directors’ remuneration report on pages 29 to 39. The highest paid
Director during the year was Zillah Byng-Thorne (2015: Zillah Byng-Thorne) and details of her remuneration are shown on page 30.
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57
Future plc
Financial
statements
6. Finance income and costs
Interest payable on interest-bearing loans and borrowings
Amortisation of bank loan arrangement fees
Other finance costs
Exchange (losses)/gains
Total finance costs
Net finance costs from continuing operations
7. Tax on loss
The tax credited in the consolidated income statement for continuing operations is analysed below:
UK corporation tax
Current tax at 20% (2015: 20.5%) on the loss for the year
Adjustments in respect of previous years
Current tax
Deferred tax origination and reversal of temporary differences
Current year (credit)/charge
Adjustments in respect of previous years
Deferred tax
Total tax credit on continuing operations
2016
£m
(0.1)
(0.1)
(0.3)
(0.2)
(0.7)
(0.7)
2016
£m
-
1.3
1.3
(1.6)
(0.2)
(1.8)
(0.5)
The tax assessed in each year differs from the standard rate of corporation tax in the UK for the relevant year. The differences are explained below:
Loss before tax
Loss before tax at the standard UK tax rate of 20% (2015: 20.5%)
Non-deductible amortisation & impairment
Losses generated and unrecognised
Losses and other timing differences not recognised in respect of tax in the US
Losses and other timing differences recognised in respect of tax in the US
Profits relieved against brought forward losses
Other net disallowable items
Adjustments in respect of previous years
Total tax credit on continuing operations
2016
£m
(14.9)
(3.0)
2.6
-
-
(1.4)
(0.2)
0.4
1.1
(0.5)
2015
£m
(0.2)
(0.4)
(0.2)
0.2
(0.6)
(0.6)
2015
£m
-
(0.3)
(0.3)
0.1
(0.1)
-
(0.3)
2015
£m
(2.3)
(0.5)
-
0.3
0.2
-
(0.1)
0.2
(0.4)
(0.3)
In 2013 the Group reached agreement with HMRC relating to the tax treatment of certain one-off transactions which took place in 2003. Part of that
agreement will result in the Group paying tax of £6.2m plus interest (comprising instalments of £85,000 per month over five years from July 2013 and a
final instalment of £2.0m). The tax payable was fully provided for in prior years’ accounts.
The liability in the balance sheet has been split based on this agreement between current liabilities and non-current liabilities.
The prior year adjustment reflects a reassessment of the availability of EU Group loss relief available to the Group as a result of the additional
uncertainty surrounding the impact of the Brexit vote on the success of the claims.
The Directors have assessed the Group’s uncertain tax positions and are comfortable that the provisions in place are not material either individually or
in aggregate and that a reasonably possible change in the next financial year would not have a material impact on the results of the Group.
Annual Report and Accounts 2016
58
8. Dividends
Equity dividends
Number of shares in issue at end of year (million)
Dividends paid in year (pence per share)
Dividends paid in year (£m)
9. Earnings per share
2016
368.8
-
-
2015
334.4
-
-
Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year. Diluted earnings per share
have been calculated by taking into account the dilutive effect of shares that would be issued on conversion into Ordinary shares of awards held under
employee share schemes.
Adjusted earnings per share removes the effect of exceptional items, impairment of intangible assets and any related tax effects from the calculation.
Total Group
Adjustments to loss after tax:
Loss after tax (£m)
Exceptional items (£m)
Impairment of intangible assets (£m)
Tax effect of the above adjustments (£m)
Adjusted profit after tax (£m)
Weighted average number of shares in issue during the year:
- Basic
- Dilutive effect of share options
- Diluted
Basic loss per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted loss per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to loss after tax have the following effect:
Basic and diluted loss per share (pence)
Exceptional items (pence)
Impairment of intangible assets (pence)
Tax effect of the above adjustments (pence)
Adjusted basic and diluted earnings per share (pence)
2016
2015
(14.2)
3.2
13.0
(0.6)
1.4
(1.3)
2.4
-
(0.5)
0.6
362,486,525
332,796,904
13,074,591
536,550
375,561,116
333,333,454
(3.9)
0.4
(3.9)
0.4
(3.9)
0.9
3.6
(0.2)
0.4
(0.4)
0.2
(0.4)
0.2
(0.4)
0.7
-
(0.1)
0.2
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59
Future plc
Financial
statements
9. Earnings per share (continued)
Continuing operations
Adjustments to loss after tax:
Loss after tax (£m)
Exceptional items (£m)
Impairment of intangible assets (£m)
Tax effect of the above adjustments (£m)
Adjusted profit after tax (£m)
Weighted average number of shares in issue during the year:
- Basic
- Dilutive effect of share options
- Diluted
Basic loss per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted loss per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to loss after tax have the following effect:
Basic and diluted loss per share (pence)
Exceptional items (pence)
Impairment of intangible assets (pence)
Tax effect of the above adjustments (pence)
Adjusted basic and diluted earnings per share (pence)
Discontinued operations
Adjustments to profit after tax:
Profit after tax (£m)
Exceptional items (£m)
Impairment of intangible assets (£m)
Tax effect of the above adjustments (£m)
Adjusted (loss)/profit after tax (£m)
Weighted average number of shares in issue during the year:
- Basic
- Dilutive effect of share options
- Diluted
Basic earnings per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted earnings per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to profit after tax have the following effect:
Basic and diluted earnings per share (pence)
Exceptional items (pence)
Impairment of intangible assets (pence)
Tax effect of the above adjustments (pence)
Adjusted basic and diluted earnings per share (pence)
2016
2015
(14.4)
3.5
13.0
(0.6)
1.5
(2.0)
2.5
-
(0.4)
0.1
362,486,525
332,796,904
13,074,591
536,550
375,561,116
333,333,454
(4.0)
0.4
(4.0)
0.4
(4.0)
1.0
3.6
(0.2)
0.4
(0.6)
-
(0.6)
-
(0.6)
0.7
-
(0.1)
-
2016
2015
0.2
(0.3)
-
-
(0.1)
0.7
(0.1)
-
(0.1)
0.5
362,486,525
332,796,904
13,074,591
536,550
375,561,116
333,333,454
0.1
-
0.1
-
0.1
(0.1)
-
-
-
0.2
0.2
0.2
0.2
0.2
-
-
-
0.2
Annual Report and Accounts 2016
60
10. Discontinued operations
No operations were classified as discontinued during either the current or prior years. The profit from operations discontinued in 2014 is analysed below. Only
those costs directly attributable to the disposed titles have been classified within discontinued operations and no apportionment of central overheads has
been made.
Revenue
Cost of sales
Gross (loss)/profit
Distribution expenses
Administration expenses
2016
£m
-
(0.1)
(0.1)
-
-
Operating (loss)/profit before depreciation, amortisation, exceptional items and impairment of intangible assets
(0.1)
Operating (loss)/profit
(Loss)/profit from discontinued operations before tax
(Loss)/profit after tax from discontinued operations
Gain on sale of operations
Tax on sale of operations
Gain on sale of operations after tax
Profit from discontinued operations
(0.1)
(0.1)
(0.1)
0.3
-
0.3
0.2
2015
£m
0.2
0.4
0.6
(0.1)
-
0.5
0.5
0.5
0.5
0.1
0.1
0.2
0.7
The gain on sale of operations in 2016 relates to the release of a provision associated with historic magazine disposals. The gain on sale of operations
in 2015 related to contingent consideration received in relation to the Craft titles.
11. Property, plant and equipment
Group
Cost
At 1 October 2014
Additions
Disposals
Exchange adjustments
At 30 September 2015
Additions
Disposals
Exchange adjustments
At 30 September 2016
Accumulated depreciation
At 1 October 2014
Charge for the year
Disposals
Exchange adjustments
At 30 September 2015
Charge for the year
Disposals
Exchange adjustments
At 30 September 2016
Net book value at 30 September 2016
Net book value at 30 September 2015
Net book value at 1 October 2014
Land and
buildings
£m
Plant and
machinery
£m
Equipment,
fixtures and
fittings
£m
2.9
-
(1.4)
0.1
1.6
-
(1.1)
-
0.5
(2.6)
(0.1)
1.4
(0.1)
(1.4)
-
1.1
-
(0.3)
0.2
0.2
0.3
4.9
0.2
-
0.1
5.2
0.3
(2.4)
0.2
3.3
(4.4)
(0.3)
-
(0.2)
(4.9)
(0.3)
2.3
(0.2)
(3.1)
0.2
0.3
0.5
2.3
-
(0.6)
0.1
1.8
-
(1.6)
0.1
0.3
(2.1)
(0.1)
0.5
-
(1.7)
(0.1)
1.6
-
(0.2)
0.1
0.1
0.2
Total
£m
10.1
0.2
(2.0)
0.3
8.6
0.3
(5.1)
0.3
4.1
(9.1)
(0.5)
1.9
(0.3)
(8.0)
(0.4)
5.0
(0.2)
(3.6)
0.5
0.6
1.0
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Depreciation is included within administration expenses in the consolidated income statement.
