Annual Report 2019
CONTENTS
03STRATEGIC REPORT
Group Overview
05STRATEGIC REPORT
Chairman's Statement
09STRATEGIC REPORT
Our Vision
and Strategy
35 39 41
STRATEGIC REPORT
Risks and
Uncertainties
STRATEGIC REPORT
Longer Term
Viability Statement
STRATEGIC REPORT
Corporate
Responsibility
71 97 105
CORPORATE GOVERNANCE
Directors'
Remuneration Report
CORPORATE GOVERNANCE
Independent
Auditors' Report
FINANCIAL STATEMENTS
Financial Statements
1 / Future plc
15STRATEGIC REPORT
Future's Markets
19STRATEGIC REPORT
31STRATEGIC REPORT
Loyal Communities
– Our Verticals
Chief Executive's
Review
47 51 53
CORPORATE GOVERNANCE
Board of Directors
CORPORATE GOVERNANCE
Directors' Report
FINANCIAL REVIEW
Financial Review
149 154
FINANCIAL STATEMENTS
Investor Information
FINANCIAL STATEMENTS
Notice of Annual
General Meeting
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Annual Report and Accounts 2019 / 2
GROUP OVERVIEW
Future plc is a global platform for specialist media, listed on the London
Stock Exchange (symbol: FUTR). These highlights refer to the Group’s
annual results for the year ended 30 September 2019.
Media division KPIs
Online users (million)
Event attendees (thousand)
2019
2018
2017
2016
211.2
142.4
49.0
44.9
2019
2018
2017
2016
Number of unique visitors to a Future website within a monthly period.
Number of visitors to a Future event.
eCommerce transactions (million)
2019
2018
2017
2016
9.8
3.2
2.0
1.1
Number of transactions made via Affiliate links on Future websites.
Magazine division KPIs
Total circulation (million)
Subscribers (million)
2019
2018
2017
2016
1.5
1.3
1.0
1.0
2019
2018
2017
2016
Total number of magazine and bookazine copies sold.
Total number of subscriptions.
151
155
76
38
0.9
0.9
0.5
0.4
3 / Future plc
Corporate KPIs
Revenue (£million)
Global audience (million)
2019
20181
2017
2016
Consolidated Group revenue.
221.5
130.1
84.4
59.0
2019
2018
2017
269.2
193.4
85.6
Includes Magazine and bookazine print circulation per issue, monthly online users,
event attendees, social reach (Twitter followers, Facebook unique impressions,
YouTube subscribers) and newsletter subscribers.
Adjusted operating profit (£million)
Reported operating profit/(loss) (£million)
2019
2018
2017
2016
52.2
18.5
8.9
2.8
2019
2018
2017
2016
Adjusted operating profit represents earnings before share-based payments
(relating to equity settled awards with vesting periods longer than 12 months)
and related social security costs, interest, tax, amortisation of acquired intangible
assets, fair value movements on contingent consideration (and unwinding of
associated discount) and on currency option, non-trading foreign exchange gains
and exceptional items.
Consolidated statutory operating profit/(loss).
Adjusted free cash flow (£million)
Free cash flow (£million)
2019
2018
2017
2016
53.7
17.4
15.3
4.6
2019
2018
2017
2016
26.7
5.3
0.8
(14.4)
49.7
12.3
10.2
1.2
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 cash flows relating to exceptional items.
Free cash flow is defined as statutory operating cash inflow less capital
expenditure.
Adjusted EBITDA (£million)
Adjusted EBITDA margin
2019
2018
2017
2016
54.5
20.7
11.0
5.2
2019
20181
2017
2016
25%
16%
13%
9%
Adjusted EBITDA represents earnings before share-based payments (relating to
equity settled awards with vesting periods longer than 12 months) and related
social security costs, interest, tax, amortisation of intangible assets, depreciation,
fair value movements on contingent consideration (and unwinding of associated
discount) and on currency option, non-trading foreign exchange gains and
exceptional items.
See Directors’ Remuneration Report pages 89 and 90.
Adjusted EBITDA margin represents adjusted EBITDA as a percentage of statutory
Group revenue.
Adjusted diluted EPS (p)
Leverage
2019
2018
20172
2016
47.5
24.3
18.4
8.8
2019
2018
2017
.74x
.86x
.91x
Adjusted diluted EPS represents adjusted profit after tax divided by the weighted
average dilutive number of shares at the year end date.
Leverage is defined as total net debt divided by adjusted EBITDA.
Notes
1. 2018 restated for IFRS 15. Revenue from contracts with customers.
2. Restated for 2018 rights issue.
Annual Report and Accounts 2019 / 4
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements
CHAIRMAN’S
STATEMENT
Richard Huntingford
Chairman
Dear Shareholders,
Steps to accelerate growth
I am delighted to report that Future has had another outstanding
year, delivering record-breaking results, both financially and in
terms of our audience. Revenue for the year increased by 70% to
£221.5m, with adjusted EBITDA up 163% at £54.5m and operating
profit up 404% at £26.7m. Global audience grew to 269 million
(from 193 million). It is a very exciting time to be at Future and we
remain positioned to deliver continued strong growth and returns
through our strategy of being a global, technology-enabled
platform for specialist media.
Clear vision and focused strategy
The Group’s outstanding results are due to the continued
relentless focus on the Group’s vision and strategy for success.
Future’s purpose is to change people’s lives through sharing
knowledge and expertise with others, making it easy and fun
for them to do what they want. We help dedicated enthusiasts
follow their passion through our high-quality branded content,
innovative and scalable technology, and unique experiences.
In doing so, we create loyal, highly-engaged communities that
are of significant value to advertisers and commercial partners.
We seek to expand our global reach through organic growth,
acquisitions and strategic partnerships, whilst also diversifying
our monetisation models to create significant, multiple revenue
streams.
In addition to the vision and strategy that is embedded across
the organisation, we also have a clear and well-understood
planning approach to how our strategy is executed. This is set out
in the Future Playbook, which captures the “rules of the game” at
work for all our staff so as to ensure that everyone is aligned and
focused on delivering the same goals. This includes the key values
that underpin all that we do as a collective organisation. Alongside
this, the Future Strategy Wheel sets out the business model that
we focus on to ensure that we are creating products and services
that can be delivered across multiple channels in a manner that
diversifies and optimises the monetisation of both our content
and our loyal communities.
The Group made a number of transformative steps during
the year to both the shape of the business and the strength
of the balance sheet in order to accelerate our growth plans.
Most notably, the Company returned to a Premium Listing in
March, and entered the FTSE 250 Index in June. This has led to
a considerable broadening of our shareholder register, both in
terms of UK institutions and new US investors.
During February we re-financed our debt, replacing our existing
bank facilities with a new, four-year £90 million multicurrency
Revolving Credit Facility which includes an incremental
£45 million accordion. This provides the Group with significant
additional flexibility and improved terms on the previous debt
facilities.
The re-financing facilitated the three acquisitions which the
Group undertook in the year. During February and March the
business acquired two portfolios: firstly, Mobile Nations, a leading
global digital publisher focused on consumer electronics and
based in the US; and secondly, two former Future-owned cycling
titles that had previously been sold to Immediate Media in 2014,
which enhance the coverage of our sporting brands within our
Hobbies division.
The acquisition towards the end of the financial year of
SmartBrief, a US-based B2B publisher of email newsletters,
significantly deepens our presence in the US B2B market and
introduces a significant new product to monetise, in addition to
new specialist verticals. This gives us an excellent opportunity to
drive further revenue and profit growth over the coming years.
Each of these acquisitions is strongly aligned to Future’s clear
and consistent strategy, as described earlier. We only invest
in acquisitions that complement and enhance our strategic
business model and create value by acquiring strong companies
in our market, enhancing their capabilities within our technology
stack, and delivering improved content across our communities.
As a result of these acquisitions, this year has seen a significant
shift in geographic importance, with revenue from the US
overtaking that of the UK for the first time. Similarly, we expect a
growing share of our revenue to come from the B2B business next
year. Both developments deliver on our strategy of diversification
and will support our future growth and performance.
In addition to being highly disciplined in ensuring that
acquisitions have a strong strategic rationale, we are also very
focused on the successful integration of acquired businesses.
We have a proven management team and a carefully planned,
5 / Future plc
Future has had an exceptional year, achieving
record levels of profitability and audience. During
the year the Company stepped up to a Premium
Listing and entered the FTSE 250. The foundation
for this success is a clear and focused strategy
which continues to be extremely well executed by
our passionate and committed team.
systematic approach which allows us to integrate acquisitions
in a timely and efficient manner. In addition, the Board closely
monitors the progress of acquisitions, both to ensure that the
full benefits of all acquisitions are ultimately delivered and to
prevent the risk of management over stretching itself in terms of
bandwidth capability.
As you may have seen, on 30 October 2019, a month after the
financial year-end, we announced the proposed conditional
acquisition of TI Media, the renowned magazine and digital
media company with a proud heritage in UK publishing, for a
total cash consideration of £140 million. This major acquisition
has compelling strategic and financial rationale, providing an
outstanding opportunity to accelerate Future’s strategy and to
bolster our growth levers. It is hoped that the acquisition will
complete in Spring 2020. We have also, post year end, announced
the further exciting acquisition of Barcroft Studios as of
1 December 2019.
Capital structure and dividends
The Group was again highly cash generative, achieving adjusted
cash conversion of 106% (2018: 96%) and finishing the year with
net debt of £40.3m. The Board’s policy is that leverage should not
exceed 1.5 times EBITDA. The Board is delighted to propose an
increased final dividend of 1.0p a share (2018: 0.5p), payable on
14 February 2020 to all shareholders on the register at the close
of business on 17 January 2020. 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.
I would like to take this opportunity to thank all of our
shareholders and members of our banking syndicate for their
confidence in the Company and its growth ambitions, as the
transformative steps that we have undertaken would not have
been possible without their continued support.
Board composition
The Board was strengthened at the start of the financial year with
Rob Hattrell joining as a Non-Executive Director and member
of the Audit, Remuneration and Nomination Committees on 1
October 2018. Rob, who is currently Vice President of eBay UK, has
already become a very valuable contributor to the Board through
his significant eCommerce, digital platform and commercial
experience.
We have had a strong and settled Board during the course of the
financial year and feedback from the recent Board evaluation
exercise shows that the Board is highly engaged, with strong
shareholder focus and clear alignment to vision and strategy,
making for constructive and challenging debate. There is a culture
of open communication, mutual trust and respect for each other’s
opinion and relevant knowledge. The additional responsibilities
and governance requirements that come with the Company’s
Premium Listing and FTSE 250 membership are well recognised
by all Board members, as is the importance of continuing to
embrace the entrepreneurial and ambitious culture that has been
the bedrock for much of the Company’s recent success. I would
like to thank all my fellow Board members for their hard work,
diligence, wisdom and commitment during what has been a very
full and busy twelve months for the Company.
On 1 July 2019, we announced that Penny Ladkin-Brand intended
to step down from her role as CFO in early 2020 to take up a new
role in the business as Chief Strategy Officer. Having undertaken
a full external search for Penny’s replacement, I was delighted to
announce that Rachel Addison, who is currently CFO of TI Media,
will join the Board as CFO upon completion of the acquisition of
the company. Rachel has a wealth of media industry experience,
including large-scale integrations, and will be a great addition to
the Future Board. I am delighted that Penny, who has played such
an important role in the Company’s success over the past four
years, will continue to serve the business in her new Chief Strategy
Officer role.
Our people
Future, more than most companies, is a “people business” and our
employees are fundamental to the success of the Company. We
are incredibly fortunate in having people who are so passionate
about the Company and the roles that they each play in the
business, and who work so hard each day to ensure that we
deliver the very best outcomes for our communities, commercial
partners and other stakeholders. It has been a very busy year that
has also brought a lot of change through the Group’s acquisition
activity in both the UK and US. On behalf of the Company’s
shareholders and the Board, I would like to say a huge Thank You
to every one of our staff for their contribution to the considerable
success that the Group has enjoyed over the past year.
I would also like to pay tribute to our incredibly hard-working
CEO, Zillah Byng-Thorne, and the outstanding leadership that she
brings to the Group. In her five years as CEO, she has led a quite
extraordinary turnaround of Future’s fortunes that has seen the
market value of the Company grow from £23 million in 2014 to its
current £1.25 billion and FTSE 250 membership.
Annual Report and Accounts 2019 / 6
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements Chief Executive Zillah
Byng-Thorne presents at
the UK Future Conference
On behalf of all shareholders, thank you so much, Zillah, for
delivering such an exceptional performance.
Looking to the future
In conclusion, Future has had an outstanding year, delivering
another strong set of financial results whilst, at the same time,
putting in place a number of new pillars that create an exciting
platform for the next stage of significant growth for the Group. As
Chairman, I look to the future with confidence, knowing that we
have a strong sense of purpose, a clear and focused strategy and
great talent, which together will deliver strong growth and returns
for shareholders.
Richard Huntingford
Chairman
4 December 2019
7 / Future plc
Annual Report and Accounts 2019 / 8
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements OUR VISION
AND STRATEGY
At Future our success is a result of the alignment within
the organisation of our vision and strategy, and how we
execute on that strategy.
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.
Future is a global specialist media
platform driven by technology, with
diversified revenue streams.
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, innovative
technology and unique experiences.
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.
We succeed by delivering content that connects with
audiences, in areas that we have expertise in,
recognising that in today’s media landscape
providing the answers to our audience's
needs is the first requirement if you want
them to spend time with you.
9 / Future plc
We are expanding our global reach
through organic growth, acquisitions
and strategic partnerships.
Investing in our business is a core part of our strategy.
That includes ensuring we invest in our core brands,
technology and people as well as looking to acquire
new assets. In determining what businesses we
acquire we are keen to ensure that they 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.
We continue to create
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 269.2
million (2018: 193.4 million) though our
websites, events, social media,
video and magazines.
We are diversifying our monetisation
models to create significant
revenue streams.
We look to grow profitably and generate cash
returns, both organically and through acquisitions,
and aim to do this through diversifying our
audience and developing new sources
of monetisation.
Our strategy is underpinned by three factors:
Winning differentiators
Competitive essentials
Activators
• Offering the easiest-to-access ‘how to’
advice wherever our audiences are
• Creating meaningful relationships with
• A disciplined approach to investment
strategic partners
through testing
• Having the most relevant review content
• Blending human and artificial
• Having a culture representative of our
in the world
intelligence
values
• Demonstrating the value of original
• Simple but brilliant proprietary software
• Brilliant at the basics
content
• Disrupting publishing through platforms
• Anticipating our customers' needs
• Knowing our customers
• Cash returns focused
• World-class Search Engine Optimisation
• Leaner, simpler philosophy
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How we execute our strategy
We have adopted 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. We have four
underlying pillars that help us execute our strategy:
Diversifying our audience
Scalable platform
We entertain, inform and engage our consumers with a
variety of content that connects across key verticals via
websites, events and magazines, and monetise this via
paid content, subscriptions, media sales, tickets sales
and eCommerce.
We continue to grow our online audience both
organically and through acquisitions; online users
grew by 48% year-on-year, 31% of which is organic. We
achieved this growth in audience by ensuring that we
focus on the content that people want to read. This
can range from exclusive new stories about the moon
landing to launching whole new content verticals, for
example the launch of Bikeperfect.com in July was
focused on reaching a broader audience of cyclists.
Within our legacy portfolio we continue to see evidence
that our audience communities are stronger than
ever thanks to our content designed specifically to
engage with our audience. For example, the audience
of GamesRadar, one of our more mature brands, has
increased by 72% YoY as we have launched a number of
new categories which suit their needs.
During the year we acquired SmartBrief, a US-based
email newsletter publisher, adding additional audience
of 5.8m subscriptions to their “smart briefs”, a material
increase in our B2B audiences. SmartBrief also brings us
the functionality to engage with our audiences through
regular newsletters across the whole Future portfolio.
In order to remain scalable we have made significant
investments in our technology as well as our back
office and infrastructure. Our strategy of investing
in one proprietary technology platform continues to
facilitate our growth, enabling Future to launch three
new organic sites for minimal cost, which supports our
organic growth ambitions. We have also continued
to invest in our core back office systems facilitating
the integration of acquisitions with limited increased
overhead. This strategy, combined with a culture of
frugality drives margin expansion as the Group grows
and on-boards new brands.
Our technology stack consists of various underlying
technologies that together manage our IP assets,
facilitate the growth of our websites and enable our
magazines to be published on time. Additionally,
it supports the growth of our commercial and
eCommerce monetisation, and crucially ensures our
audience get the user experience they want from
our content.
Our web platform “Vanilla” is highly scalable and
dynamic, allowing for online localised publishing and
multi-lingual content management capabilities. We
now have a total of 24 sites on the Vanilla platform,
compared to 13 last year.
In conjunction with Vanilla, “Hawk” is the technology
that we have developed to help customers find the right
product for them online. Hawk is a price comparison
database back-end with a number of consumer-facing
widgets which appear within content reviews. Hawk has
been instrumental in our global eCommerce growth
this year, providing us with valuable insight into our
customers' behaviours and buying preferences.
Our advertising technology, Hybrid, has been designed
to keep pace with the ever-changing advertising
landscape. Hybrid was formed from Future’s own
proprietary built technology, Bordeaux, which works
intelligently to deliver high advertising viewability and,
from the technology acquired as part of Purch, RAMP,
which in turn leads to optimised yields.
11 / Future plc
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Continued diversification
of content monetisation
Ongoing investment
Core to our strategy is the focus on diversification of
our content monetisation. Media is a disrupted industry
and to ensure we continue to grow and stay relevant to
our audiences we need to innovate and diversify.
We have invested in new ways of content monetisation
models this year, including through new language
formats, and in 2019 we launched our first multi-
language site in the Nordics with our franchise partner.
During the year we signed three new franchise
partners, in India, Benelux and Italy. Our franchise
model enables us to monetise audiences in markets
that are either non-English speaking, or in markets
where we do not operate.
We also directly launched TechRadar to the US Spanish-
speaking community in the late summer, and while
early days we are excited about the possibility of scaling
to new audiences. In addition, during the year, we have
developed our internal podcasting proposition with the
view that this could be monetised via subscriptions,
advertising and sponsorship.
The acquisition of SmartBrief not only grew our
audience reach, it also introduced a material new
revenue stream with email newsletter sponsorship.
As a result of our acquisition of What Hi-Fi in 2018, we
have created a new business line in endorsements and
sponsorship; which this year has grown by 247%.
During the year we launched a number of new events,
including The South East Homebuilding Show, Sound
for Film & TV and Wonder Women in Streaming, which
have been successful additions to our events portfolio.
Future has made significant investments during the year
both in the core business and also via acquisition.
During the year Future launched three new websites:
Bike Perfect in July 2019, 5GRadar in August 2019, and
TechRadar Español in August 2019.
There were a number of technology innovations in
the year, including the development of “Flexi”, a new
enhanced website builder tool, which enables us to
accelerate the time to launch or build a new site. A
further major development in the year was the Hybrid
advertising platform which reflected the best of the
legacy Future & Purch advertising technologies. Future
also invested in its people during the year, which included
launching a new manager development programme,
with over 160 managers participating in this training and
hiring over 40 new roles into editorial.
In February 2019 we acquired Cycling News and
Procycling from Immediate Media. These brands are
worldwide voices on professional cycling, offering
analysis, insight and exclusive interviews with industry
greats. They are two long-established brands with
robust business models and attractive development
opportunities via strong digital subscriptions, export and
licensing revenues.
In March 2019 we acquired the digital technology media
publisher Mobile Nations. Mobile Nations had launched
a portfolio of exceptional brands focused on consumer
electronics and men’s lifestyle reaching 39 million online
users worldwide. This acquisition strengthened Future’s
presence in the US and reinforces our status as the US’s
leading provider of technology news online.
In July 2019 we materially increased our presence in the
B2B market through the acquisition of SmartBrief. This
acquisition expands our audience reach through targeted
email marketing and daily digital newsletters for business
professionals, enriching their lives through the delivery
of pertinent news and content in a way that is fun and
personal.
As we move into the next financial year, our focus
continues to be on optimising all of our acquisitions
through efficient integration of operations and
monetising the additional content across our established
and new revenue streams.
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How we execute our strategy
The Future Playbook
To support our strategy and execution we have created the Future Playbook to capture
the “rules of the game” at work for our staff. This is shared with every new member of
staff to ensure we are all aligned and focused on delivering the same goals. This includes
our six values of how we behave, and serve as the guardrails that ensure we stay focused
on delivering our strategy while staying true to who we are.
We are part of
the audience and
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.
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’.
We are proud of
our past and 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.
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.
We all row
the boat
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.
Results matter –
success feels good
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.
13 / Future plc
The Future
Strategy Wheel
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Future’s Business Model
The Future Strategy Wheel
At Future our purpose is clear: to change people’s lives through
sharing knowledge and expertise with others, 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 verticals that our communities are
passionate about, where we can provide knowledge and expertise,
and we see this as a key differentiator.
Our strategy is focused on diversifying our business models and, as
a result, we operate our business through three distinct lenses:
1. globally;
2. divisionally; and
3. 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.
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 reusable 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.
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FUTURE'S MARKETS
Lens one – Globally
We run our operations across two geographies
US
Our biggest audience is in the US, with users
of 97.4 million across our websites and online
newsletters in the US and 10.3 million in
Canada. US operations relate to editorial and
monetisation of all websites across the US
and Canada, and the publication of consumer
magazines including PC Gamer and MacLife.
B2B operations are predominantly based in the
US with SmartBrief based in Washington DC and
a number of key B2B brands such as Broadcast &
Cable and Twice, also based in the US.
Revenue £m
Online users m
No of events
Circulation m
Subscribers m
2019
118.8*
107.7
31
0.6
0.5
2018
40.1
70.1
25
0.6
0.5
* Revenue excludes intra-group revenues
OFFICE LOCATIONS
United States
United Kingdom
France
Australia
Offices:
New York and
Washington DC
Number of staff:
476
Offices:
London, Bath,
Bournemouth
and Bromsgrove
Number of staff:
714
Office:
Grenoble
Office:
Sydney
Number of staff:
15
Number of staff:
18
15 / Future plc
UK
The UK operations encompass Australia, which runs as a full satellite division,
and monetisation of the rest of world audiences, as well as the shared centres of
excellence for back office including finance, HR and technology, with services in
Bath and Grenoble, France. The UK has a strong heritage in consumer magazines,
publishing titles such as Classic Rock, What Hi-fi and Period Living, and runs a
number of B2B publications such as Music Week. The UK operations also span
a number of websites and one of Future’s most successful brands, TechRadar,
originates from the UK which has a global audience of 31.6 million. The UK also
houses the Group’s licensing operations which facilitates, content distribution for
both online and print publications into 37 countries.
In Australia we have brands including Get Price, APC and PC PowerPlay which
all serve the local market.
In 2018, 69% of revenue came from the UK and 31% from the US (restated for IFRS 15).
As a result of our “US first” initiative driving US growth and acquisitions completed
during 2019, revenue from the US exceeded that of the UK for the first time (54% US,
46% UK). Organic revenue growth in the UK was 3% and in the US 40%, reflecting the
fact that over three quarters of Magazines revenue is generated in the UK.
Revenue £m
Online users m
No of events
Circulation m
Subscribers m
2019
102.7*
33.4**
25
0.9
0.4
2018
90.0
23.4
35
0.7
0.4
* Revenue excludes intra-group revenues
**Revenue from RoW users (not shown) with limited
monetisation are included in the UK segment
Annual Report and Accounts 2019 / 16
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements Lens two – Divisionally
MEDIA REVENUE STREAMS
CONTENT PUBLISHING
& LICENSING
EMAIL
NEWSLETTERS
£
ECOMMERCE
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MEDIA
H
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SUBSCRIPTIONS
ADVERTISING
EVENTS
& EXPERIENTIAL
We define our Media division as all revenues not generated by magazines
or associated with magazine sales. Included within Media division revenues
are digital advertising (including first party sold revenues, programatically
bought revenues, and content solutions), eCommerce revenue where we
receive a commission on sales made by our retail partners, events and
exhibition revenue, and email newsletter revenues.
Our flourishing Media division is positioned as a digital innovator with
significant revenue growth year-on-year across all of our key revenue
streams. Media is underpinned by our technology platforms and services,
with a dedicated team of developers and engineers. This group is tightly-
knit and agile, a collection of passionate tech experts specialising in
computer systems, data processing and scalability. In the course of the year,
the Media division expanded through the integration of the Purch assets
and it is a testament to the robustness of our technology platform that it
continues to perform well with 24 websites now on Vanilla. Media revenue
streams also expanded through the addition of Mobile Nations, the cycling
assets, the launch of a new cycling website Bike Perfect in July 2019, and
through the acquisition of SmartBrief, also in July 2019.
Media revenues are now generated from 76 websites and 56 events in the
UK and US.
17 / Future plc
Media KPIs
211m online users
142m in 2018
£1.30 organic
global RPU
£1.20 in 2018
52m social
reach
50m in 2018
151k event
attendees
155k in 2018
9.8m
eCommerce
transactions
3.2m in 2018
14 digital
licensing partners
11 in 2018
NEWSTRADE
MAGAZINE DIVISION
CONTENT PUBLISHING
& LICENSING
S
W
E
V
E
I
R
MAGAZINES
H
O
W
T
O...
MEMBERSHIP &
SUBSCRIPTIONS
NEWSTRADE
ADVERTISING
The Magazine division publishes special interest magazines and
bookazines in both print and digital format across the B2B and B2C
spheres. The portfolio covers 78 periodic titles including Classic Rock,
Guitar World, How It Works, Homebuilding & Renovating, FourFourTwo,
Digital Camera, Guitar Player, What Hi-Fi?, Guitarist, PC Gamer and Music
Week. This year we published 568 bookazines and our global circulation
reached 1.5 million (2018: 1.3 million). We have an ongoing focus on driving
a direct relationship with the reader, with subscriptions of 0.9 million (2018:
0.9 million).
Additionally, we have continued to generate revenue from our specialised
content through print licensing, and this year we signed a total of 13 new
regular frequency licensing agreements across 11 territories.
Future Fusion, our in-house creative services agency, also sits within the
Magazine division and has continued to delight its customers with its
high-quality content.
Magazines KPIs
78 magazines
568 bookazines
published
85 in 2018
published
524 in 2018
Total circulation
of 1.5m
1.3m in 2018
0.9m subscribers
0.9m in 2018
Annual Report and Accounts 2019 / 18
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19 / Future plc
Lens three – Vertically
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.
Annual Report and Accounts 2019 / 20
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements We have
continued to
strengthen our
position and reach
in the technology
vertical in the US,
and maintained
our number one
position in the UK.
Technology vertical
Brands include:
Future’s technology brands cover all aspects of consumer technology,
from phones to computing to home technology, providing reviews,
buying guides and how-tos on technology products for B2C
audiences. The consumer technology vertical is constantly evolving
and during the year we have seen audience growth across subjects,
including 5G and alternatives to traditional television consumption,
and growth in our audio visual sector.
We have continued to strengthen our position and reach in the
technology vertical in the US, becoming the number one publisher
of consumer technology in the US and maintaining our number one
position in the UK.
Online audience numbers have grown this year, with total online users
to technology websites up 56% year-on-year, 28% of which is organic.
CONTENT PUBLISHING
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EMAIL
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TECHNOLOGY
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SUBSCRIPTIONS
Vertical audience stats:
Total
subscribers:
171k
up 22k
from 2018
Total online
users:
129.7m
up 46.4m
from 2018
Total
events: 3
Total event
attendees:
626
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
Number 1 UK
and US online
consumer
technology
publisher
Number 1 UK
Hi-Fi magazine
21 / Future plc
Our games &
entertainment
portfolio is the
voice of authority
and source of
influence for
gamers, and film
and TV lovers.
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 underpinned by our two key online gaming brands,
GamesRadar+ and PC Gamer, both of which have seen growth in
online user numbers year-on-year, with GamesRadar+ up 72% and
PC Gamer up 9%. The significant growth in GamesRadar+ during the
year is partially the result of a refreshed editorial strategy, focusing
on tips as well as in-depth reviews, placing audience needs at the
centre of our content development.
CONTENT PUBLISHING
& LICENSING
Vertical audience stats:
£
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GAMES &
ENTERTAINMENT
H
O
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T
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MEMBERSHIP &
SUBSCRIPTIONS
Total
subscribers:
84k
up 2k from
2018
Total online
users: 27.7m
up 6.6m
from 2018
Total
events: 2
Total event
attendees:
1,215
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
PC Gamer is the
number 1 global
PC gaming
website
Number 1
gaming magazine
publisher in
the UK
Annual Report and Accounts 2019 / 22
Strategic ReportFinancial ReviewCorporate GovernanceFinancial StatementsEMAIL NEWSLETTERS
The addition of
Cycling News and
Procycling from
Immediate Media
this year has
enhanced our
outdoor leisure
community.
Hobbies & knowledge vertical
Brands include:
Our hobbies vertical is made up of two sectors – knowledge and
outdoor leisure. The brands in this vertical are highly specialist with
very loyal communities. Our knowledge brands cover topics such as
science and history, and produce many highly successful bookazines
throughout the year. As a result of the Purch acquisition we acquired
both the Live Science and Space.com brands, which were migrated
onto the Vanilla platform during the year. We have seen significant
audience growth in both these brands during the year – one major
editorial highlight in the year was the anniversary of the Moon
landing, which saw Space.com have one of its biggest ever single
days. In line with our desire to have market leading positions, we are
the number one publisher for space content in the US.
The addition of Cycling News and Procycling from Immediate Media
this year has enhanced our outdoor leisure community, adding to our
field sports titles, football brand FourFourTwo, and caravanning titles,
Practical Caravan and Practical Motorhome.
CONTENT PUBLISHING
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NEWSTRADE
ADVERTISING
23 / Future plc
Vertical audience stats:
Total
subscribers:
76k
up 6k from
2018
Total online
users: 32.3m
up 1.5m
from 2018
Market-leading positions:
Number 1 online
space publisher in
the US
Number 1
caravanning
magazines
publisher in the
UK
EMAIL NEWSLETTERSEVENTS & EXPERIENTIAL
Our music vertical
has seen continued
growth in Media
revenue, with a
73% year-on-year
increase.
Music vertical
Brands include:
Our music vertical attends to the needs of both music enthusiasts
and musicians themselves, our key audience groups are rock music
enthusiasts with Loudersounds.com, our main rock music listening
site. This is supported by the Metal Hammer, Classic Rock and Prog
magazines. Our main music playing sites are Musicradar.com and
Guitarworld.com, with the main musician groups that Future creates
content for being guitarists, keyboard players, drummers, and
electronic music producers.
During the year the digital brands have seen continued growth in
Media revenue, with a 73% year-on-year increase. In addition, Guitar
World was migrated onto the Vanilla platform. Future holds the no.1
position in music playing magazines in the UK and US, and the no.2
& no.3 positions online in the UK and US.
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MUSIC
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SUBSCRIPTIONS
Vertical audience stats:
Total
subscribers:
158k
up 4k from
2018
Total online
users: 7.1m
up 1.8m
from 2018
Total
events: 3
Total event
attendees:
3,828
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
Number 1
consumer music
making magazine
publisher in the
UK and the US
Annual Report and Accounts 2019 / 24
Strategic ReportFinancial ReviewCorporate GovernanceFinancial StatementsEMAIL NEWSLETTERS
The number one
homebuilding
event in the UK,
the Homebuilding
& Renovating
Show, takes place
in 8 locations
nationally.
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. We operate
three key brands in this vertical, Homebuilding & Renovating, Real
Homes and Period Living. The Homebuilding & Renovating brand
includes the UK’s number one homebuilding event in the UK, the
Homebuilding & Renovating Show, which takes place in 8 locations
nationally, with over 100,000 attendees in total. Real Homes includes
a growing magazine, the recently launched Real Homes Show
(published on YouTube) and Realhomes.com. During the course of the
year the Realhomes.com brand became a top 20 home interest brand
within the US, which is a terrific result given this site was launched
only 2 years ago, while within the UK the site has grown 128% p.a.
Vertical audience stats:
£
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HOME INTEREST
H
O
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T
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MEMBERSHIP &
SUBSCRIPTIONS
Total
subscribers:
27k
up 2k
from 2018
Total online
users: 1.3m
up 0.4m
from 2018
Total
events: 8
Total event
attendees:
102,221
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
Number 1
homebuilding
show in the UK
Number 1
homebuilding
magazine in the
UK
25 / Future plc
EMAIL NEWSLETTERSCONTENT PUBLISHING & LICENSING
Our flagship
photography event,
The Photography
Show, remains
the largest
photography
exhibition in
the UK.
Photography vertical
Brands include:
Our photography vertical is market-leading, providing creative
inspiration for the global photography community. During 2018 we
launched DigitalCameraWorld.com, which has continued to grow
this year, with online users up 354%, a testament to the quality of the
editorial content and our focus on meeting our audiences' needs.
DigitalCameraWorld.com is now the number one website in the UK
and number two in the US.
Our flagship photography event, The Photography Show, remains
the largest photography exhibition in the UK and attracted over
32,000 visitors this year. As a nod to our focus on ensuring we evolve
our product offering to meet the needs of our audiences, this year’s
show also saw the launch of The Video Show.
CONTENT PUBLISHING
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SUBSCRIPTIONS
Vertical audience stats:
Total
subscribers:
42k
down 6k from
2018
Total online
users: 2.0m
up 1.6m
from 2018
Total
events: 1
Total event
attendees:
32,058
Market-leading positions:
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
The Photography
Show is the largest
UK photography
exhibition
Annual Report and Accounts 2019 / 26
Strategic ReportFinancial ReviewCorporate GovernanceFinancial StatementsEMAIL NEWSLETTERS
B2B vertical
Our B2B division operates in a similar way to
our B2C division, ensuring it creates market-
leading specialist content to assist our audiences
in their professional life. We segment our B2B
portfolio into six distinct sub-verticals: AV/Pro
audio technology, media technology, media
entertainment, music, education and B2B
prosumer, and a brief overview of these is provided
over the next couple of pages.
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.
The acquisition of SmartBrief in July 2019
strengthened our B2B expertise and portfolio,
adding 5.8m subscriptions to the B2B subscriber
list and bringing with it the opportunity to diversify
into the Finance & Insurance sector and the
Healthcare & Medical sector, with 0.75m audience
reach in each. We also see a strategic opportunity
to drive consumer audiences through their email
newsletters with cross-market opportunities.
CONTENT PUBLISHING
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DATA
NEWSTRADE
ADVERTISING
EVENTS
& EXPERIENTIAL
Brands include:
B2B AV technology
sub-vertical
Our AV/Pro audio technology sub-vertical consists of market-leading
magazines, websites and events serving professionals in the audio
visual and professional audio community.
Our brands cover audio video and IT systems, home entertainment and
automation design, and systems integration through news, analysis,
trend reports and technology information. We provide expert advice
and support to both those looking to purchase products within these
markets and the integrators who implement these systems.
Pro Sounds News and Pro Sounds News Europe, serving the
professional audio community for over 40 years, and Mix, covering
high-end audio production for more than 30 years, cover custom
content including native advertising, white papers, video and webinars.
Vertical audience stats:
Total
subscribers:
143k
Total online
users: 334k
Total
events: 5
Total event
attendees:
1,001
Market-leading positions:
System Contractor
News is number 1 for
AV Tech in the US
27 / Future plc
Brands include:
B2B media entertainment
sub-vertical
The B2B media entertainment sub-vertical brands, including
Broadcast & Cable and Multichannel News, are a significant presence
in the media entertainment community, providing market insight
and news on the business of television including programming,
syndication and all relevant technologies including streaming.
Wonder Women, Multichannel News’ award ceremony running since
1999, is a celebration of industry decision-makers who have helped
pave the way for younger generations of women in the rapidly evolving
world of media entertainment.
Vertical audience stats:
Total
subscribers:
38k
Total online
users: 890k
Total events:
12
Total event
attendees:
3,677
Brands include:
B2B media technology
sub-vertical
The brands in the B2B media technology sub-vertical provide in-depth
features and news for those working in the technology that underpins
TV, radio and other media, an area undergoing rapid change at present.
Radio World, TV Technology and other brands help the professional
media technology community navigate through this changing
landscape, providing insight and reviews on the latest technologies
and helping enable key purchase decisions.
Vertical audience stats:
Total
subscribers:
65k
Total online
users: 215k
Total
events: 5
Total event
attendees:
2,002
Annual Report and Accounts 2019 / 28
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements Brands include:
B2B music sub-vertical
Vertical audience stats:
Our B2B music brand, Music Week, has real heritage, being a trade
media brand for the music industry for over 50 years. During the year
we ran the hugely successful Women in Music awards and also the
Music Week Tech Summit, allowing us to leverage the strength of the
Music Week brands to build out new franchises.
The B2B music portfolio complements our consumer music portfolio,
facilitating advertising cross-sell opportunities and content sharing.
Total
subscribers:
6k
Total online
users: 108k
Total
events: 4
Total event
attendees:
2,297
Brands include:
B2B education entertainment
sub-vertical
Tech & Learning has been an education technology publication and
resource for almost 40 years. Focusing primarily on K-12 educators,
it is a full education technology resource offering a truly integrated
platform across print, online and events. During the year the Tech &
Learning site was migrated to Vanilla.
We run Tech & Learning Live and Tech & Learning Summit in a number
of regions across the US throughout the year, providing deep insight
into recent market developments for both those working within
government on school boards, and also teachers and educators.
Vertical audience stats:
Total
subscribers:
67k
Total online
users: 80k
Total
events: 8
Total event
attendees:
497
29 / Future plc
Brands include:
B2B prosumer sub-vertical
Vertical audience stats:
Our B2B prosumer sub-vertical occupies a key position between the
professional and consumer, serving a community that needs to be on
top of rapid technological change whoever it may impact. Looking at
the impact of 5G networks, for example, is a change that will impact
many industries, and the B2B prosumer brands' content and expertise
helps users navigate through changing landscapes.
Total
subscribers:
19k
Total online
users: 3.6m
Total
events: 5
Total event
attendees:
1,524
Market-leading positions:
Number 1
creative and design
magazine publisher
in the UK
CreativeBloq is the
number 1 creative
and design website
in the UK and US
Sources & Definitions
Total audience reach
• Magazine and bookazine print circulation per issue + monthly
online users + event attendees + social reach (Twitter followers,
Facebook unique impressions, YouTube subscribers) +
newsletter subscribers.
Market positions
• Technology no. 1 online in UK and US: comScore technology
news category, desktop visitors age 2+ and mobile visitors age
18+, UK position Jul 19; US position Sep 19.
• No. 1 in PC gaming: based on websites in the Gaming
Information comScore category that are PC gaming focused,
desktop visitors age 2+ and mobile visitors age 18+, UK position
Jul 19; US position Sep 19.
• No. 1 in print music making in UK & US: based on magazine
copy sales in music making sector on UK newsstand (source:
distributor data, Jul 18-Jun 19) and magazine copy sales in
music sector on US Barnes & Noble newsstand (source: Barnes
& Noble sales rankings, Jun 19).
