F
u
t
u
r
e
p
c
l
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
1
8
Annual Report 2018
1
Contents
Strategic report
1
Contents
2 Group overview
3 Chairman’s statement
5
Future Playbook
(1) Our purpose
(2) Our strategy
(3) How we behave
(4) What we do
14 Loyal communities – our verticals
25 Chief Executive’s review
28 Risks and uncertainties
31 Corporate responsibility
Financial review
35 Financial review
Corporate governance
40 Board of Directors
41 Directors’ report
47 Corporate governance
report
51 Directors’ remuneration report
65
Independent auditors’ report
Financial statements
71 Financial statements
107 Notice of Annual
General Meeting
112 Investor information
‘Baroness’ singer
& guitarist John
Baizley at the 2018
Golden Gods Awards.
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 2018.
2
Corporate KPIs
Revenue
£124.6m
(2017: £84.4m)
Adjusted EBITDA1
£20.7m
(2017: £11.0m)
Adjusted EBITDA
margin
17%
(2017: 13%)
Adjusted free
cashflow2
£17.4m
(2017: £15.3m)
Adjusted
operating profit
£18.5m
(2017: £8.9m)
Leverage3
0.86x
(2017: 0.91x)
Adjusted EPS4
26.2p
(2017: 19.7p)
Reported operating
profit
£5.3m
(2017: £0.8m)
Global audience5
193.4m
(2017: 85.6m)
Media division KPIs
Online users
142.4m
(2017: 49.0m)
Magazines division KPIs
Event
attendees
155k
(2017: 76k)
eCommerce
transactions
3.2m
(2017: 2.0m)
Notes
1. Adjusted EBITDA represents earnings before
share-based payments and associated social
security costs, interest, tax, depreciation,
amortisation, impairment of intangible assets,
non-trading foreign exchange gains and
exceptional items.
2. Adjusted free cash flow is defined as adjusted
operating cash inflow less capital expenditure.
Adjusted operating cash inflow represents
operating cash inflow adjusted to exclude
cashflows relating to exceptional items.
3. Total net debt divided by EBITDA.
4. As per note 1 above and restated for rights issue.
5. Includes online users, event attendees,
magazine copy sales, subscribers and social
media reach.
Total circulation
1.3m
(2017: 1.0m)
Subscribers
935k
(2017: 461k)
Annual Report and Accounts 2018Strategic report 3
Richard Huntingford
Chairman
Future has had an outstanding year. The
financial results speak volumes for the
successful execution of the Group’s
focused strategy in leveraging its
specialist media platform and diversifying
its revenue streams, both geographically
and across its product offering.
Chairman’s statement
Dear Shareholders,
In my first year as Chairman of the Company it gives me great
pleasure to report that Future has had an excellent year. Building
on the stated strategy to be a global specialist media platform,
the Group has expanded its global reach through a combination
of organic growth, acquisitions and strategic partnerships. A
relentless focus on producing compelling, engaging and trusted
content has created loyal communities and market-leading
positions for our key brands, from which we have been able
to build diversified monetisation models with significant and
growing revenue streams.
Our previous investment in a scalable, robust and efficient
technology stack to provide content management systems,
advertising optimisation systems and eCommerce platforms
has delivered very significant financial returns during the year as
the Group reaped the benefits of the successful integration of
previous acquisitions.
The transformative acquisition of Purch at the end of the financial
year, which significantly deepens our presence in the US market,
gives us an excellent opportunity to drive further revenue and
profit growth over the coming years.
Board composition
Following Peter Allen’s decision to step down from the Board, I
was delighted to be nominated as his replacement from
1 February 2018. Over his six years as Chairman, Peter led the
Future Board through an extraordinary period of change, both
within the business and externally in the media and publishing
markets, and it is testament to that leadership and guidance that
Future finds itself in such a strong position today. On behalf of
the Board and shareholders, I thank him for his very significant
contribution to the Company.
There have been a number of other changes to the Board and its
Committees during the year.
In February 2018, we were delighted to welcome Alan Newman
to the Board as a Non-Executive Director and Chair of the Audit
Committee. Alan brings with him significant media and PLC
experience through his media and technology sector roles at
Ernst & Young and KPMG and his recent nine-year tenure as Chief
Financial Officer of YouGov plc.
At the same time, Hugo Drayton, who has served on the Board
and been a member of the Remuneration Committee since
December 2014, was appointed Chairman of the Remuneration
Committee. Hugo also acts as the Senior Independent Director.
Future plc 4
Our people
A key focus of Future’s Board and Executive leadership team
is our people. Future’s employees are its key asset and we
actively try to find ways to ensure that they are supported and
remunerated accordingly. During the year Future introduced the
living wage within the UK business to ensure that no employee is
paid less than this threshold. The Group remains fully committed
to addressing gender pay differences and increasing diversity.
Details are available in the corporate responsibility section of
this report.
A core principle at Future is that everyone gets to share in the
business’s success and, as a result of our strong performance
this year, we were delighted that all staff received the maximum
bonus in the year.
On behalf of the Board and shareholders, I would like to thank
all our employees, old and new, for their hard work and diligence
during a year that has seen so much change. The professionalism,
commitment and passion for the Future cause across all areas
of our business, has been extraordinary and fills me with great
confidence for the next phase of our exciting growth journey.
With best wishes,
Richard Huntingford
Chairman
12 December 2018
The transformative
acquisition of Purch
gives us an excellent
opportunity to drive
further growth in
revenue and profit
over the coming years.
At the end of the financial year, James Hanbury, who had served
on the Board since October 2016 as the Non-Executive Director
representative of Disruptive Capital, retired from the Board
following Disruptive’s disposal of its shareholding. I would like to
thank James for his valuable contribution to Board debate and his
commitment to the Company during his tenure.
Most recently, we were delighted to welcome Rob Hattrell to the
Board as a Non-Executive Director on 1 October 2018. Rob, who
is the Vice President of eBay UK and previously held senior roles
at Tesco and Accenture, brings with him a wealth of relevant
eCommerce and commercial experience and will add another
valuable dimension to the Board.
Without doubt, our Board roles are made somewhat easier by
two factors: a steadfast focus on a clear strategy that delivers
results, and the diligence, energy, and enthusiasm of a dynamic
Executive leadership team supported by a talented employee
base. I believe that we now have a strong, high-quality Board
that can provide the right blend of challenge and support to the
executive management as they continue to execute the growth
strategy that we believe will deliver significant long-term value to
shareholders over the coming years.
Business performance
The results speak volumes about the success of the Group’s
strategy: £124.6m revenue up 48% on prior year; £20.7m adjusted
EBITDA up 88% on prior year; and adjusted operating cashflow
up 16% on prior year. As mentioned above, it is the scalability
of Future’s global media platform that enables both this rapid
organic and inorganic growth.
The Group made four acquisitions during the year: NewBay
Media, a US-based information and events business, in April 2018;
four consumer titles including What Hi-Fi? and Practical Caravan
from Haymarket in May 2018; Australian gaming and technology
brands including PC Powerplay in August 2018; and the Purch
consumer business in September 2018.
Each of these acquisitions is strongly aligned to Future’s strategy,
whether it be through geographic expansion into the US through
NewBay and Purch, further consolidation of Future’s market-
leading consumer technology coverage through What Hi-Fi? and
Purch’s consumer brands, or through revenue diversification with
NewBay’s B2B brands.
Capital structure and dividends
The latest acquisition, Purch, would not have been possible
without the considerable support of our shareholders in funding
the acquisition through a rights issue. We were delighted that
so many of our existing shareholders took up their rights, whilst
also welcoming a number of new institutions to our shareholder
register. We intend to pursue a listing on the premium
listing segment of the Official List, subject to meeting all the
requirements of the UKLA, in the foreseeable future.
The strong business performance this year was highly cash
generative and as such, at the year end, the Group had net debt
of £17.8m. As previously mentioned, the Board is delighted to
announce the recommencement of a dividend this year and has
proposed a final dividend of 0.5p per share payable on 15 February
2019 to all shareholders on the register at close of business on
18 January 2019. We aim to pursue a progressive dividend policy
whilst optimising value for shareholders by balancing returns
to shareholders with investment in the business to support
future growth.
Annual Report and Accounts 2018Strategic report 5
Future plc
Future Playbook
At Future part of our success is a result of the alignment within
the organisation of our purpose and strategy. To support this we
have created the Future Playbook to capture the “rules” of the
game at work, which is then shared with every new member of
staff to ensure we are all aligned and focused on delivering the
same goals. Our Playbook has six main sections:
1. Our purpose – our vision
2. Where we’re going – our strategy
3. How we behave – our values
4. What we do – our business model
5. What’s important right now – our current priorities
6. Who must do what – how we get alignment
Steps one to four are relatively fixed and underpin everything we
do, whereas each year we undertake a company-wide review to
determine what is important in order to ensure we execute on
our strategy, and then who must do what within the business to
help us deliver this in the coming 12 months.
Below are the key elements of the first four features.
1. Our purpose
Why we exist
We change people’s lives through sharing knowledge and
expertise with others, making it easy and fun for them to do
what they want.
2. Our strategy
Where we’re going
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.
In 2016 Future outlined its strategy to become a global platform
business for specialist media with diversified revenue streams:
• We create fans of our brands by giving them a place they want
to spend their time and where they go to meet their needs. In
this way we continue to create loyal communities
• We expand our global reach through organic growth,
acquisitions and strategic partnerships, and diversify our
monetisation models to create significant revenue streams
• We entertain, inform and engage our consumers with content
that connects across key verticals via magazines, websites
and events; we monetise this via paid content, subscriptions,
media sales, ticket sales and eCommerce
We have adopted the McKinsey’s Three Horizons of Growth
planning approach across the organisation as a means of
delivering our strategy. This approach encourages our people to
engage with the strategy in a meaningful and relatable way.
How we succeed
We define strategy as: “Our plan for success: a collection of
intentional decisions we make to give us the best chance to
thrive and differentiate ourselves – therefore every decision, if
intentional and consistent, is our strategy.”
In addition we have three strategic filters that help to inform
decision making and provide a lens to filter ideas and decisions:
• Content that connects is at the heart of what we do
• We operate in the areas we have expertise in
• We need to grow profitably and generate cash returns
In order to ensure we remain scalable we have made significant
investments in our technology as well as our back office and
infrastructure. In particular the introduction of one website
platform (Vanilla) and one CMS have facilitated our growth. We
have also invested in our core back office systems allowing us to
integrate acquisitions with limited increase in back office costs.
This investment combined with a strict control of ongoing costs
and a strategy to insource our back office functions to a low cost
location has ensured that our bottom line growth is financially
beneficial to the group.
Our loyal communities
As we strengthen our global reach across our core verticals
we continue to be proud of the way we bring people together
to indulge in shared passions wherever they are in the world.
Cultivating a highly-engaged audience that we are able to
monetise is fundamental to everything that we do and we
are now reaching a global audience of 193.4 million (2017:
85.6 million) through our websites, events, social media and
magazines.
We continue to grow our online audience both organically and
through acquisitions; online users grew by 190% year-on-year,
12% of which is organic.
We continue to see evidence that our audience communities are
stronger than ever thanks to our customised content designed
specifically to engage with our audience. For example, the UK
Guitar Show was a huge success, being a sell-out in its inaugural
year and with Sir Paul McCartney tweeting our #WorldGuitarDay
hashtag.
Loyal communities are also significant when it comes to our
B2B brands and content, which are particularly niche. Music
Week, a UK record industry B2B brand that was acquired as
part of NewBay Media, proved the loyalty of its community with
the launch of the Music Week Tech Summit bringing in over
300 delegates at the O2 in its first year and with keynotes from
Amazon Music and the BBC. Similarly, the Music Week Awards
showed significant growth in attendees of 14% and revenue
growth of 17% since acquisition.
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
The Photography
Show 2018.
Arya Goggin shot for
Rhythm Magazine.
We also engage with our audience through our regular
newsletters and there have been many newsletter launches this
year, in addition to a focus on increasing newsletter frequency
to encourage increased audience engagement. Newsletter
launches this year included N-Photo, Computer Arts, Edge,
Guitarist, ImagineFX, Linux Format, MacFormat, Net, Official
PlayStation Magazine and Windows Help & Advice.
The Photo Plus newsletter was launched in March 2018 to
our active subscriber database and then rolled out further by
introducing newsletter sign-up. This newsletter proved highly
successful with strong average open and click rates of 47% and
11% respectively.
This year also saw the publication of our PC Gamer 25th
Anniversary Edition, which shows the considerable appeal and
longevity of some of our core brands.
A global platform
Due to our investment in our technology and infrastructure we
are primed to rapidly on-board new brands and businesses onto
our global platform.
Our tech stack consists of various underlying technologies
that allow our websites to exist and grow, our magazines to be
published on time, our commercial, eCommerce and finance
teams to work efficiently and our audiences to get the user
experience they need from our content.
Our web platform Vanilla is a highly scalable and dynamic
web platform that allows for online multi-language content
creation, dynamic content analysis as well as content
management capabilities. Having one core platform also allows
us to be streamlined and operationally efficient with a low
training overhead as all technology staff are trained in the one
platform system.
This year we have seen an increased number of migrations (five
in total) to our Vanilla platform including Guitar World and What
Hi-Fi? (both brands having been acquired during the year). We
now have a total of 15 sites on the Vanilla platform.
In conjunction with Vanilla, Hawk is the tool that we use to help
customers find the right product for them online and the
success of the Hawk widgets has been instrumental in our global
eCommerce growth this year. Hawk matches around 23 million
product offers to a single product and over one million product
offer updates are produced per second. It also means that every
click is tracked end-to-end providing us with valuable insight
into our customer behaviours.
Our advertising technology, Bordeaux, is a true enabler to
further organic growth in the commercial advertising space
and we have designed it to keep pace with the ever changing
advertising landscape. Bordeaux works intelligently to deliver
high advertising viewability, which in turn leads to increased
revenues, and this resulted in brands such as T3 achieving above
market average viewability rates of 78%.
Acquisitions
Future has made significant investments in acquisitions during
the financial year. When choosing to invest we look for assets
that will align with and enhance our existing portfolio and
further our strategic vision. We look for scalable brands that have
loyal and specialist audiences that can be monetised in different
ways and that will add value to the group.
In April 2018 we acquired NewBay Media, an information and
events business in the technology and entertainment sectors
with B2B and B2C portfolios. In particular the substantial B2B
portfolio has complemented our existing vertical offering whilst
also adding B2B expertise, hence contributing to our revenue
diversification. The acquisition allows us to further connect with
our B2B communities and facilitates content sharing across our
complementary B2C verticals.
The NewBay B2C brands have materially enhanced our music
vertical, particularly in the US. As a case in point, the combination
of the B2C and B2B music portfolio has allowed us to grow
the vertical by applying our platform strategy and creating
increasingly diversified revenues.
In May 2018 we acquired four specialist consumer brands from
Haymarket Media Group: What Hi-Fi?, FourFourTwo, Practical
Caravan and Practical Motorhome. These are established brands
with loyal audiences that complement our existing verticals.
7
With Purch arose the opportunity to acquire a leading
technology-enabled business in the US media industry. This
completed in September 2018 and allows us to significantly
expand our global reach and increase our market share in the
US. As a result of this acquisition we are in a stronger position
to create a market-leading position in consumer technology
globally. Our revenue streams were further diversified through
the addition of Publisher Services, where we provide advertising
expertise for third party websites.
As well as the acquisitions that we have made in the financial
year, we have also seen growth in some of our prior year
acquisitions.
As we move into the next financial year our focus will be on
optimising all of our acquisitions through efficient integration
of operations and monetising the additional content across our
established and new revenue streams.
As well as looking externally for portfolios that can enhance
our offering, we also look internally at our assets with a critical
view and re-evaluate the existing portfolio on a regular basis,
rationalising our brands where appropriate.
Our strategy is underpinned by three factors:
audiences are
Winning Differentiators
• Offering the easiest-to-access ‘how to’ advice wherever our
• Having the most relevant review content in the world
• Demonstrating the value of original content
• Disrupting publishing through platforms
• Anticipating our customers’ needs
Competitive Essentials
• Creating meaningful relationships with strategic partners
• Blending human and artificial intelligence
• Simple but brilliant proprietary software
• Using data to drive yield optimisation
• Knowing our customers
• World-class SEO
Enablers
• A disciplined approach to investment through test
• Having a culture representative of our values
• Brilliant at the basics
• Cash returns focused
• Leaner, simpler philosophy
3. How we behave
1
We are part of the
audience & their
community.
Our passion for our products makes
us part of the community we engage
with. Our audiences give us a voice and
that’s an incredible privilege that we
treat with reverence. We embrace all
the ways we are able to communicate
to our audiences – print, online and in
person – and love doing so.
4
It’s the people
in the boat
that matter.
Having the right team in the boat is
mission critical. We are all successful
when we are self-motivated, self-aware
and self- disciplined. We support each
other, challenge each other and have
fun with each other. We are determined
to hire people we can learn from and
who we would have as our boss.
2
Let’s do this.
We take the best decisions we can in
the face of uncertainty. It makes us
think each decision through – then we
go for it. We commit to what we’ve
agreed and have the confidence to
persevere through tough times. But
we’re able to admit mistakes because
that helps us learn and chart a new
course when we need to. That’s called
‘doing it right’.
3
We are proud of
our past & excited
about our future.
We are proud to work at Future,
because being part of this team feels
good. We are one team, one company
with big ambitions.
5
We all row
the boat.
6
Results matter –
success feels good.
No matter how long you’ve worked
here, or what your role is at Future, your
contribution counts – so grab an oar!
We move faster when everyone pulls
in the same direction. So what you do
– and how you do it – matters. We take
responsibility because that’s the best
way to get things done. We collaborate
because we’re stronger together.
We love being successful. We restlessly
look to improve, be ever creative,
and unashamedly commercial in
our ventures. Great results mean
we are able to align the needs and
expectations of our audiences,
communities, clients and shareholders.
Future plc
Strategic report 9
4. What we do
The Future
strategy wheel
At Future our purpose is clear: to
change people’s lives through
sharing our knowledge and
expertise with them, making
it easy and fun for them to do
what they want.
In fulfilling this purpose
we meet the needs of our
communities wherever and
whenever they access our
content and so create our
global audiences. We operate in
passion verticals, where we can
provide knowledge and expertise
and we see this as a
key differentiator.
CONTENT PUBLISHING
& LICENSING
PLATFORM AS
A SERVICE
£
ECOMMERCE
S
W
E
V
E
I
R
CONTENT
MEMBERSHIP &
SUBSCRIPTIONS
H
O
W
T
O...
DATA
NEWSTRADE
As our strategy is focused on
diversifying our business models we
operate our business through three
distinct lenses: globally, divisionally
and vertically. We believe this puts us in a
strong position to win at every opportunity
and to ensure we deliver on our purpose.
However, at the heart of everything we do is a
desire to ensure we meet our audience’s needs in
whichever form this arises. As a result we have focused
on creating products that can be delivered across
multiple channels on the Future wheel.
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Monetising the wheel
We have made considerable progress this year in diversifying our
routes to market and hence monetisation, through both organic
growth and acquisitions. This diversification gives our loyal
communities the opportunity to engage with us in whichever
way they please through the mediums of digital, print and
events and wherever they may be based in the world.
As we look to monetise our content as effectively as possible,
our two key focuses have been on producing re-usable content
to maximise the efficiency of our editorial teams and the
optimisation of our proprietary content management system to
enable the simple re-use of magazine content online. Our ‘how-
to’ content lends itself well to this and a single Future how-to
guide can be published in a print edition, a licensed edition, an
app, an online article and a bookazine if the material is designed
appropriately.
The acquisition of the home interest division is a perfect case
in point as to how we effectively monetise the wheel. Since the
acquisition we have built on the existing brands by:
• Launching the website RealHomes.com; by September 2018
online user numbers reached 389,000 contributing to the
increase in our global audience
• Relaunching Real Homes magazine in August 2018 and
increasing the frequency of the Real Homes newsletter
resulting in a 4% increase in recipients since January 2018
• Launching a new homebuilding event in Farnborough
• Growing the London Homebuilding & Renovating Show with
year-on-year revenue growth of 17%
As we have diversified these revenues across the wheel we
have decreased our reliance on print, which continues to
show underlying decline. However, there remain significant
opportunities within the magazine portfolio across the business.
For example we published 524 bookazines this year contributing
revenue of £9.3m to the Group.
Digital licensing has also experienced notable growth this year.
We have launched digital licensing partnerships for TechRadar
in 10 new markets and four different languages across the
Middle East and Scandinavia since October 2017. As a result of
the launch of these partnerships, TechRadar online users in the
Scandinavian territories increased 20% in the first six months and
in the Middle East online users of TechRadar have increased
by 15%.
Future plc
10
Our markets
As a result of our global audiences we operate across three continents: Europe, with offices in the UK and France; North America,
with four offices in the US; and Asia Pacific, with an office in Australia. Below is a summary of our locations and audience.
United States
United Kingdom
France
Australia
Offices: New York,
Minneapolis, Virginia, Utah
Online users: 68.8m (US & Can)
Offices: Praed Mews (London)
Southwark (London),
Bath, Bournemouth,
Bromsgrove
Offices: Paris, Grenoble
Office: Sydney
Online users: 1.3m
Online users: 5.9m (Aus & NZ)
Rest of world online users: 50.0m
Online users: 16.4m
We organise ourselves into two business divisions – Media and Magazines. Focusing on our business in this way ensures that we can
invest for growth while also ensuring we constantly assess the profitability of our magazine brands.
Turn over to see a breakdown of the Magazines and Media divisions >
Annual Report and Accounts 2018Strategic report 11
Media division
CONTENT PUBLISHING
& LICENSING
PLATFORM AS
A SERVICE
£
ECOMMERCE
S
W
E
V
E
I
R
MEDIA
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
The Media division is underpinned by our technology platforms
and services. We have an elite team of developers and engineers.
Tightly-knit and agile, they are a collective of passionate tech
experts specialising in computer systems, data processing and
scalability.
Our flourishing Media division is positioned as a leader in digital
innovation with significant revenue growth year-on-year across
all of our key revenue streams: digital advertising, eCommerce,
events and digital licensing.
Of particular note was our strong pre-Christmas trading period
starting with our most successful Black Friday and Cyber
Monday week ever. During the period we generated 60 million
page views and facilitated 250,000 transactions, with £25.5m
worth of products sold across the UK and US over the Black
Friday period.
Overall eCommerce transactions have increased 63% year-on-
year to 3.23 million (2017: 1.98 million) and this has contributed to
the outstanding revenue growth in this area of the business.
Underpinning all this success in the Media division is our
development team who won the Digital Product Development
Team of the Year award at the AOP awards in June.
Media KPIs
142m online users
up from 49m
in 2017
5k advertising
clients
65 events
up from 22 in 2017
155k event
attendees
up from 76k
in 2017
3.23m eCommerce
transactions
up from 1.98m
in 2017
£
Future plcNEWSTRADE
12
Magazines division
CONTENT PUBLISHING
& LICENSING
S
W
E
V
E
I
R
MAGAZINES
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
NEWSTRADE
ADVERTISING
Red sections on
the wheel relate
to channels
which we
monetise and
are live revenue
streams in that
division
The Magazines division publishes a number of special-interest
magazines and bookazines, in both print and digital format. The
portfolio covers technology, games and entertainment, music,
photography and design, hobbies, home interest, and B2B
verticals. Its titles include Classic Rock, Guitar Player, FourFourTwo,
Homebuilding & Renovating, Digital Camera, Guitarist, How It
Works, Total Film, What Hi-Fi? and Music Week. This year we
published 524 bookazines and our global circulation reached 1.3
million (2017: 1.0 million).
Our acquisition of the Haymarket titles prompted us to form a
new vertical, hobbies, which combines our field sports titles and
knowledge titles with three of the Haymarket titles: Practical
Caravan, Practical Motorhome and FourFourTwo.
Additionally, we have continued to generate revenue from our
specialised content through print licensing, and this year we signed
a total of 16 new regular frequency licensing agreements across 11
territories. Two of these new deals are from the titles we acquired in
the year from Haymarket. Through these licensing partnerships we
have entered five new territories – Greece, Turkey, Hungary, South
Africa and Indonesia.
Future Fusion, our in-house creative service agency, also sits
within the Magazines division and has had a successful year with
year-on-year revenue growth of 93%. This year saw the launch of
our first Canon consumer project which has generated significant
revenue for the area. As part of this partnership Fusion covered the
prestigious photography competition World Press Photo in
April 2018.
Magazines KPIs
85 magazines &
524 bookazines
90 licensing
partners
Total circulation
of 1.33m
up from 0.96m in
2017
935k subscribers
up from 461k in 2017
Average subscriber
retention of 66% in
B2C and 69% in B2B
Annual Report and Accounts 2018Strategic reportPLATFORM AS A SERVICEEVENTS & INTEGRATED MARKETING PROGRAMMESECOMMERCE£
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Loyal communities –
our verticals
By creating content that meets the needs of our audiences, and helping them
do the things they love, we create strong specialist communities. At Future we
believe that loyal communities are a differentiator in media, where we create
content that meets a need and as a result has a value for our partners.
Turn over to see a breakdown of each vertical >
15
Future plc
Technology vertical
Brands include:
Future’s technology brands cover all aspects of technology from
phones to computing to home technology; providing reviews, buying
guides and how-tos on technology products for both B2C and B2B
audiences.
With the acquisition of Purch and its leading tech brands, including
Tom’s Guide and Tom’s Hardware, we have significantly strengthened
our position and reach in the technology vertical in the US and
we already hold the number one position in the UK. Likewise the
acquisition of technology brand What Hi-Fi? from Haymarket
cemented Future’s position in the technology sector in the UK as well
as providing an entry into the neighbouring audio video market.
Online audience numbers have grown significantly with total online
users to technology websites up 228% year-on-year, 25% of which is
organic growth.