61
Future plc
Financial
statements
12. Intangible assets
Group
Cost
At 1 October 2014
Additions
Disposals
Exchange adjustments
At 30 September 2015
Additions through business combinations
Other additions
Disposals
Exchange adjustments
At 30 September 2016
Accumulated amortisation
At 1 October 2014
Charge for the year
Disposals
Exchange adjustments
At 30 September 2015
Charge for the year
Impairment
Disposals
Exchange adjustments
At 30 September 2016
Net book value at 30 September 2016
Net book value at 30 September 2015
Net book value at 1 October 2014
Goodwill
£m
Magazine
and website
£m
285.6
-
-
1.9
287.5
1.5
-
-
4.9
293.9
(244.7)
-
-
(1.9)
(246.6)
-
(13.0)
-
(4.8)
(264.4)
29.5
40.9
40.9
15.2
-
(3.1)
0.3
12.4
1.1
-
(0.2)
1.0
14.3
(15.1)
(0.1)
3.1
(0.3)
(12.4)
-
-
0.2
(1.0)
(13.2)
1.1
-
0.1
Other
£m
15.3
1.8
(2.8)
0.5
14.8
-
1.7
(0.2)
1.2
17.5
(11.9)
(2.2)
2.7
(0.5)
(11.9)
(2.0)
-
0.2
(1.2)
(14.9)
2.6
2.9
3.4
Total
£m
316.1
1.8
(5.9)
2.7
314.7
2.6
1.7
(0.4)
7.1
325.7
(271.7)
(2.3)
5.8
(2.7)
(270.9)
(2.0)
(13.0)
0.4
(7.0)
(292.5)
33.2
43.8
44.4
Magazine and website related assets relate mainly to trademarks, advertising relationships, e-commerce technology and customer lists. These assets
are amortised over their estimated economic lives, typically ranging between one and fifteen years.
Any residual amount arising as a result of the purchase consideration being in excess of the value of identified magazine related assets is recorded
as goodwill. Goodwill is not amortised under IFRS, but is subject to impairment testing either annually or on the occurrence of some triggering event.
Goodwill is recorded and tested for impairment on a territory by territory basis.
Further details regarding the intangible assets acquired during the year through business combinations are set out in note 29.
Other intangibles relate to capitalised software costs and website development costs.
Amortisation is included within administration expenses in the consolidated income statement.
Impairment assessments for goodwill and other intangibles
The goodwill balance at 30 September 2016 and 30 September 2015 relates to the UK.
The basis for calculating recoverable amounts is described in the accounting policies.
Trends in the economic and financial environment, competition and regulatory authorities’ decisions, or changes in competitor behaviour in response
to the economic environment may affect the estimate of recoverable amounts, as will unforeseen changes in the political, economic or legal systems
of some countries.
Annual Report and Accounts 2016
62
12. Intangible assets (continued)
Other assumptions that influence estimated recoverable amounts are set out below:
At 30 September 2016
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDAE margins assumed
Post-tax discount rate
Pre-tax discount rate
At 30 September 2015
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDAE margins assumed
Post-tax discount rate
Pre-tax discount rate
UK
Value in use
Five year plans
Discounted cash flow
2.0%
2.4% to 3.7%
8.2%
10.3%
UK
Value in use
Five year plans
Discounted cash flow
2.0%
5.2% to 12.4%
9.0%
11.3%
Sensitivity of recoverable amounts
At 30 September 2016 the analysis of the recoverable amounts gave rise to the following assessments of sensitivity:
UK
An impairment charge has been recorded in the year as noted below. Therefore the value in use is effectively the same as the carrying value. Any future
performance which falls slightly short of that used to determine those values would be liable to result in a further impairment. A change of plus or minus 50
basis points in the post-tax discount rate would decrease or increase respectively the recoverable amount by £1.6m. Likewise a change of plus or minus
10% in the forecast cash flows over the next five years would increase or decrease respectively the recoverable amount by £0.6m.
Impairment
At 30 September 2016 an impairment charge of £13.0m has been taken against the carrying value of the UK business. This reflects a shift in the underlying
forecast profitability and cash flows of the UK and the continued decline of print.
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13. Investments in Group undertakings
Company
Shares in Group undertakings
At 1 October
Provision for impairment
At 30 September
2016
£m
131.9
(130.9)
1.0
2015
£m
131.9
-
131.9
In September 2016 the Directors reviewed their valuations of the Company’s investments. Following this review, and the receipt of a dividend of £130.9m, the
Company’s investment in Rho Holdings Limited was written down to a carrying value of £nil resulting in an impairment charge of £130.9m.
14. Deferred tax assets and liabilities
The following are the major deferred tax assets and liabilities recognised by the Group, and the movements thereon, during the current and prior years.
At 1 October 2014 and 30 September 2015
Acquisitions
Credited to income statement
– Continuing operations
Exchange adjustment
At 30 September 2016
Intangible
assets
£m
Short term
timing
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
(0.7)
(0.3)
0.1
-
(0.9)
-
-
0.2
-
0.2
0.4
-
0.1
-
0.5
0.1
-
1.4
0.2
1.7
Total
£m
(0.2)
(0.3)
1.8
0.2
1.5
The changes to the main rate of corporation tax for the UK announced in the July 2015 Budget were substantively enacted on 18 November 2015
and the change announced in the March 2016 Budget was substantively enacted on 15 September 2016. The changes reduced the main rate of
corporation tax to 19% from 1 April 2017 and to 17% from 1 April 2020. As these changes had been substantively enacted before the year-end, any
impact has been included in these financial statements.
Certain deferred tax assets and liabilities have been offset against each other where they relate to the same jurisdiction. The following is the analysis
of deferred tax balances after offset for balance sheet purposes:
Deferred tax assets
Deferred tax liabilities
Net deferred tax asset/(liability)
2016
£m
2.4
(0.9)
1.5
2015
£m
0.5
(0.7)
(0.2)
The deferred tax asset of £2.4m (2015: £0.5m) is disclosed as a non-current asset of which the assets due within one year total £0.1m (2015: £0.1m).
The deferred tax liability of £0.9m (2015: £0.7m) is disclosed as a non-current liability of which the liabilities due within one year total £nil (2015: £nil).
As at 30 September 2016 the Group has:
• unprovided deferred tax assets on tax losses totalling £5.9m (2015: £16.1m) of which £5.4m (2015: £15.0m) arose in the US; and
• unprovided deferred tax assets on other temporary differences totalling £1.1m (2015: £1.1m) of which £1.1m (2015: £1.1m) arose in the US.
Deferred tax assets have been recognised in respect of tax losses and other temporary differences where it is probable that these assets will be
recovered.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax liability in the
foreseeable future.
The Company has no unprovided deferred tax assets or liabilities at 30 September 2016 (2015: £nil).
Annual Report and Accounts 2016
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15. Inventories
Raw materials
Work in progress
Finished goods
Total
2016
£m
0.1
0.3
-
0.4
The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £3.5m (2015: £3.5m).
16. Trade and other receivables
Current assets:
Trade receivables
Provisions for impairment of trade receivables
Trade receivables net
Amounts owed by Group undertakings
Other receivables
Prepayments and accrued income
Non-current assets:
Other receivables
Total
Group
2016
£m
Company
2016
£m
9.2
(0.6)
8.6
-
0.3
3.3
12.2
0.2
12.4
-
-
-
43.4
-
0.1
43.5
-
43.5
Group
2015
£m
11.3
(0.6)
10.7
-
0.5
4.0
15.2
0.1
15.3
2015
£m
0.1
0.3
0.1
0.5
Company
2015
£m
-
-
-
46.7
-
-
46.7
-
46.7
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
Receivable balances from the two main magazine distributors, one in the UK segment and one in the US segment, represented 26% (2015: 30%) of
the Group’s trade receivables balance at 30 September 2016.
The Group has provided for estimated irrecoverable amounts in accordance with its accounting policy described on page 52 of these financial
statements.
Credit checks are obtained and, if applicable, guarantees put in place before a new customer is accepted and terms and credit limits are agreed.
Bookings are not taken before these factors have been fulfilled. In addition, annual credit checks are carried out and fully documented. Final decisions
on credit terms are made by an appropriate senior manager within advertising or finance. In the event of a request to increase a customer’s credit limit
the following factors will be considered: trading history to date, review of credit status and review of the reason for the increase.
Included within the Group’s trade receivables balance are receivables with a carrying amount of £3.0m (2015: £2.9m) which are past due at the
reporting date but for which the Group has not provided as there has not been a significant change in credit quality and the Group believes that the
amounts are still recoverable. These relate to advertising and licensing debtors in the UK and US. The Group does not hold any security over these
balances. A breakdown of the ageing is set out below:
Past due
0-30 days
31-60 days
61-90 days
91+ days
Total
Group
2016
£m
1.6
0.8
0.3
0.3
3.0
Group
2015
£m
0.7
0.5
0.5
1.2
2.9
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16. Trade and other receivables (continued)
As at 30 September 2016, trade receivables of £0.6m (2015: £0.6m) were impaired and provided for. The individually impaired receivables mainly
relate to advertising and licensing customers. It is assessed that a portion of the receivables is expected to be recovered.
The movement in the Group provision for trade receivables during the year is as follows:
At 1 October
Provision for receivables impaired
Receivables written off during the year
At 30 September
Group
2016
£m
0.6
0.1
(0.1)
0.6
Group
2015
£m
1.1
(0.1)
(0.4)
0.6
The creation and release of provisions for impaired receivables have been included in administration expenses in the income statement with the
exception of a credit of £0.4m in 2015 relating to a distributor that filed for bankruptcy which was included within exceptional items, as described in
note 4. Amounts charged to the provision are written off when there is no realistic expectation of recovering additional cash.
The other asset classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold
any collateral as security for trade receivables.
All the Company’s receivables are with Group undertakings, with the exception of £0.1m (2015: £nil) relating to prepaid share issue costs, and no
additional disclosure in relation to credit risk is required. Interest on £0.3m (2015: £0.3m) of the amounts owed by Group undertakings has been
charged at three-month LIBOR + 2.6%. The balance of amounts owed by Group undertakings is interest-free without any terms for repayment.
17. Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents (excluding bank overdraft)
Group
2016
£m
2.9
2.9
Cash and cash equivalents include the following for the purposes of the cash flow statements:
Cash at bank and in hand
Bank overdraft (note 19)
Cash and cash equivalents
Group
2016
£m
2.9
-
2.9
Company
2016
£m
-
-
Company
2016
£m
-
(1.0)
(1.0)
Group
2015
£m
2.5
2.5
Group
2015
£m
2.5
(0.9)
1.6
Company
2015
£m
-
-
Company
2015
£m
-
(8.8)
(8.8)
The Group has a number of authorised counterparties with whom cash balances are held in the countries in which the Group operates. Credit risk is
minimised by considering the credit standing of all potential bankers before selecting them by the use of external credit ratings. 98% of the Group’s
cash is held at counterparties with an S+P credit rating of BBB+.
Annual Report and Accounts 2016
66
18. Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other taxation and social security
Other payables
Accruals and deferred income
Total
Group
2016
£m
4.4
-
0.8
0.8
15.4
21.4
Company
2016
£m
-
0.8
-
-
1.6
2.4
Group
2015
£m
6.8
-
0.7
1.2
12.0
20.7
Company
2015
£m
-
124.0
-
-
-
124.0
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Group has financial risk
management policies in place to ensure all payables are paid within the agreed credit terms.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
Amounts owed to Group undertakings were settled in the year through assignment of amounts owed by other Group undertakings. Amounts owed to
Group undertakings are unsecured and interest-free without any terms for repayment.
19. Financial liabilities – loans, borrowings and overdrafts
Non-current liabilities
Obligations under finance leases
9.6%
-
Interest rate at
30 September
2016
Interest rate at
30 September
2015
Total
Current liabilities
Bank overdraft
Sterling revolving loan
Total
Interest rate at
30 September
2016
Interest rate at
30 September
2015
-
2.5%
3.0%
3.0%
The interest-bearing loans and overdraft are repayable as follows:
Within one year
Between one and two years
Total
Group
2016
£m
0.1
0.1
Group
2016
£m
-
2.3
2.3
Group
2016
£m
2.3
0.1
2.4
Company
2016
£m
-
-
Company
2016
£m
-
2.3
2.3
Company
2016
£m
2.3
-
2.3
Group
2015
£m
-
-
Group
2015
£m
0.9
3.4
4.3
Group
2015
£m
4.3
-
4.3
Company
2015
£m
-
-
Company
2015
£m
0.9
3.4
4.3
Company
2015
£m
4.3
-
4.3
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19. Financial liabilities – loans, borrowings and overdrafts (continued)
The total multicurrency revolving and overdraft facility available to the Group at 30 September 2016 amounted to £5.0m. On 21 October 2016, following
the acquisition of Imagine, the Group negotiated a new bank facility with HSBC Bank plc to replace its existing facility with Santander plc and now
has facilities totalling £14.0m, comprising an £8.5m term loan, a £3.5m revolving credit facility and a £2.0m uncommitted overdraft facility. The new
facilities run to 23 June 2021. Repayments are required in respect of the term loan as follows:
Repayment date
30 September 2017
30 September 2018
30 September 2019
30 September 2020
23 June 2021
Repayment amount
£600,000
£800,000
£1,000,000
£1,250,000
£4,850,000
The Group has granted security to the banks and the availability of the facility is subject to certain covenants.
Fees relating to the new facility amounted to £0.4m and these will be amortised over the initial term of the facility (capitalised fees relating to the old
facility were £0.1m at 30 September 2016). The bank borrowings and interest are guaranteed by Future plc, Future Holdings 2002 Limited, Future
Publishing Limited, Future US, Inc, Future Publishing (Overseas) Limited, Future IP Limited, FutureFolio Limited and all of the entities acquired as part
of the Imagine acquisition (being Miura (Holdings) Limited, Fascination (Holdings) Limited, Skaro (Holdings) Limited, Imagine Publishing Group Limited
and Imagine Publishing Limited).
Interest payable under the current credit facility is calculated as the cost of one-month LIBOR (currently approximately 0.3%) plus an interest margin of
between 2.00% and 2.50%, dependent on the level of Bank EBITDAE.
The key covenants are set out in the following table where net debt is exclusive of non-current tax and Bank EBITDAE is not materially different to
statutory EBITDAE on a total Group basis.
Net debt/Bank EBITDAE
Bank EBITDAE/Interest
Periods from 31 March 2017 – less than 2.25 times
Periods from 31 March 2017 – more than 4.00 times
The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months. Due to the change of bankers no covenant testing was
required at year-end, however the Group was in full compliance with all covenants at all testing dates during the year ended 30 September 2016.
The Company also has a non-interest-bearing overdraft of £1.0m (2015: £7.9m) which forms part of the Group cash pooling account and can be offset
against cash balances in other Group companies.
20. Provisions
Group
At 1 October 2015
Charged in the year
Released in the year
Utilised in the year
At 30 September 2016
Property
£m
2.1
0.2
(0.5)
(0.3)
1.5
The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property. The vacant property provision is
expected to be utilised over the next five years.
Provisions for the Company were £nil (2015: £nil).
Annual Report and Accounts 2016
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21. Other non-current liabilities
Group
Other payables
2016
£m
0.5
2015
£m
0.8
Other payables consist mainly of deferred property lease liabilities and, in 2015, deferred subscription revenue.
22. Financial instruments
Financial instruments by category
The Group’s financial assets and financial liabilities are set out below:
Group
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Overdraft
Current borrowings
Non-current borrowings
Total financial liabilities
Group
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Overdraft
Current borrowings
Total financial liabilities
Amortised cost
2016
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
Total fair
value
£m
8.6
1.7
2.9
13.2
-
-
-
-
-
-
-
-
-
-
(4.4)
(10.3)
-
(2.3)
(0.1)
(17.1)
8.6
1.7
2.9
13.2
(4.4)
(10.3)
-
(2.3)
(0.1)
(17.1)
8.6
1.7
2.9
13.2
(4.4)
(10.3)
-
(2.3)
(0.1)
(17.1)
Amortised cost
2015
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
Total fair
value
£m
10.7
2.4
2.5
15.6
-
-
-
-
-
-
-
-
-
(6.8)
(10.5)
(0.9)
(3.4)
(21.6)
10.7
2.4
2.5
15.6
(6.8)
(10.5)
(0.9)
(3.4)
(21.6)
10.7
2.4
2.5
15.6
(6.8)
(10.5)
(0.9)
(3.4)
(21.6)
Note
16
17
18
19
19
19
Note
16
17
18
19
19
Total financial liabilities are shown net of unamortised costs which amounted to £0.1m (2015: £0.1m).
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22. Financial instruments (continued)
The Company’s financial assets and liabilities are set out below:
Company
Other receivables
Total financial assets
Other liabilities
Overdrafts
Current borrowings
Total financial liabilities
Company
Other receivables
Total financial assets
Other liabilities
Overdrafts
Current borrowings
Total financial liabilities
Amortised cost
2016
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
Total fair
value
£m
43.4
43.4
-
-
-
-
-
-
(2.4)
(1.0)
(2.3)
(5.7)
43.4
43.4
(2.4)
(1.0)
(2.3)
(5.7)
Amortised cost
2015
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
46.7
46.7
-
-
-
-
-
-
(124.0)
(8.8)
(3.4)
(136.2)
46.7
46.7
(124.0)
(8.8)
(3.4)
(136.2)
43.4
43.4
(2.4)
(1.0)
(2.3)
(5.7)
Total fair
value
£m
46.7
46.7
(124.0)
(8.8)
(3.4)
(136.2)
Note
16
18
19
19
Note
16
18
19
19
Total financial liabilities are shown net of unamortised costs which amounted to £0.1m (2015: £0.1m).
The fair value is the amount for which a financial instrument could be exchanged between knowledgeable, willing parties. If an active market exists,
the market price is applied. If an active market does not exist a discounted cash flow or generally accepted estimation and valuation technique based
on market conditions at the balance sheet date is used to calculate an estimated value.
The market value of financial instruments is determined by the use of valuation techniques including estimated discounted cash flows.
Treasury overview
The Group uses financial instruments to raise funding for its operations and to manage the financial risks arising from those operations. The agreements
governing the principal instruments entered into were approved by the Board.
The principal financing and treasury exposures faced by the Group arise from foreign currencies, working capital management, the financing of capital
expenditure and acquisitions, the management of interest rates on the Group’s debt, the investment of surplus cash and the management of the Group’s
debt facilities. The Group manages all of these exposures with an objective of remaining within covenant ratios agreed with the Group’s banks, and the
Group has been in compliance with its covenants during the year. These ratios are disclosed in note 19.
The capital structure of the Group is reviewed regularly by the Board to ensure that the debt/equity ratio of funding remains appropriate for the Group.
In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt.
Annual Report and Accounts 2016
70
22. Financial instruments (continued)
Currency and interest rate profile
The currency and interest rate profile of the Group’s financial assets and liabilities is shown below:
At 30 September 2016
Currency:
Sterling
US Dollar
Euro
Other
Total
At 30 September 2015
Currency:
Sterling
US Dollar
Euro
Other
Total
Financial assets
Financial liabilities
Floating
rate
£m
Non-
interest
bearing
£m
Total
£m
Floating
rate
£m
Fixed
rate
£m
Non-
interest
bearing
£m
Net financial
(liabilities)/
assets
£m
Total
£m
-
-
-
-
-
-
-
-
-
-
4.1
7.5
0.4
1.2
4.1
7.5
0.4
1.2
(2.3)
(0.1)
(10.2)
(12.6)
(8.5)
-
-
-
-
-
-
(3.2)
(0.2)
(1.1)
(3.2)
(0.2)
(1.1)
4.3
0.2
0.1
13.2
13.2
(2.3)
(0.1)
(14.7)
(17.1)
(3.9)
9.6
4.7
0.6
0.7
9.6
4.7
0.6
0.7
(4.3)
-
-
-
15.6
15.6
(4.3)
-
-
-
-
-
(13.4)
(17.7)
(8.1)
(3.5)
(0.1)
(0.3)
(3.5)
(0.1)
(0.3)
1.2
0.5
0.4
(17.3)
(21.6)
(6.0)
Interest rate risk
Details of the interest rates on borrowings as at 30 September 2016 are set out in note 19.
