AR17
Future plc
Annual Report
and Accounts
2017
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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 2017.
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
43
Independent auditors’ report
Financial Statements
49 Financial statements
87 Notice of Annual General Meeting
92
Investor information
Continuing Revenue
Net Debt
£84.4m
2016: £59.0m
£(10.0)m
2016: Net cash £0.5m
Continuing Adjusted EBITDA
Continuing Exceptional items
£11.0m
2016: £5.2m
£(3.7)m
2016: £(16.5)m
Continuing Adjusted Operating Profit
Continuing Profit Before Tax
£8.9m
2016: £2.8m
£0.2m
2016: Loss £(14.9)m
Continuing Digital Advertising
Unique Users
76%
of total continuing advertising
revenues (2016: 78%)
53.3m
a month (Q4 up 18% on Q3)
Continuing Recurring Revenues
£23.0m
2016: £15.0m
- Adjusted EBITDA
represents earnings
before share based
payments and related
social security costs,
interest, tax, depreciation,
amortisation, impairment,
and exceptional items.
- Recurring revenues
encompass eCommerce
and subscriptions.
- Exceptional items for
2016 above includes
impairment of intangible
assets of £13.0m.
- Adjusted operating
profit represents adjusted
EBITDA less depreciation
and amortisation of
acquired intangibles.
Chairman’s
statement
2
A global specialist media platform
with diversified revenue streams
I am pleased to report that the Group has had an outstanding
year and the business has gained strong momentum. Over
the past year, the Group has made material progress in
expanding the business. There has been significant growth,
both organically and through acquisition, which has resulted in
a fantastic set of results.
“ The Group’s focus on
its strategy has
produced clear
momentum, with strong
progress in both
revenue diversification
and development of
the platform.”
Peter Allen
Chairman
The Group’s full year results are extremely
positive, with year-on-year growth in revenue
of 43% and exceptional growth in adjusted
operating profit of 218%. In addition there
has been strong cash conversion
throughout the year.
Last year the Group launched its strategy
to be a global specialist media platform
business with diversified revenue streams.
This year has produced clear momentum on
this strategy, with strong progress in both
revenue diversification and development of
the platform.
Both Media and Magazine divisions are
performing well with fast revenue growth
in Media revenue streams, particularly in
eCommerce and events, and significant
added scale and operational efficiencies in
the Magazine division from acquisitions.
The Group has made a number of acquisitions
during the year, having completed the
acquisition of Imagine Publishing in October
2016, acquired Team Rock at the beginning
of 2017 and acquired the home interest
division of Centaur Media in August 2017. The
integration of home interest is well on track.
The Board and I were shocked by the
tragic news that Manjit Wolstenholme, the
Group’s senior independent non-executive
Director and Chairman of the Audit and
Remuneration Committees, passed away
suddenly on 23 November 2017. Manjit
was a tower of strength and support to me
and my colleagues, both personally and
professionally, for many years and she will be
sadly missed.
I will be stepping down from the Future Board
on 1 February 2018. I have been Chairman
of Future for over six years. During that time
the Company has had to confront a hugely
challenging market place and has now
come through as a significantly changed
business, well positioned to offer value
growth to shareholders. With the acquisitions
over the last 18 months and the executive
management leadership, the Company is
entering a new phase. I believe the time
has come for a new Chairman to take over,
to ensure stability and continuity during this
exciting next phase. I have every confidence
that Future will prosper in the coming years.
After a rigorous search for my successor, and
on the recommendation of the Nomination
Committee, the Board has appointed Richard
Huntingford as my replacement. Richard
brings extensive media industry and public
company experience from his CEO role
at Chrysalis plc and his Chairman roles at
Virgin Radio, Wireless Group plc (formerly
UTV Media plc) and Creston plc. Richard will
initially serve as acting Chairman of the Audit
and Remuneration Committees and will take
over from me as Chairman of the Board on 1
February.
The hard work and professionalism of Future’s
employees has been the driver behind the
amazing results this year. On behalf of the
Board, I would like to thank everyone for their
commitment this year.
Peter Allen
Chairman
Annual Report and Accounts 2017Strategic Report
3
Chief
Executive’s
review
“ We have delivered
significant growth in both
operating profitability and
cash conversion, driven by
strong revenue growth in
eCommerce and events.
The three acquisitions we
have made this financial year
have further strengthened
and diversified our revenue
streams.”
Zillah Byng-Thorne
Chief Executive
Strategic report
Future is a global platform for specialist media with scalable,
diversified brands. We have made significant progress against our
strategic objectives this year and have delivered some strong results,
with revenue growth of 43% year-on-year and adjusted operating
profit growth of 218% year-on-year. The acquisitions we have made
this year have added significant scale and operational efficiencies.
Future has delivered another year of growth,
with revenue up 43% year-on-year to £84.4m
(2016: £59.0m), driven by organic growth of
8% and acquisitions, adjusted EBITDA up
112% year-on-year to £11.0m (2016: £5.2m),
with adjusted EPS up 144%. In addition,
adjusted free cash flows totalled £15.3m
(2016: £4.6m) and reported EPS increased to
4.3p (2016: loss of 59.6p).
The Group has delivered growth in both
operating profitability and cash generation,
driven by strong revenue growth in
eCommerce, digital advertising and events.
Future has seen clear benefits in operational
gearing from the investment in central
functions and technology infrastructure,
evident in the significant improvement in
adjusted EBITDA margin to 13% (2016: 9%).
The investment has also allowed a number of
new brand launches to be delivered quickly
with minimal incremental investment cost.
The Media division is performing well with fast
revenue growth in all areas; eCommerce
revenue has more than doubled year-on-year,
while events have grown 58% year-on-year. In
addition, digital display advertising revenue
has increased by 21% year-on-year as a result
of valuing the quality of our audience,
combined with the investment we have made
in a technology stack that capitalises on the
growth in programmatic advertising while
maximising digital yields.
The Magazine division has benefited from
added scale and operational efficiencies
through the acquisitions of Imagine
Publishing, Team Rock and the home
interest portfolio.
The growth in revenues and operating
profitability and resulting strong cash
conversion in the period led to year-end net
debt of less than 1x adjusted EBITDA.
In light of the continued focus on debt
reduction, confidence in the Group’s growth
strategy and the continued development of the
business leading to more consistent cash
flows and diversified revenue streams, the
Board is now in a position to consider
returning to paying a dividend to
shareholders, whilst maintaining
sufficient resources to continue investing
in the business.
Global platform business for
specialist media
In 2016 Future outlined its strategy of
becoming a global platform business for
specialist media with diversified revenue
streams. Clear momentum on this strategy
gained throughout the year is reflected in the
Group’s financial performance.
The Group continues to diversify its revenue
streams; eCommerce revenues continue to
Future plc
4
We reach 53.3m users
through our websites
75.6k people attend
our events
We sell 960k
magazines and
bookazines
per month
increase in our market share, particularly
in technology.
Acquisitions
Future has made three acquisitions this year,
in line with the Group’s strategy to expand
global reach through acquisitions. These
acquisitions have added significant scale to
the business and we have benefited from the
resulting operational efficiencies.
The acquisitions have further diversified
revenue streams by adding new verticals
including knowledge, music listening and
home interest.
Current trading and outlook
Trading in the current financial year has started
well and, at this early stage, is performing in
line with the Board’s expectations.
The integrations of both Imagine and Team
Rock have been completed with synergies
delivered in line with expectations and both are
trading in line with expectations.
The integration of the home interest portfolio,
acquired in early August, is progressing well
and is expected to be fully completed by the
end of this calendar year, with the launch of
Realhomes.com in November 2017 a key part
of the acquisition strategy.
Zillah Byng-Thorne
Chief Executive
We have 31m social
media followers
grow well organically and growth in events
has been bolstered by the acquisitions of
Team Rock and the home interest portfolio.
With the introduction of a new content
vertical through the home interest acquisition,
audience diversification has increased to
seven audience communities.
Investment in digital assets and the continued
tight management of costs has increased
operating margins and helped deliver on
this strategy.
Loyal communities
Future attracts a large passionate audience
across online, events and print of 85 million;
the Group’s influential and market-leading
brands offer our audiences the opportunity to
do the things they love, through an exciting
combination of experiences, unique content
and eCommerce offerings.
Future is focused on meeting its audience’s
needs with specialised and high-quality
content and experiences. This connection
can occur wherever the audience is, with
strong engagement with users through a large
social media reach of 31 million followers
across Facebook, Twitter and YouTube and
generating seven million sessions to the
digital properties from social media.
High engagement was evident at The PC
Gaming Show at E3 in June, which was
watched live on specialist gaming channel
Twitch by an audience of industry-leading
scale, with over two million unique viewers
and 630,000 concurrent video viewers across
all platforms.
The brands are market-leading and have seen
significant audience growth of 18% year-
on-year, reaching 53.3 million online users.
In the US, the 10% year-on-year growth in
online users to 20.4 million has resulted in an
Key details of the acquisitions we have made in 2017 are included below:
Acquisition
Revenue*
Imagine Publishing
£16.4m
Team Rock
Centaur Media’s home
interest division**
£2.8m
£12.8m
*Revenue figures obtained from most recent annual financial information or, in the case of Centaur Media’s home interest division,
financial information relating to the acquired assets
** Centaur Media’s home interest division comprised Ascent Publishing Ltd and Centaur Consumer Exhibitions Ltd
Annual Report and Accounts 2017Strategic Report
5
Strategic
overview
A global platform
for specialist media
At Future, we pride ourselves on the heritage of our brands and
loyalty of our communities. Offering core expertise, we help
dedicated enthusiasts follow their passion through high-quality
content, unique experiences and innovative technology.
Our brands
Future today boasts a portfolio of over 120
brands across online, magazines and events.
Our specialist media brands cover a broad
range of sectors enabling the Group to mitigate
risk and lessen its cyclical exposure to any one
vertical.
Our events connect our communities through
meaningful experiences; small and intimate to
truly national events. We now have 24 annual
events across two countries, 10 of which we
acquired this year.
We have also seen strong organic revenue
growth from our core global super brands –
TechRadar revenue is up 37% year-on-year,
PCGamer.com revenue is up 52% year-on-year,
GamesRadar revenue is up 33% year-on-year
and T3.com revenue is up 88% year-on-year.
Our brands continue to be 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.
In addition we are capitalising on emerging
opportunities through bookazines, which is
a low cost innovation model, with over 430
bookazines produced in the year totalling
revenue of £10.1m.
Data-led innovation through content
and technology
Our global platform business enables us to
facilitate and accelerate growth opportunities
and unlock significant new sources of revenue.
This year we have seen strong organic growth,
particularly from eCommerce and events. This
has been driven by a number of new initiatives,
including new content genres within the current
brands such as broadband or T3 Home and
using data to optimise conversion rates.
Following the successful test launch of T3
Baby during the course of 2017, we have
launched a number of new sites including
DigitalCameraWorld and TheRadar. Launched
in October 2017, TheRadar is an eCommerce-
led website aimed at allowing users to find,
review and buy products across a number of
categories including tech, homeware
and beauty.
Following the recent acquisition of the home
interest portfolio we launched
Realhomes.com during November 2017, a home
interiors website accompanied by buying guides
to take advantage of current trends in our
audience’s online search and purchase intent.
Our strategy
Our highly-engaged audience
Last year we launched our strategy which
is focused on becoming a global platform
business with scalable, diversified brands.
Building a platform business allows us to unlock
and create significant new revenue streams,
expanding our brands and reaching our
audience in different ways.
This year we have clear momentum on this
strategy with strong progress in both revenue
diversification and development of the platform.
We have achieved this through organic growth,
acquisitions and strategic partnerships which
have also expanded our global reach.
The investment we have made over the last
couple of years has created an infrastructure
that we can scale and that is underpinned by
market-leading global brands in diversified
verticals. We have scalable technology which
we combine with data insight to support organic
growth.
We continue to innovate with our magazine
brands, with re-launches of Airgun Shooter
and Total Guitar in 2017 and T3 magazine in
the current financial year. We have focused
on growing our online and print subscriptions
and clubs in order to drive recurring revenue
streams and further engage with our passionate
audiences.
We are proud of our purpose which 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 audience is key to everything we do;
we understand the importance and value of our
highly engaged audience and our content and
experiences are specifically tailored to these
communities.
Reaching a global audience of 85 million
through our websites, events, social media
and magazines, we continue to create loyal
communities by giving them a place they want
to spend their time and where they go to meet
their needs.
We are focused on enhancing and building
the recurring revenue streams of online and
print subscriptions and memberships, such as
Team Rock+, PC Gamer Club and photography
premium subscriptions. Membership gives
users access to exclusive member content and
offers. Across our online and print products we
have over 500,000 subscribers, up 26% year-
on-year.
Future plc 6
By scaling investment in our platform business
coupled with our leading content, we are
expanding our global reach through digital and
print licensing. These strategic partnerships
leverage our unique platform proposition by
offering high-margin licensing and franchising
of key brands. We have signed a total of 10 new
licensing partners this year including Panini in
Spain, Beijing Muchuan Culture Development in
China and Tbreak in the Middle East.
The digital licensing opportunities that we
offer enable global partners to optimise their
local offering by accessing trusted brands and
authoritative content, and leveraging a unique
commercial model developed by Future. Two
of the 10 licensing partners signed this year,
one in India and the other in the Middle East,
are strategic in nature, where our partner is
licensing our digital content and
technology platform.
Acquisitions
Our investments this year in our platform and
data-led decision making tools underpin our
buy and build strategy, as we create additional
diversified revenue streams for these acquired
brands to generate further organic growth.
In October 2016, we completed the acquisition
of Imagine Publishing, the integration of which
is now complete. The acquisition of Imagine has
resulted in significant cost synergies and cash
generation. It has also added significant scale to
our Magazine division and introduced another
vertical, knowledge, to our portfolio. The
knowledge vertical provides specialist content
on science, history, wildlife and crime.
In January 2017, Future acquired Team Rock, a
portfolio of music listening magazines, website
and events. The new music listening vertical
complements our existing music making assets
as well as expanding our events portfolio. The
acquisition of Team Rock brings scalable
brands with a loyal fan base.
In August 2017, we acquired the home interest
division from Centaur Media. The acquisition
has significantly enhanced the scale of our
events business, with the addition of market-
leading, national home interest shows, and has
presented us with growth opportunities across
our platform business with the launch of a new
digital brand to maximise digital advertising and
eCommerce opportunities.
These acquisitions have allowed us to expand
our events profiles, whilst strengthening the
Magazine division and continuing to provide
synergistic benefits.
Annual Report and Accounts 2017Strategic Report 7
What we do
Our divisions
Future plc is an international media business organised into two
divisions, Media and Magazine.
Our gaming magazines and bookazines are
a leading authority on all types of video
gaming, including our official PlayStation
and Xbox titles.
Future’s technology titles cover all aspects of
consumer technology from the very best tech
products in T3 magazine to specialist areas
covered by MacFormat and Linux Format.
Our film and TV titles, Total Film and SFX,
take a passionate and authoritative look at
every part of the film and TV world, from all
the latest blockbusters, comic books and sci-fi
extravaganzas to the very best Oscar baiters,
arthouse masterpieces, hidden gems and
festival hits.
Future is the UK’s leading publisher of
photography magazines. Our portfolio of
specialised photography brands allows leading
brands to access and to simultaneously
engage valuable in-market consumers.
Our music portfolio is the UK’s leading and
most influential music network reaching
passionate consumers through the world’s
favourite music making brands.
Our extensive creative and design portfolio is
market-leading, providing creative inspiration
for the global design community.
Media
The Media division focuses on being at
the forefront of digital innovation with
three complementary revenue streams:
eCommerce, events and digital advertising.
It operates in a number of sectors, including
the growing technology and games markets,
and has a number of leading brands, including
TechRadar, PC Gamer, GamesRadar+, The
Photography Show, Generate and Golden
Joysticks.
Our flagship technology website, TechRadar,
is the UK’s largest consumer technology
website and a leading authority on products.
Our technology brands combined reach over
30 million users as well as a huge reach of
4.3 million across social media.
Leveraging data and SEO expertise
means that we can provide content and
eCommerce functionality suited to our
audience’s needs.
In October 2017 we launched TheRadar,
an eCommerce-led technology content
website aimed at allowing users to find, review
and buy products. In November 2017 we
launched Realhomes.com, a home interiors
and home building website.
Our gaming portfolio is the voice of authority
for gamers across the globe, guiding players
and influencing culture for over 30 years. Our
two core gaming brands are GamesRadar+
and PC Gamer. The portfolio covers the
games, films and TV our media audience love
and has an engaged social media audience of
23.8 million and reached 18.5 million monthly
users this year, its largest ever month.
PC Gamer is the biggest PC gaming brand in
the world, including two successful events,
The PC Gaming Show and PC Gamer
Weekender. In June 2017 The PC Gaming
Show was watched by 630,000 concurrent
viewers harnessing our video expertise for
multi-channel for clients and live streaming.
One of our core photography brands is The
Photography Show, which is the UK’s largest
live photography exhibition. The award-
winning show took place again in March and
attracted 32,000 visitors.
In July we launched DigitalCameraWorld,
a global photography website dedicated
to helping photographers of all skill levels
improve their images, buy the best gear and
get inspired by other photographers.
Our creative and design website,
CreativeBloq, is the number one creative and
design content website in the UK and the US,
reaching an audience of over 2.9 million. We
also host the Generate conferences, the event
for web designers and developers, which take
place in London and New York.
The acquisitions made this year have added
a number of new events to our portfolio,
including the national Homebuilding &
Renovating Show, as well as a number of
music events from Team Rock, including
Metal Hammer Golden Gods.
Magazine
The Magazine division creates specialist
magazines and bookazines, with 60
magazines and over 430 bookazines published
a year, with a total global circulation of over
one million. The Magazine portfolio spans
technology, games and entertainment,
music, creative and photography, field sports,
knowledge and home interest verticals. Its
titles include T3, Total Film, How It Works,
Edge and All About History.
We are one of the largest specialist magazine
and bookazine publishers in the UK, a position
that has been strengthened by the Imagine
Publishing, Team Rock and home interest
acquisitions this year. The acquisitions also
introduced the new verticals of knowledge,
music listening and home interest.
Future plc Business
review
8
Brands
Technology brands
TechRadar
T3
TheRadar
Gizmodo UK
Lifehacker UK
ITProPortal
Mobile Industry Awards
MacFormat
Maximum PC
Linux Format
MacLife
Games & entertainment brands
GamesRadar+
PC Gamer
Kotaku UK
Golden Joysticks
Official PlayStation
SFX
Total Film
Official Xbox
GamesTM
Edge
Creative & photography brands
CreativeBloq
DigitalCameraWorld
The Photography Show
Generate conferences
Digital Camera
N-Photo
PhotoPlus
Digital Photographer
Computer Arts
Net
ImagineFX
Photoshop Creative
Field sports brands
Airgun Shooter
Sporting Rifle
Bow International
Clay Shooting
Knowledge brands
How It Works
All About History
History of War
World of Animals
All About Space
Music brands
MusicRadar
TeamRock
The London Acoustic Show
The London Drum Show
Metal Hammer Golden Gods Awards
Progressive Music Awards
Classic Rock
Metal Hammer
Prog
Guitarist
Total Guitar
Guitar Techniques
Rhythm
Computer Music
Bass Guitar Magazine
Home interest brands
Homebuilding & Renovating
Homebuilding & Renovating Show
Real Homes
Period Living
Business review
Key Performance Indicators
The key performance indicators are presented on a continuing basis.
Corporate KPIs
Adjusted EBITDA (£m):
Adjusted operating profit (£m):
Media Division KPIs
Number of users visiting our websites (monthly)
Number of event attendees (thousands)
Number of eCommerce 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)
2017
2016
11.0
8.9
5.2
2.8
53.3m 45.2m
75.6
38.3
1,982
1,128
961
461
40%
739
399
45%
Annual Report and Accounts 2017Strategic Report 9
Risks and
uncertainties
Risk management
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.