CONTENT PUBLISHING
& LICENSING
PLATFORM AS
A SERVICE
£
ECOMMERCE
S
W
E
V
E
I
R
TECHNOLOGY
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
NEWSTRADE
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Vertical audience stats:
Total online
users: 78.9m
Total
subscribers:
149k
Total
events: 4
Total event
attendees:
1.5k
Market-leading positions:
Number 1 UK
Number 1 UK
online consumer
Hi-Fi magazine
technology
publisher
Annual Report and Accounts 2018
16
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Games & entertainment vertical
Brands include:
Our games & entertainment portfolio has been the voice of authority
and source of influence for gamers and film and TV lovers across
digital, events and print for over 30 years.
The portfolio is headed up by our two key gaming brands,
GamesRadar+ and PC Gamer, both of which have seen growth
in online user numbers year-on-year, with GamesRadar+ up 28%
and PC Gamer up 11%. In addition, these two brands have shown
significant growth in the US, with online users up 31% compared to
last year.
With the Purch acquisition we further strengthened the portfolio
with the comic books and genre entertainment brand Newsarama.
Newsarama has a large social media following, reaching 370k users
via Twitter and Facebook.
CONTENT PUBLISHING
& LICENSING
Vertical audience stats:
£
ECOMMERCE
S
W
E
V
E
I
R
GAMES &
ENTERTAINMENT
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
Total online
users: 21.1m
Total
subscribers:
82k
Total
events: 3
Total event
attendees:
4.5k
NEWSTRADE
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Market-leading positions:
PC Gamer is the
Number 1 gaming
number 1 global
magazine
PC gaming
website
publisher in the
UK
PLATFORM AS A SERVICE
17
Creative & photography vertical
Brands include:
Our creative & photography portfolio is market-leading, providing
creative inspiration for the global design and photography
communities.
This year we launched a new event, Vertex, which was attended
by 600 delegates. Vertex is an event for the Computer Graphics
(CG) community, bringing them together for networking, practical
inspiration and insight.
Online photography website Digital Camera World, which we
launched in July last year, has shown phenomenal growth this year,
with online users up by over 600%.
Our flagship photography event, The Photography Show, remains
the largest photography exhibition in the UK and attracts over
30,000 visitors each year.
CONTENT PUBLISHING
& LICENSING
Vertical audience stats:
£
ECOMMERCE
S
W
E
V
E
I
R
CREATIVE &
PHOTOGRAPHY
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
Total online
users: 3.5m
Total
subscribers:
67k
Total
events: 5
Total event
attendees:
31k
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Number 1
creative and
CreativeBloq is
The Photography
design magazine
creative and
the number 1
Show is the
largest UK
publisher in
design website in
photography
the UK
the UK and the US
exhibition
PLATFORM AS A SERVICE
Annual Report and Accounts 2018
18
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Music vertical
Brands include:
Our music vertical continues to see growth in Media revenue with
an 81% year-on-year increase. This growth has been bolstered by the
launch of our online music platform Louder, a reimagination of the
TeamRock.com brand as a definitive music site for our users. The
NewBay Media B2C music portfolio acquired this year, with brands
such as Guitar World and Guitar Player, has further contributed to
this growth.
We are the leading consumer music-making magazine publisher
and the second largest online publisher in the UK and the US. On the
back of these market-leading positions we launched the UK Guitar
Show, a sold-out event, including the second World Guitar Day.
CONTENT PUBLISHING
& LICENSING
Vertical audience stats:
£
ECOMMERCE
S
W
E
V
E
I
R
GAMES &
ENTERTAINMENT
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
Total online
users: 5.3m
Total
subscribers:
154k
Total
events: 5
Total event
attendees:
9.3k
NEWSTRADE
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Market-leading positions:
Number 1 consumer music
making magazine publisher
in the UK and the US
PLATFORM AS A SERVICE
19
Future plc
Hobbies vertical
Brands include:
Our hobbies vertical is made up of two sectors – knowledge and
outdoor leisure. The brands in the hobbies vertical are highly
specialist with loyal communities. Our knowledge brands cover
topics such as science and history and produce several highly
successful bookazines throughout the year.
The addition of Live Science and Space.com from the Purch
acquisition this year has given us the market-leading position online
in the US for science.
The outdoor leisure brands include our field sports titles, our football
brand FourFourTwo and our caravanning titles, Practical Caravan
and Practical Motorhome, which we acquired from Haymarket this
year. Following this acquisition we are the leading caravan magazine
publisher in the UK led by the long-standing Practical Caravan
which was launched in 1967.
CONTENT PUBLISHING
& LICENSING
S
W
E
V
E
I
R
HOBBIES
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
NEWSTRADE
ADVERTISING
Vertical audience stats:
Total online
users: 30.8m
Total
subscribers:
70k
Market-leading positions:
Number 1 online
Number 1
science publisher
caravanning
in the US
magazine
publisher in
the UK
PLATFORM AS A SERVICEEVENTS & INTEGRATED MARKETING PROGRAMMESECOMMERCE£
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Home interest vertical
Brands include:
The brands in our home interest vertical cover all aspects of home
building and interior design including design and building ideas,
product reviews, readers’ homes and expert advice.
Having acquired the home interest portfolio from Centaur in August
2017 we have expanded the brands by effectively monetising
our platform wheel. This has included launching the website
RealHomes.com, re-launching Real Homes magazine, increasing
the frequency of the Real Homes newsletter and launching a new
homebuilding event in Farnborough.
The number one homebuilding event in the UK, Homebuilding &
Renovating Show, takes place in eight locations nationally, with total
attendees exceeding 94,000.
Vertical audience stats:
£
ECOMMERCE
S
W
E
V
E
I
R
HOME INTEREST
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
Total online
users: 889k
Total
subscribers:
25k
Total
events: 8
Total event
attendees:
94k
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Number 1
Number 1
homebuilding
homebuilding
show in the UK
magazine in
the UK
PLATFORM AS A SERVICECONTENT PUBLISHING & LICENSING
21
B2B vertical
The acquisition of NewBay Media in
April this year greatly expanded our B2B
expertise and portfolio. This means that
we now have a separate B2B vertical
for which there are five distinct sub-
verticals: music, education, media
entertainment & technology, consumer
technology & gaming and audio
video technology.
In addition to regular magazines,
websites and events we publish a
number of show dailies, which are
publications produced for third party
events, throughout the year. For
example, we publish the Consumer
Electronics Show Daily, which is
provided to all attendees on each
day of the event. Publishing the daily
expands our visibility at the Consumer
Electronics Show, “CES”, and presents
further opportunities to offer creative
solutions to our consumer technology
clients attending the event.
A new revenue stream for us is paid
entry awards, where we create award
competitions within our verticals and
invite companies and individuals to
enter for a fee. This new source of
revenue has created further robustness
in our revenue streams.
CONTENT PUBLISHING
& LICENSING
S
W
E
V
E
I
R
B2B
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
ADVERTISING
EVENTS & INTEGRATED
MARKETING
PROGRAMMES
Brands include:
B2B music sub-vertical
Vertical audience stats:
Our B2B music portfolio consists of long established brands with real
heritage: Music Week, a trade media brand for the UK music industry
for over 50 years; Pro Sound News and Pro Sound News Europe, serving
the professional audio community for 40 years; and the 30 year old Mix
covering high-end audio production.
Since acquiring these brands as part of the NewBay acquisition in
April this year we have, using our buy and build strategy, launched
Music Tech Week Summit, which attracted 300 delegates, run a sold-
out Music Week Awards and grown both corporate and newsletter
subscriptions.
The B2B music portfolio perfectly complements our consumer music
portfolio allowing for further advertising opportunities and content
sharing.
Total online
Total
Total
users: 315k
subscribers:
events: 5
63k
Total event
attendees:
3.0k
Future plcPLATFORM AS A SERVICENEWSTRADEECOMMERCE£
22
Brands include:
B2B education sub-vertical
Vertical audience stats:
Tech & Learning has been an education technology publication and
resource for over 37 years. Focusing primarily on K-12 educators, it is a
full education technology resource offering a truly integrated platform
across print, online and events.
We run Tech & Learning Live and Tech & Learning Summit in a number
of regions across the US throughout the year.
Total online
Total
Total
users: 73k
subscribers:
events: 7
87k
Total event
attendees:
596
Brands include:
B2B media entertainment &
technology sub-vertical
Vertical audience stats:
The brands forming our media entertainment & technology vertical provide
in-depth news and features for the entertainment and tech industries,
including broadcast television and radio. These brands, including Radio World
and TV Technology, are long-standing heritage brands, having been active for
20 and 30 years respectively.
A particular success within this vertical was the launch of the new B2B OTT
& Video Distribution Summit in the US which exceeded expectations with
359 attendees and demonstrates how we are able to effectively utilise our
B2B expertise to develop new and appealing events within the Media division.
Since 1999, Multichannel News’ Wonder Women Awards in New York have
celebrated the accomplishments of industry decision-makers who have
helped pave the way for younger generations of women in the evolving
worlds of multichannel TV and related media businesses.
Total online
Total
Total
Total event
users: 661k
subscribers:
events: 15
attendees:
81k
8.7k
Annual Report and Accounts 2018Strategic report 23
Brands include:
B2B consumer technology &
gaming sub-vertical
Vertical audience stats:
TWICE is the leading brand serving the B2B needs of those in the
technology and consumer electronics industries. The brand covers
consumer technology through a suite of digital offerings: Twice.com,
eNewsletters, events and custom content including native advertising,
white papers, video and webinars.
Total online
Total
users: 75k
subscribers:
19k
Market-leading positions:
TWICE is the number one
B2B consumer technology
magazine in the US
Brands include:
B2B audio video
technology sub-vertical
Vertical audience stats:
Our AV technology vertical consists of market-leading magazines,
websites and events serving professionals in the audio video industry.
Our AV brands cover audio video and IT systems, systems integration
and home entertainment and automation design through news
analysis, trend reports, product news and technology information.
This portfolio of long-standing brands makes us the market-leading
B2B AV technology publisher in the US.
Total online
Total
Total
users: 160k
subscribers:
events: 6
99k
Total event
attendees:
578
Market-leading positions:
Leading B2B AV
technology publisher in
the US
Future plc
Stereophonics singer
Kelly Jones shot for
Total Guitar Magazine.
Strategic report 25
Zillah Byng-Thorne
Chief Executive
We have seen another year of strong
growth, demonstrating the continued
success of our strategy to establish a tech-
enabled global platform for specialist
media. We have grown revenue and
profitability both organically and through
acquisition, driven by investment in our
core operating model and continual
diversification of our revenue streams.
Chief Executive’s review
We have seen another year of substantial growth for Future with Group
revenue up 48% year-on-year to £124.6m (2017: £84.4m), which is driven
by a mixture of strong organic growth of 11% and acquisitions. Adjusted
EBITDA is up 88% year-on-year to £20.7m and adjusted EPS is up 33% to
26.2p (2017: 19.7p).
Media revenue has increased by 88% to £64.2m (2017: £34.1m), driven
primarily by the Group’s fast growing revenue streams of eCommerce
and digital display advertising, and through our successful acquisition
programme. Media revenue increased by an impressive 40% on an
underlying basis (excluding the impact of 2018 acquisitions and home
interest acquisition).
Content sits at the heart of all we do at Future, and a key measure of our
success is the continued growth of our online audiences combined with
the ability to then monetise them. During 2018 Online Revenue Per User
(RPU), a key metric, has increased in both the UK, by 26% to £1.68, and
the US, by 32% to £0.96, as we monetise our audiences more effectively
across both territories.
Organic growth in Media revenue enables us to manage the expected
decline in Magazine revenue and focus on margins and cash flow.
Acquisitions have resulted in revenues increasing within the Magazine
division by 20%, helping offset the underlying decline. As a result of the
changing mix of our business, revenue from Media exceeded Magazine
this year for the first time with the split of revenue now 52%:48%. Post
the NewBay and Purch acquisitions, this is expected to be in the region
of 65%:35%.
In conjunction with the considerable growth and development of the
Group this year, we continue to drive operational efficiencies throughout
the organisation, which has resulted in our adjusted EBITDA margin
increasing to 17% (2017: 13%).
Future remains a low capital intensive business with capital expenditure
representing 12% of adjusted EBITDA (2017: 16%; 2016: 37%).
Future continues to be highly cash-generative with efficient adjusted
cash conversion of 96% (2017: 155%) and adjusted free cash flow rising
to £17.4m (2017: £15.3m), demonstrating the Group’s ongoing focus on
efficient working capital management.
Generating predictable, consistent cash flows and diversifying revenue
streams is an ongoing focus of the Group. As a result the Board has
recommended the payment of a dividend to shareholders whilst
ensuring that we maintain sufficient resources to continue investment
in the business.
The nature of the Group’s business means there are no specific risks
to the Group associated with Brexit other than the impact general
economic uncertainty has on consumer spending.
Global platform business for specialist media
Our strategy to establish a global platform business with scalable,
diversified brands is delivering sustainable material growth, as
evidenced by our performance during this financial year.
Future plc
26
We continue to diversify our revenues through acquisitions and
organic growth both geographically and across our product
offerings, in addition to consolidating our position in our specialist
content categories.
We have seen particularly strong organic growth in eCommerce and
digital display advertising this year driven principally by excellent
growth of our consumer technology vertical, which grew its
eCommerce revenue by 136% and digital display advertising revenue
by 41%.
Strategic acquisitions have enabled us to further scale our key
revenue streams and expand geographically. Our events revenue
more than doubled to £12.9m, principally due to the full year impact
of the home interest division, which was acquired in August 2017, of
which the popular Homebuilding events form an integral part.
The acquisitions of NewBay Media and Purch this year have also
contributed to significant growth in the US, with US revenue now
representing 32% (2017: 23%) of total revenue. The expansion of
our US business provides material opportunities to monetise our
significant US online audience.
We continue to invest in the core operating model, enabling a
scalable organisation. During this year we migrated four websites on
to our website platform “Vanilla” and also launched two new brands.
People & Culture
Our six company values underpin everything we do and are a
fundamental part of everyday life at Future. One of the values is ‘It’s
the people in the boat that matter’ and this year has seen us sharpen
the focus on developing our people as we continue to grow the
business.
To this end we created a new executive role to focus solely on our
People & Culture. Their primary objective is to enable our colleagues
to be their best self, underpinning a high-performing culture. As part
of this goal we have developed an innovative residential induction
programme which immerses new starters in our values and culture.
A great outcome of this is the building of networks across the
organisation and the fostering of collaboration across our brands.
As a result of the growth of the Group, the number of employees
at Future increased from 634 to just over 1,000 globally through
acquisitions and the creation of new roles. The delivery of our
strategy is dependent on the continued nurturing of this workforce.
Recruiting and retaining the best talent regardless of the role is
crucial to our success and as a result, Future focuses on ensuring
that our employees share in our success and are rewarded fairly.
Future was proud to have become a Living Wage employer during
the year, and as a result of our significant financial performance we
were also able to reward all our staff for their talent and commitment
by paying out, for the first time (since introduction), the maximum
amount payable under the annual profit pool scheme.
The extremely successful annual conference gave the Group an
opportunity to showcase the breadth of talent amongst Future staff
and encourage networking. This year we were required to seek out a
new venue for the UK conference to accommodate our growth - an
exciting milestone, while in the US we were able to have all our new
Purch and NewBay colleagues join us.
broaden and strengthen our B2C and B2B portfolios and materially
increase our global reach. This is particularly evident in the US where
we have seen revenue growth of over 100%.
In April 2018 we acquired for £9.9m NewBay Media LLC, a US-
based content and events business that provides a material step in
diversifying revenues into B2B revenue streams.
In May 2018 we acquired for £10.7m four specialist consumer titles
from Haymarket Media Group, which expanded our portfolio into
the sport and outdoor leisure sectors as well as providing additional
diversification within the technology vertical.
In August 2018 Future acquired three gaming and technology
brands from Australian media company Nextmedia - PC PowerPlay,
Hyper and PC & Tech Authority, including magazines, digital editions,
Upgrade events and Australian PC Awards. This acquisition expands
the Group’s presence in the Australia technology and gaming media
markets. Whilst the acquisition was small, it provides us with an
important local presence.
In September 2018 we acquired the consumer division of Purch
for £99.1m (which was funded via a rights issue), a technology-
enabled US-based media business with leading online brands in
the technology and science sectors. Bringing Purch’s brands and
digital platforms into the Future business has further cemented
Future’s position as a growing, global platform for specialist media,
particularly in the US, where our market position has considerably
increased.
Key details of the acquisitions we have made in 2018 are included
below:
Acquisition
Revenue*
NewBay Media LLC
Haymarket titles
Nextmedia titles
Purch Group LLC
£36.8m
£11.2m
£1.0m
£47.5m
*Revenue figures obtained from most recent annual financial information
or where more relevant, financial information relating to the acquired
assets to demonstrate the relative size of the acquisitions (reflecting 12
months of revenues).
Current trading and outlook
The year has started well with trading ahead of the Board’s
expectations for this quarter, and while we recognise there is
still much uncertainty for the remainder of the year, the Board is
confident that trading will continue the trends of the last year with
strong growth.
The integration of the home interest division is now complete and it
has become a material operating vertical.
The integrations of NewBay and Haymarket are progressing as
planned and are substantially complete. The integration of the Purch
acquisition is progressing in line with expectations and we expect
the vast majority of the work to be completed in the early New Year.
The integration of the titles acquired from Nextmedia is also on track.
Acquisitions
Future has established a profitable global platform business through
further investment in both people and technology and through
the successful acquisition and integration of complementary
businesses. During the year Future made four acquisitions, which
Zillah Byng-Thorne
Chief Executive
12 December 2018
Annual Report and Accounts 2018Strategic report 28
28
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Risks and uncertainties
Future takes its approach to the identification, evaluation and mitigation of risk and uncertainty
extremely seriously, and so has recently developed a robust framework that embeds risk
management throughout its organisation and across its operations. Whilst it is accepted that risk
forms a part of operating in business, delivering its strategic objectives whilst mitigating those risks
is a fundamental objective for Future’s Board and its executive management teams.
Approach to risk
The Board
• Sets risk appetite taking into
account strategic objectives
• Conducts ‘deep dives’ into specific
principal risks
• Approves principal Group risks
• Asesses impact of principal risks
when analysing the Group’s
long-term viability
• Considers views from
management and the Audit
Committee as part of its review of
the effectiveness of the system of
internal controls
The Audit Committee
• Monitors the adequacy and
effectiveness of internal control and
risk management systems
• Ensures that a robust assessment
of the principal risks facing the
Group has been undertaken
Executive team
As part of the Group’s new process the executive team:
• Prioritises principal risks through formal six-monthly review process
• Allocates resources to manage risks according to potential impact
• Communicates priorities to the business
• Reviews detailed risk register to agree principal risks
• Identifies any emerging actions where Group-wide action is required
• Reviews effectiveness of risk management procedures
• Reports to the Board on a regular basis
Whilst Future operates in an evolving environment with several clear risks,
it takes a pro-active and robust approach to identifying any new risks,
and evaluating and mitigating all known risks through a regular review
process.
Our internal controls seek to minimise the impact of risks, as explained in our
Corporate Governance report on pages 47 to 50, and during the year we have
continued to develop those controls in response to the wider range of risks. We
have also recently introduced a more granular approach to risk which includes
a formal, six-monthly review by the executive team and the addition of risk
management to the Audit Committee as a standard agenda item for every meeting.
Mitigation
teams.
29
Future plc
Risk management
Risks
Description
Reliance on ‘search’
Future is exposed to Google to the extent that its websites are reliant on ‘search’ (i.e. a user navigating to one of
Future’s websites via a ‘search engine’ such as Google).
Future has a dedicated audience development team who work to ensure that Future embeds best practice within its editorial and technical
Future is very exposed to Google from a revenue perspective, particularly to any reaction by them to the ever
increasing regulation that is being imposed on them, or an unplanned change in the Google algorithm.
much as possible its reliance on ‘search’.
In addition Future continues to invest in the creation of top quality content that will meet the needs of audiences and therefore mitigate as
Changes in
advertising models
The increasing trends towards ad blocking & privacy could result in Future being unable to monetise online
advertising inventory to the same extent as it does currently.
The trend for ad blocking and new market developments are continually under review by management. Future has worked with Google and
the Coalition for Better Ads, introducing Google’s ad blocker to minimise use of alternatives, which is part of Future’s core culture to innovate
Both of these factors could have a detrimental impact on Future’s revenues.
IT
The business is increasingly dependent on technology.
Most Future offices run a skeleton network, which in turn links back to centralised data centres, and each Future
office is connected to the data centre via a managed internet service, which is provided by third parties. These
skeleton networks reduce the risk to the business of a localised network outage.
However, if the data centres were compromised (i.e. total network or server failure, or data loss) then there would
be a major impact on the production of magazines, operation of websites and the operational effectiveness of
the business.
constantly to embrace a changing marketplace.
In addition Future’s technology team have developed, through Bordeaux, tools to improve advertising viewability and the quality of adverts.
Future’s network has at least two diverse routes for all key offices and business-critical data is held on two highly resilient storage devices in
different locations. In addition, all core switches within the data centres are duplicated in different buildings so there are no single points of
failure (other than the legacy Bournemouth and NewBay US office, in respect of which plans are in place to rectify). Servers are distributed
across two main data centre locations (which house 1.5 petabytes of storage) and several significantly smaller controlled server rooms in
different buildings in Bath, Bournemouth and New York.
Investment in the IT infrastructure has been made in 2018 and more is planned for 2019 to ensure that Future maintains the highest levels of
compatibility, security and compliance.
Personal data
and cyber fraud
The collection, storage and use of personal data by the Group presents a risk of misuse, loss of personal data, or
cyber-attack which could result in high penalties from the Information Commissioner’s Office (ICO). Future may suffer
reputational risk, as well as a significant financial penalty, if it is responsible for the breach.
Future is required to comply with strict data protection and privacy legislation, including the General Data Protection
Regulation (GDPR). Such laws restrict Future’s ability to collect and use personal information relating to its customers
and third parties, including the marketing use of that information, and the GDPR places additional restrictions on
such use. The need to comply with data protection legislation is a significant control, operational and reputational risk
which can affect the Group.
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. Controls are in place to ensure compliance with data protection legislation and confirmation is sought from all
third parties who might be involved in providing or processing data to ensure they are also in compliance with such legislation.
Following GDPR coming into force in May 2018, the Group appointed a Data Protection Officer, undertook a comprehensive audit of personal
data, performed risk assessments and reviewed all of its policies and procedures in respect of personal data. Since the legislation has been
in force, a small Data Team (including the DPO) oversees all data matters to ensure compliance and to develop and improve Future’s data
practices and procedures.
Staff
The Group’s strong reputation as a leading global platform business 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 area of expertise. 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.
Operating
environment
The structural change in our operating environment and the pace of the transition from print remain a real risk. The
impact of this risk includes print circulation volumes and print advertising revenues declining at a faster rate than
anticipated and digital revenues not growing at a rate to offset the decline.
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 (particularly the growth in Media revenues) helps protect against rapid changes in the operating environment.
Future creates best-in-class content to create an emotional connection with our audiences of engaged enthusiasts, who represent an
attractive audience for advertisers. In doing so Future has become an integral part of the purchase cycle which can be monetised via
eCommerce and other digital means.
Intellectual
property
Future uses various types of third-party content including music, audio-visual material, photos, images and text. As
a publisher, Future is responsible for any intellectual property, other infringement or any legal issue relating to the
same. In addition, Future grants licences to its licensees allowing them to use various types of third-party content.
As licensor, Future is responsible to its licensees for any intellectual property infringement or for any claim that such
content breaches applicable laws.
There is a mandatory IP in-house training programme to educate Future’s editorial staff on the importance of obtaining appropriate rights
or licences and Future has a dedicated in-house rights management team. In addition, there is mandatory defamation training for all
editorial staff. 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.
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.
The Group has successfully completed and integrated nine acquisitions over the last 36 months. The management team is highly 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 which is carefully managed.
Economic
downturn / Brexit
The impact of Brexit could result in a reduction in consumer spending, resulting in loss of revenue and impact on
advertisers.
The impact of Brexit is currently unknown, however as developments arise we will, if required, quickly set up a steering committee to assess
the impact on the Group and react accordingly. The fundamental risk is partially mitigated by the geographical diversity of Future’s revenue
streams, as we do not expect Future’s US or Australian revenues to be significantly impacted by Brexit.
Annual Report and Accounts 2018
30
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Risks
Description
Mitigation
Reliance on ‘search’
Future is exposed to Google to the extent that its websites are reliant on ‘search’ (i.e. a user navigating to one of
Future’s websites via a ‘search engine’ such as Google).
Future has a dedicated audience development team who work to ensure that Future embeds best practice within its editorial and technical
teams.
Future is very exposed to Google from a revenue perspective, particularly to any reaction by them to the ever
increasing regulation that is being imposed on them, or an unplanned change in the Google algorithm.
In addition Future continues to invest in the creation of top quality content that will meet the needs of audiences and therefore mitigate as
much as possible its reliance on ‘search’.
Changes in
The increasing trends towards ad blocking & privacy could result in Future being unable to monetise online
advertising models
advertising inventory to the same extent as it does currently.
Both of these factors could have a detrimental impact on Future’s revenues.
The trend for ad blocking and new market developments are continually under review by management. Future has worked with Google and
the Coalition for Better Ads, introducing Google’s ad blocker to minimise use of alternatives, which is part of Future’s core culture to innovate
constantly to embrace a changing marketplace.
In addition Future’s technology team have developed, through Bordeaux, tools to improve advertising viewability and the quality of adverts.
IT
The business is increasingly dependent on technology.
Most Future offices run a skeleton network, which in turn links back to centralised data centres, and each Future
office is connected to the data centre via a managed internet service, which is provided by third parties. These
skeleton networks reduce the risk to the business of a localised network outage.
Future’s network has at least two diverse routes for all key offices and business-critical data is held on two highly resilient storage devices in
different locations. In addition, all core switches within the data centres are duplicated in different buildings so there are no single points of
failure (other than the legacy Bournemouth and NewBay US office, in respect of which plans are in place to rectify). Servers are distributed
across two main data centre locations (which house 1.5 petabytes of storage) and several significantly smaller controlled server rooms in
different buildings in Bath, Bournemouth and New York.