The Group’s overall policy on hedging interest rate risk is as follows:
• To the extent that net debt is below £10m there is no requirement to hedge against interest rate fluctuations on the balance of the gross debt.
• To the extent that net debt is above £10m a minimum of 25% of the balance of the gross debt greater than £10m should be hedged.
In applying the above policy, management takes full consideration of cash flow projections to fix the period for which any hedging arrangements are
entered into.
For 2016, if interest rates on net borrowings had been on average 0.5% higher/lower with all other variables held constant, the post-tax loss for the
year would have decreased/increased by £nil (2015: £nil).
There would be no impact on equity excluding retained earnings.
Foreign exchange risk
Some of the Group’s activities are carried out in countries outside the United Kingdom where transactions are carried out in that country’s own
functional currency. Movements in exchange rates can therefore have a significant impact on the Group’s total cash flows, whilst the translation of the
results, assets and liabilities of foreign operations into sterling can have a significant effect on the Group’s reported profits and balance sheet. The
main exposures are to movements in the US Dollar and Australian Dollar against sterling.
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22. Financial instruments (continued)
The Group’s policy for managing exchange rate risk is summarised as follows:
•
Transaction exposure - the Group manages this by ensuring that transactions are denominated in the local functional currency of the operating units
wherever possible. Where this is not possible the use of forward contracts to hedge exposure is considered. The use of forward contracts (or any
other derivative financial instrument) is subject to authorisation by the Chief Financial Officer.
• Translation exposure – the Group matches currency assets with currency liabilities wherever possible.
The following table summarises the Group’s sensitivity to translational currency exposures at 30 September:
2016 currency risks expressed in
Currency 1/Currency 2
£m
Reasonable shift
Impact on loss after tax if Currency 1 strengthens against Currency 2
Impact on loss after tax if Currency 1 weakens against Currency 2
Impact on equity excluding retained earnings if Currency 1 strengthens against Currency 2
Impact on equity excluding retained earnings if Currency 1 weakens against Currency 2
2015 currency risks expressed in
Currency 1/Currency 2
£m
Reasonable shift
Impact on loss after tax if Currency 1 strengthens against Currency 2
Impact on loss after tax if Currency 1 weakens against Currency 2
Impact on equity excluding retained earnings if Currency 1 strengthens against Currency 2
Impact on equity excluding retained earnings if Currency 1 weakens against Currency 2
GBP/USD
GBP/AUD
10%
(0.5)
0.5
0.5
(0.5)
10%
-
-
-
-
GBP/USD
GBP/AUD
10%
-
-
-
-
10%
0.1
(0.1)
(0.1)
0.1
Liquidity risk
The Group funds the business largely from cash flows generated from operations and long-term debt. Details of the Group’s borrowings are disclosed
in note 19.
The Group monitors and manages the cash for the Group and has maintained committed banking facilities as noted above to mitigate any liquidity
risk it may face. If necessary, inter-company loans within the Group meet short-term cash needs. The following table shows the Group’s remaining
contractual maturity for financial liabilities and derivative financial instruments. The table has been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group is obliged to pay:
30 September 2016
Trade payables
Other liabilities
Overdraft
Borrowings
Total financial liabilities
30 September 2015
Trade payables
Other liabilities
Overdraft
Borrowings
Total financial liabilities
Less than
one year
£m
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
(4.4)
(9.2)
-
(2.3)
(15.9)
-
(0.1)
-
(0.1)
(0.2)
-
(1.0)
-
-
(1.0)
-
-
-
-
-
Less than
one year
£m
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
(6.8)
(9.3)
(0.9)
(3.4)
(20.4)
-
(0.1)
-
-
(0.1)
-
(0.9)
-
-
(0.9)
-
(0.2)
-
-
(0.2)
Total
£m
(4.4)
(10.3)
-
(2.4)
(17.1)
Total
£m
(6.8)
(10.5)
(0.9)
(3.4)
(21.6)
Annual Report and Accounts 2016
72
23. Issued share capital
Authorised share capital
600,000,000 Ordinary shares of 1p each
Allotted, issued and fully paid Ordinary shares of 1p each
At beginning of year
Placing of Ordinary shares
Share scheme exercises
Share Incentive Plan matching shares
At end of year
2016
£m
6.0
2016
2015
Number of
shares
334,441,247
33,440,000
861,894
15,446
£m
3.3
0.4
-
-
Number of
shares
333,781,473
-
653,725
6,049
368,758,587
3.7
334,441,247
2015
£m
6.0
£m
3.3
-
-
-
3.3
On 27 November 2015 the Company completed a placing of 33,440,000 Ordinary shares with a nominal value of £334,400 for a total cash
commitment of £3,344,000. During the year 861,894 Ordinary shares with a nominal value of £8,619 were issued by the Company pursuant to share
scheme exercises and a further 15,446 Ordinary shares were issued under the Share Incentive Plan for a total cash commitment of £nil, as detailed in
note 24.
In 2015 653,725 Ordinary shares with a nominal value of £6,537 were issued by the Company for a total cash commitment of £nil pursuant to share
scheme exercises as detailed in note 24.
24. Share-based payments
The income statement charge for the year for share-based payments was £0.5m (2015: £0.1m). This charge has been included within administration
expenses.
These charges arise when employees are granted awards under the Group’s share option schemes, performance share plan (PSP), deferred
annual bonus scheme (DABS) or Share Incentive Plan (SIP) and when employees are granted awards by the trustees of The Future Network plc
1999 Employee Benefit Trust (EBT). The charge equates to the fair value of the award and has been calculated using the Monte Carlo and Black-
Scholes models, using the most appropriate model for each scheme. Assumptions have been made in these models for expected volatility, risk-free
rates and dividend yields.
A reconciliation of movements in share options and other share incentive schemes is shown below:
Outstanding at the beginning of the year
Granted
Share awards exercised – new share issues
Lapsed
Outstanding at 30 September
Exercisable at 30 September
2016
Number of
options/awards
2016
Weighted average
exercise price
2015
Number of
options/awards
2015
Weighted average
exercise price
16,182,214
11,806,730
(861,894)
(6,282,269)
20,844,781
349,304
£0.012
£0.000
£0.000
£0.021
£0.003
£0.000
12,885,930
12,293,441
(653,725)
(8,343,432)
16,182,214
57,052
£0.027
£0.000
£0.000
£0.017
£0.012
£0.000
The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £0.088 (2015: £0.104).
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24. Share-based payments (continued)
For options and other share incentive schemes outstanding at 30 September the weighted average exercise prices and remaining contractual lives are
as follows:
Number of options/awards
Weighted average exercise price
Weighted average remaining
contractual life in years
2016
2015
2016
2015
2016
2015
Sharesave Plan
December 2012
December 2013
PSP
December 2012
December 2013
July 2014
February 2015
May 2015
August 2015
November 2015
September 2016
DABS
November 2009
December 2010
January 2012
December 2012
December 2013
November 2015
-
520,606
-
2,156,022
2,500,000
3,717,353
1,046,979
1,647,834
6,388,860
2,415,730
1,043
5,924
25,304
7,050
102,093
309,983
691,958
805,833
678,159
2,156,022
2,500,000
6,336,415
1,046,979
1,647,834
-
-
1,043
5,924
50,085
159,869
102,093
-
£0.140
£0.130
£0.140
£0.130
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total outstanding at 30 September
20,844,781
16,182,214
£0.003
£0.012
The fair value per share for grants made during the year and the assumptions used in the calculation are as follows:
-
1
-
-
1
1
2
2
2
3
-
-
-
-
-
-
2
Grant date
Share price at grant date
Exercise price
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk-free rate
Dividend yield
Fair value
Fair value – EPS element
Fair value – cash element
DABS
30/11/15
£0.1088
-
1
50%
1
1
0%
-
2016
PSP
PSP
PSP
2015
PSP
30/11/15
£0.1088
01/09/16
£0.088
04/02/15
£0.109
18/05/15
£0.105
-
3
50%
3
3
1%
-
-
3
49%
3
3
0%
-
£0.088
£0.088
£0.088
-
3
55%
3
3
1%
-
£0.101
£0.109
£0.093
-
3
54%
3
3
1%
-
£0.099
£0.105
£0.093
£0.1088
-
-
£0.1088
£0.1088
£0.1088
1
2
-
1
2
2
3
3
-
-
-
-
-
-
1
-
2
PSP
03/08/15
£0.106
-
3
54%
3
3
1%
-
£0.100
£0.106
£0.093
Notes:
1. The expected volatility is based on Future’s historical volatility, averaged over a period equal to the expected life, where possible.
2. The Group has used the Black-Scholes model to value instruments with non-market-based performance criteria such as earnings per share. For instruments with market-based performance criteria,
notably total shareholder return, the Group has used a Monte Carlo model to determine the fair value. The Black-Scholes model has been used to value all options with the exception of 50% of certain
PSP grants which have market-based performance criteria; the Monte Carlo model has been used to value these awards.
3. In February 2016, the performance criteria in respect of 50% of awards granted in February 2015, May 2015 and August 2015 was changed from TSR performance to net cash flow. The fair value of
these awards has been recalculated as at the date of the change.