Risks
Description
Mitigation
Operating environment
Intellectual property
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 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 continues to innovate, making available its special-interest content to consumers in a number
of formats, in print, online and at events. The diversification of revenues helps protect against rapid
changes in operating enviroment. 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 eCommerce.
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 products, 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 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 model.
Advertising pipelines can be subject to slippage, with the risk that resulting revenue is pushed
into later accounting periods.
Future has available bank facilities totalling £25.4m at 30 September 2017. Failure to comply
with the financial covenants of these facilities could result in additional finance costs and the
possible withdrawal of the facilities.
The significant issues considered in relation to the financial statements for the year ended
30 September 2017 are set out in the Audit Committee section of the Corporate Governance
report on pages 26 to 28.
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.
Careful monitoring of the advertising pipeline and bookings to close the gap in the event of any shortfall.
Future continually monitors its cash flows and covenants and has operated within all its covenants
throughout the year. The Group negotiated increased facilities (up from £5.0m in 2016) following the
acquisitions of Imagine and the home interest division which expire in June 2021. There is currently
significant headroom on these facilities. See note 18 to the financial statements for more detail.
Review by Audit Committee with external auditors.
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 2017 and more is already underway in 2018.
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.
The General Data Protection Regulation (GDPR) comes into force in May 2018. GDPR extends
the scope of EU data protection law by giving data subjects additional rights and increasing the
accountability obligations on companies processing data. The maximum penalties under GDPR
are significantly higher than under the current regime.
A GDPR steering committee has been established to ensure Future’s readiness for GDPR when it comes
into force. Data policies and procedures are being reviewed and legislative updates and ICO guidance are
being monitored regularly.
Major supplier or retailer fails
Major distributor or retailer goes into administration resulting in loss of magazine sales and
associated revenue.
Acquisitions
The Group continues to search for opportunities to grow through acquisition. There is a risk that
any such acquisition or its subsequent integration fails to create value for shareholders.
Future carefully selects its suppliers, taking into account a number of factors including financial stability.
Newsstand sales are spread across a number of retailers in the UK and US. In addition, the growth in
bookazines continues to diversify the retailers we work with.
The Group has successfully completed and integrated several acquisitions over the last 18 months. The
management team has become experienced and adept at identifying suitable acquisition opportunities,
executing the deal and integrating the acquired business into the wider Future group. The risk is further
mitigated through the performance of due diligence appropriate to the size and scale of the acquisition
and the preparation of a clear and detailed integration plan.
Future plc 10
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 has increased
since last year, 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.
Risk management
Operating environment
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 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 continues to innovate, making available its special-interest content to consumers in a number
of formats, in print, online and at events. The diversification of revenues helps protect against rapid
changes in operating enviroment. 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 eCommerce.
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 products, 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 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 model.
Advertising pipelines can be subject to slippage, with the risk that resulting revenue is pushed
Careful monitoring of the advertising pipeline and bookings to close the gap in the event of any shortfall.
into later accounting periods.
Future has available bank facilities totalling £25.4m at 30 September 2017. Failure to comply
with the financial covenants of these facilities could result in additional finance costs and the
possible withdrawal of the facilities.
The significant issues considered in relation to the financial statements for the year ended
30 September 2017 are set out in the Audit Committee section of the Corporate Governance
report on pages 26 to 28.
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 continually monitors its cash flows and covenants and has operated within all its covenants
throughout the year. The Group negotiated increased facilities (up from £5.0m in 2016) following the
acquisitions of Imagine and the home interest division which expire in June 2021. There is currently
significant headroom on these facilities. See note 18 to the financial statements for more detail.
Review by Audit Committee with external auditors.
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 2017 and more is already underway in 2018.
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.
The General Data Protection Regulation (GDPR) comes into force in May 2018. GDPR extends
the scope of EU data protection law by giving data subjects additional rights and increasing the
accountability obligations on companies processing data. The maximum penalties under GDPR
are significantly higher than under the current regime.
A GDPR steering committee has been established to ensure Future’s readiness for GDPR when it comes
into force. Data policies and procedures are being reviewed and legislative updates and ICO guidance are
being monitored regularly.
Major supplier or retailer fails
Major distributor or retailer goes into administration resulting in loss of magazine sales and
associated revenue.
Acquisitions
The Group continues to search for opportunities to grow through acquisition. There is a risk that
any such acquisition or its subsequent integration fails to create value for shareholders.
Future carefully selects its suppliers, taking into account a number of factors including financial stability.
Newsstand sales are spread across a number of retailers in the UK and US. In addition, the growth in
bookazines continues to diversify the retailers we work with.
The Group has successfully completed and integrated several acquisitions over the last 18 months. The
management team has become experienced and adept at identifying suitable acquisition opportunities,
executing the deal and integrating the acquired business into the wider Future group. The risk is further
mitigated through the performance of due diligence appropriate to the size and scale of the acquisition
and the preparation of a clear and detailed integration plan.
Annual Report and Accounts 2017Strategic Report 11
Corporate
responsibility
Responsible business
Corporate responsibility is integral to the way Future conducts
its business. We focus our efforts around five 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 2017, 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.
All of our paper is sourced and produced
from sustainable, managed forests,
conforming to strict environmental and
socio-economic standards. Our paper
mills and paper merchants all hold full FSC
(Forest Stewardship Council) certification
and accreditation showing our commitment
to sourcing paper supplies from sustainable
sources.
In 2017, 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.
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
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.
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.
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 2017, there
were no fatalities, one reportable (RIDDOR)
injury and two minor injuries. There were
no fatalities or injuries in the US or Australia
during the year.
Diversity
We are committed to creating an inclusive
culture which gives everyone the freedom to
succeed, irrespective of their gender, race,
religion, disability, age or sexual orientation.
We treat each other with respect. We are
proud of the fact that 50% of our Board were
female during 2017 and the gap between
the female:male employee split has reduced
considerably in recent years.
Future’s business is underpinned by six core
values, the first of which is that ‘we are part
of the audience and their community’. We
strive to ensure that our workforce reflects the
consumers across our portfolios to maximise
engagement with our passionate audience.
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 October 2017 we held an all company
conference in the UK, US and Australia.
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 give their
views freely and contribute to initiatives, as
this continuously develops and improves our
offering for the benefit of our consumers and
clients.
Whistle-blowing and anti-bribery policies
It is Future’s policy to conduct all of our
business in an honest and ethical manner, and
we take a zero-tolerance approach to bribery
and corruption. We are committed to acting
professionally, fairly and with integrity in all our
business dealings and relationships, wherever
we operate, and we are implementing and
enforcing effective systems to counter bribery
and corruption. We have whistle-blowing
and anti-bribery policies which are updated
regularly and published on our intranet to
encourage employees to report, in good faith,
any genuine suspicions of fraud, bribery or
malpractice. The whistle-blowing policy is
also designed to ensure that any employee
who raises a genuine concern is protected.
In addition, to ensure Future is adopting best
practice with anti-corruption legislation, and to
promote transparency, a Review Kit, Trips and
Gifts Log is in place to track the whereabouts
of products sent to us for review and the
acceptance of gifts and trips by our employees.
Employment data across the Group
Split of female:male employees as at 30 September 2017
Split of female:male Directors of the Company as at 30 September 2017
Split of female:male members of the Executive Committee as at 30 September 2017
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
2017
40%:60%
3:3
1:6
Yes
None
Yes
Yes
None
Future plc 12
3. The community
4. Modern slavery
5. Human rights
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, and SpecialEffect, a charity which uses
video games and technology to enhance the
quality of life of people with disabilities.
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.
The Modern Slavery Act 2015 is aimed at
combating crimes of slavery and human
trafficking and addresses the role which
a commercial organisation has to play in
preventing these crimes, both within its own
business and within its supply chains. We are
committed to doing business ethically and
have a zero-tolerance approach to modern
slavery. Future’s Modern Slavery Act statement
is published on our corporate website,
www.futureplc.com.
Future is committed to respecting human
rights. We believe our business positively
impacts human rights by, for example,
promoting freedom of opinion and expression
and facilitating the ability to seek, receive and
impart information and ideas through all media
and across borders. In addition, we provide a
means to participate in the cultural life of the
community and enjoy the arts.
As an international company, Future is also
aware of the potential for adversely impacting
human rights and we seek to mitigate any such
effects through, for example, our efforts to
combat bribery, corruption and forced labour in
our business or in our supply chain.
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
2017
Total
73
-
73
385
4
389
462
£112.3m
20.1
£84.4m
5.5
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 2017 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 2017) monthly consumption. All figures are estimates based on % share of office space within leased buildings
except for the US office in 2017 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.
•
• We have maintained our focus on other environmental impacts, particularly initiatives to reduce waste and to continue sourcing all our magazine
Intensity Ratio - we are using ‘Tonnes per £1million revenue’.
paper from sustainable forestry.
Annual Report and Accounts 2017Strategic Report 13
Future plc
Financial
review
Growth
The financial results demonstrate that the Group is progressing
well with exciting times ahead as the business builds scale and
increasing profitability.
grown 144% to
“ Adjusted EPS has
23.2p.”
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 2017 with those for the year ended 30 September 2016. Unless otherwise stated,
change percentages relate to a comparison of these two periods.
Continuing operations
Revenue
Adjusted EBITDA
Depreciation
Adjusted amortisation
Adjusted operating profit
Adjusted net finance costs
Adjusted profit before tax
Operating profit/(loss)
Profit/(loss) before tax
Earnings/(loss) per share (p)
Adjusted earnings per share (p)
2017
£m
84.4
11.0
(0.3)
(1.8)
8.9
(0.6)
8.3
0.8
0.2
4.3
23.2
A reconciliation of adjusted operating profit to profit/(loss) before tax is shown below:
Adjusted operating profit
Adjusted net finance costs
Adjusted profit before tax
Adjusting items:
Share-based payments (including related social security costs)
Exceptional items
Amortisation of acquired intangibles
Impairment of intangible assets
Non-trading foreign exchange loss
Profit/(loss) before tax
Revenue
2017
£m
8.9
(0.6)
8.3
(2.1)
(3.7)
(2.3)
-
-
0.2
2016
£m
59.0
5.2
(0.4)
(2.0)
2.8
(0.5)
2.3
(14.2)
(14.9)
(59.6)
9.5
2016
£m
2.8
(0.5)
2.3
(0.5)
(3.5)
-
(13.0)
(0.2)
(14.9)
Group revenue was up 43% to £84.4m (2016: £59.0m), which was achieved both organically
(increase of 8%) and through acquisition. UK revenue was up 50% to £67.2m (2016: £44.7m) with US
revenue up 26% to £19.1m (2016: £15.2m).
The Group’s strategy is to continue to build recurring revenue streams. These encompass
eCommerce and subscriptions, and now represent 27% of the Group’s total revenue (2016: 25%).
Annual Report and Accounts 2017
14
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Group revenue 2017
1: Media 40%
2: Magazine 60%
1
2
Group revenue 2016
1: Media 41%
2: Magazine 59%
Media
Media revenue has increased by 43% to £34.1m (2016: £23.9m), driven by the Group’s fast growing
revenue streams; eCommerce, events and through acquisition. On an underlying basis, excluding
the impact of 2017 acquisitions, Media revenues increased by 34%.
In the UK, Media revenues increased by 50% to £21.1m (2016: £14.1m), driven by eCommerce
growth of 88% to £4.9m (2016: £2.6m) and events growth of 58% to £5.2m (2016: £3.3m).
The US also experienced exceptional growth, up 41% year-on-year to £14.7m (2016: £10.4m), with
eCommerce revenues being the biggest driver of this growth – up 135% to £4.0m (2016: £1.7m).
Digital advertising in the US now represents 90% (2016: 88%) of US advertising revenues.
Magazine
Magazine revenue increased by 43% to £50.3m (2016: £35.1m) largely driven by acquisitions. On
an underlying basis, excluding the impact of 2017 acquisitions, Magazine revenues declined 9% to
£31.9m.
The division is constantly looking for ways to innovate and published over 430 bookazines in the year
totalling revenue of £10.1m.
EBITDA and operating profit
The Group’s adjusted EBITDA was up 112% to £11.0m (2016: £5.2m), of which £6.9m (2016:
£3.2m) was UK and £4.1m (2016: £2.0m) was US. Operating profit increased £15.0m to £0.8m
(2016: loss of £14.2m).
Future’s headcount increased to 634 from 449 employees as additional staff joined the Group
through acquisition. Rationalisation of the Group’s overhead base continues with a focus on
process re-engineering. The global content management system migration (CMS) was completed
in early 2017, which puts the Group in a strong position to benefit from economies of scale as the
number of brands increases. The Team Rock and Imagine acquisitions have been fully integrated
and the home interest acquisition is expected to be fully integrated into the Group’s operations and
systems by the end of the calendar year.
Exceptional items and impairment
Exceptional costs were £3.7m (2016: £3.5m). Restructuring costs of £1.1m include headcount
reduction and transformation related activity. The vacant property provision movement during the
year of £1.2m mainly relates to surplus office space in the US.
Acquisition related costs include deal fees and subsequent integration related activity and total
£1.4m (2016: £2.3m) and relate to the acquisitions of Imagine, Team Rock and home interest.
A non-cash impairment charge of £13.0m was recognised in the prior year against goodwill
attributable to the UK business, which reflected a shift in the underlying profitability and cash flows
of the Group and the continued decline of print.
Net finance costs
Net finance costs fell to £0.6m (2016: £0.7m) as strong cash conversion allowed the Group to
repay additional debt facilities arranged to fund acquisitions and due to lower interest on the legacy
HMRC settlement agreement which will be fully repaid during 2018.
The Group’s adjusted pre-tax profit was £8.3m (2016: £2.3m) and reported pre-tax profit was
£0.2m (2016: loss of £14.9m) reflecting significantly improved performance.
15
Future plc
Financial
review
Taxation
Cash flow and net debt
Going concern
The tax credit for the year amounted to £1.4m
(2016: £0.5m), comprising a current tax charge
of £0.8m (2016: £1.3m) and a deferred tax
credit of £2.2m (2016: £1.8m) predominantly
related to the recognition of further US losses,
acquired intangible assets and share schemes.
The current tax charge arises in the UK where
the standard rate of corporation tax is 19.5%.
Earnings/(loss) per share
Basic earnings/(loss) per share (p) 4.3 (59.6)
Adjusted earnings per share (p)
23.2
9.5
2017
2016
Adjusted earnings per share is based on
the profit/(loss) after taxation which is then
adjusted to exclude share-based payments
(including related social security costs),
exceptional items, amortisation of acquired
intangible assets, impairment of intangible
assets, non-trading foreign exchange and
related tax effects.
The continuing adjusted profit after tax
amounted to £8.6m (2016: £2.3m) and the
weighted average number of shares in issue
was 37m (2016: 24m).
Dividend
The Board is not recommending a final dividend
for the year ended 30 September 2017.
In light of the continued focus on debt reduction,
confidence in the Group’s growth strategy and
the continued development of the business
leading to more consistent cash flow and
diversified revenue streams, the Board is now in
a position to consider returning to payment of a
dividend whilst maintaining sufficient resources
to continue investing in the business in 2018.
Net debt at 30 September 2017 was £10.0m
(2016: net cash of £0.5m), which reflects the
additional debt taken on to fund the Imagine and
home interest acquisitions.
During the year, there was a cash inflow from
operations before exceptional items of £17.1m
(2016: £6.5m) reflecting a significant focus on
improving the Group’s working capital cycle and
trading performance.
A reconciliation of adjusted operating cash
inflow to cash inflow from operations is included
below:
Adjusted operating cash inflow
17.1
6.5
2017
£m
2016
£m
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 this reason the
Directors continue to adopt the going concern
basis in preparing the consolidated financial
statements for the year ended 30
September 2017.
Key performance indicators (KPIs)
Management uses a number of KPIs to
measure the Group’s operational and financial
performance, the most important of which are
set out on page 8.
Cash flows related to
exceptional items
Conclusion
(5.1)
(3.4)
Cash inflow from operations
12.0
3.1
Other significant movements in cash flows
include exceptional payments of £5.1m
(2016: £3.4m), £1.8m (2016: £1.9m) of capital
expenditure, net proceeds from issuing shares
of £21.0m, draw down of bank loans (net of
repayments and arrangement fees) of £10.6m
and payments of £32.6m (net of cash acquired)
to fund acquisitions. Foreign exchange and
other movements accounted for the balance of
cash flows.
Credit facility and covenants
The Group had available facilities of £25.4m
at 30 September 2017, expiring in June
2021. Further details of these new facilities
are included within note 18 to the financial
statements.
The Group has completed several
transformational acquisitions in the last 12
months and moves into a new exciting phase
of its development. The Group is well placed to
achieve its ambitions for 2018 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
8 December 2017
Annual Report and Accounts 2017
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17
Future plc
Board of
Directors
Strong leadership
Peter Allen
Independent non-executive Chairman
Richard Huntingford
Independent non-executive and
Chairman Designate
Zillah Byng-Thorne
Chief Executive
James Hanbury
Deputy Chairman
Penny Ladkin-Brand
Chief Financial Officer and
Company Secretary
Hugo Drayton
Independent non-executive
18
Peter Allen
Chairman
sln
Richard Huntingford
Independent non-executive and
Chairman Designate
sln
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 and a non-executive Director of
Istesso Limited. Peter has decided not to seek
re-election to the Board and will step down on
1 February 2018.
Richard was appointed to the Board on 1
December 2017 and will take over as Chairman
on 1 February 2018. Richard had a 20 year
career at Chrysalis plc and was CEO from 2000
to 2007, following which he was Chairman
of Virgin Radio until its sale in 2008. More
recently, he has been non-executive Chairman
of Wireless Group plc (formerly UTV Media
plc) from 2012 to 2016 and non-executive
Director/Chairman of Creston plc from 2011
to 2016. He is currently Chairman of Crown
Place VCT plc and non-executive Director of JP
Morgan Investment Trust plc. He is a chartered
accountant, having qualified with KPMG.
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.
James Hanbury
Deputy Chairman
sl
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
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.
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. Penny is currently
a non-executive Director of Next Fifteen
Communications Group plc.
Hugo Drayton
Independent non-executive
sl
Hugo joined Future on 1 December 2014. He
is CEO of the advertising technology business,
Inskin Media. Prior to Inskin, 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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Member of the
Nomination
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Member of the Audit
Committee
Annual Report and Accounts 2017Corporate Governance
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Directors’
report
For the year ended
30 September 2017
Principal activity
The principal activity of the Company and
its subsidiaries (the ‘Group’) as a whole is
the publishing of special-interest consumer
magazines and websites and the operation
of events notably in the areas of: technology;
games and entertainment; music; knowledge;
creative and photography; field sports and
home interest.
The Company is a public company limited by
shares listed on the London Stock Exchange
and is incorporated and domiciled in the UK.
It has subsidiaries operating in the UK, the US
and Australia.
Business review
The purpose of the Annual Report is to provide
information to the shareholders of the Company.
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, the 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
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.
available at the date of preparation of this
Annual Report and the Company undertakes
no obligation to update those forward-looking
statements.
Result of 2017 Annual General Meeting
All resolutions put to the Annual General
Meeting held on 1 February 2017 were
passed unanimously on a show of hands.
Shareholders holding more than 50% of all
issued shares submitted proxy votes and of
those, more than 95% of all proxy votes cast
were in favour of all resolutions.
Reported financial results
The audited financial statements for the
year ended 30 September 2017 are set out
on pages 49 to 86. Details of the Group’s
results are set out in the consolidated income
statement on page 50 and in the notes to the
financial statements on pages 60 to 86.
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.
The Board is not recommending a final
dividend for the year.
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 79. As at 30
September 2017, the number of shares in
issue was 45.4 million. This represents an
increase of 85% compared with the number of
shares in issue as at 30 September 2016. In
October 2016, 12.0 million shares were issued
by the Company as consideration for the
acquisition of Imagine. In July 2017, 8.8 million
shares were issued by way of a placing of
Ordinary shares in the Company to part fund
the acquisition of home interest. 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.