• No. 1 in print photography in the UK: based on magazine
circulation in photography sector (source: ABC).
• No. 1 online in Space in US: based on internally produced
competitive set of all websites about space in the US, ranked by
comScore desktop visitors age 2+ and mobile visitors age 18+,
Sep 19.
• No. 1 in print home renovations in the UK: magazine copy sales
in home improvement – DIY sector on UK newsstand (source:
distributor data), Jul 18-Jun 19.
• No. 1 in print AV tech in US: based on internally produced
competitive set of all B2B AV technology magazines in the US,
ranked by advertising pages, MediaRadar Jul 18-Jun 19.
• No. 1 in print B2B music in UK: based on music specific
magazine copy sales in trade & professional sector on UK
newsstand (source: distributor data, Jul 18-Jun 19).
• No. 1 in creative online in UK & US: based on internally produced
competitive set of all websites about digital design in the
UK and US, ranked by comScore desktop visitors age 2+ and
mobile visitors age 18+, UK position Jul 19; US position Sep 19.
Annual Report and Accounts 2019 / 30
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements CHIEF
EXECUTIVE’S
REVIEW
Zillah Byng-Thorne
Chief Executive
In 2019 the Group has achieved a significant step change in scale,
particularly in the US through the acquisition of Mobile Nations in
March 2019 following the acquisition of Purch at the end of 2018.
Group revenue has grown by 70% year-on-year to £221.5m (2018:
£130.1m, restated from £124.6m for IFRS 15), which is driven by a
mixture of strong organic growth of 11% and acquisitions. Adjusted
EBITDA is up 163% year-on-year to £54.5m, with adjusted diluted
EPS up 95% to 47.5p (2018: 24.3p).
Future’s core business has continued to perform well with strong
like-for-like revenue growth of 11% at constant currency (13% at
actual currency). Adjusted EBITDA margin increased to 25% (2018:
16%, restated from 17% for IFRS 15) as a result of the increasing
scale of the Group and the shifting revenue mix, and operating
profit increased to £26.7m (2018: £5.3m).
Media revenue has increased by 134% to £154.9m (2018: £66.3m
restated for IFRS 15), driven primarily by the Group’s fast growing
revenue streams of eCommerce and digital display advertising,
and through our execution and successful integration of
acquisitions. Media revenue increased by 32% on an organic basis.
A key factor has been our success in the US, with US revenues
now accounting for 54% of group revenues and 67% of Media
revenues. This has been underpinned by the acquisitions which
have allowed us to build operations of sufficient scale to attract a
talented workforce, with US staff now totalling over 450.
Content is at the centre of everything we do at Future, and a key
measure of our success is the continued growth of our online
audiences, combined with our ability to then monetise them.
During 2019, restated organic online revenue per user (RPU) has
increased in the UK from £1.67 to £1.76, a 5% increase, and in the US
from £0.86 to £0.99, a 15% increase. Online audience growth has
been turbo-charged through the acquisitions of Purch and Mobile
Nations.
Organic growth in Media revenue enables us to manage the
expected decline in Magazine revenue and focus on margins and
cash flow. Our acquisitions in the year have significantly expanded
our Media division, which now accounts for 70% of our revenues.
Future continues to be highly cash-generative with adjusted cash
conversion of 106% (2018: 96%) and adjusted free cash flow of
£53.7m (2018: £17.4m) demonstrating the Group’s continued focus
on efficient working capital management. To provide further
balance sheet strength to support the Group's next phase of
growth, a significant refinancing was completed in the year with
a £90m RCF now in place, together with an additional £45m
accordion facility.
31 / Future plc
In March, the Group’s application to return to a Premium Listing
was accepted, reflecting the ambition of the Group to broaden and
strengthen its shareholder base. Following the success of the Group
in 2019, the Board has recommended the payment of an increased
dividend to shareholders whilst ensuring that we maintain
sufficient resources to continue investment in the business.
The nature of the Group’s business and the level of geographic
diversification and presence in the US means that there are no
specific risks to the Group associated with Brexit other than
the impact that general economic uncertainty has on
consumer spending.
Global platform business for specialist media
Our simple, clear strategy to build a technology-enabled global
specialist media platform business with scalable, diversified
brands continues to deliver sustainable, material growth through
audience engagement and technology innovation.
The Purch integration is now complete and as a result Future has
achieved market leadership in the consumer technology category
in the US, with comScore now recognising Future as the largest
digital network for consumer tech news.
Future has enhanced its technology platform through the
addition of "RAMP" advertising technology, which was acquired
as part of Purch. Considerable testing was undertaken during
the first half to identify the optimal combination of Future's
advertising technology solutions, "Bordeaux" and RAMP, resulting
in the creation of "Hybrid", a best of breed advertising technology
solution. In line with the Group's focus on developing a simplified
and scalable technology stack, Hybrid was migrated to the legacy
Future sites during April. Migration of the Purch sites to Hybrid
happened concurrently with the migration to the Vanilla website
platform.
The migration of Purch websites onto Vanilla is now complete and
the Group now has 24 sites on the Vanilla platform in total, with 11
migrated in the last year.
A number of brands have achieved significant audience
growth during the year, in particular we are very proud of the
performance of T3, which has grown its global audience by 218%
in the year, as a result of a focused and disciplined editorial
approach. On the same theme, the renaissance of GamesRadar+,
a 20-year-old brand, highlights the impact of great content on
audiences. GamesRadar+ has been the fastest growing gaming site
in the US on comScore this year, and the giant that is TechRadar
keeps on growing, up 16% year-on-year in terms of audience.
The outstanding results for 2019 demonstrate
the benefits of a clear and focused strategy of
growing our core business through expanding
our audience and reach in existing verticals. We
now have a substantial presence in the US and
are successfully leveraging our brands on our
technology platform, which has driven strong
growth across the business.
Our newer organically launched sites, Digital Camera World and
Real Homes, delivered particularly strong audience growth of 354%
and 167% respectively.
new collegues to Future and acquired a further 250+ colleagues
through acquisitions. One of our key initiatives is training our print
editorial staff on our digital technologies to ensure they are skilled
and are able to use their expertise across the business.
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.
People and Culture
Our approach to people and culture is to embed it into everything
we do. There is a Future way and we want to ensure that all of our
colleagues understand this and can thrive as part of the Future
community. We also recognise that not everyone will want to be
a part of the Future story and that sadly as a result of acquisitions
we sometimes may have to part company with some colleagues.
We strive to ensure that all colleagues at Future have a positive
experience and are treated with respect regardless of the length
of their tenure with us. One of the main ways in which we look to
achieve this is by embedding our strategy for people and culture
in our values. Below is a highlight of some of the key initiatives we
have focused on this year.
We are proud of our past and excited about our future.
We are proud of the changes we have made and those ahead of us.
We are committed to improving and evolving our environmental
and social impact, to benefit not only our employees but also our
communities. Our newly formed Future Communities are working
locally to ensure we are making a positive change, from reducing
our carbon footprint to sourcing local suppliers. The work we do
leads to a healthier local economy as well as a healthier world.
We all row the boat.
Everyone at Future matters, and each of our opinions is valid. In
order to ensure we get feedback from our people we run a number
of initiatives throughout the year, including "Ask Me Anything",
Slack Chats and employee stay interviews. We embrace feedback
and want to ensure all colleagues’ opinions are heard. During the
year in recognition of the US editorial staff's desire to unionise,
we have commenced collective bargaining, and expect to have
this agreed in the coming months. More recently, after receiving
a number of points of feedback in respect of our travel policy,
we have amended this to ensure that we make travelling for our
employees an easier experience.
It’s the people in the boat that matter.
As a business, we believe it's the people we work with that
matter, and ensuring we have the right teams in place to deliver
our best work is critical. During the year we recruited over 250
Let’s do this.
At Future we have a bias for action, and recognise that to move
forward at pace, we need to lean into change. In order to ensure we
equip our managers with the skills and resilience to embrace this,
we have been running management development workshops to
provide support and further develop our talent.
We are part of the audience and the community.
We firmly believe that at Future we are part of our communities, be
they our local direct communities or those who read our content.
Part of our strategy at Future is to ensure we only ever have experts
creating content for us, to ensure that we can meet our audiences
needs. During the year we increased the number of expert writers
in our Media division by 40, an increase of over 10%.
Results matter, success feels good.
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.
As a result of our financial performance, this year we were able
to reward all staff for their talent and commitment by paying
out the maximum amount under the annual profit scheme for
the second year running. Even more pleasingly, as a result of the
record-breaking year we decided to share that success with our
colleagues and increased the maximum payment for all tier profit
pool payments by 60% as a one off gesture.
The extremely successful annual conferences gave the Group
an opportunity to showcase the breadth of talent amongst the
Future staff and encourage networking. This year we welcomed
colleagues from Mobile Nations and SmartBrief to the US
conference.
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 2019 Future made three
exciting acquisitions, which broaden and strengthen both our B2C
and B2B portfolios and further increase our global reach.
In February 2019 we re-acquired the Cycling News and Procycling
brands from Immediate Media for £1.65m. These had been sold in
2014 and we were delighted to welcome them back into Future.
Annual Report and Accounts 2019 / 32
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements
These long-established and profitable brands perfectly complement
our leading consumer hobbies portfolio and offer attractive
development opportunities, further supporting our commitment to
grow and deliver expertly written and credible content.
In March 2019 we acquired Mobile Nations, a leading US-based
global digital publisher focused on consumer electronics, for
an initial consideration of $60m and a further $55m in deferred
consideration, which, following its stellar performance post
acquisition, was agreed early on 11 October 2019. We already had
an established commercial relationship with Mobile Nations
through its longstanding partnership with Purch, which we
acquired in September 2018. The addition of Mobile Nations'
brands will deepen our presence and expand our opportunities to
monetise our significant US online audience.
In July 2019 we acquired SmartBrief for an initial consideration of
$45m (with additional contingent deferred consideration up to
a total cap of $20m subject to meeting certain financial targets
based on the year ending 31 July 2020). SmartBrief is a digital
media publisher of targeted business news and information,
combining technology and editorial expertise to deliver relevant
industry news curated from over 1,500 sources. The acquisition
significantly deepens and consolidates our presence in the
US B2B market and further diversifies our revenue streams.
SmartBrief allows advertisers to target and engage with decision-
makers and influencers, and enhances Future’s B2B reach via
their proprietary technology stack through the addition of
automated email marketing.
Key details of the acquisitions we have made in 2019 are
included below:
Acquisition
Immediate cycling brands
Mobile Nations
SmartBrief
Revenue*
£2.0m
$16.4m
$35.1m
*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).
Note that Mobile Nations includes revenues that became intra-group on acquisition
by Future.
Current trading
The year has started very positively, with continuing strong
growth.
The integration of Purch and of the Cycling News and Procycling
brands has now been completed and SmartBrief is progressing
very well. Following the announcement that we had reached
agreement with the sellers of Mobile Nations to settle the
deferred consideration early, we have launched Future Labs as a
centre for innovation within the Group and are excited about the
possibilities that this might unveil.
We have also announced the acquisition of Barcroft Studios, from
1 December 2019, and the proposed conditional acquisition of TI
Media (which we hope to complete in the Spring of 2020), which
both provide outstanding opportunities to accelerate our growth
in the future.
Zillah Byng-Thorne
Chief Executive
4 December 2019
33 / Future plc
Stage 5 of 2019 OVO
Women's Tour, photographed
for Pro Cycling Magazine
Annual Report and Accounts 2019 / 34
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements RISKS AND
UNCERTAINTIES
Effective risk management is essential to support the achievement
of our strategic and operational objectives as we address the
challenges and uncertainties facing businesses today.
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,
either by reducing their likelihood or mitigating their impact, as
explained further in the Corporate Governance report on pages
63 to 64, and during the year we have continued to develop those
controls. The more granular approach to risk that was introduced
in the prior year has ensured that effective risk management
remains at the core of the Group’s strategy, which includes a
formal, six-monthly review by the ELT and the addition of risk
management to the Audit Committee as a standard agenda
item for every meeting. There have been no significant control
failings or weaknesses identified during the year in respect of risk
management.
Our Principal Risks
The output from the above process is a summary of Principal
Risks that is set out in the table on pages 37 to 38 and
summarised in the heat map opposite. The heat map sets out the
relative likelihood of the risk crystallising and the impact on the
Group if the risk did crystallise – effectively the ‘gross’ risk score
before considering the strength of any mitigation. The relative
strength of the mitigation available to the Group to combat each
risk is depicted in the colour of the risk on the heat map (green
being strong, amber being average and red being low mitigation)
with arrows detailing the movement of the gross risk from the
prior year. The symbol E has been included in the Summary of
Principal Risks table overleaf to indicate risks emerging in FY19.
Each Principal Risk has been analysed according to its impact on
both the Group’s existing business model, as set out in the ‘Future
Strategy Wheel’, and the core elements of the Group’s strategy as
set out in the ‘Future Playbook’. More information on the Future
Strategy Wheel and the Future Playbook can be found on pages
13 and 14. Considering both the existing business model together
with the strategic direction of the Group, the Board carried
out a robust assessment of long term viability, which included
performing sensitivity analysis and reverse stress-testing.
The symbol V has been included in the Summary of Principal
Risks table overleaf to indicate those that have been taken into
account when performing the viability testing.
The Board has overall responsibility for the risk management
framework and for ensuring that we manage risks appropriately.
Future takes its approach to the identification, evaluation and
mitigation of risk and uncertainty extremely seriously, and applies
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 the Group’s risk appetite taking into account its
strategic objectives
• Identifies principal Group risks
• Conducts ‘deep dives’ into specific Principal Risks
• Carries out a robust assessment of any emerging risks
• Assesses the impact of Principal Risks when analysing the
Group’s long-term viability and sustainability
• 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
• Includes an update on risk as a standing agenda item for
every meeting
Executive Leadership Team
• Prioritises Principal Risks through a formal bi-annual review
process
• Allocates resources to manage risks according to potential
impact
• Communicates priorities to the business
• Reviews detailed risk registers to agree Principal Risks
• Identifies any emerging actions where Group-wide action is
required
• Reviews effectiveness of risk management procedures
• Reports to the Audit Committee and Board on a regular basis
The Executive Leadership Team (ELT) is responsible for identifying
risks and working with the Group Financial Controller to capture
them in the Group’s risk register. All risks identified by the ELT
are scored out of 5 (with 5 being the highest) in respect of three
areas: the likelihood of the risk crystallising, the impact if the risk
does crystallise, and the strength of any mitigation in place (in
respect of mitigation, a score of 1 represents strong mitigation). A
combined score is then calculated by multiplying each of these
scores together (with 125 being the highest possible score).
35 / Future plc
Principal Risks Heat Map
7
6
2
1
3
4
5
Gross Risk (before mitigation)
1. Personal data
2. Staff- Key person risk
3. Cyber security and IT
4. Economic downturn/Brexit
5. Advertising
6. Reliance on 'search'
7. Acquisitions
Risk increased
Risk decreased
h
g
H
i
t
c
a
p
m
I
w
o
L
Low
Probability
High
Strong mitigation
Average mitigation
Low mitigation
Changes to the Group’s risk assessment in the year
As a result of the risk review undertaken during the year, several risks identified as Principal Risks in prior years are no longer considered
to be as significant and are therefore not included in the Summary of Principal Risks table overleaf, with the reasons for the reduction in
the perceived level of risk set out below:
FY18 principal risks not included in FY19 assessment
Reason for reduction in risk rating
Operating environment – the structural change in our
operating environment and the pace of transition from print.
The acquisitions of Purch, Mobile Nations and SmartBrief, together
with underlying organic growth in digital revenues, mean that
the Magazine division is a much smaller proportion of the Group’s
revenues which has reduced the impact of this risk.
Changes in advertising models – the increasing trends towards
ad blocking and privacy could result in Future being unable to
monetise online advertising inventory to the same extent it
does currently.
Ad blocking has not had a significant impact on the Group’s ability
to monetise its websites as we have to date effectively mitigated
this through the use of technology and working with the Coalition
for Better Ads to ensure that we are at the forefront of market best-
practice.
Intellectual property – as a publisher, Future is responsible
for any intellectual property infringement or legal issue.
Intellectual property infringement and management continues to
be a vitally important area, however, with the growth experienced
by the Group in the year the materiality of this risk in the context of
the overall Group has reduced.
Annual Report and Accounts 2019 / 36
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements SUMMARY OF PRINCIPAL RISKS
Risks
Description
Mitigation
Personal data
V
Business Model
link: i, ii, vi
Strategy link: 3
Staff – Key
person risk
Business Model
link: i-vii
Strategy link: 1-5
Cyber security
and IT
E
Business Model
link: i, ii, iii, vi
Strategy link: 1
Economic
downturn /
Brexit
V
Business Model
link: ii-vi
Strategy link: 2
Advertising
V E
Business Model
Link: i, iii-vi
Strategy link: 2
Reliance on
‘search’
V
Business Model
Link: ii-iv, vi, vii
Strategy link: 3
Acquisitions
V
Business Model
link: i-vii
Strategy link: 5
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) or claims from data
subjects. Future may suffer reputational risk, as well as a significant financial penalty, if it is responsible for the breach.
Future (and the third parties it relies on) 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 and place significant transparency and accountability obligations on Future. The need to comply with
data protection legislation is a significant control, operational and reputational risk which can affect the Group.
The Data Protection Officer oversees all data protection matters and works with stakeholders within the Group to review, develop and
improve its data practices and procedures.
The Group has implemented a process to respond to subject access requests in a proper and timely fashion and uses a Consent
Management Platform on its websites within the IAB's Consent and Transparency Framework.
Controls and contract provisions are in place to ensure compliance with data protection legislation and confirmation is sought from all
3rd parties who might be involved in providing or processing data to ensure they are also in compliance with such legislation.
The Group is heavily dependent on its CEO and her absence would have a significant impact on the Group. There is
not currently an obvious candidate within the organisation who could step up to replace her as CEO, and the Board
would therefore most likely have to undertake an external search for a successor.
With the further transition away from print and growth in digital revenues the Group is increasingly reliant on
technology.
Hacking of the Group’s websites or any hacking or infiltration of the Group’s public owned and operated
infrastructure resulting in loss of data, could result in significant interruption to trading, disruption to the Group’s
operations and damage to its reputation along with further heavy investment being required.
The data protection elements of this risk have been considered in the Personal Data risk set out above.
Political and economic instability and uncertainty in the UK or US could have an adverse impact on the Group’s
operations.
materialise.
We do not expect Brexit to have a significant impact on the business however a high degree of economic
uncertainty still remains which could reduce consumer spending, resulting in loss of revenue and impact on
advertisers.
The continued industry shift in the advertising model from 1st Party advertising to Premium Programmatic
advertising exposes the Group to commercial risk as this is likely to result in a reduction in yield.
relationships.
Future is very 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).
teams.
Any unforeseen change to the Google algorithm, its nature or business model could significantly impact the
Group’s revenues.
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 wider Group.
The Board has undertaken a detailed succession planning and talent review exercise in the year to ensure (wherever possible) that
the Group is not overly exposed to any one employee. This exercise highlights how each of the executive team could be covered in an
emergency and who were the obvious successors within the organisation.
The Group has also recruited several new senior roles within the year to provide additional strength in experience and expertise to the
senior management team.
In order to attract and retain top talent and ensure that Future remains an attractive place to work, appropriate reward packages
(including long term incentive schemes) are in place for key individuals.
Future seeks to ensure all of its systems and public owned and operated infrastructure complies with best practice as regards to
security, by continually investing in and upgrading IT systems and processes. The Group’s core network is protected by Two-Factor
authentication security and firewall restrictions, with a plan in place to mitigate the effects of any hack.
To protect against system/network outages (caused by fraud or other issues), Future’s network has multiple back-up facilities held in
different locations that minimises any single point of failure. Servers are distributed across two main data centre locations and several
controlled server rooms in different buildings in Bath, Bournemouth and New York.
Following the completion of acquisitions, assets are quickly moved onto the Group's existing infrastructure (data centres and Cloud
based providers) except where not possible or practicable. Websites acquired by the Group are usually transitioned to the Group’s
platform to ensure they meet the required security and best-practice standards.
This risk is mitigated by keeping abreast of macro-economic developments and ensuring that the Group responds swiftly to any as they
The Group is diverse, both geographically and through its large number of revenue streams. This insulates it from political or economic
instability in any particular country or region.
In addition, the Group has focused on being the market leader wherever possible, which should make it more durable in a recession as
historically advertisers are more likely to continue to spend with the market leader in any particular sector.
The Group seeks to mitigate this risk by ensuring that its sales teams are trained to sell the benefits associated with working with Future
(rather than acquiring advertising programmatically) and by ensuring that we continue to maintain and develop deep direct client
This risk is further mitigated by the Group’s expansion of its video offering which further diversifies its revenue streams, and through the
use of its Hybrid technology which ensures that Future drives the best yields available in the market.
Future has a dedicated audience development team who work to ensure Future embeds best practice within its editorial and technical
In addition, Future continues to invest in the creation of top quality content, that follows best practice to meet the needs of audiences
and therefore mitigate as much as possible its reliance on ‘search’.
The Group’s recent diversification into B2B drives a direct relationship with the end customer and the Group continues to invest in other
direct sources to drive direct traffic and reduce its reliance on Google.
The Group has successfully completed and integrated eight 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 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.
The Directors do not see the impact of climate change as one of the Group’s Principal Risks. For more information on Group initiatives to
minimise and mitigate its environmental impact, please refer to the Corporate Responsibility Report on pages 41 and 42.
37 / Future plc
Key:
Link to Future's Business Model:
Link to our vision and strategy:
Long-term viability:
i. Email newsletters
1. A global specialist media platform
ii. Membership and subscriptions
2. We create fans of brands
V: Risk taken into account as part of the
Company’s long term viability assessment (see page 39)
iii. Advertising
iv. Events & experiential
v. Newstrade
vi. eCommerce and lead gen
3. Our loyal communities
4. Diversifying monetisation
5. Expanding global reach
E: Emerging risk for FY19
vii. Content publishing & licensing
Mitigation:
Strong mitigation
Average mitigation
Low mitigation
Risks
Description
Mitigation
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) or claims from data
subjects. Future may suffer reputational risk, as well as a significant financial penalty, if it is responsible for the breach.
Future (and the third parties it relies on) 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 and place significant transparency and accountability obligations on Future. The need to comply with
data protection legislation is a significant control, operational and reputational risk which can affect the Group.
The Data Protection Officer oversees all data protection matters and works with stakeholders within the Group to review, develop and
improve its data practices and procedures.
The Group has implemented a process to respond to subject access requests in a proper and timely fashion and uses a Consent
Management Platform on its websites within the IAB's Consent and Transparency Framework.
Controls and contract provisions are in place to ensure compliance with data protection legislation and confirmation is sought from all
3rd parties who might be involved in providing or processing data to ensure they are also in compliance with such legislation.
The Board has undertaken a detailed succession planning and talent review exercise in the year to ensure (wherever possible) that
the Group is not overly exposed to any one employee. This exercise highlights how each of the executive team could be covered in an
emergency and who were the obvious successors within the organisation.
The Group has also recruited several new senior roles within the year to provide additional strength in experience and expertise to the
senior management team.
In order to attract and retain top talent and ensure that Future remains an attractive place to work, appropriate reward packages
(including long term incentive schemes) are in place for key individuals.
Future seeks to ensure all of its systems and public owned and operated infrastructure complies with best practice as regards to
security, by continually investing in and upgrading IT systems and processes. The Group’s core network is protected by Two-Factor
authentication security and firewall restrictions, with a plan in place to mitigate the effects of any hack.
To protect against system/network outages (caused by fraud or other issues), Future’s network has multiple back-up facilities held in
different locations that minimises any single point of failure. Servers are distributed across two main data centre locations and several
controlled server rooms in different buildings in Bath, Bournemouth and New York.
Following the completion of acquisitions, assets are quickly moved onto the Group's existing infrastructure (data centres and Cloud
based providers) except where not possible or practicable. Websites acquired by the Group are usually transitioned to the Group’s
platform to ensure they meet the required security and best-practice standards.
Political and economic instability and uncertainty in the UK or US could have an adverse impact on the Group’s
This risk is mitigated by keeping abreast of macro-economic developments and ensuring that the Group responds swiftly to any as they
materialise.
The Group is diverse, both geographically and through its large number of revenue streams. This insulates it from political or economic
instability in any particular country or region.
In addition, the Group has focused on being the market leader wherever possible, which should make it more durable in a recession as
historically advertisers are more likely to continue to spend with the market leader in any particular sector.
The Group seeks to mitigate this risk by ensuring that its sales teams are trained to sell the benefits associated with working with Future
(rather than acquiring advertising programmatically) and by ensuring that we continue to maintain and develop deep direct client
relationships.
This risk is further mitigated by the Group’s expansion of its video offering which further diversifies its revenue streams, and through the
use of its Hybrid technology which ensures that Future drives the best yields available in the market.
Future has a dedicated audience development team who work to ensure Future embeds best practice within its editorial and technical
teams.
In addition, Future continues to invest in the creation of top quality content, that follows best practice to meet the needs of audiences
and therefore mitigate as much as possible its reliance on ‘search’.
The Group’s recent diversification into B2B drives a direct relationship with the end customer and the Group continues to invest in other
direct sources to drive direct traffic and reduce its reliance on Google.
The Group has successfully completed and integrated eight 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 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.
Annual Report and Accounts 2019 / 38
Personal data
V
Business Model
link: i, ii, vi
Strategy link: 3
Staff – Key
person risk
Business Model
link: i-vii
Strategy link: 1-5
Economic
downturn /
Brexit
V
Business Model
link: ii-vi
Strategy link: 2
Advertising
V E
Business Model
Link: i, iii-vi
Strategy link: 2
Reliance on
‘search’
V
Business Model
Link: ii-iv, vi, vii
Strategy link: 3
Acquisitions
V
link: i-vii
Strategy link: 5
The Group is heavily dependent on its CEO and her absence would have a significant impact on the Group. There is
not currently an obvious candidate within the organisation who could step up to replace her as CEO, and the Board
would therefore most likely have to undertake an external search for a successor.
With the further transition away from print and growth in digital revenues the Group is increasingly reliant on
Cyber security
technology.
and IT
E
Business Model
link: i, ii, iii, vi
Strategy link: 1
Hacking of the Group’s websites or any hacking or infiltration of the Group’s public owned and operated
infrastructure resulting in loss of data, could result in significant interruption to trading, disruption to the Group’s
operations and damage to its reputation along with further heavy investment being required.
The data protection elements of this risk have been considered in the Personal Data risk set out above.
operations.
advertisers.
We do not expect Brexit to have a significant impact on the business however a high degree of economic
uncertainty still remains which could reduce consumer spending, resulting in loss of revenue and impact on
The continued industry shift in the advertising model from 1st Party advertising to Premium Programmatic
advertising exposes the Group to commercial risk as this is likely to result in a reduction in yield.
Future is very 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).
Any unforeseen change to the Google algorithm, its nature or business model could significantly impact the
Group’s revenues.
Business Model
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.
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements
LONGER TERM
VIABILITY STATEMENT
Assessing the Group’s longer term prospects
and viability
The Directors have based their assessment of viability on
the Group’s current strategy, which is outlined in pages 9 to
14. The Group’s prospects are assessed primarily through its
annual long term detailed planning process, which considers
profitability, the Group’s cash flows, committed facilities, liquidity
and forecast funding requirement over the next three years.
This exercise is completed annually and was signed off by the
Board in September 2019. As part of this the Board considers
the appropriateness of key assumptions, taking into account the
external environment and the Group’s strategy.
The assessment period
A three-year period is used for the Group’s Viability Statement as
this aligns with the length of the Group’s detailed plan, and this
horizon most appropriately reflects the dynamic and changing
Media environment in which the Group operates.
Assessing the Group’s viability
The viability of the Group has been assessed, taking into account
its current financial position, including external funding in place
over the assessment period, and after modelling the impact of
certain scenarios arising from the Principal Risks, which have the
greatest potential impact on viability in that period.
of these scenarios individually threaten the viability of the Group.
The assessment undertaken includes the impact of the
acquisition of TI Media which was announced on 30 October
2019 and is expected to complete in the Spring of 2020 (both on
the basis that it completes as expected and also in an unlikely
scenario that significant undertakings in lieu are required by the
Competition and Markets Authority) and also the post year end
acquisition of Barcroft Studios.
These scenarios assume that the Group takes up the option to
extend its bank facilities for a further year (which is entirely within
its control) so that they expire in February 2024. The scenarios
below are hypothetical and purposely severe with the aim of
creating outcomes that have the ability to threaten the viability of
the Group. The Group has multiple control measures in place to
prevent and mitigate the scenarios from taking place.
In the case of these scenarios arising, various options are available
to the Group in order to maintain liquidity so as to continue
in operation, such as reducing any non-essential capital and
operating expenditure as well as ceasing payment of dividends.
None of these mitigating actions are assumed in our current
scenario modelling.
The results of the above stress testing showed that the Group
would be able to withstand the impact of these scenarios
occurring over the assessment period.
A number of scenarios have been modelled, considered severe
but plausible, that encompass these identified risks. Whilst each
of the risks on pages 37 to 38 has a potential impact and has been
considered as part of the assessment, only those that represent
severe but plausible scenarios were selected for modelling. None
Based on these severe but plausible scenarios, the Directors
have a reasonable expectation that the Company will continue in
operation and meet its liabilities as they fall due over the three-
year period considered.
Viability statement
Scenario
Associated Principal Risk(s)
Description
Data security breach
1. Personal data
A serious data security or regulatory breach results in a significant
monetary penalty and a loss of reputation among customers resulting in
a significant reduction in Media revenues and additional IT costs whilst
the breach is rectified. Given the inherent uncertainty of total quantum,
this test is purposely severe as a stress test for the Group.
Significant revenue reduction
2. Key person risk;
4. Economic downturn/
Brexit;
5. Advertising;
6. Reliance on ‘search’
This scenario assumes a significant reduction in eCommerce and
advertising growth, accelerated decline in magazine revenues and
margins and longer collection days.
Significant change in external
environment
4. Economic downturn/
Brexit
This assumes a weakening of USD/GBP exchange rates, higher interest
rates and overhead increases.
Acquisition fails to deliver
value
2. Key person risk;
7. Acquisitions
This scenario assumes that no synergies are realised from the acquisition
of TI Media (£15m p/a are planned as outlined in the related shareholder
circular).
39 / Future plc
Lead singer and guitarist of Earth;
Dylan Carlson photographed
for Total Guitar magazine
Annual Report and Accounts 2019 / 40
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements CORPORATE
RESPONSIBILITY
We are part of the audience and the community, investing in our
people and making a positive impact.
In 2019, we made significant investments in our people, our
communities and our environment, ensuring we are able to make
a positive impact in every location we operate.
magazine gifts containing electronic components are removed
and responsibly disposed of in accordance with WEEE (Waste
Electrical and Electronic Equipment Directive) regulations.
We focus our efforts around key areas where we believe we can
make a difference, and ensure that these remain aligned with our
core operating values.
1. We are proud of our past and excited about our future
We are proud of the changes we have made. We are committed
to improving and evolving our environmental and social impact,
benefitting not only our employees and our communities, but
also making important changes to create a better future for
generations to come.
The environment
We strive to positively impact our environment and ensure
whatever we do, we minimise harm to our planet.
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 it in a way that is
ethically responsible and environmentally sustainable. In 2019, 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. We have grown our use of recycled paper stocks
through 2019 and will continue to do so in 2020 across both the
UK and US, especially in our Bookazine portfolio.
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 2019, 100% of the paper we used in our magazines in both the
UK and US was FSC and PEFC (Programme for the Endorsement
of Forest Certification) certified. All of our suppliers in the print
and paper supply chain hold FSC and PEFC certification, as
well as other internationally recognised and independently
audited certification schemes for environmental care in forest
management and conservation.
Recycling of unsold magazines and gifts
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 used in recycled paper manufacture or in other recycling
operations, or they are handed to local schools and hospitals. We
also support the Professional Publishers Association’s initiative
encouraging readers to recycle their magazines after use, and
are now full members of the OPRL (On-Pack-Recycling-Label)
Scheme which provides full access to and use of correct recycling
labelling, instructing consumers how to responsibly recycle or
dispose of our magazines and packaging. Gifts on our unsold
copies are incinerated to create further energy, and any
41 / Future plc
Packaging
We comply with our obligations under the Producer
Responsibility Obligations (Packaging Waste) Regulations, and
carry out an annual packaging waste audit where we declare our
packaging waste volumes to the Environment Agency and offset
our waste by purchase of Packaging Waste Recovery Notes.
We use LDPE4 (number 4-coded low-density polyethylene)
to wrap our subscriptions and newstrade copies, which is fully
recyclable. Recycling logos were updated in late October 2019
to show the latest information available on recyclability of the
wrappers, directing customers to recycle the bags at local
supermarkets. In addition, the UK subscription mailing copies
of our Home Interest titles will be wrapped in paper rather than
plastic from January 2020 onwards.
2. We all row the boat
Each employee in the Group is encouraged to live a greener life by
reducing pollution, reusing or recycling, and saving energy.
Recycling and waste management in the office
We play an active part in recycling across all of our locations.
We have clearly defined communal waste and recycling areas
in all offices across the UK and US. We are trialling a new food
waste recycling facility in our Bath office in the UK and, if this is
successful, we will roll it out to other offices. We will be working
with our waste provider to complete quarterly reporting so we
can trace waste usage more efficiently and monitor progress
on reducing our waste that is sent to landfill. We are currently
recycling 30% of waste and are aiming to achieve 50% waste
recycling by January 2020. Earlier in the year in our New York
office we removed all canned drinks, replacing them with a drinks
dispenser for reusable cups, at the same time we replaced the
paper cups with glasses and mugs.
Reducing our carbon footprint
We operate multi-country multi-site offices and we strive to
reduce the need for face to face meetings unless absolutely
necessary by encouraging our teams to use video conferencing
where possible, reducing air, car, and train travel.
We use a building management system in our largest UK office
to manage all central plant and ensure the building is as energy
efficient as possible. All plant is run to tight schedules to ensure
energy is not wasted, and we have a heat recovery system in
place to minimise gas usage. New LED light fittings were
installed in our largest UK office, reducing energy consumption
by approximately 25%. This project will continue to be rolled out
to all other UK offices.
Statement of Greenhouse Gas (GHG) Emissions for the Group
Global GHG emissions in tonnes of CO2 equivalent:
Emissions from
The combustion of fuel:
gas for heating and fuel;
for vehicles (Scope 1)
The purchase of electricity: heat,
steam or coolingby the Group for
its own use (Scope 2)
Total Emissions (CO2e Tonnes)
UK
US
Total
UK
US
Total
2018
Total
2019
Total
97
-
97
331
3
334
431
96
-
96
298
205
503
599
Total Revenue1
£130.1m
£221.5m
Intensity Ratio (CO2e Tonnes per £1m)1
3.3
2.7
1 Revenue restated for the impact of IFRS 15 Revenue from contracts with customers
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 2019 DEFRA GHG Conversion
Factor Repository to calculate the CO2e. As a Group with only
office-based activities and no manufacturing activities, under the
GHG Protocol Corporate Standard, our emissions fall under Scope
1 (the combustion of fuel) and Scope 2 (the purchase of electricity).
Notes:
• Scope 1 – Time periods for combustion of gas for heating –
figures for all offices are for the financial year. All figures are
estimates based on % share of office space within leased
buildings except for UK Bath offices, which are actual
consumption, where whole buildings or floors within buildings
have their own meters.
• Scope 1 – Time periods for combustion of fuel in vehicles – only
the UK operates leased vehicles and figures for the consumption
of fuel are based on averaged annual mileage.
• Scope 2 – Time periods for consumption of electricity – figures
for the UK and US offices are for the financial year. Figures
for the Australian office are pro-rated from typical 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.
• Intensity Ratio – we are using ‘Tonnes per £1 million revenue’.
• We have maintained our focus on other environmental impacts,
particularly initiatives to reduce waste and to continue sourcing
all our magazine paper from sustainable forestry.
Fruitful Office provides fruit to Future’s UK offices every week
and plants one tree in Malawi for each basket of fruit delivered.
During the period from June 2018 to June 2019, 743 trees were
planted on behalf of Future. In addition to mitigating the effects
of global warming and deforestation, this provides income to local
communities.
Single use plastics
We are passionate about removing single use plastics whenever
and wherever possible.
In 2019, we have continued to significantly reduce single use
plastic at all of our offices, corporate and commercial events.
At the onsite café in our Bath office customers are encouraged
to bring a mug or keep a cup by receiving double stamps on
their loyalty cards when they do. Takeaway food containers are
biodegradable and compostable, and are made from recycled
materials, and all straws are paper. In all our office kitchens in
the UK and US, we have removed all single use plastics such as
cups and cutlery. We also gifted all our staff a metal water bottle
for their personal use following the removal of disposable plastic
cups. At our commercial events, plastic reduction strategies
tend to be venue-specific, however, initiatives have included the
removal of plastic covers on name badges, and the recycling of
lanyards.
Supplier environmental and ethical 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, and require all suppliers to complete our anti-bribery
and modern slavery questionnaires. No material contract is
awarded to any contractor without satisfactory return of this
information.
3. It’s the people in the boat that matter
As a business, we aim to work in the most environmentally and
socially sustainable way to create safe and secure surroundings in
which our employees, audience and suppliers can thrive.
Our six Company values underpin everything we do and are a
fundamental part of everyday life at Future.
Our people
We are a people business first and foremost, and, with a growing
footprint in the UK and US, significant investments have been
made this year in attracting and developing talent.
We have had a large number of new starters join the business
in 2019 – with 278 new joiners and over 260 staff joining from
acquisitions. To aid the smooth integration of new talent, all new
joiners participate in an induction programme which immerses
new starters in our values and culture. For our acquisition
businesses we run a mini induction programme over one day. A
great outcome from this is the building of networks across the
organisation and ensuring everyone gets off to the best possible
start on their journey with Future. In order to ensure that there is
consistency in the way that people are managed across legacy
and newly acquired assets, 50 US senior managers from legacy
Future, Purch and Newbay businesses participated in an off-site
one-day session to create closer alignment.
The extremely successful annual conferences in the UK and the
US, which all employees attend, once more gave an opportunity
to showcase the breadth of talent amongst the Future staff and
encourage networking.
Development
In 2019, we invested in a new role, hiring a Head of Learning
and Development, as a key focus for us is to develop our talent
across all locations, with a number of new programmes being
introduced and delivered during this year and into 2020:
• Our Graduate programme has launched and the first cohort
has embarked on their journey with us. In addition, we continue
to build our talent network with key universities and colleges to
ensure we attract and recruit the best graduates to join us.
• We have also continued to significantly invest in the personal
development of our managers, ensuring they are the best
people managers and brilliant at the basics. This year we have
held over 70 workshops with 160 participants and this continues
to be a focus into the next year.