Future plc operates one share option scheme being the Future plc 2010 Approved Sharesave Plan (2010 Sharesave Plan) and at 30 September 2016
options had been granted under this scheme.
Annual Report and Accounts 2016
74
24. Share-based payments (continued)
The 2010 Sharesave Plan (the Sharesave Plan)
Under the Sharesave Plan the option entitlement granted to participating employees is linked to the monthly contributions which such employees have
agreed to pay into the Sharesave Plan (up to a maximum amount of £250 per month). The options granted under the Sharesave Plan vest on the third
anniversary of the grant of such options. Where legal and regulatory constraints permit, the Company uses its discretion to offer options granted under
the Sharesave Plan at a discount to the market price in force at the date of the invitation being made.
Other share-based payments
No further share options are to be granted. Instead, the Group has put into place a number of alternative share incentive schemes.
Performance Share Plan (PSP)
The PSP is a share-based incentive scheme open to the executive Directors and certain other key senior managers, usually based on a percentage
of the participant’s salary. Awards under this scheme are subject to stretching performance criteria measured against both earnings per share (EPS)
and either total shareholder return (TSR) or net cash flow, depending on the date of grant. Subject to the participant’s continued employment within the
Group, awards will vest three years after the date of grant assuming that the following performance criteria are achieved:
Performance criteria in respect of awards granted prior to 4 February 2015
•
•
A maximum of 50% of an award will vest if the Group’s growth in adjusted EPS is equal to RPI plus 8%, 0% will vest if the Group’s growth in
adjusted EPS is equal to RPI plus 3%, and vesting will be on a pro rata straight-line basis between the two. If growth in the Group’s adjusted EPS is
less than RPI plus 3%, none of that 50% of the award will vest.
The remaining 50% of the award will vest if the Company’s TSR performance, compared to a group of similar companies, places it in the top quintile
as against the comparator companies. If the Company’s TSR performance is median, 12.5% of the award will vest, and vesting will be on a pro rata
straight-line basis between the two points. If the Company’s performance is below median, none of that 50% of the award will vest. The comparator
group of companies is as disclosed on page 32 of this Annual Report.
Performance criteria in respect of awards granted between 4 February 2015 and 29 November 2015
In February 2016, the Remuneration Committee exercised its discretion to change the performance criteria in respect of 50% of awards granted
between 4 February 2015 and 29 November 2015 from TSR performance to net cash flow in order to better align the interests of participants and
shareholders. There was no change to the EPS performance criteria in respect of the remaining 50% of these awards. The revised performance
criteria are as follows:
•
•
A maximum of 50% of an award will vest if the Group’s adjusted EPS for the year ended 30 September 2017 (the last financial year of the
performance period) is 1.4p, 12.5% will vest if the Group’s EPS is 1.0p, and vesting will be on a pro rata straight-line basis between the two. If the
Group’s adjusted EPS is below 1.0p, none of that 50% of the award will vest.
The remaining 50% of the award will vest if the Group’s net cash flow for the year ended 30 September 2017 (the last financial year of the
performance period) is £1.25m, 12.5% will vest if the Group’s net cash flow is £0.25m, and vesting will be on a pro rata straight-line basis between
the two. If the Group’s net cash flow is below £0.25m, none of that 50% of the award will vest.
Performance criteria in respect of awards granted between 30 November 2015 and 30 September 2016
•
•
A maximum of 50% of an award will vest if the Group’s adjusted EPS for the year ended 30 September 2018 (the last financial year of the
performance period) is 1.5p, 12.5% will vest if the Group’s EPS is 1.2p, and vesting will be on a pro rata straight-line basis between the two. If the
Group’s adjusted EPS is below 1.2p, none of that 50% of the award will vest.
The remaining 50% of the award will vest if the Group’s net cash flow for the year ended 30 September 2018 (the last financial year of the
performance period) is £0.75m, 12.5% will vest if the Group’s net cash flow is £(0.25)m, and vesting will be on a pro rata straight-line basis between
the two. If the Group’s net cash flow is below £(0.25)m, none of that 50% of the award will vest.
Grants were made under the PSP in February 2015, May 2015, August 2015, November 2015 and September 2016.
Deferred Annual Bonus Scheme (DABS)
The DABS is a share-based incentive scheme open to certain managers across the Group. The maximum value of any shares granted under the
DABS to any one participant will be an amount which is equal to a fixed percentage of that eligible participant’s annual bonus for the previous financial
year. The number of shares over which an award is to be granted to each participant will be calculated by reference to the market value of an Ordinary
share in the Company on the date of the award. Unless the Remuneration Committee decides otherwise at the date of grant, the shares awarded
under the DABS will vest six months after the date of the award, subject only to the employee remaining in the employment of the Group throughout
the vesting period.
A grant was made under the DABS in November 2015.
Share Incentive Plan (SIP)
In April 2015 the Group adopted a SIP which is open to all UK employees including the executive Directors. The scheme is a tax efficient incentive
plan pursuant to which employees are eligible to acquire up to £150 (or 10% of salary, if less) worth of Ordinary shares in the Company per month
or £1,800 per annum. Under the SIP employees are invited to subscribe for Partnership shares via salary deductions. If an employee agrees to buy
Partnership shares the Company currently matches the number of Partnership shares bought with an award of Matching shares on the basis of one
Matching share for every four Partnership shares. Matching share awards to date have been met by the issue of Ordinary shares to Yorkshire Building
Society as Trustee of the SIP.
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25. Other reserves
Treasury reserve
The treasury reserve represents the cost of shares in Future plc purchased in the market and held by the EBT to satisfy awards made by the trustees.
At beginning and end of year
Group
2016
£m
(0.3)
Group
2015
£m
(0.3)
The 1,426,848 (2015: 1,426,848) shares held by the EBT represent 0.4% (2015: 0.4%) of the Company’s issued share capital. The treasury reserve is
non-distributable.
Merger reserve
The merger reserve of £109.0m (2015: £109.0m) arose following the 1999 Group reorganisation and is non-distributable.
26. Pensions
The Group operates a defined contribution scheme for employees resident in the United Kingdom.
In the US, the Group operates a section 401(K) profit sharing defined contribution plan in respect of pensions, which covers substantially all Future US
employees. The section 401(K) plan allows employees to invest in 29 funds run by T. Rowe Price, but the employees, not the employer, have complete
control over which funds they invest in, although they have no control over the stocks owned by the funds.
During the year, £0.7m (2015: £0.8m) contributions were made to these plans and at 30 September 2016 the outstanding balance due to be paid over
to the plans was £0.1m (2015: £0.1m).
27. Commitments and contingent liabilities
(a) Operating lease commitments
At 30 September 2016, the Group had the following total future lease payments under non-cancellable operating leases:
Within one year
Between one and five years
After five years
Total
Land and
buildings
£m
2.2
6.4
7.0
15.6
Other
£m
-
-
-
-
Total
2016
£m
2.2
6.4
7.0
15.6
Land and
buildings
£m
2.5
5.8
5.8
14.1
Other
£m
0.1
-
-
0.1
Total
2015
£m
2.6
5.8
5.8
14.2
Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2016 total £1.8m (2015: £1.5m).
During the year, £1.6m (2015: £1.9m) was recognised in the income statement in respect of operating lease rental payments and £0.4m (2015: £0.2m)
was recognised in respect of sub-lease receipts.
The Group leases various offices under non-cancellable operating lease agreements. The leases have various terms, escalation clauses and renewal
rights. The Group also leases other equipment under non-cancellable operating lease agreements.
(b) Contingent liabilities
There are no contingent liabilities expected to result in a material loss for the Group.
(c) Capital commitments
There were no material capital commitments as at 30 September 2016 (2015: £nil).
28. Related party transactions
The Group had no material transactions with related parties in 2016 or 2015 which might reasonably be expected to influence decisions made by users
of these financial statements.
During the year, the Company had management charges payable of £0.5m (2015: £0.2m) to subsidiary undertakings. The outstanding balance owed
at 30 September 2016 was £0.5m (2015: £0.2m).
Annual Report and Accounts 2016
76
29. Acquisitions
Acquisition of Blaze Publishing
On 12 May 2016, Future Publishing Limited acquired certain assets from Blaze Publishing Limited for cash consideration of £0.4m. In addition,
deferred consideration of up to £0.3m is payable by 12 May 2017 based on gross contribution targets.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets:
- Advertising relationships
Trade and other payables
Deferred tax liabilities
Net assets acquired
Goodwill
Consideration
Consideration satisfied by:
Cash - initial consideration
Cash - deferred consideration
Total consideration
Book value
£m
Fair value
adjustment
£m
Provisional
fair value
£m
-
0.4
0.4
(0.2)
-
(0.2)
-
(0.1)
(0.1)
(0.2)
0.3
0.1
0.6
0.7
0.4
0.3
0.7
The goodwill is attributable to the synergies expected to arise in integrating the magazines and events into the wider Future group. The advertising
relationships will be amortised over a period of fifteen years.
Included within the Group’s results for the year are revenues of £0.9m and profit for the year of £nil from the Blaze assets.
If the acquisition had been completed on the first day of the financial year, it would have contributed £2.8m of revenue and profit of £0.1m during
the year.
Acquisition of Next Commerce Pty Ltd
On 15 August 2016, Future Publishing (Overseas) Limited acquired 100% of the share capital of Next Commerce Pty Ltd for cash consideration of
£0.3m. In addition, deferred consideration of up to £0.6m, in the form of shares in Future plc, is payable by 24 January 2017 based on
revenue performance.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets:
- E-commerce technology
Trade and other receivables
Cash
Trade and other payables
Deferred tax liabilities
Net assets acquired
Goodwill
Consideration
Consideration satisfied by:
Cash - initial consideration
Deferred consideration due in future years
Total consideration
Book value
£m
Fair value
adjustment
£m
Provisional
fair value
£m
-
0.6
0.6
0.2
0.1
-
-
0.2
0.1
(0.3)
(0.1)
(0.4)
-
(0.2)
(0.2)
-
0.3
0.3
0.6
0.9
0.3
0.6
0.9
The goodwill is attributable to the synergies expected to arise in leveraging the technology acquired across Future’s existing portfolio. The e-commerce
technology will be amortised over a period of ten years.