However, if the data centres were compromised (i.e. total network or server failure, or data loss) then there would
be a major impact on the production of magazines, operation of websites and the operational effectiveness of
Investment in the IT infrastructure has been made in 2018 and more is planned for 2019 to ensure that Future maintains the highest levels of
compatibility, security and compliance.
the business.
Personal data
and cyber fraud
The collection, storage and use of personal data by the Group presents a risk of misuse, loss of personal data, or
cyber-attack which could result in high penalties from the Information Commissioner’s Office (ICO). Future may suffer
reputational risk, as well as a significant financial penalty, if it is responsible for the breach.
Future is required to comply with strict data protection and privacy legislation, including the General Data Protection
Regulation (GDPR). Such laws restrict Future’s ability to collect and use personal information relating to its customers
and third parties, including the marketing use of that information, and the GDPR places additional restrictions on
such use. The need to comply with data protection legislation is a significant control, operational and reputational risk
which can affect the Group.
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. Controls are in place to ensure compliance with data protection legislation and confirmation is sought from all
third parties who might be involved in providing or processing data to ensure they are also in compliance with such legislation.
Following GDPR coming into force in May 2018, the Group appointed a Data Protection Officer, undertook a comprehensive audit of personal
data, performed risk assessments and reviewed all of its policies and procedures in respect of personal data. Since the legislation has been
in force, a small Data Team (including the DPO) oversees all data matters to ensure compliance and to develop and improve Future’s data
practices and procedures.
Staff
The Group’s strong reputation as a leading global platform business makes its staff potentially attractive to
competitors. There is a risk that key staff will move elsewhere if offered significant increases in remuneration with
Future employs people who are passionate about their area of expertise. 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.
which Future is unable to compete.
Operating
environment
The structural change in our operating environment and the pace of the transition from print remain a real risk. The
impact of this risk includes print circulation volumes and print advertising revenues declining at a faster rate than
anticipated and digital revenues not growing at a rate to offset the decline.
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 (particularly the growth in Media revenues) helps protect against rapid changes in the operating environment.
Future creates best-in-class content to create an emotional connection with our audiences of engaged enthusiasts, who represent an
attractive audience for advertisers. In doing so Future has become an integral part of the purchase cycle which can be monetised via
eCommerce and other digital means.
Intellectual
property
Future uses various types of third-party content including music, audio-visual material, photos, images and text. As
a publisher, Future is responsible for any intellectual property, other infringement or any legal issue relating to the
same. In addition, Future grants licences to its licensees allowing them to use various types of third-party content.
As licensor, Future is responsible to its licensees for any intellectual property infringement or for any claim that such
There is a mandatory IP in-house training programme to educate Future’s editorial staff on the importance of obtaining appropriate rights
or licences and Future has a dedicated in-house rights management team. In addition, there is mandatory defamation training for all
editorial staff. 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.
content breaches applicable laws.
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.
The Group has successfully completed and integrated nine acquisitions over the last 36 months. The management team is highly 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 which is carefully managed.
Economic
The impact of Brexit could result in a reduction in consumer spending, resulting in loss of revenue and impact on
downturn / Brexit
advertisers.
The impact of Brexit is currently unknown, however as developments arise we will, if required, quickly set up a steering committee to assess
the impact on the Group and react accordingly. The fundamental risk is partially mitigated by the geographical diversity of Future’s revenue
streams, as we do not expect Future’s US or Australian revenues to be significantly impacted by Brexit.
31
Future plc
Corporate responsibility – we are part
of the audience and the community
Corporate responsibility is integral to the way Future
conducts its business. We focus our efforts around five
key areas where we believe we can make a difference.
1. The environment
We have a responsibility to reduce our impact on the planet
whilst encouraging our consumers and partners to support our
initiatives.
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
2018, all 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.
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 2018, 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
either recycled or handed to local schools and hospitals. 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 are committed to reducing waste
across all of our events, reducing our reliance on single-use
plastic. We play an active part in recycling across all of our
locations.
In 2018, we have moved towards significantly reducing single
use plastic at all of our UK events. We partnered with Sky Ocean
Rescue at our Mobile Industry Awards to hold our first plastic-
free event in May.
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
Our six company values underpin everything we
do and are a fundamental part of everyday life at
Future.
Future’s employees are our most important asset;
collectively, they are our winning differentiator.
Throughout the year, we have made a number
of changes which reinforce our focus around our
people. We have evolved our Human Resources
function to that of a People & Culture team focusing
on evolving our culture by embedding our values
into everything we do, enabling inclusion and high
performance.
In addition to evolving the focus of the People
and Culture team, we have seen the creation
of a dedicated People & Culture Managing
Director whose primary objective is to enable our
colleagues to be their best self, underpinning our
high-performance environment. We relocated
this position to New York this year to reflect the
changing nature of our business, ensuring we could
embed our values and Company culture, whilst
supporting the continued growth in the US.
We have had a large number of new starters join the business
in 2018 - with 191 new joiners and over 500 staff joining from
acquisitions. To aid the smooth integration of new talent,
we have made a number of investments in our People &
Culture function and have ensured that all new joiners get
off to the best start at Future by developing a hugely popular
residential induction programme which immerses new
starters in our values and culture. A great outcome from this
is the building of networks across the organisation and the
fostering of collaboration across our brands. During the year
we also introduced a new software application to improve our
management of our people, making it easier and faster for our
employees to execute simple tasks.
Employment data across the Group
Split of female:male employees as at 30 September 2018
Split of female:male Directors of the Company as at 30 September 2018
2018
41%:59%
40%:60%
Split of female:male members of the Executive Committee as at 30 September 2018
36%:64%
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
Yes
None
Yes
Yes
None
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
The extremely successful annual conference gave an opportunity
to showcase the breadth of talent amongst the Future staff and
encourage networking. This year we were required to seek out a
new venue for the UK conference to accommodate our growth
- an exciting milestone, while in the US we were able to have all
our new colleagues from the Purch & NewBay acquisitions
join us.
Diversity
At Future we are passionate about equality and diversity
throughout our organisation and we pride ourselves on having
a transparent and inclusive culture which enables everyone,
regardless of their background, race, ethnicity, or gender, to
thrive. Both Future’s CEO and CFO are women and as outlined
in the table opposite 40% of Future Plc’s board is female and
36% of Future’s Executive Leadership positions are held by
women. This demonstrates our commitment to inclusion
and gender diversity.
As reported externally in Future’s Gender Pay Gap report (for the
snap-shot period ending 5 April 2017) we were pleased to report
that Future’s median pay gap is below the national average and
that as an organisation we reward our employees on a consistent
basis with the proportion of individuals receiving a bonus being
almost identical for both men and women.
Future’s business is underpinned by six core values, the first of
which is that ‘we are part of the audience and their community’.
At Future we recognise that our audiences are highly engaged,
passionate and tribal. We strive to ensure that our workforce
reflects their diversity, in order to maximise engagement whilst
also being reverent to the privilege it is to be part of these
communities.
In the US we have signed the Ascent promise which is a
commitment to creating an inclusive and equitable workplace,
including sharing best practice.
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. The new HR and
recruitment system, which was launched during the year, also
acts as a hub for all internal communications and ensures that
our geographically diverse workforce are kept abreast of all key
developments.
We hold quarterly town hall sessions for all employees and
extended leadership team meetings where we discuss key
strategic initiatives and the performance of the business.
In September 2018 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.
33
In addition to this, we have a weekly staff communication
highlighting best practice across the Group, a monthly CEO
video blog which covers a round-up of key themes in the month
and, on an ad-hoc basis, we run an ‘Ask Zillah’ SlackChat session
where our CEO goes online with the whole Group to answer
any questions. 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
All employees reward
In January 2018 we were
delighted to receive an official
accreditation confirming Future’s
status as a living wage employer.
This resulted in a number of
employees receiving a salary
increase. This is based upon
the cost of living and equates
to almost a pound more per
hour than the government set
minimum wage. As a result of our
significant financial performance
we were also able to reward
all our staff for their talent and
commitment by paying out, for
the first time (since
introduction), the maximum
amount payable under the
annual profit pool scheme.
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.
Health and safety
The health and safety of all employees is a key priority for the
Group. Future is largely an office-based environment and all
locations 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 2018, there were no
fatalities and 11 minor injuries. There were no fatalities or injuries
in the US or Australia during the year.
3. The community
Giving something back
In the UK the Group has worked in partnership with Bath-based
charitable foundation Quartet, which makes 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. We are committed to giving back to our
local communities and support local charities in both the UK and
the US. In addition, Future provides a staff matching scheme for
all employees who raise money for charitable ventures.
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.
4. Modern slavery
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.
5. Human rights
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.
Future plc 34
2018
Total
97
-
97
331
3
334
431
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)
UK
US
Total
UK
US
Total
Total Emissions (CO2e Tonnes)
Total Revenue
Intensity Ratio (CO2e Tonnes per £1m)
Total
470
102
572
1,310
376
1,686
2,258
£112.3m
£124.6m
20.1
3.5
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 2018
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
• Scope 2 – Time periods for consumption of electricity – figures for the UK and US offices are for
figures for the consumption of fuel are based on averaged annual mileage.
the financial year. Figures for the Australian office are pro-rated from typical (August 2018) monthly
consumption. All figures are estimates based on % share of office space within leased buildings except
for certain US and UK offices which are actual consumption where whole buildings or floors within
buildings have their own meters.
• Scope 2 – Electricity Sources – No electricity was purchased from owned or controlled sources.
• Fugitive Emissions – the Group benefits from air conditioning in some of its leasehold buildings. The
scale of emissions from leaks is very small (estimated to be less than 0.5% of total emissions) and is
deemed to be immaterial to overall reporting and trends.
• Base Year - Financial year 2013 is our baseline year.
• Intensity Ratio - we are using ‘Tonnes per £1million revenue’.
• We have maintained our focus on other environmental impacts, particularly initiatives to reduce waste
and to continue sourcing all our magazine paper from sustainable forestry.
Annual Report and Accounts 2018Strategic report 35
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Financial review:
The financial results demonstrate that the
Group has had a fantastic year and
achieved significant growth. There are
exciting times ahead as the business
builds scale and increasing profitability.
Financial summary – An excellent year
The financial review is based primarily on a comparison of results
for the year ended 30 September 2018 with those for the year
ended 30 September 2017. Unless otherwise stated, change
percentages relate to a comparison of these two periods.
Revenue
Adjusted EBITDA
Depreciation
Adjusted amortisation
Adjusted operating profit
Adjusted net finance costs
Adjusted profit before tax
Operating profit
Profit before tax
Earnings per share (p)*
Adjusted earnings per share (p)*
2018
124.6
20.7
(0.6)
(1.6)
18.5
(1.1)
17.4
5.3
4.4
5.1
26.2
2017
£m
84.4
11.0
(0.3)
(1.8)
8.9
(0.6)
8.3
0.8
0.2
3.7
19.7
*2017 figures have been restated to reflect the bonus element of the 2018 rights issue
Items described as ‘Adjusted’ in the table above exclude the
items detailed as ‘Adjusting’ in the reconciliation below. Adjusted
items are a non-GAAP measure. For further details refer to the
section on presentation of non-statutory measures.
A reconciliation of adjusted operating profit to profit 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
Non-trading foreign exchange gain
Profit before tax
Revenue
2018
£m
18.5
(1.1)
17.4
2017
£m
8.9
(0.6)
8.3
(3.1)
(2.1)
(4.4)
(5.7)
0.2
4.4
(3.7)
(2.3)
-
0.2
Group revenue was up 48% to £124.6m (2017: £84.4m), which
was achieved both organically (increase of 11%) and through
acquisition. UK revenue was up 38% to £92.5m (2017: £67.2m) with
US revenue up 109% to £39.9m (2017: £19.1m).
Future plc 36
Media
Taxation
Media revenue increased by 88% to £64.2m (2017: £34.1m),
driven primarily by the Group’s fast-growing revenue streams,
eCommerce and digital display advertising, and through
acquisition. On an underlying basis, excluding the impact of
2018 and home interest acquisitions, Media revenues increased
by 40%.
In the UK, Media revenues increased by 100% to £42.3m (2017:
£21.1m), driven by eCommerce growth of 80% to £8.8m (2017:
£4.9m) and events growth of 130% to £12.0m (2017: £5.2m). The
US also experienced exceptional growth, up 102% to £29.7m
(2017: £14.7m), with eCommerce revenues being the biggest
driver of this growth – up 134% to £9.4m (2017: £4.0m).
The tax charge for the year amounted to £1.5m (2017: credit of
£1.4m), comprising a current tax charge of £1.9m (2017: £0.8m)
and a deferred tax credit of £0.4m (2017: £2.2m) predominantly
related to the recognition of further historic US losses (as we now
expect to generate sufficient profits in the US to utilise them),
acquired intangible assets and share schemes. The current
tax charge mainly arises in the UK where the standard rate of
corporation tax is 19%.
The Group has also now fully repaid the HMRC settlement
agreement following the final £2m bullet payment in June 2018.
Earnings per share
Magazine
Magazine revenue increased by 20% to £60.4m (2017: £50.3m)
largely driven by acquisitions. On an underlying basis, excluding
the impact of 2018 and home interest acquisitions, Magazine
revenues declined 8% to £45.7m.
Basic earnings per share (p)
Adjusted earnings per share (p)
2018
5.1
26.2
2017
*restated
3.7
19.7
The division is constantly looking for ways to innovate and
published 524 bookazines in the year with revenue totalling
£9.3m.
Adjusted EBITDA and operating profit
The Group’s adjusted EBITDA was up 88% to £20.7m (2017:
£11.0m), of which £15.3m (2017: £6.9m) was UK and £5.4m (2017:
£4.1m) was US. Operating profit increased by £4.5m to £5.3m
(2017: £0.8m).
Adjusted operating margin increased to 15% (2017: 11%) and
gross profit margin increased to 44% (2017: 40%) as the Group
benefited from strong growth in higher margin Media revenues.
Future’s headcount increased to just over 1,000 from 634
employees as additional staff joined the Group through the
various acquisitions. Back office operations are centralised in the
UK, which enables the Group to take advantage of economies
of scale and commonality of processes. The NewBay and
Haymarket titles acquisitions have been fully integrated into the
Group and the integration of the Purch acquisition is in the early
stages but progressing in line with expectations. Integration of
the Australian brands acquired from Nextmedia is also on track.
Exceptional items and impairment
Exceptional costs were £4.4m (2017: £3.7m). These are mainly
acquisition-related, with deal fees and subsequent integration-
related activity in respect of the acquisitions of NewBay, the
Haymarket titles and Purch totalling £4.3m. Vacant property,
other restructuring and transformation-related activity make up
the balance of exceptional items.
Net finance costs
Net finance costs increased to £0.9m (2017: £0.6m) reflecting
higher interest costs as the Group funded the acquisitions of the
Haymarket titles and NewBay through new and existing bank
facilities.
The Group’s adjusted pre-tax profit was £17.4m (2017: £8.3m)
and reported pre-tax profit was £4.4m (2017: £0.2m) reflecting
significantly improved levels of profitability.
* 2017 figures have been restated to reflect the bonus element of the 2018 rights issue
Adjusted earnings per share is based on the profit 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 adjusted profit after tax amounted to £14.9m (2017: £8.6m)
and the weighted average number of shares in issue was 56.9m
(2017 restated: 43.6m), the increase reflecting the impact of
the rights issue that was completed in August 2018 to fund the
Purch acquisition.
Dividend
The Board is recommending a final dividend of 0.5p per share
for the year ended 30 September 2018, payable on 15 February
2019 to all shareholders on the register at close of business on 18
January 2019.
Cash flow and net debt
Net debt at 30 September 2018 was £17.8m (2017: £10.0m)
reflecting the additional draw-down of debt to fund both the
acquisitions of NewBay and the Haymarket titles.
During the year, there was a cash inflow from operations before
exceptional items of £19.8m (2017: £17.1m) reflecting the significant
improvement in the Group’s trading performance and the
significant focus on improving the Group’s working capital cycle.
A reconciliation of adjusted operating cash inflow to cash inflow
from operations is included below:
Adjusted operating cash inflow
Cash flows related to exceptional items
Cash inflow from operations
2018
£m
19.8
(5.1)
14.7
2017
£m
17.1
(5.1)
12.0
Annual Report and Accounts 2018Financial review
37
Financial
review
Other significant movements in cash flows include exceptional
payments of £5.1m (2017: £5.1m), £2.4m (2017: £1.8m) of capital
expenditure, net proceeds from issuing shares (via a rights issue)
of £102.3m, draw-down of bank loans (net of repayments and
arrangement fees) of £4.0m and payments of £117.1m (net of
cash acquired) to fund acquisitions. Foreign exchange and other
movements accounted for the balance of cash flows.
The Group continued to be extremely cash generative with
adjusted cash conversion of 96% (2017: 155%) and adjusted free
cash flow increasing to £17.4m (2017: £15.3m) reflecting the
ongoing efficient cash management by the Group.
The Group remains a very low capital intensive business with
capital expenditure as a percentage of adjusted EBITDA of
only 12%.
Credit facility
The Group had available facilities of £28.2m at 30 September
2018. This includes £5.4m of facilities which were taken out during
2018 to part-fund the NewBay acquisition which are due for
repayment in July 2019, with the remainder expiring in June 2021.
Further details of these facilities are included within note 17 to the
financial statements.
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 the Directors continue to adopt the going
concern basis in preparing the consolidated financial statements
for the year ended 30 September 2018.
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 2.
Conclusion
The Group has completed transformational acquisitions during
the last 12 months and moves into a new exciting phase of its
development. The Group is well placed to achieve its ambitions
for 2019 and beyond.
The Strategic Report (which comprises Group overview,
Chairman’s Statement, Future Playbook, Loyal communities - our
verticals, Chief Executive’s review, 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
12 December 2018
Future plc i
F
n
a
n
c
a
i
l
r
e
v
i
e
w
Anna Calvi shot for
Guitarist Magazine.
Strong leadership
40
Board of
Directors
Richard Huntingford
Independent Non-Executive
Chairman
sn
Richard was appointed to the Board
on 1 December 2017 and took 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 Mid Cap
Investment Trust plc and The Bankers
Investment Trust plc. He is a chartered
accountant, having qualified with KPMG.
Zillah Byng-Thorne
Chief Executive
s
Penny Ladkin-Brand
Chief Financial Officer and
Company Secretary
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 Board, she was Chief
Financial Officer of Trader Media Group
(owner of Auto Trader), from 2009 to
2012, and interim Chief Executive Officer
from 2012 to 2013. Before this, Zillah was
Commercial Director and Chief Financial
Officer at Fitness First Limited and
Chief Financial Officer of the Thresher
Group. Zillah is currently a Non-Executive
Director of Gocompare.com Group plc
and PaddyPowerBetfair plc. She is a
chartered management account (CIMA),
and qualified treasurer (ACT). She has
a MA in Management from Glasgow
University and a MSc in Behavioural
Change from Henley Business School.
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
has a background in digital media and
expertise in digital monetisation models.
Penny is currently a Non-Executive
Director of Next Fifteen Communications
Group plc. She is a chartered accountant,
having qualified with PwC. She has a
BA Honours in Classics from Oxford
University and is also a Trustee of The
Media Trust.
Hugo Drayton
Independent Non-Executive
sl
Alan Newman
Independent Non-Executive
ln
Rob Hattrell
Independent Non-Executive
s
Hugo was appointed as a Non-Executive
Director of Future plc 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.
Hugo is Chairman of the Remuneration
Committee and Senior Independent
Director.
Alan was appointed as a Non-Executive
Director and Chairman of the Audit
Committee of Future plc on 6 February
2018. Alan was Chief Financial Officer of
YouGov plc from 2008 to 2017 and before
that was a Partner at Ernst & Young
Business Advisory Services and at KPMG
Consulting, where he worked mainly with
clients in the media, telecommunications
and technology sectors. He previously
held corporate management roles at
Pearson plc and MAI plc (now United
Business Media). Alan is Chairman of the
Freud Museum London. He is a chartered
accountant and has an MA in Modern
Languages (French and Spanish) from
Cambridge University.
Rob was appointed as a Non-Executive
Director on 1 October 2018 and is Vice
President of eBay UK where he leads one
of eBay’s strongest markets worldwide.
Previously at Tesco, Rob was most
recently responsible for the supermarket’s
General Merchandise business across the
UK and Central Europe. He has also held
the position of Partner in the global retail
practice at Accenture. Rob graduated
from Oxford University with a degree in
Geography.
Richard Huntingford was appointed to the Board as an independent Non-
Executive Director on 1 December 2017 and succeeded Peter Allen as Chairman
in February 2018. Alan Newman was appointed to the Board as an independent
Non-Executive Director on 6 February 2018. Rob Hattrell was also appointed as an
independent Non-Executive Director on 1 October 2018. James Hanbury stepped
down as Deputy Chairman on 30 September 2018. Hugo Drayton was appointed
Senior Independent Director in October 2018. See page 47 for further detail.
s
Member of the
Nomination
Committee
l
Member of the
Remuneration
Committee
n
Member of
the Audit
Committee
Annual Report and Accounts 2018Corporate governance 41
Directors’
report
For the year ended
30 September 2018
Directors’ report
The Directors are pleased to present their annual report
for the year ended 30 September 2018. The information
presented in this Directors’ report relates to Future plc
and its subsidiaries and the Chairman’s statement, Chief
Executive’s review, Financial review and Corporate
responsibility statement are each incorporated by
reference into, and form part of, this Directors’ report.
Principal activity
The principal activity of the Company and its subsidiaries (the
‘Group’) is the publishing of special-interest content, notably
in the areas of: technology; games and entertainment; music;
photography and design; hobbies; home interest and B2B
sectors, across a range of international locations.
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
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 available at the date
of preparation of this Annual Report and the Company undertakes
no obligation to update those forward-looking statements.
Result of 2018 Annual General Meeting
All resolutions put to the Annual General Meeting held on 5
February 2018 were passed unanimously on a show of hands.
Shareholders holding more than 71% of all issued shares
submitted proxy votes and of those, more than 83% of all proxy
votes cast were in favour of all resolutions.
The purpose of the Annual Report is to provide information to the
shareholders of the Company.
Reported financial results
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 audited financial statements for the year ended 30
September 2018 are set out on pages 72 to 106. Details of the
Group’s results are set out in the consolidated income statement
on page 72 and in the notes to the financial statements on pages
83 to 106.
Dividends
The Annual Report contains certain forward-looking statements
with respect to the operations, performance and financial
The Board’s policy is that dividends should be covered at least
four times by adjusted earnings per share and free cashflow. The
Significant shareholdings
At 12 December 2018, the Company had been notified of the following significant interests in its Ordinary shares:
Shareholder
Aberforth Partners
Canaccord Genuity Wealth Management (Inst)
Invesco
Slater Investments
Merian Global Investors
AXA Framlington Investment Managers
BlackRock
Herald Investment Management
Total number of shares in issue
Number of shares
Percentage of
issued share capital
8,869,259
8,652,196
8,125,722
6,795,250
4,882,392
4,427,759
4,098,540
2,485,082
48,336,200
81,849,101
10.84%
10.57%
9.93%
8.30%
5.97%
5.41%
5.01%
3.04%
59.06%
100%
Future plc 42
Restated
Balance as at
30 September 2017
Purchases
during the year
Share scheme
exercises during
the year
Balance as at
30 September 2018
(or date of
resignation if
earlier)
Sales during
the year
108,255
31,780
-
45,436
-
-
86,167
16,859
131,811
52,720
24,500
23,502
8,750
-
-
-
222,689
(193,000)
269,75510
167,652
(55,000)
197,15210
-
-
-
-
-
-
-
-
-
-
-
-
24,500
68,938
8,750
-
86,1678
16,8599
672,121
288,497
241,283
390,341
(248,000)
Directors’ shareholdings (audited)
Directors in office at 30 September 2018
Executive2
Zillah Byng-Thorne3
Penny Ladkin-Brand4
Non-executive
Richard Huntingford5
James Hanbury6
Alan Newman7
Hugo Drayton
Peter Allen
Manjit Wolstenholme
Total
1. All holdings are beneficial.
2. Details of the share options and awards for Executive Directors are set out on page 57. No such options or awards are granted to Non-Executive Directors.
3. 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). On 20 August 2018 Zillah Byng-Thorne acquired 89,311 shares at £3.03 per
share through taking up 86% of her rights following the completion of the rights issue that was announced on 18 July 2018. Max Thorne, a person closely associated with Zillah
Byng-Thorne, (who held no Ordinary Shares prior to the rights issue), acquired 42,500 shares through the rights issue process on 20 August 2018 and now holds 42,500 Ordinary
Shares which are included in the total for Zillah Byng-Thorne above. Share awards granted on 30 November 2015 vested in full on 23 November 2018.
4. 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. On 1
September 2018, following the vesting in full of the PSP award that was granted on 3 August 2015 Penny Ladkin-Brand received 109,856 Ordinary shares (of which she sold
55,000 on 24 September 2018 to cover the tax and national insurance arising). On 20 August 2018 Penny Ladkin-Brand acquired 46,754 shares at £3.03 per share through taking
up her rights in full following the completion of the rights issue that was announced on 18 July 2018. On 20 August 2018 Mark Brand, a person closely associated
with Penny Ladkin-Brand acquired 5,966 shares at £3.03 per share through taking up his rights in full following the completion of the rights issue that was announced on 18 July
2018. Mark Brand now holds 13,921 Ordinary Shares (which are included in the balance for Penny Ladkin-Brand above). Share awards granted on 30 November 2015 vested in full
on 23 November 2018.
5. Richard Huntingford purchased 14,000 ordinary shares at a price of £4.93 per share on 18 July 2018 and on 20 August 2018 acquired a further 10,500 at £3.03 per share through
taking up his rights in full following the completion of the rights issue that was announced on 18 July 2018.
6. On 20 August 2018 James Hanbury acquired 23,502 shares at £3.03 per share through taking up a portion of his rights following the completion of the rights issue that was
announced on 18 July 2018.