Directors
Share capital
The Company has a single class of share
capital which is divided into Ordinary shares
of fifteen pence each. The rights and
obligations attaching to the Company’s
Ordinary shares and provisions governing the
Biographical details of the Directors holding
office as at 8 December 2017 are set out on
page 18.
Directors’ shareholdings in the Company’s
share capital are set out opposite. No Director
has any interest in any other share capital of
the Company or any other Group company, nor
At 8 December 2017, the Company had been notified of the following significant interests in its Ordinary shares:
Shareholder
Aberforth Partners LLP
Hargreave Hale (Discretionary)
Disruptive Capital Investments Limited
Lombard Odier Investment Managers
River and Mercantile Asset Management
Invesco Perpetual
AXA Framlington Investment Managers
JO Hambro Capital Management
Herald Investment Management
Directors’ holdings (see opposite)
Total of significant holdings
Total number of shares in issue
Number of shares
Percentage of
issued share capital
8,498,699
5,542,538
4,621,412
3,457,051
3,302,786
2,245,508
2,003,460
1,768,029
1,734,333
33,173,816
361,462
33,535,278
45,655,967
18.62%
12.14%
10.12%
7.57%
7.23%
4.92%
4.39%
3.87%
3.80%
72.66%
0.79%
73.45%
100%
Future plc 2020
Directors’ shareholdings (audited)
Directors in office at 30 September 2017
Executive
Zillah Byng-Thorne
Penny Ladkin-Brand
Non-executive
Peter Allen
James Hanbury
Manjit Wolstenholme
Hugo Drayton
Total
Restated
Balance as at
30 September 2016
On appointment
Purchases
during the year
Balance as at
30 September 2017
72,758
10,000
73,333
-
16,859
-
172,950
-
-
-
31,3363
-
-
40,2582
21,780
12,834
14,100
-
-
31,336
88,972
113,016
31,780
86,167
45,436
16,859
-
293,258
Notes:
1. All holdings are beneficial.
2. The purchase of 4,615 of these shares was effected by the exercise of 4,615 Sharesave options on 1 August 2017.
3. James Hanbury received 31,336 shares as consideration for his shareholding in Miura (Holdings) Limited on 21 October 2016.
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.
5. The Group completed a share consolidation on 2 February 2017 whereby 15 Ordinary shares of one pence were exchanged for one new Ordinary share of 15 pence. All references to the number of
shares prior to this date have been restated.
6. On 27 November 2017, following the full vesting of the PSP award granted on 16 July 2014, Zillah Byng-Thorne received 166,667 Ordinary shares which she sold on 29 November 2017. Also on 27
November 2017, following the achievement of the 2017 Annual Bonus EBITDA target, Zillah Byng-Thorne received a bonus share award of 56,022 Ordinary shares (of which 26,333 shares were sold
on 29 November 2017 to cover the tax and national insurance arising). Zillah Byng-Thorne’s total shareholding following these transactions was 142,705 Ordinary shares.
7. On 27 November 2017, following the achievement of the 2017 Annual Bonus EBITDA target, Penny Ladkin-Brand received a bonus share award of 38,515 Ordinary shares, resulting in a total holding of
70,295 Ordinary shares.
does any Director have a material interest in
any contract of significance to the Group.
Corporate governance
Corporate responsibility
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 18 on page
73) 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 79) 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 75 to 78.
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.
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.
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.
Annual General Meeting 2017
At the Company’s nineteenth Annual General
Meeting, which will be held on Monday 5
February 2018 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 87 to 88 and an
explanation of all proposed resolutions is
provided below.
Ordinary resolution 1 – Financial
statements
Shareholders will be asked to approve the
financial statements of the Company for the
financial year ended 30 September 2017,
together with the reports of the Directors and
auditors. The audited financial statements
appear on pages 49 to 86.
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Annual Report and Accounts 2017Corporate Governance
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Directors’
report
For the year ended
30 September 2017
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
2017, which is set out on pages 30 to 36.
£4,565,590 which represents approximately
two thirds of the Company’s issued Ordinary
shares (excluding treasury shares) as at 8
December 2017. This maximum is reduced by
the nominal amount of any equity securities
allotted under paragraph 11.2 of the Notice of
AGM; and
Ordinary resolution 3 – Directors’
remuneration policy report
Shareholders will be asked to approve the
amendments to the Directors’ remuneration
policy for the three year period commencing 1
October 2016, which are proposed within the
Directors’ remuneration policy report set out
on pages 38 to 41.
Ordinary resolutions 4 to 8 – Election
of Richard Huntingford and annual re-
election of other Directors
Following Richard Huntingford’s appointment
to the Board on 1 December 2017, he stands
for election to confirm his appointment.
Consistent with our policy since 2004, all
Directors with the exception of Peter Allen,
who has elected to stand down at the AGM in
February 2018, and Manjit Wolstenholme, who
sadly passed away on 23 November 2017, are
proposed for re-election. Biographical details
of all Directors are set out on page 18.
Ordinary resolutions 9 and 10 –
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 11 – To authorise
the Directors to issue and allot new
Ordinary shares
Under the provisions of section 551 of the
Companies Act 2006 (the “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 £4,565,590 as follows:
(a) in relation to a pre-emptive rights issue only,
equity securities (as defined by section 560 of
the Act) up to a maximum nominal amount of
(b) in any other case, equity securities up to
a maximum nominal amount of £2,282,795
which represents just under one third of the
Company’s issued Ordinary shares as at 8
December 2017. This maximum is reduced by
the nominal amount of any equity securities
allotted under paragraph 11.1 of the Notice
of AGM in excess of £2,282,795. If granted,
this authority would replace all previous
authorities granted in this connection. The
authority granted by this resolution will expire
on 31 March 2019 or, if earlier, following the
conclusion of the next AGM of the Company.
If the Directors exercise the authority granted
under paragraph 11.1 of the Notice of AGM,
they will all stand for re-election at the following
AGM.
The Directors shall exercise this authority
in connection with exercises under share
incentive schemes. 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 12 – 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 Act, the
Directors continue to propose a resolution
designed to avoid inadvertent infringement of
these definitions.
The 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.
Special resolution 13 – Disapplication
of statutory pre-emption rights
Resolution 13 will, if passed, authorise the
Directors in certain circumstances to allot
equity securities (as defined by section
560 of the Act) or sell shares 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 £342,420
representing approximately 5% of the nominal
value of the issued Ordinary share capital of
the Company as at 8 December 2017 being
the latest practicable date before publication
of the Notice of AGM. Unless revoked, varied
or extended, this authority will expire at the
conclusion of the next AGM of the Company or
31 March 2019, whichever is the earlier.
The figure of 5% reflects the Pre-Emption
Group’s Statement of Principles for the
disapplication of pre-emption rights and the
Directors will have due regard to the Principles
in relation to the exercise of this authority.
Special resolution 14 – Additional
disapplication of pre-emption rights
This resolution seeks a further power pursuant
to the authority granted by resolution 11 to
allot equity securities (as defined by section
560 of the Act) or sell shares 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) up
to a maximum nominal amount of £342,420,
representing approximately 5% of the nominal
value of the issued Ordinary share capital of
the Company as at 8 December 2017, being
the latest practicable date before publication of
the Notice of AGM. This is in addition to the 5%
referred to in resolution 13 above and, unless
revoked, varied or extended, this authority will
expire at the conclusion of the next AGM of the
Company or 31 March 2019, whichever is the
earlier.
The Directors will have due regard to the
Pre-Emption Group’s Statement of Principles
in relation to the exercise of this authority and
confirm they intend to use this power only
where that allotment is in connection with an
acquisition or specified capital investment
(within the meaning given in the most recent
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.
Future plc 22
liabilities, financial position and loss of the
Company;
:: the Group financial statements, which
have been prepared in accordance with
IFRSs as issued by the International
Accounting Standards Board (IASB), give
a true and fair view of the assets, liabilities,
financial position and profit of the Group; and
:: the Directors’ report includes a fair review
of the development and performance of the
business and the position of the Group and
Company, together with a description of the
principal risks and uncertainties that it faces.
In the case of each Director in office at the date
the Directors’ report is approved:
:: so far as the Director is aware, there is no
relevant audit information of which the Group
and Company’s auditors are unaware; and
:: they have taken all the steps that they
ought to have taken as a Director in order
to make themselves aware of any relevant
audit information and to establish that the
Group and Company’s auditors are aware of
that information.
Approved by the Board of Directors and signed
on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
8 December 2017
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Special resolution 15 – 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 15 seeks to renew
approval for notice periods of at least 14 clear
days.
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 1 February
2018. 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 89 to 91.
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; (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.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the
Annual 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 financial statements in accordance with
International Financial Reporting Standards
(IFRSs) as issued by the International
Accounting Standards Board (IASB) and
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 Company and
of the profit or loss of the Group and Company
for that period. In preparing the financial
statements, the Directors are required to:
:: select suitable accounting policies and then
apply them consistently;
:: state whether applicable IFRSs as issued
by the International Accounting Standards
Board (IASB) have been followed for the
Group financial statements and IFRSs
as adopted by the European Union have
been followed for the Company financial
statements, subject to any material
departures disclosed and explained in the
financial statements;
:: make judgements and accounting estimates
that are reasonable and prudent; and
:: prepare the financial statements on the
going concern basis unless it is
inappropriate to presume that the Group and
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that are sufficient
to show and explain the Group and Company’s
transactions and disclose with reasonable
accuracy at any time the financial position of the
Group and Company 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.
The Directors are also responsible for
safeguarding the assets of the Group and
Company 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.
The Directors consider that the Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable and provides
the information necessary for shareholders to
assess the Group and Company’s performance,
business model and strategy.
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:
:: the Company financial statements, which
have been prepared in accordance with
IFRSs as adopted by the European Union,
give a true and fair view of the assets,
Annual Report and Accounts 2017Corporate Governance
23
Corporate
Governance
report
“ Good corporate
governance is
underpinned by values,
vision and strategic
leadership.”
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
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.
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.
As a Standard Listed entity the Group is not
required to comply with the requirements of
the UK Corporate Governance Code (April
2016) (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
was appointed to the Board as a representative
of Disruptive Capital Investments Limited,
the Company’s third largest shareholder,
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 was the senior independent
non-executive Director during 2017 and the
search for her successor is underway. There is
a genuine mix of views and insights, as well as
experience.
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.
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.
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 changes during the year
Following the acquisition of Imagine James
Hanbury was appointed to the Board as
Deputy Chairman on 21 October 2016. There
were no other changes to the Board during the
year ended 30 September 2017.
Subsequent to the year-end Peter Allen
signalled his intention not to seek re-election to
the Board and, very sadly, the Group’s senior
independent non-executive Director, Manjit
Wolstenholme, passed away unexpectedly
in November 2017. In addition, Richard
Huntingford was appointed to the Board as
an independent non-executive Director on 1
December 2017. Richard brings a wealth of
media experience and will succeed Peter Allen
as Chairman.
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.
Board meetings
The Board had seven scheduled meetings
during the financial year and attendance is
summarised opposite. The Board had five
unscheduled telephone meetings to discuss
and approve aspects of the Imagine and home
interest acquisitions, during which a sufficient
quorum of directors including 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.
All of the non-executive Directors, with the
exception of James Hanbury, are considered to
be independent by the Board. James Hanbury
There is a written schedule of matters reserved
for the Board which sets out those matters
that require Board approval including setting
Future plc
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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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strategy, approving budgets and financial
statements and setting up policies. It was
noted that 42 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.
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 2017. The
Company maintains appropriate insurance for
its Directors.
Director
Peter Allen
Zillah Byng-Thorne
Manjit Wolstenholme
Hugo Drayton
Penny Ladkin-Brand
James Hanbury
(appointed 21 October 2016)
Attendance
(7 scheduled meetings)
7 of 7
7 of 7
7 of 7
7 of 7
7 of 7
7 of 7
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.
The Board has a number of nominated
advisers (as listed on page 93). 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.
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. 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
Chairman discussed the Board’s performance
during the year and any specific requirements
for training and development with each
Director. 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.
Summary of performance evaluation
Objectives for 2017
Steps taken during 2017
Support management in developing the
Executive Leadership Committee
Provided guidance and advice on succession
planning and the composition of the Committee
Support management grow the business
through acquisition
Significant acquisitions completed in the year
including Imagine and home interest
Annual Report and Accounts 2017Corporate Governance
25
Corporate
Governance
report
“ At Future, we remain
committed to ensuring
that good corporate
governance is enshrined
at the heart of our
business.”
Peter Allen
Chairman
Internal audit
The Audit Committee and the Board have
again during 2017 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 and anti-bribery policies
As part of its internal controls, the Group has
whistle-blowing and anti-bribery policies which
are 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 whistle-blowing 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
Regulatory News Service of the London Stock
Exchange including the Company’s latest
annual and interim results.
All Directors are available to meet
shareholders at the AGM or on request
by contacting the Chairman or Company
Secretary. Because more than 70% of the
Company’s shares are held by significant
shareholders, the executive Directors hold a
series of meetings presenting the interim and
annual results to these shareholders 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.
Going concern
The Directors are required to make an
assessment of the Group’s ability to continue
to trade as a 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 this reason they continue to adopt
the going concern basis in preparing the
Group’s financial statements.
Financial covenant compliance
Key covenants are tested quarterly and the
Group was in full compliance with all covenants
at all testing dates during the year. The Group
has covenants in respect of net debt/bank
EBITDA and bank EBITDA/interest. Further
details are included within note 18 on page 73.
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.
The Board reviewed and endorsed a summary
of the Group’s internal control framework
during the year.
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 who have the responsibility and
accountability to provide information in
accordance with the Group’s policies and
procedures.
The Executive Committee holds monthly
meetings with 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.
Future plc
26
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2. Audit Committee
Member
Manjit Wolstenholme
(Chairman in 2017)1
Peter Allen
Attendance
(3 scheduled meetings)
3 of 3
3 of 3
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 2017 and concluded that no
impairment was required.
1. As the Chairman of the Committee during 2017, Manjit
Wolstenholme had recent and relevant financial experience
and the acting Chairman, Richard Huntingford (appointed 1
December 2017), has recent and relevant financial experience.
The key assumptions made in that
assessment were as follows:
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 2017 Annual Report was fair, balanced
and understandable and advised the Board
accordingly.
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 2017. 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 2017, 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.
- Long term growth rate to perpetuity 2.0%
- EBITDA margins assumed 12.0% to
12.9%
- Discount rate (post-tax) 7.7%
The Audit Committee agreed with
management’s conclusion that no
impairment is required.
3. Exceptional items
Due to the continued restructuring of
the business and significant acquisition
related activity there are a number of items
considered exceptional in nature. The Audit
Committee has discussed the items with
the auditors and agrees with the conclusion
that these items should be presented as
exceptional.
4. Acquisition accounting
The Audit Committee has reviewed
the acquisition accounting prepared by
management, including the fair value
assessments performed on the opening
balance sheets for both the Imagine and
home interest acquisitions, and agrees with
the judgements made.
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 and due diligence in
respect of the Imagine and home interest
acquisitions. For further details regarding fees
paid, see note 3 to the financial statements on
page 61.
Auditors’ 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
i
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.
Annual Report and Accounts 2017Corporate Governance
27
Future plc
Corporate
Governance
report
28
i
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
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.
For the financial year ended 30 September
2017, the Audit Committee has conducted
its review of the auditors’ independence and
concluded that no conflict of interest exists
between PricewaterhouseCoopers LLP’s audit
and non-audit work, and that their involvement
in non-audit matters, which (as noted on page
26) mainly comprised advice in respect of
the Imagine and home interest acquisitions,
was the most effective way of conducting the
Group’s business during the year.
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
2018 AGM. In line with best practice, each
Committee member seeking re-election was
excluded from approving the proposal for their
re-election.
4. Remuneration Committee
Member
Manjit Wolstenholme
(Chairman in 2017)1
Attendance
(3 scheduled meetings)
3 of 3
3 of 3
3 of 3
3 of 3
Auditors appointment policy
The Audit Committee has reviewed its policy
for appointing auditors and awarding non-audit
work.
Peter Allen
Hugo Drayton
James Hanbury
The Group has used PricewaterhouseCoopers
LLP for reporting accountant work on both the
acquisitions of Imagine and home interest and
also working capital advisory work on the
acquisition of home interest. The Audit
Committee considered whether this constituted
a threat to independence and confirmed that it
was comfortable that there were appropriate
safeguards in place.
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 auditors for
19 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
1. Richard Huntingford was appointed acting Chairman of the
Committee on 1 December 2017.
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 41.
Approved by the Board of Directors and signed
on its behalf by:
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Member
Peter Allen (Chairman)
Manjit Wolstenholme
Hugo Drayton
James Hanbury
Attendance
(1 scheduled meeting)
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
8 December 2017
1 of 1
1 of 1
1 of 1
1 of 1
Annual Report and Accounts 2017Corporate Governance
29
Directors’
remuneration
report
For the year ended
30 September 2017
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 2017. 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
2017, and a Remuneration policy report, setting out the Group’s 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 involved
assessing 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. In
particular the Committee, after taking advice from remuneration specialists at Ernst &
Young focused its efforts on ensuring that the remuneration packages received by the
executive Directors recognise their contribution to transforming the Group’s performance
and market capitalisation as well as continue to incentivise going forwards.
The Committee also considered the remuneration of non-executive Directors and has
proposed amendments to the current remuneration policy to be tabled at the AGM in
February 2018 to ensure that these fees reflect prevailing market rates. The amendments
to the policy will be subject to a binding shareholder vote at the Company’s AGM on 5
February 2018 and will take effect immediately thereafter.
The remuneration philosophy is designed to ensure that reward for performance is
competitive and appropriate to the significantly increased scale and market capitalisation
of the Group following the transformation of the business combined with the significant
acquisitions of Imagine and home interest in 2017, as well as the future development 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 team to deliver growth in the short, medium
and long term and hope to receive your continued support at the Company’s 2018 AGM.
Peter Allen
(on behalf of the Remuneration Committee)
8 December 2017
Quick find contents
Implementation report
Page 30
Remuneration policy
report
Page 38
Future plc
Implementation report
The following report provides details of Directors’ remuneration
for the year ended 30 September 2017. In setting remuneration
for the year, the Committee applied the principles set out in the
Remuneration policy report.
30
Remuneration Committee
Three independent non-executive Directors
served on the Remuneration Committee during
the year to 30 September 2017: Manjit
Wolstenholme chaired the Committee during
the year and both Peter Allen and Hugo
Drayton served throughout the year. James
Hanbury joined the Committee following his
appointment to the Board on 21 October 2016.
Richard Huntingford was appointed as acting
Chairman of the Committee in December 2017.
Penny Ladkin-Brand acted as Secretary to the
Committee throughout the year.
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.
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 and 35.
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.
Performance-related bonus (Annual
Bonus Scheme)
Operation of the scheme
The performance-related bonus is subject to
profit related performance criteria, 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, 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. During
2017, a profit pool bonus was introduced for
all employees across the Group, including
the executive Directors. The maximum bonus
payable during 2017 was 95% of current basic
annual salary for both Zillah Byng-Thorne as
Chief Executive and Penny Ladkin-Brand as
Chief Financial Officer.
Single Total Figure of Remuneration (audited)
The remuneration of the Directors is set out below:
Salary/fees
Benefits1
Annual bonus2
PSP3
Pension
Total
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
2017
£’000
2016
£’000
Executive Directors in office as
at 30 September 2017
Zillah Byng-Thorne4
Penny Ladkin-Brand4
Total for executive Directors
Non-executive Directors in office as
at 30 September 2017
Peter Allen
Manjit Wolstenholme
James Hanbury5
Hugo Drayton
350
250
600
95
50
60
40
300
178
478
101
50
-
40
Total for non-executive Directors
245
191
10
-
10
-
-
-
-
-
10
-
10
640
324
964
-
-
-
-
-
-
-
-
-
-
Total
845
669
10
10
964
-
-
-
-
-
-
-
-
-
1,452
921
2,373
-
-
-
-
-
2,373
-
-
-
-
-
-
-
-
-
44
11
55
-
-
-
-
-
37
8
45
2,496
1,506
4,002
347
186
533
101
50
-
40
95
50
60
40
-
-
-
-
-
245
191
55
45
4,247
724
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 are set out on pages 30 and 31. In addition to amounts included in respect of the Annual Bonus Scheme for 2017, both Zillah Byng-Thorne and Penny
Ladkin-Brand received transaction bonuses of £350,000 and £125,000 respectively following the successful completion and integration of the Imagine acquisition in October 2016. During 2016, both
Zillah Byng-Thorne and Penny Ladkin-Brand waived their entitlement to any performance bonus (although the criteria had been partly satisfied) and as a result no bonus payment was made in 2016.