Included within the Group’s results for the year are revenues of £0.2m and profit for the year of £nil from Next Commerce Pty Ltd.
If the acquisition had been completed on the first day of the financial year, it would have contributed £2.0m of revenue and profit of £0.2m during
the year.
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29. Acquisitions (continued)
Acquisition of Noble House Media Limited
On 5 April 2016, Future Publishing Limited acquired 100% of the share capital of Noble House Media Limited for cash consideration of £0.1m.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets:
- Events acquired
Trade and other receivables
Trade and other payables
Net liabilities acquired
Goodwill
Consideration
Consideration satisfied by:
Cash
Total consideration
Book value
£m
Fair value
adjustment
£m
Provisional
fair value
£m
-
0.1
0.1
0.1
-
0.1
(0.4)
(0.3)
-
0.1
(0.4)
(0.2)
0.3
0.1
0.1
0.1
The goodwill is attributable to the synergies expected to arise in integrating the events into the wider Future group.
Included within the Group’s results for the year are revenues of £0.3m and loss for the year of £(0.1)m from Noble House Media Limited.
If the acquisition had been completed on the first day of the financial year, it would have contributed £0.8m of revenue and profit of £nil during the year.
Annual Report and Accounts 2016
78
30. Subsidiary undertakings
Details of the Company’s subsidiaries at 30 September 2016 are set out below. All subsidiaries are included in the consolidation. Shares of those
companies marked with an * are indirectly owned by Future plc through an intermediate holding company.
Company name and registered number
A&S Publishing Company Limited*
01584580
ECV Price Malaysia Sdn. Bhd.*
1021502-V
Future Holdings (2002) Limited
04387886
Future IP Limited
08207186
Future Publishing Limited*
02008885
Future Publishing (Overseas) Limited*
06202940
Future Publishing Holdings Limited
03430449
Future US, Inc*
0513070
Future Verlag GmbH*
HRB125675
FutureFolio Limited*
07956484
FXM International Limited
04212478
Rho Holdings Limited
00040056
Next Commerce Philippines Inc*
CS201517783
Next Commerce Pty Ltd*
113 146 786
Noble House Media Limited*
03220964
Pricepanda Group GmbH*
HRB138471B
Pricepanda Singapore Pte Ltd*
201214200D
Sarracenia Limited*
04582851
Country of
incorporation
Nature of business
Holding %
Class of shares
England and Wales
Non-trading
Malaysia
Dormant
England and Wales
Holding company
England and Wales
Intellectual property
England and Wales
England and Wales
Publishing
Publishing
100
100
100
100
100
100
£1 Ordinary shares
RM1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
England and Wales
Holding company
87.5
1 pence Ordinary shares
USA (State of California)
Publishing
Germany
Non-trading
England and Wales
Digital publishing solutions
England and Wales
Non-trading
Guernsey
Investment company
Philippines
Australia
Dormant
Comparison shopping
search engine
England and Wales
Publishing
Germany
Singapore
Dormant
Dormant
100
87.5
100
100
100
100
100
100
100
100
Not applicable
€1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
₱1 Ordinary shares
$1 Ordinary shares
£1 Ordinary shares
€1 Ordinary shares
€1 Ordinary shares
England and Wales
Dormant
100
£1 Ordinary shares
A&S Publishing Company Limited, Future Holdings (2002) Limited, Future IP Limited, Future Publishing Limited, FutureFolio Limited, FXM
International Limited and Noble House Media Limited are exempt from the requirement to file audited accounts by virtue of Section 479A of the
Companies Act 2006. Sarracenia Limited is exempt from the requirement to file audited accounts by virtue of Section 480 of the Companies Act 2006.
31. Post balance sheet event
On 21 October 2016 the Company completed the acquisition of 100% of the share capital of Miura (Holdings) Limited, the holding company and
ultimate parent company of Imagine Publishing Limited, for total consideration of 179,567,841 new Ordinary shares in the Company which, at the
closing price of 8.5p on 20 October 2016, represents consideration of £15.3m. As part of this transaction the Group refinanced, entering into new bank
facilities totalling £14.0m. Further details of these new facilities are included within note 19.
Fair value information on the assets and liabilities acquired is not yet available.
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Future plc
Notice of Annual
General Meeting
This Notice of Meeting is important and requires your immediate attention.
If you are in any doubt as to what action you should take, you should consult your
stockbroker, bank manager, solicitor, accountant or other independent adviser
authorised under the Financial Services and Markets Act 2000.
If you have sold or otherwise transferred all your shares in Future plc, please forward
this notice, together with the accompanying documents, as soon as possible either to
the purchaser or transferee, or to the person who arranged the sale or transfer so that
they can pass these documents to the purchaser or transferee.
Notice of Annual General Meeting
Notice is hereby given that the eighteenth Annual General Meeting of Future plc will be held
on Wednesday 1 February 2017 at Future’s London office, 1-10 Praed Mews, London W2 1QY
at 10:30am at which the following resolutions numbered 1 to 14 will be proposed as ordinary
resolutions, and resolutions numbered 15 to 18 will be proposed as special resolutions.
Ordinary Business
Ordinary resolutions
11.
To authorise the Directors to determine
the remuneration of the auditors of the
Company.
To receive and adopt the audited financial
statements of the Company for the
financial year ended 30 September 2016
and the reports of the Directors and the
auditors (the “Annual Report”).
12.
1.
2.
3.
To approve the Directors’ remuneration
implementation report as set out in pages
30 to 35 of the Annual Report of the
Company for the financial year ended 30
September 2016.
To approve the Remuneration policy
report as set out in pages 36 to 39 of
the Annual Report of the Company for
the three year period commencing on 1
October 2016.
4. To elect as a Director James Hanbury.
5. To re-elect as a Director Peter Allen.
6.
7.
To re-elect as a Director Zillah
Byng-Thorne.
To re-elect as a Director Penny
Ladkin-Brand.
8. To re-elect as a Director Manjit
Wolstenholme.
9.
To re-elect as a Director Hugo Drayton.
10.
To reappoint PricewaterhouseCoopers
LLP, Chartered Accountants and
Registered Auditors, as auditors of the
Company to hold office until the conclusion
of the next General Meeting at which
accounts are laid before the Company.
That, in substitution for any existing
authority, the Directors be and are
hereby generally and unconditionally
authorised in accordance with section 551
of the Companies Act 2006 (the ‘Act’) to
exercise all the powers of the Company to
allot shares in the Company and to grant
rights to subscribe for, or to convert any
security into, shares in the Company:
12.1 in connection with an offer by way of a
rights issue (comprising equity securities
as defined by section 560 of the Act),
up to an aggregate nominal amount of
£3,656,200 (such amount to be reduced
by the nominal amount of any relevant
securities allotted under paragraph
12.2 below):
(a)
(b)
to holders of Ordinary shares in the
capital of the Company in proportion (as
nearly as may be practicable) to their
respective holdings of Ordinary shares in
the capital of the Company; and
to holders of any other equity securities
as required by the rights of those
securities or as the Directors otherwise
consider necessary, but subject to such
exclusions or other arrangements as the
Board may deem necessary or expedient
in relation to treasury shares, fractional
entitlements, record dates, legal or
practical problems in or under the laws of
any territory, or the requirements of any
regulatory body or stock exchange; and
12.2 in any other case, up to an aggregate
nominal amount of £1,828,100 (such
amount to be reduced by the nominal
amount of any equity securities allotted
under paragraph 12.1 above in excess
of £1,828,100), at any time or times
during the period beginning on the date
of the passing of this resolution and
ending following the conclusion of the
Company’s next Annual General Meeting
or, if earlier, on 31 March 2018 (unless
previously revoked or varied by the
Company in General Meeting) save that
the Company may before expiry of this
authority make an offer or agreement
which would or might require relevant
securities to be allotted after its expiry
and the Directors may allot relevant
securities pursuant to such an offer or
agreement as if the authority hereby
conferred had not expired.
13.
That, following the broader definitions
introduced by sections 363 to 365 of the
Act of the terms used in (i), (ii) and (iii)
below (which for the purposes of this
resolution have the meanings given by
the Act), the Company and its
subsidiaries at any time during the period
for which the resolution is effective be
authorised together to:
(i)
make political donations to political
parties and/or independent election
candidates not exceeding £50,000
in total;
(ii)
make political donations to political
organisations other than political parties
not exceeding £50,000 in total; and
Annual Report and Accounts 2016
80
Special resolutions
17.
(iii)
incur political expenditure not exceeding
£50,000 in total, during the period
beginning with the date of the passing of
this resolution and ending following the
conclusion of the Company’s next Annual
General Meeting or, if earlier, on 31
March 2018.