Annual Report and Accounts 2019 / 42
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements
• Our apprentice programme currently has over 40 participants
and this is a key focus into 2020 and beyond, ensuring that all
colleagues have an opportunity to gain formal qualifications
whilst working with us.
• Our 'Future Leaders' programme is in development and
will launch in 2020, providing our top talent an opportunity to
participate in a structured programme which will equip them
with the skills to be our future leaders, in addition to gaining a
formal qualification.
• Our colleague induction programme has welcomed more
than 100 new starters into our business, and we are embarking
on a programme to continuously improve our onboarding
experience.
• Our commitment to creating a learning culture saw us
organise a month of 'sharing is caring' sessions where managers
volunteered to create and facilitate four modules covering
the key topics of: Managing remote workers; How we learn
and develop our teams; Creating and delivering impactful
presentations, and; How to use the tools we have at our disposal
as managers. These were attended by over 100 managers from
across the business and we will look to replicate this in 2020.
Workforce Engagement
The Board recognises the importance of our people, and each of
the Directors is firmly committed to developing and retaining the
talent within the business, and encouraging new talent to join.
The Board has had a sharp focus on people and culture during
the year, with the Chief Operating Officer, who is responsible
for global HR, regularly joining Board meetings to provide the
Board with key information regarding employee recruitment and
retention, updates on the integration of staff who joined through
acquisitions, the recruitment of new employees, the development
of existing employees and to discuss succession planning for
the senior management team. In addition, during the year, a HR
Dashboard showing key people statistics, including the number
of open positions and average time to offer, numbers of new
starters, leavers, average churn, length of tenure and gender
breakdown, has been included as a standard reference paper in
every Board pack.
Members of the senior management team attend the annual
Board strategy day, regularly present at Board meetings and
attend Board dinners to enable the Non-Executive Directors
to get to know the senior management team. The Board also
believes it is important to visit the different locations within the
business, and during this year the annual strategy session was
hosted in our Bath office – during this time the Board hosted
a lunch with a number of senior managers. Later in the year
the Board travelled to the New York office to meet with our
colleagues there. As part of that visit they met senior editorial staff
and hosted an “Ask Me Anything” (AMA) session with employees.
Employment data across the group
2019
Split of female:male employees as at 30 September 2019
39.1% : 60.9%
(of 1,037 employees)
Split of female:male Directors of the Company
as at 30 September 2019
Split of female:male members of the Executive
Committee as at 30 September 2019
2 : 4
3 : 6
Disclosure re. ethnic diversity
Not mandated
Earnings meet at least legal minimum
or minimum set by industry.
Yes. We are also a
living wage employer
in the UK.
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
None
Yes
Yes
Employment of young people under the age of 15
None
43 / Future plc
The Chairman attended the company conference in the UK, with
Hugo Drayton, the Senior Independent Director, who also visited
the office in Australia to spend time with the management team
there. All Board members have participated in some interviews of
key senior management hires during the year.
Diversity
At Future we are passionate about equality and diversity
throughout our organisation. We pride ourselves on treating
people with dignity and respect, and having a transparent and
inclusive culture which enables everyone, regardless of their
background, race, ethnicity, or gender, to thrive. We are working
to explore the creation of under-represented talent pools across
the business through apprenticeship schemes and internships.
Future operates a zero tolerance policy with regard to any
form of harassment or discriminatory behaviour at any level
within the organisation, as well as a zero tolerance policy of
retaliation against any employee that raises any concern to their
managers or via any of the other channels open to employees
for reporting harassment or discriminatory behaviour. We have
a whistleblowing process in place to ensure that any issues can
be raised confidentially. Our manager development programme
includes equipping our leaders with the necessary skills to
ensure that every person is managed fairly and consistently
across the business.
As reported externally in Future’s Gender Pay Gap Report (for
the snap-shot period ending 5 April 2019) we continue to ensure
we have the best possible person for the job and are in the
unusual position of having two of the most senior positions of
Chief Executive and Chief Financial Officer held by women. As
a result of strategic acquisitions during the year we have seen
our headcount increase considerably and this has negatively
impacted our gender pay ratios, with only 31% of acquired
colleagues being female.
We remain firmly committed to ensuring that men and women
are paid equally for fulfilling equivalent roles across the business
and we have implemented a number of initiatives to ensure this is
the case. These include the appointment of a dedicated Diversity
Manager to enhance our recruitment, promotion and succession
planning processes, and the introduction of a mid-year salary
review process, giving the business the framework to review and
tackle any discrepancy in salary accordingly.
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.
We have recently added a Diversity and Inclusion focused
workstream within each of our Employee Community
Committees, with the aim being to champion diversity and
inclusion across the business while representing the views and
needs of all of our employees. We are also rolling out Diversity and
Inclusion training.
In the US we have signed the Ascent promise which is a
commitment to creating an inclusive and equitable workplace,
including sharing best practice. Our anti-harassment training
programme was rolled out in the US during the year with all staff
completing the training.
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 whistleblowing, and we have
a commitment to diversity and opportunity. The HR and
recruitment system, which was launched last 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 2019, we held all-company conferences in the
UK and the US. 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.
At our conferences we run AMA sessions with the ELT and the
organisation to enable staff to have the opportunity to raise
questions they may have about the business.
In addition to this, we have a weekly staff 'communication
snapshot’ highlighting best practice across the Group, a monthly
ELT 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 the Chief Executive is live with the whole Group to
answer any questions. Following questions raised during the AMA
session at the UK conference in 2019, as well as feedback received
during the year, amendments were made to the Company’s
policy on hotel accommodation. Our environment is therefore
one where we encourage employees to give their views freely and
contribute to policies and initiatives, knowing that their opinion
counts, which continuously develops and improves our offering
for the benefit of our consumers, clients and colleagues.
Whistleblowing 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 whistleblowing, anti-bribery and corruption policies
which are updated regularly and published on our intranet. The
whistleblowing policy is designed to encourage employees to
report, in good faith, any genuine suspicions of fraud, bribery,
malpractice, modern slavery and human trafficking. Concerns
may be raised according to a stated escalation process from an
individual’s line manager, via their head of department, Head of
People Operations, to the Head of Legal and then to the Board of
Directors, including the Senior Independent Director. Concerns
may also be raised completely anonymously by post. The whistle-
blowing policy is also designed to ensure that any employee who
raises a genuine concern is protected. During the year, no issues
of concern were raised via any of the whistleblowing channels.
In addition, to ensure Future is adopting best practice with anti-
corruption legislation, and to promote transparency, a Review
Kit, Trips and Gifts Log is in place to track the whereabouts of
products sent to us for review and the acceptance of gifts and
trips by our employees. We also have in place an Editorial Ethics
Committee which monitors the approach to gifts and review
trips to ensure not only are we legally complaint, but that we also
comply with our own ethical and editorial standards.
Health and safety
The health and safety of all employees is a key priority for the
Group. Future is largely an office-based environment; all 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 2019, there were no fatalities
and 9 minor injuries across all sites (2018: no fatalities and 11 minor
injuries). There were no fatalities or injuries in the US or Australia
during the year (2018: nil).
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.
Modern slavery (Supplier Code of Conduct)
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 for the current and previous years is published
on our corporate website:
www.futureplc.com/modern-slavery-statement
4. Let’s do this
We are making daily changes to continually transform, create
and develop our business sustainably and responsibly. This is our
chance to make a positive impact on our planet.
In December 2018, Employee Community Committees were set
up in each of our main office locations to empower staff and give
them the opportunity to take the lead on important initiatives.
A new budget was created to ensure that the new Community
Committees were empowered to deliver their ideas by having
the financial support required. In total we invested £30,200 in
this initiative. The Communities are led by passionate volunteers
who meet each month to set goals and objectives, and lead the
agenda for the following themes:
• Sustainability and environment
• Charity and outreach
• Local community
• Social events
• Office environment
• Health and wellness
• Inclusion and diversity
The communities teams have been able to make a real difference
to their local environment, positively impacting the experience of
their colleagues.
Since inception, the teams have launched some fantastic
initiatives across all of our office locations. We are particularly
proud of what our community teams have achieved, such as;
• Over 100 gifts were donated to disadvantaged children in
New York last Christmas;
• Health and wellness initiatives are now a regular part of
the week in all of our locations from yoga, running clubs and
meditation to discounted gym memberships;
• Introduction of regular fruit drops in all our offices to support
healthy eating; and
• Office social events that bring all colleagues together.
Annual Report and Accounts 2019 / 44
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements
5. We are part of the audience and the community
6. Results matter, success feels good
The positive changes we are making are enabling us to
strengthen our local communities, from reducing our carbon
footprint to sourcing local suppliers. The work we do leads to a
healthier local economy as well as a healthier world.
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. Across all of our locations in the UK and
US, we have completed a number of charitable events that matter
most to our local communities, from cake sales, sponsored fitness
activities, and in New York championing engagement with local
disadvantaged schools by providing talks on careers in media
and offering the opportunity to visit our offices and learn more.
In addition, Future provides a staff matching scheme for all
employees who raise money for charitable ventures. In late 2019,
we will adopt national charities in both the UK and US following
recommendation from our Community teams.
Furthermore, our commercial events make donations to
charities associated with that event or industry, for example
the Broadcasting & Cable Hall of Fame donated $75,000 to
the Broadcasters Foundation, an organisation whose mission
is to help industry executives who find themselves in financial
difficulties due to illness, natural disaster, advanced age or
misfortune, as well as $25,000 to the Paley Centre which leads the
discussion about the cultural, creative, and social significance
of television, radio, and emerging platforms for the professional
community and media-interested public. From our music events,
we donated to Music 4 All, a charity that helps give access to
music to the less privileged, and to the National Deaf Children’s
Society.
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, Creative Bath,
Content Marketing Association, the Marketing Society and the
International Federation of the Periodical Press.
Our business achievements provide us with the opportunity to
invest in our people and the planet, to improve and enhance the
global community.
All employees' reward
In January 2018 we were delighted to receive 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.
Also in 2019 in the US, where possible, we made the decision to
move to salaried pay which resulted in a significant increase in the
effective hourly rate and increased financial security.
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 the maximum amount payable under the annual
profit pool scheme, which represents 11% of the average salary
across Future.
We offer a number of great benefits for our staff such as
sabbaticals to promote well-being. Our scheme offers up to
three months for every five years worked. During the year two
colleagues took up the option to enjoy a sabbatical. We also
continue to offer unlimited holiday for all of our staff, allowing
them to strike a good work life balance. In the UK, we offer
benefits for staff such as Perks At Work and the Taste Card. In the
US, we offer discounted gym memberships along with other
local perks.
Non-financial information statement
The Company is required to comply with the new non-financial
reporting requirements set out in Sections 414CA and 414CB of
the Companies Act 20 06. The table below sets out where in the
Annual Report the relevant information regarding the key non-
financial matters can be found.
Reporting Requirement
Policies and standards which govern our approach
Information
Environmental matters
CSR Policy
Employees
Future Playbook,
Diversity Policy,
Whistleblower Policy
Human Rights
Slavery and Human Trafficking Policy
Social Matters
CSR Policy
Anti-corruption and anti-bribery
Anti-bribery and corruption policy,
Whistleblowing policy
Description of Principal Risks and
impact of business activity
Greenhouse Gas Emissions
Description of business model
Future strategy wheel
Non-financial KPIs
Sources & Definitions
Corporate Responsibility Report pages
41 to 42
Strategic Report, page 13
Corporate Responsibility Report,
page 43
Corporate Governance Report, page 64
and Corporate Responsibility Report,
page 44
Corporate Responsibility Report,
page 44
Corporate Responsibility Report,
pages 41 to 45
Corporate Responsibility Report,
page 44
Risk section, pages 35 to 38 and
Corporate Responsibility Report, page 42
Strategic Report, pages 9 to 14
Strategic Report, pages 17 to 30,
Sources page 30
45 / Future plc
The Bath Community and
Culture team photographed
outside Future's Bath office
Annual Report and Accounts 2019 / 46
Strategic ReportFinancial ReviewCorporate GovernanceFinancial Statements FINANCIAL
REVIEW
Penny Ladkin-Brand
Chief Financial Officer
Financial summary
Revenue
The financial review is based primarily on a comparison of results
for the year ended 30 September 2019 with those for the year
ended 30 September 2018. Unless otherwise stated, change
percentages relate to a comparison of these two periods. Organic
growth is defined as year-on-year growth for the like-for-like
portfolio of brands (at constant currency) and excludes all
acquisitions made during FY18 and FY19.
Revenue1
Adjusted EBITDA2
Depreciation
Adjusted amortisation2
Adjusted operating profit2
Adjusted net finance costs2
Other income
Adjusted profit before tax2
Operating profit
Profit before tax
Earnings per share (p)
Adjusted earnings per share (p)2
Adjusted diluted earnings per share (p)2
2019
£m
221.5
54.5
(0.9)
(1.4)
52.2
(2.1)
0.2
50.3
26.7
12.7
9.9
50.1
47.5
2018
£m
130.1
20.7
(0.6)
(1.6)
18.5
(1.1)
-
17.4
5.3
4.4
5.1
26.2
24.3
1 Restated for the impact of adopting IFRS 15 Revenue from contracts with customers.
Revenue and net operating expenses have both increased by £5.5m with a net nil impact
on operating profit.
2 Adjusted items are a non-GAAP measure. For further details refer to the section on
Alternative Performance Measures on page 50.
The Directors believe that adjusted results provide additional
useful information on the core operational performance of the
Group, and review the results of the Group on an adjusted basis
internally. See page 50 for a reconciliation between adjusted and
statutory results.
47 / Future plc
Sub-
segment
Media
£m
Magazines
£m
2019
£m
Total
£m
Sub-
segment
Media1
£m
Magazines1
£m
Segment:
UK
USA
Total
50.4
104.5
154.9
52.3
102.7
14.3
118.8
66.6
221.5
36.8
29.5
66.3
53.2
10.6
63.8
20181
£m
Total1
£m
90.0
40.1
130.1
1 Restated for the impact of adopting IFRS 15 Revenue from contracts with customers.
Revenue and net operating expenses have both increased by £5.5m with a net nil impact
on operating profit.
Group revenue increased 70% to £221.5m (2018: £130.1m restated
for IFRS 15), which includes an £8.5m uplift as a result of adopting
IFRS 15 (2018: £124.6m with £5.5m uplift). The adjustment for IFRS
15 relates principally to revenues which have previously been
shown net of agents’ commission and have therefore now been
grossed up, with an equal and opposite adjustment in cost of
sales. The impact of the IFRS 15 adjustment has increased in the
year due to the change in revenue mix.
Revenue growth has been achieved both organically (increase of
11% at constant currency and 13% on actual currency) and
through acquisition.
UK and US operations have both performed well with US Media
revenue growth of 51% on an organic basis. The US results were
also boosted by the acquisition of Newbay and Purch in 2018
and Mobile Nations in 2019, meaning 54% of Group revenue (net
of intra-group revenues) is now derived from the US, with total
US revenue up 196% to £118.8m (2018: £40.1m). UK revenue also
performed well and was up 14% to £102.7m (2018: £90.0m).
Media revenue increased by 134% to £154.9m (2018: £66.3m),
driven by the acquisition of Purch, as a pure-play digital
business, as well as organic growth in eCommerce and digital
display advertising, which has seen a strong performance in
programmatic revenues. On an organic basis Media revenues
increased by 32%.
Magazine revenue increased by 4% to £66.6m (2018: £63.8m)
largely driven by the acquisition of Newbay, the four specialist
brands from Haymarket in 2018 and the acquisition of Procycling
Magazine in February 2019. On an organic basis, Magazine revenues
declined 10% to £47.9m in line with our expectations.
An exceptional year, achieving record
levels of profitability. Execution of our
strategy through both organic growth
and strategic acquisitions has driven
our robust 2019 financial results.
The Group is constantly looking for ways to innovate and as a
content-led business seeks to meet the needs of its specialist
communities, which it measures through the strength of its
audience and the effective monetisation of that audience. In the
year, Future saw its online audience increase organically (31% year-
on-year) and through the increased scale of the Group, with online
audience growing by 44% year-on-year.
Operating profit and adjusted EBITDA
Reported operating profit increased by £21.4m to £26.7m (2018:
£5.3m). Reported operating margin increased to 12% (2018: 4%)
as a result of the increasing scale of the Group and the shifting
revenue mix.
Adjusted operating margin increased to 24% (2018: 14%) and gross
profit margin increased to 48% (2018: 43% restated for the impact
of IFRS 15) as the Group benefited from strong growth in higher
margin Media revenues.
The Group’s adjusted EBITDA was up 163% to £54.5m (2018:
£20.7m), of which £31.2m (2018: £15.3m) was UK and £23.3m (2018:
£5.4m) was US, reflecting the strong growth of the Media division,
the US business and the operating leverage provided by the
increased scale of the Group.
Statutory exceptional items
Exceptional costs were £3.4m (2018: £4.4m). These are mainly
acquisition-related, with deal fees in respect of the acquisition of
Mobile Nations and SmartBrief and the subsequent integration-
related activity of SmartBrief and Purch totalling £2.5m. Costs
also include £0.8m of professional fees relating to the Group’s
transfer to a Premium Listing on the Official List of the Financial
Conduct Authority.
Net finance costs
During the period the Group agreed a new multi-currency Revolving
Credit Facility ("RCF") of £90m. The RCF, which replaced Future's
existing debt facilities, has an initial maturity of February 2023 and
includes an incremental £45m accordion, which following the year
end was committed in order to fund the acquisition of TI Media.
Net finance costs increased to £14.2m (2018: £0.9m), mainly relating
to an £11.7m increase in fair value of the contingent consideration
for the Mobile Nations acquisition, as well as £1.2m arising on the
unwinding of the discount on the contingent consideration in the
period. External interest payable of £1.5m reflects the draw-down
of the RCF to fund the Mobile Nations and SmartBrief acquisitions.
Included within amortisation of bank loan arrangement fees is
the release of prepaid costs of £0.4m in relation to the previous
loan facility.
Adjusted EBITDA
£60.0
£50.0
£40.0
£30.0
£20.0
£10.0
£0.0
m
£
A
D
T
I
B
E
6%
£3.7
2015
9%
£5.2
2016
13%
£11.0
2017
25%
£54.5
16%
£20.7
2018
2019
30%
20%
15%
10%
5%
0%
Annual Report and Accounts 2019 / 48
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Taxation
The tax charge for the year amounted to £4.6m (2018: £1.5m),
comprising a current tax charge of £7.0m (2018: £1.9m) and a
deferred tax credit of £2.4m (2018: £0.4m). The deferred tax credit
predominantly related to the recognition in full of the brought
forward deferred tax asset on losses in the US due to the Group’s
increasing profitability, as well as 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’s adjusted effective tax rate is 18% (2018: 14%), being
reflective of the credit arising on the recognition in full of the
brought forward deferred tax asset on losses in the US and the
charge relating to the provision recognised for uncertain tax
positions. The Group’s statutory effective tax rate is 36% (2018:
34%), with the difference between the statutory rate and adjusted
effective rates being the impact of the fair value movement on
the contingent consideration recognised in respect of the Mobile
Nations acquisition.
The Directors have assessed the Group’s uncertain tax positions
and in the current year a provision for uncertain tax positions of
£5.6m has been recognised. Further information is provided in
the accounting policies section and note 8.
Earnings per share
and on currency option, exceptional items, amortisation of
intangible assets arising on acquisitions, non-trading exchange
gains and any related tax effects. Adjusted profit after tax was
£41.2m (2018: £14.9m).
Dividend
The Board is recommending a final dividend of 1p per share for the
year ended 30 September 2019, payable on 14 February 2020 to all
shareholders on the register at close of business on 17 January 2020.
Cash flow and net debt
Net debt at 30 September 2019 was £40.3m (2018: £17.8m)
reflecting the additional draw-down of debt to fund both the
acquisitions of Mobile Nations and SmartBrief.
During the year, there was a cash inflow from operations of
£53.7m (2018: £14.7m) reflecting the Group’s stong trading
performance and the continued focus on improving the working
capital cycle.
Excluding exceptional items, adjusted operating cash inflow was
£57.7m (2018: £19.8m). A reconciliation of adjusted operating cash
inflow to cash inflow from operations is included below:
Basic earnings per share (p)
Adjusted earnings per share (p)
Diluted earnings per share (p)
Adjusted diluted basic earnings per share (p)
2019
9.9
50.1
9.3
47.5
2018
5.1
26.2
4.7
24.3
Adjusted operating cash inflow
Cash flows related to exceptional items
Cash inflow from operations
2019
£m
57.7
(4.0)
53.7
2018
£m
19.8
(5.1)
14.7
Basic earnings per share are calculated using the weighted average
number of Ordinary shares in issue during the year of 82.2m (2018:
56.9m), the increase reflecting the impact of the rights issue that
was completed in August 2018 to fund the Purch acquisition, as
well as the issue of 0.6m shares in the period for the acquisition of
Mobile Nations and 1.0m to fund the acquisition of SmartBrief.
Adjusted earnings per share is based on the profit after taxation
which is then adjusted to exclude share-based payments (relating
to equity-settled share awards with vesting periods longer than 12
months) and associated social security costs, fair value movements
on contingent consideration (and unwinding of associated discount)
Other significant movements in cash flows include £4.0m (2018:
£2.4m) of capital expenditure, draw-down of bank loans and
overdraft (net of repayments and arrangement fees) of £19.3m
(2018: £4.0m) and payments of £65.8m (2018: £117.1m) to fund
acquisitions (net of disposals). The Group recommenced the
payment of dividends in the year (£0.4m, 2018: £nil) and also
acquired a foreign exchange option in order to hedge the cash
exposure in respect of the MoNa Mobile Nations, LLC contingent
consideration (£0.7m, 2018: £nil). Foreign exchange and other
movements accounted for the balance of cash flows.
Adjusted cash conversion was 106% (2018: 96%) and adjusted
free cash flow increased to £53.7m (2018: £17.4m) reflecting the
ongoing efficient cash management by the Group. See page
Growth in cash generation
Free Cash flows
m
£
w
o
fl
h
s
a
C
e
e
r
F
£60.0
£50.0
£40.0
£30.0
£20.0
£10.0
£0.0
(£10.0)
£53.7
£(4.3)
£4.6
£15.3
£17.4
2015
2016
2017
2018
2019
*Free Cash Flows defined as operating cash flow before exceptional items, less capital expenditure
49 / Future plc
114 for a reconciliation of adjusted free cash flow to cash inflow
from operations. The Group remains a very low capital intensive
business with capital expenditure as a percentage of adjusted
EBITDA of only 7% (2018: 12%).
Going concern
As part of the year-end process and as required by IAS 1
Presentation of Financial Statements, the Directors have
undertaken a going concern review. This included reviewing the
Group’s forecasts and projections, and assessing the headroom
on the new £90 million multicurrency Revolving Credit Facility
(“RCF”) (and subsequent proposed exercise of the additional
£45m accordion option following the announcement of the
acquisition of TI Media) and banking covenants, as well
as considering the assessment made as part of the Viability
Statement, provided on page 39.
This assessment indicated that the Group will be able to operate
well within the level of its current available RCF. The Directors also
note that at the year end the Group had net current liabilities of
£65.6m (2018: £13.9m). This was primarily as a result of deferred
consideration of £43.9m (of which £21.8m was settled in October
2019 in shares, with the balance to be settled by drawing on the
RCF) on the acquisition of MoNa Mobile Nations, LLC (see notes 28
and 30 for further details) and deferred income relating to events
and subscriptions.
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 at least 12 months from the
date of this report. For this reason the Directors continue to adopt
the going concern basis in preparing the consolidated financial
statements for the year ended 30 September 2019.
Statutory
Share-based
payments
Exceptional
items
Amortisation
of acquired
intangibles
Increase in
fair value of
contingent
consideration
Unwinding of
discount
Fair value gain
on currency
option
Tax impact
Adjusted
2019
Revenue (£)
EBITDA (£)
EBITDA margin (%)
Operating profit (£)
Net finance costs (£)
Profit before tax (£)
Tax (£)
Profit after tax (£)
Basic earnings per share (pence)
Diluted earnings per share (pence)
221.5
42.1
19%
26.7
(14.2)
12.7
(4.6)
8.1
9.9p
9.3p
-
9.0
9.0
-
9.0
-
9.0
11.0p
10.4p
-
3.4
3.4
-
3.4
-
3.4
4.1p
3.9p
-
-
13.1
-
13.1
-
13.1
15.9p
15.1p
-
-
-
11.7
11.7
-
11.7
14.2p
13.5p
-
-
-
1.2
1.2
-
1.2
1.5p
1.4p
-
-
-
(0.8)
(0.8)
-
(0.8)
(1.0)p
(0.9)p
-
-
-
-
-
(4.5)
(4.5)
(5.5)p
(5.2)p
221.5
54.5
25%
52.2
(2.1)
50.3
(9.1)
41.2
50.1p
47.5p
2018
Revenue (£)1
EBITDA (£)
EBITDA margin (%)1
Operating profit (£)
Net finance costs (£)
Profit before tax (£)
Tax (£)
Profit after tax (£)
Basic earnings per share (pence)
Diluted earnings per share (pence)
Statutory
Share-based
payments
Exceptional
items
Amortisation
of acquired
intangibles
Non-trading
FX gain
Tax impact
Adjusted
130.1
13.2
10%
5.3
(0.9)
4.4
(1.5)
2.9
5.1p
4.7p
-
3.1
3.1
-
3.1
-
3.1
5.4p
5.1p
-
4.4
4.4
-
4.4
-
4.4
7.7p
7.2p
-
-
5.7
-
5.7
-
5.7
10.0p
9.3p
-
-
-
(0.2)
(0.2)
-
(0.2)
(0.3)p
(0.3)p
-
-
-
-
-
(1.0)2
(1.0)
(1.7)p
(1.7)p
130.1
20.7
16%
18.5
(1.1)
17.4
(2.5)
14.9
26.2p
24.3p
1 Restated for the imapct of IFRS 15.
2 The tax line includes an adjustment for the US tax rate change from 38% to 24% on the deferred tax asset brought forward.
Alternative performance measures
Conclusion
Alternative performance measures (APMs) are used by the Board
to assess the Group’s performance, providing additional useful
information for shareholders on the underlying performance of
the Group. These measures are not defined by IFRS and are not
intended to be a substitute for IFRS measures.
The Group presents adjusted EBITDA, operating profit and
EPS, which are calculated as the statutory reported measures
stated before charges relating to share-based payments (relating
to equity-settled share awards with vesting periods longer than 12
months), and associated social security costs, fair value movements
on contingent consideration (and unwinding of associated discount)
and on currency option, exceptional items, amortisation of intangible
assets arising on acquisitions, non-trading exchange gains and any
related tax effects. EPS is used as a key performance indicator for
the Performance Share Plan. The table above reconciles the APMs
to the statutory reported measures.
The Group has completed a number of significant 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 2020 and beyond.
The Strategic Report and the Financial Review are approved by
the Board of Directors and signed on its behalf by:
Penny Ladkin-Brand
Chief Financial Officer
4 December 2019
Annual Report and Accounts 2019 / 50
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
BOARD OF DIRECTORS
Richard Huntingford
Zillah Byng-Thorne
Penny Ladkin-Brand
Chief Executive
Chief Financial Officer
Key strengths: Commercial finance,
accounting and audit, business
development, pricing, investor relations,
media and technology, strategy, internal
controls and risk management.
Experience: 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 Auto Trader Group plc. She is a
chartered accountant, having qualified
with PwC and has a BA Honours in
Classics from Oxford University.
Current external roles: Penny is
currently a Non-Executive Director of
Next Fifteen Communications Group plc
and a Trustee of The Media Trust.
s
Key strengths: Executive leadership,
corporate finance and accounting,
business and commercial development,
culture and strategy, business change,
M&A, investor relations, public company
leadership and governance, media, sales
and technology.
Experience: 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. She is a chartered
management accountant (CIMA) and
qualified treasurer (ACT). She has a
MA in Management from Glasgow
University and a MSc in Behavioural
Change from Henley Business School.
Current external roles: Zillah is currently
a Non-Executive Director of GoCo Group
plc, Flutter Entertainment plc and The
Hut Group Ltd.
Independent Non-Executive
Chairman
s
Key strengths: Public company
governance and leadership, strategy
and M&A, corporate finance,
investment, business development,
executive leadership, investor relations,
media, accounting and audit.
Experience: 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
and Chairman of Creston plc from 2011
to 2016. He is a chartered accountant,
having qualified with KPMG.
Current external roles: Richard is
currently Chairman of Crown Place
VCT plc and Non-Executive Director of
JPMorgan Mid Cap Investment Trust plc
and The Bankers Investment Trust plc.
51 / Future plc
The Board provides effective and entrepreneurial leadership, strategic
oversight and cultural stewardship of the Company to promote its long-
term sustainable success, and has a particular responsibility for maintaining
effective risk management and internal control systems.
Hugo Drayton
Senior Independent
Non-Executive
s l n
Key strengths: Advertising and
marketing, technology, customer
behaviour, media, executive leadership,
business development.
Experience: Hugo was appointed as a
Non-Executive Director of Future plc
on 1 December 2014 and is Chairman
of the Remuneration Committee and
Senior Independent Director. 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. He
has also chaired the British Internet
Publishers’ Alliance.
Current external roles: Hugo is a trustee
of the British Skin Foundation and is a
regular contributor to trade press and
publishing conferences.
Alan Newman
Rob Hattrell
Independent Non-Executive
Independent Non-Executive
sl n
sln
Key strengths: Digital platforms,
eCommerce and online sales, retail
and customer behaviour, technology,
business development, executive
leadership.
Experience: 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.
Current external roles: Vice President,
eBay UK.
Key strengths: Corporate finance,
accounting and audit, executive
leadership, investor relations, media,
telecommunications and technology,
public company leadership and
governance, strategy and M&A.
Experience: Alan was appointed as a
Non-Executive Director and Chairman
of the Audit Committee of Future plc on
6 February 2018. He 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).
He is a chartered accountant and has an
MA in Modern Languages (French and
Spanish) from Cambridge University.
Current external roles: Alan is Chief
Financial Officer of Ebiquity plc
and Chairman of the Freud
Museum London.
s
Member of the
Nomination
Committee
l
Member of the
Remuneration
Committee
n
Member of
the Audit
Committee
Denotes
committee
chair
Annual Report and Accounts 2019 / 52
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
DIRECTORS' REPORT
The Directors are pleased to present their annual report for the year ended 30
September 2019. The information presented in this Directors’ Report relates to
Future plc and its subsidiaries. The Chairman’s Statement, Chief Executive’s
Review, Financial Review and Corporate Responsibility Report 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 of a global platform business for specialist media,
driven by technology, with diversified revenue streams. Its
business comprises two divisions: “Media” which focuses on
eCommerce, events and digital advertising; and “Magazine”
which creates specialist magazines and bookazines.
The Company is a public company limited by shares listed in
the premium segment of 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
Reviews of the Group’s activities during the year, the position
at the year-end and developments since then are set out in the
Chairman’s statement, the Chief Executive’s review, the Corporate
Governance report and the Financial review. The Financial review
and Strategic report explain financial performance, KPIs, the
position at the year-end, any post balance sheet events, any likely
future developments and a description of the Principal Risks and
uncertainties facing the Group and how these are managed.
The Annual Report contains certain forward-looking statements
with respect to the operations, performance and financial
condition of the Group. By their nature, these statements involve
uncertainty since future events and circumstances can cause
results to differ from those anticipated. The forward-looking
statements reflect knowledge and information available at the
date of preparation of this Annual Report and the Company
undertakes no obligation to update those forward-looking
statements.
The Company remains compliant with the Financial Conduct
Authority’s Listing Rule 9.8.6 and Disclosure Guidance and
Transparency Rule 7.2.1. The Group has complied with sections
414CA and 414CB as well as 414C of the Companies Act 2006
following the introduction of the Companies, Partnerships and
Groups (Accounts and Non-Financial Reporting) Regulations
2016. Relevant information can be found throughout the Strategic
Report and Corporate Governance sections of this Annual Report.
Result of 2019 Annual General Meeting
All resolutions put to the Annual General Meeting held on
7 February 2019 were passed unanimously on a show of
hands. Shareholders holding more than 70% of all issued
shares submitted proxy votes and of those, more than 90% of
all proxy votes cast were in favour of all resolutions, with the
exception of the resolutions regarding the approval of the
remuneration implementation report and the amendments
to the remuneration policy. Details regarding the work of
the Remuneration Committee during the year to address
shareholder concerns regarding the Company’s
53 / Future plc
remuneration policies and practices are set out in the Directors’
Remuneration Report on pages 71 to 96.
Reported financial results
The audited financial statements for the year ended
30 September 2019 are set out on pages 106 to 148. Details of the
Group’s results are set out in the consolidated income statement
on page 106 and in the notes to the financial statements on
pages 113 to 148.
Dividends
The Board’s policy is that dividends should be covered at least
four times by adjusted earnings per share and free cashflow. The
Company’s Employee Benefit Trust (EBT) waives its entitlement
to any dividends. The Board is recommending a final dividend for
the year of 1.0p per share (2018: 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.
Details of all movements in share capital are given in note 22
on page 138. As at 30 September 2019, the number of shares
in issue was 83,595,421 (2018: 81,518,591). This represents an
increase of 2.5% compared with the number of shares in issue as
at 30 September 2018. In March 2019, 615,166 shares were issued
by the Company to part fund the acquisition of MoNa Mobile
Nations, LLC. In August 2019, 1,027,492 shares were issued by
the Company to part fund the acquisition of SmartBrief, Inc.
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. After the year end,
a further 14,418,854 shares were issued in connection with the
Mobile Nations earnout payment, the acquisition of Barcroft
Studios, and the proposed acquistion of TI Media and the vesting
of certain executive and all employee share schemes.
Significant shareholdings
As at 30 September 2019, the Company had been notified of the following significant interests in its Ordinary Shares:
Shareholder
Canaccord Genuity Group Inc.
Blackrock
Slater Investments Ltd
Old Mutual Global Investors (UK) Limited
Standard Life Aberdeen plc
Aberforth Partners LLP
Invesco
JPMorgan Asset Management Holdings Inc.
Oberweis Asset Management, Inc.
AXA Investment Managers
Total number of shares in issue
Number of shares
Percentage of
issued share capital
8,189,816
5,622,113
2,753,000
2,639,617
4,309,673
4,151,813
4,103,205
3,873,459
3,161,925
3,099,132
83,595,421
9.93%
6.72%
6.02%
5.68%
5.26%
4.97%
4.91%
4.69%
3.83%
3.81%
At 4 December 2019, the Company had been notified of the following significant interests in its Ordinary Shares:
Shareholder
Slater Investments Ltd
Old Mutual Global Investors (UK) Limited
JPMorgan Asset Management Holdings Inc
Blackrock
Standard Life Aberdeen plc
Canaccord Genuity Group Inc
Aberforth Partners LLP
Invesco
AXA Investment Managers
Oberweis Asset Management, Inc.
Total number of shares in issue
Directors’ shareholdings (audited)
Directors in office at 30 September 2019
Executive2
Zillah Byng-Thorne3
Penny Ladkin-Brand4
Non-Executive
Richard Huntingford
Alan Newman
Hugo Drayton
Rob Hattrell
Total
Number of shares
Percentage of
issued share capital
2,753,000
2,639,617
4,269,605
5,086,160
4,309,673
4,863,031
4,151,813
4,103,205
3,099,132
3,614,157
98,014,275
6.02%
5.68%
5.48%
5.43%
5.26%
4.99%
4.97%
4.91%
3.81%
3.71%
Balance as at
30 September
2018
Purchases
during
the year
Share scheme
exercises
during
the year
Sales during
the year
Balance as at
30 September
2019
269,755
197,152
24,500
8,750
-
-
43,935
10,050
195,919
(262,404)
97,960 (133,000)
247,2055
172,1625
-
-
-
-
-
-
-
-
-
-
-
-
24,500
8,750
-
-
500,157
53,985
293,879
(395,404)
452,617
1. All holdings are beneficial.
2. Details of the share options and awards for Executive Directors are set out on page 94. No such options or awards are granted to Non-Executive Directors.
3. On 23 November 2018, following the full vesting of the PSP award granted on 30 November 2015, Zillah Byng-Thorne received 195,919 Ordinary shares. Zillah Byng-Thorne sold 235,608
Ordinary shares on 23 November 2018 at a price of £5.10 per Ordinary share, and a further 26,796 Ordinary shares on 26 November 2018 at a price of £5.15 per Ordinary share, and purchased
2,236 Ordinary shares at a price of £5.1749 per Ordinary share on 27 November 2018, 13,050 Ordinary shares at a price of £5.3625 per share on 28 November 2018 and a further 9,864 Ordinary
shares at a price of £10.07 per Ordinary share on 16 August 2019. Max Thorne (husband of Zillah Byng-Thorne) purchased 13,360 Ordinary shares at a price of £5.1485 per Ordinary share on 23
November 2018, and a further 5,425 Ordinary shares at a price of £7.50 per Ordinary share on 6 March 2019.
4. On 23 November 2018, following the full vesting of the PSP award granted on 30 November 2015, Penny Ladkin-Brand received 97,960 Ordinary shares. Penny Ladkin-Brand sold 133,000
Ordinary shares on 23 November 2018 at a price of £5.10 per Ordinary share. On 16 August 2019, Penny purchased 10,050 Ordinary shares at a price of £9.95 per Ordinary share.
5. Since 30 September 2019, the Executive Directors have transacted in shares (following share purchases and the vesting of share awards on 23 November 2019). At 4 December 2019,
Zillah Byng-Thorne held 462,015 shares and Penny Ladkin-Brand held 519,666 shares.
Annual Report and Accounts 2019 / 54
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Directors
Annual General Meeting 2020
Biographical details of the Directors holding office as at
4 December 2019, including a summary of the key skills and
experience that are deemed applicable to ensuring the long
term sustainable success of the Company, are set out on pages
51 and 52.
The Directors’ shareholdings in the Company’s share capital are
set out on page 54. No Director has any interest in any other
share capital of the Company or any other Group company, nor
does any Director have a material interest in any contract of
significance to the Group.
Significant agreements
The provisions of the European Directive on Takeover Bids (as
implemented in the UK in the Companies Act 2006) require
the Company to disclose any significant agreements which
take effect, alter or terminate upon a change of control of
the Company. In common with many other companies, the
Group’s bank facility (details of which are set out in note 18
on pages 132 and 133) is terminable upon change of control
of the Company. In common with market practice, awards
under certain of the Group’s long-term incentive plans (details
of which are set out in the Directors’ remuneration report on
pages 71 to 96 and note 23 on pages 139 to 141) 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 21 on pages 133 to 138.
Corporate governance
The Board’s report on this subject is set out on pages 59 to 70.
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 41
to 42.