7. On 20 August 2018 Alan Newman purchased 5,000 ordinary shares at a price of £4.95 per share and on 20 July 2018 a further 3,750 at £3.03 per share through taking up his rights
in full following the completion of the rights issue that was announced on 18 July 2018.
8. Balance for Peter Allen is as at 1 February 2018, the date of his resignation from the Board.
9. Balance for Manjit Wolstenholme is as at 23 November 2017, the date of her resignation from the Board.
10. Since 30 September 2018 the Executive Directors have transacted in shares (following the vesting of share awards on 23 November 2018). At 12 December 2018,
Zillah Byng-Thorne held 218,866 shares and Penny Ladkin-Brand held 162,112 shares.
Company’s Employee Benefit Trust (EBT) waives its entitlement
to any dividends. The Board is recommending a final dividend for
the year of 0.5p per share.
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 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.
34.9 million shares were issued by way of a rights issue to fund
the acquisition of Purch. 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. In June 2018 the Company’s share premium account of
£47.4m was cancelled by special resolution, confirmed by the
High Court of Justice in July 2018.
Directors
Biographical details of the Directors holding office as at 12
December 2018 are set out on page 40.
Directors’ shareholdings in the Company’s share capital are set
out above. No Director has any interest in any other share capital
of the Company or any other Group company, nor does any
Director have a material interest in any contract of significance
to the Group.
Significant agreements
Details of all movements in share capital are given in note 21 on
page 99. As at 30 September 2018, the number of shares in issue
was 81.5 million. This represents an increase of 80% compared
with the number of shares in issue as at 30 September 2017.
In April 2018, 0.3 million shares were issued by the Company
to part fund the acquisition of NewBay Media. In May 2018,
0.4 million shares were issued by the Company to part fund
the acquisition of the titles from Haymarket. In August 2018,
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 17 on page 94) is
terminable upon change of control of the Company. In common
with market practice, awards under certain of the Group’s
Annual Report and Accounts 2018Corporate governance 43
Directors’
report
For the year ended
30 September 2018
long-term incentive plans (details of which are set out in the
Directors’ remuneration report on pages 53 to 56 and note 22
on pages 99 to 102) 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 20 on pages 95 to 98.
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 2018, which is set out on pages 53 to 60.
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 report set out on pages 61 to 64.
Corporate governance
Ordinary resolution 4 – Declaration of a dividend
The Board’s report on this subject is set out on pages 47 to 50.
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.
Corporate responsibility
The Board considers that issues of corporate responsibility are
important. The Board’s report, including the Group’s policies
on employee involvement and disability, and a statement on
Greenhouse Gas Emissions for the Group, is set out on pages 31
to 34.
Annual General Meeting 2018
At the Company’s twentieth Annual General Meeting, which will
be held on 7 February 2019 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 107 to 108 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
2018, together with the reports of the Directors and auditors.
The audited financial statements appear on pages 72 to 106.
Shareholders will be asked to approve a final dividend of 0.5p
per ordinary share for the year ended 30 September 2018, as
recommended by the Directors. The dividend, if approved, will
be payable on 15 February 2019 to shareholders on the register
at the close of business on 18 January 2019.
Ordinary resolutions 5 to 10 – Election of Alan Newman
and Rob Hattrell and annual re-election of other
Directors
Following Alan Newman’s appointment to the Board on 6
February 2018, and Rob Hattrell’s appointment to the Board on 1
October 2018, they stand for election to confirm their respective
appointments.
Consistent with our policy since 2004, all Directors with the
exception of James Hanbury, who elected to stand down at
30 September 2018, are proposed for re-election. Biographical
details of all Directors are set out on page 40.
Ordinary resolutions 11 and 12 – 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
50 in the Corporate Governance report.
Ordinary resolution 13 – 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 £8,184,910 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 £8,184,910 which represents
approximately two thirds of the Company’s issued Ordinary
shares (excluding treasury shares) as at 12 December 2018. This
maximum is reduced by the nominal amount of any equity
securities allotted under paragraph 13.2 of the Notice of AGM;
and
Future plc 44
(b) in any other case, equity securities up to a maximum
nominal amount of £4,092,455 which represents just under
one third of the Company’s issued Ordinary shares as at 12
December 2018. This maximum is reduced by the nominal
amount of any equity securities allotted under paragraph 13.1
of the Notice of AGM in excess of £4,092,455. If granted, this
authority would replace all previous authorities granted in this
connection. The authority granted by this resolution will expire
on 6 May 2020 or, if earlier, following the conclusion of the next
AGM of the Company. If the Directors exercise the authority
granted under paragraph 13.1 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 14 – 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 15 – Disapplication of statutory pre-
emption rights
Resolution 15 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 £613,868 representing
approximately 5% of the nominal value of the issued Ordinary
share capital of the Company as at 12 December 2018 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 6 May 2020,
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 16 – Additional disapplication of
pre-emption rights
This resolution seeks a further power pursuant to the authority
granted by resolution 13 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 £613,868, representing
approximately 5% of the nominal value of the issued Ordinary
share capital of the Company as at 12 December 2018, being the
latest practicable date before publication of the Notice of AGM.
This is in addition to the 5% referred to in resolution 15 above
and, unless revoked, varied or extended, this authority will
expire at the conclusion of the next AGM of the Company or 6
May 2020, 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.
Special resolution 17 – 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 17 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 5th February 2019. 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 109
to 111.
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.
Annual Report and Accounts 2018Corporate governance • 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
12 December 2018
45
Directors’
report
For the year ended
30 September 2018
Statement of Directors’ responsibilities in respect of
the financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
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 adopted by the European Union 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 adopted by the European
Union 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 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 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 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.
Directors’ confirmations
Each of the Directors, whose names and functions are listed in
the Board of Directors section on page 40, 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,
liabilities, financial position and profit of the Company;
• the Group 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, liabilities, financial
position and profit of the Group; and
Future plc C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e
Toshihiro Nagoshi –
chief creative officer
for Sega – shot in Japan
for EDGE magazine.
47
Corporate
governance
report
The principle
of governance
Corporate governance does not mean ticking various
legislative and regulatory boxes, but requires a
thoughtful and considered approach from the Board
down to the Company’s operations to identify and apply
the principles of correct corporate governance
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 (as
amended from time to time) and the Group has therefore not
adopted the UK Corporate Governance Code (April 2016) (the
“2016 Code”). However, the Directors continue to comply with the
key Principles of the 2016 Code, and it is the Group’s intention
to comply with the key Principles of the new UK Corporate
Governance Code (July 2018) (the “2018 Code”). A thorough
review of the Group’s compliance against the Provisions of the
2018 Code is underway and will be completed during the year
ending 30 September 2019.
1. Board of Directors
Membership of the Board
The Board consists of two Executive and four independent Non-
Executive Directors. Biographies of Directors and details of their
other time commitments are set out on page 40.
Board changes during the year
Richard Huntingford was appointed to the Board as an
independent Non-Executive Director on 1 December 2017
and succeeded Peter Allen as Chairman in February 2018.
Richard brings over 30 years of media experience to the Board.
Very sadly, the Group’s senior independent Non-Executive
Director, Manjit Wolstenholme, passed away unexpectedly in
November 2017.
Alan Newman was appointed as an independent Non-Executive
Director to the Board on 6 February 2018 and brings with him
significant media and PLC experience. Rob Hattrell was also
appointed as an independent Non-Executive on 1 October 2018
and adds significant eCommerce experience to the Board.
Following Disruptive Capital Investments Limited’s shareholding
falling below 10% its right to have a Board representative
lapsed and as a result James Hanbury stepped down as Deputy
Chairman on 30 September 2018. James has made a significant
contribution since joining the Board following the acquisition of
Imagine in October 2016.
Hugo Drayton was appointed senior independent Director in
October 2018.
There were no other changes to the Board during the year ended
30 September 2018.
Role of the Non-Executive Directors
The Non-Executives play a critical role on the Board in overseeing
and scrutinising the running of the business and in ensuring that
corporate governance remains at the top of the agenda.
The Non-Executive Directors all serve three-year terms,
terminable by either party on three months’ notice at any time
and subject to their election and annual re-election or removal by
shareholders. Although annual re-election is not a requirement for
Future, we believe it is the best way to ensure Non-Executives are
directly accountable to shareholders.
All of the Non-Executive Directors serving at the date of this
report are considered to be independent by the Board. 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.
The Board reviews the other commitments and Board roles
held by the Non-Executive Directors to ensure that they are
able to fulfil their obligations to the Company. In this regard, it
should be noted that the majority of Richard Huntingford’s other
commitments are at investment trusts.
Roles of the Chairman and Chief Executive
The duties and responsibilities of the Board are effectively
divided so that the Chairman leads the Board and the Chief
Executive leads the business.
Board meetings
The Board had seven scheduled meetings during the financial
year and attendance is summarised opposite. The Board had a
further seven unscheduled telephone meetings to discuss and
approve aspects of the acquisitions made during the year and
also to finalise the 2017 annual results, during which a sufficient
quorum of Directors 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.
There is a written schedule of matters reserved for the Board
which sets out those matters that require Board approval
including setting strategy, approving budgets and financial
statements and setting up policies. It was noted that 45 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.
Future plc 48
Board meetings
Director
Peter Allen
(resigned 1 February 2018)
Richard Huntingford
(appointed 1 December 2017)
Zillah Byng-Thorne
Manjit Wolstenholme
(resigned 23 November 2017)
Hugo Drayton
Penny Ladkin-Brand
James Hanbury
(resigned 30 September 2018)
Alan Newman
(appointed 6 February 2018)
Attendance
(7 scheduled meetings)
2 of 2
5 of 5
7 of 7
2 of 2
7 of 7
7 of 7
7 of 7
4 of 4
1. Manjit Wolstenholme resigned from the Board on 23 November 2017
and Peter Allen resigned from the Board on 1 February 2018. Richard
Huntingford joined the Board on 1 December 2017 and took over as
Chairman on 1 February 2018. Alan Newman joined the Board on 6
February 2018 and James Hanbury resigned from the Board on 30
September 2018.
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 113). 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. 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 2018. The Company
maintains appropriate insurance for its Directors.
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.
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 17
on pages 94 and 95.
Risk management and internal controls
Details of the principal risks and the Group’s approach to
managing them are set out on pages 28 to 30. The Board
Summary of performance evaluation
Objectives for 2018
Steps taken during 2018
Support management in developing the executive
team and succession planning in respect of key roles
A review of executive team undertaken and plans for
succession / cover in an emergency detailed where
key dependencies highlighted. Further work to be
undertaken in this area in 2019.
Support management grow the business
through acquisition
Significant acquisitions completed in the year
including NewBay, the Haymarket titles and Purch.
Annual Report and Accounts 2018Corporate governance 49
Corporate
governance
report
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 process
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.
Internal audit
The Audit Committee and the Board have again during 2018
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.
The Executive Directors hold a series of meetings presenting the
interim and annual results to those shareholders who request a
meeting 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.
Audit Committee
Member
Attendance
(3 scheduled meetings)
Manjit Wolstenholme (Chairman
to 23 November 2017)1,2
Richard Huntingford (Acting
Chairman from 1 December 2017 to
6 February 2018)
Alan Newman (Chairman from
6 February 2018)
Peter Allen2
Hugo Drayton
1 of 1
2 of 2
2 of 2
1 of 1
3 of 3
1. As the Chairman of the Committee until 23 November 2017, Manjit
Wolstenholme had recent and relevant financial experience. Richard
Huntingford served as acting Chairman from 1 December 2017 until he
was replaced by Alan Newman on 6 February 2018. Both Richard and
Alan have recent, relevant financial experience.
2. Manjit Wolstenholme resigned from the Committee on 23 November
2017 and Peter Allen resigned from the Committee on 1 February 2018.
2. Audit Committee
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 2018
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 2018. 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 2018,
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 revenue
on the larger advertising contracts and have concluded that they
are appropriate. The estimates and judgements made have been
discussed with the auditors and the Audit Committee.
2. Carrying value of goodwill and long lived assets
IAS 36 requires an impairment test to be performed for goodwill
on an annual basis or where there is an indication of impairment.
Future plc 50
Management prepared a detailed impairment assessment
of both the UK and US businesses at 30 September 2018 and
concluded that no impairment was required.
The key assumptions made in that assessment were as follows:
- Long term growth rate to perpetuity UK: 0%, US: 3%
- EBITDA margins assumed UK: 17.7% to 19.7% and US: 21.8% to
24.2%
- Discount rate (post-tax) 9% (both UK and US)
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, be reappointed as auditors for the forthcoming year.
Pricewaterhouse Coopers LLP have been the Company’s
auditors for 20 years, but there has been a rotation of
audit partner in the current 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.
The Audit Committee agreed with management’s conclusion
that no impairment is required.
3. Nomination Committee
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 the NewBay,
Purch and Haymarket titles acquisitions, and agrees with the
judgements made.
5. Recognition of deferred tax asset
The Audit Committee discussed the recognition of additional
deferred tax asset in respect of historic US losses with the
auditors. The Committee agreed with management’s conclusion
that both the recognition of such an asset and the quantum
recognised is appropriate given the profits that the US business
is expected to generate in the future.
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 in respect of the Purch Group LLC
acquisition. For further details regarding fees paid, see note 3 to
the financial statements on page 84.
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 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 2018, 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 above) mainly comprised of work in a reporting
accountant capacity in respect of the Purch acquisition, was
the most effective way of conducting the Group’s business
during the year.
Auditors appointment policy
The Audit Committee has reviewed its policy for appointing
auditors.
Nomination Committee
Member
Peter Allen1
Manjit Wolstenholme1
Hugo Drayton
James Hanbury1
Richard Huntingford1
(Chairman)
Alan Newman1
Zillah Byng-Thorne1
Attendance
(3 scheduled meetings)
0 of 0
0 of 0
3 of 3
3 of 3
3 of 3
3 of 3
3 of 3
1. Manjit Wolstenholme resigned from the Committee on 23 November 2017
and Peter Allen resigned from the Committee on 1 February 2018. Richard
Huntingford joined the Committee on 1 December 2017 and took over as
Chairman on 1 February 2018. Alan Newman joined the Committee on 6
February 2018. Zillah Byng-Thorne joined the Committee on 1 February 2018
and James Hanbury resigned from the Committee on 30 September 2018.
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 2019
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
See page 53 in the Remuneration Report for details of Directors’
meeting attendance and the role of the Committee.
Approved by the Board of Directors and signed on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
12 December 2018
Annual Report and Accounts 2018Corporate governance
51
Hugo Drayton
Chairman of the
Remuneration
Committee
Directors’ remuneration report
Future has had a successful year, with
adjusted EPS increasing by 33% to 26.2p per
share; our remuneration policy is designed
to align remuneration with shareholder
interests, and to deliver long-term
performance. We are confident that we can
continue the recent strong growth,
performance and results in this coming year.
Annual statement from the Chairman of
the Remuneration Committee
Dear Shareholders,
I am pleased to present the remuneration report for the year ended
30 September 2018, in my new role as Chairman of the Remuneration
Committee.
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 2018;
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.
Remuneration Policy
Future’s Remuneration Policy is designed to ensure that reward for
performance is competitive and appropriately aligned to the scale and
market capitalisation of the Group - which has significantly increased
following the acquisitions of Purch, NewBay and the titles from
Haymarket in 2018. The Remuneration Policy seeks to align remuneration
with shareholders’ 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.
Performance and Reward in 2018
The Group has had an extremely successful year: adjusted EBITDA
increased 88% to £20.7m (2017: £11.0m); adjusted operating profit rose
108% to £18.5m (2017: £8.9m); and adjusted EPS increased by 33% to
26.2p per share (2017: 19.7p per share - restated for rights issue). See page
35 of the financial review section for further details of the Group’s 2018
performance.
The Group has grown significantly in the past two years, with its share
price experiencing rapid growth from around 120p per share at the end
of 2016, to 524p, and a market cap of circa £429m (at the time of writing).
We recognise that one key element of these results is due to Future’s
Executive Directors having developed and delivered a successful growth
strategy for the Company.
In September 2018, in order to recognise the continued performance
and growth of the Group, the Committee approved bonus payments
at the maximum level within policy for both the CEO and CFO (at 150%
and at 125% of salary, respectively) for the 2018 year. This bonus award
is linked to the exceptional performance outlined above, in a year in
which the Company also completed a significant fund-raise (via a rights
issue) and completed a number of significant acquisitions. Given this
continued, exceptional performance - and as both the CEO and CFO
already hold significant shareholdings resulting from their reinvestment
in the Company via the rights issue - the Committee made the decision
to award the bonus in cash.
Future plc 52
Directors’
remuneration
report
For the year ended
30 September 2018
Share awards granted to the CEO and CFO on 30 November
2015 vested in full on 23 November 2018. Although the original
vesting date was 30 November 2018, following the Remuneration
Committee meeting on 20 November 2018 the Committee
applied its discretion to bring the vesting date of this award
forward to 23 November 2018 in order to align the vesting with the
annual results announcement. At the time that the awards were
made the business was on the cusp of being cash-generative and
the targets set were designed to be stretching. The adjusted EPS
for the relevant measurement period was 24.2p for the Group and
the net cash flow was £10.3m (after adjusting for exceptional cash
flows associated with the acquisitions and rights issues made
during the measurement period). This performance significantly
exceeded the original targets of EPS of 22.5p (19.1p after
adjustment to reflect rights issue impact) and net cashflow of
£0.75m. Consequently, the Performance Share Plan (PSP) awards
granted to Zillah Byng-Thorne and Penny Ladkin-Brand vested in
full on 23 November 2018.
In accordance with remuneration guidelines, the Single Figure
Table (included within this report) includes disclosure of any PSP
awards for which performance criteria that relate to 2018 have
been met in the year. Accordingly, the PSP amount in the table
includes the vesting of the award detailed above in November
2018, and also 50% of the November 2016 and February 2017
awards (even though these will not vest until November 2019).
The actual number of share awards vesting in the financial year
was 166,667 and 129,137 for the CEO and CFO respectively, which
vested on 27 November 2017 and 1 September 2018 and were
included in the Single Figure Table in 2017. Excluding the impact
of the unvested shares relating to 2019, the single figure number
would be £2,076,000 for the CEO and £1,143,000 for the CFO.
Whilst the Company already has elements of best practice in
its Deferred Annual Bonus Plan (DABS) and PSP (for example
malus/clawback), it lacks a holding period post-vesting for the
PSP; and there is no set policy on the element of annual bonus
that should be paid in shares, or the basis for the deferral of that
element of the award.
These factors, coupled with the Company’s overall performance,
led us to consider carefully the timing, structure and quantum
of the different elements of the compensation package, from a
shareholder perspective, in ensuring pay for performance, as well
as from the participant’s perspective. The Committee has resolved
to make a number of changes within policy and propose changes
to the Policy. These are summarised below.
Changes within Policy
With effect from 1 October 2018, the salary of the CEO
increased by 19%, to £475,000 (the salary of the CFO remained
the same) which was determined having taken account of
relevant comparator data, reflecting the significantly increased
breadth and complexity of the role which requires a significant
time commitment in the US, and was in line with policy with
regards to not being higher than the market.
The Committee determined to use the exceptional
circumstances clause relating to PSP awards that exceed 100%
of pay to make awards in November 2018 of 200% of salary
to the CEO and 167% of salary to the CFO. These awards are
subject to a two-year holding period that follows the three-year
vesting period. The conditions of performance will be based on
the last 90 days of the performance period. The targets for the
maximum payout of the PSP have been set such as to be very
stretching and in line with shareholder interests.
Performance and Reward in 2019 onwards
Changes to Remuneration Policy
The successful rights issue and acquisition of Purch, earlier this
year, and the ongoing performance of the business has led the
Committee to review and propose a number of changes to the
current approach on remuneration, to bring in certain elements
viewed as best practice and also to make certain adjustments to
compensation potential within the current policy. One key driver
for this is that the business is now larger and more complex, and
that, with around half of the business in the US, the CEO now has
to commit a significant amount of time to this market, including
the work involved with the integration of the recent Purch
acquisition. Additionally, the Board has indicated its intention to
move up to a premium listing and, as a result, wanted to ensure
that the latest best practice in terms of remuneration is being
captured. Therefore, ensuring the right package, appropriately
linked to future performance, is vital for the Executive Directors
and for shareholders. Therefore the Committee is proposing
changes to the Remuneration Policy to be tabled at the AGM in
February 2019. The changes are subject to a binding shareholder
vote and would be effective from the date of the AGM. Whilst
the changes are covered in the Implementation Report and the
Remuneration Policy section, I set out below the key changes.
The Committee has circulated the proposals to the six largest
shareholders to obtain feedback prior to tabling the proposed
amendments at
the AGM.
In considering our approach the following context may be helpful:
In 2016 we took the step of making significant awards to
both the CEO and CFO (PSP awards over 400% of pay); these
awards are due to vest in November 2019. All performance
obligations have been met with the exception of elapsed time.
To date, both Directors have built up significant shareholdings
in the business but we are conscious that there is a need
to strike the right balance between long-term holding and
ensuring a level of accessible reward year-on-year.
The annual bonus will be paid 50% in cash, 50% by way of a
share award, increasing the share mix from one third and adding
an additional year to the holding period, such that 50% of the
bonus will now be subject to a two-year holding period.
The maximum PSP award is increased to 200% from 100%. Any
award over 150% would vest only for exceptional performance.
As an example, at the present time the Committee would
consider exceptional performance to be the achievement of
a compound annual growth rate of 20%, although conditions
attached to each award would remain at the discretion of the
Committee.
A two-year holding period will be imposed on PSP awards.
The Committee also wishes to apply formal share ownership
guidelines of 200% of salary for the CEO and CFO. Both
Executive Directors already hold in excess of this requirement;
however, there is currently no formal policy.
Shareholder Feedback
We believe that the Policy will incentivise the Executive Directors
to deliver profitable growth in the short, medium and long term.
The Remuneration Committee is committed to responding
to developments in best practice. If you have any feedback in
this regard I will be available at the AGM to answer any specific
questions and will be available throughout the year to discuss
these matters. I hope you will support the AGM resolution and
approve our Annual Report on Remuneration.
Hugo Drayton
Chairman of the Remuneration Committee
12 December 2018
Annual Report and Accounts 2018Corporate governance 53
Implementation report
The following report provides details of Directors’
remuneration for the year ended 30 September 2018. In
setting remuneration for the year, the Committee
applied the principles set out in the Remuneration
Policy report.
Remuneration Committee
Four independent Non-Executive Directors served on the Remuneration Committee during the year to 30 September 2018: Manjit
Wolstenholme chaired the Committee until 23 November 2017 and was replaced by Richard Huntingford as acting Chairman of
the Committee until Hugo Drayton was appointed Chairman on 6 February 2018. Peter Allen served on the Committee until his
resignation on 1 February 2018. James Hanbury served on the Committee throughout the year until his resignation on 30 September
2018. Alan Newman was appointed as a Non-Executive Director and joined the Committee on 6 February 2018. Penny Ladkin-Brand
acted as Secretary to the Committee throughout the year.
Member
Peter Allen
Manjit Wolstenholme
Hugo Drayton
James Hanbury
Alan Newman
Committee Meetings
20 November 2017
14 May 2018
6 July 2018
25 September 2018
Attendance at
meetings
✔
✔
✔
✔
-
-
-
✔
✔
✔
-
-
✔
✔
✔
-
-
✔
-
✔
100%
100%
100%
100%
100%
*Other regular attendees included the Chairman – Richard Huntingford; Remuneration Advisers – Ernst & Young; the CEO – Zillah Bing-Thorne; and the
Managing Director - People & Culture who attended the meetings by invitation but who are not members. Individuals are not present when their own
remuneration is discussed.
The role of the Remuneration Committee
reviewed annually, are available on the Company’s website
(www.futureplc.com).
The Committee is responsible for determining the overall
remuneration policy of the Group, and in particular it is
responsible for:
Pay and benefits
Determining the appropriate basic annual salaries, incentive
arrangements and terms of employment of Executive
Directors.
Base salary for the CEO increased to £475,000 from 1 October
2018 and will be reviewed next in 2020. The base salary of the
CFO remains at £275,000.
Making recommendations regarding Non-Executive
Directors’ fees.
Pension contributions and other benefits remain the same
in 2019.
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.
Performance-related bonus (Annual Bonus Scheme)
Operation of the scheme
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 pages 61 and 62.
No Director is involved in deciding his or her own remuneration.
The terms of reference of the Remuneration Committee,
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 2018, a profit pool bonus was again
in operation for all employees across the Group, including the
Executive Directors. Following the exceptional performance of
the Group in 2018, in a year in which the Company also completed
Future plc 54
Single Total Figure of Remuneration (audited)
The remuneration of the Directors is set out below:
Salary/fees
Benefits1
Annual bonus2
PSP3
Pension4
Total
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
2018
£’000
2017
£’000
Executive Directors
in office as at 30
September 2018
Zillah Byng-Thorne4
Penny Ladkin-Brand4,7
400
249
350
250
Total for Executive
Directors
649
600
17
13
30
10
-
10
600
344
640
324
3,705
1,466
1,452
921
944
964
5,171
2,373
60
37
97
44 4,782
2,496
11
2,109
1,506
55
6,891
4,002
Non-Executive Directors
in office as at 30
September 2018
Richard Huntingford5
Alan Newman5
Hugo Drayton
Total for Non-Executive
Directors
Former Non-Executive
Director
James Hanbury6
Peter Allen6
Manjit Wolstenholme6
Total for former Non-
Executive Directors
88
32
47
167
65
40
9
-
-
40
40
60
95
50
114
205
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
88
32
47
167
65
40
9
-
-
40
40
60
95
50
114
205
Total
930
845
30
10
944
964
5,171
2,373
97
55
7,172
4,247
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 53 to 55.