3. Details relating to the Performance Share Plan (“PSP”) are set out on page 31. The amount included in the table above in respect of Zillah Byng-Thorne relates to the PSP award granted on 16 July
2014 which vested in full on 27 November 2017, following the achievement of performance criteria over the three-year period ended 30 September 2017, and 25% of the PSP awards granted on 23
November 2016 and 2 February 2017 which will vest on 23 November 2019, following the achievement of the adjusted EBITDA target for the year ended 30 September 2017. The value of the July 2014
award has been calculated using the share price on the date of vesting of 382p and the value of the November 2016 and February 2017 awards has been calculated using the average share price for
the last three months of the financial year of 308p, as the award had not vested at the date of this report. The amount included in respect of Penny Ladkin-Brand relates to the PSP award granted on 2
August 2015 which will vest in full on 2 August 2018, following the achievement of performance criteria over the three-year period ended 30 September 2017, and 25% of the PSP awards granted on 23
November 2016 and 2 February 2017 which will vest on 23 November 2019, following the achievement of the adjusted EBITDA target for the year ended 30 September 2017. As these awards had not
vested at the date of this report, the value above has been calculated using the average share price for the last three months of the financial year of 308p.
4. Zillah Byng-Thorne received a cash supplement in lieu of pension contribution with effect from 1 July 2016 and Penny Ladkin-Brand received a cash supplement in lieu of pension contribution with
effect from 1 November 2016. These additional cash payments are not included in determining their entitlement to any bonus, share-based incentive or pension entitlement.
5. James Hanbury was appointed to the Board on 21 October 2016.
6. Richard Huntingford was appointed to the Board on 1 December 2017 and consequently no remuneration is included in the table above.
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Annual Report and Accounts 2017Corporate Governance
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Directors’
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report
For the year ended
30 September 2017
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.
Performance targets
The performance-related bonus for the
executive Directors during 2017 comprised two
elements. A maximum of 45% of current basic
annual salary was payable under the profit pool
bonus subject to the achievement of target
EBITDA and a further 50% of current basic
annual salary was payable in shares, which
must be held for at least one year, subject to
the achievement of target EBITDA.
The profit criteria for payment of the profit pool
bonus set for 2017 was in a range from 101% to
120% target EBITDA, as follows:
:: If EBITDA is at or below target EBITDA, no
profit-related bonus will be payable.
:: If EBITDA target is exceeded by 10% or
more, 50% of the potential maximum of the
profit-related bonus will be payable.
:: If EBITDA target is exceeded by 20% or
more, 100% of the potential maximum of the
profit-related bonus will be payable.
:: If EBITDA 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 profit criteria in respect of the shares
bonus was a specified target EBITDA, which
had to be met in full in order for the bonus
shares to be issued.
The EBITDA 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.
Actual performance against targets
for the year
Based on EBITDA performance achieved for
2017, the Chief Executive and the Chief Financial
Officer were each awarded a profit pool bonus of
22.5% of their current salary and a shares bonus
of 50% of their current salary.
2005 Performance Share Plan (PSP)
Operation of the scheme
The PSP has been in operation since 2005
and is designed to reward performance,
usually 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. 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 400% of basic annual
salary may be approved. Awards under this
scheme are granted to executive Directors and
certain key employees. The PSP will expire 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 during the year ended 30
September 2017
EBITDA (50% of award)
25% of the award will vest if the Group’s
adjusted EBITDA for the year ended 30
September 2017 is at or above target. If the
Group’s adjusted EBITDA is below target, none
of that 25% of the award will vest.
25% of the award will vest if the Group’s
adjusted EBITDA for the year ending 30
September 2018 is at or above target. If the
Group’s adjusted EBITDA is below target, none
of that 25% of the award will vest.
Share price performance (50% of award)
25% of the award will vest if the Company’s
share price performance in the period from
the date of grant to 30 September 2018 is at
or above target. If the Company’s share price
performance is below target, none of that 25% of
the award will vest.
25% of the award will vest if the Company’s
share price performance in the period from
the date of grant to 30 September 2019 is at
or above target. If the Company’s share price
performance is below target, none of that 25% of
the award will vest.
Performance criteria in respect of awards
granted between 30 November 2015 and
30 September 2016
Earnings Per Share (50% of award)
Adjusted EPS for the last financial year of the
performance period of at least 18.0p 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 22.5p 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 £(0.25)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 16 July 2014 and 29
November 2015
In July 2017, the Remuneration Committee
exercised its discretion to change the
performance criteria in respect of the award
granted to Zillah Byng-Thorne in July 2014
from TSR performance and EPS growth to
absolute EPS and net cash flow in order to align
the performance criteria for awards made to
the executive Directors. The Committee also
extended the vesting date from 16 July 2017 to
27 November 2017. The performance criteria
are as follows:
Earnings Per Share (50% of award)
Adjusted EPS for the last financial year of the
performance period of at least 15.0p 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 21.0p 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 against targets in respect of
the 16 December 2013 awards
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 December
2013 lapsed in its entirety on 16 December 2016.
Future plc 32
Performance against targets in respect of
the awards granted on 16 July 2014 and 2
August 2015
The adjusted diluted EPS for the relevant
measurement period was 21.0p for the Group
and the net cash flow was £8.9m (after making
adjustments for net debt acquired with Imagine
and debt drawn down to fund the acquisition of
home interest). Consequently, the PSP award
granted to Zillah Byng-Thorne on 16 July 2014
vested in full on 27 November 2017 and the
PSP award granted to Penny Ladkin-Brand on 2
August 2015 will vest in full on 2 August 2018.
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.
Pension entitlements (audited)
Payments for loss of office (audited)
The only element of remuneration that is
pensionable is basic annual salary, excluding
performance-related bonuses and benefits in
kind. During the year ended 30 September
2017, employer’s pension contributions were
payable for the executive Directors at a rate of
12.5% for the Chief Executive and up to 6% for
the Chief Financial Officer. The entitlement to
employer’s pension contributions was paid in
cash as a salary supplement to Zillah
Byng-Thorne, with effect from 1 July 2016, and
to Penny Ladkin-Brand, with effect from 1
November 2016. This additional cash payment
is not included in determining their entitlement
to any performance-related bonus, share-
based incentive or pension. The Company had
no liability in respect of the executive Directors’
pensions as at 30 September 2017. 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 2017.
During the financial year to 30 September 2017
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
30 September 2017, Zillah Byng-Thorne had a
holding of 113,016 shares which, at the share
price on the same date, were worth £349,785.
In respect of Penny Ladkin-Brand, the period
commenced on 3 August 2015 and will end on 2
August 2020. As at 30 September 2017, Penny
Ladkin-Brand had a holding of 31,780 shares
which, at the share price on the same date,
were worth £98,359.
Details of Directors’ shareholdings are set out
on page 20 of the Directors’ report.
Share incentives awarded during the year (audited)
PSP Grants
Zillah Byng-Thorne
23 November 2016
200%
Date of award
% salary
Value (£)
700,000
Penny Ladkin-Brand
23 November 2016
200%
500,000
% vesting at
min performance
No. shares
awarded
75%
75%
529,702
378,358
Zillah Byng-Thorne
2 February 2017
200%
700,000
75%
529,702
Penny Ladkin-Brand
2 February 2017
200%
500,000
75%
378,358
Performance period
1 October 2016 – 30
September 2019
1 October 2016 – 30
September 2019
1 October 2016 – 30
September 2019
1 October 2016 – 30
September 2019
Notes:
1. The value of the PSP awards are usually calculated using the share price at the date of grant, which was 132.15p per share for the 23 November 2016 awards to Zillah Byng-Thorne and Penny
Ladkin-Brand. The value of the awards granted to Zillah Byng-Thorne and Penny Ladkin-Brand on 2 February 2017 was based on the same share price as the awards granted on 23 November
2016 as they were considered to be part of the same share award.
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 50% vesting of the EBITDA element and the 100% vesting of the share price performance element of the award as the relevant
criteria have been met in full at 8 December 2017.
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Annual Report and Accounts 2017Corporate Governance
33
Directors’
remuneration
report
For the year ended
30 September 2017
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
Euromoney Instl. Investor
Gocompare.com
Huntsworth
Informa
ITE Group
ITV
Moneysupermarket.com GP
Pearson
RELX
Rightmove
Sky
STV Group
Tarsus Group
Trinity Mirror
UBM
WPP
Zoopla Property Group
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.
PSP1
Zillah Byng-Thorne4
Date of grant
16 Dec 2013
16 Jul 2014
30 Nov 2015
23 Nov 2016
2 Feb 2017
Penny Ladkin-Brand
3 Aug 2015
30 Nov 2015
23 Nov 2016
2 Feb 2017
Price
paid
for
grant
Earliest
exercise date
Expiry
date
Restated
Exercise
price per
share (p)
Restated
Balance at
1 Oct
2016
Granted
during the
year3
Vested
during the
year
Lapsed
unexercised
during
the year
Balance at
30 Sept
2017
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
16 Dec 2016
27 Nov 2017
30 Nov 2018
23 Nov 2019
23 Nov 2019
3 Aug 2018
30 Nov 2018
23 Nov 2019
23 Nov 2019
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
133,334
166,667
166,667
-
-
-
-
-
529,702
529,702
109,856
83,334
-
-
-
-
378,358
378,358
-
-
-
-
-
-
-
-
-
(133,334)
-
-
-
-
-
-
-
-
-
-
166,667
166,667
529,702
529,702
109,856
83,334
378,358
378,358
-
Sharesave2
Zillah Byng-Thorne
13 Dec 2013
Nil
1 Feb 2017
1 Aug 2017
195.0
4,615
-
(4,615)
Notes:
1. The performance criteria which apply to awards granted under the PSP scheme are set out on page 31.
2. Details of the Sharesave scheme, which has no performance conditions, are set out in note 24 on page 81.
3. The market price at the time of grant of the PSP award on 23 November 2016 was 132.15p per share and this price was also used for the grant of the PSP award on 2 February 2017 as they were
considered to be part of the same share award.
4. In July 2017 the Remuneration Committee exercised its discretion to change the performance criteria in respect of the award granted to Zillah Byng-Thorne in July 2014 from TSR performance and
EPS growth to absolute EPS and net cash flow in order to align the performance criteria for awards made to the executive Directors. The Committee also extended the vesting date from 16 July 2017
to 27 November 2017.
5. Zillah Byng-Thorne exercised 4,615 options under the Sharesave scheme on 1 August 2017. The exercise price of the options was 195p per share and the market price on the date of exercise
was 320p per share.
6. The awards granted to Zillah Byng-Thorne on 16 December 2013 lapsed on 16 December 2016, since the relevant performance criteria were not met.
7. Balances at 1 October 2016 in the table above have been restated to reflect the share consolidation in February 2017.
Future plc
Annual Report and Accounts 2017
34
Graph: Past nine financial years ended 30 September 2017
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
2017
Future (rebased to 100)
FTSE All-Share Media Index (UK companies) (rebased to 100)
Chief Executive pay during last nine 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)
2017 (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
£2,496
0%
40%
0%
50%
0%
20%
36%
0%7
88%8
100%1
48%2
100%3
0%4
0%4
0%5
0%5
0%5
100%
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 lapsed 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.
7. Zillah Byng-Thorne waived her performance-related bonus for 2016.
8. Zillah Byng-Thorne received a transaction bonus of £350,000 following the successful completion of the Imagine acquisition in October 2016. The right to a performance-related bonus was waived in
2016 as a result of this transaction bonus being paid. The 88% in the table reflects the combination of this transaction bonus, the profit pool bonus which was awarded as a result of EBITDA
performance achieved for 2017 and the further bonus of 50% of current salary (to be satisfied in shares that must be held for at least one year) for the achievement of 2017 target EBITDA.
35
Directors’
remuneration
report
For the year ended
30 September 2017
Percentage change in remuneration of Chief Executive
Salary
Benefits (inc pension)
Bonus
2017
2016
% change
2017
2016
% change
2017
2016
% change
Chief Executive
All employees
£350,000
£300,000
+16.7%
£54,000
£47,000
+14.9% £640,000
£38,758
£38,491
+0.7%
£1,777
£3,022
-41.2%
£1,551
-
-
+100%
+100%
Relative importance of spend on pay
The relative importance of 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
2017
£m
28.8
52.6
1.8
-
2016
£m
24.0
34.3
1.9
-
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 cast on the Directors’ remuneration report beginning on 1 October 2016 to 30 September 2019 were as
follows:
Approval of Directors’ remuneration report for 2017*
18,578,620
99.93
1,732
0.01
11,690
0.06
For
%
Discretionary
%
Against
%
*The numbers of shares stated above have been restated to reflect the share consolidation in February 2017.
Implementation of remuneration policy in the year to 30 September 2018
The Remuneration Committee does not propose to make any changes to the remuneration policy that was outlined in the Annual Report for the year
ended 30 September 2016 and approved at the Company’s Annual General Meeting in February 2017, a copy of which is set out on pages 38 to 41,
other than as detailed below in respect of non-executive Directors’ fees.
The Remuneration Committee proposes the following changes to the remuneration policy for 2018 for non-executive Directors, as outlined in the
Remuneration policy report on pages 38 to 41, subject to shareholder approval at the Company’s AGM on 5 February 2018.
Non-executive Directors
Element
Operation of element
Max. potential value
Performance,
weighting & time
Fees
Non-executive Directors’ fees
are reviewed every three
years and paid in 12 monthly
instalments.
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
The Chairman’s fee will increase to £120,000
from 1 October 2017.
Subject to shareholder approval at the AGM in
February 2018 the following changes are proposed:
1. An increase in the base fee for non-executive
Directors by £5,000 to £45,000 effective from 1
February 2018.
2. An additional fee of £7,500 for the role of Senior
Independent Director and £5,000 for each Chairman
of Remuneration and Audit Committee role held.
Future plc
36
Executive Directors:
As detailed opposite, the overall remuneration policy for executive Directors remains unchanged, however the changes to remuneration that have taken
place in respect of 2018 in accordance with the policy are detailed below:
Element
Operation of element
Max. potential value
Base salary
No change
Zillah Byng-Thorne’s salary as Chief Executive
increased to £400,000 and Penny Ladkin-
Brand’s salary as Chief Financial Officer
increased to £275,000, both with effect from
1 October 2017.
Performance,
weighting & time
No change
Benefits
No change
Zillah Byng Thorne’s total benefits increased
to £17,000 and Penny Ladkin-Brand’s total
benefits increased to £15,000, both with effect
from 1 October 2017.
No change
Annual Bonus
No change
No change to the profit pool bonus that was
introduced in 20171.
No change
PSP
No change
Pension
No change
The Executive Directors received an award
of 100% of salary in November 2017 which,
subject to the achievement of certain
performance conditions, will vest in November
2020.
No change
Employers’ pension contributions were
increased to a rate of 15% for both the Chief
Executive and the Chief Financial Officer from
1 October 2017.
No change
Notes:
1. Performance targets for the Annual Bonus for 2018 are not disclosed due to their commercial sensitivity. In the event that there is an increase in the executive Directors’ base salaries during the year, the
potential maximum value of the Annual Bonus and pension shall increase accordingly.
Advisers to the Remuneration Committee
Ernst & Young LLP (‘EY’) advise the Committee in respect of various share incentives and executive remuneration and were paid £9,000 in the year for
providing these services to the Committee.
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 2017Corporate Governance 37
Future plc
Annual Report and Accounts 2017
38
Remuneration policy report
The policy set out below applies for all financial years
beginning on or after 1 October 2016 to 30 September 2019 following
shareholder approval at the Company’s Annual General Meeting on 1
February 2017.
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. The Committee does not propose
to make any changes to the policy that was
approved by shareholders at the Company’s
Annual General meeting in February 2017 in
respect of executive Directors’ remuneration
however it seeks to amend the level of non-
executive Directors’ fees to reflect prevailing
market rates and therefore intends to put the
proposed amendments to the policy in respect
of non-executive Directors’ remuneration
forward to shareholders for approval at the
Company’s Annual General Meeting to be
held on 5 February 2018.
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
15% 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. 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.
3. 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
Service contracts and payments for loss of office
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 the
performance-related bonus of the Chief
Executive and Chief Financial Officer in order
to ensure that the Committee retains discretion
and to ensure no performance-related bonus is
unjustly received.
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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39
Directors’
remuneration
report
For the year ended
30 September 2017
Remuneration table
Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Changes for 2018
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.
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.
Salary increases shall generally reflect market conditions,
Not applicable.
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.
Benefits
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.
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.
Pension
The Company shall make a contribution up to a maximum percentage of basic annual salary.
To ensure broad competitiveness with market practice.
Total cost annually shall not exceed 15% of basic annual salary.
Not applicable.
Basic annual salary of Chief Executive increased
to £400,000 and Chief Financial Officer to
£275,000 (both with effect from 1 October 2017)
from £350,000 and £250,000 respectively.
Total benefits provided to the Chief Executive
increased to £17,000 and to the Chief Financial
Officer to £15,000 (both with effect from 1
October 2017).
Employers’ pension contributions increased
to 15% for both the Chief Executive and
Chief Financial Officer (from 12.5% and 6%
respectively).
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, 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.
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
Executive Directors received an award of 100%
annual salary, however in exceptional circumstances the Committee
the Directors’ remuneration report provided they are not deemed to be commercially
of salary in November 2017.
retains discretion to grant one-off awards of a value up to 400% of
sensitive.
basic annual salary.
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.
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
Not applicable.
be the limits set out in UK tax legislation.
No change.
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 2018 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
Objective & link to strategy
Performance measures
Changes for 2018
Non-executive Directors’ fees are reviewed every three years and paid in 12 monthly instalments.
Reflects the time commitment and responsibilities of the roles.
Not applicable.
The Chairman’s fee will increase to £120,000 from 1 October 2017.
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
Subject to shareholder approval at the AGM in February 2018 the following further
changes are proposed:
1. An increase in the base fee for non-executive Directors by £5,000 to £45,000
effective from 1 February 2018 onwards.
2. An additional fee of £7,500 for the role of Senior Independent Director (increased
from £5,000) and £5,000 for each role as Chairman of either Remuneration or Audit
Committee.
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. Currently additional fees for chairing a Committee apply only once, regardless of the number of Committees
of which a non-executive Director is Chairman. Subject to shareholder approval it is proposed that this is amended so that a fee is payable for each Chairman role held. Non-executive Directors are not
included in any performance-related bonus, share incentive schemes or pension arrangements.
Future plc 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.
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.
To ensure broad competitiveness with market practice.
Total cost annually shall not exceed 15% of basic annual salary.
Not applicable.
Performance-
related bonus1
the Committee’s discretion,
Targets are set annually by the Committee, based on (i) financial performance against budget and, at
Designed to reward delivery of shareholder value and
implementation of the Group’s strategy.
(ii) individual subjective performance targets which are determined for each 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.
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.
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.
40
Changes for 2018
Basic annual salary of Chief Executive increased
to £400,000 and Chief Financial Officer to
£275,000 (both with effect from 1 October 2017)
from £350,000 and £250,000 respectively.
Total benefits provided to the Chief Executive
increased to £17,000 and to the Chief Financial
Officer to £15,000 (both with effect from 1
October 2017).
Employers’ pension contributions increased
to 15% for both the Chief Executive and
Chief Financial Officer (from 12.5% and 6%
respectively).
No change.
Long term
share-based
incentive2
granted by prior employer.