55 / Future plc
At the Company’s twenty first Annual General Meeting, which
will be held at 10:30am on Wednesday 5 February 2020 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 149 to
153 and an explanation of all proposed resolutions is provided
below.
Ordinary resolution 1 – Financial statements
Shareholders will be asked to adopt the financial statements of
the Company for the financial year ended 30 September 2019,
together with the reports of the Directors and auditors. The
audited financial statements appear on pages 106 to 148.
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 2019, which is set out on pages 149 to 153.
Ordinary resolution 3 – Directors’ remuneration policy
report
Shareholders will be asked to approve the Directors’
remuneration policy for the three year period commencing
1 October 2019, which is proposed within the Directors’
remuneration implementation report set out on pages 87 to 96.
Ordinary resolution 4 – Declaration of a dividend
Shareholders will be asked to approve a final dividend of 1.0p
per ordinary share for the year ended 30 September 2019, as
recommended by the Directors. The dividend, if approved, will
be payable on 14 February 2020 to shareholders on the register
at the close of business on 17 January 2020.
Ordinary resolutions 5 to 10 – Annual re-election
of Directors
As required by the UK Corporate Governance Code, and
consistent with our policy since 2004, all Directors are proposed
for re-election. Following an internal evaluation of the Board’s
performance and effectiveness in September 2019, the Board is
satisfied that each Director being proposed for re-election has
the skills, experience and commitment necessary to contribute
effectively to the Board. The Board therefore unanimously
recommends the re-election of the Directors set out in
Resolutions 5 to 10.
Biographical details of each of the Directors standing for re-
election appear on pages 51 and 52 of this document, including
skills and experience which are deemed to be important to the
Company’s long-term sustainable success. Further information
regarding the Directors’ contributions to the Board during
the year under review is set out on page 61 of the Corporate
Governance report.
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 67 of the Audit Committee's report 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 £9,801,426 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 £9,801,426 which represents
approximately two thirds of the Company’s issued Ordinary
shares (excluding treasury shares) as at 4 December 2019. This
maximum is reduced by the nominal amount of any equity
securities allotted under paragraph 13.2 of the Notice of AGM;
and
(b) in any other case, equity securities up to a maximum
nominal amount of £4,900,713 which represents just under
one third of the Company’s issued Ordinary shares as at 4
December 2019. 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 £4,900,713. If granted, this
authority would replace all previous authorities granted in this
connection.
The authority granted by this resolution will expire on 4 May
2021 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 £735,107 representing
approximately 5% of the nominal value of the issued Ordinary
share capital of the Company, as at 4 December 2019 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 4 May 2021,
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 £735,107, representing
approximately 5% of the nominal value of the issued Ordinary
share capital of the Company as at 4 December 2019, being the
latest practicable date before publication of the Notice of AGM.
This is in addition to the 5% proposed 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 4 May 2021,
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. It is the Directors’
intention to use this shorter 14 day notice period only when
they consider it appropriate and expedient to do so.
Special resolution 18 – Directors’ fees
It is proposed that, in line with prevailing market practice
and in conjunction with the adoption of the Company’s new
Remuneration Policy, Article 13.3 of the Company’s Articles of
Association be amended so as to limit the aggregate amount of
fees payable annually to the Directors as a whole to £600,000.
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 3rd February 2020. 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 151
to 153.
Annual Report and Accounts 2019 / 56
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Recommendations
Directors’ confirmations
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, as soon
as possible after the conclusion of the AGM, and no later than
6.00pm on 5 February 2020.
Statement of Directors’ responsibilities in respect of
the financial statements
Each of the Directors, whose names and functions are listed in
the Board of Directors section on pages 51 and 52, confirm that,
to the best of their knowledge:
• the Company financial statements, which have been prepared
in accordance with IFRS 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 IFRS as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position
and profit of the Group;
• they consider the Annual Report and financial statements,
taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess
the Group’s position and performance, business model and
strategy; and
• the Directors’ report includes a fair review of the development
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
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.
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;
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:
• 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;
Timothy Maw
Company Secretary
4 December 2019
• 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.
57 / Future plc
England and Manchester City footballer
Raheem Sterling photographed for
FourFourTwo magazine
Annual Report and Accounts 2019 / 58
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements CHAIRMAN’S
INTRODUCTION
Richard Huntingford
Chairman
Dear fellow shareholder,
I am pleased to introduce our Corporate Governance Report
for the year ended 30 September 2019. This report outlines how
the Board has ensured that robust and effective governance
procedures are in place to enable the Company to deliver on its
strategy and promote the long-term sustainable success of the
Company for the mutual benefit of all of our stakeholders.
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.
The Board has had a strong focus during the year on the
Company’s short, medium and long-term strategic goals,
including the integration of recent acquisitions and the growth
of the core business, and ensuring that the Company has the
right people in place to deliver on its strategy. During this period
of accelerated growth, it is vital to ensure that the Company’s
governance processes are robust in order to ensure that the
business is protected and that all stakeholders’ interests are
taken into account.
In preparation for the Company’s move up to Premium Listing
during the year, the Board carried out a rigorous review of the
Company’s internal control environment, including its policies,
practices and procedures and its approach to risk management,
and has updated its practices where it considered appropriate to
do so. More detail on this is set out in the Risk section on pages
35 to 36 and the report on the Audit Committee’s work during
the year on pages 65 to 67.
The Company has a strong culture of working together (“we all
row the boat”) to be part of our audience and communities, and
striving for excellence in all that we do. The Board recognises
the importance of the Company’s culture in achieving its goals
(“results matter, success feels good”), and has a key focus on
2018 UK Corporate Governance Code Prinicples
A. A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term
sustaintable success of the company, generating value for shareholders and contributing to wider society.
B. The board should establish the company’s purpose, values and strategy, and satisfy
itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote
the desired culture.
C. The board should ensure that the necessary resources are in place for the company
to meet its objectives and measure performance against them. The board should also establish a prudent
framework of controls, which enable risk to be assessed and managed.
D. In order for the company to meet its responsibilities to shareholders and stakeholders,
the board should ensure effective engagement with, and encourage participation from, these parties.
E. The board should ensure that workforce policies and practices are consistent with the
company’s values and support its long term sustainable success. The workforce should be able to raise any
matters of concern.
59 / Future plc
During this period of accelerated
growth, it is vital to ensure that the
Company’s governance processes are
robust in order to ensure that the
business is protected and that all
stakeholders’ interests are
taken into account.
setting this culture, and ensuring that the necessary resources
are in place to deliver the Company’s strategy.
The Board is kept up to date on key issues regarding employees
by the inclusion in Board packs of an HR Dashboard, with
the Chief Operating Officer or HR Director attending Board
meetings to discuss matters relating to people and culture. No
specific cultural issues have arisen during the year; however,
a significant focus of the people and culture team has been
ensuring that those who have joined the Future family as a
result of recent acquisitions are fully aligned with the culture
of the Company. The Board has chosen not to adopt any of the
three methods proposed in the 2018 UK Code for engaging
with the workforce, believing its alternative arrangements are
sufficiently robust. Details of these arrangements are set out in
the Corporate Responsibility Report on pages 41 to 45.
UK Corporate Governance Code Compliance Statement
The Company confirms that it has complied in full with the
provisions of the 2016 UK Corporate Governance Code (the “2016
Code”) during its period of inclusion in the Premium segment of
the London Stock Exchange’s Main Market. Furthermore, with
the exception of Code Provision C.3.1 (composition of the Audit
Committee) until 9 February, it complied in full with the 2016
Code throughout the year even though it was not mandatory to
do so prior to the date of its Premium listing.
Prior to its move to the Premium segment on 1 April 2019,
the Directors also performed a thorough review of each of
the detailed provisions proposed by the 2018 UK Corporate
Governance Code (the “2018 Code”, being the Code applicable
to financial years beginning on or after 1 January 2019), following
which the Directors put in place the necessary processes and
procedures to ensure that the Company complies with the
provisions of the 2018 Code prior to their mandatory application,
or explains why areas of departure from the 2018 Code are in the
best interests of the Company as a whole. Copies of the 2016 and
2018 versions of the Code are available via the FRC’s website:
www.frc.org.uk
Richard Huntingford
Chairman of the Board
Annual Report and Accounts 2019 / 60
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
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 pages 51 and 52.
Board changes during the year
Rob Hattrell was appointed as an independent Non-Executive
Director on 1 October 2018 and adds significant experience of
digital platforms and eCommerce to the Board.
Hugo Drayton was appointed Senior Independent Non-Executive
Director in October 2018.
There were no other changes to the Board during the year ended
30 September 2019, although the Company announced the
intention of Penny Ladkin-Brand to resign from the position of
Chief Financial Officer, to assume the role of Chief Strategy Officer
upon completion of the TI Media acquisition, at which time Rachel
Addison will join the board as Chief Financial Officer.
Role of the Non-Executive Directors
The Non-Executive Directors 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.
Non-Executive Directors are initially appointed for a term of three
years, subject to annual re-election, and terminable by either
party on three months’ notice at any time. This may, subject to
satisfactory performance and re-election by shareholders, be
extended by mutual agreement.
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 for keeping in touch with the
executive and senior management team, shareholders and other
stakeholders. The Chairman is expected to commit a minimum of
40 days per year to fulfilling this role. During the year, each of the
Non-Executive Directors has devoted significantly more time to
performing their duties given the step up to Premium Listing, and
the increased scale and complexity of the Group.
Richard Huntingford: in his role as Chairman of the Board, Richard
offers to meet with key shareholders at least annually, and has
held many face-to-face meetings and telephone calls with those
who wish to take up his offer during the year. In addition, Richard
attended a number of meetings that Hugo Drayton, Chairman of
the Remuneration Committee had with shareholders to discuss
the Company’s 3-year remuneration policy. During the year,
Richard spent at least 60 days dealing with Company matters due
to the increase in corporate activity and the move to premium
listed status. Richard is a highly effective Chairman, and interacts
regularly with the Executive and Non-Executive Directors outside
of Board meetings, and also with the Company’s advisors. Richard
also has a keen focus on ethical, social and governance matters.
61 / Future plc
Hugo Drayton: in his role as Senior Independent Director, Hugo
has devoted a significant amount of time outside of Board
meetings to assisting the Company with the recruitment of a
number of senior managers, and has spent time visiting the
Company’s Australian office. In his role as Chairman of the
Remuneration Committee, he has spent a significant amount of
time on remuneration matters during the year, including running
the tender process for a new remuneration advisor, reviewing and
discussing the proposed remuneration policy with the Company’s
remuneration advisors and 15 of its key shareholders.
Alan Newman: in his role as Chairman of the Audit Committee,
Alan has devoted a significant amount of time to leading the
auditor tender process on behalf of the Board during the year,
together with reviewing and overseeing the testing of the newly
implemented internal controls environment, and working with
the finance team and auditors to agree the year end audit plan.
He engages regularly with the finance team, and is excellently
qualified for the role of Chairman of the Audit Committee.
Rob Hattrell: Rob has been an excellent addition to the Board as
Non-Executive Director. His experience at eBay, and his insight in
key areas of focus for the Company such as US advertising trends
and eCommerce, is particularly valuable to Board discussions.
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 prior to their appointment
to the Board, and monitors their time commitment following their
appointment, including by requiring all Non-Executive Directors
to obtain the approval of the Board before undertaking any
other external commitments. In this regard, it should be noted
that the majority of Richard Huntingford’s other appointments
are at investment trusts and do not require significant time
commitment, and that the Board has approved Zillah Byng-
Thorne’s Non-Executive Director roles with GoCo Group plc,
Flutter Entertainment plc and The Hut Group, and considers that
the experience and insights gained from her roles on the Boards
of other companies is of significant benefit to the Company.
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, together with one strategy session, and attendance is
summarised opposite. The Board had a further number of
unscheduled telephone meetings to discuss and approve various
matters during which a sufficient quorum of Directors were
present. In addition, a sub-committee of the Board held four
telephone meetings to discuss, approve and finalise, amongst
other things, the acquisitions made during the year, and the 2018
full year and 2019 half year results.
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,
papers for all strategic and operational agenda items, a report
from the Company Secretary summarising any key legal issues
and providing any regulatory/legislative and governance 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 strategic
matters including M&A activity.
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 42 matters
had been considered by the Board during the year. The schedule
is available on the Company’s website at www.futureplc.com. The
Board delegates day-to-day operational matters to the
Group’s senior management team.
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 155). 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.
Attendance
(8 scheduled meetings*)
8 of 8
8 of 8
8 of 8
8 of 8
8 of 8
8 of 8
Director
Richard Huntingford
Zillah Byng-Thorne
Hugo Drayton
Penny Ladkin-Brand
Alan Newman
Rob Hattrell
* Includes 1 strategy session
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 2019. The Company maintains
appropriate insurance for its Directors.
Engaging with Stakeholders
The Board is committed to engaging effectively with, and creating
value for, its shareholders and key stakeholders, as it considers
this to be fundamental to continuing to develop the business in a
sustainable manner.
Our investors: the Board is committed to ensuring that it engages
with, and creates value for, all those who invest in it, including its
retail and institutional shareholders and its banks. The Directors
recognise that institutional shareholders have a duty to ensure
that their holdings in the Company are in the best interests of and
create value for the underlying investors, and are aligned with the
ethical and social values of those investors. The Board seeks to
have an open dialogue with all of its shareholders, and to address
questions or concerns that may be raised by any shareholder.
Following feedback from certain shareholders regarding the
resolutions proposed at the Company’s AGM in 2019 regarding
remuneration, a thorough consultation was carried out with
shareholders during the year, details of which are set out in the
Directors’ Remuneration Report on pages 73 to 74. The Company
has also been well supported by debt financing and refinanced
its debt arrangements during the course of the year, bringing two
new banks (in addition to the incumbent bank) into the banking
syndicate. Management regularly engage with the banks to keep
them abreast of company performance and strategy. In addition,
further information regarding the manner in which the Board
communicates and engages with investors is set out on page 64
of this report.
Our people: our people are critical to the success of the business
and it is therefore essential that they are engaged and aligned
with our purpose, strategy and values. We have a regular
communication programme with employees throughout the
year, and strive to embed the same culture and values across
the Group. During the year, particular focus has been given to
integrating the large number of people in the US who have joined
the Group as a result of recent acquisitions, on developing our
people and providing a clear career progression path within the
business. More detailed information on how we engage with our
people is set out in the Corporate Responsibility Report on pages
41 to 45.
Our audience: we bring together a highly engaged and loyal
audience who indulge in shared passions through our customised
content which is carefully crafted by experts in their fields, and
which we are able to bring to our audience through print, online
and in person. Information on how we engage with our audience
is set out in pages 9 to 16.
Our commercial partners: with our network of expert-led content,
we bring a large, passionate community to our commercial
partners, providing them with great opportunities to connect with
our audience. Further detail on how we engage with and create
value for our commercial partners is set out on pages 5 and 6.
Our suppliers: we work only with suppliers who are proven, via
our internal due diligence checklists, to share our high ethical and
envirormental standards. Further detail on how we engage with
our suppliers, and the ethical and environmental standards to
which we hold them and ourselves, are set out on pages 41 and 42
of the Corporate Responsibility Report.
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. In particular,
prior to the Company’s move up to the Premium segment of the
London Stock Exchange during the year, the Board was provided
with training and comprehensive materials in relation to the
UK Corporate Governance Code and the Company’s continuing
obligtions under the UK Listing Rules.
Annual Report and Accounts 2019 / 62
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Performance evaluation
The Directors completed a detailed Board performance evaluation
questionnaire as part of the annual performance evaluation
process. Each questionnaire was analysed and a summary of
the results and the Board’s performance was presented to the
Board for discussion. The Board considers this exercise to be of
significant value, and focus is placed on reviewing the quality
of information provided to the Board at the Board’s discussions,
the effectiveness of the Board, the composition of the Board,
including the skillset of the various Directors, highlighting
whether there are any gaps in the breadth and depth of the Board
that should be addressed by the Nomination Committee as part
of its succession planning, and to ensure that the Board is best
placed to deliver on its strategic goals and ensure the long term
sustaintable success of the Company.
The Board has determined that, going forwards, a performance
evaluation should be carried out by an external facilitator once
every three years, as required by the UK Corporate Governance
Code, with the first performance evaluation to be conducted by
an external facilitator no later than 2021.
Summary of performance evaluation
Following an internal performance evaluation carried out in 2018,
the following main objectives were identified for 2019, together
with steps taken to address them.
Greater emphasis needed on, and time devoted to,
succession planning:
Both the Board and Nomination Committee have actively
reviewed the senior management structure and the composition
of the Board during the year. The Board has agreed the
approach to succession planning for the senior executive team
and, following the decision of the Nomination Committee to
strengthen the Board, the recruitment process for an additional
Non-Executive Director is well advanced.
Managing the step up to Premium listed status:
The Company was re-admitted to the Premium segment of the
London Stock Exchange on 1 April 2019. A thorough review of the
Group’s policies, processes and procedures was undertaken prior
to the move up to Premium Listing, with particular focus on
risk management, the internal control environment, corporate
governance and compliance with the Company’s continuing
obligations under the Listing Rules.
In 2019 an internal performance evaluation was again carried
out, by way of questionnaire, identifying areas of strength and
weakness. The questionnaire was structured to provide direct
comparison with the previous year, allowing the Board to identify
improving or declining trends and monitor the effectiveness of
the steps taken to address the previous year’s findings. The 2019
performance evaluation, which was discussed at the October
2019 Board meeting, concluded that the Board is highly engaged
with strong shareholder focus and clear alignment to vision and
strategy, making for constructive and challenging debate. There
is a culture of open communication, mutual trust and respect for
each other’s opinions and industry knowledge. The Board also
agreed on the following actions for the forthcoming year:
Objectives for 2020
Steps to be taken during 2020
Continued focus on
succession planning
and diversity
To continue the recruitment of additional Non-Executive Director(s), particularly with plc or US media
experience, and to monitor and review talent development and retention to strengthen and deepen the ELT,
especially with respect to succession planning for the Executive Directors.
Review meeting
processes and timings
Timings and sequencing of Board and Committee meetings to be reviewed to ensure sufficient time for
deep dives into areas of the business as well as governance issues commensurate with the Company’s
Premium Listed status.
Director training to
keep pace with
Company growth
Leverage external advisors for formal and technical training; adequately timetable internal updates on
technological and business developments.
Going concern and long term viability statement
Financial covenant compliance
In order to adopt the going concern basis in preparing the Group's
financial statements, 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 the Group has adequate resources to continue in operational
existence for at least 12 months from the date of this report.
In compliance with section C.2.2 of the 2016 Code, the Directors
have also assessed the prospects and the viability of the Group
over a longer period than the 12 months required by the ‘Going
Concern’ provision, and have chosen a three year period to 30
September 2022. The viability statement, and the reasons why a
three year period was considered most appropriate for the Group,
is set out in the Risk section on pages 35 to 39.
Key covenants are tested quarterly and the Group was in full
compliance with all covenants at all testing dates during the year.
The Group has covenants in respect of net debt/bank EBITDA and
bank EBITDA/interest. Further details are included within note 18
on pages 132 and 133.
Risk management and internal controls
Details of the Company’s principal and emerging risks and the
Group’s approach to managing them are set out on pages 35
to 38. The Board acknowledges that it is responsible for the
Group’s risk management and internal control, and processes and
systems. During the year, as part of the step up to Premium Listed
status, the Board conducted a review of financial, operational,
legal and compliance risks with the assistance of the Group legal
63 / Future plc
Relationship and communication with shareholders
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, and host an annual capital markets
day with various senior members of the Group management team
which has proven to be popular, with 75 investors and analysts
attending in February 2019. The Chairman offers to meet with key
shareholders at least annually, and during 2019 he met or spoke
individually with the Company’s key shareholders on at least
twelve occasions. The Chairman of the Remuneration Committee
consulted with representatives of fifteen of the Company’s largest
shareholders and proxy agencies with regard to the Company’s
remuneration policy, as is explained in more detail in the Directors
Remuneration Report on page 86.
In order that all Directors are aware of the views of shareholders,
each Board pack includes a note of views 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.
and finance teams and the Executive Leadership Team, 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 and the Committee is comfortable that the
systems accord with the relevant FRC guidance in respect of this
area. The Audit Committee regularly receives and reviews risk
updates from the Executive team.
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 below.
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 and FP&A directors who are responsible
and accountable for providing information in accordance with the
Group’s policies and procedures. These have been in place for the
whole year and were formally documented in the Group’s finance
manual following the step up to Premium Listed status.
The Executive Committee holds monthly meetings with senior
management in order to review financial results, and ensure that
business and operational issues are explored and addressed in a
timely manner. The risk register is reviewed and updated at least
twice a year by the Executive Committee. Further details of the
procedures that are in place to identify emerging risks, and of how
these risks are managed and mitigated, are set out in the Risk
section on pages 35 to 38. This process has been in place for the
whole year and up to the date of approval of the annual report.
Internal audit
The Audit Committee and the Board have again during 2019
considered whether there is a need for an internal audit function,
in particular bearing in mind the increased size and complexity
of the Group and the Company’s step up to a Premium Listing. It
was concluded that it is appropriate for internal control reviews to
be undertaken on a rotational basis by members of the finance
team, led by an individual reporting directly to the Chair of the
Audit Committee for this purpose. Accordingly, a divisional
Finance Director was appointed to this role in February 2019. The
key areas of the control environment are to be reviewed every
year, with quarterly meetings held to agree which areas should
be audited and key controls tested over the course of the year.
The aim of this exercise is to provide the Committee with comfort
over the Group’s control environment. The work undertaken in
this exercise will be shared with the external auditors to enable
them to leverage, where possible, findings for their external audit.
The Audit Committee will continue to monitor this process and
review annually whether or not a dedicated internal audit function
may be required as Future's business grows in scale, size and
complexity.
The Board relies on the work detailed above in obtaining comfort
over the effectiveness of the Group’s internal control systems.
Whistleblowing and anti-bribery policies
As part of its internal controls, the Group has whistleblowing 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,
modern slavery and human trafficking in order to identify any
problems within the Group at an early stage. The whistleblowing
policy is also designed to ensure that any employee who raises a
genuine concern is protected. Further information can be found
in the Corporate Responsibility Report on page 44.
Annual Report and Accounts 2019 / 64
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements 2. AUDIT
COMMITTEE
Introduction from Audit
Committee Chairman
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 relation to
acquisitions, and in preparation for the Company moving up to a
Premium Listing.
For further details regarding fees paid, see note 4 to the financial
statements on page 123.
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 September 2019. 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 Board is required to confirm that the Annual Report and
Financial Statements are fair, balanced and understandable (see
page 57). To enable the Board to make this declaration, there
is a year-end review process to ensure the Committee, and the
Board as a whole, has access to all relevant information and, in
particular, management’s papers on significant issues faced by
the Group. The Committee received a summary of key factors
considered in determining whether the Annual Report is fair,
balanced and understandable. The Committee, and all other
Board members, also received drafts of the Annual Report and
Financial Statements in sufficient time to review and challenge
the disclosures if necessary. In addition, our auditors, PwC,
reviewed the consistency between the reporting narrative of the
Annual Report and the Financial Statements.
The significant judgements considered in relation to the financial
statements for the year ended 30 September 2019, which were
originally identified and discussed as part of the planning process
referred to above, are set out overleaf and were addressed as
detailed overleaf:
During the year, the Committee
has supported the Board on a
number of significant governance
matters, including reviewing the
Company’s polices, practices
and procedures, and its internal
control environment in anticipation of its move up to Premium
Listing, as well as carrying out a regular, robust assessment of
the principal and emerging risks for the Company. It has also
played a key role, on behalf of the Board, in the management of
the audit tender process. This led to the recommendation that
PricewaterhouseCoopers LLP be re-appointed to serve as the
Company's auditors for the year ended 30 September 2020 and
that subsequently, Deloitte LLP should be appointed to serve
as the Company's auditors with effect from the year ended 30
September 2021.
This report provides further, detailed information on the work
undertaken by the Committee during the year.
Member
Alan Newman
(Chairman from 6 February 2018)
Richard Huntingford
(Resigned 7 February 2019)
Hugo Drayton
Rob Hattrell
(From 7 February 2019)
Attendance
(3 scheduled
meetings)
3 of 3
1 of 1
3 of 3
2 of 2
1. Richard Huntingford served as acting Chairman from 1 December 2017 until he was
replaced by Alan Newman on 6 February 2018. He stepped down from the Committee on 7
February 2019 to ensure that the composition of the Committee would be compliant with
the provisions of the 2016 UK Corporate Governance code when the Company moved up
to a Premium Listing. Alan has recent, relevant financial experience and the Committee
as a whole has experience of and competence in the sectors including media, sales and
eCommerce, in which the Group operates.
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 2019 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.
65 / Future plc
Summary of performance
evaluation
Area of focus
Reporting issue
Role of the Committee
Conclusion / Action taken
Acquisition
accounting
As outlined on page 5 in
the Strategic Report, the
Group has completed a
number of significant
acquisitions during the
year.
At the request of the Committee the Group engaged 3rd
party valuations experts to assist in the preparation of
the purchase price allocation exercises for all significant
acquisitions. The Committee has reviewed detailed papers
setting out the acquisition accounting undertaken,
including purchase price allocations and opening balance
sheet fair value assessments, (including valuation of
contingent consideration where relevant) performed for the
Mobile Nations, cycling titles and SmartBrief acquisitions,
as well as the finalisation of the fair values assigned to the
Purch acquisition.
Carrying
value of
goodwill and
long lived
assets
The
classification
of
exceptional
items
Tax
The Group has goodwill
and other intangibles
totaling £329m on the
balance sheet at 30
September 2019. The
level of goodwill has
increased significantly
due to the number
of acquisitions in the
year. IAS 36 requires an
impairment test
to be performed for
goodwill on an annual
basis or where there
is an indication of
impairment.
Due to the significant
acquisition-related
activity a number
of items (such as
acquisition or related
integration costs and
Premium Listing related
costs) totaling £3.4m are
considered exceptional
in nature.
In the year an additional
deferred tax asset
of £6.6m has been
recognised in respect
of historic US tax losses.
The impact on the
income statement is a
credit of £6.6m and on
the balance sheet the
total deferred tax asset
recognised in respect of
losses at 30 September
2019 is £6.7m (at 30
September 2018: £2.1m).
A provision for uncertain
tax positions has also
been recognised. The
impact on the income
statement is a debit
of £5.2m and on the
balance sheet a tax
liability of £5.6m split
between current and
deferred tax has been
recognised (at 30
September 2018: £nil).
The net impact of the
two movements is a
credit to the income
statement of £1.4m.
Management prepared a detailed impairment assessment
of both the UK and US businesses at 30 September 2019 and
concluded that no impairment was required.
The Committee challenged management’s assessment and
the assumptions made, which included:
- Long-term growth rate to perpetuity UK: 3%, US: 3%
- EBITDA margins assumed UK: 24% to 33%, US: 19%
to 21%
- Discount rate (post-tax) 8.2% (both UK and US)
Refer to note 12 on page 128 for further information in
respect of the carrying value of goodwill and long lived
assets.
The Committee reviewed and challenged information
provided by management explaining the nature and
rationale for the inclusion of these items and discussed
them with the auditors. Refer to note 5 on page 123 for
further information in respect of exceptional items.
The Group has significant previously unrecognised US tax
losses brought forward from the years 2007-2016. Of these
losses £2.1m had been recognised (net of utilisation, tax
rate changes and foreign exchange movements) at the end
of FY18. In FY19, the Committee discussed the recognition
of further US tax losses with the auditors and reviewed
detailed papers prepared by management at several points
throughout the year. These papers set out advice received
from the Group’s external tax advisors in respect of the
applicable US tax legislation (s382 of the US Tax Code).
These concluded that although there was a restriction on
annual loss use, the restricted amount is still very large, and
that combined with the significant growth and anticipated
continued profitability of the US business, it is now likely
that the US profits will be sufficient to enable existing US
tax losses to be utilised in the foreseeable future. Therefore
the requirements set out in IAS 12: Income Taxes for the
recognition of losses as an asset were satisfied as at 30
September 2019.
The Committee also discussed the recognition of a provision
for uncertain tax positions, noting that the Group's higher
level of profitability increases the probability of uncertain tax
items being crystallised as liabilities (or in the case of the US,
reducing the deferred tax asset on losses).
The Committee therefore agreed with the recommendation
to recognise a provision under IAS 12, applying the
measurement principles of IFRIC 23.
For information in respect of the impact of both of these
items refer to page 129.
The Committee agreed with
the judgements made by
management in respect of
the acquisition accounting
undertaken during the year
and the presentation in the
Group’s results for the year
ended 30 September 2019.
Refer to note 28 on pages 143
to 146 for further information
in respect of the acquisition
accounting undertaken in
the year.
The Committee agreed with
management’s conclusion
that no impairment is required
on the basis that there is
significant headroom on
both the UK and US goodwill
and intangibles, even when
reasonably possible changes
are made to the underlying
assumptions and inputs.
The Committee and
management will continue
to closely monitor the level
of headroom on goodwill
and other indefinite lived
intangibles.
The Committee agreed with
the conclusion that these
items should be separately
presented within exceptional
items, so as to assist the users
of the financial statements to
better understand the results
of the core operations of the
Group.
The Committee agreed with
the recognition of a deferred
tax asset relating to losses
and a current and deferred
tax liability relating to the
provision for uncertain tax
positions. The Committee and
management will continue to
monitor the appropriateness
of these judgements in FY20
and beyond, considering the
Group's activities and the
effect on its tax liabilities, and
developments in applicable
tax legislation, accounting
standards and relevant
guidance, including IFRIC 23.
See page 113 for more
information in respect of the
impact of IFRIC 23.
Annual Report and Accounts 2019 / 66
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Five firms, including the incumbent, were invited to participate
in the tender process, two of which declined to participate due
to having insufficient resources to dedicate to the process. Each
firm participating in the tender process was provided with access
to a data room of key written information and documentation,
given the opportunity to meet with key senior managers during
a “carousel day”, and received a list of proposal requirements and
a description of the selection criteria. Each firm then presented
to an Audit Tender Panel comprising the members of the Audit
Committee as voting members, assisted by the Chairman, CEO,
CFO, Group Finance Director and Group Financial Controller. In
reaching its conclusions, the Audit Committee took into account
the presentations made by the firms and their written tender
documents and along with the advice of the management
members of the tender panel.
As a result of the tender process, the Audit Committee
recommended and the Board agreed to recommend to
shareholders that Deloitte LLP be appointed to succeed
PricewaterhouseCoopers LLP as the Company's auditors.
However, the Audit Committee also recommended that due
to the high level of acquisition integration activities and the
impending change in Chief Financial Officer in 2019/20 that the
proposed change of auditor be deferred until the year ended 30
September 2021. The Board concurred with this recommendation.
Accordingly, a resolution to re-appoint PricewaterhouseCoopers
LLP for the year ending 30 September 2020 is being proposed
to shareholders at the 2019 AGM (to be held in February 2020). A
resolution to appoint Deloitte LLP as auditors for the year ending
30 September 2021 will be proposed to shareholders at the
Company's AGM to be held early in 2021.
As a result of carrying out the tender process during 2019,
the Company confirms that it has complied with the terms
of The Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014 (the Order)
since moving up to Premium Listing. In addition to requiring
mandatory audit re-tendering at least every ten years for FTSE 350
companies, the Order provides that only the Audit Committee,
acting collectively or through its Chair, and for and on behalf of
the Board is permitted:
• to the extent permissible in law and regulation, to negotiate
and agree the statutory audit fee and the scope of the
statutory audit;
• to initiate and supervise a competitive tender process;
• to make recommendations to the Directors as to the auditor
appointment pursuant to a competitive tender process;
• to influence the appointment of the audit engagement
partner; and
• to authorise an auditor to provide any non-audit services to
the Group, prior to the commencement of those non-audit
services.
Alan Newman
Chairman of Audit Committee
Auditors’ independence and effectiveness
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.
The Group’s Audit Independence Policy is intended to put in place
appropriate controls for the approval and engagement of any
non-audit assignments according to the nature and value of the
work, to safeguard audit objectivity and independence. Non-
audit services are normally limited to assignments that are closely
related to the annual audit or where the work is of such a nature
that a detailed understanding of the Group is necessary. The FRC
Ethical Standard sets out the permissible non-audit services that
external auditors can perform, and PricewaterhouseCoopers
LLP ensures that all requests from the Group to provide non-
audit services, to any PricewaterhouseCoopers LLP office,
are considered in the context of the Group’s policy and
PricewaterhouseCoopers LLP's own ethical standards. All services
undertaken by the external auditor require approval from the
Committee before the commencment of any work. Full disclosure
of audit and non-audit fees paid in the year ended 30 September
2019 are set out in note 4 to the financial statements on page 123.
For the financial year ended 30 September 2019, 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, was the
most effective way of conducting the Group’s business during
the year.
Following conclusion of the 2018 audit, key members of the
Company’s finance team and management who were directly
involved in the audit process provided verbal feedback to
the Chairman of the Audit Committee on the audit process,
including audit planning, interaction with management and the
finance team, their understanding of the business, their audit
methodology and the robustness of their challenges around
management’s judgements. No significant concerns were raised
as part of this process.
For the 2019 audit, the Audit Committee has established a
questionnaire for key members of the Company’s finance team
and management involved in the audit process to complete to
provide their feedback to the Audit Committee. No significant
concerns were raised as part of this process.
Auditors' appointment policy and tender process
During the year, the Audit Committee reviewed its policy for
the appointment of external auditors. The Committee took into
account that the Company's inclusion in the FTSE 250 in June
2019 requires it to comply with statutory rules which specify that
a competitive tender for audit services must be held at least once
every ten years. The last full tender process had been conducted
in 2009. The Audit Committee also recognised that the incumbent
auditors, PricewaterhouseCoopers had held office since 1999 and
will be required in any event under CMA rules to relinquish office
at the latest by the year ended 30 September 2024. The current
Audit Partner, Katharine Finn, has been in place for two years of
a five year rotating tenure. The Audit Committee notes however,
that it, and the Board remain satisfied with the quality of service,
independence and objectivity of PwC.
The Audit Committee approved and supervised the audit tender
process, including specifiying the selection criteria setting the
timetable and approving the tender documents. The Chair of the
Audit Committee also met the audit partners proposed by each
firm in order to assess their quality, experience and fit with the
Company.
67 / Future plc
Portrait of American musician Cory Wong,
guitarist with funk rock group Vulfpeck,
photographed Total Guitar Magazine
Annual Report and Accounts 2019 / 68
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements 3. NOMINATION
COMMITTEE
CEO, current CFO, and COO; aptitude tests; and references.
Accordingly, Rachel Addison was recommended to the Board
for appointment as CFO, effective from the completion of the
acquisition of TI Media, which is expected in Spring 2020. The
Committee also liaised with the Remuneration Committee in
setting Rachel Addison’s remuneration, which was made with
regard to the proposed remuneration policy, as set out on pages
78 to 86 of the Directors’ Remuneration Report.
A similar process is being carried out by Heidrick & Struggles in
the search for an additional Non-Executive Director. It is hoped
that this process will complete in early 2020.
In these appointments, the Committee is mindful of the diversity
aspirations and programmes within the Company as a whole,
details of which are set out in the Corporate Responsibility
Report on pages 41 to 45, together with external indicatives
such as the Hampton-Alexander Review. As noted in the report,
two of the most senior leadership positions in the Company are
held by women, with the ELT reflecting a similar ratio. As part
of the succession planning referred to above, the Committee
is committed to ensuring that the Board and ELT as well as the
company as a whole reflects our audience.
Following discussion of the skills and contribution of each
Director, and in conjunction with the Board Performance
evaluation conducted in October 2019, the Nomination
Committee supports the proposed re-election of all Directors
standing for re-election at the AGM in 2020. In line with best
practice, each Committee member seeking re-election was
excluded from approving the proposal for their re-election.
Richard Huntingford
Chairman
Introduction from
Nomination
Committee Chairman:
During the year, the
Nomination Committee
has continued its focus
on the skillset of, and
succession planning for,
the Board. Taking into consideration the Group’s strategy and
rapid expansion, as well as feedback from the Board’s internal
performance evaluation review last year, the Committee
commenced the search for an additional Non-Executive Director
with relevant US media experience. Additionally, the decision
by Penny Ladkin-Brand to step down as CFO required the
Committee to oversee the search for a replacement CFO. Full
details on both of the search processes can be found below, and
the Committee was pleased to recommend to the Board the
appointment of Rachel Addison as CFO following the completion
of the acquisition of TI Media, which is expected in the Spring
of 2020. After the year end, the Committee also approved the
change of Company Secretary, and considered the directors
proposed for re-election by shareholders at the AGM.
Member
Richard Huntingford (Chairman)
Hugo Drayton
Alan Newman
Zillah Byng-Thorne
Rob Hattrell
Attendance
(3 scheduled
meetings)
3 of 3
3 of 3
3 of 3
3 of 3
3 of 3
During the year, the Nomination Committee reviewed and
analysed the composition of the Board and the specific skills and
attributes that each Director brings to the Board. A skills matrix,
aligned to the company’s strategy for long term sustainable
success was developed, and each Director assessed against it.
Noting in particular the rapid expansion of the Group during the
year, it was agreed that an additional Non-Executive Director,
particularly with relevant US media experience, would be a
useful addition to the Board given the relative size of the US
within the Group following the recent acquisitions. The matrix
was again used to benchmark potential candidates for the CFO
role, following the announcement that Penny Ladkin-Brand
would be stepping down from the Board to commence a new
role as Chief Strategy Officer following the completion of the
acquisition of TI Media.
Accordingly, Heidrick & Struggles was appointed to lead the
search for the new Non-Executive Director, and Redgrave
Partners was appointed to lead the search for a new Chief
Financial Officer. Neither of these search firms has any other
connection with any of the Directors, or the Company.
Working with Redgrave Partners, the Committee developed
a candidate specification and drew up a shortlist of suitable
candidates who were subject to a three stage process including
interviews with the Chairman, Chairman of the Audit Committee,
69 / Future plc
4. REMUNERATION
COMMITTEE
See page 71 in the Remuneration Report for details of Directors’
meeting attendance and the role of the Committee.
5. CORPORATE
GOVERNANCE REPORT
This report is approved by the Board of Directors and signed on its behalf by:
Richard Huntingford
Chairman
4 December 2019
Annual Report and Accounts 2019 / 70
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements DIRECTORS'
REMUNERATION
REPORT
Hugo Drayton
Chair of the Remuneration Committee
Committee membership and key activities undertaken
during the year
Attendance
Hugo Drayton (Chair)
Alan Newman
Rob Hattrell1
Overall remuneration
Annual base salary review
Annual bonus
Approval of FY18 bonus outcomes
Review and set performance
conditions and targets for
FY19 bonus
PSP
Approve vesting of 2015
PSP awards
Review and set PSP
performance conditions
and targets for 2018 PSP
Approve amendment to PSP rules
for administrative purposes
Governance and other matters
Approve Implementation Report
Review and approve
Remuneration Policy
Conduct consultation with
top 15 shareholders
Review governance trends and
shareholder themes
Review AGM voting and
consider appropriate response
Review Committee Effectiveness
✔
Review Committee’s
appointed advisors
Oct
2018
Nov
2018
May
2019
Jul
2019
Sep
2019
✔
✔
✔
✔
✔
✔
✔
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✔
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✔
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1. Rob Hattrell was unable to attend the ad-hoc October 2018 meeting due to
prior commitments.