3. Details relating to the Performance Share Plan (“PSP”) are set out on pages 55 to 56. The amount included in the table above in respect of Zillah Byng-Thorne relates to the PSP
award granted on 30 November 2015 which vested in full on 23 November 2018, following the achievement of performance criteria over the three-year period ended 30
September 2018, and 50% 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 2018 and the share price target for the period ended 30 September 2018. The value of the award that vested in November 2018
has been calculated using the share price on the date of vesting of £5.10 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 £4.35, 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 30 November 2015 which vested in full on 23 November 2018, following the achievement of performance criteria over the three-year period
ended 30 September 2018, and 50% 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 2018 and the share price target for the period ended 30 September 2018. The value of the November 2018 award has
been calculated using the share price on the date of vesting of £5.10 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 £4.35, as the award had not vested at the date of this report.
4. Both Zillah Byng-Thorne and Penny Ladkin-Brand received cash supplements in lieu of pension contributions. These additional cash payments are not included in determining
their entitlement to any bonus, share-based incentive or pension entitlement.
5. Richard Huntingford was appointed to the Board on 1 December 2017 and Alan Newman was appointed to the Board on 6 February 2018.
6. Manjit Wolstenholme resigned from the Board on 23 November 2017, Peter Allen resigned from the Board on 1 February 2018 and James Hanbury resigned from the Board on 30
September 2018.
7. Penny Ladkin-Brand’s remuneration is lower in the year than her base remuneration, as Penny was on maternity leave for two and a half months.
a significant fund-raise (via a rights issue) and made a number of
significant acquisitions, the Committee exercised its discretion
and increased the bonus payable during 2018 to 150% and 125% (up
from 95%) of basic annual salary for both Zillah Byng-Thorne and
Penny Ladkin-Brand respectively.
Payment of any performance-related bonus under the Annual
Bonus Scheme is usually made following the announcement
of the preliminary results and the conclusion of the audit in
respect of the preceding financial year. In July 2018, based on
performance, the Committee resolved to make a payment ‘on
account’, which constituted 45% of salary paid to Zillah Byng-
Thorne and Penny Ladkin-Brand. This step was taken to facilitate
the participation by the Directors in the rights issue (in which
Penny Ladkin-Brand took up all of her rights and Zillah Byng-
Thorne took up 86% of her rights) that was announced on 18 July
2018 and concluded on 20 August 2018. The balance of this bonus
was paid in November 2018. The advance bonus payment was
used in full to part fund their subscription for shares. 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.
Annual Report and Accounts 2018Corporate governance 55
Directors’
remuneration
report
For the year ended
30 September 2018
Performance targets
The performance-related bonus for the Executive Directors during
2018 originally comprised two elements:
A maximum of 45% of current basic annual salary was paid
under the profit pool bonus subject to the achievement of target
EBITDA.
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 2018
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 2018, the targets were
all met in full and following the exceptional 2018 performance
and successful completion of the Purch Group LLC acquisition
the Committee exercised its discretion and increased the bonus
payable during 2018 to 150% and 125% of current basic annual
salary (all to be paid in cash) for both the Chief Executive and
the Chief Financial Officer respectively. The payment of the full
bonus in cash was to recognise the performance of the Directors
in leading the Group through an exceptional period and for the
considerable achievements of the year.
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 200% of basic annual
salary (increased from 100% in 2018). 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.
On 21 August 2018, Future plc completed a 3 for 4 rights issue
(the “rights issue”) in order to fund the acquisition of Purch Group
LLC. Following the completion of the rights issue the Committee
resolved, as is common practice, to adjust the awards held by
participants to account for the effect of the discounted rights
issue. The adjustment was undertaken in line with a commonly
accepted approach which takes into consideration the number of
new shares created as a result of the rights issue (as disclosed in
the table set out on page 99). The Committee also reviewed and
where appropriate updated the performance criteria for each of
the outstanding awards. Any changes to the performance criteria
are detailed below. The Committee was advised by Ernst & Young
LLP (“EY”) during this process to ensure that any changes being
made were in line with market best practice.
Performance criteria in respect of awards granted during the
year ended 30 September 2018
Earnings Per Share (50% of award)
Adjusted EPS for the last financial year of the performance period
(being the year ending 30 September 2020) of at least 23.0p 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 26.0p and on a
straight-line basis between these amounts.
Share price performance (50% of award)
25% of this part of the award will vest if the Company’s share price
performance in the period from the date of grant to 30 September
2020 is at the lower target price with full vesting of this part of
the award at the upper target price level and straight-line vesting
in between. If the Company’s share price performance is below
target, none of this element of the award will vest. Following the
completion of the rights issue the Committee rebased the share
price targets to adjust for the impact of the Purch acquisition and
associated rights issue.
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 this element of the
award will vest.
25% of the award will vest if the Group’s adjusted EBITDA for the
year ended 30 September 2018 is at or above target. If the Group’s
adjusted EBITDA is below target, none of this element 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 this element 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 this element of the award
will vest.
Future plc 56
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.
Following the completion of the rights issue the Committee
amended the adjusted EPS targets to a range of 15.3p and 19.1p
and agreed that the calculation of this performance target would
be adjusted to exclude the impact of the Purch acquisition and
associated rights issue on earnings.
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. Following the completion of the rights issue the
Committee agreed that the calculation of this award would be
adjusted to exclude the impact of any cash flows arising from the
Purch acquisition and associated rights issue on Net Cash Flow.
Performance against targets in respect of the awards granted
between 30 November 2015 and 30 September 2016
The adjusted EPS for the relevant measurement period was 24.2p
for the Group and the net cash flow was £10.3m (after making
adjustment to remove the impact of Purch and the rights issue,
adjusting for exceptional cashflows and cashflows associated
with the acquisitions made during the measurement period).
Consequently the PSP awards granted to Zillah Byng-Thorne and
Penny Ladkin-Brand vested in full on 23 November 2018.
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 in order to align with the other
Executive Directors. 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 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 3 August 2015 vested in full on 1 September 2018.
The Committee exercised its discretion to extend the vesting period
for the PSP award granted to Penny Ladkin-Brand on 3 August
2015 to 1 September 2018 (from 3 August 2018) in order to avoid the
vesting of the award prior to the completion of the rights issue.
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
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.
Non-Executive Directors’ remuneration
Share incentives awarded during the year (audited)
PSP & DABS Grants
Award Date of award2
%
salary
Value (£)
% vesting at
min performance3,4
No. shares
awarded5
Performance period
Zillah Byng-Thorne
PSP3 24 November 2017
100% 400,0001 62.5%
134,3455
Penny Ladkin-Brand
PSP3 24 November 2017
100% 275,0001
62.5%
92,3635
Zillah Byng-Thorne6
DABS 24 November 2017
50%
200,000
100%
56,022
Penny Ladkin-Brand6 DABS 24 November 2017
50%
137,500
100%
38,515
1 October 2017 – 30
September 2020
1 October 2017 – 30
September 2020
1 October 2016 – 30
September 2017
1 October 2016 – 30
September 2017
Notes:
1. The value of the PSP awards were calculated using the share price at the date of grant, which was 350p per share.
2. The PSP awards are exercisable at nil value.
3. The performance conditions attached to the grant of these awards are the same as set out on pages 53 to 55.
4. The percentage vesting at minimum performance represents the 25% vesting of the adjusted EPS element and the 100% vesting of the share price performance element of
the award as the relevant share price criteria have been met in full at 12 December 2018.
5. The number of shares awarded to Zillah Byng-Thorne and Penny Ladkin-Brand was originally 114,286 and 78,572 respectively. However, following the completion of the
rights issue on 21 August 2018 the Committee elected to ‘make good’ all share award holders by increasing their number of options. The share incentives awarded to Zillah
Byng-Thorne and Penny Ladkin-Brand in respect of the 24 November 2017 award were therefore increased by 20,059 and 13,791 shares respectively.
6. Based on the EBITDA performance achieved for 2017 both Zillah Byng-Thorne and Penny Ladkin-Brand were each awarded a shares bonus of 50% of their salary.
Annual Report and Accounts 2018Corporate governance 57
Directors’
remuneration
report
For the year ended
30 September 2018
Pension entitlements (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 2018,
employer’s pension contributions were payable for the Executive
Directors at a rate of 15% for both the Chief Executive and the
Chief Financial Officer. The entitlement to employer’s pension
contributions was paid in cash as a salary supplement to Zillah
Byng-Thorne and to Penny Ladkin-Brand. 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 2018. 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 2018.
Payments for loss of office (audited)
During the financial year to 30 September 2018 no payments in
respect of loss of office were made.
Statement of Directors’ shareholding and share
interests (audited)
The Company has historically had 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. The Committee has reviewed this policy and
amended it to increase the level of holding to at least two times
salary. It is noted that both Executive Directors currently meet this
requirement.
In respect of Zillah Byng-Thorne, the relevant five-year period
commenced on 1 November 2013 and ended on 31 October 2018.
As at 30 September 2018, Zillah Byng-Thorne had a holding of
269,755 shares which, at the share price on the same date, were
worth £1.3m.
In respect of Penny Ladkin-Brand, the period commenced on 3
August 2015 and will end on 2 August 2020. As at 30 September
2018, Penny Ladkin-Brand had a holding of 197,152 shares which, at
the share price on the same date, were worth £0.95m.
Details of Directors’ shareholdings are set out on page 42 of the
Directors’ report.
Directors’ interests in share schemes (audited)
Details of options and other share incentives held by Executive Directors and movements during the year are set out below,
including details of the awards made during the year.
Price
paid
for
grant
Date of grant1
Zillah Byng-Thorne
16 Jul 2014
30 Nov 2015
23 Nov 2016
2 Feb 2017
24 Nov 2017
24 Nov 20175
Penny Ladkin-Brand 3 Aug 20154
30 Nov 2015
23 Nov 2016
2 Feb 2017
24 Nov 2017
24 Nov 20175
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Earliest
exercise date
Expiry
date
27 Nov 2017 N/A
30 Nov 2018 N/A
23 Nov 2019 N/A
23 Nov 2019 N/A
24 Nov 2020 N/A
24 Nov 2017 N/A
1 Sept 20184 N/A
30 Nov 2018 N/A
23 Nov 2019 N/A
23 Nov 2019 N/A
24 Nov 2020 N/A
24 Nov 2017 N/A
Exercise
price
per
share
(p)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Balance at
1 Oct
2017
166,667
166,667
529,702
529,702
-
-
-
-
-
-
114,286
56,022
109,856
83,334
378,358
378,358
-
-
-
-
-
-
78,572
38,515
Granted
during
the
year3
Granted
during the
year –
rights issue
adjustment2
Vested
during the
year3
Balance at
30 Sept
2018
-
(166,667)
-
29,252
92,970
92,970
20,059
-
-
-
-
195,919
622,672
622,672
134,345
-
(56,022)
19,281
(129,137)
-
-
14,626
66,407
66,407
13,791
-
97,960
- 444,765
- 444,765
-
92,363
-
(38,515)
-
Notes:
1. The performance criteria which apply to awards granted under the PSP scheme are set out on pages 55 to 56.
2. Following the completion of the rights issue on 21 August 2018 the Committee elected to ‘make good’ all share award holders by increasing their number of options. All
share incentives awarded to Zillah Byng-Thorne and Penny Ladkin-Brand were therefore increased accordingly.
3. In July 2017 the 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.
4. The Committee exercised its discretion to extend the vesting period for the PSP award granted to Penny Ladkin-Brand on 3 August 2015 to 1 September 2018 (from 2
August 2018) in order to avoid the vesting of the award prior to the completion of the rights issue.
5. Based on the EBITDA performance achieved for 2017 both Zillah Byng-Thorne and Penny Ladkin-Brand were each awarded a shares bonus of 50% of their salary.
Future plc
58
Graph: Past ten financial years ended 30 September 2018
Alignment of reward and Total Shareholder Return: Rebased to Future plc as of 1 October 2009
This graph shows a comparison of Future’s total shareholder return (share price growth plus dividends) with that of the FTSE
All-Share Media Index. This group was selected as it is provides the best comparison of Future’s recent performance relative
to the other companies in its sector. This demonstrates that there has been a significant and sustained improvement in the
performance of the Group over the last 2 years, with the gap between the Group and the comparator group rapidly narrowing.
350
300
250
200
150
100
50
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Future (rebased to 100)
FTSE All-Share Media Index (UK companies) (rebased to 100)
Chief Executive pay during last ten years
The table below shows the Chief Executive’s single figure of remuneration and variable pay outcomes over the same period as
the graph above.
Stevie Spring
Mark Wood
Zillah Byng-Thorne
Year
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
CEO single figure of
remuneration £’000
Annual Bonus as %
of Maximum
PSP Vesting
(% of maximum)
£423
£746
£546
£430
£331
£3066
£471
£347
£2,496
£4,782
0%
40%
0%
50%
0%
20%
36%
0%7
88%8
100%
100%1
48%2
100%3
0%4
0%4
0%5
0%5
0%5
100%
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, as 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.
Annual Report and Accounts 2018Corporate governance
59
Directors’
remuneration
report
For the year ended
30 September 2018
Percentage change in remuneration of Chief Executive
Salary
Benefits (inc pension)
Bonus
2018
2017
% change
2018
2017
% change
2018
2017
% change
£400,000
£350,000
14%
£77,000
£54,000
43% £600,000
£640,000
(6)%
£49,859
£38,758
29%
£2,964
£1,777
67%
£2,659
£1,551
71%
Chief
Executive
All
employees*
*Includes the US staff taken on as part of the Purch and NewBay acquisitions in 2018, which has increased average pay.
Relative importance of spend on pay
The relative importance of spend on pay for the business is shown in the chart below.
8
1
0
2
7
1
0
2
Group pay:
£37.5m
Group operating costs excluding
Group pay & exceptional costs: £78.7m
Capital expenditure:
£2.4m
Group pay:
£28.8m
Group operating costs
excluding Group pay &
exceptional costs: £52.6m
Capital expenditure:
£1.8m
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.
Shareholder voting
At the 2017 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
%
Future plc
60
Implementation of remuneration policy in the year to 30 September 2019
The Remuneration Committee proposes the following changes to the remuneration policy that have taken place in 2018 for
2019 in accordance with the policy for the Executive Directors, as outlined in the Remuneration Policy report on pages 61 to
64, subject to shareholder approval at the Company’s AGM on 7 February 2019.
Element
Operation of element
Max. potential value
Base salary
No change
Zillah Byng-Thorne’s salary as Chief
Executive increased to £475,000 with
effect from 1 October 2018.
Performance,
weighting & time
No change
Benefits
No change
No change
No change
Annual Bonus1 No change
PSP
No change
Zillah Byng-Thorne and Penny Ladkin-
Brand to be paid an annual bonus of 150%
and 125% respectively in respect of the
year ended September 2018.
No change although half of any future
award to be paid as a share award
which is subject to a two-year holding
period.
Zillah Byng-Thorne and Penny Ladkin-
Brand received awards of 200% and 167%
of salary respectively in November 2018
which, subject to the achievement of
certain performance conditions, will vest
in November 2021.
Imposition of a two-year holding
period post vesting after three years.
Pension
No change
No change
No change
Shareholding
guidelines
The Committee wishes to enact formal share ownership guidelines requiring both the CEO and CFO to hold
shares worth the equivalent of 200% of salary. Both Executive Directors hold in excess of this requirement
however there is currently no formal policy.
Note:
1. Performance targets for the Annual Bonus 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 £20,000 in the year for providing these services to the Committee. After undertaking the appropriate enquiries and
checks, the Remuneration Committee is satisfied that the advice received was objective and independent.
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 47 to 50.
Annual Report and Accounts 2018Corporate governance 61
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 and 5
February 2018 in respect of Non-Executive
remuneration.
In determining the level and make-up of Executive Directors’
remuneration, the Committee carefully considers the following
issues:
(a) Remuneration packages offered to Executive Directors
should be competitive with those available for comparable
roles in companies operating in similar markets and on a
similar scale. They should be sufficiently desirable so as to
attract, retain and motivate high calibre Directors to perform
at the highest levels, whilst at the same time ensuring that
recruitment and remuneration expenditure is not excessive
and does not encourage excessive risk-taking.
(b) The interests of Executive Directors should be aligned
with those of shareholders by ensuring that a significant
proportion of remuneration is linked to Group performance.
(c) Remuneration packages and employment conditions of
Executive Directors are considered in conjunction with both
those of key senior managers (keeping succession planning
in mind) and all employees in the Group in order to achieve
a consistent remuneration policy across the Group. The
Committee has given particular attention to ensuring that
the remuneration packages of the key senior managers
recruited during the year are aligned with those of the
Executive Directors.
(d) Bonus potential and share scheme awards that are capped
at a percentage of salary are restricted if salaries are low.
(e) Subjective criteria are applied to 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.
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 proposes several changes in respect of Directors’
remuneration to the policy that was approved by shareholders
at the Company’s Annual General meeting in February 2017.
These changes seek to reflect how current remuneration
practice is evolving and to ensure that remuneration strikes
the right balance between incentivisation and alignment with
shareholder expectations.
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 below:
Element of
remuneration
Salary
Benefits
Pension
Performance-
related bonus2
Share incentive
schemes1
Maximum % of salary
Not higher than
market value
Dependent on
circumstances
15% of basic
annual salary
150%
Up to 200%
Notes:
1. PSP scheme rules provide for awards of up to 200% of
basic annual salary (with any vesting over 150% only
for exceptional performance), 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.
Future plc 62
Service contracts and payments for loss of office
Executive Directors
Contract provision
Policy
Details
Notice periods
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.
Compensation for
loss of office
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.
Treatment of share
incentives
on termination
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.
Change of control
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.
Non-Executive
Directors
Notice periods
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.
Consideration of employee conditions within the Group
Consideration of shareholder views
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 and ‘rising stars’ under the PSP and DABS schemes,
the details of which are set out in note 22 on pages 99 to 102. The
Group operates a Share Incentive Plan in order to encourage
active employee share ownership.
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:
Hugo Drayton
Chairman of the Remuneration Committee
12 December 2018
Turn over for the Remuneration Table >
Annual Report and Accounts 2018Corporate governance 63
Remuneration table
Executive Directors
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.
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.
The Company shall continue to provide benefits
Not applicable.
No change.
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Changes for 2019
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.
Salary increases shall generally reflect market
Not applicable.
No change.
Benefits
Pension
Performance-
related bonus1
The Committee retains discretion to pay a salary supplement to an Executive
Director for fulfilling the role of another higher paid Executive Director when
that Executive Director leaves the Company.
Current benefits available to Executive Directors are car allowance, permanent
health insurance, healthcare and life assurance. Additional benefits may be
offered if applicable and subject to the maximum value of all benefits not
exceeding the maximum potential value set by the Committee.
To ensure broad competitiveness with
market practice.
The Company shall make a contribution up to a maximum percentage of
basic annual salary.
To ensure broad competitiveness with
market practice.
annual salary.
Total cost annually shall not exceed 15% of basic
Not applicable.
No change.
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
The performance measures, relative
A new requirement that 50% of any
Officer the Committee retains discretion to
weightings and targets are set annually
performance-related bonus will be delivered
vary the potential total maximum bonus, the
by the Committee. Details of the
by way of a deferred share award, which will
weighting of the variable elements and the
measures and their relative weightings
only vest two years after the award date. This
stretch of the targets in order to incentivise or
are disclosed annually in the Directors’
will ensure an additional focus, post-vesting,
recruit Executive Directors, provided that the total
remuneration report with the targets
on the longer-term performance of the
maximum potential bonus for any one year shall
disclosed provided they are not deemed
business, regardless of the likelihood of vesting
not exceed 150% of basic annual salary and that
to be commercially sensitive. The
of LTIP awards.
the maximum bonus shall only be payable for
Committee retains discretion to adjust
over performance.
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.
Long term
share-based
incentive2
Annual awards to Executive Directors of up to a maximum of 2 times basic
annual salary, with discretion to award up to a maximum of 4 times 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 200% (increased from 100% in 2018)
The performance targets are set annually
A higher maximum percentage of salary of
by the Committee and disclosed annually
200% introduced, however any award in excess
of basic annual salary, however in exceptional
in the Directors’ remuneration report
of 150% of pay would vest only for exceptional
circumstances the Committee retains discretion to
provided they are not deemed to be
performance. Introduction of a requirement
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.
grant one-off awards of a value up to 400% of basic
commercially sensitive.
annual salary.
Awards vest at the end of the three-
year performance period, when the
Committee will assess performance
for a two-year holding period, to be imposed
following the three-year performance period.
This creates an additional longer-term incentive,
which ensures that even if participants cease
employment, the value of their award will be
against the targets set and determine, in
impacted by the post-employment performance
its absolute discretion, the overall level of
of the Group and therefore ensure focus on the
vesting of the award.
long-term value of the business. This change also
brings our approach more in line with market
practice and shareholder expectations.
All-employee share
plans3
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
Not applicable.
No change.
share plans will be the limits set out in UK tax
legislation.
The Committee retains discretion to allow Executive Directors to participate
in the SIP on the same terms as other employees.
Notes to the table
1. The performance-related bonus 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 2019 are not
disclosed here due to their commercial sensitivity.
Non-Executive Directors
Element
Fees1
Operation
Objective & link to strategy
Max. potential value
Performance measures
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.
Changes for 2019
No change.
Chairman: £120,000
Deputy Chairman: £65,000
Other Non-Executive Directors: £45,000
Additional fees payable:
Chairman of Committee: £5,000
(per Chairman role)
Senior independent Director: £7,500
Member of Committee: Nil
Notes to the table
1. Fees are paid at a standard annual rate to reflect the time, commitment and responsibilities of the roles, with additional fees paid to those who chair Board Committees to reflect
their additional responsibilities. Separately, the Board sets the fee payable to the Chairman of the Board. 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 64
Remuneration table
Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Changes for 2019
Basic annual salary
Basic annual salary is paid in 12 equal monthly instalments during the year
To recruit, retain and motivate
and is reviewed annually. When assessing the level of basic annual salary, the
individuals of high calibre, and reflect
Committee takes into account performance, market conditions, remuneration
the skills, experience and contribution
of equivalent roles within comparable companies, the size and scale of the
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.
Benefits
Current benefits available to Executive Directors are car allowance, permanent
To ensure broad competitiveness with
health insurance, healthcare and life assurance. Additional benefits may be
market practice.
offered if applicable and subject to the maximum value of all benefits not
exceeding the maximum potential value set by the Committee.
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.
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.
No change.
Not applicable.
No change.
Pension
The Company shall make a contribution up to a maximum percentage of
To ensure broad competitiveness with
basic annual salary.
market practice.
Total cost annually shall not exceed 15% of basic
annual salary.
Not applicable.
No change.
Performance-
related bonus1
Targets are set annually by the Committee, based on (i) financial
performance against budget and, at the Committee’s discretion,
Designed to reward delivery of
shareholder value and implementation
(ii) individual subjective performance targets which are determined for each
of the Group’s strategy.
Executive Director.
The Committee retains discretion to set the financial targets based on the
performance during the previous financial year and the budget for the
forthcoming year, and performance of the individual against their specific
subjective performance targets.
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.
Long term
share-based
incentive2
Annual awards to Executive Directors of up to a maximum of 2 times basic
Designed to reward delivery of
annual salary, with discretion to award up to a maximum of 4 times basic
shareholder value in the medium-to-
annual salary, e.g. recruitment of a Director or to “buy out” awards granted by
long term.
prior employer.
Value of grant as a maximum percentage of
salary is 200% (increased from 100% in 2018)
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 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 performance measures, relative
weightings and targets are set annually
by the Committee. Details of the
measures and their relative weightings
are disclosed annually in the Directors’
remuneration report with the targets
disclosed provided they are not deemed
to be commercially sensitive. The
Committee retains discretion to adjust
the targets if events occur which lead
it to conclude that they are no longer
appropriate.
The Committee also retains discretion to
adjust the outcome of the performance-
related bonus for any performance
measure if it considers that to be
appropriate.
The performance targets are set annually
by the Committee and disclosed annually
in the Directors’ remuneration report
provided they are not deemed to be
commercially sensitive.
Awards vest at the end of the three-
year performance period, when the
Committee will assess performance
against the targets set and determine, in
its absolute discretion, the overall level of
vesting of the award.
A new requirement that 50% of any
performance-related bonus will be delivered
by way of a deferred share award, which will
only vest two years after the award date. This
will ensure an additional focus, post-vesting,
on the longer-term performance of the
business, regardless of the likelihood of vesting
of LTIP awards.
A higher maximum percentage of salary of
200% introduced, however any award in excess
of 150% of pay would vest only for exceptional
performance. Introduction of a requirement
for a two-year holding period, to be imposed
following the three-year performance period.
This creates an additional longer-term incentive,
which ensures that even if participants cease
employment, the value of their award will be
impacted by the post-employment performance
of the Group and therefore ensure focus on the
long-term value of the business. This change also
brings our approach more in line with market
practice and shareholder expectations.
All-employee share
The Company operates a Share Incentive Plan (“SIP”) in the UK which
plans3
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 Committee retains discretion to allow Executive Directors to participate
in the SIP on the same terms as other employees.
Non-Executive Directors
Element
Fees1
Non-Executive Directors’ fees are reviewed every three years and paid in 12
Reflects the time commitment and
monthly instalments.
responsibilities of the roles.
Operation
Objective & link to strategy
Max. potential value
Performance measures
Chairman: £120,000
Deputy Chairman: £65,000
Other Non-Executive Directors: £45,000
Additional fees payable:
Chairman of Committee: £5,000
(per Chairman role)
Senior independent Director: £7,500
Member of Committee: Nil
Not applicable.
Changes for 2019
No change.
2. PSP performance targets: Additional details of the performance criteria attaching to PSP awards granted to date are set out on pages 53 to 56.
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 and ‘rising stars’, however the Company introduced a Share Incentive Plan in 2015 to encourage share ownership.
Annual Report and Accounts 2018Corporate governance 65
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 2018 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 International Financial Reporting Standards (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 2018; the Consolidated income statement, the Consolidated
statement of comprehensive income, the Consolidated and Company cash flow 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 2017 to 30 September 2018.
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.