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, e.g. recruitment of a Director or to “buy out” awards
medium-to-long term.
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 targets are set annually by the Committee and disclosed annually in
the Directors’ remuneration report provided they are not deemed to be commercially
sensitive.
Executive Directors received an award of 100%
of salary in November 2017.
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.
No change.
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.
The Committee retains discretion to allow executive Directors to participate in the SIP on the same
terms as other employees.
Non-executive Directors
Element
Fees1
Operation
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. Currently additional fees for chairing a Committee apply only once, regardless of the number of Committees
of which a non-executive Director is Chairman. Subject to shareholder approval it is proposed that this is amended so that a fee is payable for each Chairman role held. 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 certain key individuals, 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
Changes for 2018
Not applicable.
The Chairman’s fee will increase to £120,000 from 1 October 2017.
Subject to shareholder approval at the AGM in February 2018 the following further
changes are proposed:
1. An increase in the base fee for non-executive Directors by £5,000 to £45,000
effective from 1 February 2018 onwards.
2. An additional fee of £7,500 for the role of Senior Independent Director (increased
from £5,000) and £5,000 for each role as Chairman of either Remuneration or Audit
Committee.
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Annual Report and Accounts 2017Corporate Governance
41
Future plc
Directors’
remuneration
report
For the year ended
30 September 2017
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 pool bonus scheme.
Discretionary share incentive awards are
granted to certain key employees under the
PSP and DABS schemes, the details of which
are set out at note 24 on page 81. 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:
Peter Allen
(on behalf of the Remuneration Committee)
8 December 2017
Annual Report and Accounts 2017
42
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43
Future plc
Independent
auditors’ report
Independent auditors’ report to
the members of Future plc
Report on the audit of the financial statements
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 2017 and of the Group’s profit and the
Group’s and the Company’s cash flows for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union and, as regards the Company’s financial statements, as
applied in accordance with the provisions of the Companies Act 2006; and
• 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.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise: the Consolidated
and Company balance sheets as at 30 September 2017; the Consolidated income statement, the Consolidated statement of comprehensive income,
the Consolidated and Company cash flows statements, and the Consolidated and Company statements of changes in equity for the year then ended;
the Accounting Policies; and the notes to the financial statements.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group
or the Company.
Other than those disclosed in note 3 to the financial statements, we have provided no non-audit services to the Group or the Company in the period
from 1 October 2016 to 30 September 2017.
Our audit approach
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to
fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Future plc 44
Key audit matter
How our audit addressed the key audit matter
The measurement of Magazine newsstand revenue
(£26.9 million (2016: £16.9 million) within the Magazine segment)
Refer to note 1 for further information
We assessed whether the estimated number of returns was reasonable
by comparing the estimate to historical trends and by considering the
accuracy of management’s forecasting in the past.
Magazine newsstand revenue is recognised at the date that the related
publication goes on sale. The amount of revenue recognised is based on
the number of issues printed and an estimate of the number of returns.
We considered whether there had been any change to the types of
magazines sold or changes to the market environment which could
increase the level of uncertainty in the estimate.
We focused on this area because of the inherent subjectivity in estimating
the number of returns and because of the significance of Magazine
revenue to the Group’s reported result. Changes to the estimated number
of returns can have a material impact on Magazine revenue.
Group
The valuation of goodwill
(£65.8 million (2016: £29.5 million))
Refer to note 11 for further information
Goodwill is an intangible asset that arises on the acquisition of a
business and reflects the portion of the consideration paid which cannot
be allocated to separately identifiable acquired assets. 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.
We focused on this area because goodwill is material to the consolidated
financial statements and the assumptions used in the impairment
assessment are inherently subjective. In particular, the assessment is
highly sensitive to changes in forecast earnings before interest, tax,
depreciation, amortisation, impairment and exceptional items (EBITDA)
margins.
Group
The classification of exceptional items
(£3.7 million (2016: £3.5 million))
Refer to note 4 for further information
The Group’s accounting policy is to report items of income and expenses
as exceptional items 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.
Exceptional items primarily consisted of redundancy and acquisition
related costs associated with the restructuring of the business and other
transformational activity. We focused on this area because exceptional
items are material to the consolidated financial statements and there is a
degree of judgement in their classification.
Group
We also examined the number of returns processed after the year-end and
compared that data to the level of returns forecast by management.
Based on the work performed, we found that the methods and
assumptions used to estimate the number of returns were appropriate and
that the estimate was supported by the evidence obtained.
Our work to address the valuation of goodwill was supported by our
in-house valuation experts, and included the following procedures:
• We assessed whether the forecast EBITDA margins were reasonable
by comparing them to historical trends and by considering the accuracy
of management’s forecasting in the past. We considered whether there
had been any changes to the business or to the market environment
which could increase the level of uncertainty in the forecast.
• We performed sensitivities to confirm that the forecast EBITDA
margin continues to remain the key assumption to which the impairment
assessment is most sensitive. We also considered to what level
the EBITDA margin would need to deteriorate to in order to indicate
impairment.
• We used our in-house valuation experts to compare the discount rate to
our own estimate of the Group’s cost of capital, adjusted for the effects
of tax.
• We also assessed the reasonableness of the assumed long-term growth
rate in light of external growth forecasts for the UK economy.
Based on the work performed, we found that the methods used in the
impairment assessment were appropriate and that the conclusions
reached were supported by the evidence obtained.
We tested the classification of exceptional items by;
• examining supporting information such as invoices;
• checking that redundancy costs agreed to the payments made to those
employees; and
• confirming that those payments were described as redundancy payments
in written communications with those employees.
Redundancy and acquisition related costs have been incurred in both
the current year and in prior years so we challenged management as to
whether such costs were exceptional in nature. Management’s view was
that whilst these charges have persisted in 2017, they have arisen from a
significant, ongoing restructuring and transformation programme, as set
out in further detail in the Chief Executive’s Review on page 3.
Following completion of this programme these charges will not recur.
Given the scale of the restructuring and transformation programme,
and that only redundancy and acquisition costs specific to it are being
separated, we accepted this treatment for the current year.
From the evidence obtained, we concurred with management’s
assessment to classify and disclose these costs as separately reported
exceptional items, in line with the disclosed accounting policy.
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Annual Report and Accounts 2017Corporate Governance
45
Independent
auditors’ report
Key audit matter
How our audit addressed the key audit matter
The accounting for the acquisition of Imagine Publishing and the
home interest division of Centaur Media
Refer to note 29 for further information
On 21 October 2016, the Group completed its acquisition of Imagine
Publishing and on 1 August 2017 its acquisition of the home interest
division of Centaur Media. We focused on these transactions because
they are material to the consolidated financial statements and because
there is a degree of judgement in the identification and valuation of the
assets and liabilities acquired.
Our work over the accounting for the acquisition included the following
procedures:
• We agreed the cash consideration paid to supporting documentation.
• We tested the fair value adjustments to the assets and liabilities acquired
and, based on our understanding of the acquired business, assessed
whether all assets and liabilities had been appropriately identified and
classified. We also considered any required alignment of accounting
policies and valuation methodologies.
Group and parent
• We re-performed the calculation of goodwill.
• We assessed the sufficiency of the disclosures relating to the acquisition,
taking into account the requirements of relevant financial reporting
standards and tested the completeness and accuracy of those
disclosures.
Based on the work performed, we found that the accounting for the
acquisition was appropriate and that the fair value of the acquired assets
and liabilities was supported by the evidence obtained.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
The Group is structured along two geographical lines, being the UK and US. The Group’s financial statements consist of a consolidation of 23
statutory entities; but the Group primarily operates through two main trading entities; Future Publishing Limited and Future US, Inc.
In establishing the overall approach to the Group audit, we determine the type of work that we needed to perform at each entity to be able to conclude
whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.
In our view, the two main trading entities required a full scope audit of their complete financial information, due to their size and their risk
characteristics. These were audited by the UK Group engagement team. This, together with our audit of the parent holding Company and testing of
the consolidation at Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole and accounted for
94% of the Group’s revenue, 80% of the Group’s reported profit before tax and 76% of the Group’s net assets.
Future plc 46
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£840,000
How we
determined it
1% of revenue
£820,000
0.86% of total assets
Rationale for
benchmark applied
In arriving at this judgement we considered the financial
measures which we believed to be most relevant to the
shareholders in assessing the performance of the Group.
As a holding company, the entity is not considered to be profit
orientated. In such circumstances, total assets is a generally
accepted benchmark.
Profit before tax is a generally accepted benchmark for a
profit orientated business. However, due to restructuring and
continued transformational activity, the Group has continued
to report losses and there has been a degree of volatility in
this measure. We concluded that, in isolation, this metric did
not appropriately reflect the scale of the Group’s ongoing
operations or its underlying performance.
As a result, revenue was considered to be the most
appropriate metric, but in quantifying materiality we have also
had regard to other performance measures such as operating
profit and the impact of exceptional items.
For each component in the scope of our Group audit, we allocated an equal materiality of £756,000, which was less than our overall Group materiality.
Certain components were audited to a local statutory audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £42,000 (Group audit) and £40,000
(Company audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
•
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s
and Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the
financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability to
continue as a going concern.
Annual Report and Accounts 2017Corporate Governance 47
Independent
auditors’ report
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The
Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether
there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have
been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 and ISAs (UK) require us
also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year
ended 30 September 2017 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
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 in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend
to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
Future plc 48
Other required reporting
Companies Act 2006 exception reporting
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
• certain disclosures of Directors’ remuneration specified by law are not made; 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.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 11 May 1999 to audit the financial statements for the
year ended 31 December 1999 and subsequent financial periods. The period of total uninterrupted engagement is 19 years, covering the years ended
31 December 1999 to 30 September 2017.
Colin Bates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
8 December 2017
Annual Report and Accounts 2017Corporate Governance 49
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
50
50
51
51
52
53
54
55
56
60
Annual Report and Accounts 2017
50
Consolidated income statement
for the year ended 30 September 2017
Continuing operations
Revenue
Net operating expenses
Operating profit/(loss)
Finance income
Finance costs
Net finance costs
Profit/(loss) before tax
Tax on profit/(loss)
Profit/(loss) for the year from continuing operations
Discontinued operations
(Loss)/profit for the year from discontinued operations
Profit/(loss) for the year attributable to owners of the parent
Earnings per 15p Ordinary share
Basic earnings/(loss) per share – Total Group
Diluted earnings/(loss) per share – Total Group
Basic earnings/(loss) per share – Continuing operations
Diluted earnings/(loss) per share – Continuing operations
2017
2016
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
Note
1
2
6
6
1
7
84.4
(75.5)
8.9
0.1
(0.7)
(0.6)
8.3
0.3
8.6
-
8.6
-
84.4
59.0
(8.1)
(8.1)
-
-
-
(8.1)
1.1
(7.0)
-
(7.0)
(83.6)
(56.2)
0.8
0.1
(0.7)
(0.6)
0.2
1.4
1.6
-
1.6
2.8
-
(0.5)
(0.5)
2.3
-
2.3
(0.1)
2.2
-
(17.0)
(17.0)
-
(0.2)
(0.2)
59.0
(73.2)
(14.2)
-
(0.7)
(0.7)
(17.2)
(14.9)
0.5
0.5
(16.7)
(14.4)
0.3
0.2
(16.4)
(14.2)
Adjusted
results
pence
2017
Adjusting
items
pence
Statutory
results
pence
Adjusted
results
pence
23.2
21.0
23.2
21.0
(18.9)
(17.1)
(18.9)
(17.1)
4.3
3.9
4.3
3.9
9.1
8.8
9.5
9.2
Note
9
9
9
9
Restated
2016*
Adjusting
items
pence
(67.9)
(67.6)
(69.1)
(68.8)
Statutory
results
pence
(58.8)
(58.8)
(59.6)
(59.6)
* The prior year comparatives have been restated to reflect the 15:1 share consolidation completed on 2 February 2017.
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 2017
Profit/(loss) for the year
Items that may be reclassified to the consolidated income statement
Continuing operations
Currency translation differences
Other comprehensive (loss)/income for the year from continuing operations
Total comprehensive income/(loss) for the year attributable to continuing operations
Total comprehensive income for the year attributable to discontinued operations
Total comprehensive income/(loss) for the year attributable to owners of the parent
Items in the statement above are disclosed net of tax.
2017
£m
1.6
(0.2)
(0.2)
1.4
-
1.4
2016
£m
(14.2)
0.3
0.3
(14.1)
0.2
(13.9)
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51
Future plc
Financial
statements
Consolidated statement of changes in equity
for the year ended 30 September 2017
Group
Balance at 1 October 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
Profit for the year
Currency translation differences
Other comprehensive loss for the year
Total comprehensive income for the year
Share capital issued during the year
Share schemes
- Value of employees’ services
- Deferred tax on options
Balance at 30 September 2017
Company statement of changes in equity
for the year ended 30 September 2017
Company
Balance at 1 October 2015
Loss 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
Loss for the year
Total comprehensive loss for the year
Share capital issued during the year
Share schemes
- Value of employees’ services
- Deferred tax on options
Balance at 30 September 2017
Issued
share
capital
£m
Share
premium
account
£m
Note
Merger
reserve
£m
Treasury
reserve
£m
Accumulated
losses
£m
3.3
24.8
109.0
(0.3)
-
-
-
-
0.4
-
3.7
-
-
-
-
3.1
-
-
6.8
5
23
5
13
-
-
-
-
2.8
-
27.6
-
-
-
-
-
-
-
-
-
-
109.0
-
-
-
-
19.8
13.5
-
-
-
-
-
-
-
-
-
-
(0.3)
-
-
-
-
-
-
-
(105.4)
(14.2)
0.3
0.3
(13.9)
-
0.5
(118.8)
1.6
(0.2)
(0.2)
1.4
-
1.8
0.5
47.4
122.5
(0.3)
(115.1)
Note
Issued
share
capital
£m
3.3
-
-
0.4
-
3.7
-
-
3.1
-
-
6.8
23
13
Share
premium
account
£m
Merger
reserve
£m
Retained
earnings
£m
24.8
-
-
2.8
-
27.6
-
-
-
-
-
-
-
-
-
-
19.8
13.5
-
-
-
-
47.4
13.5
9.9
(6.4)
(6.4)
-
0.5
4.0
(2.3)
(2.3)
-
1.8
0.5
4.0
Total
equity
£m
31.4
(14.2)
0.3
0.3
(13.9)
3.2
0.5
21.2
1.6
(0.2)
(0.2)
1.4
36.4
1.8
0.5
61.3
Total
equity
£m
38.0
(6.4)
(6.4)
3.2
0.5
35.3
(2.3)
(2.3)
36.4
1.8
0.5
71.7
Annual Report and Accounts 2017
52
Consolidated balance sheet
as at 30 September 2017
Assets
Non-current assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - other
Investments
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
Financial liabilities - derivatives
Trade and other payables
Corporation tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
10
11
11
13
14
15
16
23
25
25
25
18
13
20
21
18
19
17
2017
£m
1.0
65.8
26.5
0.2
4.4
97.9
0.7
0.1
13.6
10.1
24.5
122.4
6.8
47.4
122.5
(0.3)
(115.1)
61.3
16.9
-
4.6
2.6
0.6
24.7
3.2
0.1
29.9
3.2
36.4
61.1
122.4
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
The financial statements on pages 49 to 86 were approved by the Board of Directors on 8 December 2017 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 2017
Assets
Non-current assets
Investment in Group undertakings
Deferred tax
Total non-current assets
Current assets
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
Retained earnings
Total equity
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings
Corporation tax payable
Total non-current liabilities
Current liabilities
Financial liabilities - interest-bearing loans and borrowings
Financial liabilities - non-interest-bearing overdraft
Financial liabilities - derivatives
Trade and other payables
Corporation tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
12
13
15
16
23
25
25
18
18
18
19
17
2017
£m
19.5
0.8
20.3
74.4
0.7
75.1
95.4
6.8
47.4
13.5
4.0
71.7
16.9
-
16.9
3.1
-
0.1
0.9
2.7
6.8
23.7
95.4
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
The financial statements on pages 49 to 86 were approved by the Board of Directors on 8 December 2017 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 2017
54
Consolidated and Company cash flow statements
for the year ended 30 September 2017
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 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 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
2017
£m
Company
2017
£m
12.0
-
(0.6)
(1.4)
10.0
(0.6)
(1.2)
(0.8)
(31.8)
0.2
-
(34.2)
22.0
(1.0)
23.3
(12.0)
(0.7)
(0.1)
31.5
7.3
2.9
(0.1)
10.1
10.1
(2.6)
-
(0.6)
(0.8)
(4.0)
-
-
-
-
-
(25.9)
(25.9)
22.0
(1.0)
23.3
(12.0)
(0.7)
-
31.6
1.7
(1.0)
-
0.7
0.7
Group
2016
£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)
Company
2016
£m
(1.4)
-
(0.4)
(0.7)
(2.5)
-
-
-
-
-
8.3
8.3
3.3
(0.2)
4.6
4.6
(5.7)
-
(0.1)
1.9
1.1
1.6
0.2
2.9
2.9
(5.7)
-
-
2.0
7.8
(8.8)
-
(1.0)
(1.0)
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Future plc
Financial
statements
Notes to the Consolidated and Company cash flow statements
for the year ended 30 September 2017
A. Cash generated from operations
The reconciliation of profit/(loss) for the year to cash generated from/(used in) operations is set out below:
Profit/(loss) for the year – Continuing operations
– Discontinued operations
Profit/(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
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 cash/(debt)
Group
2017
£m
Company
2017
£m
1.6
-
1.6
0.3
4.1
-
-
1.8
-
-
0.6
(1.4)
7.0
1.0
0.1
6.0
(2.1)
12.0
(2.3)
-
(2.3)
-
-
-
-
-
-
(0.3)
0.6
0.7
(1.3)
-
-
0.1
(1.4)
(2.6)
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
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net cash/(debt)
1 October
2016
£m
2.9
(2.3)
(0.1)
0.5
Cash flows
£m
Acquisitions
£m
Finance leases
entered into
£m
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2017
£m
5.6
6.0
(17.2)
(5.6)
1.7
(6.9)
-
(5.2)
-
(0.1)
-
(0.1)
-
0.1
0.4
0.5
(0.1)
-
-
(0.1)
10.1
(3.2)
(16.9)
(10.0)
Company
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net debt
C. Reconciliation of movement in net cash/(debt)
1 October
2016
£m
(1.0)
(2.3)
-
(3.3)
Net cash/(debt) at start of year
Increase in cash and cash equivalents
Movement in borrowings
Borrowings acquired with subsidiaries
Finance leases entered into
Other non-cash changes
Exchange movements
Net (debt)/cash at end of year
Cash flows
£m
Acquisitions
£m
Other non-cash
changes
£m
30 September
2017
£m
1.7
6.0
(17.3)
(9.6)
Group
2017
£m
0.5
7.3
(11.2)
(6.9)
(0.1)
0.5
(0.1)
(10.0)
-
(6.9)
-
(6.9)
Company
2017
£m
(3.3)
1.7
(11.3)
(6.9)
-
0.5
-
(19.3)
-
0.1
0.4
0.5
Group
2016
£m
(1.8)
1.1
1.2
-
(0.2)
-
0.2
0.5
0.7
(3.1)
(16.9)
(19.3)
Company
2016
£m
(12.2)
7.8
1.1
-
-
-
-
(3.3)
Annual Report and Accounts 2017
56
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 measured at fair value.
The principal accounting policies applied in the preparation of the consolidated financial statements published in this 2017 Annual
Report are set out on pages 56 to 59. 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 IFRS Interpretations Committee’s (IFRS IC) interpretations
as adopted by the European Union, applicable as at 30 September 2017, 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.
Presentation of non-statutory measures
The Directors believe that adjusted results and
adjusted earnings per share provide additional
useful information on the core operational
performance of the Group to shareholders, and
review the results of the Group on an adjusted
basis internally. The term ‘adjusted’ is not a
defined term under IFRS and may not therefore
be comparable with similarly titled profit
measurements reported by other companies.