71 / Future plc
As in previous years, this report is split into three sections: (a)
this Annual Statement; (b) the Policy Report, setting out the
Group’s remuneration policy (“Policy”) for Executive and Non-
Executive Directors that will apply for the next three years; and
(c) the Implementation Report, setting out details of Directors’
remuneration for the financial years ended 30 September 2019
and ending 30 September 2020. This year we will be asking
shareholders to approve a new Policy at our Annual General
Meeting. The background and rationale for the proposed changes
are set out below in this Annual Statement.
Performance and Reward in 2019
Future’s financial performance in 2019 has continued to be
exceptionally strong, with successful execution of the Group’s
strategy - to deliver growth through audience engagement and
technology innovation - generating significant growth. Highlights
from our full year results included £221.5m of revenue, up 70%
on prior year; £54.5m of adjusted EBITDA, up 163% on prior year;
and adjusted operating cash inflow, up 191% on prior year. This
performance is underpinned by ongoing investment in our core
businesses and has supported our strategic acquisitions to drive
further growth during the year. Thanks to the cash generative
nature of our business, the Board was delighted to recommence
payment of dividends in February 2019. Future plc’s sustained
financial over-performance has underpinned the creation of
significant shareholder value over recent years; a £100 investment
in Future plc on 30 September 2016 is now (30 September 2019)
worth £1,167, far exceeding returns from similar investments in the
FTSE All-Share Media and FTSE 250 indices over the same period
(£128 and £119, respectively). During this year of significant growth,
Future plc has also moved up to a Premium Listing, and been
promoted to the FTSE 250 index.
Our continued ambition to expand the scale and diversification
of the Group is reflected by a number of further important
acquisitions this year: Mobile Nations increases our presence
and position in the technology sector in the US; ProCycling
and Cyclingnews.com give Future a credible foothold in a new
(and rapidly growing) specialist community; and, more recently,
SmartBrief boosts our presence in the B2B sector and enhances
our proprietary technology capabilities. These acquisitions further
support the strong progress made against our ambition to
diversify geographically.
Reflecting one of Future plc’s core values, the Board and
Executive leadership team continues to invest heavily in our
people; collectively we place great emphasis on ensuring that
our corporate culture supports all employees to achieve their
full potential. This aim has been supported by the creation, last
On behalf of the Board, I am delighted
to present the Directors’ Remuneration
Report for the financial year ended 30
September 2019, which includes details
of proposed changes to our
Remuneration Policy.
Historic TSR performance
Growth in the value of a hypothetical £100 holding over the 3 years to 30 September 2019
£1,400
£1,300
£1,200
£1,100
£1,000
£900
£800
£700
£600
£500
£400
£300
£200
£100
£0
Sep 2016
Mar 2017
Sep 2017
Mar 2018
Sep 2018
Mar 2019
Sep 2019
Future
FTSE 250 Index
(excl. investment trusts)
FTSE All-Share Media
Index
year, of a new People and Culture team. Other initiatives include:
succession planning, talent development, and establishing
office community teams, to enable employees to create for
themselves the environment in which they work – which is
especially important as we integrate new teams who have joined
the Future family as a result of the M&A activity. We are also
pleased to announce that, for the year ending 30 September
2019, we increased the employee Profit Pool bonus to £3,000 per
person – a one-off event – so all our staff share in the outstanding
performance to which they have contributed.
In light of this strong financial and operational performance, the
Committee approved bonus payments of 100% of maximum
for both the CEO and CFO (150% of salary and 125% of salary
respectively), of which 50% is deferred into Future plc shares for 2
years. Further details are included on page 76.
The performance conditions attached to the remaining 25%
of PSP awards made to Executive Directors in November 2016
and February 2017 were tested to 30 September 2019. Over the
performance period, the Company’s share price significantly
exceeded the targets set at grant. Accordingly, these shares will
vest fully in November 2019, along with the other 75% of the PSP
awards that vested based on performance in previous financial
years. Further details are included on page 76.
Annual Report and Accounts 2019 / 72
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements As outlined in last year’s report, Executive Directors were granted
awards under the PSP in November 2018 of 200% of salary for the
CEO and 167% of salary for the CFO. These awards vest subject
to the achievement of stretching performance targets, and are
subject to a two-year holding period that follows the three-year
vesting period. Further details are included on page 91.
The Committee is satisfied that overall pay outcomes in respect
of the year ended 30 September 2019 are appropriate and reflect
Future’s exceptional performance over the last 3 years. Our
remuneration places a significant weighting on variable pay,
rewarding executives for delivering against stretching short-term
and long-term targets, aligned with the Company’s strategy.
The performance-related bonus outcome for the year ended 30
September 2019 reflects another strong year of profit growth,
while vesting of the final part of awards granted under the PSP in
November 2016 and February 2017 – which constitutes the largest
part of each Executive Director’s single figure of remuneration for
the year – reflects strong longer-term financial performance, and
significant value creation for shareholders over the performance
period. Accordingly, the Committee has not exercised any
discretion in relation to the outcome of the variable pay schemes.
Review of the Remuneration Policy
As you may recall, having undertaken a successful rights issue
and acquisition of Purch, the Committee reviewed and proposed
a number of changes to Future’s approach on remuneration:
having consulted with our largest shareholders, we submitted a
revised Policy to shareholders at the February 2019 AGM. Changes
included an increase in the maximum PSP opportunity – from
100% to 200% of salary – as well as the adoption of best practice
features, such as annual bonus deferral, a mandatory two-year
holding period on vested PSP shares, and the formal adoption of
share ownership guidelines.
While the Policy was approved with a clear majority of over 70%
of votes cast at the AGM, the Committee recognised the views of
those shareholders who felt they could not support this resolution,
or the resolution approving the annual report on remuneration
for 2018 (which received c.67% support). Reflecting the Board’s
philosophy on engagement, we committed to consult further
with shareholders during 2019 and to submit the Remuneration
Policy for shareholder approval at the February 2020 AGM. As
a result, a significant proportion of the Committee’s time this
year has been spent on reviewing the existing Policy, to ensure
that it continues to support Future’s strategy while appropriately
reflecting market and best practice, following the Company’s
promotion to the FTSE 250.
In reviewing the Policy, the Committee has been mindful of the
hugely important role that our Executive team – and especially
the Executive Directors – plays in Future’s success: their hard
work, strategic direction and sustained ambition have driven the
extraordinary value created in recent years for all our shareholders.
The Committee holds central to its philosophy on executive
remuneration the principle that Director remuneration should
be closely aligned with the Company’s performance. In this
context, the Committee keeps remuneration under review, and
has concluded that these appropriately reflect the exceptional
performance levels that continue to be achieved. In developing
the proposed remuneration policy for the next three years, the
Committee has worked hard to ensure that it maintains a strong
link between pay and performance (with an opportunity for
exceptional performance to be appropriately rewarded), is aligned
to shareholders’ interests, and helps retain, focus and reward our
critical senior talent over the next phase of Future plc’s journey.
Zillah Byng-Thorne has established a demonstrable and valuable
track record as a high performing and high-profile CEO, and on
behalf of our shareholders we are committed to retaining her
focus, drive and leadership to achieve yet more success for
the Company.
A summary of the headline changes to Future’s proposal
on remuneration arising from the reviews and shareholder
consultation is included in the table below:
Element of remuneration Headline changes
Performance-related
annual bonus
PSP
Pension
Salaries
Board Chair and Non-
Executive Director fees
Increase in maximum bonus
opportunities from 150% to 200% of salary
for the Chief Executive and from 125%
to 150% of salary for the Chief Financial
Officer, to incentivise and reward even
stronger performance than currently.
Awards in each of the next three years
will be expressed as fixed numbers
of shares, set in the first cycle to be
equivalent to 200% of salary for the Chief
Executive and 167% of salary for the Chief
Financial Officer. The Committee will
apply a cap on the number of shares
granted in future years, to the extent
that the implied face value on the award
date exceeds 2x the grant made in
November 2019 (i.e. 400% of salary for the
Chief Executive, in line with the current
exceptional maximum opportunity
provided for in our policy; and 335% of
salary for the Chief Financial Officer).
Absolute TSR (i.e. share price plus
rolled up dividends) will replace the
current share price target, reflecting the
recommencement of dividend payments
to shareholders.
Maximum pension contributions for
new Executive Directors will be in line
with the rate offered to the majority of
employees in the relevant jurisdiction,
currently 6% in the UK.
Pension contributions for existing
Executive Directors will be aligned with
the broader workforce rate within a
reasonable period of time over the life of
the new Policy.
CFO salary to be increased to £350,000
with effect from 1 October 2019. No
change to CEO salary.
Moved from triennial to annual
reviews and introduced flexibility to
pay additional Committee fees and
expenses.
Fees to be increased with effect from 1
March 2020 as follows:
Board Chair: £200,000
Non-Executive Director base fee: £55,000
Additional fees:
Chair of the Audit or Remuneration
Committees: £10,000
Senior Independent Director: £10,000
The background to, and rationale for, the main changes are as
follows:
Annual bonus
Alongside the Executive Director reviews, the Policy on the Board
Chair fee has been reviewed by the Remuneration Committee,
and the Policy on Non-Executive Director fees has been reviewed
by the Board Chair and Chief Executive, to ensure these remain
appropriate, reflecting the significant increase in responsibilities
and FTSE 250 market practice.
The Committee is proposing to increase the maximum annual
bonus opportunities for the Chief Executive from 150% to 200%
of salary, and for the Chief Financial Officer from 125% to 150%
of salary, for FY20. These increases are intended to address the
competitiveness of our Total Cash (i.e. fixed pay + bonus) reward
in an increasingly global market for Executive Director talent,
73 / Future plc
in a manner that emphasises our commitment to demonstrate
the strong link between executive pay levels and Future
plc’s performance. Targets have been set to be appropriately
stretching. Consistent with the approach adopted last year, 50% of
any bonus earned will be delivered in Future plc shares released
only after 2 years.
appropriate, given the likelihood of significant step increases
every three years and that, accordingly, reviews would now take
place on an annual basis (in line with all employees). We are also
taking this opportunity to introduce market-standard flexibility
around the payment of additional Committee fees over the life of
the Policy, and on the reimbursement of expenses.
In relation to the implementation of our policy for FY20, the
Committee intends that EBITDA will revert to being the sole
annual bonus measure. During its review of policy, the Committee
considered introducing other financial and non-financial
measures. However, it concluded that the simplicity offered by
focusing on a single measure outweighs the potential merits (and
complexities) of introducing additional measures at this time.
The Committee will retain flexibility in the policy to introduce
additional measures if it considers this to be helpful or necessary.
Any such measures would be aligned to Company strategy for
future years, and we would provide details of any changes at the
relevant time. As in recent years, it is intended that FY20 EBITDA
targets be disclosed retrospectively, in the 2020 Annual Report on
Remuneration, to allow shareholders to make an informed voting
decision on pay outcomes.
PSP
The Committee considered the long-term incentive framework
in detail, and assessed whether alternative approaches (such as
restricted shares or a value creation plan) would be appropriate
for Future plc. On balance we agreed that broadly maintaining the
current design would best support our longer-term strategy and
would be more straightforward to communicate to stakeholders.
The principal change proposed is to calibrate future PSP awards
as a fixed number of shares, rather than the current ‘% of salary’
approach. The Committee believes this is a more appropriate
mechanism, because it rewards share price appreciation and
penalises share price falls (fixing the face value of awards risks the
opposite, which we recognise has been a voting issue at a number
of FTSE companies during 2019). This approach also reduces
pressure on base salary levels among participants, and provides
more visibility on the impact on share dilution of our incentive
schemes. The Committee intends to review the number of shares
awarded every three years. However, we will continue to operate
within the exceptional award limits outlined in the existing policy,
and will cap awards to Executive Directors if the face value on the
award date were to exceed 2x the face value of the grants made in
November 2019.
FY20 PSP awards will continue to be based on an equal blend
of EPS and share price measures. In a slight change to previous
years, and reflecting the recent recommencement of dividend
payments, we propose to replace the element based on share
price with absolute TSR (i.e. share price plus rolled-up dividends).
The Committee considers that EPS is an important and well-
accepted measure of Company performance that reinforces
our strategic objective of achieving profitable growth. The
use of absolute TSR is strongly aligned with shareholders, and
ensures participants are rewarded only if they deliver material
returns to shareholders over the longer-term. Reflecting on
market practice, the Committee considered whether adopting
a relative TSR measure would be appropriate for Future plc at
this time. However, it was concluded that the Company’s unique
business structure – and a lack of direct, listed competitors –
would make comparisons (and therefore target setting) difficult,
would increase the complexity of the scheme, and would reduce
line-of-sight and the motivational effectiveness of the PSP for all
participants.
Details of how the Committee intends to implement the new
Remuneration Policy in respect of all elements of the package are
included in the Implementation Report, with a summary provided
in the overview table on page 75.
Board Chair and Non-Executive Director fees
The Policy for Non-Executive Director fees was considered in light
of Future’s promotion to the FTSE 250 and upgrade to a Premium
Listing. It was resolved that triennial fee reviews were no longer
Board Director remuneration levels
As covered by our current and proposed remuneration policies,
Board director remuneration levels are reviewed periodically to
ensure that they reflect role size and responsibilities, individuals’
performance and contribution, and the scale and complexity of
the business. The Committee (and, in relation to NED fee levels,
the Chairman and Executive Directors) reviewed pay levels as
part of the broader review of policy. The Future plc of today has
strong foundations for future success, an impressive performance
track record in recent years (resulting this year in a return to the
Premium Segment and entry into the FTSE 250 index), and its
scale and complexity have increased as Future has transformed
into a global multi-platform media business. The scope, scale and
responsibilities of the Board (as well as across other organisation
levels more broadly) have increased materially, and the
Committee concluded that it would be appropriate at this time to:
Increase the Chairman’s fee to £200,000 per annum with effect
from 1 March 2020 (last reviewed in 2017). Whilst this represents
a significant increase on the current fee rate, the Committee has
sought to reflect the significant additional complexity and time
commitment required of the role (increased for the Board Chair
from 40 days to 60 days) and the related workload this entails;
and
Increase the CFO’s salary to £350,000 per annum with effect
from 1 October 2019 (last reviewed in 2017). In making this
decision, the Committee took into account the Group’s
performance, pay of equivalent roles within comparable
companies, performance and pay.
Notwithstanding that the same principles apply to the
remuneration of the CEO, as agreed in 2019 the CEO’s salary will
next be reviewed for FY21.
In considering similar factors, the Board Chair and Chief Executive
resolved to normalise the base fee for Non-Executive Directors,
as well as the standard additional fees for the Senior Independent
Director and/or chairing Board Committees. In all cases, the
intention is that fee increases in future will normally be aligned
with the increase applied to the workforce of the Group.
Conclusion
I would like to thank the many shareholders who have taken time
in recent weeks to meet with me, in person and by telephone. I
have engaged directly with each of our largest 15 shareholders.
The feedback I have heard has been gratefully received by the
Committee and our advisors, and has helpfully informed our
deliberations and conclusions in this sensitive, important part of
our directorial duties.
These are exciting times at Future plc. Against a background of
political and economic uncertainty and a tough media landscape
– Future’s leadership team continues to focus on a winning
strategy, and to work hard on behalf of all shareholders. I hope
that you will be satisfied with the proposals that your Committee
has produced, and that you will continue to support the Company
as it seeks further growth and new, profitable business.
Hugo Drayton
Chair of the Remuneration Committee
4 December 2019
Annual Report and Accounts 2019 / 74
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Overview of proposed Executive Director Remuneration Policy and implementation
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FY19
Overview of new policy
FY20
Salaries effective 1 October 2018, as
follows:
• CEO = £475,000
• CFO = £275,000
See page 88
Reviewed from time to time, with
reference to salary levels for similar roles
at comparable companies, to individual
contribution to performance; and to the
experience of each Executive
• CEO base salary to remain at £475,000
• CFO base salary increased to £350,000
with effect from 1 October 2019
See page 80
See page 95
In line with policy
For existing Executive Directors:
company pension contributions will be
aligned with the broader workforce rate
within a reasonable period of time over
the life of the new Policy
For new Executive Director appointees:
company pension contributions will be
aligned with the majority of employees in
the relevant jurisdiction, currently 6% of
salary in the UK
Benefits typically consist of the provision
of a company car or a car allowance, and
private health care insurance
No change to pension contributions or
benefits for FY20
See page 91
See page 80
See page 95
Annual bonuses of 100% of maximum for
each Executive Director based on strong
EBITDA and EPS performance:
• CEO = 150% of salary (£712,500)
• CFO = 125% of salary (£343,750)
Bonuses to be paid 50% in cash in
November 2019 and 50% in Future
shares, deferred for two years
Maximum annual bonus opportunity of
200% of salary
Performance measures based primarily
on financial metrics but may include
non-financial metrics and/or individual
objectives if deemed appropriate
50% of bonus earned is deferred in
Future shares for two years
Malus and clawback provisions apply
CEO bonus opportunity to be increased
to 200% of salary
CFO bonus opportunity to be increased
to 150% of salary
FY20 bonuses to be based entirely
on EBITDA
See page 89
See page 80
See page 95
Final 25% of PSP awards granted in
November 2016 and February 2017
vested at 100% based on Future’s
share price performance
Fixed number of shares awarded in each
of the next three years (subject to an
overall cap of 400% of salary at the time
of grant for the Chief Executive; 335% of
salary for Chief Financial Officer)
Awards of 200% and 167% of salary to
be made to the Chief Executive and
Chief Financial Officer respectively in
November 2019, with the number of
shares to be fixed for the next two grants
Awards vest subject to performance over
a three-year period. Vested shares are
subject to an additional two-year
holding period
Performance to be measured over the
period 1 October 2019 to 30 September
2022 against EPS (50%) and absolute TSR
(50%)
Malus and clawback provisions apply
Two-year holding period will apply to
vested shares
See page 90
See page 80
See page 95
75 / Future plc
2019 REMUNERATION
AT A GLANCE
2019 Single Figure of remuneration for Executive Directors
£’000
Salary
Benefits
Pension
Total fixed
Zillah Byng-Thorne
Penny Ladkin-Brand
475
325
17
15
71
41
563
381
Annual
bonus
713
344
PSP
4,402
3,144
Total
variable
Total
remuneration
5,115
3,488
5,678
3,869
2019 Annual Bonus outcomes
Measure
Weighting
Threshold
Stretch target
(100% payout)
Actual
Achievement
Adjusted EBITDA
Adjusted EPS
75%
25%
No payment below stretch target
No payment below stretch target
£33m
27.6p
£54.5m
50.1p
100%
100%
Executive
Zillah Byng-Thorne
Penny Ladkin-Brand
Overall
Achievement
Maximum bonus
Bonus earned1
100%
100%
150% of salary
125% of salary
£712,500
£343,750
1 To be paid 50% in cash and 50% in deferred shares
PSP vesting to 30 September 2019
Measure
Share price
Weighting
100%
Maximum
(100% vesting)
300p
Actual
1,105p
Achievement
100%
Executive
Achievement
Interests vesting1
Date vesting
Value realised2
Zillah Byng-Thorne
Penny Ladkin-Brand
100%
100%
155,668
155,668
111,191
111,191
November 2016
February 2017
November 2016
February 2017
23 November 2019
£4,402,291
23 November 2019
£3,144,489
1 Representing the final 25% of LTIP awards granted in November 2016 and February 2017, vesting of which was dependent on share price performance to 30 September 2019.
See page 90 for further details
2 Based on share price at vesting on 23 November 2019 of 1,414p
Annual Report and Accounts 2019 / 76
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Time horizon of our remuneration structure for FY20
September
2019
September
2020
September
2021
September
2022
September
2023
September
2024
September
2025
Fixed pay
Paid
monthly
Cash
50% paid
in cash
following
year end
Performance-
related bonus
Performance
measured
over
financial
year
Deferred
shares
50% deferred
in shares for
2 years
Release
PSP
Performance measured
over 3 financial years
Vest
Release
2-year mandatory
holding period
This report has been prepared in accordance with the provisions
of the Companies Act 2006 and Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended). It also meets the requirements
of the UK Listing Authority’s Listing Rules and the Disclosure and
Transparency Rules.
In accordance with the Regulations, the following sections of the
Remuneration Report are subject to audit: the Single total figure
of remuneration for Directors and accompanying notes
(page 88), Scheme interests awarded during the financial year
(page 91), Payments to past directors (page 93), Payments for loss
of office (page 93) and the statement of directors’ shareholdings
and share interests (page 93). The remaining sections of the
report are not subject to audit.
The Committee is seeking shareholder approval for a new
remuneration policy at the 2020 AGM. A summary of the
principal changes compared to the previously approved policy
is provided in the Annual Statement above, and identified in the
relevant sections below.
77 / Future plc
REMUNERATION
POLICY REPORT
The Group aims to balance the need to attract, retain and
motivate Executive Directors and other senior executives of an
appropriate calibre with the need to be cost effective, whilst
at the same time rewarding exceptional performance. The
Committee has designed a remuneration policy that balances
those factors, taking account of prevailing best practice,
investor expectations and the level of remuneration and pay
awards made generally to employees of the Group.
In determining the level and make-up of Executive Directors’
remuneration, the Committee carefully considers the following
principles:
Remuneration packages offered to Executive Directors should
be competitive with those available for comparable roles in
high-growth companies and companies operating in similar
markets, on a similar scale and with a similar culture to Future.
They should be sufficiently competitive 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 that
remuneration does not encourage excessive risk-taking.
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.
Remuneration packages and employment conditions of
Executive Directors should be 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 should retain overarching discretion to adjust
performance-related elements of remuneration to ensure
alignment of pay with performance and that there is no
reward for failure – whether financial or operational.
Above all, Executive Director remuneration should support
the strategy, values and culture of the Group. Pay should be
simple and easy to understand, with all aspects clear and
openly communicated to stakeholders and in alignment with
pay philosophies across the Group.
This section of the report sets out the policy for Executive
Directors which the Company is asking shareholders to approve
at the February 2020 AGM. It is intended that the revised policy
will come into effect from that date.
Annual Report and Accounts 2019 / 78
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Salary increases shall generally reflect market
conditions, performance of the individual, new
challenges or a new strategic direction for
the business.
There may be occasions when the Committee
needs to recognise circumstances including, but not
limited to: an individual’s development in the role, a
change in the responsibility and/or complexity of the
role. In these circumstances, the Committee may
award a higher annual increase than the average
for the workforce, the rationale for which will be
explained to shareholders in the Annual Report on
Remuneration.
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.
annual salary.
Total cost annually shall not exceed 15% of basic
Policy table – Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Policy changes for FY20
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.
Not applicable.
None.
Benefits
Current benefits available to Executive Directors are car allowance, permanent
health insurance, healthcare and life assurance. Additional benefits may be
offered if deemed appropriate.
To ensure broad competitiveness with
market practice.
Not applicable.
None.
Pension
The Company shall make a contribution up to a maximum percentage of
basic annual salary.
To ensure alignment with the wider
workforce and broad competitiveness with
market practice.
Pension contributions for existing Directors will be
aligned with the broader workforce rate within a
reasonable period of time over the life of the
new Policy.
Not applicable.
For Directors appointed from 1 October 2019, the
maximum contribution will be aligned to that
offered to the majority of employees in the relevant
jurisdiction at the time of appointment (currently 6%
in the UK).
Outlined intention to reduce existing
Directors’ pension contributions over time.
Confirmation that Directors appointed
from 1 October 2019 will have a pension
contribution that is aligned with the wider
workforce in the relevant jurisdiction.
All-employee share
plans
The Company operates a Share Incentive Plan (“SIP”) in the UK which
qualifies for tax benefits.
The Committee retains discretion to allow Executive Directors to participate in
the SIP on the same terms as other employees.
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
Not applicable.
legislation.
None.
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.
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.
50% of any performance-related bonus earned will be delivered by way of a
deferred share award, which will only vest two years after the award date.
A payment equal to the value of dividends which would have accrued on
deferred awards may be made following the release of awards to participants,
either in the form of cash or as additional shares.
Payments and awards in relation to the performance-related bonus are
subject to malus and clawback provisions, further details of which are
included as a note to the policy table.
Annual awards of conditional shares or nil-cost options to Executive Directors.
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.
A payment equal to the value of dividends which would have accrued on
vested awards may be made following the release of awards to participants,
either in the form of cash or as additional shares.
Awards under the PSP are subject to malus and clawback provisions, further
details of which are included as a note to the policy table.
Designed to reward delivery of shareholder
value and implementation of the Group’s
strategy.
Designed to reward delivery of shareholder
value in the medium-to-long term.
Performance-
related bonus
Long-term
share-based
incentive
79 / Future plc
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 200% of basic annual salary and that
the maximum bonus shall only be payable for
outperformance of stretching targets.
Target performance will typically deliver up to 50%
of maximum bonus, with threshold performance
typically paying up to 25% of maximum bonus.
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
Maximum bonus opportunities increased
disclosed, provided they are not deemed to be
from 150% to 200% of salary for the Chief
commercially sensitive. The Committee retains
Executive, and from 125% to 150% of salary
discretion to adjust the targets if events occur
for the Chief Financial Officer.
Clarification that dividends may accrue and
be paid in respect of deferred share awards.
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.
Awards expressed as a fixed number of shares for
each of the next 3 cycles:
For the Chief Executive, such number of shares
equivalent to 200% of salary for the first award, and
fixed at that number for the following two cycles.
For the Chief Financial Officer, such number of
shares equivalent to 167% of salary for the first award,
and fixed at that number for the following two
cycles.
Whilst the intention is to review the number
of shares awarded only every three years, the
Committee would nevertheless reduce the number
of shares granted if the implied % of salary due to be
awarded would exceed 2x the November 2019 grant
values. The overall cap is therefore 400%
of salary.
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.
At the end of the three-year performance
to expressing awards as a fixed number of
period, the Committee will assess performance
shares (subject to overall 400% of salary cap).
against the targets set and determine, in its
absolute discretion, the overall level of vesting
Clarification that awards may be structured as
of the award.
conditional share awards or nil-cost options.
Change in granting approach from % of salary
Under each measure, threshold performance will
Clarification that dividends may accrue and
generally result in up to 25% of maximum vesting
be paid in respect of vested awards.
for that element.
Awards are subject to a mandatory two-year
holding period following the end of a three-year
vesting period.
Policy table – Executive Directors
Element
Operation
Objective & link to strategy
Max. potential value
Performance measures
Policy changes for FY20
Basic annual salary
Committee takes into account performance, market conditions, remuneration
experience and contribution of the relevant
Basic annual salary is paid in 12 equal monthly instalments during the year
To recruit, retain and motivate individuals
and is reviewed annually. When assessing the level of basic annual salary, the
of high calibre, and reflect the skills,
of equivalent roles within comparable companies, the size and scale of the
Director.
business and pay in the Group as a whole.
Benefits
Current benefits available to Executive Directors are car allowance, permanent
health insurance, healthcare and life assurance. Additional benefits may be
offered if deemed appropriate.
To ensure broad competitiveness with
market practice.
Salary increases shall generally reflect market
conditions, performance of the individual, new
challenges or a new strategic direction for
the business.
There may be occasions when the Committee
needs to recognise circumstances including, but not
limited to: an individual’s development in the role, a
change in the responsibility and/or complexity of the
role. In these circumstances, the Committee may
award a higher annual increase than the average
for the workforce, the rationale for which will be
explained to shareholders in the Annual Report on
Remuneration.
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.
Total cost annually shall not exceed 15% of basic
annual salary.
Not applicable.
None.
Not applicable.
None.
Pension
basic annual salary.
The Company shall make a contribution up to a maximum percentage of
To ensure alignment with the wider
workforce and broad competitiveness with
market practice.
Pension contributions for existing Directors will be
aligned with the broader workforce rate within a
reasonable period of time over the life of the
new Policy.
Not applicable.
All-employee share
plans
The Company operates a Share Incentive Plan (“SIP”) in the UK which
qualifies for tax benefits.
To encourage share ownership by
employees and align their interests with
The Committee retains discretion to allow Executive Directors to participate in
those of the shareholders.
For Directors appointed from 1 October 2019, the
maximum contribution will be aligned to that
offered to the majority of employees in the relevant
jurisdiction at the time of appointment (currently 6%
in the UK).
The maximum participation levels for all-employee
share plans will be the limits set out in UK tax
legislation.
Not applicable.
None.
Outlined intention to reduce existing
Directors’ pension contributions over time.
Confirmation that Directors appointed
from 1 October 2019 will have a pension
contribution that is aligned with the wider
workforce in the relevant jurisdiction.
Performance-
related bonus
Designed to reward delivery of shareholder
value and implementation of the Group’s
the SIP on the same terms as other employees.
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.
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.
50% of any performance-related bonus earned will be delivered by way of a
strategy.
deferred share award, which will only vest two years after the award date.
A payment equal to the value of dividends which would have accrued on
deferred awards may be made following the release of awards to participants,
either in the form of cash or as additional shares.
Payments and awards in relation to the performance-related bonus are
subject to malus and clawback provisions, further details of which are
included as a note to the policy table.
Annual awards of conditional shares or nil-cost options to Executive Directors.
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.
A payment equal to the value of dividends which would have accrued on
vested awards may be made following the release of awards to participants,
either in the form of cash or as additional shares.
Awards under the PSP are subject to malus and clawback provisions, further
details of which are included as a note to the policy table.
Long-term
share-based
incentive
Designed to reward delivery of shareholder
value in the medium-to-long term.
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 200% of basic annual salary and that
the maximum bonus shall only be payable for
outperformance of stretching targets.
Target performance will typically deliver up to 50%
of maximum bonus, with threshold performance
typically paying up to 25% of maximum bonus.
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.
Maximum bonus opportunities increased
from 150% to 200% of salary for the Chief
Executive, and from 125% to 150% of salary
for the Chief Financial Officer.
Clarification that dividends may accrue and
be paid in respect of deferred share awards.
Awards expressed as a fixed number of shares for
each of the next 3 cycles:
For the Chief Executive, such number of shares
equivalent to 200% of salary for the first award, and
fixed at that number for the following two cycles.
For the Chief Financial Officer, such number of
shares equivalent to 167% of salary for the first award,
and fixed at that number for the following two
cycles.
Whilst the intention is to review the number
of shares awarded only every three years, the
Committee would nevertheless reduce the number
of shares granted if the implied % of salary due to be
awarded would exceed 2x the November 2019 grant
values. The overall cap is therefore 400%
of salary.
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.
At the end of the three-year performance
period, the Committee will assess performance
against the targets set and determine, in its
absolute discretion, the overall level of vesting
of the award.
Change in granting approach from % of salary
to expressing awards as a fixed number of
shares (subject to overall 400% of salary cap).
Clarification that awards may be structured as
conditional share awards or nil-cost options.
Under each measure, threshold performance will
generally result in up to 25% of maximum vesting
for that element.
Clarification that dividends may accrue and
be paid in respect of vested awards.
Awards are subject to a mandatory two-year
holding period following the end of a three-year
vesting period.
Annual Report and Accounts 2019 / 80
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Malus and clawback
Payments and awards under the performance-related bonus
and PSP are subject to malus and clawback provisions which
can be applied to both vested and unvested awards. Malus and
clawback provisions will apply for a period of at least two years
after payment or vesting. Circumstances in which malus and
clawback may be applied include a material misstatement of
the Company’s financial accounts, fraud or gross misconduct
on the part of the award-holder or an error in calculating the
award vesting outcome.
Participants in the performance-related bonus and PSP are
required to acknowledge their understanding and acceptance
of the malus and clawback provisions as a pre-condition to
participating in these schemes. The Committee is satisfied
that the malus and clawback provisions are appropriate
and enforceable.
Pay for performance scenarios
The charts opposite provide an illustration of the potential
future reward opportunities for the Chief Executive and Chief
Financial Officer, and the potential split between the different
elements of remuneration under four different performance
scenarios: ‘Minimum’, ‘Target’, ‘Maximum’ and ‘Maximum
(including share price appreciation on PSP awards)’.
Potential reward opportunities are based on Future’s
remuneration policy, applied to the base salary effective 1
October 2019. The performance-related bonus and PSP are
based on the maximum opportunities set out under the
remuneration policy for normal circumstances. Note that
the PSP awards granted in a year do not normally vest until
the third anniversary of the date of grant (and are thereafter
subject to a 2-year holding period), and the projected value is
based on the face value at award rather than vesting (i.e. the
scenarios exclude the impact of any share price movement over
the period). The exception to this is the final scenario which, in
line with the requirements of The Companies (Miscellaneous
Reporting) Regulations 2018, illustrates the maximum outcome
assuming share price appreciation for the purpose of PSP value.
We have assumed 52% share price growth, consistent with
the maximum absolute TSR target applying to the FY20
awards, rather than the 50% assumption outlined in the
reporting regulations.
The ‘Minimum’ scenario reflects base salary, pension and
benefits (i.e. fixed remuneration) which are the only
elements of the Executive’s remuneration packages not
linked to performance.
The ‘Target’ scenario reflects fixed remuneration as above, plus
performance-related bonus payout of 50% of maximum and
PSP threshold vesting at 25% of maximum award.
The ‘Maximum’ scenario is shown on two bases: excluding and
including the impact of share price appreciation on the value
of PSP outcomes. In both cases, the scenario includes fixed
remuneration and full payout of all incentives, with the final
scenario also including the impact of a 52% increase in Future’s
share price on the value of the PSP.
Notes to the Policy table
For the avoidance of doubt, in approving this Directors'
Remuneration Policy, authority is given to the Company to
honour any commitments entered into with current or former
directors under a previous Policy (such as the vesting or
exercise of past share awards).
Performance measure selection and approach
to target setting
Measures used under the performance-related bonus and PSP
are selected annually to reflect the Group’s main short- and
long-term objectives and can reflect both financial and non-
financial priorities, as appropriate.
The Committee considers that EBITDA and EPS (used in both
the performance-related bonus and PSP respectively) are
important and well-accepted measures of the Company’s
performance that reinforce the strategic objective of
achieving profitable growth. The use of absolute TSR in the
PSP is strongly aligned with shareholders and ensures that
executives are rewarded only if they deliver material returns to
shareholders over the longer-term. More generally, the focus on
absolute performance measures reflects the Company’s unique
business structure and lack of direct competitors which would
make comparisons (and therefore target setting) difficult.
Targets applying to the performance-related bonus and PSP are
reviewed annually at the start of each cycle, based on a number
of internal and external reference points. Performance targets
are set to be stretching but achievable, with regard to the
particular strategic priorities and the economic environment
in a given year. Targets for the performance-related bonus are
typically not disclosed in advance due to commercial sensitivity
but will typically be retrospectively disclosed in full following
the year end to the extent that such commercial sensitivity
concerns no longer apply. The Committee will look to disclose
PSP targets prospectively subject to the same considerations
around commercial sensitivity.
Remuneration for other employees
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 awarded to the Executive
Directors, other senior executives, and certain key individuals
and ‘rising stars’. However, the Company introduced a Share
Incentive Plan in 2015 to encourage share ownership more
broadly, reflecting a key principle that all employees should be
able to share in the Group’s success.
Shareholding guidelines
The Committee strongly believes in aligning the interests of
Executive Directors and shareholders. Shareholding guidelines
were formalised in 2018 which require Executive Directors to
acquire and maintain a holding (excluding shares that remain
subject to performance conditions) equivalent to 200% of base
salary within 5 years of appointment. Details of the Executive
Directors’ current shareholdings – which are in excess of the
guidelines – are provided in the Implementation Report on
page 94. The Committee considered the introduction of
post-employment guidelines, but believes that the existing
annual bonus deferral period and PSP holding period provide
sufficient alignment at this time and that further work around
the technicalities of applying and monitoring such guidelines
needs to be undertaken before committing to them in the
Remuneration Policy.
81 / Future plc
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
R
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
R
£3,000
£2,500
£2,000
£1,500
£1,000
£500
£0
£1,750
£1,500
£1,250
£1,000
£750
£500
£250
£0
Zillah Byng-Thorne
£1,276
18.6%
37.2%
£2,938
48.5%
£2,463
38.6%
38.6%
32.3%
£563
100.0%
44.2%
22.9%
19.2%
Minimum
On-target
Maximum
Maximum including
share price appreciation
Fixed remuneration
Performance-related bonus
PSP
Penny Ladkin-Brand
£826
17.7%
31.8%
£1,819
48.2%
£1,527
38.3%
34.4%
28.9%
£418
100.0%
50.5%
27.3%
22.9%
Minimum
On-target
Maximum
Maximum including
share price appreciation
Fixed remuneration
Performance-related bonus
PSP
Annual Report and Accounts 2019 / 82
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
FY20 remuneration assumptions
Executive
Salary
Pension
Benefits
Maximum
performance-
related bonus
Zillah Byng-Thorne
£475,000
15% of salary
£17,000
200% of salary
Penny Ladkin-Brand
£350,000
15% of salary
£15,000
150% of salary
Maximum PSP
Equivalent to 200% of
salary
Equivalent to 167% of
salary
Policy table
Non-Executive Directors
Non-Executive Directors are not eligible to participate in any performance-related bonus, share incentive schemes or pension
arrangements. Details of the policy on fees paid to Non-Executive Directors are set out in the table below:
Element
Operation
Objective & link to
strategy
Max. potential value
Performance
measures
Policy
changes
for 2020
Fees
Non-Executive Directors’ fees are
reviewed annually and paid in 12
monthly instalments.
In addition to the base fee, additional
fees are payable for acting as Senior
Independent Director and as Chair
of any of the Board’s Committees.
In the event that the Board requires
the formation of an additional Board
Committee, fees for the Chair (and
where relevant, membership) of such
Committee will be determined by the
Board at the time.
The fees paid to the Chairman are
determined by the Committee,
whilst the fees of the Non-Executive
Directors are determined by
the Board.
Expenses incurred by the Chairman
and the Non-Executive Directors
in the performance of their duties
(including taxable travel and
accommodation benefits) may be
reimbursed or paid for directly by the
Company, as appropriate.
To attract and retain high
calibre Non-Executive
Directors with broad
commercial and other
experience relevant to the
Company, and reflect the
time commitment and
responsibilities of
these roles.
Non-Executive Director fee
increases are applied in
line with the outcome of
the annual fee review and
would normally be aligned
with the increase awarded
to the workforce.
Fees for the year under
review and for the following
year are set out in the
Implementation Report on
page 96.
Aggregate fees paid to
Non-Executive Directors
are subject to the limits
set out in the Articles
of Association.
Not applicable.
Fee reviews
will be
undertaken
annually rather
than triennially.