We gained an understanding of the legal and regulatory framework applicable to the group and the industry in which it operates,
and considered the risk of acts by the group which were contrary to applicable laws and regulations, including fraud. We designed
audit procedures at group and significant component level to respond to the risk, recognising that the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations
that could give rise to a material misstatement in the group and company financial statements, including, but not limited to,
the Companies Act 2006, the Listing Rules and UK and US tax legislation. Our tests included, but were not limited to, review of
the financial statement disclosures to underlying supporting documentation, enquiries of management and the Group’s legal
department and testing compliance with tax filing deadlines. There are inherent limitations in the audit procedures described above
and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial
statements, the less likely we would become aware of it.
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed the risk
of management override of internal controls, including testing journals and 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 66
Key audit matter
How our audit addressed the key audit matter
The measurement of Magazine newsstand
revenue
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 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 could have
a material impact on Magazine revenue.
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.
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 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.
The valuation of goodwill (£99.8 million (2017:
£65.8 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 where 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 and impairment (EBITDA)
margins.
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 continued
to remain the key assumption to which the impairment assessment was 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 forecasts for the UK and US economies.
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.
The classification of exceptional items (£4.4
million (2017: £3.7 million)). Refer to note 4 for
further information
The Group’s accounting policy is to report items
of income and expense as exceptional items
where they relate to an event which 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
acquisition related costs. We focussed on this
area because exceptional items are material
to the consolidated financial statements and
because there is a degree of judgement in
their classification.
We tested the classification of exceptional items by examining supporting
information such as invoices.
Acquisition related costs have been incurred in both the current and in prior years
and so we challenged management as to whether such costs were exceptional in
nature. Management’s view was that whilst these charges have persisted in 2018,
they have arisen from a significant, ongoing transformation programme.
Following completion of this programme, these charges will not recur. Given the
scale of change brought about by the acquisitions completed this year, and the fact
that, materially, only costs related to those transactions have been 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.
Annual Report and Accounts 2018Corporate governance 67
Independent
auditors’
report
Key audit matter
How our audit addressed the key audit matter
The accounting for the acquisition of NewBay
Media LLC, Haymarket and Purch Group LLC.
Refer to note 27 for further information
During the year, the Group completed its
acquisition of NewBay Media LLC, Haymarket
and Purch Group LLC. We focused on the
accounting for these transactions because
they are material to the consolidated financial
statements of the Group 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 acquisitions was supported by our in-house
valuation experts and included the following procedures:
• We agreed the cash and equity consideration paid to supporting documentation.
• We tested the fair values of the assets and liabilities acquired and, based on our
understanding of the acquired businesses, assessed whether all assets and
liabilities had been appropriately identified. We also considered any required
alignment of accounting policies and valuation methodologies.
• We used our in-house valuation experts to assess the appropriateness of the
methodology used to value intangible assets and the reasonableness of certain,
key assumptions.
• We re-performed the calculation of goodwill.
• We assessed the sufficiency of the disclosures relating to the acquisitions, taking
into account the requirements of relevant financial reporting standards and tested
the completeness and accuracy of those disclosures.
Based on the work performed and recognising that due to the proximity of the
acquisitions to the year-end, the fair values are provisional, we found that the fair
value of the acquired assets and liabilities was supported by the evidence obtained.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
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.
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 21 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.
Future plc
68
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
£1,246,000 (2017: £840,000)
£2,040,000 (2017: 820,000)
How we
determined it
1% of revenue
1% of total assets
As a holding company, the entity is not considered to
be profit orientated. In such circumstances, total assets
is a generally accepted benchmark.
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. Profit before tax is a
generally accepted benchmark for a profit-orientated
business. However, due to restructuring and continued
transformational activity, 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 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 £1,134,000, 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 £62,000 (Group
audit) (2017: £42,000) and £102,000 (Company audit) (2017: £40,000) 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 2018Corporate governance 69
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 2018 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 in respect of the financial statements set out on page 45, 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 the
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
70
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
20 years, covering the years ended 31 December 1999 to 30 September 2018.
Katharine Finn (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
12 December 2018
Annual Report and Accounts 2018Corporate governance 71
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
72
72
73
73
74
75
76
77
78
83
Future plc
72
Consolidated income statement
for the year ended 30 September 2018
Revenue
Net operating expenses
Operating profit
Finance income
Finance costs
Net finance costs
Profit before tax
Tax (charge)/credit
Profit for the year attributable to owners of the parent
See page 78 and note 9 for a reconciliation between adjusted and statutory results.
Earnings per 15p Ordinary share
Basic earnings per share
Diluted earnings per share
2018
2017
Non -GAAP
Adjusted
results
£m
Note
Adjusting
items
£m
Statutory
results
£m
Non -GAAP
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
1
2
6
6
1
7
124.6
-
124.6
(106.1)
(13.2)
(119.3)
18.5
(13.2)
-
(1.1)
(1.1)
17.4
(2.5)
14.9
-
0.2
0.2
(13.0)
1.0
(12.0)
5.3
-
(0.9)
(0.9)
4.4
(1.5)
2.9
84.4
(75.5)
8.9
0.1
(0.7)
(0.6)
8.3
0.3
8.6
-
(8.1)
(8.1)
-
-
-
(8.1)
1.1
(7.0)
84.4
(83.6)
0.8
0.1
(0.7)
(0.6)
0.2
1.4
1.6
2018
pence
5.1
4.7
Restated
2017*
pence
3.7
3.4
Note
9
9
* 2017 figures have been restated to reflect the bonus element of the rights issue that took place In August 2018.
As permitted by the exemption under Section 408 of the Companies Act 2006 no Company income statement or statement of
comprehensive income is presented. The Company profit for the year was £0.1m (2017: loss of £2.3m).
Consolidated statement of comprehensive income
for the year ended 30 September 2018
Profit for the year
Items that may be reclassified to the consolidated income statement
Currency translation differences
Other comprehensive loss for the year
Total comprehensive income for the year attributable to owners of the parent
Items in the statement above are disclosed net of tax.
2018
£m
2.9
(0.3)
(0.3)
2.6
2017
£m
1.6
(0.2)
(0.2)
1.4
Annual Report and Accounts 2018Financial statements
73
Financial
statements
Consolidated statement of changes in equity
for the year ended 30 September 2018
Group
Balance at 1 October 2016
Profit for the year
Currency translation differences
Other comprehensive income 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
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 premium reduction
Share schemes
- Value of employees’ services
- Deferred tax on options
Balance at 30 September 2018
Note
21, 23
5
13
21, 23
23
5
13
Issued
share
capital
£m
3.7
Share
premium
account
£m
27.6
Merger
reserve
£m
109.0
Treasury
reserve
£m
Accumulated
losses
£m
(0.3)
(118.8)
-
-
-
-
3.1
-
-
6.8
-
-
-
5.4
-
-
-
-
-
-
-
-
-
-
-
19.8
13.5
-
-
-
-
-
-
-
-
-
-
-
1.6
(0.2)
(0.2)
1.4
-
1.8
0.5
47.4
122.5
(0.3)
(115.1)
-
-
-
97.2
(47.4)
-
-
-
-
-
2.4
-
-
-
-
-
-
-
-
-
-
2.9
(0.3)
(0.3)
2.6
-
47.4
2.6
1.1
Total
equity
£m
21.2
1.6
(0.2)
(0.2)
1.4
36.4
1.8
0.5
61.3
2.9
(0.3)
(0.3)
2.6
105.0
-
2.6
1.1
12.2
97.2
124.9
(0.3)
(61.4)
172.6
Company statement of changes in equity
for the year ended 30 September 2018
Company
Balance at 1 October 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
Profit for the year
Total comprehensive income for the year
Share capital issued during the year
Share premium reduction
Share schemes
- Value of employees’ services
- Deferred tax on options
Balance at 30 September 2018
Merger
reserve
£m
Retained
earnings
£m
Issued
share
capital
£m
Note
3.7
-
-
3.1
-
-
6.8
-
-
5.4
-
-
-
21, 23
13
21, 23
23
13
Share
premium
account
£m
27.6
-
-
-
-
-
19.8
13.5
-
-
47.4
-
-
97.2
(47.4)
-
-
-
-
13.5
-
-
2.4
-
-
-
12.2
97.2
15.9
Total
equity
£m
35.3
(2.3)
(2.3)
36.4
1.8
0.5
71.7
0.1
0.1
105.0
-
2.6
1.1
180.5
4.0
(2.3)
(2.3)
-
1.8
0.5
4.0
0.1
0.1
-
47.4
2.6
1.1
55.2
Future plc
Consolidated balance sheet
as at 30 September 2018
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
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
74
Note
2018
£m
2017
£m
10
11
11
13
14
15
21
23
23
23
17
13
18
19
17
16
1.7
99.8
103.6
0.2
5.3
210.6
-
0.1
37.6
6.4
44.1
254.7
12.2
97.2
124.9
(0.3)
(61.4)
172.6
15.7
5.1
2.8
0.5
24.1
8.5
-
48.4
1.1
58.0
82.1
254.7
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
The financial statements on pages 72 to 106 were approved by the Board of Directors on 12 December 2018 and signed on its
behalf by:
Richard Huntingford
Chairman
Penny Ladkin-Brand
Chief Financial Officer
Annual Report and Accounts 2018Financial statements 75
Financial
statements
Company balance sheet
as at 30 September 2018
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
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
2018
£m
12
13
14
15
21
23
23
17
17
16
123.6
2.2
125.8
79.7
0.3
80.0
205.8
12.2
97.2
15.9
55.2
180.5
15.7
15.7
8.5
-
1.0
0.1
9.6
25.3
205.8
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
The financial statements on pages 72 to 106 were approved by the Board of Directors on 12 December 2018 and signed on its
behalf by:
Richard Huntingford
Chairman
Penny Ladkin-Brand
Chief Financial Officer
Future plc
Company registration number: 3757874
Future plc Consolidated and Company cash flow statements
for the year ended 30 September 2018
Cash flows from operating activities
Cash generated from/(used in) operations
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
Capital contributions to subsidiaries
Net movement in amounts owed to/by subsidiaries
Net cash used in 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 (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange adjustments
Cash and cash equivalents at end of year
Group
2018
£m
14.7
(0.9)
(4.0)
9.8
(1.2)
(1.2)
-
(117.1)
-
-
-
(119.5)
105.7
(3.4)
7.4
(3.3)
(0.1)
-
106.3
(3.4)
10.1
(0.3)
6.4
Company
2018
£m
(2.1)
(0.9)
(2.6)
(5.6)
-
-
-
-
-
(100.1)
(1.0)
(101.1)
105.7
(3.4)
7.4
(3.3)
(0.1)
-
106.3
(0.4)
0.7
-
0.3
Group
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
76
Company
2017
£m
(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
Annual Report and Accounts 2018Financial statements 77
Financial
statements
Notes to the Consolidated and Company cash flow statements
for the year ended 30 September 2018
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
Adjustments for:
Depreciation charge
Amortisation of intangible assets
Share schemes
- Value of employees’ services
Dividend receivable from Group undertaking
Net finance costs
Tax charge/(credit)
Profit/(loss) before changes in working capital and provisions
Movement in provisions
Decrease in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from/(used in) operations
B. Analysis of net debt
Group
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net debt
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 (debt)/cash
Net (debt)/cash at start of year
(Decrease)/increase in cash and cash equivalents
Increase in borrowings
Borrowings acquired with subsidiaries
Finance leases entered into
Other non-cash changes
Exchange movements
Net debt at end of year
Group
2018
£m
2.9
0.6
7.3
2.6
-
0.9
1.5
15.8
-
0.7
(7.0)
5.2
14.7
Company
2018
£m
0.1
-
-
-
(3.2)
0.9
(0.1)
(2.3)
-
-
-
0.2
(2.1)
Group
2017
£m
1.6
0.3
4.1
1.8
-
0.6
(1.4)
7.0
1.0
0.1
6.0
(2.1)
12.0
Company
2017
£m
(2.3)
-
-
-
(0.3)
0.6
0.7
(1.3)
-
-
0.1
(1.4)
(2.6)
1 October
2017
£m
Cash flows
£m
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2018
£m
10.1
(3.2)
(16.9)
(10.0)
(3.4)
(5.3)
0.9
(7.8)
-
-
0.3
0.3
(0.3)
-
-
(0.3)
6.4
(8.5)
(15.7)
(17.8)
1 October
2017
£m
0.7
(3.1)
(16.9)
(19.3)
Group
2018
£m
(10.0)
(3.4)
(4.4)
-
-
0.3
(0.3)
(17.8)
Cash flows
£m
Other non-cash
changes
£m
30 September
2018
£m
(0.4)
(5.4)
1.0
(4.8)
Company
2018
£m
(19.3)
(0.4)
(4.4)
-
-
0.2
-
-
-
0.2
0.2
Group
2017
£m
0.5
7.3
(11.2)
(6.9)
(0.1)
0.5
(0.1)
(23.9)
(10.0)
0.3
(8.5)
(15.7)
(23.9)
Company
2017
£m
(3.3)
1.7
(11.3)
(6.9)
-
0.5
-
(19.3)
Future plc
78
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
2018 Annual Report are set out on pages 78 to 82. 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 2018, 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 37.
Presentation of non-statutory
measures
calculated using the standard rate of
corporation tax in the relevant jurisdiction.
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
they result in a level of charge that would
distort the user’s view of the core trading
performance of the Group. Details of
share-based payments are shown in
note 22.
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.
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 gains and
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 effect of the items above that are
allowable deductions for tax purposes
A reconciliation of adjusted operating profit
to profit before tax is shown below:
Adjusted operating profit
Adjusted finance costs
Adjusted profit before tax
Adjusting items:
Share-based payments
(including social
security costs)
2018
£m
18.5
(1.1)
17.4
2017
£m
8.9
(0.6)
8.3
(3.1)
(2.1)
Exceptional items
(4.4)
(3.7)
Amortisation of acquired
intangibles
(5.7)
(2.3)
Non-trading foreign
exchange gain
0.2
-
Profit before tax
4.4
0.2
A reconciliation between adjusted and
statutory earnings per share measures is
shown in note 9.
Basis of consolidation
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.
The cost of an acquisition is measured
as the fair value of the assets given,
equity instruments issued and liabilities
incurred or assumed at the date of
exchange, and includes the fair value
of any asset or liability resulting from a
contingent consideration arrangement.
Acquisition-related costs are expensed
as incurred. Identifiable assets acquired
and liabilities and contingent liabilities
assumed in a business combination are
measured initially at their fair values at
the acquisition date. The excess of the
cost of acquisition over the fair value of
the Group’s share of the identifiable net
assets acquired is recorded as goodwill.
Inter-company transactions, balances and
unrealised gains on transactions between
Group companies are eliminated.
Unrealised losses are also eliminated but
are considered an impairment indicator of
the asset transferred. Accounting policies
of subsidiaries have been changed where
necessary to ensure consistency with the
policies adopted by the Group.
Segment reporting
The Group is organised and arranged
primarily by geographical segment.
Operating segments are reported in
a manner consistent with the internal
reporting provided to the Chief Operating
Decision Makers who are considered to
be the Executive Directors of Future plc.
The Group also uses a sub-segment split of
Media and Magazines for further analysis.
Revenue recognition
Revenue from the sale of goods is
recognised in the income statement
when the significant risks and rewards of
ownership have been transferred to the
buyer. Revenue from services rendered is
recognised in the income statement once
the service has been completed.
Revenue comprises the fair value of the
consideration received or receivable for
the sale of goods and services in the
ordinary course of the Group’s activities.
Revenue is shown net of value-added tax,
estimated returns, rebates and discounts
and after eliminating sales within the
Group. The following recognition criteria
also apply:
• Magazine newsstand circulation and
advertising revenue is recognised
according to the date that the related
publication goes on sale.
Annual Report and Accounts 2018Financial statements 79
Financial
statements
• Online advertising revenue is recognised
over the period during which the
advertisements are served.
• Revenue from the sale of digital
magazine subscriptions is recognised
uniformly over the term of the
subscription.
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.
• Event income is recognised when the
Employee benefits
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.
On consolidation, exchange differences
arising from the translation of the
net investment in foreign operations,
and of borrowings and other currency
(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
Future plc
80
or substantively enacted by the balance
sheet date and are expected to apply
when the related deferred tax asset is
realised or the deferred tax liability is
settled in the appropriate territory.
Deferred tax assets are recognised to
the extent that it is probable that future
taxable profits will be available against
which the temporary differences can
be utilised. Deferred tax is provided
on temporary differences arising on
investments in subsidiaries, except
where the timing of the reversal of the
temporary difference is controlled by
the Group and it is probable that the
temporary difference will not reverse
in the foreseeable future.
Certain 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
growth rate of between 0% and 3% 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 of, the goodwill associated with
that operation is included in the carrying
amount of the operation in determining
Annual Report and Accounts 2018Financial statements 81
Financial
statements
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 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.
Cash and cash equivalents
Cash and cash equivalents include cash
in hand, deposits held at call with banks
and bank overdrafts for the purpose of
the cash flow statement. Bank overdrafts
are shown within borrowings in current
liabilities on the balance sheet.
Trade and other payables
Trade and other payables are initially
recognised at fair value and subsequently
measured at amortised cost using the
effective interest method.
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.
Investments
The Company’s investments in subsidiary
undertakings are stated at the fair value
of consideration payable, including
related acquisition costs, less any
provisions for impairment.
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.
Critical judgements in applying the
Group’s accounting policies
The areas where the Board has made
critical judgements in applying the
Group’s accounting policies (apart from
those involving estimations which are
dealt with separately below) are:
(a) Accounting for acquisitions
Management applies judgement in
accounting for acquisitions, including
identifying assets arising from
the application of IFRS 3 ‘Business
combinations’ and undertaking Purchase
Price Allocation exercises to allocate value
between assets acquired. See note 27 for
further detail.
(b) Exceptional items
Due to the significant acquisition related
activity, there are a number of items
considered exceptional in nature. In
the current year these largely consist of
acquisition and integration related costs
of £4.3m, relating to the acquisitions of
NewBay Media LLC and Purch Group
LLC, as well as the titles from Haymarket
Media Group. See notes 4 and 27 for
further detail.
Key sources of estimation uncertainty
The following are areas of key sources of
estimation uncertainty that may have
a significant risk of causing a material
adjustment to the carrying amounts
of assets and liabilities within the next
financial year:
(a) Taxation
Deferred tax assets have been recognised
for unused tax losses to the extent that
it is probable that taxable profit will be
available against which the deductible
temporary differences can be utilised.
The Group has accumulated substantial
US tax losses in prior years, equating to
a potential deferred tax asset of c. £7m
as at 30 September 2018. The recognised
deferred tax asset of £1.8m equates to the
taxable losses expected to be used over
a reasonably foreseeable period, using
a blended federal and state tax rate of
24%. The carrying amount of deferred
tax assets is reviewed at the end of each
reporting period and updated to the
extent that it is no longer probable that
sufficient taxable profit will be available
to allow the benefit of part, or all, of that
deferred tax asset to be utilised. Beyond
this reasonably foreseeable period there is
considered to be too much uncertainty to
meet the criteria for recognising deferred
tax assets.
Future plc
82
IFRS 9 ‘Financial Instruments’ is effective
for the Group for the year ending 30
September 2019. Applying IFRS 9 will
result in changes to the measurement
and disclosure of financial instruments
and introduces a new expected loss
impairment model. The Group does not
currently expect adoption of the standard
to have a significant impact on its
consolidated results or financial position,
but will result in increased disclosure.
The Group is continuing to assess the
impact of adopting 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.
(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 assumptions are made
in respect of discount rates, growth
rates, royalty rates and the estimated
life of intangibles. During the year, such
estimates have been made regarding the
purchase of the Haymarket titles, as well
as the NewBay and Purch acquisitions.
See notes 11 and 27 for further details.
(c) Carrying value of goodwill
The Group uses forecast cash flow
information and estimates of future
growth to assess whether goodwill is
impaired. Key assumptions include the
EBITDA margin allocated to each CGU,
the growth rate to perpetuity and the
discount rate. If the results of an operation
in future years are adverse to the
estimates used for impairment testing,
impairment may be triggered at that
point. Further details, including sensitivity
testing, are included within note 11.
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:
• Amendments to IFRS 12 as a result of
Annual improvements to IFRSs 2014-
2016 Cycle.
• Amendment to IAS 7 Statement of Cash
Flows.
• Amendment to IAS 12 Income Taxes.
Certain new standards, amendments and
interpretations to existing standards have
been published that are mandatory for
accounting periods beginning on or after
1 October 2018 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.
• Annual improvements to IFRSs 2014-2016
Cycle (apart from the amendment to
IFRS 12 effective in the current year).
• Annual improvements to IFRSs 2015-2017
Cycle.
IFRS 15 ‘Revenue from contracts with
customers’ includes new regulations
for the recognition of revenue that are
independent of a specific industry or
transaction. The new standard replaces
the current risk and reward approach
of IAS 18 ‘Revenue’ with a contract-
based five-step model. In addition to
substantially more extensive application
guidance for the accounting treatment of
revenue from contracts with customers,
there are more detailed disclosure note
requirements.
Application of the standard is mandatory
for financial years beginning on or after
1 January 2018 and the Group has not
elected to early-adopt the standard
so the Group will therefore apply
the new standard for the first time
from 1 October 2018. The Group has
elected to apply the fully retrospective
method for initial application, applying
IFRS 15 retrospectively (and restating
comparatives) from the period beginning
1 October 2017.
As part of the implementation, the Group
has conducted a thorough analysis of all
material revenue streams and customer
contracts and reviewed sales and
accounting processes to identify the need
for changes. The Directors have assessed
the anticipated impact of implementing
IFRS 15 on the Group balance sheet and
income statement for the year ended 30
September 2018 based on the revenues
generated during the year and balance
sheet position as at 30 September 2018.
The following impact has been identified
for the Group:
Print and digital magazine newstrade
and subscription revenue, and digital
advertising revenues and expenses will
change as a result of the new standard.
Based on the enhanced guidance around
the principal/agent approach, revenue will
be recognised as the amount paid by the
end consumer, rather than the amount
remitted by the agent, and related
commissions paid to agents will be
recognised as an expense within cost of
sales. We do not expect a material impact
on transition relating to any other revenue
streams within the Group.
Based on the Group’s income statement
for the year ended 30 September 2018,
the Directors expect an increase in
revenue of £6.2m, along with an increase
in cost of sales of £6.2m. The Directors
do not expect any impact on the balance
sheet as a result of these changes.
Annual Report and Accounts 2018Financial statements
83
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
2018
£m
92.5
39.9
(7.8)
124.6
Transactions between segments are carried out at arm’s length.
(ii) Segment adjusted EBITDA
UK
US
Total
2018
£m
Underlying adjusted
EBITDA
£m
Intragroup
adjustments
£m
Adjusted
EBITDA
£m
Underlying adjusted
EBITDA
£m
Intragroup
adjustments
£m
7.5
13.2
20.7
7.8
(7.8)
-
15.3
5.4
20.7
5.0
6.0
11.0
1.9
(1.9)
-
2017
£m
67.2
19.1
(1.9)
84.4
2017
£m
Adjusted
EBITDA
£m
6.9
4.1
11.0
Adjusted EBITDA is used by the Executive Directors to assess the performance of each segment. The table above shows the impact of
intragroup adjustments on the adjusted EBITDA of each segment.
Intra-group adjustments relate to the net impact of charges from the UK to the US in respect of management fees (for back office
revenue functions such as finance, HR and IT which are based in the UK) and licence fees for the use of intellectual property. The
increase in the year is driven by the growth in media revenue in the US.
A reconciliation of total segment adjusted EBITDA to profit before tax is provided as follows:
2018
£m
20.7
(3.1)
(0.6)
(7.3)
(4.4)
(0.9)
4.4
2017
£m
11.0
(2.1)
(0.3)
(4.1)
(3.7)
(0.6)
0.2
Total segment adjusted EBITDA
Share-based payments (including social security costs)
Depreciation
Amortisation
Exceptional items
Net finance costs
Profit before tax
(iii) Segment assets and liabilities
UK
US
Total
(iv) Other segment information
UK
US
Total
Segment assets
Segment liabilities
Segment net assets
2018
£m
123.7
131.0
254.7
2017
£m
113.9
8.5
122.4
2018
£m
(62.3)
(19.8)
(82.1)
2017
£m
(56.5)
(4.6)
(61.1)
2018
£m
61.4
111.2
172.6
2017
£m
57.4
3.9
61.3
Non-current assets
Additions to
non-current assets
Depreciation
and amortisation
Exceptional items
2018
£m
101.8
103.5
205.3
2017
£m
93.5
-
93.5
2018
£m
15.4
104.5
119.9
2017
£m
64.5
-
64.5
2018
£m
6.8
1.1
7.9
2017
£m
4.3
0.1
4.4
2018
£m
1.8
2.6
4.4
2017
£m
2.4
1.3
3.7
Future plc
84
Other than the items disclosed above and a share-based payments charge of £2.6m (2017: £1.8m) there were no other significant non-
cash expenses during the year.
(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
(ii) Gross profit by business segment
Media
Magazine
Other
Add back: distribution expenses
Total
2018
£m
71.9
60.5
(7.8)
124.6
2018
£m
54.2
39.7
(44.1)
5.5
55.3
2017
£m
35.8
50.5
(1.9)
84.4
2017
£m
27.6
33.4
(31.8)
4.7
33.9
Revenue of £19.1m (2017: £19.7m) and £13.2m (2017: £8.8m) arose from sales to the Group’s two largest single customers, being groups
of companies under common control. No other single customer or group of customers under common control contributed 10% or
more to the Group’s revenue in either the current or prior year.