14. That, subject to and conditional upon
admission of the New Ordinary Shares
(as defined below) to the standard listing
segment of the Official List and to trading
on London Stock Exchange plc’s main
market for listed securities becoming
effective, every 15 Ordinary shares of 1
pence each in the capital of the
Company in issue and outstanding or
held in treasury as at 6.00 p.m. on
Wednesday, 1 February 2017 (or such
other time and date as the Directors may
determine) be consolidated into 1
Ordinary share of 15 pence in the capital
of the Company (each a “New Ordinary
Share”), provided that, where such
consolidation results in any member
being entitled to a fraction of a New
Ordinary Share, such fraction shall, so
far as possible, be aggregated with the
fractions of New Ordinary Shares to
which other members of the Company
may be entitled and the Directors be and
are hereby authorised to sell (or appoint
any other person to sell to any person),
on behalf of the relevant members, all
the New Ordinary Shares representing
such fractions at the best price
reasonably obtainable to any person,
and to pay the proceeds of sale (net of
expenses) in due proportion to the
relevant members entitled thereto (save
that any fraction of a penny which would
otherwise be payable shall be rounded
up or down in accordance with the usual
practice of the registrar of the Company
and, subject to resolution 17 being
passed, if the proceeds are less than
£3.00 in the case of any one shareholder,
they will be donated to charities chosen
by the Company) and that any Director
(or any person appointed by the
Directors) shall be and is hereby
authorised to execute an instrument of
transfer in respect of such shares on
behalf of the relevant members and to do
all acts and things the Directors consider
necessary or expedient to effect the
transfer of such shares to, or in
accordance with the directions of, any
buyer of any such shares.
15.
That, subject to the passing of resolution
12, the Directors be and are hereby
authorised pursuant to Article 3.2 and
section 570 of the Act to allot equity
securities (within the meaning of section
560 of the Act) for cash pursuant to the
authority conferred upon it for the
purposes of section 551 of the Act by
resolution 12 provided that such authority
shall be limited to:
(a) the allotment of equity securities in
connection with an offer by way of a
rights issue, open offer or pre-emptive
offer to holders of Ordinary shares on the
register of members of the Company on
a date fixed by the Directors where the
equity securities to be allotted to existing
shareholders shall be in proportion (as
nearly as may be) to their respective
holdings and, if the rights attaching to
any other equity securities so provide, in
favour of the holders of those equity
securities in accordance with such rights,
but subject to such exclusions or other
arrangements as the Directors consider
necessary or expedient in connection
with Ordinary shares representing
fractional entitlements or on account of
either legal or practical problems arising
in connection with the laws of any
territory, or of the requirements of any
generally recognised regulatory body or
stock exchange in any territory; and
(b) the allotment (otherwise than pursuant to
sub-paragraph (a) above) of equity
securities up to an aggregate nominal
amount of £548,430 (representing just
under 10% of the issued share capital of
the Company as at 13 December 2016)
and such authority shall expire at the
conclusion of the Company’s next Annual
General Meeting or, if earlier, on 31
March 2018 (save that the Company may
before the expiry of such authority make
an offer or agreement which would or
might require equity securities to be
allotted after its expiry and the Directors
may allot equity securities pursuant to
such an offer or agreement as if the
power hereby conferred had not expired).
16.
That a general meeting, other than an
Annual General Meeting, may be called
on not less than 14 clear days’ notice.
That the articles of association of the
Company (the “Articles”) be amended so
as to add the following paragraph at the
end of Article 2.5:
“Where any member’s entitlement to a
portion of the proceeds of sale amounts
to less than a minimum figure determined
by the Directors from time to time (and if
not so determined £3.00), that member’s
portion may, at the Directors’ discretion,
be distributed to an institution which is a
charity for the purposes of the law of
England and Wales.”
18. That the Articles be amended so as to
add the following Article 27:
“Power to change the name of the
Company
The Board may change the name of the
Company.”
On behalf of the Board
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
13 December 2016
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Future plc
Notice of
Annual General
Meeting
Notes
Further information about the AGM
Electronic appointment of proxies
Eligible shareholders
1.
Information regarding the meeting,
including the information required by
section 311A of the Act, is available from:
www.futureplc.com/invest-in-future.
Attendance at the AGM
2. If you wish to attend the meeting in
person, please bring the attendance card
attached to your form of proxy and arrive
at Future’s London office, 1-10 Praed
Mews, London W2 1QY, in sufficient
time for registration. Appointment of
a proxy does not preclude a member
from attending the meeting and voting
in person. If a member has appointed a
proxy and attends the meeting in person,
the proxy appointment will automatically
be terminated.
Appointment of proxies
3. Any member entitled to attend and vote
at the meeting may appoint one or more
proxies to attend, speak and vote in their
place. A member may appoint more than
one proxy provided that each proxy is
appointed to exercise the rights attached
to a different share or shares held by that
shareholder. If you appoint multiple proxies
for a number of shares in excess of your
holding, the proxy appointments may be
treated as invalid. A proxy need not be a
member of the Company. A proxy card
is enclosed. To be effective, proxy cards
should be completed in accordance with
these notes and the notes to the proxy
form, signed and returned so as to be
received by the Company’s Registrars:
Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol
BS99 6ZY
not later than 10:30am on Monday 30
January 2017 being two business days
before the time appointed for the holding of
the meeting. If you submit more than one
valid proxy appointment, the appointment
received last before the latest time for the
receipt of proxies will take precedence.
4. As an alternative to completing the printed
proxy form, you may appoint a proxy
electronically by visiting the following
website: www.investorcentre.co.uk/eproxy.
You will be asked to enter the Control
Number, the Shareholder Reference
Number (SRN) and PIN as printed on your
proxy form and to agree to certain terms
and conditions. To be effective, electronic
appointments must have been received by
the Company’s Registrars not later than
10:30am on Monday 30 January 2017.
Number of shares in issue
5. As at the close of business on 13 December
2016 (being the last business day prior to
the publication of this notice) the Company’s
issued share capital consisted of
548,430,719 Ordinary shares of one penny
each. Each Ordinary share carries one vote.
There are no shares held in treasury. The
total number of voting rights in the Company
is therefore 548,430,719.
Documents available for inspection
6. Printed copies of the service contracts of
the Company’s Directors and the letters
of appointment for the non-executive
Directors will be available for inspection
during usual business hours on any
weekday (Saturdays, Sundays and public
holidays excluded) at the Company’s
London office at
1-10 Praed Mews,
London,
W2 1QY
and at the Company’s registered office at
Quay House,
The Ambury,
Bath,
BA1 1UA
including on the day of the meeting from
10:15am until its completion.
7.
The Company, pursuant to Regulation
41 of The Uncertificated Securities
Regulations 2001, specifies that only those
members on the register of the Company
as at 6pm on Monday 30 January 2017
or, if this meeting is adjourned, in the
register of members 48 hours before the
time of any adjourned meeting, shall be
entitled to attend and vote at the meeting
in respect of the number of shares
registered in their name at that time.
Changes to entries on the Register after
6pm on Monday 30 January 2017 or, if this
meeting is adjourned, in the register of
members 48 hours before the time of any
adjourned meeting, shall be disregarded
in determining the rights of any person to
attend or vote at the meeting.
Indirect investors
8. Any person to whom this notice is sent
who is a person that has been nominated
under section 146 of the Act to enjoy
information rights (a ‘Nominated Person’)
does not have a right to appoint a
proxy. However, a Nominated Person
may, under an agreement with the
registered shareholder by whom they
were nominated (a ‘Relevant Member’),
have a right to be appointed (or to have
someone else appointed) as a proxy for
the meeting. Alternatively, if a Nominated
Person does not have such a right, or
does not wish to exercise it, they may
have a right under any such agreement to
give instructions to the Relevant Member
as to the exercise of voting rights.
A Nominated Person’s main point of
contact in terms of their investment in the
Company remains the Relevant Member
(or, perhaps, the Nominated Person’s
custodian or broker) and the Nominated
Person should continue to contact
them (and not the Company) regarding
any changes or queries relating to the
Nominated Person’s personal details and
their interest in the Company (including
any administrative matters). The only
exception to this is where the Company
expressly requests a response from the
Nominated Person.
Annual Report and Accounts 2016
82
message is transmitted by means of the
CREST system by any particular time. In
this connection, CREST members and,
where applicable, their CREST sponsors
or voting service providers are referred, in
particular, to those sections of the CREST
Manual concerning practical limitations of
the CREST system and timings.
The Company may treat as invalid a CREST
Proxy Instruction in the circumstances
set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
Amending a proxy
10. To change a proxy instruction, a member
needs to submit a new proxy appointment
using the methods set out above. Note
that the deadlines for receipt of proxy
appointments (see above) also apply
in relation to amended instructions;
any amended proxy appointment
received after the relevant deadline
will be disregarded. Where a member
has appointed a proxy using the paper
proxy form and would like to change the
instructions using another such form, that
member should contact the Registrars on
+44 (0)370 707 1443.
If more than one valid proxy appointment
is submitted, the appointment received
last before the deadline for the receipt of
proxies will take precedence.
Revoking a proxy
11. In order to revoke a proxy instruction, a
signed letter clearly stating a member’s
intention to revoke a proxy appointment
must be sent by post or by hand to the
Company’s Registrars:
Corporate members
12. In the case of a member which is a
company, any proxy form, amendment
or revocation must be executed under its
common seal or signed on its behalf by
an officer of the company or an attorney
for the company. Any power of attorney
or any other authority under which
the documents are signed (or a duly
certified copy of such power of authority)
must be included. A corporate member
can appoint one or more corporate
representatives who may exercise, on
its behalf, all its powers as a member
provided that no more than one corporate
representative exercises powers over
the same share. Members considering
the appointment of a corporate
representative should check their own
legal position, the Company’s articles of
association and the relevant provision of
the Companies Act 2006.
Joint holders
13. Where more than one of the joint holders
purports to vote or appoint a proxy, only
the vote or appointment submitted by the
member whose name appears first on the
register will be accepted.
Questions at the AGM
14. Under section 319A of the Act, the
Company must answer any question you
ask relating to the business being dealt
with at the meeting unless:
(a) answering the question would interfere
unduly with the preparation for the meeting
or involve the disclosure of confidential
information;
Computershare Investor Services PLC,
The Pavilions, Bridgwater Road,
Bristol BS99 6ZY.