It is not intended to be a substitute for, or
superior to, IFRS measurements of profit.
Adjustments are made in respect of:
Share-based payments – share-based
payment expenses or credits, together with the
associated social security costs, are excluded
from the adjusted results of the Group as the
Directors believe that the volatility of these
charges can distort the user’s view of the core
trading performance of the Group. Details of
share-based payments are shown in note 24.
Exceptional items – the Group considers items
of income and expense as exceptional and
excludes them from the adjusted results where
the nature of the item, or its size, is material
and likely to be non-recurring in nature (in the
medium term) so as to assist the user of the
financial statements to better understand the
results of the core operations of the Group.
Details of exceptional items are shown in note 4.
effect of the items above that are allowable
deductions for tax purposes calculated using
the standard rate of corporation tax.
A reconciliation of adjusted operating profit to
profit/(loss) before tax is shown below:
Adjusted operating profit
Adjusted finance costs
Adjusted profit before tax
Adjusting items:
Share-based payments
Exceptional items
Amortisation of acquired
intangibles
2017
£m
8.9
2016
£m
2.8
(0.6)
(0.5)
8.3
2.3
(2.1)
(3.7)
(0.5)
(3.5)
(2.3)
-
Impairment of intangible assets
Non-trading foreign exchange
losses
-
-
(13.0)
(0.2)
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.
Profit/(loss) before tax
0.2
(14.9)
Segment reporting
A reconciliation between adjusted and statutory
earnings per share measures is shown in note 9.
Basis of consolidation
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.
Amortisation of acquired intangible assets –
the amortisation charge for those intangible
assets recognised on business combinations
is excluded from the adjusted results of the
Group since they are non-cash charges arising
from non-trading investment activities. As
such, they are not considered reflective of the
core trading performance of the Group.
Non-trading foreign exchange losses – certain
other items are excluded from adjusted results
where their inclusion distorts the comparability
of core trading results year-on-year.
The tax related to adjusting items is the tax
The consolidated financial statements
incorporate the financial statements of
Future plc (the Company) and its subsidiary
undertakings. Subsidiaries are all entities
controlled by the Group. Control exists when
the Group is either exposed to or has the rights
to variable returns from its involvement with the
entity and has the ability to affect those returns
through its power over the 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.
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
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Future plc
Financial
statements
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.
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.
• Online advertising revenue is recognised over
the period during which the advertisements
are served.
Employee benefits
• 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
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.
(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
Annual Report and Accounts 2017
58
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,
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
Goodwill represents the difference between
the cost of the acquisition and the fair value of
net identifiable assets acquired.
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, eCommerce
technology and other ‘magazine and
website related’ intangibles
Magazine and website 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 ten
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.
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.
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).
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.
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:
• 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
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.
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.
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59
Future plc
Financial
statements
Cash and cash equivalents
Investments
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.
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.
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.
Borrowings
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.
Exceptional items
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 which
the Board believes contain the most significant
accounting estimates are:
(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 11.
(b) Valuation of acquired intangible assets
Acquisitions may result in the recognition of
intangible assets, such as titles, trademarks,
customer lists, advertising relationships,
publishing rights and eCommerce technology.
These assets are valued using a discounted
cash flow model or a relief from royalty method.
In applying these valuation methods, a number
of key judgements are made in respect of
discount rates, growth rates and royalty rates.
(c) 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.
(d) 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.
(e) Recoverability of investments
The carrying amount of the Company’s
investments in subsidiary undertakings is
reviewed annually to determine if there is any
indication of impairment. If any such indication
exists, the investments’ recoverable amounts
are estimated. The recoverable amount is the
higher of fair value less cost to sell and value in
use. Value in use is the present value of the
estimated future cash flows. Impairment losses
are recognised in the income statement when
the carrying amount of an asset exceeds its
estimated recoverable amount.
New or revised accounting standards
and interpretations
There has been no material impact from
the adoption of the following new or revised
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.
Certain new standards, amendments and
interpretations to existing standards have been
published that are mandatory for accounting
periods beginning on or after 1 October 2017 or
later periods but which the Group has chosen
not to adopt early. These include the following
standards which are relevant to the Group:
•
•
•
•
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.
The Group has begun to assess the impact of
adopting both IFRS 15, which will be effective
for the year ending 30 September 2019, and
IFRS 16, which will be effective for the year
ending 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 2017
60
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 adjusted EBITDA
UK
US
Total segment adjusted EBITDA from continuing operations
2017
£m
67.2
19.1
(1.9)
84.4
2017
£m
6.9
4.1
11.0
2016
£m
44.7
15.2
(0.9)
59.0
2016
£m
3.2
2.0
5.2
Adjusted EBITDA is used by the executive Directors to assess the performance of each segment.
A reconciliation of total segment adjusted EBITDA from continuing operations to profit/(loss) before tax from continuing operations is provided as
follows:
Total segment adjusted EBITDA from continuing operations
Share-based payments (including social security costs)
Depreciation
Amortisation
Exceptional items
Impairment of intangible assets
Net finance costs
Profit/(loss) before tax from continuing operations
(iii) Segment assets and liabilities
2017
£m
11.0
(2.1)
(0.3)
(4.1)
(3.7)
-
(0.6)
0.2
2016
£m
5.2
(0.5)
(0.4)
(2.0)
(3.5)
(13.0)
(0.7)
(14.9)
UK
US
Total
(iv) Other segment information
UK
US
Continuing operations
Discontinued operations
Total
Segment assets
Segment liabilities
Segment net assets
2017
£m
113.9
8.5
122.4
2016
£m
46.6
5.3
51.9
2017
£m
(56.5)
(4.6)
(61.1)
2016
£m
(26.5)
(4.2)
(30.7)
2017
£m
57.4
3.9
61.3
2016
£m
20.1
1.1
21.2
Additions to
non-current assets
Depreciation
and amortisation
Impairment charges
Exceptional items
2017
£m
64.5
-
64.5
-
64.5
2016
£m
4.6
-
4.6
-
4.6
2017
£m
4.3
0.1
4.4
-
4.4
2016
£m
1.9
0.5
2.4
-
2.4
2017
£m
-
-
-
-
-
2016
£m
13.0
-
13.0
-
13.0
2017
£m
2.4
1.3
3.7
-
3.7
2016
£m
2.8
0.7
3.5
(0.3)
3.2
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Other than the items disclosed above and a share-based payments charge of £1.8m (2016: £0.5m) there were no other significant non-cash expenses
during the year.
61
Future plc
Financial
statements
1. Segmental reporting (continued)
(b) Business segment
After geographical location, the Group is managed in two 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. Net operating expenses
Operating profit/(loss) from continuing operations is stated after charging:
Adjusted
results
£m
(50.5)
(4.7)
-
-
(0.3)
(1.8)
-
(18.2)
(75.5)
2017
Adjusting
items
£m
Statutory
results
£m
-
-
(2.1)
(3.7)
-
(2.3)
-
-
(8.1)
(50.5)
(4.7)
(2.1)
(3.7)
(0.3)
(4.1)
-
(18.2)
(83.6)
Adjusted
results
£m
(37.2)
(3.6)
-
-
(0.4)
(2.0)
-
(13.0)
(56.2)
Cost of sales
Distribution expenses
Share-based payments (including social
security costs)
Exceptional items (note 4)
Depreciation
Amortisation
Impairment of intangible assets
Other administration expenses
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
Other assurance services
Services relating to corporate finance transactions
Total fees
2017
£m
35.8
50.5
(1.9)
84.4
2017
£m
27.6
33.4
(31.8)
4.7
33.9
2016
£m
24.5
35.4
(0.9)
59.0
2016
£m
19.5
23.5
(24.8)
3.6
21.8
2016
Adjusting
items
£m
Statutory
results
£m
-
-
(0.5)
(3.5)
-
-
(13.0)
-
(17.0)
2017
£m
0.16
0.02
0.18
-
-
0.29
0.06
0.53
(37.2)
(3.6)
(0.5)
(3.5)
(0.4)
(2.0)
(13.0)
(13.0)
(73.2)
2016
£m
0.10
0.02
0.12
0.05
0.03
-
0.14
0.34
Annual Report and Accounts 2017
62
4. Exceptional items from continuing operations
Vacant property provision movements
Restructuring and redundancy costs
Acquisition and integration related costs
Profit on disposal of magazine titles and trademarks
Total charge
2017
£m
1.2
1.1
1.4
-
3.7
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 activities.
The acquisition and integration related costs represent fees incurred in respect of the acquisitions and subsequent integrations of Miura (Holdings)
Limited, the ultimate parent company of Imagine Publishing Limited, which was completed on 21 October 2016, and the home interest division of
Centaur Media plc, which was completed on 1 August 2017. Further details in respect of the acquisitions are shown in note 29.
5. Employee costs from continuing operations
Wages and salaries
Social security costs
Other pension costs
Share schemes
- Value of employees’ services
Total employee costs from continuing operations
Average monthly number of people for continuing operations
(including Directors)
Production
Administration
Total
Group
2017
£m
26.0
2.5
0.6
1.8
30.9
Group
2017
No.
471
111
582
Company
2017
£m
0.3
-
-
-
0.3
Company
2017
No.
-
4
4
Group
2016
£m
21.3
2.0
0.7
0.5
24.5
Group
2016
No.
399
89
488
Company
2016
£m
0.2
-
-
-
0.2
Company
2016
No.
-
4
4
At 30 September 2017, the actual number of people employed by the Group was 634 (2016: 449). In respect of our reportable segments 592 (2016: 390)
were employed in the UK and 42 (2016: 59) were employed in the US.
Key management personnel compensation
Salaries and other short-term employee benefits
Post employment benefits
Share schemes
- Value of employees’ services
Total
Group
2017
£m
Company
2017
£m
1.4
0.1
1.3
2.8
0.3
-
-
0.3
Group
2016
£m
0.7
-
0.2
0.9
Company
2016
£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 2017 £0.4m (2016:
£0.3m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne and £0.2m (2016: £0.2m) 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 41. The highest paid
Director during the year was Zillah Byng-Thorne (2016: Zillah Byng-Thorne) and details of her remuneration are shown on page 30.
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63
Future plc
Financial
statements
6. Finance income and costs
Fair value gain on interest rate derivative not in a hedge relationship
Total finance income
Interest payable on interest-bearing loans and borrowings
Amortisation of bank loan arrangement fees
Other finance costs
Adjusted finance costs
Exchange losses
Total reported finance costs
Net finance costs from continuing operations
7. Tax on profit/(loss)
The tax credited in the consolidated income statement for continuing operations is analysed below:
UK corporation tax
Current tax at 19.5% (2016: 20%) on the profit/(loss) for the year
Adjustments in respect of previous years
Current tax
Deferred tax origination and reversal of temporary differences
Current year credit
Adjustments in respect of previous years
Deferred tax
Total tax credit on continuing operations
2017
£m
0.1
0.1
(0.4)
(0.2)
(0.1)
(0.7)
-
(0.7)
(0.6)
2017
£m
0.6
0.2
0.8
(2.0)
(0.2)
(2.2)
(1.4)
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:
Profit/(loss) before tax
Profit/(loss) before tax at the standard UK tax rate of 19.5% (2016: 20%)
Non-deductible amortisation & impairment
Losses not previously recognised
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
2017
£m
0.2
-
-
(0.7)
(1.3)
-
0.6
-
(1.4)
2016
£m
-
-
(0.1)
(0.1)
(0.3)
(0.5)
(0.2)
(0.7)
(0.7)
2016
£m
-
1.3
1.3
(1.6)
(0.2)
(1.8)
(0.5)
2016
£m
(14.9)
(3.0)
2.6
-
(1.4)
(0.2)
0.4
1.1
(0.5)
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’ financial statements.
The prior year adjustment in 2016 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 material impact on the results of the Group.
Annual Report and Accounts 2017
64
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)
2017
45.4
-
-
Restated
2016*
24.6
-
-
* The prior year comparatives have been restated to reflect the 15:1 share consolidation completed on 2 February 2017.
9. Earnings per share
Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year. Diluted earnings per share
have been calculated by taking into account the dilutive effect of shares that would be issued on conversion into Ordinary shares of awards held under
employee share schemes.
On 2 February 2017, the Company issued one new Ordinary share of 15 pence for each 15 existing Ordinary shares of 1 pence following completion of
a share consolidation. The weighted average number of shares in issue for all periods has been adjusted for the share consolidation.
Adjusted earnings per share remove the effect of share-based payments, exceptional items, amortisation of intangible assets arising on acquisitions,
impairment of intangible assets, exchange losses included in finance costs and any related tax effects from the calculation.
Total Group
Adjustments to profit/(loss) after tax:
Profit/(loss) after tax (£m)
Share-based payments (including social security costs) (£m)
Exceptional items (£m)
Amortisation of intangible assets arising on acquisitions (£m)
Impairment of intangible assets (£m)
Exchange losses included in finance costs (£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 earnings/(loss) per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted earnings/(loss) per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to profit/(loss) after tax have the following effect:
Basic earnings/(loss) per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Impairment of intangible assets (pence)
Exchange losses included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted basic earnings per share (pence)
Diluted earnings/(loss) per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Impairment of intangible assets (pence)
Exchange losses included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted diluted earnings per share (pence)
2017
1.6
2.1
3.7
2.3
-
-
(1.1)
8.6
Restated
2016
(14.2)
0.5
3.2
-
13.0
0.2
(0.5)
2.2
37,093,344
24,165,768
3,878,185
871,639
40,971,529
25,037,407
4.3
23.2
3.9
21.0
4.3
5.7
10.0
6.2
-
-
(3.0)
23.2
3.9
5.2
9.0
5.6
-
-
(2.7)
21.0
(58.8)
9.1
(58.8)
8.8
(58.8)
2.1
13.3
-
53.8
0.8
(2.1)
9.1
(58.8)
2.1
13.3
-
53.4
0.8
(2.0)
8.8
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Future plc
Financial
statements
9. Earnings per share (continued)
Continuing operations
Adjustments to profit/(loss) after tax:
Profit/(loss) after tax (£m)
Share-based payments (including social security costs) (£m)
Exceptional items (£m)
Amortisation of intangible assets arising on acquisitions (£m)
Impairment of intangible assets (£m)
Exchange losses included in finance costs (£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 earnings/(loss) per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted earnings/(loss) per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to profit/(loss) after tax have the following effect:
Basic earnings/(loss) per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Impairment of intangible assets (pence)
Exchange losses included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted basic earnings per share (pence)
Diluted earnings/(loss) per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Impairment of intangible assets (pence)
Exchange losses included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted diluted earnings per share (pence)
2017
1.6
2.1
3.7
2.3
-
-
(1.1)
8.6
Restated
2016
(14.4)
0.5
3.5
-
13.0
0.2
(0.5)
2.3
37,093,344
24,165,768
3,878,185
871,639
40,971,529
25,037,407
4.3
23.2
3.9
21.0
4.3
5.7
10.0
6.2
-
-
(3.0)
23.2
3.9
5.2
9.0
5.6
-
-
(2.7)
21.0
(59.6)
9.5
(59.6)
9.2
(59.6)
2.1
14.5
-
53.8
0.8
(2.1)
9.5
(59.6)
2.1
14.5
-
53.4
0.8
(2.0)
9.2
Annual Report and Accounts 2017
66
10. Property, plant and equipment
Group
Cost
At 1 October 2015
Additions
Disposals
Exchange adjustments
At 30 September 2016
Additions through business combinations
Other additions
At 30 September 2017
Accumulated depreciation
At 1 October 2015
Charge for the year
Disposals
Exchange adjustments
At 30 September 2016
Charge for the year
At 30 September 2017
Net book value at 30 September 2017
Net book value at 30 September 2016
Net book value at 1 October 2015
Land and
buildings
£m
Plant and
machinery
£m
Equipment,
fixtures and
fittings
£m
1.6
-
(1.1)
-
0.5
-
0.2
0.7
(1.4)
-
1.1
-
(0.3)
-
(0.3)
0.4
0.2
0.2
5.2
0.3
(2.4)
0.2
3.3
0.1
0.2
3.6
(4.9)
(0.3)
2.3
(0.2)
(3.1)
(0.2)
(3.3)
0.3
0.2
0.3
1.8
-
(1.6)
0.1
0.3
-
0.3
0.6
(1.7)
(0.1)
1.6
-
(0.2)
(0.1)
(0.3)
0.3
0.1
0.1
Total
£m
8.6
0.3
(5.1)
0.3
4.1
0.1
0.7
4.9
(8.0)
(0.4)
5.0
(0.2)
(3.6)
(0.3)
(3.9)
1.0
0.5
0.6
Depreciation is included within administration expenses in the consolidated income statement.
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Future plc
Financial
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11. Intangible assets
Group
Cost
At 1 October 2015
Additions through business combinations
Other additions
Disposals
Exchange adjustments
At 30 September 2016
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Disposals
Exchange adjustments
At 30 September 2017
Accumulated amortisation
At 1 October 2015
Charge for the year
Impairment
Disposals
Exchange adjustments
At 30 September 2016
Charge for the year
Disposals
Exchange adjustments
At 30 September 2017
Net book value at 30 September 2017
Net book value at 30 September 2016
Net book value at 1 October 2015
Goodwill
£m
Magazine
and website
£m
287.5
1.5
-
-
4.9
293.9
36.6
-
(0.2)
-
(1.1)
329.2
(246.6)
-
(13.0)
-
(4.8)
(264.4)
-
-
1.0
(263.4)
65.8
29.5
40.9
12.4
1.1
-
(0.2)
1.0
14.3
25.5
-
-
(1.4)
(0.2)
38.2
(12.4)
-
-
0.2
(1.0)
(13.2)
(2.3)
1.1
0.2
(14.2)
24.0
1.1
-
Other
£m
14.8
-
1.7
(0.2)
1.2
17.5
0.1
1.5
-
-
(0.3)
18.8
(11.9)
(2.0)
-
0.2
(1.2)
(14.9)
(1.8)
-
0.4
(16.3)
2.5
2.6
2.9
Total
£m
314.7
2.6
1.7
(0.4)
7.1
325.7
62.2
1.5
(0.2)
(1.4)
(1.6)
386.2
(270.9)
(2.0)
(13.0)
0.4
(7.0)
(292.5)
(4.1)
1.1
1.6
(293.9)
92.3
33.2
43.8
Magazine and website related assets relate mainly to trademarks, advertising relationships, publishing rights and customer lists. These assets are
amortised over their estimated economic lives, typically ranging between one and ten 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 at least annually or more frequently 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
The net book value of goodwill at both 30 September 2017 and 30 September 2016 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 2017
68
11. Intangible assets (continued)
Other assumptions that influence estimated recoverable amounts are set out below:
At 30 September 2017
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDA margins assumed
Post-tax discount rate
Pre-tax discount rate
At 30 September 2016
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDA margins assumed
Post-tax discount rate
Pre-tax discount rate
UK
Value in use
Five year plans
Discounted cash flow
2.0%
12.0% to 12.9%
7.7%
9.4%
UK
Value in use
Five year plans
Discounted cash flow
2.0%
2.4% to 3.7%
8.2%
10.3%
Sensitivity of recoverable amounts
At 30 September 2017 the analysis of the recoverable amounts gave rise to the following assessments of sensitivity:
The value in use of the UK business exceeded the carrying value by £43.3m. A change of plus or minus 50 basis points in the post-tax discount rate
would decrease or increase respectively the recoverable amount by £8.7m. 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 £11.7m.
Goodwill is not considered to be impaired at 30 September 2017.
Impairment
At 30 September 2016 an impairment charge of £13.0m was taken against the carrying value of the UK business. This reflected a shift in the underlying
profitability and cash flows of the UK and the continued decline of print.