2. Net operating expenses
Operating profit is stated after charging:
Cost of sales
Distribution expenses
Share-based payments (including
social security costs)
Exceptional items (note 4)
Depreciation
Amortisation
Other administration expenses
3. Fees paid to auditors
Adjusted
results
£m
(69.3)
(5.5)
-
-
(0.6)
(1.6)
(29.1)
(106.1)
2018
Adjusting
items
£m
-
-
(3.1)
(4.4)
-
(5.7)
-
(13.2)
Statutory
results
£m
(69.3)
(5.5)
(3.1)
(4.4)
(0.6)
(7.3)
(29.1)
(119.3)
Adjusted
results
£m
(50.5)
(4.7)
-
-
(0.3)
(1.8)
(18.2)
(75.5)
Audit fees in respect of the audit of the financial statements of the Company and the consolidated
financial statements
Audit related assurance services
Other assurance services1
Services relating to corporate finance transactions
Other non-audit services
Total fees
1. Other assurance services relate to reporting accountant services for the rights issue and prospectus associated with the acquisition of Purch Group LLC.
2017
Adjusting
items
£m
-
-
(2.1)
(3.7)
-
(2.3)
-
(8.1)
2018
£m
0.19
0.02
0.21
0.47
-
0.02
0.70
Statutory
results
£m
(50.5)
(4.7)
(2.1)
(3.7)
(0.3)
(4.1)
(18.2)
(83.6)
2017
£m
0.16
0.02
0.18
0.29
0.06
-
0.53
Annual Report and Accounts 2018Financial statements
85
Financial
statements
4. Exceptional items
Vacant property provision movements
Restructuring and redundancy costs
Acquisition and integration related costs
Total charge
2018
£m
(0.1)
0.2
4.3
4.4
2017
£m
1.2
1.1
1.4
3.7
The vacant property provision movement (£0.9m credit in the UK, £0.8m charge in the US) 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
Purch Group LLC, NewBay Media LLC and the specialist consumer titles purchased from Haymarket Media Group.
Further details in respect of the acquisitions are shown in note 27.
5. Employee costs
Wages and salaries
Social security costs
Other pension costs
Share schemes
- Value of employees’ services
Total employee costs
Average monthly number of people (including Directors)
Production
Administration
Total
Group
2018
£m
33.7
2.8
1.0
2.6
40.1
Group
2018
No.
519
179
698
Company
2018
£m
0.3
-
-
-
0.3
Company
2018
No.
-
6
6
Group
2017
£m
26.0
2.5
0.6
1.8
30.9
Group
2017
No.
471
111
582
At 30 September 2018, the actual number of people employed by the Group was 1,004 (2017: 634). In respect of our reportable
segments 667 (2017: 592) were employed in the UK and 337 (2017: 42) 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
2018
£m
1.6
0.1
1.2
2.9
Company
2018
£m
0.3
-
-
0.3
Group
2017
£m
1.4
0.1
1.3
2.8
Company
2017
£m
0.3
-
-
-
0.3
Company
2017
No.
-
4
4
Company
2017
£m
0.3
-
-
0.3
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
2018 £0.4m (2017: £0.4m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne and £0.2m (2017:
£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 51 to 60. The
highest paid Director during the year was Zillah Byng-Thorne (2017: Zillah Byng-Thorne) and details of her remuneration are shown on
page 54.
Future plc
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
Non-trading foreign exchange gain
Total reported finance costs
Net finance costs
7. Tax on profit
The tax charged/(credited) in the consolidated income statement is analysed below:
Corporation tax
Current tax at 19% (2017 : 19.5%) on the profit for the year
Adjustments in respect of previous years
Current tax charge
Deferred tax origination and reversal of temporary differences
Current year charge/(credit)
Adjustments in respect of previous years
Deferred tax
Total tax charge/(credit)
2018
£m
-
-
(0.9)
(0.2)
-
(1.1)
0.2
(0.9)
(0.9)
2018
£m
1.8
0.1
1.9
0.5
(0.9)
(0.4)
1.5
The tax assessed in each year differs from the standard rate of corporation tax in the UK for the relevant year. The differences are
explained below:
Profit before tax
Profit before tax at the standard UK tax rate of 19% (2017: 19.5%)
Losses not previously recognised
Expenses not deductible for tax purposes
Share-based payments
Overseas tax rates/credits
Difference in tax rates
Adjustments in respect of previous years
Total tax charge/(credit)
2018
£m
4.4
0.8
(1.0)
1.0
(0.2)
0.5
1.2
(0.8)
1.5
86
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)
2017
£m
0.2
-
(0.7)
0.6
-
(1.3)
-
-
(1.4)
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 resulted 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), which was fully settled in June 2018.
The difference in tax rates contains an adjustment to the US deferred tax asset, following the tax rate reforms contained in the
Tax Cuts & Jobs Act of 2017 which means that deferred tax in the US is now recognised at a blended federal and state rate of 24%
(2017: 38%).
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.
The prior year adjustment contains an adjustment to the US deferred tax asset in respect of the US intangible assets, which are fully
tax deductible over 15 years.
Annual Report and Accounts 2018Financial statements
87
Financial
statements
8. Dividends
Equity dividends
Number of shares in issue at end of year (million)
Dividends paid in year (pence per share)
Dividends paid in year (£m)
9. Earnings per share
2018
81.5
-
-
2017
45.4
-
-
2018
Restated 2017*
Adjusted results
pence
Adjusting items
pence
Statutory results
pence
Adjusting results
pence
Adjusted items
pence
Statutory results
pence
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
26.2
24.3
(21.1)
(19.6)
5.1
4.7
19.7
18.4
(16.0)
(15.0)
3.7
3.4
Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year. Diluted
earnings per share have been calculated by taking into account the dilutive effect of shares that would be issued on conversion into
Ordinary shares of awards held under employee share schemes.
Adjusted earnings per share remove the effect of share-based payments, exceptional items, amortisation of intangible assets arising
on acquisitions, impairment of intangible assets, exchange gains and losses included in finance costs and any related tax effects from
the calculation.
Total Group
Adjustments to profit after tax:
Profit after tax (£m)
Share-based payments (including social security costs) (£m)
Exceptional items (£m)
Amortisation of intangible assets arising on acquisitions (£m)
Exchange gains 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 per share (in pence)
Adjusted basic earnings per share (in pence)
Diluted earnings per share (in pence)
Adjusted diluted earnings per share (in pence)
The adjustments to profit after tax have the following effect:
Basic earnings per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Exchange gains included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted basic earnings per share (pence)
Diluted earnings per share (pence)
Share-based payments (including social security costs) (pence)
Exceptional items (pence)
Amortisation of intangible assets arising on acquisitions (pence)
Exchange gains included in finance costs (pence)
Tax effect of the above adjustments (pence)
Adjusted diluted earnings per share (pence)
* 2017 figures have been restated to reflect the bonus element of the rights issue that took place in August 2018.
2018
2.9
3.1
4.4
5.7
(0.2)
(1.0)
14.9
Restated
2017*
1.6
2.1
3.7
2.3
-
(1.1)
8.6
56,886,851
4,453,155
43,601,771
3,126,287
61,340,006
46,728,058
5.1
26.2
4.7
24.3
5.1
5.4
7.7
10.0
(0.3)
(1.7)
26.2
4.7
5.1
7.2
9.3
(0.3)
(1.7)
24.3
3.7
19.7
3.4
18.4
3.7
4.8
8.5
5.3
-
(2.6)
19.7
3.4
4.5
7.9
4.9
-
(2.3)
18.4
Future plc
88
Total
£m
4.1
0.1
0.7
4.9
1.3
6.2
(3.6)
(0.3)
(3.9)
(0.6)
(4.5)
1.7
1.0
0.5
Land and
buildings
£m
Plant and
machinery
£m
Equipment,
fixtures and fittings
£m
0.5
-
0.2
0.7
0.3
1.0
(0.3)
-
(0.3)
(0.1)
(0.4)
0.6
0.4
0.2
3.3
0.1
0.2
3.6
0.9
4.5
(3.1)
(0.2)
(3.3)
(0.4)
(3.7)
0.8
0.3
0.2
0.3
-
0.3
0.6
0.1
0.7
(0.2)
(0.1)
(0.3)
(0.1)
(0.4)
0.3
0.3
0.1
10. Property, plant and equipment
Group
Cost
At 1 October 2016
Additions through business combinations
Other additions
At 30 September 2017
Other additions
At 30 September 2018
Accumulated depreciation
At 1 October 2016
Charge for the year
At 30 September 2017
Charge for the year
At 30 September 2018
Net book value at 30 September 2018
Net book value at 30 September 2017
Net book value at 1 October 2016
Depreciation is included within administration expenses in the consolidated income statement.
Annual Report and Accounts 2018Financial statements 89
Financial
statements
11. Intangible assets
Group
Cost
At 1 October 2016
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Disposals
Exchange adjustments
At 30 September 2017
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Exchange adjustments
At 30 September 2018
Accumulated amortisation and impairment
At 1 October 2016
Charge for the year
Disposals
Exchange adjustments
At 30 September 2017
Charge for the year
Exchange adjustments
At 30 September 2018
Net book value at 30 September 2018
Net book value at 30 September 2017
Net book value at 1 October 2016
Goodwill
£m
Magazine
and website
£m
293.9
36.6
-
(0.2)
-
(1.1)
329.2
34.1
-
(0.2)
0.9
364.0
(264.4)
-
-
1.0
(263.4)
-
(0.8)
(264.2)
99.8
65.8
29.5
14.3
25.5
-
-
(1.4)
(0.2)
38.2
83.3
-
-
0.1
121.6
(13.2)
(2.3)
1.1
0.2
(14.2)
(5.7)
(0.2)
(20.1)
101.5
24.0
1.1
Other
£m
17.5
0.1
1.5
-
-
(0.3)
18.8
-
1.2
-
-
20.0
(14.9)
(1.8)
-
0.4
(16.3)
(1.6)
-
(17.9)
2.1
2.5
2.6
Total
£m
325.7
62.2
1.5
(0.2)
(1.4)
(1.6)
386.2
117.4
1.2
(0.2)
1.0
505.6
(292.5)
(4.1)
1.1
1.6
(293.9)
(7.3)
(1.0)
(302.2)
203.4
92.3
33.2
Acquired intangibles 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 acquired 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 27.
Other intangibles relate to capitalised software costs and website development costs which are internally generated.
Amortisation is included within administration expenses in the consolidated income statement.
Impairment assessments for goodwill
The net book value of goodwill at 30 September 2018 consists of £72.8m relating to the UK and £27.0m relating to the US. The
goodwill at 30 September 2017 related wholly 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.
Future plc 90
11. Intangible assets (continued)
Other assumptions that influence estimated recoverable amounts are set out below:
At 30 September 2018
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDA margins assumed
Post-tax discount rate
Pre-tax discount rate
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
UK
US
Value in use
Five year plans
Discounted cash flow
0.0%
17.7% to 19.7%
9.0%
11.8%
Value in use
Five year plans
Discounted cash flow
3.0%
21.8% to 24.2%
9.0%
11.8%
UK
Value in use
Five year plans
Discounted cash flow
2.0%
12.0% to 12.9%
7.7%
9.4%
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption
Growth rate into perpetuity
EBITDA margins assumed
Post-tax discount rate
Pre-tax discount rate
Approach used to determining values
This is the growth rate used to extrapolate cash flows beyond
the period of the three-year plan. The rates are consistent with
forecasts included in industry reports.
EBITDA margin is based on budgeted and forecast margins from
the Group’s three-year plan (based on past performance and
management’s expectations for the future), adjusted to include
intragroup management and licence charges.
The pre-tax discount rate adjusted for the impact of tax.
Reflects risks relevant to each CGU and the country in
which they operate.
Sensitivity of recoverable amounts
At 30 September 2018 the analysis of the recoverable amounts gave rise to the following assessments of sensitivity:
The value in use of the UK business and the value in use of the US business exceeded their carrying values by £31.0m and £106.4m
respectively. A change of plus 50 basis points in the post-tax discount rate would decrease the recoverable amount of the UK business
by £5.2m and the US business by £12.4m. A change of minus 50 basis points in the post-tax discount rate would increase the recoverable
amount of the UK business by £5.8m and the US business by £12.4m. All other assumptions remaining constant, EBITDA margin in the
three-year plan would need to reduce to 14.5% in the UK and 12.6% in the US to trigger an impairment of either CGU. This is considered
to be a reasonably possible change.
Goodwill is not considered to be impaired at 30 September 2018.
Annual Report and Accounts 2018Financial statements
91
Financial
statements
12. Investments in Group undertakings
Company
Shares in Group undertakings
At 1 October
Additions
At 30 September
2018
£m
19.5
104.1
123.6
2017
£m
1.0
18.5
19.5
Additions of £101.1m represent an increased investment in Future Holdings 2002 Limited arising as a result of the capitalisation of
amounts owed to the Company by other Group companies as a result of the approach to funding the NewBay Media LLC and Purch
Group LLC acquisitions.
The remaining addition of £3.0m represents the fair value of share-based compensation awards granted to employees of subsidiary
undertakings of Future Holdings 2002 Limited, and related social security costs, treated as a capital contribution to that company.
The Directors believe that the carrying values of the investments are supported by their underlying assets.
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 2016
Acquisitions
Credited to income statement
Credited to equity
Exchange adjustment
At 30 September 2017
Acquisitions
Credited to income statement
Credited to equity
At 30 September 2018
Intangible
assets
£m
Share-based pay-
ments
£m
Temporary
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
(0.9)
(4.3)
0.6
-
-
(4.6)
(1.1)
0.8
-
(4.9)
-
-
0.3
0.5
-
0.8
-
0.5
1.1
2.4
0.2
-
-
-
-
0.2
-
-
-
0.2
0.5
-
0.1
-
-
0.6
-
-
-
0.6
1.7
-
1.2
-
(0.1)
2.8
-
(0.9)
-
1.9
Total
£m
1.5
(4.3)
2.2
0.5
(0.1)
(0.2)
(1.1)
0.4
1.1
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 asset/(liability)
2018
£m
5.3
(5.1)
0.2
2017
£m
4.4
(4.6)
(0.2)
The deferred tax asset of £5.3m (2017: £4.4m) is disclosed as a non-current asset of which the assets due within one year total £0.5m
(2017: £0.4m). The deferred tax liability of £5.1m (2017: £4.6m) is disclosed as a non-current liability of which the liabilities due within
one year total £0.8m (2017: £0.7m).
As at 30 September 2018 the Group has:
• unprovided tax losses totalling £33.0m (2017: £33.1m) of which £28.2m (2017: £29.0m) arose in the US; and
• unprovided other temporary differences in the US totalling £nil (2017: £2.0m).
Deferred tax assets have been recognised in respect of tax losses and other temporary differences where it is probable that these
assets will be recovered.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax
liability in the foreseeable future. See note 7 for the impact of any changes in tax rates compared to the previous accounting period
which have been substantively enacted and have impacted the measurement of deferred tax balances.
The deferred tax asset of £2.2m (2017: £0.8m) 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 2018 (2017: £nil).
Future plc
14. 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
Total
Group
2018
£m
32.7
(3.3)
29.4
-
2.4
5.8
37.6
Company
2018
£m
-
-
-
79.7
-
-
79.7
Group
2017
£m
11.9
(2.2)
9.7
-
0.4
3.5
13.6
92
Company
2017
£m
-
-
-
74.4
-
-
74.4
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The Group has provided for estimated irrecoverable amounts in accordance with its accounting policy described on page 81 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 £14.6m (2017: £4.6m) 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,
events 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
2018
£m
6.3
4.0
2.5
1.8
14.6
Group
2017
£m
2.9
1.3
0.3
0.1
4.6
As at 30 September 2018, trade receivables of £3.3m (2017: £2.2m) 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
2018
£m
2.2
0.7
1.5
(1.1)
3.3
Group
2017
£m
0.6
0.5
1.3
(0.2)
2.2
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 and no additional disclosure in relation to credit risk is required. Interest
on £5.4m (2017: £0.3m) of the amounts owed by Group undertakings has been charged at one-month USD LIBOR plus 2%. The
balance of amounts owed by Group undertakings is interest-free without any terms for repayment.
Annual Report and Accounts 2018Financial statements
93
Financial
statements
15. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statements:
Cash at bank and in hand
Cash and cash equivalents
Group
2018
£m
6.4
6.4
Company
2018
£m
0.3
0.3
Group
2017
£m
10.1
10.1
Company
2017
£m
0.7
0.7
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+.
16. Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other taxation and social security
Other payables
Accruals and deferred income
Total
Group
2018
£m
4.9
-
2.6
2.7
38.2
48.4
Company
2018
£m
-
0.5
-
-
0.5
1.0
Group
2017
£m
2.5
-
0.9
0.7
25.8
29.9
Company
2017
£m
-
0.7
-
-
0.2
0.9
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.
Future plc
17. Financial liabilities – loans, borrowings and overdrafts
Non-current liabilities
Sterling term loan
Sterling revolving loan
Total
Current liabilities
Sterling term loan
Sterling revolving loan
US dollar term loan
Obligations under finance leases
Total
Interest rate at
30 September
2018
Interest rate at
30 September
2017
3.0%
3.0%
2.8%
2.8%
Interest rate at
30 September
2018
Interest rate at
30 September
2017
3.0%
3.0%
4.8%
2.8%
2.8%
-
0.0%
The interest-bearing loans are repayable as follows:
Within one year
Between one and two years
Between two and five years
Total
Group
2018
£m
7.6
8.1
15.7
Group
2018
£m
2.3
0.9
5.3
-
8.5
Group
2018
£m
8.8
4.9
11.0
24.7
Company
2018
£m
7.6
8.1
15.7
Company
2018
£m
2.3
0.9
5.3
-
8.5
Company
2018
£m
8.8
4.9
11.0
24.7
Group
2017
£m
10.0
6.9
16.9
Group
2017
£m
1.8
1.3
-
0.1
3.2
Group
2017
£m
3.2
3.3
13.6
20.1
94
Company
2017
£m
10.0
6.9
16.9
Company
2017
£m
1.8
1.3
-
-
3.1
Company
2017
£m
3.1
3.3
13.6
20.0
Following the acquisition of NewBay Media LLC on 3 April 2018, the Group negotiated a new bank facility of $7.0m US dollars with HSBC Bank
plc. The new facilities run to 3 July 2019.
The total multicurrency revolving and overdraft facility available to the Group at 30 September 2018 amounted to £28.2m, comprising £15.6m
of UK and US term loans (including a $7.0m US dollar loan), a total of £10.6m revolving credit facilities and a £2.0m uncommitted overdraft
facility. The facilities run to 23 June 2021. Repayments required in respect of the facilities are as follows:
Repayment date
3 July 2019 (US dollar term loan)
30 September 2019
30 September 2020
23 June 2021
Repayment amount
$7,000,000
£3,400,000
£4,850,000
£11,050,000
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 £0.1m and these are being amortised over the term of the facility. The bank borrowings
and interest are guaranteed by Future plc.
Interest payable under the current credit facility for sterling denominated loans is calculated as the cost of one-month LIBOR (currently
approximately 0.7%) plus an interest margin of between 2.0% and 2.5%, dependent on the level of Bank EBITDA.
Interest payable under the current credit facility for the US dollar denominated loan is calculated as the cost of one-month USD LIBOR
(currently approximately 2.3%) plus an interest margin of between 2.0% and 2.5%.
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
Annual Report and Accounts 2018Financial statements
95
Financial
statements
17. Financial liabilities – loans, borrowings and overdrafts (continued)
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
Bank EBITDA/Interest
30 September 2018
Covenant
1.12 times
28.43 times
< 2.25 times
> 4.00 times
The Company had not drawn down on its non-interest-bearing overdraft at 30 September 2018 or at 30 September 2017. Any draw
down forms part of the Group cash pooling account and can be offset against cash balances in other Group companies.
18. Provisions
Group
At 1 October 2017
Charged in the year
Released in the year
Utilised in the year
At 30 September 2018
Property
£m
2.6
1.4
(1.0)
(0.2)
2.8
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 nine years.
Provisions for the Company were £nil (2017: £nil).
19. Other non-current liabilities
Group
Other payables
Other payables consist mainly of deferred property lease liabilities.
20. Financial instruments
Financial instruments by category
The Group’s financial assets and financial liabilities are set out below:
2018
£m
0.5
2017
£m
0.6
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
Amortised cost
2018
Loans and
receivables
£m
Other
liabilities
£m
Total carrying value
£m
29.4
2.4
6.4
38.2
-
-
-
-
-
-
-
-
-
(4.9)
(33.9)
(8.5)
(15.7)
(63.0)
29.4
2.4
6.4
38.2
(4.9)
(33.9)
(8.5)
(15.7)
(63.0)
Total fair
value
£m
29.4
2.4
6.4
38.2
(4.9)
(33.9)
(8.5)
(15.7)
(63.0)
Note
14
15
16
17
17
Future plc 20. Financial instruments (continued)
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
Note
14
15
16
17
17
Fair value
Amortised cost
2017
Derivatives
£m
Loans and
receivables
£m
Other
liabilities
£m
Total carrying value
£m
-
-
-
-
-
-
-
-
(0.1)
(0.1)
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)
Total financial liabilities are shown net of unamortised costs which amounted to £0.5m (2017: £0.6m).
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
Total financial liabilities
Company
Other receivables
Cash and cash equivalents
Total financial assets
Other liabilities
Current borrowings
Non-current borrowings
Derivatives
Total financial liabilities
Amortised cost
2018
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
79.7
0.3
80.0
-
-
-
-
-
-
-
(1.0)
(8.5)
(15.7)
(25.2)
79.7
0.3
80.0
(1.0)
(8.5)
(15.7)
(25.2)
Note
14
15
16
17
17
Fair value
Amortised cost
2017
Note
Derivatives
£m
Loans and
receivables
£m
Other
liabilities
£m
Total carrying
value
£m
14
15
16
17
17
-
-
-
-
-
-
(0.1)
(0.1)
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)
96
Total fair
value
£m
9.7
1.4
10.1
21.2
(2.5)
(14.4)
(3.2)
(16.9)
(0.1)
(37.1)
Total fair
value
£m
79.7
0.3
80.0
(1.0)
(8.5)
(15.7)
(25.2)
Total fair
value
£m
74.4
0.7
75.1
(0.9)
(3.1)
(16.9)
(0.1)
(21.0)
Total financial liabilities are shown net of unamortised costs which amounted to £0.5m (2017: £0.6m).
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.
Annual Report and Accounts 2018Financial statements 97
Financial
statements
20. Financial instruments (continued)
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 Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, provide returns for
shareholders and benefits for shareholders.
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 17.
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 2018
Currency:
Sterling
US Dollar
Euro
Other
Total
At 30 September 2017
Currency:
Sterling
US Dollar
Euro
Other
Total
Financial assets
Financial liabilities
Non-
interest
bearing
£m
Total
£m
Floating
rate
£m
Fixed
rate
£m
Non-
interest
bearing
£m
Net financial
(liabilities)/
assets
£m
Total
£m
10.5
26.1
0.4
1.2
38.2
12.1
7.6
0.2
1.3
21.2
10.5
26.1
0.4
1.2
38.2
12.1
7.6
0.2
1.3
21.2
(18.8)
(5.4)
-
-
(24.2)
-
-
-
-
-
(20.0)
(0.1)
-
-
-
-
-
-
(20.0)
(0.1)
(22.6)
(15.5)
-
(0.7)
(38.8)
(13.5)
(2.9)
(0.1)
(0.5)
(17.0)
(41.4)
(20.9)
-
(0.7)
(63.0)
(33.6)
(2.9)
(0.1)
(0.5)
(37.1)
(30.9)
5.2
0.4
0.5
(24.8)
(21.5)
4.7
0.1
0.8
(15.9)
Interest rate risk
Details of the interest rates on borrowings as at 30 September 2018 are set out in note 17.
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 in the
prior year, as at 30 September 2018 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 2018, 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 (2017: £0.1m).
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.
Future plc
20. Financial instruments (continued)
The following table summarises the Group’s sensitivity to translational currency exposures at 30 September:
2018 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
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
98
GBP/USD
10%
(0.3)
0.3
0.3
(0.3)
GBP/USD
10%
(0.3)
0.3
0.3
(0.3)
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 17.
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 2018
Trade payables
Other liabilities
Borrowings
Total financial liabilities
30 September 2017
Trade payables
Other liabilities
Borrowings
Derivatives
Total financial liabilities
Less than
one year
£m
(4.9)
(33.0)
(8.5)
(46.4)
Between one
and two years
£m
Between two
and five years
£m
-
(0.2)
(4.8)
(5.0)
-
(0.4)
(10.9)
(11.3)
Over five
years
£m
-
(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
(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)
Total
£m
(4.9)
(33.9)
(24.2)
(63.0)
Total
£m
(2.5)
(14.4)
(20.1)
(0.1)
(37.1)
Annual Report and Accounts 2018Financial statements
99
Financial
statements
21. 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
2018
2017
Number of
shares
45,392,814
654,400
34,880,772
589,895
710
81,518,591
£m
6.8
0.1
5.2
0.1
-
12.2
Number of
shares
24,583,908
11,971,189
8,800,000
37,392
325
45,392,814
£m
3.7
1.8
1.3
-
-
6.8
On 3 April 2018, the Company issued 283,692 Ordinary shares with a nominal value of £42,554 as consideration for the acquisition of
NewBay Media LLC.
On 1 May 2018, the Company issued 370,708 Ordinary shares with a nominal value of £55,606 as consideration for the acquisition of
Haymarket titles.
On 21 August 2018, the Company issued 34,880,772 Ordinary shares with a nominal value of £5,232,116 pursuant to a rights issue in
order to fund the acquisition of Purch Group LLC, further details of which are shown in note 23.
During the year 589,895 Ordinary shares with a nominal value of £88,484 were issued by the Company pursuant to share scheme
exercises and a further 710 Ordinary shares were issued under the Share Incentive Plan for a combined total cash commitment of £nil,
as detailed in note 22.
22. Share-based payments
The income statement charge for the year for share-based payments was £2.6m (2017: £1.8m). This charge has been included within
administration expenses.
These charges arise when employees are granted awards under the Group’s share option schemes, performance share plan (PSP),
deferred annual bonus scheme (DABS) or Share Incentive Plan (SIP) and when employees are granted awards by the trustees of The
Future Network plc 1999 Employee Benefit Trust (EBT). The charge equates to the fair value of the award and has been calculated
using the Monte Carlo and Black-Scholes models, using the most appropriate model for each scheme. Assumptions have been made
in these models for expected volatility, risk-free rates and dividend yields.