Introduced
standard
flexibility
around new
Committees
and expenses.
83 / Future plc
Approach to recruitment remuneration
External Executive Director appointment
In line with our principles on remuneration, 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 that is linked to targets set for the financial
performance of the Group against budget, and the Group’s performance against its business objectives and 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
Approach
Maximum %
of salary
Salary
The base salaries of new appointees will be determined by reference to relevant market data, experience
and skills of the individual, internal relativities and their current basic salary.
n/a
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. Alternatively, where new appointees have initial basic salaries set below market-level, any shortfall
may be managed with phased increases over a period of up to three years subject to the individual’s
development in the role.
Benefits
New appointees will be eligible to receive benefits which may include (but are not limited to) the provision
of a car allowance, permanent health insurance, healthcare and life assurance.
n/a
If the Director is required to relocate then the policy is to provide reasonable, time-limited relocation, travel
and subsistence payments at the discretion of the Committee.
New appointees will also be eligible to participate in all-employee share schemes, where relevant.
Pension
New appointees will receive company pension contributions or an equivalent cash supplement aligned to
that offered to the majority of employees in the relevant jurisdiction at the time of appointment.
Performance-
related bonus
The structure described in the Policy able will apply to new appointees with the relevant maximum being
pro-rated to reflect the proportion of employment over the year. If used, individual targets will be tailored to
the executive.
n/a
200%
Share incentive
schemes
New appointees will be granted awards under the PSP on the same terms as other executives, as described
in the Policy table. Awards will typically be expressed as a fixed number of shares, reviewed at least every
three years, albeit with an overall grant value cap of 400% of salary.
Fixed number of
shares, up to 400%
In determining an appropriate remuneration package, the
Remuneration Committee will take into consideration all
relevant factors (including quantum, nature of remuneration
and the jurisdiction from which the candidate was recruited) to
ensure that arrangements are in the best interests of both the
Company and its shareholders.
The Committee may make an award in respect of a new
appointment to buy out incentive arrangements forfeited
on leaving a previous employer on a like-for-like basis, which
may be awarded in addition to the remuneration structure
outlined in the table above. In doing so, the Committee will
consider relevant factors including time remaining until
vesting, any performance conditions attached to these awards
and the likelihood of such conditions being met. Any such
buy-out awards would typically be made under the existing
performance-related bonus and PSP schemes, although
in exceptional circumstances the Committee may use the
exemption permitted within the Listing Rules. Any buy-out
awards would have a fair value no higher than that of the
awards forfeited.
Internal Executive Director promotion
In cases of appointing a new Executive Director by way of
internal promotion, the Remuneration Committee and Board
will be consistent with the policy for external appointees detailed
above. Where an individual has contractual commitments made
prior to their promotion to Executive Director level, the Company
will continue to honour these arrangements.
Non-Executive Directors
In recruiting a new Non-Executive Director, the Remuneration
Committee will utilise the policy as set out in the table on
page 83.
Annual Report and Accounts 2019 / 84
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Service contracts and loss of office payments
Copies of Directors’ service agreements and letters of appointment are available for inspection on request at the Company’s
registered office.
Executive Directors
It is the Company’s policy that Executive Directors should serve under rolling service contracts of 12 months’ duration or less. The
Remuneration Committee will review the contractual terms for new Executive Directors to ensure these reflect best practice.
In summary, the contractual provisions for current Executive Directors are as follows:
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 up to 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.
Change of control
In the event of a change of control, a Director’s
appointment may be terminated within three
months of the change of control by the Company, or
on one month’s notice by the Director (to expire no
later than three months from the date of the change
of control).
While service agreements allow for monthly
payments during the 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.
In the event of termination by either the Director or
the Company, the Director will be entitled to receive
6 months’ salary.
In a leaver event, the following payments may also be made to
departing Executive Directors:
1. Any share-based entitlements granted to an Executive
Director under Company share plans will be determined
based on the relevant plan rules. In certain prescribed
circumstances, such as death, ill-health, injury, disability,
redundancy, retirement or other circumstances at the
discretion of the Committee, ‘good leaver’ status may
be applied. Under the PSP, for good leavers, awards will
normally be reduced pro-rata to reflect the proportion
of the vesting period actually served and tested for
performance at the end of the original performance
period. Vested PSP awards which are subject to an
additional holding period will typically be retained and
released at the end of the holding period, with Committee
discretion to accelerate the release of such awards in
certain good leaver or change of control circumstances.
Deferred bonus shares will normally be retained by
the Executive Director and released in full following
completion of the applicable deferral period, with
Committee discretion to accelerate the vesting of awards
in certain good leaver or change of control circumstances;
2. A bonus may be payable for the period of active service in
certain prescribed good leaver circumstances and in
other circumstances at the discretion of the Committee
and subject to the achievement of the relevant
performance targets;
3. At the discretion of the Remuneration Committee, a
contribution to reasonable outplacement costs in the
event of termination of employment due to redundancy.
The Committee also retains the ability to reimburse
reasonable legal costs incurred in connection with a
termination of employment; and
4. Any payment for statutory entitlements or to settle or
compromise claims in connection with a termination of
any existing or future Executive Director as necessary.
85 / Future plc
Non-Executive Directors
Contract provision
Policy
Details
Notice periods
Three 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.
External appointments
Consideration of shareholder views
The Remuneration Committee considers shareholder
feedback received as part of any discussions with
shareholders and consults with shareholders on specific
matters as and when appropriate.
As part of its work during 2019, the Remuneration Committee
consulted with investors representing around 60% of Future’s
issued share capital to seek their views on the proposed
changes to the Remuneration Policy, as well as remuneration
at Future more broadly. The Committee is grateful for those
investors who actively participated in the consultation and we
welcome the constructive feedback received. The Committee
used the feedback received to refine and develop the final
proposals, including the planned alignment of existing
Executive Director pension contributions with the wider
workforce by the end of the three-year policy period. We are
confident that these proposals appropriately reflect recent
developments in best practice while also supporting Future in
attracting, retaining and motivating the Executive Directors
and other senior employees. The Committee will continue to
monitor trends and developments in corporate governance
and market practice to ensure the structure of the executive
remuneration remains appropriate.
Executive Directors are encouraged to hold one Non-Executive
role in addition to their full-time position in order to broaden
their experience, and may retain any fees received in respect
of such roles. All appointments must first be agreed by the
Committee and must not represent a conflict to their current
role. In the case of Zillah Byng-Thorne, it was agreed at the time
of her appointment that she could hold three Non-Executive
roles in addition to her position as Chief Executive. This is a
one-off exception agreed with the Chief Executive, with the
normal policy being no more than one external Non-Executive
role. Zillah Byng-Thorne has agreed not to replace any of her
Non-Executive positions as they time mature.
In respect of positions at listed companies, during the financial
year ended 30 September 2019, Zillah Byng-Thorne served as
a Non-Executive Director at Flutter Entertainment plc and
GoCo Group plc for which she retained total fees of £177,000.
Similarly, Penny Ladkin-Brand served as a Non-Executive
Director of Next Fifteen Communications Group plc for which
she retained fees of £46,000.
Consideration of conditions elsewhere
in the Company
The Committee takes into consideration the pay and
conditions of employees across the Group when determining
remuneration for Executive Directors, although currently
does not formally consult with employees on the executive
remuneration policy and framework.
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 23 on pages
139 to 141. The Group operates a Share Incentive Plan in order to
encourage active employee share ownership.
Annual Report and Accounts 2019 / 86
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
IMPLEMENTATION
REPORT
The following report provides details of how the current Directors’
Remuneration Policy was applied for the year ended 30 September
2019 and how the Committee intends to apply the proposed new
Policy in the year ending 30 September 2020.
The Remuneration Committee
The Committee is responsible for determining the overall
remuneration policy of the Group, and in particular for:
• Determining the appropriate basic annual salaries,
incentive arrangements and terms of employment of
Executive Directors.
• Monitoring and reviewing 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.
• Setting the Chairman’s remuneration.
• Approving the terms of any new share-based incentive
scheme for any employees of the Group, subject, where
appropriate, to shareholder approval.
The terms of reference of the Remuneration Committee,
reviewed annually, are available on the Company’s website
(www.futureplc.com). As of 30 September 2019, the
Remuneration Committee comprised three independent
Non-Executive Directors, each of whom had served on the
Committee for the full financial year:
• Hugo Drayton (Chair)
• Alan Newman
• Rob Hattrell
Services provided to the Committee by EY during 2019 included
preparation and advice of shareholder communications and a
review of the remuneration policy and report. Fees paid to EY
for services provided to the Committee during the financial
year were £11,000 (2018: £20,000) on the basis of time and
materials. Following their appointment as remuneration
consultants, services provided to the Committee by Mercer
included supporting the review of the remuneration policy,
regulatory guidance, advice on shareholder trends and
consultation support, and Directors’ Remuneration Report
drafting support. Fees paid to Mercer during the financial year
were £45,890 on the basis of time and materials.
Mercer does not provide any other services to the Group and
the Committee is satisfied that Mercer remains independent.
Furthermore, Mercer is a signatory to, and founding member
of, the Remuneration Consultants’ Code of Conduct (www.
remunerationconsultantsgroup.com) which requires that its
advice be objective and impartial.
Shareholder voting
The following table shows the results of the binding vote on
the FY2018 Policy Report and the advisory vote on the FY2018
Implementation Report at the 2019 Annual General Meeting:
Remuneration
Policy report
FY2018
Implementation
report
FY2018
45,864,661
70.4%
19,264,216
29.6%
43,528,731
66.8%
21,601,804
33.2%
65,128,877
65,130,535
4,699,926
4,698,268
Other Directors and executives, including Richard Huntingford
(Board Chairman), Zillah Byng-Thorne (Chief Executive) and
Claire MacLellan (Chief Operating Officer) have been, from
time to time, invited to attend meetings of the Committee.
The Company Secretary, or nominee, acts as secretary to the
Committee. No individuals are involved in decisions relating to
their own remuneration.
Details of the Committee’s principal activities during the year
ended 30 September 2019 and attendance of Committee
members is included on page 71.
For (including discretionary)
Against
Total votes cast
(excluding withheld votes)
Votes withheld
Advisers
The Committee is informed of key developments and best
practice in the field of remuneration and obtains advice from
independent external consultants, when required, on individual
remuneration packages and executive remuneration practices
in general. Ernst & Young LLP (‘EY’) were the Committee’s
appointed remuneration consultants until April 2019. Reflecting
best practice, the Committee undertook a competitive tender
process during the year, with shortlisted firms invited to attend
a detailed interview with members of the Committee. Following
a thorough and transparent review, the Committee appointed
Mercer | Kepler (‘Mercer’) as remuneration consultants to the
Board with effect from 23 April 2019.
87 / Future plc
Single figure of remuneration for Directors (audited)
The table below sets out a single figure for the total remuneration received for the last two financial years by each Executive and Non-
Executive Director who served in the year ended 30 September 2019:
£'000
Executive Directors
Zillah Byng-Thorne
Penny Ladkin-Brand5
Non-Executive Directors
Hugo Drayton
Rob Hattrell6
Richard Huntingford7
Alan Newman8
Total
Year
ended 30
September
Basic
salary
or fees
Taxable
benefits1
Annual
bonus3
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
475
400
325
249
53
47
45
-
120
88
50
32
1,068
816
17
17
15
13
-
-
-
-
-
-
-
-
32
30
PSP4
4,402
9,804
3,144
6,789
-
-
-
-
-
-
-
-
Pension
benefit2
71
60
41
37
-
-
-
-
-
-
-
-
Total
single
figure
5,678
10,881
3,869
7,432
53
47
45
-
120
88
50
32
713
600
344
344
-
-
-
-
-
-
-
-
1,057
944
7,546
16,593
112
97
9,815
18,480
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. 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.
3. Relates to payment for performance during the year and includes the grant date value of any amount paid in shares under the Deferred Annual Bonus Scheme. Details relating to the Annual
Bonus are set out on page 89.
4. The PSP figures are consistent with the approach taken in the last two reports, i.e. awards are captured in the year that performance periods have ended (see page 90 for further details).
2018 figure: 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 vested 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 share price at date of vest on 23
November 2019 of 1,414p (which is updated from the 3-month average share price to 30 September 2018 used in last year’s report).
2019 figure: relates to 25% of the PSP awards granted on 23 November 2016 and 2 February 2017 which vested on 23 November 2019, following the achievement of the share price target for
the period ended 30 September 2019. The value of these awards has been calculated using the share price at date of vest on 23 November 2019 of 1,414p.
Further details relating to the PSP are set out on page 90.
5. Penny Ladkin-Brand’s remuneration for 2019 is higher in the year than her annualised package. Penny was on maternity leave for two and a half months of the year, and the figure above
includes accrued holiday pay (paid to her on her return in 2019) as well as a maternity leave payment in line with the Group’s maternity policy.
6. Rob Hattrell was appointed to the Board on 1 October 2018.
7. Richard Huntingford was appointed to the Board on 1 December 2017, and became Chairman on 1 February 2018.
8. Alan Newman was appointed to the Board on 6 February 2018.
Annual Report and Accounts 2019 / 88
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Incentive outcomes for the year ended 30 September 2019 (audited)
Performance-related bonus (Annual Bonus Scheme)
During 2019, the Company operated a profit pool bonus for all employees across the Group, including the Executive Directors. This
profit pool comprised 50% of the Executive Director bonus opportunity for FY19, and was subject to over-performance of the EBITDA
budget set. The remaining 50% of the opportunity was based on a combination of EBITDA (25%) and EPS (25%) performance. Maximum
opportunities were maintained at 150% of salary for the Chief Executive and 125% of salary for the Chief Financial Officer; overall total
payouts were based 75% on Adjusted EBITDA and 25% on Adjusted EPS.
Actual adjusted EBITDA performance for the year of £54.5m significantly exceeded the stretch target of £33m (which was 59% growth
on the prior year), resulting in a formulaic outcome of 100% of maximum for this element. Similarly, actual adjusted EPS performance
for the year of 50.1p significantly exceeded the stretch target of 27.6p (which was set as 5% growth on the prior year) resulting in 100% of
maximum becoming payable for this element. Combining the elements, the Chief Executive and Chief Financial Officer both earned
100% of their maximum opportunity for the annual bonus.
2019 Performance-related bonus
Adjusted
EBITDA
(75%)
Adjusted
EPS
(25%)
Below Stretch Target
Below Stretch Target
Stretch target
(100%)
£33m
Stretch target
(100%)
27.6p
Actual
£54.5m
Actual
50.1p
In confirming this outcome, the Committee took into account the broader financial and operational performance of the Group during the
year, the exceptional shareholder returns generated and the strong and effective leadership demonstrated by the Executive Directors.
Accordingly, the Committee determined that in respect of the year to 30 September 2019, the following annual bonuses would be awarded:
Performance-related bonus
Base salary
Zillah Byng-Thorne
£475,000
Penny Ladkin-Brand
£275,000
x
x
Maximum
incentive
opportunity
(% of salary)
150%
125%
x
x
EBITDA
and EPS
performance
outcome
(% of
maximum )
=
Performance-
related bonus
outcome
Cash
(50%)
Deferred
shares
(50%)
100%
100%
=
£712,500
£356,250
£356,250
(25,194 shares)
£343,750
£171,875
£171,875
(12,155 shares)
In accordance with the Remuneration Policy, 50% of these bonus amounts have been paid in cash, with the remaining 50% converted
into Future shares and deferred for 2 years.
89 / Future plc
As with the annual bonus, in confirming this outcome the
Committee took into account the broader financial and
operational performance of the Group over the 3-year
performance period, the exceptional returns generated
for shareholders and the strong and effective leadership
demonstrated by the Executive Directors. Notwithstanding that
Future’s actual performance significantly exceeded the level
required for maximum vesting, the Committee is satisfied that
the targets originally set were appropriately stretching, with 300p
representing c.185% growth on the trailing 30-day average share
price to 1 October 2016.
Given the performance condition applying to these awards was
share price, all of the value vesting is technically attributable to
share price appreciation. The value attributable to share price
over and above maximum vesting target of 300p was c.£3.5m
and c.£2.5m for Zillah Byng-Thorne and Penny Ladkin-Brand
respectively (c.79% of the total value reported). The Committee
has not exercised any discretion in respect of this share price
appreciation.
Performance Share Plan (PSP)
Awards vesting on performance to 30 September 2019
Vesting of awards made on 23 November 2016 and 2 February
2017 was dependent on two equally-weighted performance
conditions – adjusted EBITDA and share price – assessed over one-
to three-year performance periods, as follows:
Measure Weighting
Performance period
Adjusted
EBITDA
Adjusted
EBITDA
Share
price
Share
price
25%
25%
25%
25%
Year ended 30
September 2017
Year ended 30
September 2018
Year ended 30
September 2018
Year ended 30
September 2019
Captured in
single figure
for year ending
30 September
2017
2018
2018
2019
The value of 75% of these awards has been captured previously
in the single figures for years ending 30 September 2017 (25%)
and 30 September 2018 (50%), due to the performance targets
being met in prior years. The single figure for the year ended
September 2019 reflects the final 25% of awards vesting on share
price performance between grant and 30 September 2019, further
details of which are set out below.
Measure
Targets Outcome Vesting %
Share price
(highest trailing 30-
day average price
achieved over the
performance period)
0% vesting below 300p
100% vesting for 300p or
above (reflecting an 85%
increase on the grant
date share price)
1,105p
100%
Performance Share Plan
Shares
subject to
award
x
Share price
performance
(% of maximum)
x
Share price on
vesting
(23 November
2019)
=
PSP
outcome
Zillah Byng-Thorne
Penny Ladkin-Brand
311,336
(115,668 Nov 16
115,668 Feb 17)
222,383
(111,191 Nov 16
111,191 Feb 17)
x
100%
100%
x
1,414p
1,414p
=
£4,402,291
£3,144,489
Annual Report and Accounts 2019 / 90
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Performance Share Plan awards during the year
Base salary
Zillah Byng-Thorne
£475,000
Penny Ladkin-Brand
£275,000
x
x
Maximum
incentive
opportunity
(% of salary)
x
Share price
at grant
=
Number
of shares
granted
200%
167%
x
483p
483p
=
196,687
95,083
Awards granted during the year to 30 September 2019
Pension entitlements (audited)
On 22 November 2018, Executive Directors were granted awards
under the PSP with face values of between 167% and 200% of their
respective salaries. The three-year period over which performance
will be measured began on 1 October 2018 and will end on 30
September 2021. Any awards vesting for performance will be
subject to an additional two-year holding period.
Vesting of these awards is dependent on two equally-weighted
measures over the three-year performance period: earnings per
share (EPS) and share price. There is no retest provision. Details of
the vesting schedules are provided below:
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 2019,
employer’s pension contributions were payable to the Executive
Directors as a salary supplement, at a rate of 15% of salary for both
the Chief Executive and the Chief Financial Officer. 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 2019. Normal retirement
age under the scheme rules is 75.
Review of past performance
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 and the FTSE250 Index (excluding
investment trusts). The FTSE All-Share Media Index was selected
as it provides a comparison of Future’s performance relative to the
other companies in its sector, whilst the FTSE250 Index is shown
this year to reflect the Group having moved up to a Premium
Listing and its inclusion in the FTSE250 index.
Measure
Weighting % Targets
EPS for year
ending
30 September
2021
Share price
(90-day average to
30 September
2021)
0% vesting below 5% CAGR
19% vesting for 5% CAGR
50%
75% vesting for 10% CAGR
100% vesting for 20% CAGR
Straight-line vesting
between these points
0% vesting below 5% CAGR
19% vesting for 5% CAGR
75% vesting for 10% CAGR
50%
100% vesting for 20% CAGR
Straight-line vesting
between these points
Reflecting the increase in maximum opportunity under the PSP
to 200% of salary, and consistent with our commitment in last
year’s Directors’ Remuneration Report, awards over 150% of salary
vest only for exceptional performance. The Committee has set
very stretching targets between 75% and 100% vesting, requiring
between 10% and 20% CAGR for each performance measure over
the performance period.
91 / Future plc
Historical TSR performance
Growth in the value of a hypothetical £100 holding over the 10 years to 30 September 2019
9
0
0
2
r
e
b
m
e
t
p
e
S
0
3
t
a
d
e
t
s
e
v
n
i
0
0
1
£
f
o
e
u
a
V
l
£700
£600
£500
£400
£300
£200
£100
£0
Sep 2009
Sep 2010
Sep 2011
Sep 2012
Sep 2013
Sep 2014
Sep 2015
Sep 2016
Sep 2017
Sep 2018
Sep 2019
Future
FTSE250 Index (excl. investment trusts)
FTSE All-Share Media Index
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
2019
CEO single
figure of
remuneration £’000
Annual
Bonus as %
of Maximum
PSP Vesting
(% of maximum)
£423
£746
£546
£430
£331
£3066
£471
£347
£5,4259 £10,8819
£5,678
0%
40%
0%
50%
0%
20%
36%
0%7
88%8
100%
100%
100%1
48%2
100%3
0%4
0%4
0%5
0%5
0%5
100%
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.
9. Figures restated to reflect the share price at date of vest for PSP awards granted in November 2016 and February 2017.
Annual Report and Accounts 2019 / 92
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Percentage change in remuneration of Chief Executive
Salary
Taxable Benefits
Bonus
2019
2018 % change
2019
2018 % change
2019
2018 % change
Chief Executive
£475,000
£400,000
All employees
£58,520
£49,859
19%
17%
£17,000
£17,000
-% £712,500
£600,000
£3,838
£2,964
29%
£7,079
£2,659
19%
166%
Relative importance of spend on pay
The relative importance of spend on pay for the business is shown in the table below.
9
1
0
2
8
1
0
2
Group pay:
£72.7m
(+94%)
Group operating costs excluding
Group pay & exceptional costs: £118.7m (+41%)
Capital expenditure:
£4.0m (+67%)
Distributions to
shareholders £1.0m (150%)
Group pay:
£37.5m
Group operating costs
excluding Group pay &
exceptional costs: £84.0m
Capital expenditure:
£2.4m
Distributions to
shareholders £0.4m
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,
investment in capital expenditure and distributions to shareholders. Prior year Group operating costs have been restated by
£5.5m for the impact of IFRS 15. See note 2 of the financial statements for further details.
Figures are derived from the Group’s consolidated financial statements. Distribution to shareholders figures in the table
relate to the dividends paid (or payable) for the FY18 and FY19 financial years being, respectively, (i) the 0.5p final dividend for
the FY18 financial year paid in February 2019; and (ii) the 1.0p final dividend proposed for the FY19 financial year, payable in
February 2020.
Payments to past Directors (audited)
No payments were made to any past Directors during the
financial year ended 30 September 2019.
Payments for loss of office (audited)
During the financial year to 30 September 2019 no payments in
respect of loss of office were made.
Statement of Directors’ shareholding and share
interests (audited)
The Company has a policy on share ownership by Executive
Directors which requires that any such Director should
accumulate a holding in shares over a five-year period from
appointment where the value of those shares represents at least
two times salary. 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 2019, Zillah Byng-Thorne had a holding of
247,205 shares which, at the share price on the same date, were
worth £3,030,733 (638% of salary).
In respect of Penny Ladkin-Brand, the period commenced on 3
August 2015 and will end on 2 August 2020. As at 30 September
2019, Penny Ladkin-Brand had a holding of 172,162 shares which,
at the share price on the same date, were worth £2,110,706 (768%
of salary).
93 / Future plc
Executive Director shareholdings
0%
100%
200%
300%
400%
500%
600%
700%
800%
Zillah
Byng-Thorne
Required holding
Actual holding (638% of salary)
Penny
Ladkin-Brand
Required holding
Actual holding (768% of salary)
Details of Directors’ shareholdings are set out on page 54 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 in the tables below.
PSP
Director
Zillah
Byng-Thorne
Total
Penny
Ladkin-Brand
Total
Date of
grant
Earliest
exercise
date
Expiry date
Exercise
price per
share (p)
Balance at 1
Oct 20181
Granted
during the
year3
Vested
during the
year4
Balance
at 30 Sept
2019
30 Nov 15
30 Nov 18
23 Nov 16
2 Feb 17
24 Nov 17
22 Nov 18
23 Nov 19
23 Nov 19
24 Nov 20
22 Nov 212
30 Nov 15
30 Nov 18
23 Nov 16
2 Feb 17
24 Nov 17
22 Nov 18
23 Nov 19
23 Nov 19
24 Nov 20
22 Nov 212
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
195,919
622,672
622,672
134,345
-
1,575,608
97,960
444,765
444,765
92,363
-
1,079,853
-
-
-
-
196,687
196,687
-
-
-
-
95,083
95,083
195,919
-
-
-
-
-
622,6725
622,6725
134,345
196,687
195,919
1,576,376
97,960
-
-
-
-
-
444,7655
444,7655
92,363
95,083
97,960
1,076,976
Notes:
1. 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, as detailed in last year’s report.
2. Awards granted in November 2018 will be subject to a mandatory 2-year holding period following vesting.
3. Details of awards granted in the year are set out on page 91.
4. Details of awards vesting during the year were set out in last year’s report.
5. Awards were converted to nil-cost options as at 3 July 2019. Awards vested in full following year end on 23 November 2019.
DABS
Director
Zillah Byng-Thorne
Total
Penny Ladkin-Brand
24 Nov 17
24 Nov 18
Total
Date of
grant
End of
deferral
period
Balance at
1 Oct 2018
Granted
during the
year
Released
during the
year
Balance at
30 Sept
2019
24 Nov 17
24 Nov 18
56,022
56,022
38,515
38,515
-
-
-
-
56,022
56,022
38,515
38,515
-
-
-
-
Annual Report and Accounts 2019 / 94
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Implementation of remuneration policy in the year to 30 September 2020
The Remuneration Committee is proposing a number of changes
to the Remuneration Policy as outlined in the Remuneration
Policy report on pages 78 to 80. Subject to shareholder approval
at the Company’s AGM on 5 February 2020, the Committee
intends to implement the policy as follows during the year to 30
September 2020.
PSP
For FY20, the Chief Executive will receive an award of 200% of
salary and the Chief Financial Officer will receive an award of 167%
of salary vesting based on an equal blend of EPS and absolute TSR
measured over 3 financial years as follows:
Salary
Following last year’s increase to £475,000, the Committee has
committed to next review Zillah Byng-Thorne’s salary in 2020
and accordingly proposes no change with effect from 1 October
2019. The Committee at the same time reviewed the pay for
Penny Ladkin-Brand, whose salary had not been increased for two
years, and determined that her base salary would be increased to
£350,000 with effect from 1 October 2019. In making this decision,
the Committee took into account the Group’s performance, and pay
of equivalent roles within comparable companies
Base salary
from
1 October
2018
Base salary
from
1 October
2019
Percentage
increase
£475,000
£475,000
Nil%
£275,000
£350,000
27.3%
Director
Zillah
Byng-Thorne
Penny
Ladkin-Brand
Measure
Weighting
Performance period
EPS for year
ending
30 September
2022
Absolute TSR
(growth
between 30
September
2019 and 30
September
2022; 3-month
averaging)
0% vesting below 56p
25% vesting for 56p (7% CAGR)
50% vesting for 62p (10% CAGR)
50%
100% vesting for 71p or
above (16% CAGR)
Straight-line vesting between points
0% vesting below 6% per annum
25% vesting for 6% per annum
50%
100% vesting for 15% per annum
Straight-line vesting
between these points
Pension and benefits
Executive Directors will continue to receive a pension contribution
of up to 15% of salary or an equivalent cash allowance. No changes
are proposed to the benefits provided.
Full vesting under each element will require continued
exceptional performance over the next three years. Any awards
vesting for performance will be subject to an additional two-year
holding period, during which time clawback provisions will also
apply. Further details of the grant date and number of interests
awarded – which will remain constant for the next two grants –
will be disclosed in next year’s report.
Annual bonus
The Company will continue to operate a profit pool bonus for all
employees across the Group, including the Executive Directors.
The Profit pool pays out a fixed amount of cash for the majority
of employees based on delivering EBITDA performance above
Budget. In addition to the profit pool component which accounts
for 25% of the Chief Executive’s bonus opportunity (worth 50%
of salary), a further opportunity to earn an additional 150% of
salary as a bonus is possible. The same profit pool scheme
applies to the Chief Financial Officer, with an additional 100%
of salary payable as a bonus for outperformance above this
level. Subject to shareholder approval of the new Remuneration
Policy, the maximum opportunity will be 200% of salary for the
Chief Executive and 150% of salary for the Chief Financial Officer.
Specific performance targets for the Annual Bonus are not
disclosed due to their commercial sensitivity, however it is the
Committee’s intention that these will be disclosed retrospectively
in next year’s report. 50% of any bonus earned will be deferred in
Future shares for 2 years.
95 / Future plc
Non-Executive Director fees
Non-Executive Directors do not participate in any of the
Company’s share incentive arrangements, nor do they receive
any benefits. Fees will be reviewed annually with effect from the
date of the new Remuneration Policy (previously triennially). The
Board Chair’s fees are set by the Committee, and those for the
Non-Executive Directors are set by the Board as a whole. The
background to, and rationale for, increases to be made with effect
from 1 March 2020 is included in the Remuneration Committee
Chair’s Statement on page 71.
Position
Board Chair
Fees from
1 October
2018
Fees from
1 March
2020
£120,000
£200,000
Non-Executive Director
£45,000
£55,000
Senior Independent Director
£7,500
£10,000
Audit Committee Chair
£5,000
£10,000
Remuneration Committee Chair
£5,000
£10,000
New Chief Financial Officer
On 30 October 2019 it was announced that Rachel Addison, TI
Media CFO, would be joining the Board and succeeding Penny
Ladkin-Brand as Chief Financial Officer upon completion of the TI
Media acquisition (expected to be in in Spring 2020). At the same
time, Penny Ladkin-Brand will move into a new role within the
Group as Chief Strategy Officer.
Rachel Addison’s remuneration arrangements will be in line
with the proposed Remuneration Policy outlined earlier in this
report. Further details will be included in next year’s Directors’
Remuneration Report.
Dilution
Awards under Future plc incentive plans may be satisfied by
treasury shares or the issue of new shares or the purchase of
shares in the market.
Under Investment Association guidelines, the issue of new shares
or reissue of treasury shares under a plan, when aggregated
with awards under all of a company’s other schemes, must not
exceed 10% of the issued ordinary share capital (adjusted for share
issuance and cancellation) in any rolling ten-year period. As at 30
September 2019 this limit had not been exceeded (8.2%).
Approved by the Board and signed on its behalf by
Hugo Drayton
Chair of the Remuneration Committee
4 December 2019
Annual Report and Accounts 2019 / 96
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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 2019 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, which comprise: the Consolidated and Company
balance sheets as at 30 September 2019; the Consolidated income statement and Consolidated statement of comprehensive income,
the Consolidated and Company cash flow statements, the Notes to 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 4 to the financial statements, we have provided no non-audit services to the group or the company
in the period from 1 October 2018 to 30 September 2019.
97 / Future plc
Our audit approach
Overview
• Overall group materiality: £1,363,000, (2018: £1,246,000), based on 2.5% of adjusted
EBITDA.
• Overall company materiality: £2,408,000 (2018: £2,040,000), based on 1% of total
assets.
• The scope of our audit and the nature, timing and extent of audit procedures
performed were determined by our risk assessment, the financial significance of
components and other qualitative factors (including history of misstatement through
fraud or error).
• We performed audit procedures over three components we considered either
financially significant or higher risk in the context of the Group (full scope audit) and
over one component specific audit procedures were performed on certain account
balances and transactions.
• We also performed other procedures including Group and component level analytical
review procedures to mitigate the risk of material misstatement in the insignificant
components.
• Procedures were also performed at the Group level over the consolidation process.
• The accounting for acquisitions (Group).
• The classification of exceptional items (Group).
• The valuation of goodwill (Group).
• Accounting for uncertain tax provisions (Group and parent).
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.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to financial reporting and related company legislation and taxation legislation, and we considered the extent to
which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and
determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure,
and management bias in accounting estimates. Audit procedures performed by the group engagement team and/or component
auditors included:
• Discussions with the Board of directors, management and the Group’s and Company’s legal function, including consideration of
known or suspected instances of non-compliance with laws and regulation and fraud;
• Reviewing relevant meeting minutes including those of the Board of directors and its key sub-committees (including the Audit
Committee);
• Evaluation of management’s controls designed to prevent and detect irregularities, in particular the whistleblowing policy and
employee code of conduct;
• Assessment of matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of such
matters;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation
to the valuation of goodwill, the valuation of assets and liabilities acquired through business combinations and uncertain tax
positions (see related key audit matters below); and
• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
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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. Also,
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.
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.
Key audit matter
How our audit addressed the key audit matter
The accounting for acquisitions. (Refer
to note 28 for further information).
Our work over the accounting for the 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 disclosures relating to the acquisitions, taking into
account the requirements of relevant financial reporting standards and tested the
completeness and accuracy of those disclosures.
• We have reperformed the risk weighted calculation used to arrive at the fair value
of contingent consideration.
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 are satisfied that the revisions made to the purchase price allocation between goodwill
and intangibles in respect of the acquisition of Purch LLC are reasonable.
We tested the classification of exceptional items by examining supporting information such
as invoices.
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.
During the year, the Group completed
its acquisition of MoNa Mobile
Nations LLC and SmartBrief Inc.
We focussed on the accounting for
these transactions because the 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.
The group also finalised the
accounting for the acquisition of
Purch LLC acquired on 4th September
2018.
The classification of exceptional items
(£3.4 million (2018: £4.4 million)) Refer
to note 5 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.
99 / Future plc
Key audit matter
How our audit addressed the key audit matter
The valuation of goodwill (£218.7m
(2018: £99.8 million)). Refer to note 12
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.
Accounting for uncertain tax
provisions
The Group and Parent is subject to
tax laws in a number of jurisdictions,
primarily the US and UK. The Group
has material intra-group transactions
which relate to sharing intangible
assets, making it very hard to be
certain regarding the appropriate
transfer pricing policy.
In addition, the group has a number of
additional tax risks arising from how
the business has evolved over time,
and these risks are exacerbated by the
rapid increase in profits during FY19.
The net result is that the group has
recognised a material centrally held
provision of £5.6m against uncertain
tax positions, the valuation of which
is a highly judgemental area. Where
tax positions are not settled with the
tax authorities, the Directors take into
account precedent and the advice of
external experts.
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 for the UK to which the impairment assessment was most
sensitive and revenue growth continued to remain the key assumption for the US to which
the impairment assessment was most sensitive. We also considered to what level these
metrics would need to deteriorate 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.
Our work to address the value of this provision included the following procedures:
• We engaged our in-house tax specialists to review the tax provisions as a whole,
including the uncertain tax provision.
• We challenged management’s choice of assumptions and scenarios in which they
anticipated risks would arise, to confirm the existence of each risk.
• We assessed each component of management’s provision against external
evidence, where available, to confirm their estimate of the amount of tax at stake from each
identified risk.
• We reviewed the external advice received by management, and compared this
with management’s judgement of the likelihood of risk and our own experience to assess
the probabilities assigned by management in their weighted average estimate of the
provision as a whole.
• For the transfer pricing risks, we consulted in depth with our in-house transfer
pricing specialists to enhance our own judgement of the risks.
• We modelled alternative scenarios to gauge the sensitivity of the provision as a
whole to changing assumptions.
• We challenged management regarding the possibility of a ‘competent authority
asset’ in respect of the transfer pricing risk and challenged their judgement regarding
whether or not they would be likely to pursue such an asset in their different scenarios.
• We considered whether any aspect of this provision should have been recorded in
the prior year.
Based on the work performed, we concluded that the provision falls within a reasonable
range of estimates.
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.
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Independent
auditors’
report
The Group is structured along two geographical lines, being the UK and US. The Group’s financial statements consist of a
consolidation of 24 statutory entities; but the Group primarily operates through two main trading entities; Future Publishing Limited
and Future US, Inc. Each of these statutory entities is deemed to represent a separate component.
In establishing the overall approach to the Group audit, we determined the type of work that we needed to perform at each
component 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. All audit work was undertaken by the UK Group engagement team.
In our view, the two main trading entities and the Future plc entity all required a full scope audit of their complete financial
information, due to their size and their risk characteristics.
We considered the individual financial significance of other components in relation to primary statement account balances. We
also considered the presence of any significant audit risks and other qualitative factors (including history of misstatements through
fraud or error). Any component which contributed a significant proportion of one or more primary statement account balances was
subject to specific audit procedures over those account balances. We performed such procedures over certain account balances and
transactions within one component, in addition to the three full scope components above.
All remaining components were subject to other procedures which mitigated the risk of material misstatement, including Group and
component level analytical review procedures.
This, together with our testing of the consolidation process at Group level, gave us the evidence we needed for our opinion on the
Group financial statements as a whole.
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
£1,363,000 (2018: £1,246,000).
£2,408,000 (2018: £2,040,000).
2.5% of adjusted EBITDA.
1% of total assets.
As a holding company, the entity is not considered
to be profit-oriented. In such circumstances, total
assets is a generally accepted benchmark. Company
materiality has been capped at £800,000 to reflect its
allocation of materiality for the purpose of the Group
audit.
In the prior year, we concluded that revenue was
the most appropriate benchmark to determine
overall materiality. We re-evaluated our benchmark
in the current year, following the integration of
the businesses acquired by the Group in FY18 and
considering the current scale of the business and
the impact of the Group’s ongoing acquisition and
integration activities. Consequently, we concluded
that an adjusted EBITDA benchmark is now
appropriate. 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-oriented
business. However, due to 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, adjusted EBITDA was considered the
most appropriate benchmark, to exclude those items
which are not representative of the core operational
performance of the Group. In quantifying materiality,
we have also had regard to other performance
measures such as revenue and unadjusted EBITDA.
How we
determined it
Rationale for
benchmark applied
101 / Future plc
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The
range of materiality allocated across components was between £800,000 and £1,275,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £68,000 (Group
audit) (2018: £62,000) and £68,000 (Company audit) (2018: £102,000) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add
or draw attention to in respect of the directors’ statement in the
financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting
in preparing the financial statements and the directors’
identification of any material uncertainties to the group’s and the
company’s ability to continue as a going concern over a period of
at least twelve months from the date of approval of the financial
statements.
We have nothing material to add or to draw attention to.
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. For example,
the terms on which the United Kingdom may withdraw from
the European Union are not clear, and it is difficult to evaluate
all of the potential implications on the group’s trade, customers,
suppliers and the wider economy.
We are required to report if the directors’ statement relating
to Going Concern in accordance with Listing Rule 9.8.6R(3) is
materially inconsistent with our knowledge obtained in the audit.
We have nothing to 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, Directors’ report and Corporate Governance Statement, 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 (CA06),
ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as
described below (required by ISAs (UK) unless otherwise stated).