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Future plc
Financial
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12. Investments in Group undertakings
Company
Shares in Group undertakings
At 1 October
Additions
Provision for impairment
At 30 September
2017
£m
1.0
18.5
-
19.5
2016
£m
131.9
-
(130.9)
1.0
Additions of £16.7m during the year relate to the acquisition of Miura (Holdings) Limited, the holding company and ultimate parent company of Imagine
Publishing Limited, and the subsequent capitalisation of an intercompany balance owed to the Company. Following the acquisition, the trade and assets of
Imagine Publishing Limited were transferred to Future Publishing Limited, a fellow subsidiary undertaking, and a group re-organisation effected to settle all
intercompany balances between the companies acquired and the rest of the Group. The investment held by the Company was subsequently re-designated
as an investment in Future Holdings 2002 Limited, the parent company of Future Publishing Limited.
The remaining addition of £1.8m represents the fair value of share based compensation awards granted to employees of subsidiary undertakings of Future
Holdings 2002 Limited, treated as a capital contribution to that company.
The Directors believe that the carrying values of the investments are supported by their underlying assets.
In September 2016, following a review of the valuation of the Company’s investments 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.
13. Deferred tax
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 2015
Acquisitions
Credited to income statement
– Continuing operations
Exchange adjustment
At 30 September 2016
Acquisitions
Credited to income statement
– Continuing operations
Credited to equity
Exchange adjustment
At 30 September 2017
Intangible
assets
£m
Share-based
payments
£m
Short term
timing
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
(0.7)
(0.3)
0.1
-
(0.9)
(4.3)
0.6
-
-
(4.6)
-
-
-
-
-
-
0.3
0.5
-
0.8
-
-
0.2
-
0.2
-
-
-
-
0.2
0.4
-
0.1
-
0.5
-
0.1
-
-
0.6
0.1
-
1.4
0.2
1.7
-
1.2
-
(0.1)
2.8
Total
£m
(0.2)
(0.3)
1.8
0.2
1.5
(4.3)
2.2
0.5
(0.1)
(0.2)
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 (liability)/asset
2017
£m
4.4
(4.6)
(0.2)
2016
£m
2.4
(0.9)
1.5
The deferred tax asset of £4.4m (2016: £2.4m) is disclosed as a non-current asset of which the assets due within one year total £0.4m (2016: £0.1m).
The deferred tax liability of £4.6m (2016: £0.9m) is disclosed as a non-current liability of which the liabilities due within one year total £0.7m
(2016: £nil).
As at 30 September 2017 the Group has:
• unprovided tax losses totalling £33.1m (2016: £38.3m) of which £29.0m (2016: £34.9m) arose in the US; and
• unprovided other temporary differences in the US totalling £2.0m (2016: £2.8m).
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.
Annual Report and Accounts 2017
70
13. Deferred tax (continued)
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 deferred tax asset of £0.8m (2016: £nil) recognised on the Company’s balance sheet is in respect of share-based payments. The Company has
no unprovided deferred tax assets or liabilities at 30 September 2017 (2016: £nil).
14. Inventories
Raw materials
Work in progress
Total
2017
£m
0.2
0.5
0.7
The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £5.4m (2016: £3.5m).
15. 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
2017
£m
Company
2017
£m
11.9
(2.2)
9.7
-
0.4
3.5
13.6
-
13.6
-
-
-
74.4
-
-
74.4
-
74.4
Group
2016
£m
9.2
(0.6)
8.6
-
0.3
3.3
12.2
0.2
12.4
2016
£m
0.1
0.3
0.4
Company
2016
£m
-
-
-
43.4
-
0.1
43.5
-
43.5
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
Receivable balances from the Group’s two main magazine distributors, one in the UK segment and one in the US segment, represented 13% (2016:
26%) of the Group’s trade receivables balance at 30 September 2017.
The Group has provided for estimated irrecoverable amounts in accordance with its accounting policy described on page 58 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 £4.6m (2016: £3.0m) 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
2017
£m
2.9
1.3
0.3
0.1
4.6
Group
2016
£m
1.6
0.8
0.3
0.3
3.0
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Future plc
Financial
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15. Trade and other receivables (continued)
As at 30 September 2017, trade receivables of £2.2m (2016: £0.6m) were impaired and provided for. The individually impaired receivables mainly
relate to advertising, events 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
On acquisition
Receivables written off during the year
At 30 September
Group
2017
£m
0.6
0.5
1.3
(0.2)
2.2
Group
2016
£m
0.6
0.1
-
(0.1)
0.6
The creation and release of provisions for impaired receivables have been included in administration expenses in the income statement. 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 in 2016 relating to prepaid share issue costs, and no
additional disclosure in relation to credit risk is required. Interest on £0.3m (2016: £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.
16. Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents (excluding bank overdraft)
Group
2017
£m
10.1
10.1
Cash and cash equivalents include the following for the purposes of the cash flow statements:
Cash at bank and in hand
Bank overdraft (note 18)
Cash and cash equivalents
Group
2017
£m
10.1
-
10.1
Company
2017
£m
0.7
0.7
Company
2017
£m
0.7
-
0.7
Group
2016
£m
2.9
2.9
Group
2016
£m
2.9
-
2.9
Company
2016
£m
-
-
Company
2016
£m
-
(1.0)
(1.0)
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. All of the Group’s cash
at bank is held at counterparties with an S+P credit rating of at least BBB+.
Annual Report and Accounts 2017
72
17. Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other taxation and social security
Other payables
Accruals and deferred income
Total
Group
2017
£m
2.5
-
0.9
0.7
25.8
29.9
Company
2017
£m
-
0.7
-
-
0.2
0.9
Group
2016
£m
4.4
-
0.8
0.8
15.4
21.4
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.
18. Financial liabilities – loans, borrowings and overdrafts
Non-current liabilities
Sterling term loan
Sterling revolving loan
Interest rate at
30 September
2017
Interest rate at
30 September
2016
2.8%
2.8%
-
-
Obligations under finance leases
-
9.6%
Total
Current liabilities
Sterling term loan
Sterling revolving loan
Obligations under finance leases
Total
Interest rate at
30 September
2017
Interest rate at
30 September
2016
2.8%
2.8%
0.0%
-
2.5%
-
The interest-bearing loans are repayable as follows:
Within one year
Between one and two years
Between two and five years
Total
Group
2017
£m
10.0
6.9
16.9
-
16.9
Group
2017
£m
1.8
1.3
3.1
0.1
3.2
Group
2017
£m
3.2
3.3
13.6
20.1
Company
2017
£m
10.0
6.9
16.9
-
16.9
Company
2017
£m
1.8
1.3
3.1
-
3.1
Company
2017
£m
3.1
3.3
13.6
20.0
Group
2016
£m
-
-
-
0.1
0.1
Group
2016
£m
-
2.3
2.3
-
2.3
Group
2016
£m
2.3
0.1
-
2.4
Company
2016
£m
-
0.8
-
-
1.6
2.4
Company
2016
£m
-
-
-
-
-
Company
2016
£m
-
2.3
2.3
-
2.3
Company
2016
£m
2.3
-
-
2.3
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18. Financial liabilities – loans, borrowings and overdrafts (continued)
On 21 October 2016, following the acquisition of Imagine, the Group negotiated a new bank facility with HSBC Bank plc to replace its previous facility
with Santander plc. This new facility was subsequently amended and restated in August 2017 following the home interest acquisition. The total
multicurrency revolving and overdraft facility available to the Group at 30 September 2017 amounted to £25.4m, comprising a £12.0m term loan, a total
of £11.4m revolving credit facilities and a £2.0m uncommitted overdraft facility. The new facilities run to 23 June 2021. Repayments required in respect
of the facilities are as follows:
Repayment date
30 September 2017*
30 September 2018
30 September 2019
30 September 2020
23 June 2021
Repayment amount
£600,000
£2,600,000
£3,400,000
£4,850,000
£14,550,000
*£0.6m was due to be repaid on 30 September 2017 however this was not taken by the bank until October 2017.
The Group has granted security to the bank and the availability of the facility is subject to certain covenants.
Total fees relating to the new facility amounted to £0.7m and these are being amortised over the term of the facility. The bank borrowings and interest are
guaranteed by Future plc, Future Holdings 2002 Limited, Future Publishing Limited, Future US, Inc, Future Publishing (Overseas) Limited and Next Commerce
Pty Ltd.
Interest payable under the current credit facility is calculated as the cost of one-month LIBOR (currently approximately 0.5%) plus an interest margin of between
2.0% and 2.5%, dependent on the level of Bank EBITDA.
The key covenants are set out in the following table where net debt is exclusive of non-current tax and other payables and Bank EBITDA is not materially
different to statutory EBITDA.
Net debt/Bank EBITDA
Bank EBITDA/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 and the covenant position at the year-end is set out in
the following table:
Net debt/Bank EBITDA
0.69 times < 2.25 times
30 September 2017 Covenant
Bank EBITDA/Interest
37.28 times > 4.00 times
The Company had not drawn down on its non-interest-bearing overdraft at 30 September 2017 (2016: £1.0m). Any draw down forms part of the Group
cash pooling account and can be offset against cash balances in other Group companies.
Annual Report and Accounts 2017
74
19. Financial liabilities – derivatives
The Group acquired an interest rate swap as part of the Imagine acquisition. The swap was originally entered into by Skaro (Holdings) Limited and was
transferred into the name of the Company following the acquisition.
The fair value of the swap at 30 September 2017 was £0.1m using Level 2 – inputs that are observable for the asset or liability, either directly (that is,
as prices) or indirectly (that is, derived from prices).
20. Provisions
Group
At 1 October 2016
On acquisition
Charged in the year
Released in the year
Utilised in the year
At 30 September 2017
Property
£m
1.5
0.1
1.4
(0.1)
(0.3)
2.6
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 ten years.
Provisions for the Company were £nil (2016: £nil).
21. Other non-current liabilities
Group
Other payables
Other payables consist mainly of deferred property lease liabilities.
2017
£m
0.6
2016
£m
0.5
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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
Current borrowings
Non-current borrowings
Derivatives
Total financial liabilities
Group
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Current borrowings
Non-current borrowings
Total financial liabilities
Note
15
16
17
18
18
19
Fair value
Amortised cost
2017
Derivatives
£m
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
Total fair
value
£m
-
-
-
-
-
-
-
-
(0.1)
(0.1)
Note
15
16
17
18
18
9.7
1.4
10.1
21.2
-
-
-
-
-
-
-
-
-
-
(2.5)
(14.4)
(3.2)
(16.9)
-
(37.0)
9.7
1.4
10.1
21.2
(2.5)
(14.4)
(3.2)
(16.9)
(0.1)
(37.1)
9.7
1.4
10.1
21.2
(2.5)
(14.4)
(3.2)
(16.9)
(0.1)
(37.1)
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)
Total financial liabilities are shown net of unamortised costs which amounted to £0.6m (2016: £0.1m).
Annual Report and Accounts 2017
76
22. Financial instruments (continued)
The Company’s financial assets and liabilities are set out below:
Company
Other receivables
Cash and cash equivalents
Total financial assets
Other liabilities
Current borrowings
Non-current borrowings
Derivatives
Total financial liabilities
Company
Other receivables
Total financial assets
Other liabilities
Overdrafts
Current borrowings
Total financial liabilities
Fair value
Amortised cost
2017
Note
Derivatives
£m
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
Total fair
value
£m
15
16
17
18
18
19
-
-
-
-
-
-
(0.1)
(0.1)
Note
15
17
18
18
74.4
0.7
75.1
-
-
-
-
-
-
-
-
(0.9)
(3.1)
(16.9)
-
(20.9)
74.4
0.7
75.1
(0.9)
(3.1)
(16.9)
(0.1)
(21.0)
74.4
0.7
75.1
(0.9)
(3.1)
(16.9)
(0.1)
(21.0)
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)
43.4
43.4
(2.4)
(1.0)
(2.3)
(5.7)
Total financial liabilities are shown net of unamortised costs which amounted to £0.6m (2016: £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 18.
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Future plc
Financial
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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 2017
Currency:
Sterling
US Dollar
Euro
Other
Total
At 30 September 2016
Currency:
Sterling
US Dollar
Euro
Other
Total
Financial assets
Financial liabilities
Non-
interest
bearing
£m
12.1
7.6
0.2
1.3
21.2
4.1
7.5
0.4
1.2
Total
£m
12.1
7.6
0.2
1.3
21.2
4.1
7.5
0.4
1.2
Floating
rate
£m
Fixed
rate
£m
Non-
interest
bearing
£m
Net financial
(liabilities)/
assets
£m
Total
£m
(20.0)
(0.1)
(13.5)
(33.6)
(21.5)
-
-
-
(20.0)
-
-
-
-
(2.9)
(0.1)
(0.5)
(2.9)
(0.1)
(0.5)
4.7
0.1
0.8
(17.1)
(37.1)
(15.9)
(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)
Interest rate risk
Details of the interest rates on borrowings as at 30 September 2017 are set out in note 18.
The Group has no significant interest-bearing assets but is exposed to interest rate risk as it borrows funds at floating interest rates through its bank
facilities. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group evaluates its risk appetite towards interest
rate risks regularly and may undertake hedging activities, including interest rate swap contracts, to manage interest rate risk in relation to its revolving
credit facility if deemed necessary. The Group did not enter into any hedging transactions during the current or prior years and, although it inherited
an interest rate swap as part of the Imagine acquisition, as at 30 September 2017 the only floating rate to which the Group was exposed is LIBOR. The
Group’s exposure to interest rates on financial assets and financial liabilities is detailed in the liquidity risk section of this note.
For 2017, if interest rates on net borrowings had been on average 0.5% higher/lower with all other variables held constant, the post-tax profit for the
year would have decreased/increased by £0.1m (2016: £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 exposure is to movements in the US Dollar against sterling.
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.
Annual Report and Accounts 2017
78
22. Financial instruments (continued)
The following table summarises the Group’s sensitivity to translational currency exposures at 30 September:
2017 currency risks expressed in
Currency 1/Currency 2
£m
Reasonable shift
Impact on profit after tax if Currency 1 strengthens against Currency 2
Impact on profit 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
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
GBP/USD
10%
(0.3)
0.3
0.3
(0.3)
GBP/USD
10%
(0.5)
0.5
0.5
(0.5)
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 18.
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 2017
Trade payables
Other liabilities
Borrowings
Derivatives
Total financial liabilities
30 September 2016
Trade payables
Other liabilities
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
(2.5)
(12.6)
(3.2)
(0.1)
(18.4)
-
(0.6)
(3.3)
-
(3.9)
-
(0.9)
(13.6)
-
(14.5)
-
(0.3)
-
-
(0.3)
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)
-
-
-
-
Total
£m
(2.5)
(14.4)
(20.1)
(0.1)
(37.1)
Total
£m
(4.4)
(10.3)
(2.4)
(17.1)
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Future plc
Financial
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23. Issued share capital
Allotted, issued and fully paid Ordinary shares of 15p each
At beginning of year
Issued as consideration for acquisition
Placing of Ordinary shares
Share scheme exercises
Share Incentive Plan matching shares
At end of year
2017
Restated
2016
Number of
shares
24,583,908
11,971,189
8,800,000
37,392
325
£m
3.7
1.8
1.3
-
-
Number of
shares
22,296,085
-
2,229,333
57,460
1,030
45,392,814
6.8
24,583,908
£m
3.3
-
0.4
-
-
3.7
On 2 February 2017, the Company issued one new Ordinary share of 15 pence for each 15 existing Ordinary shares of one pence following completion
of a share consolidation. Prior year comparatives have been restated on this basis.
On 21 October 2016, the Company issued 11,971,189 Ordinary shares with a nominal value of £1,795,678 as consideration for the acquisition of
Miura (Holdings) Limited, the holding company and ultimate parent company of Imagine Publishing Limited. On 7 July 2017, the Company completed
a placing of 8,800,000 Ordinary shares with a nominal value of £1,320,000 for a total cash commitment of £22,000,000 in order to fund the home
interest acquisition, further details of which are shown in note 29. During the year 37,392 Ordinary shares with a nominal value of £5,609 were issued
by the Company pursuant to share scheme exercises and a further 325 Ordinary shares were issued under the Share Incentive Plan for a combined
total cash commitment of £40,312, as detailed in note 24.
In 2016 the Company completed a placing of 2,229,333 Ordinary shares with a nominal value of £334,400 for a total cash commitment of £3,344,000,
issued 57,460 Ordinary shares with a nominal value of £8,619 pursuant to share scheme exercises and issued a further 1,030 Ordinary shares under
the Share Incentive Plan for a combined cash commitment of £nil, as detailed in note 24.
24. Share-based payments
The income statement charge for the year for share-based payments was £1.8m (2016: £0.5m). 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, where prior year comparatives have been
restated to reflect the share consolidation in February 2017:
Outstanding at the beginning of the year
Granted
Share awards exercised – new share issues
Lapsed
Outstanding at 30 September
Exercisable at 30 September
2017
Number of
options/awards
2017
Weighted average
exercise price
Restated
2016
Number of
options/awards
Restated
2016
Weighted average
exercise price
1,389,633
3,956,118
(37,392)
(1,037,300)
4,271,059
13,121
£0.049
£0.000
£1.078
£0.026
£0.000
£0.000
1,078,814
787,115
(57,460)
(418,836)
1,389,633
23,287
£0.187
£0.000
£0.000
£0.320
£0.049
£0.000
The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £2.150 (2016: £1.314).
Annual Report and Accounts 2017
80
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
2017
Restated
2016
2017
Restated
2016
2017
2016
34,700
£1.950
£1.950
Sharesave Plan
December 2013
PSP
December 2013
July 2014
February 2015
May 2015
August 2015
November 2015
September 2016
November 2016
February 2017
DABS
November 2009
December 2010
January 2012
December 2012
December 2013
November 2015
-
-
166,667
127,889
69,799
109,856
322,894
80,525
1,546,732
1,833,576
69
393
1,686
470
1,706
8,797
143,734
166,667
247,824
69,799
109,856
425,925
161,049
-
-
69
393
1,686
470
6,803
20,658
Total outstanding at 30 September
4,271,059
1,389,633
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£0.049
-
-
-
-
1
1
1
2
2
2
-
-
-
-
-
-
2
1
-
1
1
2
2
2
3
-
-
-
-
-
-
-
-
2
The fair value per share for grants made during the year and the assumptions used in the calculation are as follows:
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 – EBITDA element
Fair value – share price element
Fair value – EPS element
Fair value – cash element
2017
Restated
2016
PSP
PSP
DABS
PSP
PSP
23/11/16
£1.3335
02/02/17
£1.7950
30/11/15
£1.6313
30/11/15
£1.6313
01/09/16
£1.3125
-
3
40%
3
3
0%
-
£0.8716
£1.3335
£0.4097
-
-
-
3
37%
3
3
0%
-
£1.3752
£1.7950
£0.9554
-
-
-
1
50%
1
1
0%
-
-
3
50%
3
3
1%
-
-
3
49%
3
3
0%
-
£1.6313
£1.6313
£1.3125
-
-
-
-
-
-
-
-
£1.6313
£1.6313
£1.3125
£1.3125
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 and share price performance, 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 July 2017, the performance criteria in respect of the award granted in July 2014 were changed from TSR performance and EPS growth to net cash flow and absolute EPS. The fair value of this award
has been recalculated as at the date of the change.
4. Prior year comparatives have been restated to reflect the share consolidation in February 2017.
Future plc operates one share option scheme being the Future plc 2010 Approved Sharesave Plan (2010 Sharesave Plan) and at 30 September 2017
there were no options outstanding under this scheme.
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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 employees, usually based on a percentage of
the participant’s salary. Awards under this scheme are subject to stretching performance criteria measured against a combination of earnings per
share (EPS), total shareholder return (TSR), net cash flow, adjusted EBITDA or share price performance, depending on the date of grant. Unless
the Remuneration Committee decides otherwise at the date of grant, awards will vest three years after the date of grant subject to the participant’s
continued employment within the Group and achievement of the following performance criteria:
Performance criteria in respect of awards granted in December 2013
• 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.