A reconciliation of movements in share options and other share incentive schemes is shown below:
Outstanding at the beginning of the year
Granted
Share awards exercised – new share issues
Cancelled
Adjustment on rights issue
Outstanding at 30 September
Exercisable at 30 September
2018
Number of
options/awards
2018
Weighted average
exercise price
2017
Number of
options/awards
2017
Weighted average
exercise price
4,271,059
782,451
(589,895)
(251,065)
758,173
4,970,723
9,344
£0.000
£0.000
£0.000
£0.000
-
£0.000
£0.000
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
The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £4.080
(2017: £2.150).
Future plc
100
22. 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 remaining
contractual life in years
2018
2017
2018
2017
PSP
July 2014
February 2015
May 2015
August 2015
November 2015
September 2016
November 2016
February 2017
November 2017
February 2018
May 2018
July 2018
DABS
November 2009
December 2010
January 2012
December 2012
December 2013
November 2015
-
-
-
-
379,567
47,331
1,749,634
2,005,190
504,521
64,611
127,976
82,549
-
-
-
-
-
9,344
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
Total outstanding at 30 September
4,970,723
4,271,059
-
-
-
-
-
1
1
1
2
2
3
3
-
-
-
-
-
-
1
-
-
1
1
1
2
2
2
-
-
-
-
-
-
-
-
-
-
2
The weighted average exercise price for share options outstanding at 30 September 2018 is £nil (2017: £nil).
On 21 August 2018, Future plc completed a 3 for 4 rights issue (the “rights issue”) in order to fund the acquisition of Purch Group LLC.
Following the completion of the rights issue the Committee elected to ‘make good’ all share award holders by increasing the number
of options they hold using a HMRC approved formula which takes into consideration the number of new shares created as a result of
the rights issue (as disclosed in the table set out on page 99). This change did not impact the fair value of the awards.
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 volatility1
Option life (years)
Expected life (years)
Risk-free rate
Dividend yield
Fair value2
Fair value – EBITDA element2
Fair value – share price element2
Fair value – EPS element2
2018
2017
PSP
PSP
PSP
PSP
PSP
PSP
30/11/2017
01/02/2018
01/05/2018
01/07/2018
23/11/2016
02/02/2017
£3.6000
£4.1000
£4.5500
£5.3600
£1.3335
£1.7950
-
3
-
3
36%
36%
3
3
0.56%
-
3
3
0.81%
-
-
3
41%
3
3
0.81%
-
-
3
41%
3
3
0.81%
-
-
3
40%
3
3
0%
-
-
3
37%
3
3
0%
-
£3.1137
£3.3909
£3.9684
£4.5618
-
£2.6273
£3.6000
-
£2.6318
£4.1500
-
£3.3867
£4.5500
-
£3.7636
£5.3600
£0.8716
£1.3335
£0.4097
-
£1.3752
£1.7950
£0.9554
-
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.
Annual Report and Accounts 2018Financial statements
101
Financial
statements
22. 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. The Sharesave Plan was discontinued during the year and at 30 September 2018 there are no
options outstanding under this scheme.
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 and ‘rising stars’, 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), 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
which are detailed below.
On 21 August 2018, Future plc completed a 3 for 4 rights issue (the “rights issue”) in order to fund the acquisition of Purch Group
LLC. Following the completion of the rights issue the Remuneration Committee elected to ‘make good’ all share award holders by
increasing the number of options they hold using a HMRC approved formula which takes into consideration the number of new
shares created as a result of the rights issue (as disclosed in the table set out on page 99). The Remuneration Committee also reviewed
and where appropriate updated the performance criteria for each of the outstanding awards. Any changes to the performance criteria
are also detailed below.
Performance criteria in respect of awards granted between 16 July 2014 and 29 November 2015:
• 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 this element 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 this element of the award will vest.
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 Remuneration Committee also extended the vesting date of the award from 16 July 2017
to 27 November 2017 in order to align with the other Executive Director.
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 vested in full on 1 September 2018. The Remuneration Committee exercised its judgement to extend
the vesting period for the PSP award granted to Penny Ladkin-Brand on 2 August 2015 to 1 September 2018 (from 2 August 2018) in
order to avoid the vesting of the award prior to the completion of the rights issue.
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 this element of the award will vest. Following the
completion of the rights issue the Remuneration Committee amended the adjusted EPS targets to a range of 15.3p and 19.1p
and agreed that the calculation of this performance target would be adjusted to exclude the impact of the Purch acquisition and
associated rights issue on earnings.
• 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 this element of the award will vest. Following the
completion of the rights issue the Remuneration Committee agreed that the calculation of this award will be adjusted to exclude the
impact of any cash flows arising from the Purch acquisition and associated rights issue on Net Cash Flow.
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 this element 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 this element of the award will vest.
Future plc 102
22. Share-based payments (continued)
• 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 this element 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 this element of the award will vest.
Performance criteria in respect of awards granted during the year ended 30 September 2018:
• A maximum of 50% of the award will vest if the Group’s adjusted EPS for the year ended 30 September 2020 (the last financial
year of the performance period) is 26.0p, 12.5% will vest if the Group’s adjusted EPS is 23.0p, and vesting will be on a pro rata straight-
line basis between the two. If the Group’s adjusted EPS is below 23p, none of this element of the award will vest.
• A maximum of 50% of the award will vest if the Company’s share price performance in the period from the date of grant to 30
September 2020 is at or above target. 25% of this part of the award will vest if the Company’s share price performance in the period
from the date of grant to 30 September 2020 is at the lower target price with full vesting of this part of the award at the upper target
price level and straight-line vesting in between. If the Company’s share price performance is below target, none of this element of
the award will vest. Following the completion of the rights issue the Remuneration Committee rebased the share price targets to
adjust for the impact of the Purch acquisition and associated rights issue.
Grants were made under the PSP in November 2016, February 2017, November 2017, February 2018, May 2018 and July 2018.
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 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.
The last grant made under the DABS was in November 2017.
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.
23. 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
Share premium reduction
At 30 September
2018
£m
47.4
100.5
(3.3)
(47.4)
97.2
2017
£m
27.6
20.7
(0.9)
-
47.4
In June 2018 the Company’s share premium amount of £47.4m was cancelled by special resolution, confirmed by the High Court of
Justice in July 2018.
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
2018
£m
(0.3)
Group
2017
£m
(0.3)
The 111,818 (2017: 95,123) shares held by the EBT represent 0.1% (2017: 0.2%) of the Company’s issued share capital. The treasury reserve
is non-distributable.
Annual Report and Accounts 2018Financial statements
103
Financial
statements
23. Reserves (continued)
Merger reserve
At 1 October
Premium arising on equity shares issued as consideration
Costs of share issue
At 30 September
Group
2018
£m
122.5
2.4
-
124.9
Company
2018
£m
13.5
2.4
-
15.9
Group
2017
£m
109.0
13.6
(0.1)
122.5
Company
2017
£m
-
13.6
(0.1)
13.5
The comparative brought forward balance in the Group merger reserve of £109.0m arose following the 1999 Group reorganisation and
is non-distributable. The movement in the current year relates to the premium on shares issued as consideration for the acquisitions
of NewBay Media LLC in April 2018 and the Haymarket titles in May 2018. The movement in the merger reserve during the prior year
relates to the premium on shares issued as consideration for the acquisition of Miura (Holdings) Limited in October 2016.
24. 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 22 registered mutual funds at Charles
Schwab Bank, the plan’s custodian. 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, £1.0m (2017: £0.6m) contributions were made to these plans and at 30 September 2018 the outstanding balance due
to be paid over to the plans was £0.4m (2017: £0.1m).
25. Commitments and contingent liabilities
(a) Operating lease commitments
At 30 September 2018, 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
3.7
8.3
5.1
17.1
Other
£m
-
-
-
-
Total
2018
£m
3.7
8.3
5.1
17.1
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
Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2018 total £2.1m (2017: £0.8m).
During the year, £2.1m (2017: £1.7m) was recognised in the income statement in respect of operating lease rental payments and £0.3m
(2017: £0.2m) was recognised in respect of sub-lease receipts.
The Group leases various offices under non-cancellable operating lease agreements. The leases have various terms, escalation clauses
and renewal rights. The Group also leases other equipment under non-cancellable operating lease agreements.
(b) Contingent liabilities
There are no contingent liabilities expected to result in a material loss for the Group.
(c) Capital commitments
There were no material capital commitments as at 30 September 2018 (2017: £nil).
26. Related party transactions
The Group had no material transactions with related parties in 2018 or 2017 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 (2017: £0.9m) to subsidiary undertakings. The outstanding
balance owed at 30 September 2018 was £0.9m (2017: £0.9m). See note 20 for details of loans.
No individuals other than the Directors meet the definition of key management personnel. Details of key management personnel
compensation are set out in the Directors Remuneration Report on page 54.
Future plc
104
27. Acquisitions
Acquisition of NewBay Media LLC
On 3 April 2018 Future US inc. acquired 100% of the share capital of NewBay Media LLC (NewBay), the mainly US-based information
and events business, for net consideration of £8.8m cash and £1.1m shares.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Publishing rights
- Brands
- Other intangibles
Trade and other receivables
Trade and other payables
Deferred tax
Net assets acquired
Goodwill
Consideration:
Equity shares
Cash
Total consideration
Provisional
fair value
2.5
2.0
0.9
4.6
(6.7)
(0.1)
3.2
6.7
9.9
1.1
8.8
9.9
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, customer lists, events and brands will be amortised over a
period of five years. US intangibles, including goodwill, are expected to be deductible for tax purposes.
Gross trade receivables were £5.4m, of which £4.6m on acquisition were expected to be recovered.
The acquisition enhances the Group’s market-leading position in music and consumer electronics and in addition brings B2B titles
in the complementary verticals of audio visual, television broadcasting and educational technology, which will further increase the
Group’s revenue diversification model whilst also bringing B2B expertise to the Group’s existing titles.
Included within the Group’s results for the year are revenues of £13.7m and a loss before tax of £0.1m (excluding deal fees, associated
integration costs and acquired intangible amortisation) from NewBay Media LLC.
If the acquisition has been completed on the first day of the financial year, it would have contributed £31.5m of revenue and profit
before tax of £0.6m (excluding deal fees, associated integration costs and acquired intangible amortisation) during the year.
Acquisition of Haymarket titles
On 1 May 2018 Future Holdings 2002 Limited completed the acquisition of the specialist consumer titles of What Hi-Fi?, FourFourTwo,
Practical Caravan and Practical Motorhome from Haymarket Media Group for net consideration of £9.3m cash and £1.4m shares.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Publishing rights
- Brands
- Websites
Trade and other payables
Deferred tax
Net assets acquired
Goodwill
Consideration:
Equity shares
Cash
Total consideration
Provisional
fair value
£m
1.3
0.2
3.8
(0.9)
(0.9)
3.5
7.2
10.7
1.4
9.3
10.7
Annual Report and Accounts 2018Financial statements 105
Financial
statements
27. Acquisitions (continued)
The goodwill is attributable to the synergies expected to arise in integrating the magazines and websites into the wider Future group.
The goodwill will not be deductible for tax purposes. The publishing rights, brands and websites will be amortised over a period of five
years. The acquisition presents organic growth opportunities by leveraging and expanding brands and content through the Group’s
platform.
Included within the Group’s results for the year are revenues of £3.5m and a profit before tax of £0.6m (excluding deal fees, associated
integration costs and acquired intangible amortisation) from the Haymarket titles.
If the acquisition has been completed on the first day of the financial year, it would have contributed £8.9m of revenue and profit
before tax of £2.0m (excluding deal fees, associated integration costs and acquired intangible amortisation) during the year.
Acquisition of Purch Group LLC
On 4 September 2018, Future US Inc. acquired 100% of the share capital of Purch Group LLC, a technology platform and publisher, for
net consideration of £99.1m.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Customer lists
- Websites
Trade and other receivables
Trade and other payables
Net assets acquired
Goodwill
Consideration:
Cash
Total consideration
Provisional
fair value
10.0
62.5
11.2
(4.8)
78.9
20.2
99.1
99.1
99.1
The goodwill is attributable to the synergies expected to arise in integrating the websites and customer lists into the wider Future
group. The websites and customer lists will both be amortised over a period of 10 years. Intangibles, including goodwill, are expected
to be deductible for tax purposes.
Gross trade receivables were £11.7m, of which £11.2m on acquisition were expected to be recovered.
This acquisition substantially strengthens the Group’s presence in the US market, boosting its scale and momentum while further
diversifying our revenue streams. Purch B2C’s leading brands also gives the Group market leadership in the highly attractive
consumer technology market. In addition, its data driven content model is highly complementary to the Group’s existing capabilities
and will accelerate the Group’s progress as it continues to build its global platform for specialist media.
Included within the Group’s results for the year are revenues of £3.8m and a profit before tax of £0.1m (excluding deal fees, associated
integration costs and acquired intangible amortisation) from Purch Group LLC.
If the acquisition has been completed on the first day of the financial year, it would have contributed £47.5m of revenue and a profit
before tax of £7.9m (excluding deal fees, associated integration costs and acquired intangible amortisation) during the year.
See note 4 for details of the total amount of acquisition and integration related costs recognised as exceptional items in respect of
these acquisitions.
The fair values are described as ‘provisional’ for each of the acquisitions as they all occurred within six months of the balance sheet
date and so further time is required (particularly in respect of Purch) in order to fully ascertain the fair value of assets and liabilities
acquired. The Purch transaction is subject to a working capital adjustment.
Future plc 106
28. Subsidiary undertakings
Details of the Company’s subsidiaries at 30 September 2018 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
Future Holdings 2002 Limited
04387886
Future Publishing Limited*
02008885
Future Publishing (Overseas) Limited*
06202940
Future Publishing Holdings Limited
03430449
Future US, Inc*
1513070
Future Verlag GmbH*
HRB125675
FutureFolio Limited*
07956484
Next Commerce Philippines Inc*
CS201517783
Next Commerce Pty Ltd*
113 146 786
Pricepanda Group GmbH*
HRB138471B
Newbay Media UK Holdco Limited
04387886
Newbay Media Europe Limited*
03641099
Future New1 Limited*
10562453
Mobile Entertainment Limited*
05318803
CTW Media Limited*
04371784
MCV Media UK Limited*
03537416
Active Junky Inc*
5341234
Purch Technologies Sarl*
84138050400016
Newbay Media LLC*
4208889
Purch Group LLC*
4560993
Sarracenia Limited
04582851
Country of
incorporation and
registered office
Nature of business
Holding %
Class of shares
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
Holding company
England and Wales1
England and Wales1
Publishing
Publishing
100
100
100
100
100
100
£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
Publishing
Germany3
Non-trading
England and Wales1 Digital publishing solutions
Philippines4
Dormant
Australia5
Comparison shopping
Germany6
Dormant
England and Wales1
Holding Company
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
In liquidation7
England and Wales1
In liquidation8
England and Wales1
In liquidation7
USA2
France
USA2
USA2
England and Wales1
Trading
Non-trading
Non-trading
Trading
Dormant
100
87.5
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Not applicable
€1 Ordinary shares
£1 Ordinary shares
₱1 Ordinary shares
$1 Ordinary shares
€1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
Not applicable
Not applicable
Not applicable
Not applicable
£1 Ordinary shares
1 Registered office: Quay House, The Ambury, Bath, BA1 1UA, England
2 Registered office: 11 West 42nd Street, New York, NY 10036
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 Company was dissolved on 24 October 2018
8 Company was dissolved on 26 October 2018
A&S Publishing Company Limited, Ascent Publishing Limited, Centaur Consumer Exhibitions Limited, Future Holdings 2002 Limited,
Future Publishing Limited, FutureFolio Limited, NewBay Media UK Holdco Limited, NewBay Media Europe Limited and Future New1
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.
Annual Report and Accounts 2018Financial statements
107
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 twentieth Annual General Meeting of Future plc will be held on 7 February 2019 at
Future’s London office, 1-10 Praed Mews, London W2 1QY at 10:30am at which the following resolutions numbered 1 to
14 will be proposed as ordinary resolutions, and resolutions numbered 15 to 17 will be proposed as special resolutions.
Ordinary Business
Ordinary resolutions
1.
2.
To receive and adopt the audited
financial statements of the Company
for the financial year ended 30
September 2018 and the reports of
the Directors and the auditors (the
“Annual Report”).
To approve the Directors’
remuneration implementation
report as set out in pages 53 to 60 of
the Annual Report of the Company
for the financial year ended 30
September 2018.
3. To approve the amendments to the
Remuneration policy for the three
year period commencing on 1
October 2016 as set out in pages 61
to 64 of the Annual Report of the
Company.
4. To declare a final dividend upon the
recommendation of the Directors for
the year ended 30 September 2018 of
0.5p per ordinary share payable on 15
February 2019 to shareholders on the
register at the close of business on 18
January 2019.
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.
12. To authorise the Directors to
determine the remuneration of the
auditors of the Company.
13. 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:
13.1 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 £8,184,910
(such amount to be reduced by the
nominal amount of any relevant
securities allotted under paragraph
13.2 below):
5. To elect as a Director Alan Newman.
(a) to holders of Ordinary shares in the
6. To elect as a Director Rob Hattrell.
7. To re-elect as a Director Richard
Huntingford.
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
8. To re-elect as a Director Zillah
(b) to holders of any other equity
Byng-Thorne.
9.
To re-elect as a Director Penny
Ladkin-Brand.
10. To re-elect as a Director Hugo
Drayton.
11. To reappoint
PricewaterhouseCoopers
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
13.2 in any other case, up to an aggregate
nominal amount of £4,092,455
(such amount to be reduced by
the nominal amount of any equity
securities allotted under paragraph
13.1 above in excess of £4,092,455,
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 6 May 2020
(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.
14. 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
Future plc
108
Annual General Meeting or, if earlier,
on 6 May 2020.
Special resolutions
may allot equity securities (and sell
treasury shares) under any such offer
or agreement as if the authority had
not expired.
15. That, if resolution 13 is passed, the
16. That, if resolution 13 is passed,
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:
the Board be authorised in addition
to any authority granted under
resolution 15 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) 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
13.1 of resolution 13, by way of a rights
issue only):
a)
limited to the allotment of equity
securities or sale of treasury shares
up to a nominal amount of £613,868;
and
b) used only for the purposes of
(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
£613,868,
such authority to expire at the end of
the next AGM of the Company or, if
earlier, at the close of business on 6
May 2020 (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
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
6 May 2020 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.
17. 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
12 December 2018
Annual Report and Accounts 2018Financial statements
109
Notice of
Annual
General
Meeting
Notes
Further information about the AGM
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 Tuesday
5 February 2019 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 Tuesday 5 February 2019.
Number of shares in issue
5.
As at the close of business on 12
December 2018 (being the last
business day prior to the publication
of this notice) the Company’s issued
share capital consisted of 81,849,101
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 81,849,101.
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 Tuesday
5 February 2019 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 Tuesday 5 February 2019
or, if this meeting is adjourned, in the
register of members 48 hours before
the time of any adjourned meeting,
shall be disregarded in determining
the rights of any person to attend or
vote at the meeting.
Indirect investors
8. Any person to whom this notice is
sent who is a person that has been
nominated under section 146 of the
Act to enjoy information rights (a
‘Nominated Person’) does not have
a right to appoint a proxy. However,
a Nominated Person may, under
an agreement with the registered
shareholder by whom they were
nominated (a ‘Relevant Member’),
have a right to be appointed (or to
have someone else appointed) as a
proxy for the meeting. Alternatively,
if a Nominated Person does not
have such a right, or does not wish
to exercise it, they may have a right
under any such agreement to give
instructions to the Relevant Member
as to the exercise of voting rights.
A Nominated Person’s main point of
contact in terms of their investment
in the Company remains the Relevant
Member (or, perhaps, the Nominated
Person’s custodian or broker) and
the Nominated Person should
continue to contact them (and not
the Company) regarding any changes
or queries relating to the Nominated
Person’s personal details and their
interest in the Company (including
any administrative matters). The
only exception to this is where
the Company expressly requests
a response from the Nominated
Person.
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
Future plc
110
as to be received by the issuer’s agent
(ID 3RA50) by 10:30am on Tuesday
5 February 2019 or, if the meeting is
adjourned, not less than 48 hours
before the time fixed for the adjourned
meeting. For this purpose, the time
of receipt will be taken to be the time
(as determined by the timestamp
applied to the message by the CREST
Applications Host) from which the
issuer’s agent is able to retrieve the
message by enquiry to CREST in the
manner prescribed by CREST. After
this time any change of instructions
to proxies appointed through CREST
should be communicated to the
appointee through other means.
CREST members and, where
applicable, their CREST sponsors or
voting service providers should note
that Euroclear UK & Ireland Limited
does not make available special
procedures in CREST for any particular
messages. Normal system timings
and limitations will therefore apply in
relation to the input of CREST Proxy
Instructions. It is the responsibility
of the CREST member concerned to
take (or, if the CREST member is a
CREST personal member or sponsored
member or has appointed a voting
service provider(s), to procure that
his CREST sponsor or voting service
provider(s) take(s)) such action as
shall be necessary to ensure that a
message is transmitted by means of
the CREST system by any particular
time. In this connection, CREST
members and, where applicable, their
CREST sponsors or voting service
providers are referred, in particular, to
those sections of the CREST Manual
concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid
a CREST Proxy Instruction in the
circumstances set out in Regulation
35(5)(a) of the Uncertificated Securities
Regulations 2001.
Amending a proxy
10. To change a proxy instruction, a
member needs to submit a new
proxy appointment using the
methods set out above. Note that
the deadlines for receipt of proxy
appointments (see above) also apply
in relation to amended instructions;
any amended proxy appointment
received after the relevant deadline
will be disregarded. Where a member
has appointed a proxy using the
paper proxy form and would like
to change the instructions using
another such form, that member
should contact the Registrars on +44
(0)370 707 1443.
If more than one valid proxy
appointment is submitted, the
appointment received last before the
deadline for the receipt of proxies will
take precedence.
(b) the answer has already been given on
a website in the form of an answer to
a question; or
Revoking a proxy
11. In order to revoke a proxy instruction,
a signed letter clearly stating a
member’s intention to revoke a proxy
appointment must be sent by post or
by hand to the Company’s Registrars:
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.
Joint holders
13. Where more than one of the joint
holders purports to vote or appoint a
proxy, only the vote or appointment
submitted by the member whose
name appears first on the register will
be accepted.
Questions at the AGM
14. Under section 319A of the Act, the
Company must answer any question
you ask relating to the business being
dealt with at the meeting unless:
(a) answering the question would
interfere unduly with the preparation
for the meeting or involve the
disclosure of confidential information;
(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 111, 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 111, may, subject to
the conditions set out at note 19,
require the Company to include in
the business to be dealt with at the
AGM a matter (other than a proposed
resolution) which may properly be
included in the business (a matter of
business).
Website publication of any
audit concerns
17. Pursuant to Chapter 5 of Part 16 of the
Act, where requested by a member or
members meeting the qualification
criteria set out at note 18 on page 111,
the Company must publish on its
website a statement setting out any
matter that such members propose to
raise at the AGM relating to the audit
of the Company’s accounts (including
the auditors’ report and the conduct
of the audit) that are to be laid before
the AGM.
Where the Company is required
to publish such a statement on its
website:
(a) it may not require the members
making the request to pay any
expenses incurred by the Company in
complying with the request;
(b) it must forward the statement to the
Company’s auditors no later than the
time the statement is made available
on the Company’s website; and
(c) the statement may be dealt with as
part of the business of the AGM.
Annual Report and Accounts 2018Financial statements
111
Notice of
Annual
General
Meeting
The request:
(d) in the case of a request made in hard
copy form, such request must be:
(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);
(i) signed by you and state your full
name and address; and
(ii) sent either: by post to
(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
Company Secretary,
Future plc,
Quay House,
The Ambury,
Bath BA1 1UA;
(f) must be received by the Company at
or by fax to +44(0)1225 732266
least one week before the AGM.
Members’ qualification criteria
marked for the attention of the
Company Secretary; and
(e) in the case of a request made in
18. In order to be able to exercise the
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.
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.
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;
(iii) in the case of a resolution, must be
accompanied by a statement setting
out the grounds for the request;
(iv) must be authenticated by the person
or persons making it; and
(v) must be received by the Company not
later than six weeks before the date of
the AGM;
Future plc
112
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
Annual Report and Accounts 2018Financial statements
113
Directors and advisers
Directors
Advisers
Richard Huntingford
Independent Non-Executive Chairman
Zillah Byng-Thorne
Chief Executive
Penny Ladkin-Brand
Chief Financial Officer
and Company Secretary
Hugo Drayton
Independent Non-Executive Director
Alan Newman
Independent Non-Executive Director
Rob Hattrell
Independent Non-Executive Director
Offices
Registered office
Future plc
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
London office
1-10 Praed Mews
London W2 1QY
Tel +44 (0)20 7042 4000
www.futureplc.com
Company registration number 3757874
Registered in England and Wales
Independent auditors
PricewaterhouseCoopers LLP
Chartered accountants and statutory auditors
2 Glass Wharf
Bristol BS2 0FR
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
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
23 November 2018
Annual General Meeting
7 February 2019
Half-year end
31 March 2019
Announcement of
interim results
May 2019
Financial year-end
30 September 2019
Future plc
Annual Report and Accounts 2018
114114
Contacts
Future plc and
Future Publishing Ltd
Registered office
Quay House
The Ambury
Bath BA1 1UA
Tel +44 (0)1225 442244
Future US, Inc.
15th Floor,
11 W 42nd Street,
New York, NY 10036
USA
Tel +1 212 378 0448
www.futureplc.com
London office
1-10 Praed Mews
London W2 1QY
Tel +44 (0)20 7042 4000
Future Publishing
(Overseas) Ltd
Suite 3, Level 10
100 Walker Street
North Sydney
NSW 2060
Australia
Tel +61 2 9955 2677
Annual Report and Accounts 2018Strategic report