Annual Report and Accounts 2019 / 102
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements 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 2019 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements. (CA06)
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. (CA06)
Directors’ Remuneration
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (on pages 59 to 60) about internal controls and risk management systems in relation to financial reporting processes
and about share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure Guidance and Transparency Rules
sourcebook of the FCA (“DTR”) is consistent with the financial statements and has been prepared in accordance with applicable
legal requirements. (CA06)
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 this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (on pages 59 to 60) with respect to the company’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared by
the company. (CA06)
The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency
or liquidity of the group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on page 57 of the Annual Report that they have carried out a robust assessment of the principal risks
facing the group, including those that would threaten its business model, future performance, solvency or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 39 of the Annual Report as to how they have assessed the prospects of the group, over what
period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a
reasonable expectation that the group will be able to continue in operation and meet its liabilities as they fall due over the period of
their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of
the principal risks facing the group and statement in relation to the longer-term viability of the group. Our review was substantially
less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the
“Code”); and considering whether the statements are consistent with the knowledge and understanding of the group and company
and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 57, that they consider the Annual Report taken as a whole to be fair, balanced
and understandable, and provides the information necessary for the members to assess the group’s and company’s position and
performance, business model and strategy is materially inconsistent with our knowledge of the group and company obtained in
the course of performing our audit.
• The section of the Annual Report on page 65 describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
• The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
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. (CA06)
103 / Future plc
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities set out on page 57, 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.
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
21 years, covering the years ended 31 December 1999 to 30 September 2019.
Katharine Finn (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
4 December 2019
Annual Report and Accounts 2019 / 104
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements 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
106
106
107
107
108
109
110
111
113
119
105 / Future plc
Consolidated income statement
for the year ended 30 September 2019
Revenue
Net operating expenses
Operating profit
Finance income
Finance costs
Net finance costs
Other income
Profit before tax
Tax (charge)/credit
Profit for the year attributable to owners of the parent
.
2019
2018 restated1
Non -GAAP
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
Non -GAAP
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
221.5
-
221.5
(169.3)
(25.5)
(194.8)
130.1
(111.6)
52.2
(25.5)
-
(2.1)
(2.1)
0.2
50.3
(9.1)
41.2
0.8
(12.9)
(12.1)
-
(37.6)
4.5
(33.1)
26.7
0.8
(15.0)
(14.2)
0.2
12.7
(4.6)
8.1
18.5
-
(1.1)
(1.1)
-
17.4
(2.5)
14.9
-
(13.2)
(13.2)
-
0.2
0.2
-
(13.0)
1.0
(12.0)
130.1
(124.8)
5.3
-
(0.9)
(0.9)
-
4.4
(1.5)
2.9
Note
1,2
3
7
7,28
1
8
See page 114 and note 10 for a reconciliation between adjusted and statutory results
1 Restated for the impact of adopting IFRS 15 Revenue from contracts with customers. Revenue and net operating expenses have both increased by £5.5m with a net
nil impact on operating profit.
Earnings per 15p Ordinary share
Basic earnings per share
Diluted earnings per share
Consolidated statement of comprehensive income
for the year ended 30 September 2019
Profit for the year
Items that may be reclassified to the consolidated income statement
Currency translation differences
Other comprehensive profit/(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.
Note
10
10
2019
pence
2018
pence
9.9
9.3
5.1
4.7
2019
£m
8.1
8.3
8.3
16.4
2018
£m
2.9
(0.3)
(0.3)
2.6
Annual Report and Accounts 2019 / 106
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Share capital issued during the year
22, 24
0.3
Share capital issued during the year
22, 24
5.4
Financial
statements
Consolidated statement of changes in equity
for the year ended 30 September 2019
Group
Balance at 1 October 2017
Profit for the year
Currency translation differences
Other comprehensive loss for the year
Total comprehensive income for the year
Share premium reduction
Share schemes
- Value of employees’ services
- Deferred tax on options
Balance at 30 September 2018
Profit for the year
Currency translation differences
Other comprehensive income for the year
Total comprehensive income for the year
Share schemes
- Value of employees’ services
- Deferred tax on options
Dividends paid to shareholders
Balance at 30 September 2019
Company statement of changes in equity
for the year ended 30 September 2019
Company
Balance at 1 October 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
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
Dividends paid to shareholders
Balance at 30 September 2019
107 / Future plc
Note
Issued
share
capital
£m
6.8
Share
premium
account
£m
47.4
Merger
reserve
£m
122.5
Treasury
reserve
£m
Accumulated
losses
£m
(0.3)
(115.1)
-
-
-
-
-
-
-
-
24
6
14
-
-
-
6
14
9
-
-
-
-
-
-
-
97.2
(47.4)
-
-
-
-
-
-
2.4
-
-
-
-
-
-
-
-
-
-
-
2.9
(0.3)
(0.3)
2.6
-
47.4
2.6
1.1
-
-
-
-
-
-
-
-
-
-
-
-
15.5
-
-
-
-
-
-
-
-
-
-
-
8.1
8.3
8.3
16.4
-
3.4
5.6
(0.4)
(36.4)
12.5
97.2
140.4
(0.3)
12.2
97.2
124.9
(0.3)
(61.4)
172.6
Merger
reserve
£m
Retained
earnings
£m
Issued
share
capital
£m
6.8
-
-
5.4
-
-
-
12.2
-
-
0.3
-
-
-
Note
22, 24
14
22, 24
14
9
Share
premium
account
£m
47.4
-
-
97.2
(47.4)
-
-
13.5
-
-
2.4
-
-
-
97.2
15.9
-
-
-
-
-
-
-
15.5
-
-
12.5
97.2
31.4
4.0
0.1
0.1
-
47.4
2.6
1.1
55.2
(1.6)
(1.6)
-
3.4
2.3
(0.4)
58.9
Total
equity
£m
61.3
2.9
(0.3)
(0.3)
2.6
105.0
-
2.6
1.1
8.1
8.3
8.3
16.4
15.8
3.4
5.6
(0.4)
213.4
Total
equity
£m
71.7
0.1
0.1
105.0
-
2.6
1.1
180.5
(1.6)
(1.6)
15.8
3.4
2.3
(0.4)
200.0
Consolidated balance sheet
as at 30 September 2019
Assets
Non-current assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - other
Investments
Deferred tax
Total non-current assets
Current assets
Corporation tax recoverable
Trade and other receivables
Cash and cash equivalents
Financial asset - derivative
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
Contingent consideration
Total non-current liabilities
Current liabilities
Financial liabilities - interest-bearing loans and borrowings
Trade and other payables
Corporation tax payable
Deferred consideration
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2019
£m
2018
£m
11
12
12
14
15
16
21
22
24
24
24
18
14
19
20
21
18
17
21
2.5
218.7
110.3
0.2
3.7
335.4
1.1
41.9
6.6
1.4
51.0
1.7
99.8
103.6
0.2
5.3
210.6
0.1
37.6
6.4
-
44.1
386.4
254.7
12.5
97.2
140.4
(0.3)
(36.4)
213.4
42.6
0.4
2.1
0.4
10.9
56.4
4.3
62.4
6.0
43.9
116.6
173.0
386.4
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
The financial statements on pages 106 to 148 were approved by the Board of Directors on 4 December 2019 and signed on
its behalf by:
Richard Huntingford
Chairman
Penny Ladkin-Brand
Chief Financial Officer
Annual Report and Accounts 2019 / 108
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Financial
statements
Company balance sheet
as at 30 September 2019
Assets
Non-current assets
Investment in Group undertakings
Deferred tax
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Financial asset - derivative
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
Trade and other payables
Corporation tax payable
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2019
£m
2018
£m
13
14
15
16
21
22
24
24
18
18
17
142.2
4.5
146.7
94.7
-
1.4
96.1
242.8
12.5
97.2
31.4
58.9
200.0
42.6
42.6
-
0.2
-
0.2
42.8
242.8
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
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's loss for the year was £1.6m (2018: profit of £0.1m).
The financial statements on pages 106 to 148 were approved by the Board of Directors on 4 December 2019 and signed on its behalf
by:
Richard Huntingford
Chairman
Penny Ladkin-Brand
Chief Financial Officer
109 / Future plc
Consolidated and Company cash flow statements
for the year ended 30 September 2019
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 websites
Purchase of subsidiary undertakings, net of debt and 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
Drawdown of overdraft
Bank arrangement fees
Purchase of derivative
Dividends paid
Net cash generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange adjustments
Cash and cash equivalents at end of year
Group
2019
£m
Company
2019
£m
53.7
(1.5)
(3.1)
49.1
(1.4)
(2.6)
(1.6)
(64.6)
0.4
-
-
(69.8)
-
-
84.2
(68.4)
4.3
(0.8)
(0.7)
(0.4)
18.2
(2.5)
6.4
2.7
6.6
(2.3)
(1.4)
-
(3.7)
-
-
-
-
-
-
(10.5)
(10.5)
-
-
84.2
(68.4)
-
(0.8)
(0.7)
(0.4)
13.9
(0.3)
0.3
-
-
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
Annual Report and Accounts 2019 / 110
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Financial
statements
Notes to the Consolidated and Company cash flow statements
for the year ended 30 September 2019
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/(income)
Tax charge/(credit)
Profit on the sale of operations
Profit/(loss) before changes in working capital and provisions
Movement in provisions
Decrease in inventories
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from/(used in) operations
B. Analysis of net debt
Group
2019
£m
8.1
0.9
14.5
3.4
-
14.2
4.6
(0.2)
45.5
(0.7)
-
3.5
5.4
53.7
Company
2019
£m
(1.6)
-
-
-
-
(0.3)
(0.1)
-
(2.0)
-
-
-
(0.3)
(2.3)
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
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
1 October
2018
£m
6.4
(8.5)
(15.7)
(17.8)
1 October
2018
£m
0.3
(8.5)
(15.7)
(23.9)
Cash flows
£m
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2019
£m
(2.5)
4.2
(23.5)
(21.8)
-
-
(0.5)
(0.5)
2.7
-
(2.9)
(0.2)
6.6
(4.3)
(42.6)
(40.3)
Cash flows
£m
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2019
£m
(0.3)
8.5
(23.5)
(15.3)
-
-
(0.5)
(0.5)
-
-
(2.9)
(2.9)
-
-
(42.6)
(42.6)
111 / Future plc
C. Reconciliation of movement in net debt
Net debt at start of year
Decrease in cash and cash equivalents
Increase in borrowings
Other non-cash changes
Exchange movements
Net debt at end of year
D. Changes in financial assets and financial liabilities
Group
2019
£m
(17.8)
(2.5)
(19.3)
(0.5)
(0.2)
(40.3)
Company
2019
£m
(23.9)
(0.3)
(15.0)
(0.5)
(2.9)
(42.6)
Group
2018
£m
(10.0)
(3.4)
(4.4)
0.3
(0.3)
(17.8)
Company
2018
£m
(19.3)
(0.4)
(4.4)
0.2
-
(23.9)
Group
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial asset - derivative
Total financial assets
Financial liabilities
Trade and other payables
Current borrowings
Non-current borrowings
Deferred consideration
Contingent consideration
Total financial liabilities
Net financial assets and liabilities
1 October
2018
£m
Cash flows
£m
Acquisitions
£m
Changes in
fair values and
unwinding
of discount
£m
Exchange
movements
£m
30 September
2019
£m
31.8
6.4
-
38.2
(38.8)
(8.5)
(15.7)
-
-
(63.0)
(24.8)
(3.4)
(2.5)
0.6
(5.3)
(6.1)
4.2
(24.0)
-
-
(25.9)
(31.2)
8.2
-
-
8.2
(7.2)
-
-
(29.3)
(10.9)
(47.4)
(39.2)
-
-
0.8
0.8
-
-
-
(12.9)
-
(12.9)
(12.1)
(0.6)
2.7
-
2.1
(1.7)
-
(2.9)
(1.7)
-
(6.3)
(4.2)
36.0
6.6
1.4
44.0
(53.8)
(4.3)
(42.6)
(43.9)
(10.9)
(155.5)
(111.5)
Annual Report and Accounts 2019 / 112
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Accounting policies
Compliance statement and basis of preparation
Future plc (the Company) is incorporated and registered in England and Wales and is a public company limited by shares. The address of
the Company’s registered office and its registered number are given on page 155. The financial statements consolidate those of Future
plc and its subsidiaries (the Group).
The financial statements of the Group and the individual financial statements of the parent company 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 2019, and those
parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The principal accounting policies applied in the preparation of the consolidated financial statements published in this 2019 Annual
Report are set out on pages 113 to 118. These policies have been applied consistently to all years presented, unless otherwise stated
below. 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 going concern basis has been adopted in preparing these financial statements as stated by the Directors on page 57.
New or revised accounting
standards and interpretations
adopted in the year
The following standards and amendments
became effective in the year:
- IFRS 9 Financial instruments;
- IFRS 15 Revenue from contracts with
customers;
- amendments as a result of Annual
Improvements 2014-2016 Cycle; and
- amendments to IFRS 2 Classification and
measurement of share-based payment
transactions.
There has been no material impact
from the adoption of new standards,
amendments to standards or
interpretations which are relevant to the
Group, other than as set out below.
The Group has adopted IFRS 9 Financial
instruments and IFRS 15 Revenue from
contracts with customers from 1 October
2018.
Applying IFRS 9 has resulted in changes
to the measurement and disclosure of
financial instruments and introduces a
new expected loss impairment model.
The standard has been applied fully
retrospectively, as required by IFRS 9, but
the designation of financial assets and
liabilities has been taken at the date of
initial application. The Group has adopted
the simplified approach to recognise
lifetime credit losses for trade receivables.
The adoption of the standard has not
had a significant impact on the Group’s
consolidated results or financial position.
See note 15 for further detail.
IFRS 15 replaces the risk and reward
approach of IAS 18 Revenue with a
contract based five-step model. 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.
113 / Future plc
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. Print and digital
magazine newstrade and subscription
revenue, and digital advertising revenues
and expenses have changed as a result of
the new standard. Based on the enhanced
guidance around the principal/agent
approach, revenue is recognised as the
amount paid by the end consumer, rather
than the amount remitted by the agent.
Related commissions paid to agents are
recognised as an expense within cost of
sales. There has been no material impact
on transition relating to any other revenue
streams within the Group.
The adoption of IFRS 15 has resulted in
an increase in revenue of £8.5m for the
year ending 30 September 2019, along
with an increase in cost of sales of £8.5m,
compared to what would have been
reported under IAS 18. The comparative
period income statement for the year
ending 30 September 2018 has been
restated for an increase in revenue of
£5.5m and an increase in cost of sales
of £5.5m. There has been no impact on
retained earnings at the date of transition
or subsequently.
New accounting standards,
amendments and interpretations
that are issued but not yet applied
by the Group
Certain new standards, amendments and
interpretations to existing standards have
been published that are mandatory for
accounting periods beginning on or after
1 October 2019 and which the Group has
chosen not to adopt early. These include
the following standards which are relevant
to the Group:
- IFRS 16 Leases;
- IFRIC 23 Uncertainty over income tax
treatments;
- amendment to IFRS 9 Prepayment
features with negative compensation and
modifications of financial liabilities;
- amendment to IFRS 3 Clarifying the
definition of a business;
- amendment to IAS 1 and IAS 8 Definition
of Material; and
- Annual Improvements to IFRS Standards
2015-2017 Cycle.
The Group is continuing to assess the
impact of IFRS 16 Leases, which will be
effective for the year ending 30 September
2020. Adoption of this standard will result
in the recognition on balance sheet of
assets and liabilities relating to leases
which are currently being accounted for
as operating leases. On transition the
Group intends to apply the modified
retrospective approach, with the right-
of-use asset measured as if IFRS 16
had always applied and the difference
between lease assets and liabilities being
recognised within retained earnings. The
discount rate used will be the incremental
borrowing rate determined on a lease-by-
lease basis at 1 October 2019, being the
date of initial application. Prior periods
will not be restated. The Group anticipates
a material increase of around £15.3m in
reported assets and around £16.2m in
reported liabilities as a result of adopting
IFRS 16. In the income statement the
operating lease rent expense will be
replaced with the depreciation of right-
of-use assets and finance costs on lease
liabilities. The Group is expecting to take
advantage of the following practical
expedients on transition:
- rely on our assessment of where leases
exist under current reporting standards
IAS 17 Leases and IFRIC 4 Determining
Whether an Arrangement Contains a
Lease;
- exclude low-value leases;
- exclude short-term leases, being those
with a term of 12 months or less from 1
October 2019;
- rely on our assessment of onerous leases
under IAS 37 Provisions, contingent
liabilities and contingent assets applied
immediately before the date of initial
application as an alternative to performing
an impairment review;
- use hindsight when determining the
lease term where the contract includes
options to extend or terminate; and
- exclude initial direct costs from the
measurement of the right-of-use asset.
Although there will be no change to actual
cash outflows, under IFRS 16 repayments
relating to the principal portion of the
lease liability will be presented within
cash flows from financing activities and
the portion relating to the repayment of
interest presented within cash flows from
operating activities. Payments relating
to short-term and low-value leases will
continue to be included in cash flows from
operating activities.
IFRIC 23 Uncertainty over income tax
treatments provides guidance and
clarifies how to apply the recognition
and measurement requirements in IAS 12
Income taxes where there is uncertainty
over income tax treatments. Historically,
the Group has not recognised any specific
provisions for uncertain tax positions in
its accounts, but in the current year it has
chosen to recognise a provision. This is not
due to the introduction of IFRIC 23, but
instead is due to the changing risk profile
of the group, and in particular as it relates
to cross border transfer pricing arising
from the Group's increasing US presence.
However, the guidance in IFRIC 23 has
been considered in the measurement of
this provision, notwithstanding the fact
that it will not be mandatory for the group
until the year ending 30 September 2020.
For more detail about the provision for
uncertain tax positions, see the ‘critical
judgements’ section on page 118.
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.
Presentation of non-statutory
measures
The Directors believe that adjusted results
and adjusted earnings per share provide
additional useful information on the core
operational performance of the Group to
shareholders, and review the results of the
Group on an adjusted basis internally. The
term ‘adjusted’ is not a defined term under
IFRS and may not therefore be comparable
with similarly titled profit measurements
reported by other companies. It is not
intended to be a substitute for, or superior
to, IFRS measurements of profit.
Adjustments are made in respect of:
Share-based payments – share-based
payment expenses (relating to equity-
settled share awards with vesting periods
longer than 12 months), together with
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
23.
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 not
related to the core underlying trading of
the Group 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 5.
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 to be reflective of the
core trading performance of the Group.
Change in the fair value of contingent
consideration - the Group excludes the
remeasurement of these acquisition-
related liabilities from its adjusted results
as the impact of remeasurement can
vary significantly depending on the
underlying acquisition's performance. The
unwinding of the discount on contingent
consideration is also excluded from the
Group's adjusted results on the basis that
it is non-cash and the balance is driven by
the Group’s assessment of the relevant
discount rate to apply. Excluding these
items ensures comparability with prior
years.
Changes in the fair value of currency
option - the Group has excluded this
from its adjusted results as the option
was acquired in order to hedge USD
exposure to acquisition related contingent
consideration and does not relate to the
core underlying 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, calculated using
the standard rate of corporation tax in the
relevant jurisdiction.
A reconciliation of adjusted operating
profit to profit before tax is shown below:
Adjusted operating profit
Adjusted finance costs
Other income
Adjusted profit before tax
Adjusting items:
Share-based payments
(including social
security costs)
2019
£m
52.2
(2.1)
0.2
50.3
2018
£m
18.5
(1.1)
-
17.4
(9.0)
(3.1)
Exceptional items
(3.4)
(4.4)
Amortisation of acquired
intangibles
Increase in fair value of
contingent consideration
Unwindling of discount
Fair value gain on
currency option
Non-trading foreign
exchange gain
(13.1)
(5.7)
(11.7)
(1.2)
0.8
-
-
-
-
0.2
Profit before tax
12.7
4.4
A reconciliation of adjusted free cash flow
to cash flow from operations is shown
below:
2019
£m
2018
£m
Adjusted free cash flow
53.7
17.4
Cash flows related to
capital expenditure
Adjusted operating cash
inflow
Cash flows related to
exceptional items
Cash inflow from
operations
4.0
2.4
57.7
19.8
(4.0)
(5.1)
53.7
14.7
A reconciliation between adjusted and
statutory earnings per share measures is
shown in note 10.
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
Annual Report and Accounts 2019 / 114
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
account for the acquisition of subsidiaries
by the Group.
amount remitted by the agent.
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. The
Group also uses a sub-segment split of
Media and Magazines for further analysis.
Operating segments are reported in
a manner consistent with the internal
reporting provided to the Chief Operating
Decision Makers who are considered to be
the Executive Directors of Future plc.
Revenue recognition
Revenue from contracts with customers
is recognised in the income statement
in line with the five-step model in IFRS
15, to reflect the pattern of transfer of
goods and services to the customer.
Revenue is recognised in the income
statement when control passes to the
customer. If the customer simultaneously
receives and consumes the benefits of
the contract, revenue is recognised over
time. Otherwise, revenue is recognised at
a point in time.
Revenue comprises the transaction price
of the contract, being 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.
For print and digital magazine newstrade
and subscription revenue, and digital
advertising revenues and expenses,
revenue is recognised as the amount paid
by the end consumer, rather than the
115 / Future plc
Related commissions paid to agents are
recognised as an expense within cost of
sales.
The following recognition criteria also
apply:
- eCommerce revenue is recognised at
the time of the related product sale
- Magazine newsstand circulation, print
subscription and advertising revenue is
recognised according to the date that
the related publication goes on sale
- Online advertising revenue is
recognised over the period during
which the adverts are served
- Revenue from the sale of digital
magazine subscriptions is recognised
uniformly over the term of the
subscription
- Event income is recognised when the
event has taken place
- Licensing revenue is recognised on the
supply of the licensed content
(c) Group companies
The results and financial position of all
the Group entities that have a functional
currency different from the presentation
currency are translated into the
presentation currency as follows:
(i) Assets and liabilities for each balance
sheet are translated at the closing
rate at the date of that balance sheet.
(ii) Income and expenses for each
income statement are translated at
average exchange rates.
(iii) All resulting exchange differences
are recognised as a separate
component of equity.
On consolidation, exchange differences
arising from the translation of the
net investment in foreign operations,
and of borrowings and other currency
instruments designated as hedges
of such investments, are taken to
shareholders’ equity. When a foreign
operation is sold, exchange differences
that were recorded in equity are
recognised in the income statement as
part of the gain or loss on sale.
- Other revenue is recognised at the
time of sale or provision of service
Employee benefits
The right of return is considered to be
variable consideration. The probable
amount of expected returns is estimated
using the most-likely amount method
and accounted for as a reduction in
revenue.
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.
(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 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 for equity-settled
awards and liabilities for cash-settled
awards.
The grant by the Company of share
awards to the employees of subsidiary
undertakings is treated as a capital
contribution. The fair value of employee
services received, measured by reference
to the grant date fair value, is recognised
over the vesting period as an increase to
investment in subsidiary undertakings,
with a corresponding credit to equity in
the Company’s financial statements.
Shares in the Company are held in trust to
satisfy the exercise of awards under certain
of the Group’s share-based compensation
plans and exceptional awards. The trust
is consolidated within the Group financial
statements. These shares are presented
in the consolidated balance sheet as a
deduction from equity at the market value
on the date of acquisition.
(c) Bonus plans
The Group recognises a liability and
an expense for bonuses taking into
consideration the profit attributable to
the Company’s shareholders after certain
adjustments. The Group recognises a
provision where contractually obliged or
where there is a past practice that has
created a constructive obligation.
Leases
Leases in which the Group assumes
substantially all the risks and rewards
of ownership of the leased assets are
classified as finance leases. All other
leases are classed as operating leases.
Assets held under finance leases are
included either as property, plant and
equipment or intangible assets at the
lower of their fair value at inception or
the present value of the minimum lease
payments and are depreciated over their
estimated economic lives or the finance
lease period, whichever is the shorter. The
corresponding liability is recorded within
borrowings. The interest element of the
rental costs is charged against profits
over the period of the lease using the
actuarial method.
Payments made under operating leases
(net of any incentives received from
the lessor) are charged to the income
statement on a straight-line basis over the
period of the lease.
Tax
Tax on the profit or loss for the year
comprises current tax and deferred tax.
Tax is recognised in the income statement
except to the extent that it relates to items
recognised directly in equity in which case
it is recognised in equity.
Current tax is payable based on taxable
profits for the year, using tax rates that
have been enacted or substantively
enacted at the balance sheet date, along
with any adjustment relating to tax
payable in previous years. Management
periodically evaluates items detailed in tax
returns where the tax treatment is subject
to interpretation. Taxable profit differs
from net profit in the income statement
in that income or expense items that are
taxable or deductible in other years are
excluded – as are items that are never
taxable or deductible. Current tax assets
relate to payments on account not offset
against current tax liabilities.
Deferred tax is provided in full, using the
liability method, on temporary differences
arising between the tax bases of assets
and liabilities and their carrying amounts
in the consolidated financial statements.
However, deferred tax is not accounted
for if it arises from initial recognition of
an asset or liability in a transaction other
than a business combination that at the
time of the transaction affects neither
accounting nor taxable profit or loss.
Deferred tax is determined using tax
rates (and laws) that have been enacted
or substantively enacted by the balance
sheet date and are expected to apply
when the related deferred tax asset is
realised or the deferred tax liability is
settled in the appropriate territory.
Deferred tax assets are recognised to
the extent that it is probable that future
taxable profits will be available against
which the temporary differences can
be utilised. Deferred tax is provided
on temporary differences arising on
investments in subsidiaries, except
where the timing of the reversal of the
temporary difference is controlled by
the Group and it is probable that the
temporary difference will not reverse
in the foreseeable future.
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.
Uncertain tax positions are provided for
under IAS 12, with due consideration
for the interpretive guidance in IFRIC
23. Each uncertain tax treatment is
considered either separately or together
with other uncertain positons in the
same jurisdiction, depending on which
approach better predicts the resolution
of the uncertainty. The effect of the
uncertainty is measured with reference
to the expected value, i.e. the sum of the
probability-weighted amounts in a range
of possible outcomes. The expected
value better predicts the resolution of
the uncertainty where there is a range of
possible outcomes.
Deferred tax in business
combinations
In business combinations, deferred tax
is calculated at the date of acquisition.
Where the fair value (and therefore the
acquisition accounting value) of assets
acquired is different from its tax base, a
deferred tax asset or liability is recognised
on the temporary difference. The tax
base is dependent on the expected tax
deductions available in the applicable
jurisdiction over the life of the asset.
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.
Annual Report and Accounts 2019 / 116
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements (b) Titles, trademarks, customer lists,
brands, subscriber databases, creative
services relationships, 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
fifteen years).
Expenditure incurred on the launch of
new magazine titles is recognised as
an expense in the income statement as
incurred.
(c) Computer software and website
development
Non-integral computer software
purchases are stated at cost less
accumulated amortisation. Costs incurred
in the development of new websites
are capitalised only where the cost can
be directly attributed to developing the
website to operate in the manner intended
by management and only to the extent of
the future economic benefits expected
from its use. These costs are amortised on
a straight-line basis over their estimated
useful lives (between one and three
years). Costs associated with maintaining
computer software or websites are
recognised as an expense as incurred.
Impairment tests and Cash-
Generating Units (CGUs)
A CGU is defined as the smallest
identifiable group of assets that generates
cash inflows that are largely independent
of the cash inflows from other assets or
groups of assets.
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.
117 / Future plc
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 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
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 loss
allowance. The Group applies the IFRS
9 simplified approach to measuring
expected credit losses, which uses a
lifetime expected loss allowance for all
trade receivables. Expected loss rates,
calculated based on historical credit
losses, are applied to trade receivables
grouped based on days past due.
Cash and cash equivalents
Cash and cash equivalents include cash
in hand and deposits held on call with
banks. 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. In the prior year the Group
applied cash flow hedge accounting 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
IFRS 9. In accordance with its treasury
policy, the Group does not hold or issue
any derivative financial instruments for
trading purposes.
Where hedge accounting is not applied,
changes in fair value of derivative financial
instruments are recognised within profit
or loss.
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 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 not related to the core underlying
trading of the Group 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 5.
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, undertaking Purchase
Price Allocation exercises to allocate value
between assets acquired, including the
allocation between intangible assets
and goodwill, and valuing contingent
consideration. See note 28 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 costs
of returning to the premium segment
of the official list of £0.8m as well as
acquisition and integration related costs
of £2.5m, relating to the acquisitions of
MoNa Mobile Nations, LLC and SmartBrief,
Inc. See notes 5 and 28 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
Where tax exposures can be quantified, a
provision is made based on best estimates
and the judgement of the Directors.
Details of the provision for uncertain
tax positions in relation to material tax
exposures are discussed below. As the
ultimate resolution of tax exposures
usually occurs at a point in time, and given
the inherent uncertainties in assessing
the outcomes of these exposures, there
could, in future periods, be adjustments
to these provisions that have a material
positive or negative effect on our results
in any particular period. Provisions for
tax contingencies require the Directors
to make estimates and judgements with
respect to the ultimate outcome of a tax
audit, and actual results could vary from
these estimates.
In the current year, the uncertain tax
positions of the Group have been
reviewed, and a provision has been put in
place for £5.6m (2018: £nil). The provision
has been calculated under IAS 12, in line
with the guidance published in IFRIC 23.
This relates to a number of risks across
jurisdictions, but in particular the risk of
challenge by the tax authorities of the
Group's transfer pricing arrangements.
Although the Directors continue to believe
that Future’s transfer pricing is robust,
its position as a digital media business
and the increasing attention on transfer
pricing as it relates to cross border
taxation of the digital economy creates
uncertainty.
(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 Immediate Media titles, as
well as the MoNa Mobile Nations, LLC and
SmartBrief, Inc. acquisitions. See notes 12
and 28 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 12.
Annual Report and Accounts 2019 / 118
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
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. The Group also uses a sub-segment split of Media (websites and events) and
Magazines for further analysis. The Group considers that the assets within each geographical segment are exposed to the same risks.
(a) Reportable segment
(i) Segment revenue
Segment:
UK
US
Total
Sub-segment
Media
£m
Magazines
£m
50.4
104.5
154.9
52.3
14.3
66.6
2019
£m
Total
£m
102.7
118.8
221.5
Sub-segment
Media1
£m
Magazines1
£m
36.8
29.5
66.3
53.2
10.6
63.8
2018
£m
Total1
£m
90.0
40.1
130.1
1 Restated for the impact of adopting IFRS 15 Revenue from contracts with customers. Revenue and net operating expenses have both increased by £5.5m. There is a net nil impact on
operating profit. This also excludes intra-group adjustments as these are not allocated to either Media or Magazine.
Transactions between segments are carried out at arm’s length.
(ii) Segment adjusted EBITDA
Adjusted EBITDA is used by the Executive Directors to assess the performance of each segment. EBITDA for the Media and Magazines
sub-segments is not reported internally, as overheads are not fully allocated on this basis. The table below shows the impact of
intragroup adjustments on the adjusted EBITDA for the UK and US segments:
UK
US
Total
2019
£m
Underlying adjusted
EBITDA
£m
Intragroup
adjustments
£m
Adjusted
EBITDA
£m
Underlying adjusted
EBITDA
£m
Intragroup
adjustments
£m
12.8
41.7
54.5
18.4
(18.4)
-
31.2
23.3
54.5
7.5
13.2
20.7
7.8
(7.8)
-
2018
£m
Adjusted
EBITDA
£m
15.3
5.4
20.7
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:
Total segment adjusted EBITDA
Share-based payments (including social security costs)
Depreciation
Amortisation
Exceptional items
Net finance costs
Other income
Profit before tax
(iii) Segment assets and liabilities
UK
US
Total
119 / Future plc
2019
£m
54.5
(9.0)
(0.9)
(14.5)
(3.4)
(14.2)
0.2
12.7
2018
£m
20.7
(3.1)
(0.6)
(7.3)
(4.4)
(0.9)
-
4.4
Segment assets
Segment liabilities
Segment net assets
2019
£m
123.3
263.1
386.4
2018
£m
123.7
131.0
254.7
2019
£m
(97.3)
(75.7)
(173.0)
2018
£m
(62.3)
(19.8)
(82.1)
2019
£m
26.0
187.4
213.4
2018
£m
61.4
111.2
172.6
(iv) Other segment information
Non-current assets
Additions to
non-current assets
Depreciation
and amortisation
Exceptional items
UK
US
Total
2019
£m
98.5
233.2
331.7
2018
£m
101.8
103.5
205.3
2019
£m
4.1
130.7
134.8
2018
£m
15.4
104.5
119.9
2019
£m
7.2
8.2
15.4
2018
£m
6.8
1.1
7.9
2019
£m
1.4
2.0
3.4
Other than the items disclosed above and a share-based payments charge (excluding social security costs) of £3.9m (2018: £2.6m)
there were no other significant non-cash expenses during the year.
(b) Business segment
(i) Gross profit by business segment
Media
£m
Magazines
£m
Other
£m
Sub segment
Add back
distribution
expenses
£m
2019
£m
Total
£m
Media
£m
Magazines
£m
Other
£m
Sub segment
Add back
distribution
expenses
£m
Segment:
UK
US
Total
42.5
84.7
127.2
32.8
8.6
41.4
(35.2)
(33.9)
(69.1)
4.5
2.5
7.0
44.6
61.9
106.5
28.8
25.4
54.2
33.5
6.2
39.7
(32.2)
(11.9)
(44.1)
4.0
1.5
5.5
2018
£m
1.8
2.6
4.4
2018
£m
Total
£m
34.1
21.2
55.3
Revenue of £38.2m arose from sales to the Group’s largest single customer which operates as an intermediary for digital advertising
customers (2018: £19.1m and £13.2m from the Group's two largest single customers). No end customer, or 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. The
above analysis excludes the impact of intra-group adjustments.
2. Revenue
The Group has applied IFRS 15 from 1 October 2018, using the fully retrospective method for initial application, meaning comparative
periods have been restated from 1 October 2017.
The Group has applied the practical expedient to allow incremental costs of obtaining a contract to not be capitalised where the
amortisation period is 12 months or less. No contract assets or liabilities have been recognised on application of IFRS 15.
See note 1 for disaggregation of revenue by sub-segment.
Timing of satisfaction of performance obligations
Revenue is recognised in the income statement when control passes to the customer. If the customer simultaneously receives and
consumes the benefits of the contract, revenue is recognised over time. Otherwise, revenue is recognised at a point in time. The table
overleaf provides detail for each revenue stream:
Annual Report and Accounts 2019 / 120
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Revenue stream
Nature, timing and satisfaction of
performance obligations
Revenue recognition under IFRS 15
Future operates a number of websites with
advertising space on their webpages which are
sold via 1st party and programmatic/3rd party
routes. Customers can purchase by time and
number of impressions.
For impressions, the performance obligation is the
presentation of the advert to the customer. For
time-based adverts, the performance obligation is
the provision of an advert over a period of time to
be seen by the customer.
Revenue is recognised at the point the advert
is presented to the customer or over the period
during which the advertisements are served.
No change in timing of revenue recognition from
the previous accounting standard, IAS 18.
Principal vs agent considerations have meant
revenue under certain contracts is recognised on
a gross basis (further detail provided on page 122).
Online advertising revenue
eCommerce revenue
Print and digital magazine
subscriptions
The Group earns commission when purchases
are made directly from 3rd parties by consumers
clicking through to these products through links
on the Group’s websites. The facilitation of each
product sale reflects a separate performance
obligation.
Subscriptions of magazines are sold online, with
subsribers sent a digital or print version of the
magazine every month (or multiple versions in a
‘double issue month’).
Cash is received in advance (either annually or
monthly via direct debit).
For print subscriptions each magazine delivered
represents a distinct performance obligation,
whereas for digital magazines providing access
to the digital content represents a distinct
performance obligation.
Magazine newsstand
circulation and advertising
revenue
Single issues of magazines are sold in stores and
online.
The provision of each issue is a separate
performance obligation, which is satisfied when
the issue goes on sale.
Future holds a number of events throughout the
year, including shows and awards events. Revenue
arises from the following:
Event income
- stand/table space;
- sponsorship;
- ticket sales; and
- marketing packages.
Cash is collected in advance of the event.
Each event is a separate performance obligation,
being satisfied when the event has taken place.
License fees are charged for the use of Future’s
brands and content.
Performance obligations are satisfied over time (for
example magazine content provided each month)
and at a point in time (historic content is provided
up-front).
Licensing revenue
121 / Future plc
Revenues related to these commissions are
recognised at the time of the related product sale,
less an estimate to reflect the likelihood of product
returns to the retailer based on historic return rates.
For digital magazines cash collected in advance is
deferred, with revenue recognised uniformly over
the term of the subscription.
For print magazines cash collected in advance is
deferred, with revenue recognised at a point in time
when the relevant publication being subscribed to
goes on sale.
No change in timing of revenue recognition from
the previous accounting standard, IAS 18.
Principal vs agent considerations have meant
revenue under certain contracts is recognised on a
gross basis (further detail provided on page 122).
Revenue is recognised at a point in time on the
date that the related publication goes on sale based
on the estimate of sales net of returns.
No change in timing of revenue recognition from
the previous accounting standard, IAS 18.
Principal vs agent considerations have meant
revenue under certain contracts is recognised on a
gross basis (further detail provided on page 122).
Cash collected in advance is deferred, with
revenue recognised at a point in time when the
event takes place.
No change in timing of revenue recognition from
the previous accounting standard, IAS 18.
Revenue is recognised on the supply of the
licensed content, based on usage.
No change in timing of revenue recognition from
the previous accounting standard, IAS 18.
The table below disaggregates revenue according to the timing of satisfaction of performance obligations:
Over time
£m
Point in time
£m
Total revenue
£m
Over time
£m
Point in time
£m
Total revenue
£m
2019
£m
2018
£m
Total revenue
6.4
215.1
221.5
5.9
124.2
130.1
Principal vs agent
On application of IFRS 15, the Group has made an assessment of all contracts to determine whether distributors are acting as agents
for the Group. Where the Group retains the following risks and responsibilities, which are indicators of an agency relationship, revenue
has been recorded on a gross basis:
- discretion in establishing pricing of products, with the third party receiving a fixed percentage of consideration;
- primary responsibility for fulfiling the contract, for example by determining sales volumes and retaining responsibility for delivery to
the end customer.
Following this assessment the Group has concluded that it sells via an agent for certain print and digital magazine newstrade and
subscription revenues, and digital advertising revenues.
Under IFRS 15, revenue recognised is the amount paid by the end consumer, rather than the amount remitted by the agent. Related
commissions paid to agents are recognised as an expense within cost of sales. This differs from the Group’s assessment under the
previous accounting standard for revenue, IAS 18, and has resulted in a gross up of revenue and cost of sales in the current and prior
year.
The impact is an increase in revenue of £8.5m for the year ending 30 September 2019, along with an increase in cost of sales of
£8.5m, compared to what would have been reported under IAS 18. The comparative period income statement for the year ending 30
September 2018 has been restated for an increase in revenue of £5.5m and an increase in cost of sales of £5.5m. There has been no
impact on retained earnings at the date of transition or subsequently.