(b) the answer has already been given on
a website in the form of an answer to a
question; or
Note that the deadlines for receipt of proxy
appointments (see above) also apply in
relation to revocations; any revocation
received after the relevant deadline will be
disregarded.
(c) it is undesirable in the interests of the
Company or the good order of the meeting
that the question be answered.
Appointment of proxies
through CREST
9. CREST members who wish to appoint
a proxy or proxies through the CREST
electronic proxy appointment service
may do so for the meeting and any
adjournment(s) thereof by using the
procedures described in the CREST
Manual. CREST personal members or other
CREST sponsored members, and those
CREST members who have appointed a
voting service provider(s), should refer to
their CREST sponsor or voting service
provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or
instruction made using the CREST
service to be valid, the appropriate
CREST message (a ‘CREST Proxy
Instruction’) must be properly authenticated
in accordance with Euroclear UK &
Ireland Limited’s specifications and must
contain the information required for such
instructions, as described in the CREST
Manual. The message, regardless of
whether it constitutes the appointment of a
proxy or an amendment to the instruction
given to a previously appointed proxy must,
in order to be valid, be transmitted so as
to be received by the issuer’s agent (ID
3RA50) by 10:30am on Monday 30 January
2017 or, if the meeting is adjourned, not
less than 48 hours before the time fixed for
the adjourned meeting. For this purpose,
the time of receipt will be taken to be the
time (as determined by the timestamp
applied to the message by the CREST
Applications Host) from which the issuer’s
agent is able to retrieve the message by
enquiry to CREST in the manner prescribed
by CREST. After this time any change of
instructions to proxies appointed through
CREST should be communicated to the
appointee through other means.
CREST members and, where applicable,
their CREST sponsors or voting service
providers should note that Euroclear UK
& Ireland Limited does not make available
special procedures in CREST for any
particular messages. Normal system
timings and limitations will therefore apply
in relation to the input of CREST Proxy
Instructions. It is the responsibility of the
CREST member concerned to take (or, if
the CREST member is a CREST personal
member or sponsored member or has
appointed a voting service provider(s), to
procure that his CREST sponsor or voting
service provider(s) take(s)) such action
as shall be necessary to ensure that a
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Future plc
Notice of
Annual General
Meeting
Members’ right to require circulation of
a resolution to be proposed at the AGM
15. Under section 338 of the Act, a member or
members meeting the qualification criteria
set out at note 18 below, may, subject to
conditions set out at note 19, require the
Company to give to members notice of a
resolution which may properly be moved
and is intended to be moved at that meeting.
Members’ right to have a matter of
business dealt with at the AGM
16. Under section 338A of the Act, a member
or members meeting the qualification
criteria set out at note 18 below, may,
subject to the conditions set out at note
19, require the Company to include in the
business to be dealt with at the AGM a
matter (other than a proposed resolution)
which may properly be included in the
business (a matter of business).
Website publication of any
audit concerns
17. Pursuant to Chapter 5 of Part 16 of the
Act, where requested by a member or
members meeting the qualification criteria
set out at note 18 below, the Company
must publish on its website a statement
setting out any matter that such members
propose to raise at the AGM relating to the
audit of the Company’s accounts (including
the auditors’ report and the conduct of the
audit) that are to be laid before the AGM.
Where the Company is required to publish
such a statement on its website:
(a) it may not require the members making the
request to pay any expenses incurred by
the Company in complying with the request;
(b) it must forward the statement to the
Company’s auditors no later than the time
the statement is made available on the
Company’s website; and
(c) the statement may be dealt with as part of
the business of the AGM.
The request:
(d) may be in hard copy form or in electronic
form and must be authenticated by the
person or persons making it (see note
19(d) and (e) below);
(e) should either set out the statement in
full or, if supporting a statement sent
by another member, clearly identify the
statement which is being supported; and
(d) in the case of a request made in hard copy
form, such request must be:
(i) signed by you and state your full name and
address; and
(f) must be received by the Company at least
one week before the AGM.
(ii) sent either: by post to
Members’ qualification criteria
18. In order to be able to exercise the members’
rights set out in notes 15 to 17 above the
relevant request must be made by:
(a) a member or members having a right to
Company Secretary,
Future plc,
Quay House,
The Ambury,
Bath BA1 1UA;
or by fax to +44(0)1225 732266
vote at the AGM and holding at least 5% of
total voting rights of the Company; or
marked for the attention of the Company
Secretary; and
(b) at least 100 members having a right to vote
at the AGM and holding, on average, at
least £100 of paid up share capital.
(e) in the case of a request made in electronic
form, such request must:
(i) state your full name and address; and
Conditions
(ii) be sent to cosec@futurenet.com.
Please state ‘AGM’ in the subject line of the
email. You may not use this electronic address
to communicate with the Company for any
other purpose.
19. The conditions are that:
(a) any resolution must not, if passed,
be ineffective (whether by reason of
inconsistency with any enactment or the
Company’s constitution or otherwise);
(b) the resolution or matter of business must
not be defamatory of any person, frivolous
or vexatious;
(c) the request:
(i) may be in hard copy form or in
electronic form;
(ii) must identify the resolution or the matter
of business of which notice is to be
given by either setting it out in full or, if
supporting a resolution/matter of business
sent by another member, clearly identifying
the resolution/matter of business which is
being supported;
(iii) in the case of a resolution, must be
accompanied by a statement setting out
the grounds for the request;
(iv) must be authenticated by the person or
persons making it; and
(v) must be received by the Company not later
than six weeks before the date of the AGM;
Annual Report and Accounts 2016
84
Investor information
For enquiries of a general nature regarding the Company and
for investor relations enquiries please contact Penny Ladkin-
Brand at the Company’s Registered Office, or visit
www.futureplc.com and select the investor relations section.
Registrar and transfer office
The Company’s share register is maintained by:
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Tel: +44 (0)370 707 1443
Shareholders should contact the Registrar, Computershare, in connection with changes
of address, lost share certificates, transfers of shares and bank mandate forms to enable
automated payment of dividends.
Online information – www.investorcentre.co.uk
Our Registrar, Computershare, has a service to provide shareholders with online internet access
to details of their shareholdings.
The service is free, secure and easy to use.
To register for the service, go to
www.investorcentre.co.uk.
Unsolicited mail
The share register is by law a public document. To limit the receipt of mail from other
organisations, please register with the Mailing Preference Service, by visiting
www.mpsonline.org.uk/mpsr/.
Warning to shareholders – ‘boiler room’ scams
In recent years, many companies have become aware that their shareholders have received
unsolicited phone calls or correspondence concerning investment matters. These are typically
from overseas-based ‘brokers’ who target UK shareholders, offering to sell them what often turn
out to be worthless or high-risk shares in US or UK investments. These operations are commonly
known as ‘boiler rooms’. These ‘brokers’ can be very persistent and extremely persuasive.
It is not just the novice investor that has been duped in this way; many of the victims had been
successfully investing for several years. Shareholders are advised to be very wary of any unsolicited
advice, offers to buy shares at a discount or offers of free company reports. If you receive any
unsolicited investment advice:
•
Make sure you get the correct name of the person and organisation
Check that they are properly authorised by the FCA before getting involved by visiting
•
www.fca.org.uk/register
•
Report the matter to the FCA either by calling 0800 111 6768 or by completing the fraud
reporting form on the FCA website at: www.fca.org.uk/consumers/scams/investment-
scams/share-fraud-and-boiler-room-scams/reporting-form
•
If the calls persist, hang up.
If you deal with an unauthorised firm, you will not be eligible to receive payment under the
Financial Services Compensation Scheme.
Details of any share dealing facilities that the Company endorses will be included in company mailings.
More detailed information on this or similar activity can be found at
www.moneyadviceservice.org.uk.
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Registered office
Future plc
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
www.futureplc.com/invest-in-future
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Future plc
Directors and advisers
Advisers
Independent auditors
PricewaterhouseCoopers LLP
Chartered accountants and statutory auditors
2 Glass Wharf
Bristol BS2 0FR
Broker
Numis Securities Ltd
10 Paternoster Square
London EC4M 7LT
Principal bankers
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Directors
Peter Allen
Chairman
James Hanbury
Deputy Chairman
Zillah Byng-Thorne
Chief Executive
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Manjit Wolstenholme
Senior independent non-executive Director
Hugo Drayton
Independent non-executive Director
Offices
Registered office
Future plc
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
London office
1-10 Praed Mews
London W2 1QY
Tel +44 (0)20 7042 4000
Leamington office
First floor
Unit 4, Jephson Court
Tancred Close
Leamington Spa CV31 3RZ
Tel +44 (0)1225 442244
www.futureplc.com
Company registration number 3757874
Registered in England and Wales
Financial calendar
Announcement of
annual results
23 November 2016
Annual General Meeting
1 February 2017
Half-year end
31 March 2017
Announcement of
interim results
May 2017
Financial year-end
30 September 2017
Annual Report and Accounts 2016
86
Contacts
Future plc and
Future Publishing Ltd
Registered office
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
Future US, Inc.
1 Lombard Street
Suite 200
San Francisco
CA 94111
USA
Tel +1 650 238 2400
www.futureplc.com
London office
1-10 Praed Mews
London W2 1QY
Tel +44 (0)20 7042 4000
Leamington office
First floor
Unit 4, Jephson Court
Tancred Close
Leamington Spa CV31 3RZ
Tel +44 (0)1225 442244
Future Publishing
(Overseas) Ltd
Suite 3, Level 10
100 Walker Street
North Sydney
NSW 2060
Australia
Tel +61 2 9955 2677
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