Performance criteria in respect of awards granted between 16 July 2014 and 29 November 2015
In July 2017, the Remuneration Committee exercised its discretion to change the performance criteria in respect of the award granted in July 2014
from TSR performance and EPS growth to net cash flow and absolute EPS in order to align the performance criteria for awards made to the executive
Directors. The Committee also extended the vesting date of the award from 16 July 2017 to 27 November 2017. The 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 21.0p, 12.5% will vest if the Group’s adjusted EPS is 15.0p, and vesting will be on a pro rata straight-line basis between the
two. If the Group’s adjusted EPS is below 15.0p, 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 22.5p, 12.5% will vest if the Group’s adjusted EPS is 18.0p, and vesting will be on a pro rata straight-line basis between
the two. If the Group’s adjusted EPS is below 18.0p, 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 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.
Performance criteria in respect of awards granted during the year ended 30 September 2017
• 25% of the award will vest if the Group’s adjusted EBITDA for the year ended 30 September 2017 is at or above target. If the Group’s adjusted
EBITDA is below target, none of that 25% of the award will vest.
• 25% of the award will vest if the Group’s adjusted EBITDA for the year ending 30 September 2018 is at or above target. If the Group’s adjusted
EBITDA is below target, none of that 25% of the award will vest.
• 25% of the award will vest if the Company’s share price performance in the period from the date of grant to 30 September 2018 is at or above
target. If the Company’s share price performance is below target, none of that 25% of the award will vest.
• 25% of the award will vest if the Company’s share price performance in the period from the date of grant to 30 September 2019 is at or above
target. If the Company’s share price performance is below target, none of that 25% of the award will vest.
Grants were made under the PSP in November 2015, September 2016, November 2016 and February 2017.
Deferred Annual Bonus Scheme (DABS)
The DABS is a share-based incentive scheme open to the executive Directors and 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 usually 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
Annual Report and Accounts 2017
82
24. Share-based payments (continued)
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)
The SIP is open to all UK employees including the executive Directors. It 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.
25. Reserves
Share premium account
Share premium represents the excess of proceeds received over the nominal value of new shares issued.
Group and Company
At 1 October
Premium arising on issue of equity shares
Costs of share issue
At 30 September
2017
£m
27.6
20.7
(0.9)
47.4
2016
£m
24.8
3.0
(0.2)
27.6
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 1 October and 30 September
Group
2017
£m
(0.3)
Group
2016
£m
(0.3)
The 95,123 (2016 restated: 95,123) shares held by the EBT represent 0.2% (2016: 0.4%) of the Company’s issued share capital. The treasury reserve
is non-distributable.
Merger reserve
At 1 October
Premium arising on equity shares issued as consideration
Costs of share issue
At 30 September
Group
2017
£m
109.0
13.6
(0.1)
122.5
Company
2017
£m
-
13.6
(0.1)
13.5
Group
2016
£m
109.0
-
-
109.0
Company
2016
£m
-
-
-
-
The movement in the merger reserve during the year relates to the premium on shares issued as consideration for the acquisition of Miura (Holdings)
Limited in October 2016. Further details of the acquisition are set out in note 29.
The brought forward balance in the Group merger reserve of £109.0m (2016: £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 registered mutual funds supported by T. Rowe Price, the plan’s service provider.
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, £0.6m (2016: £0.7m) contributions were made to these plans and at 30 September 2017 the outstanding balance due to be paid over
to the plans was £0.1m (2016: £0.1m).
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27. Commitments and contingent liabilities
(a) Operating lease commitments
At 30 September 2017, 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
2.1
7.4
6.5
16.0
Other
£m
-
-
-
-
Total
2017
£m
2.1
7.4
6.5
16.0
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
Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2017 total £0.8m (2016: £1.8m).
During the year, £1.7m (2016: £1.6m) was recognised in the income statement in respect of operating lease rental payments and £0.2m (2016: £0.4m)
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 2017 (2016: £nil).
28. Related party transactions
The Group had no material transactions with related parties in 2017 or 2016 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 £0.9m (2016: £0.5m) to subsidiary undertakings. The outstanding balance owed
at 30 September 2017 was £0.9m (2016: £0.5m).
29. Acquisitions
Acquisition of Miura (Holdings) Limited
On 21 October 2016, Future plc acquired 100% of the share capital of Miura (Holdings) Limited, the holding company and ultimate parent company of
Imagine Publishing Limited, for total consideration of 11,971,189 new shares in the Company which, at the closing price of 129p on 21 October 2016,
represents consideration of £15.4m.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Publishing rights
- Brands
- Other intangibles
Tangible assets
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Corporation tax
Deferred tax
Loans and borrowings
Net liabilities acquired
Goodwill
Consideration:
Equity shares
Cash
Total consideration
Provisional
fair value
£m
6.8
2.0
0.1
0.1
0.3
2.7
1.7
(6.3)
(0.1)
(1.5)
(6.9)
(1.1)
16.6
15.5
15.4
0.1
15.5
Annual Report and Accounts 2017
84
29. Acquisitions (continued)
The goodwill is attributable to the synergies expected to arise in integrating the magazines into the wider Future group and through combining
production and back office functions. The publishing rights and brands will be amortised over periods of five and ten years respectively.
Included within the Group’s results for the year are revenues of £14.8m and statutory profit before tax for the period of £2.0m (excluding deal fees and
associated integration costs) from Miura (Holdings) Limited and its subsidiaries.
If the acquisition had been completed on the first day of the financial year, it would have contributed £15.3m of revenue and statutory profit before tax
of £2.0m during the year.
Acquisition of Ascent Publishing Limited and Centaur Consumer Exhibitions Limited (“home interest”)
On 1 August 2017, Future plc acquired 100% of the share capital of both Ascent Publishing Limited and Centaur Consumer Exhibitions Limited for total
consideration of £32.8m.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Publishing rights
- Brands
- Customer lists
Inventories
Trade and other receivables
Trade and other payables
Deferred tax
Provisions
Net assets acquired
Goodwill
Consideration:
Cash
Total consideration
Provisional
fair value
£m
3.9
4.7
6.9
0.1
4.6
(4.5)
(2.6)
(0.1)
13.0
19.8
32.8
32.8
32.8
The goodwill is attributable to the synergies expected to arise in integrating the magazines and events into the wider Future group. The publishing
rights, brands and customer lists will be amortised over periods of five, ten and eight years respectively.
Included within the Group’s results for the year are revenues of £2.5m and statutory profit before tax for the period of £0.4m (excluding deal fees and
associated integration costs) from home interest.
If the acquisition had been completed on the first day of the financial year, it would have contributed £13.2m of revenue and statutory profit before tax
of £2.0m during the year.
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Future plc
Financial
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29. Acquisitions (continued)
Acquisition of Team Rock
On 6 January 2017, Future Publishing Limited acquired certain assets from Team Rock Limited for cash consideration of £0.8m.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Publishing rights
Trade and other payables
Deferred tax
Net assets acquired
Goodwill
Consideration:
Cash
Total consideration
Provisional
fair value
£m
1.2
(0.4)
(0.2)
0.6
0.2
0.8
0.8
0.8
The goodwill is attributable to the synergies expected to arise in integrating the magazines and websites into the wider Future group. The publishing
rights will be amortised over a period of five years.
Included within the Group’s results for the year are revenues of £3.2m and statutory profit before tax for the period of £0.6m (excluding deal fees and
associated integration costs) from the Team Rock assets.
If the acquisition had been completed on the first day of the financial year, it would have contributed £4.8m of revenue and statutory profit before tax of
£1.0m during the period.
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. The consideration payable
included deferred consideration of up to £0.6m, in the form of shares in Future plc, payable by 24 January 2017 based on revenue performance.
At 30 September 2016 the provisional fair value of deferred consideration was measured at £0.6m. In January 2017, Future Publishing (Overseas)
Limited agreed with the sellers to pay deferred consideration of £0.7m in cash instead of shares in Future plc. As this change to deferred consideration
occurred within one year of the date of acquisition, the provisional fair value of goodwill recognised at 30 September 2016 has been adjusted, as
detailed below:
Goodwill
Provisional fair value at
30 September 2016
£m
Fair value adjustment
£m
0.6
0.1
Fair value at
30 September 2017
£m
0.7
Acquisition of Blaze Publishing
On 12 May 2016, Future Publishing Limited acquired certain assets from Blaze Publishing Limited for cash consideration of £0.4m. The consideration
payable included deferred consideration of up to £0.3m payable by 12 May 2017 based on gross contribution targets. At 30 September 2016 the
provisional fair value of deferred consideration was measured at £0.3m. During the year ended 30 September 2017 it was determined that no deferred
consideration was payable. As this change to deferred consideration occured within one year of the date of acquisition, the provisional fair value of
goodwill recognised at 30 September 2016 has been adjusted, as detailed below:
Goodwill
Provisional fair value at
30 September 2016
£m
Fair value adjustment
£m
0.6
(0.3)
Fair value at
30 September 2017
£m
0.3
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.
Annual Report and Accounts 2017
86
30. Subsidiary undertakings
Details of the Company’s subsidiaries at 30 September 2017 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
Ascent Publishing Limited*
02561341
Centaur Consumer Exhibitions Limited*
07276298
Fascination (Holdings) Limited*
08464940
Future Holdings 2002 Limited
04387886
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
Imagine Publishing Group Limited*
07375965
Imagine Publishing Limited*
05374037
Miura (Holdings) Limited
08464815
Next Commerce Philippines Inc*
CS201517783
Next Commerce Pty Ltd*
113 146 786
Pricepanda Group GmbH*
HRB138471B
Rho Holdings Limited
00040056
Sarracenia Limited
04582851
Skaro (Holdings) Limited*
08469998
Nature of business
Holding %
Class of shares
Country of
incorporation and
registered office
England and Wales1
England and Wales1
England and Wales1
Non-trading
Non-trading
Non-trading
England and Wales1
Holding company
England and Wales1
Holding company
England and Wales1
England and Wales1
Publishing
Publishing
100
100
100
100
100
100
100
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
England and Wales1
Holding company
87.5
1 pence Ordinary shares
USA (State of California)2
Germany3
Publishing
Non-trading
England and Wales1
Digital publishing solutions
100
87.5
100
Not applicable
€1 Ordinary shares
£1 Ordinary shares
England and Wales1
Holding company
100
1 pence Ordinary shares
England and Wales1
Non-trading
100
1 pence Ordinary shares
England and Wales1
Holding company
Philippines4
Dormant
Australia5
Germany6
Comparison shopping
search engine
Dormant
Guernsey7
Investment company
England and Wales1
Dormant
England and Wales1
Holding company
100
100
100
100
100
100
100
£1 Ordinary shares
₱1 Ordinary shares
$1 Ordinary shares
€1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
1 Registered office: Quay House, The Ambury, Bath, BA1 1UA, England
2 Registered office: 1390 Market St, Suite 200, San Francisco, CA 94102, USA
3 Registered office: c/o Poruba GbR, Clemensstraße 32, 80803 Munich, Germany
4 Registered office: 2/F GC Corporate Plaza, 150 Legaspi Street, Legaspi Village, Makati, Manila, Philippines
5 Registered office: Suite 3, Level 10, 100 Walker Street, North Sydney, NSW 2060, Australia
6 Registered office: Charlottenstraße 4, 10969 Berlin, Germany
7 Registered office: Aquitaine Group Limited, PO Box 357, Mill Court, La Charroterie, St Peter Port, GY1 3XH, Guernsey
A&S Publishing Company Limited, Ascent Publishing Limited, Centaur Consumer Exhibitions Limited, Fascination (Holdings) Limited, Future Holdings
2002 Limited, Future Publishing Limited, FutureFolio Limited, Imagine Publishing Group Limited, Imagine Publishing Limited, Miura (Holdings) Limited
and Skaro (Holdings) Limited are exempt from the requirement to file audited financial statements by virtue of Section 479A of the Companies Act
2006. Sarracenia Limited is exempt from the requirement to file audited financial statements by virtue of Section 480 of the Companies Act 2006.
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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 nineteenth Annual General Meeting of Future plc will be held on
Monday 5 February 2018 at Future’s London office, 1-10 Praed Mews, London W2 1QY at 10:30am
at which the following resolutions numbered 1 to 12 will be proposed as ordinary resolutions, and
resolutions numbered 13 to 15 will be proposed as special resolutions.
Ordinary Business
Ordinary resolutions
1. To receive and adopt the audited
financial statements of the Company for
the financial year ended 30 September
2017 and the reports of the Directors and
the auditors (the “Annual Report”).
2. To approve the Directors’ remuneration
implementation report as set out in
pages 30 to 36 of the Annual Report of
the Company for the financial year ended
30 September 2017.
3. To approve the amendments to the
Remuneration policy for the three year
period commencing on 1 October 2016
as set out in pages 38 to 41 of the Annual
Report of the Company.
4. To elect as a Director Richard
Huntingford.
5. To re-elect as a Director Zillah
Byng-Thorne.
6. To re-elect as a Director Penny
Ladkin-Brand.
7. To re-elect as a Director Hugo Drayton.
8. To re-elect as a Director James Hanbury.
9. 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.
10. To authorise the Directors to determine
the remuneration of the auditors of the
Company.
11. 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:
11.1 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
£4,565,590 (such amount to be reduced
by the nominal amount of any relevant
securities allotted under paragraph 11.2
below):
(a)
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
(b)
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
11.2 in any other case, up to an aggregate
nominal amount of £2,282,795 (such
amount to be reduced by the nominal
amount of any equity securities allotted
under paragraph 11.1 above in excess
of £2,282,795), 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 2019 (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.
12. To authorise the Company, and all
companies that are its subsidiaries, at
any time during the period for which this
resolution has effect for the purposes of
Section 366 of the Act to:
(a) make political donations to political
parties and/or independent election
candidates not exceeding £50,000 in
total;
(b) make political donations to political
organisations other than political parties
not exceeding £50,000 in total; and
(c) 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 2019.
Future plc 88
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Special resolutions
13. That, if resolution 11 is passed, the
14. That, if resolution 11 is passed, the
Directors be authorised to allot equity
securities (as defined in section 560
of the Act) for cash under the authority
given by that resolution (in accordance
with section 570(1) of the Act) and/
or to sell Ordinary shares held by
the Company as treasury shares (in
accordance with section 573 of the Act)
for cash as if section 561(1) of the Act did
not apply to any such allotment or sale,
such authority to be limited to:
(a) the allotment of equity securities in
connection with an offer of, or invitation
to apply for, equity securities (but in
the case of the authority granted under
paragraph 11.1 of resolution 11, by way of
a rights issue only):
(i)
in favour of holders of Ordinary shares in
the capital of the Company, where the
equity securities respectively attributable
to the interests of all such holders are
proportionate (as nearly as practicable)
to the respective number of Ordinary
shares in the capital of the Company
held by them; and
(ii) 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 Directors may deem
necessary or expedient to deal with
treasury shares, fractional entitlements
or legal, regulatory or practical problems
arising under the laws or requirements
of any overseas territory or by virtue of
shares being represented by depository
receipts or the requirements of any
regulatory body or stock exchange or any
other matter whatsoever; and
(b) the allotment, otherwise than pursuant
to sub-paragraph (a) above, of equity
securities up to an aggregate nominal
value equal to £342,420,
such authority to expire at the end of
the next AGM of the Company or, if
earlier, at the close of business on 31
March 2019 (unless previously revoked
or varied by the Company in General
Meeting but, in each case, prior to its
expiry the Company may make offers,
and enter into agreements, which would,
or might, require equity securities to be
allotted (and treasury shares to be sold)
after the authority expires and the Board
may allot equity securities (and sell
treasury shares) under any such offer
or agreement as if the authority had not
expired.
Board be authorised in addition to any
authority granted under resolution 13
to allot equity securities (as defined in
section 560 of the Act) for cash under
the authority given by that resolution (in
accordance with section 570(1) of the
Act) and/or to sell Ordinary shares held
by the Company as treasury shares (in
accordance with section 573 of the Act)
for cash as if section 561(1) of the Act did
not apply to any such allotment or sale,
such authority to be:
a)
limited to the allotment of equity
securities or sale of treasury shares up to
a nominal amount of £342,420; and
b) used only for the purposes of financing
(or refinancing, if the authority is to be
used within six months after the original
transaction) a transaction which the
Board of the Company determines to be
an acquisition or other capital investment
of a kind contemplated by the Statement
of Principles on Disapplying Pre-Emption
Rights most recently published by the
Pre-Emption Group prior to the date of
this notice,
such authority to expire at the end of the
next AGM of the Company or, if earlier, at
the close of business on 31 March 2019
but, in each case, prior to its expiry the
Company may make offers, and enter
into agreements, which would, or might,
require equity securities to be allotted
(and treasury shares to be sold) after
the authority expires and the Board
may allot equity securities (and sell
treasury shares) under any such offer
or agreement as if the authority had not
expired.
15. That a general meeting, other than an
Annual General Meeting, may be called
on not less than 14 clear days’ notice.
On behalf of the Board
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
8 December 2017
Annual Report and Accounts 2017Financial Statements
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Notice of
Annual General
Meeting
Notes
Further information about the AGM
Number of shares in issue
Indirect investors
5. As at the close of business on 8 December
2017 (being the last business day prior
to the publication of this notice) the
Company’s issued share capital consisted
of 45,655,967 Ordinary shares of 15 pence
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 45,655,967.
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.
Eligible shareholders
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 Thursday 1 February 2018
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 Thursday 1 February 2018 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.
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 Thursday 1
February 2018 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.
Electronic appointment of proxies
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 Thursday 1 February 2018.
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.
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 Thursday
1 February 2018 or, if the meeting is
adjourned, not less than 48 hours before
Future plc
90
Revoking a proxy
Questions at the AGM
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
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.
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:
Computershare Investor Services PLC,
The Pavilions, Bridgwater Road,
Bristol BS99 6ZY.
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.
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.
Amending a proxy
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.
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.
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;
(b) the answer has already been given on
a website in the form of an answer to a
question; or
(c) it is undesirable in the interests of the
Company or the good order of the meeting
that the question be answered.
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 on page 91, 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 on page 91, 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).
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Notice of
Annual General
Meeting
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
Conditions
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;
(c) the statement may be dealt with as part of
(iii) in the case of a resolution, must be
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
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;
(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
(ii) sent either: by post to
one week before the AGM.
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
vote at the AGM and holding at least 5% of
total voting rights of the Company; or
(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.
Company Secretary,
Future plc,
Quay House,
The Ambury,
Bath BA1 1UA;
or by fax to +44(0)1225 732266
marked for the attention of the Company
Secretary; and
(e) in the case of a request made in electronic
form, such request must:
(i) state your full name and address; and
(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.
Future plc
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
Directors
Advisers
Peter Allen
Chairman (until 1 February 2018)
Richard Huntingford
Chairman (with effect from 1 February 2018)
Independent auditors
PricewaterhouseCoopers LLP
Chartered accountants and statutory auditors
2 Glass Wharf
Bristol BS2 0FR
James Hanbury
Deputy Chairman
Zillah Byng-Thorne
Chief Executive
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Hugo Drayton
Independent non-executive Director
Brokers
Numis Securities Ltd
10 Paternoster Square
London EC4M 7LT
N+1 Singer
1 Bartholomew Lane
London EC2N 2AX
Principal bankers
HSBC Bank plc
8 Canada Square
London E14 5HQ
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
www.futureplc.com
Company registration number 3757874
Registered in England and Wales
Solicitors
Simmons and Simmons LLP
1 Linear Park
Avon Street
Temple Quay
Bristol BS2 OPS
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Financial calendar
Announcement of
annual results
24 November 2017
Annual General Meeting
5 February 2018
Half-year end
31 March 2018
Announcement of
interim results
May 2018
Financial year-end
30 September 2018
Annual Report and Accounts 2017
94
Contacts
Future plc and
Future Publishing Ltd
Registered office
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
Future US, Inc.
1390 Market Street
Suite 200
San Francisco
CA 94102
USA
Tel +1 650 238 2400
www.futureplc.com
London office
1-10 Praed Mews
London W2 1QY
Tel +44 (0)20 7042 4000
Bournemouth office
Richmond House
33 Richmond Hill
Bournemouth BH2 6EZ
Bromsgrove office
Sugar Brook Court
2 Aston Road
Bromsgrove B60 3EX
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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