There has been no material impact on transition relating to any other revenue streams within the Group.
3. Net operating expenses
Operating profit is stated after charging:
Cost of sales
Distribution expenses
Share-based payments (including
social security costs)
Exceptional items (note 5)
Depreciation
Amortisation
Other administration expenses
Adjusted
results
£m
(115.0)
(7.0)
(1.2)
-
(0.9)
(1.4)
(43.8)
(169.3)
Adjusting
items
£m
-
-
(9.0)
(3.4)
-
(13.1)
-
(25.5)
2019
Statutory
results
£m
(115.0)
(7.0)
(10.2)
(3.4)
(0.9)
(14.5)
(43.8)
(194.8)
Adjusted
results
£m
(74.8)1
(5.5)
-
-
(0.6)
(1.6)
(29.1)
(111.6)
Adjusting
items
£m
-
-
(3.1)
(4.4)
-
(5.7)
-
(13.2)
2018
Statutory
results
£m
(74.8)1
(5.5)
(3.1)
(4.4)
(0.6)
(7.3)
(29.1)
(124.8)
1 Restated for the impact of adopting IFRS 15 Revenue from contracts with customers. Revenue and net operating expenses have both increased by £5.5m with a net nil
impact on operating profit
Annual Report and Accounts 2019 / 122
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
4. Fees paid to auditors
Audit fees in respect of the audit of the financial statements of the
Company and the consolidated financial statements
Audit related assurance services
Other assurance services1
Other non-audit services
Total fees
2019
£m
0.28
0.02
0.30
0.54
-
0.84
2018
£m
0.19
0.02
0.21
0.47
0.02
0.70
1 Other assurance services in the current year relate to fees in relation to the return to Premium Listing and advisory services for the Mobile Nations acquisition and TI Media acquisition
which was announced on 30 October 2019. In the prior year services relate to reporting accountant services for the rights issue and prospectus associated with the acquisition of Purch
Group LLC.
5. Exceptional items
Premium listing costs
Acquisition and integration related costs
Restructuring and redundancy costs
Vacant property provision movements
Total charge
2019
£m
0.8
2.5
-
0.1
3.4
2018
£m
-
4.3
0.2
(0.1)
4.4
Premium listing costs include legal fees relating to the Group’s transfer to a Premium Listing on the Official List of the Financial
Conduct Authority in accordance with Listing Rule 5.4A of the Listing Rules.
The acquisition and integration related costs represent expenses incurred in respect of the acquisition and subsequent integrations of
MoNa Mobile Nations, LLC and SmartBrief, Inc and the integration of Purch which was acquired in September 2018, as well as costs in
respect of the acquisition of TI Media, announced on 30 October 2019.
Further details in respect of the acquisitions are shown in notes 28 and 30.
6. Employee costs
Wages and salaries
Social security costs
Other pension costs
Share schemes
- Value of employees’ services1
- Employer’s NI on share options
Total employee costs
1 In the current year, £3.4m relates to equity-settled and £0.5m to cash settled share based payments.
Average monthly number of people (including Directors)
Production
Administration
Total
Group
2019
£m
60.0
5.2
1.3
3.9
6.2
76.6
Group
2019
No.
770
219
989
Company
2019
£m
1.2
-
-
-
-
1.2
Company
2019
No.
-
6
6
Group
2018
£m
33.7
2.3
1.0
2.6
0.5
40.1
Group
2018
No.
519
179
698
Company
2018
£m
0.9
-
-
-
-
0.9
Company
2018
No.
-
6
6
At 30 September 2019, the actual number of people employed by the Group was 1,225 (2018: 1,004). In respect of our reportable
segments 750 (2018: 667) were employed in the UK and 475 (2018: 337) were employed in the US.
123 / Future plc
Key management personnel compensation
Salaries and other short-term employee benefits
Post employment benefits
Share schemes
- Value of employees’ services
- Employer’s NI on share options
Total
Group
2019
£m
1.9
0.1
0.5
3.1
5.6
Company
2019
£m
1.2
-
-
-
1.2
Group
2018
£m
1.6
0.1
1.1
0.1
2.9
Company
2018
£m
0.9
-
-
-
0.9
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 2019
£0.6m (2018: £0.4m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne and £0.3m (2018: £0.2m)
was recharged in respect of Penny Ladkin-Brand. These recharges are included in the salaries line for the Company in the table above.
Further details on the Directors’ remuneration and interests are given in the Directors’ remuneration report on pages 71 to 96. The
highest paid Director during the year was Zillah Byng-Thorne (2018: Zillah Byng-Thorne) and details of her remuneration are shown on
page 88.
7. Finance income and costs
Interest payable on interest-bearing loans and borrowings
Amortisation of bank loan arrangement fees
Adjusted finance costs
Increase in fair value of contingent consideration
Unwinding of discount
Non-trading foreign exchange gain
Total reported finance costs
Fair value gain on currency option
Total reported finance income
Net finance costs
2019
£m
(1.5)
(0.6)
(2.1)
(11.7)
(1.2)
-
(15.0)
0.8
0.8
(14.2)
2018
£m
(0.9)
(0.2)
(1.1)
-
-
0.2
(0.9)
-
-
(0.9)
On 14 February 2019 the Group signed a £90 million multicurrency Revolving Credit Facility (“RCF”), including an incremental
uncommitted £45 million accordion, providing additional flexibility. Included within amortisation of bank loan arrangement fees is the
release of prepaid costs of £0.4m in relation to the previous loan facility.
The £11.7m increase in fair value of contingent consideration arose in respect of the MoNa Mobile Nations, LLC acquisition, which is
measured at fair value through profit or loss account and for which a final amount payable of $55 million was agreed on 11 October
2019. Refer to note 29 for further detail. Similarly, £1.2m arose from unwinding of the discount on the contingent consideration in the
year. See note 21 for further details.
8. Tax on profit
The tax charged/(credited) in the consolidated income statement is analysed below:
Corporation tax
Current tax at 19% (2018 : 19%) 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 (credit)/charge
Adjustments in respect of previous years
Deferred tax
Total tax charge
2019
£m
7.5
(0.5)
7.0
(3.2)
0.8
(2.4)
4.6
2018
£m
1.8
0.1
1.9
0.5
(0.9)
(0.4)
1.5
Annual Report and Accounts 2019 / 124
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
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% (2018: 19%)
Losses not previously recognised
Provision for uncertain tax positions
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
2019
£m
12.7
2.4
(6.6)
5.2
3.5
(0.1)
-
(0.1)
0.3
4.6
2018
£m
4.4
0.8
(1.0)
-
1.0
(0.2)
0.5
1.2
(0.8)
1.5
The Directors have assessed the Group’s uncertain tax positions and in the current year a provision for uncertain tax positions of
£5.6m has been recognised under IAS 12, taking into account the guidance published in IFRIC 23. Further information is given in the
accounting policies section of the Financial Statements on page 118. The impact on the current year tax charge is a charge of £5.2m.
Historically, the deferred tax asset in the US arising on tax losses brought forward remained partially unrecognised. Due to the Group’s
increasing profitability (particularly in the US) this asset has now been recognised in full. The impact on the current tax charge has
been a credit of £6.6m.
9. 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)
2019
83.6
0.05
(0.4)
2018
81.5
-
-
Interim dividends are recognised in the period in which they are paid and final dividends are recognised in the period in which they
are approved. The dividend in respect of the year ended 30 September 2018 was paid on 15 February 2019. On 15 November 2019 the
Board proposed a dividend of 1p per share in respect of the year ended 30 September 2019, which subject to shareholder consent at
the AGM, will be paid on 14 February 2020 to shareholders on the register on 17 January 2020.
10. Earnings per share
Adjusted results
pence
Adjusting items
pence
Statutory results
pence
Adjusting results
pence
Adjusted items
pence
Statutory results
pence
2019
2018
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
50.1
47.5
(40.2)
(38.2)
9.9
9.3
26.2
24.3
(21.1)
(19.6)
5.1
4.7
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 and contingent consideration.
Adjusted earnings per share is based on profit after taxation which is then adjusted to exclude share-based payments (relating
to equity-settled share awards with vesting periods longer than 12 months) and related security costs, interest, tax, amortisation
of acquired intangible assets, fair value movements on contingent consideration (and unwinding of associated discount) and on
currency option, non-trading foreign exchange gains and exceptional items and any related tax effects.
125 / Future plc
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)
Increase in fair value of contingent consideration (£m)
Unwinding of discount (£m)
Fair value gain on currency option (£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)
Increase in fair value of contingent consideration (pence)
Unwinding of discount (pence)
Fair value gain on currency option (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)
Increase in fair value of contingent consideration (pence)
Unwinding of discount (pence)
Fair value gain on currency option (pence)
Tax effect of the above adjustments (pence)
Adjusted diluted earnings per share (pence)
2019
8.1
9.0
3.4
13.1
-
11.7
1.2
(0.8)
(4.5)
41.2
2018
2.9
3.1
4.4
5.7
(0.2)
-
-
-
(1.0)
14.9
82,190,827
56,886,851
4,536,480
4,453,155
86,727,307
61,340,006
9.9
50.1
9.3
47.5
9.9
11.0
4.1
15.9
-
14.2
1.5
(1.0)
(5.5)
50.1
9.3
10.4
3.9
15.1
-
13.5
1.4
(0.9)
(5.2)
47.5
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
Annual Report and Accounts 2019 / 126
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Financial
statements
11. Property, plant and equipment
Group
Cost
At 1 October 2017
Additions
At 30 September 2018
On acquisition
Additions
At 30 September 2019
Accumulated depreciation
At 1 October 2017
Charge for the year
At 30 September 2018
On acquisition
Charge for the year
At 30 September 2019
Net book value at 30 September 2019
Net book value at 30 September 2018
Net book value at 1 October 2017
Land and
buildings
£m
Plant and
machinery
£m
Equipment,
fixtures and fittings
£m
0.7
0.3
1.0
0.4
0.2
1.6
(0.3)
(0.1)
(0.4)
(0.2)
(0.1)
(0.7)
0.9
0.6
0.4
3.6
0.9
4.5
0.5
1.1
6.1
(3.3)
(0.4)
(3.7)
(0.3)
(0.7)
(4.7)
1.4
0.8
0.3
Total
£m
4.9
1.3
6.2
1.1
1.3
8.6
(3.9)
(0.6)
(4.5)
(0.7)
(0.9)
(6.1)
2.5
1.7
1.0
Total
£m
386.2
117.4
1.2
(0.2)
1.0
505.6
129.8
2.6
1.4
(0.2)
9.2
648.4
(293.9)
(7.3)
(1.0)
(302.2)
(14.5)
(2.7)
(319.4)
329.0
203.4
92.3
0.6
0.1
0.7
0.2
-
0.9
(0.3)
(0.1)
(0.4)
(0.2)
(0.1)
(0.7)
0.2
0.3
0.3
Other
£m
18.8
-
1.2
-
-
20.0
0.1
2.6
-
-
0.5
23.2
(16.3)
(1.6)
-
(17.9)
(1.4)
(0.5)
(19.8)
3.4
2.1
2.5
Depreciation is included within administration expenses in the consolidated income statement.
12. Intangible assets
Group
Cost
At 1 October 2017
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Exchange adjustments
At 30 September 2018
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Disposal
Exchange adjustments
At 30 September 2019
Accumulated amortisation and impairment
At 1 October 2017
Charge for the year
Exchange adjustments
At 30 September 2018
Charge for the year
Exchange adjustments
At 30 September 2019
Net book value at 30 September 2019
Net book value at 30 September 2018
Net book value at 1 October 2017
127 / Future plc
Goodwill
£m
Acquired
intangibles
£m
329.2
34.1
-
(0.2)
0.9
364.0
78.1
-
39.2
(0.2)
3.6
484.7
(263.4)
-
(0.8)
(264.2)
-
(1.8)
(266.0)
218.7
99.8
65.8
38.2
83.3
-
-
0.1
121.6
51.6
-
(37.8)
-
5.1
140.5
(14.2)
(5.7)
(0.2)
(20.1)
(13.1)
(0.4)
(33.6)
106.9
101.5
24.0
Acquired intangibles relate mainly to brands, subscriber databases, trademarks, advertising relationships, creative services
relationships, publishing rights, content and customer lists. These assets are amortised over their estimated economic lives, typically
ranging between one and fifteen years.
Any residual amount arising as a result of the purchase consideration being in excess of the value of 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 (and adjustments to fair
value in respect of these intangibles) are set out in note 28.
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 2019 consists of £73.9m (2018: £72.8m) relating to the UK and £144.8m (2018: £27.0m)
relating to the US.
The basis for calculating recoverable amounts is described in the accounting policies on page 117.
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.
The UK and US segments are considered to be the smallest group of cash generating units (‘CGU’) which independently generate
cashflows so impairment testing has been performed at this level.
Other assumptions that influence estimated recoverable amounts are set out below:
At 30 September 2019
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDA margins assumed*
Post-tax discount rate
Pre-tax discount rate
*Note that EBITDA margins are after intra-group adjustments for management fees and licence charges.
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
UK
US
Value in use
Five year plans
Discounted cash flow
3.0%
24.0% to 33.0%
8.2%
10.6%
Value in use
Five year plans
Discounted cash flow
3.0%
19.0% to 21.0%
8.2%
10.6%
UK
US
Value in use
Five year plans
Discounted cash flow
Value in use
Five year plans
Discounted cash flow
0.0%
17.7% to 19.7%
9.0%
11.8%
3.0%
21.8% to 24.2%
9.0%
11.8%
*Note that EBITDA margins are after intra-group adjustments for management fees and licence charges.
Management has determined the values assigned to each of the above key assumptions as follows:
Assumption
Approach used to determining values
Growth rate into perpetuity
This is the growth rate used to extrapolate cash flows beyond the period of the five-year plan. The
rates are consistent with forecasts included in industry reports.
EBITDA margins assumed
EBITDA margin is based on budgeted and forecast margins from the Group’s five-year plan
(based on past performance and management’s expectations for the future), adjusted to include
intragroup management and licence charges.
Post-tax discount rate
Pre-tax discount rate
The pre-tax discount rate adjusted for the impact of tax.
Reflects risks relevant to each CGU and the country in which they operate.
Annual Report and Accounts 2019 / 128
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Financial
statements
Sensitivity of recoverable amounts
At 30 September 2019 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 £459.8m and £254.5m
respectively. A change of plus 50 basis points in the post-tax discount rate would decrease the recoverable amount of the UK business
by £32.3m and the US business by £20.7m. A change of minus 50 basis points in the post-tax discount rate would increase the
recoverable amount of the UK business by £36.5m and the US business by £23.4m. The Group has conducted sensitivity analysis of
the impairment testing and has concluded that no reasonably possible change would result in an impairment of goodwill for either
CGU.
Goodwill is not considered to be impaired at 30 September 2019.
13. Investments in Group undertakings
Company
Shares in Group undertakings
At 1 October
Additions
At 30 September
2019
£m
123.6
18.6
142.2
2018
£m
19.5
104.1
123.6
Additions of £15.2m 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 MoNa Mobile Nations, LLC and
SmartBrief, Inc. acquisitions.
The remaining addition of £3.4m represents the fair value of share-based compensation awards granted to employees of subsidiary
undertakings of Future Holdings 2002 Limited, treated as a capital contribution to that company.
The Directors believe that the carrying values of the investments are supported by their underlying assets.
14. 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 2017
Acquisitions
Credited to income statement
Credited to equity
At 30 September 2018
Acquisitions
Credited to income statement
Credited to equity
Exchange adjustment
At 30 September 2019
Intangible
assets
£m
Share-based
payments
£m
Temporary
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
Provision for
uncertain tax
positions
£m
(4.6)
(1.1)
0.8
-
(4.9)
(4.8)
(0.7)
-
(0.2)
(10.6)
0.8
-
0.5
1.1
2.4
-
0.2
5.6
-
8.2
0.2
-
-
-
0.2
-
0.1
-
-
0.3
0.6
-
-
-
0.6
-
(0.1)
-
-
0.5
2.8
-
(0.9)
-
1.9
-
4.7
-
0.1
6.7
-
-
-
-
-
-
(1.8)
-
-
(1.8)
Total
£m
(0.2)
(1.1)
0.4
1.1
0.2
(4.8)
2.4
5.6
(0.1)
3.3
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
2019
£m
3.7
(0.4)
3.3
2018
£m
5.3
(5.1)
0.2
The net deferred tax asset of £3.3m (2018: £0.2m) comprises a deferred tax asset of £3.7m (2018: £5.3m) and a deferred tax liability of
£0.4m (2018: £5.1m).
129 / Future plc
As at 30 September 2019 the Group has: unrecognised tax losses totalling £4.9m (2018: £33.0m) of which £nil (2018: £28.2m) arose in
the US.
Deferred tax assets have been recognised in respect of tax losses and other temporary differences where it is probable that these
assets will be recovered.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax
liability in the foreseeable future. See note 8 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 £4.5m (2018: £2.2m) 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 2019 (2018: £nil).
15. Trade and other receivables
Current assets:
Trade receivables
Alowance for impairment of trade receivables
Trade receivables net
Amounts owed by Group undertakings
Other receivables
Prepayments and accrued income
Total
Group
2019
£m
38.6
(3.2)
35.4
-
0.6
5.9
41.9
Company
2019
£m
-
-
-
94.7
-
-
94.7
Group
2018
£m
32.7
(3.3)
29.4
-
2.4
5.8
37.6
Company
2018
£m
-
-
-
79.7
-
-
79.7
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
Adoption of IFRS 9 Financial Instruments
The Group has adopted IFRS 9 Financial instruments from 1 October 2018, applying the simplified approach to recognise lifetime
credit losses for trade receivables. The adoption of the standard has not had a significant impact on the Group’s consolidated results
or financial position.
A breakdown of the ageing is set out below:
Past due
0-30 days
31-60 days
61-90 days
91+ days
Total
Group
2019
£m
3.6
1.4
1.3
2.0
8.3
Group
2018
restated1
£m
5.7
3.2
1.8
4.2
14.9
1 Restated for the impact of adopting IFRS 9 Financial instruments. Whilst there has been no change in the total provision recognised, application of the lifetime credit losses method has
meant the provision has moved between ageing categories
..
As at 30 September 2019, trade receivables of £3.2m (2018: £3.3m) were impaired and provided for. The individually impaired receivables
mainly relate to advertising, events and licensing customers.
Annual Report and Accounts 2019 / 130
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
The movement in the Group allowance for impairment of trade receivables during the year is as follows:
At 1 October
Impairment losses recognised on trade receivables:
On acquisition
Provided for in the year
Receivables written off during the year
At 30 September
Group
2019
£m
3.3
0.5
0.8
(1.4)
3.2
Receivables written off during the year include amounts provided for in full on acquisitions.
The allowance for impairment of trade receivables is split by ageing category as follows:
Gross carrying amount of trade receivables
Allowance for impairment of trade receivables
Expected loss rate
Current
0-30 days
31-60 days
61-90 days
91+ days
27.9
0.8
2.8%
4.1
0.5
1.7
0.3
1.7
0.4
3.2
1.2
9.9%
20.5%
29.6%
17.0%
Group
2018
£m
2.2
1.5
0.7
(1.1)
3.3
Total
38.6
3.2
Impairment losses have been included in administration expenses in the income statement. Impaired amounts are written off when
there is no realistic expectation of recovering additional cash.
Credit risk
Credit checks are required for both new and existing accounts where trading exceeds a risk based deminimus threshold. Default
credit terms are 30 days but can be extended for commercial reasons. Final decisions on both the customer credit limit and the
extension of credit terms are made by a senior manager in the finance function who will take consideration of the following factors;
trading history to date, credit status of the customer, deal profitability and any other relevant commercial factors.
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 £38.6m (2018: £5.4m) 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. There has been no material impact
of adopting IFRS 9 on the Company's financial statements.
16. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statements:
Cash and cash equivalents
Group
2019
£m
6.6
Company
2019
£m
-
Group
2018
£m
6.4
Company
2018
£m
0.3
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. 95% of the Group's cash and cash equivalent balance was held with counterparties with a minimum S&P credit
rating of A-. The remaining 5% related to small short term balances held with PayPal (BBB+). The Group monitors the exposure, credit
rating and outlook of all financial counterparties on a regular basis.
17. Trade and other payables
Trade payables
Amounts owed to Group undertakings
Other taxation and social security
Other payables
Accruals and deferred income
Total
131 / Future plc
Group
2019
£m
3.4
-
8.2
2.3
48.5
62.4
Company
2019
£m
-
-
-
-
0.2
0.2
Group
2018
£m
4.9
-
2.6
2.7
38.2
48.4
Company
2018
£m
-
0.5
-
-
0.5
1.0
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Group has
financial risk management policies in place to ensure all payables are paid within the agreed credit terms.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
18. Financial liabilities – loans, borrowings and overdrafts
Non-current liabilities
Sterling term loan
Sterling revolving loan
US dollar revolving loan
Total
Current liabilities
Multi-currency overdraft
Sterling term loan
Sterling revolving loan
US dollar term loan
Total
Interest rate at
30 September
2019
Interest rate at
30 September
2018
n/a
2.5%
3.8%
3.0%
3.0%
n/a
Interest rate at
30 September
2019
Interest rate at
30 September
2018
2.59%
n/a
n/a
n/a
n/a
3.0%
3.0%
4.8%
The interest-bearing loans are repayable as follows:
Within one year
Between one and two years
Between two and five years
Total
Group
2019
£m
-
14.3
28.3
42.6
Group
2019
£m
4.3
-
-
-
4.3
Group
2019
£m
4.3
-
42.6
46.9
Company
2019
£m
-
14.3
28.3
42.6
Company
2019
£m
-
-
-
-
-
Company
2019
£m
-
-
42.6
42.6
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
On 14 February 2019 the Group signed a £90 million multicurrency Revolving Credit Facility ("RCF"), including an incremental
uncommitted £45 million accordion, providing additional flexibility. The facility replaced existing debt facilities and has an initial maturity
of February 2023.
All material companies in the Group are guarantors to the facility and the availability of the facility is subject to certain covenants.
Total fees relating to the new facility amounted to £0.8m 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 facility for sterling denominated loans is calculated as the cost of one-month LIBOR (currently
approximately 0.7%) plus an interest margin of between 1.75% and 3.0%, dependent on the level of Leverage.
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 1.7%) plus an interest margin of between 1.75% and 3.0%, dependent on the level of Leverage.
The term of RCF spans the proposed LIBOR end date of 2021, it is the intention of the Group to agree an alternative reference rate with
the Lenders ahead of the LIBOR end date.
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. The covenants are calculated on a consistent GAAP basis however, it is not anticipated
that the adoption of new financial standards (IFRS 16) will have a material impact on the covenant calculations.
Net debt/Bank EBITDA
Bank EBITDA/Interest
Leverage in respect of any Relevant Period shall not exceed 3.0:1
Interest Cover in respect of any Relevant Period shall not be less than 4.0:1
Annual Report and Accounts 2019 / 132
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months and the covenant position at
30 September 2019 is set out in the following table:
Net debt/Bank EBITDA
Bank EBITDA/Interest
30 September 2019
1.0 times
24.1 times
Covenant
< 3.0 times
> 4.0 times
The Group had drawn down £4.3m on its interest-bearing overdraft at 30 September 2019 (30 September 2018: £nil). Any draw down
forms part of the Group cash pooling account and can be offset against cash balances in other Group companies. Net of pooling the
Group had an overdraft position of £2.7m and total cash balance, including non-pool accounts of £2.3m.
19. Provisions
Group
At 1 October 2018
Charged in the year
Released in the year
Utilised in the year
At 30 September 2019
Property
£m
2.8
0.7
(0.7)
(0.7)
2.1
The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property. The majority of
the vacant property provision is expected to be utilised over the next two years, with the remainder over seven years.
Provisions for the Company were £nil (2018: £nil).
20. Other non-current liabilities
Group
Other payables
2019
£m
0.4
2018
£m
0.5
Other payables consist mainly of a property lease incentive which is amortised over the life of the lease.
21. Financial instruments
Adoption of IFRS 9 Financial Instruments
IFRS 9 Financial Instruments became effective for the Group from 1 October 2018. The standard has been applied fully retrospectively,
as required by IFRS 9, but the designation of financial assets and liabilities has been taken at the date of initial application. The Group
has adopted the simplified approach to recognise lifetime credit losses for trade receivables. The change in approach has not had a
material impact on the provision for bad debt.
IFRS 9 largely retains the existing classifications for financial liabilities. For the Group’s financial assets, the following table shows the
new measurement categories under IFRS 9:
Financial asset
Cash and cash equivalents
Trade and other receivables
Derivative – purchased option
IFRS 9 classification
Previous classification under IAS 39
Amortised cost
Amortised cost
Fair value through profit or loss
Loans and receivables
Loans and receivables
N/a
There has not been a significant impact on the carrying amounts of assets held.
133 / Future plc
The following table presents the Group’s financial assets and liabilities that are measured at fair value at 30 September 2019:
Assets
Financial asset – derivative
Liabilities
Deferred consideration
Contingent consideration
All other financial assets and liabilities are classed as level 1.
Deferred and contingent consideration
Level 2
Fair value
£m
1.4
-
Level 3
Fair value
£m
-
(43.9)
(10.9)
Deferred consideration of £43.9m ($55m) relates to the acquisition of MoNa Mobile Nations, LLC and £10.9m of contingent
consideration relates to the acquisition of SmartBrief, Inc. (see note 28 for further details).
The contingent consideration for SmartBrief has been valued using a scenario-based approach drawing from internal EBITDAE
projections and forecasts and weighting them according to the perceived probability of being achieved. The outcome is then
discounted to reflect the market risk related to the earn outs and underlying achievement of the EBITDAE targets.
The amount of deferred consideration for MoNa Mobile Nations, LLC was agreed on 11 October 2019 (see note 30), therefore other
than in deterimining the discount rate to apply there is little judgement involved in estimating the amount of deferred consideration
payable.
The discount rates for both the acquisition of MoNa Mobile Nations, LLC and the acquisition of SmartBrief, Inc were determined using
a Capital Asset Pricing Model (CAPM) approach.
The main level 3 inputs used in valuing the deferred and contingent consideration are shown in the table below.
Assumption
Discount rate
EBITDAE/gross profit
MoNa Mobile Nations, LLC
SmartBrief, Inc.
3%
n/a
10%
$26.4m - $31.5m
A 10% change in the discount rate applied to the MoNa Mobile Nations, LLC deferred consideration, which is considered to be a
reasonably possible alternative assumption, would give rise to less than £0.1m impact on the quantum of the liability recognised.
The table below sets out the sensitivity of level 3 inputs to a 10% change in the assumptions for the SmartBrief, Inc. contingent
consideration, which is considered to be a reasonably possible alternative assumption:
Assumption
Discount rate
Discount rate
Gross profit
Gross profit
Financial asset - derivative
Increase/(decrease)
Increase/(decrease)
in liability
10%
(10)%
10%
(10)%
£(0.1)m
£0.1m
£3.2m
£(8.4)m
A derivative foreign currency option to buy $30m in June 2020 was acquired in order to hedge the currency exposure arising on the
deferred consideration.
The derivative option has been valued using rates available from publicly-quoted sources and at 30 September 2019 had a value of
£1.4 million.
In the comparative period no financial assets or liabilities were measured at fair value. There were no transfers between levels in the
current or prior period.
Annual Report and Accounts 2019 / 134
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
Financial instruments by category
The designation of financial assets and liabilities under IFRS 9 has been taken at the date of initial application, therefore the prior year
classifications have not been amended.
The Group’s financial assets and financial liabilities are set out below:
Note
Amortised
cost
£m
Fair value through
profit or loss
£m
Total carrying
value
£m
15
15
16
17
18
21
21
18
Note
15
15
16
17
18
18
Note
15
17
18
-
35.4
0.6
6.6
42.6
(3.4)
(50.4)
(4.3)
-
-
(42.6)
(100.7)
1.4
-
-
-
1.4
-
-
-
(43.9)
(10.9)
-
(54.8)
1.4
35.4
0.6
6.6
44.0
(3.4)
(50.4)
(4.3)
(43.9)
(10.9)
(42.6)
(155.5)
Amortised cost
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)
Amortised
cost
£m
Fair value through
profit or loss
£m
Total carrying
value
£m
-
94.7
94.7
(0.2)
(42.6)
(42.8)
1.4
-
1.4
-
-
-
1.4
94.7
96.1
(0.2)
(42.6)
(42.8)
2019
Total fair
value
£m
1.4
35.4
0.6
6.6
44.0
(3.4)
(50.4)
(4.3)
(43.9)
(10.9)
(42.6)
(155.5)
2018
Total fair
value
£m
29.4
2.4
6.4
38.2
(4.9)
(33.9)
(8.5)
(15.7)
(63.0)
2019
Total fair
value
£m
1.4
94.7
96.1
(0.2)
(42.6)
(42.8)
Group
Financial asset - derivative
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Current borrowings
Deferred consideration
Contingent consideration
Non-current borrowings
Total financial liabilities
Group
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Current borrowings
Non-current borrowings
Total financial liabilities
The Company’s financial assets and liabilities are set out below:
Company
Financial asset - derivative
Other receivables
Total financial assets
Other liabilities
Non-current borrowings
Total financial liabilities
135 / Future plc
Company
Other receivables
Cash and cash equivalents
Total financial assets
Other liabilities
Current borrowings
Non-current borrowings
Total financial liabilities
Amortised cost
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
15
16
17
18
18
2018
Total fair
value
£m
79.7
0.3
80.0
(1.0)
(8.5)
(15.7)
(25.2)
In both the Group and Company tables total financial liabilities are shown net of unamortised costs which amounted to £0.7m (2018:
£0.5m).
The fair value is the amount for which a financial instrument could be exchanged between knowledgeable, willing parties. If an active
market exists, the market price is applied. If an active market does not exist a discounted cash flow or generally accepted estimation
and valuation technique based on market conditions at the balance sheet date is used to calculate an estimated value.
The market value of financial instruments is determined by the use of valuation techniques including estimated discounted cash
flows.
Treasury overview
The Group uses financial instruments where appropriate 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
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 18.
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 2019
Currency:
Sterling
US Dollar
Euro
Other
Total
At 30 September 2018
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
10.8
31.1
0.6
1.5
44.0
10.5
26.1
0.4
1.2
38.2
10.8
31.1
0.6
1.5
(18.6)
(28.3)
-
-
44.0
(46.9)
10.5
26.1
0.4
1.2
38.2
(18.8)
(5.4)
-
-
(24.2)
-
-
-
-
-
-
-
-
-
-
(35.6)
(71.8)
(0.4)
(0.8)
(54.2)
(100.1)
(0.4)
(0.8)
(43.4)
(69.0)
0.2
0.7
(108.6)
(155.5)
(111.5)
(22.6)
(15.5)
-
(0.7)
(38.8)
(41.4)
(20.9)
-
(0.7)
(63.0)
(30.9)
5.2
0.4
0.5
(24.8)
Annual Report and Accounts 2019 / 136
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
Interest rate risk
Details of the interest rates on borrowings as at 30 September 2019 are set out in note 18.
The Group has no significant interest-bearing assets but is exposed to interest rate risk as it borrows funds at floating interest rates
through its bank facilities. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group evaluates
its risk appetite towards interest rate risks regularly and may undertake hedging activities, including interest rate swap contracts,
to manage interest rate risk in relation to its revolving credit facility if deemed necessary. The Group did not enter into any hedging
transactions during the current or prior years and as at 30 September 2019 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 2019, 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 £0.2m (2018: £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, however
the Group seeks to ensure that its balance sheet positions are naturally hedged wherever possible. The use of forward contracts (or
any other derivative financial instrument) is subject to authorisation by the Board.
A derivative foreign currency option to buy $30m in June 2020 was acquired in order to hedge the currency exposure arising on
contingent consideration relating to the MoNa Mobile Nations, LLC and SmartBrief, Inc. (see page 134 for further detail).
The following table summarises the Group’s sensitivity to translational currency exposures at 30 September:
2019 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
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
GBP/USD
10%
0.2
(0.2)
-
-
GBP/USD
10%
(0.3)
0.3
0.3
(0.3)
137 / Future plc
Liquidity risk
The Group funds the business largely from cash flows generated from operations and long-term debt. Details of the Group’s
borrowings are disclosed in note 18.
The Group monitors and manages the cash for the Group and has maintained committed banking facilities as noted above to
mitigate any liquidity risk it may face. If necessary, inter-company loans within the Group meet short-term cash needs. The following
table shows the Group’s remaining contractual maturity for financial liabilities and derivative financial instruments. The table has
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is obliged
to pay:
30 September 2019
Trade payables
Other liabilities
Borrowings
Deferred consideration
Contingent consideration
Total financial liabilities
30 September 2018
Trade payables
Other liabilities
Borrowings
Total financial liabilities
22. Issued share capital
Less than
one year
£m
(3.4)
(50.4)
(4.3)
(43.9)
-
(102.0)
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
-
-
-
-
(10.9)
(10.9)
-
-
(42.6)
-
-
(42.6)
-
-
-
-
-
-
Less than
one year
£m
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
(4.9)
(33.0)
(8.5)
(46.4)
-
(0.2)
(4.8)
(5.0)
-
(0.4)
(10.9)
(11.3)
-
(0.3)
-
(0.3)
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
Number of
shares
81,518,591
1,642,658
-
433,580
592
83,595,421
2019
£m
12.2
0.2
-
0.1
-
12.5
Number of
shares
45,392,814
654,400
34,880,772
589,895
710
81,518,591
Total
£m
(3.4)
(50.4)
(46.9)
(43.9)
(10.9)
(155.5)
Total
£m
(4.9)
(33.9)
(24.2)
(63.0)
2018
£m
6.8
0.1
5.2
0.1
-
12.2
On 1 March 2019, the Company issued 615,166 Ordinary shares with a nominal value of £92,275 as consideration for the acquisition of
MoNa Mobile Nations, LLC.
Between 1 August and 6 August 2019, the Company issued 1,027,492 Ordinary shares with a nominal value of £154,124 as consideration
for the acquisition SmartBrief, Inc.
Further details of acquisitions are shown in note 28.
During the year 433,580 Ordinary shares with a nominal value of £65,037 were issued by the Company pursuant to share scheme
exercises and a further 592 Ordinary shares were issued under the Share Incentive Plan for a combined total cash commitment of £nil,
as detailed in note 23.
Annual Report and Accounts 2019 / 138
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
23. Share-based payments
The income statement charge for the year for share-based payments (and related social security costs) was £10.1m (2018: £2.6m). 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 plc 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
2019
Number of
options/awards
2019
Weighted average
exercise price
2018
Number of
options/awards
2018
Weighted average
exercise price
4,970,723
1,124,899
(433,580)
(435,006)
-
5,227,036
2,663
£0.000
£0.000
£0.000
£0.000
-
£0.000
£0.000
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
The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £5.916
(2018: £4.080).
For options and other share incentive schemes outstanding at 30 September the weighted average exercise prices and remaining
contractual lives are as follows:
PSP
November 2015
September 2016
November 2016
February 2017
November 2017
February 2018
May 2018
July 2018
November 2018
March 2019
May 2019
June 2019
August 2019
DABS
November 2015
Total outstanding at 30 September
Number of options/awards
Weighted average remaining
contractual life in years
2019
2018
2019
2018
-
-
1,749,634
2,005,190
504,521
64,611
-
-
691,759
13,393
161,179
16,992
17,094
379,567
47,331
1,749,634
2,005,190
504,521
64,611
127,976
82,549
-
-
-
-
-
2,663
9,344
5,227,036
4,970,723
-
-
-
-
1
1
2
2
2
2
3
3
3
-
1
-
1
1
1
2
2
3
3
-
-
-
-
-
-
1
The weighted average exercise price for share options outstanding at 30 September 2019 is £nil (2018: £nil).
139 / Future plc
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 – share price element2
Fair value – EPS element2
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 – share price element2
Fair value – EPS element2
PSP
PSP
PSP
PSP
2019
PSP
23 Nov 2018 14 Mar 2019 17 May 2019
10 Jun 2019 12 Aug 2019
£5.1400
£7.3600
£8.4500
£11.7700
£10.1400
-
3
-
3
-
3
-
3
-
3
45%
45%
46%
46%
47%
3
3
3
3
3
3
0.79%
0.79%
0.69%
-
£3.9010
£2.6619
£5.1400
-
£5.6070
£3.8540
£7.360
-
£6.4290
£4.4081
£8.4500
3
3
0.51%
-
£9.8648
£7.9595
£11.7700
PSP
PSP
PSP
3
3
0.33%
-
£8.1741
£6.2082
£10.1400
2018
PSP
30 Nov 2017
01 Feb 2018 01 May 2018
01 Jul 2018
£3.6000
£4.1000
£4.5500
£5.3600
-
3
36%
3
3
0.56%
-
£3.1137
£2.6273
£3.6000
-
3
36%
3
3
0.81%
-
£3.3909
£2.6318
£4.1500
-
3
41%
3
3
0.81%
-
£3.9684
£3.3867
£4.5500
-
3
41%
3
3
0.81%
-
£4.5618
£3.7636
£5.3600
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 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.
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.
Performance criteria in respect of awards granted during the year ended 30 September 2017:
Performance metrics are weighted 50% on the Group’s adjusted EBITDA (split 25% for the achievement of target for the year ending
30 September 2017 and 25% for the year ending 30 September 2018) and 50% on the Company’s share price (split 25% for the
achievement of target for the year ending 30 September 2018 and 25% for the year ending 30 September 2019). If the target is not met
for either condition in either year, that portion of the award will not vest. If the target is met, that portion of the award vests in full.
Performance criteria in respect of awards granted during the year ended 30 September 2018:
Performance metrics are weighted 50% on the Group’s adjusted EPS and 50% on the Company’s share price. The threshold entry
point of 25% vesting for the EPS element requires a 5% compound annual growth rate (CAGR), with 100% vesting at 10% CAGR. The
threshold entry point of 25% vesting for the share price element requires a 5% CAGR, with 100% vesting at 9% CAGR. Vesting will be
on a straightline basis between the threshold and maximum for both elements. Following the completion of the rights issue in the
year ended 30 September 2018 the Remuneration Committee rebased the share price targets to adjust for the impact of the Purch
acquisition and associated rights issue.
Annual Report and Accounts 2019 / 140
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements Financial
statements
Performance criteria in respect of awards granted during the year ended 30 September 2019:
Performance metrics are weighted 50% on the Group’s adjusted EPS and 50% on the Company’s share price. The threshold entry
point of 19% vesting for the EPS element requires a 5% CAGR, with 100% vesting at 20% CAGR. The threshold entry point of 19% vesting
for the share price element requires 5% CAGR, with 100% vesting at 20% CAGR. Vesting will be on a straightline basis between the
threshold and maximum for both elements.
Grants were made under the PSP in November 2016, February 2017, November 2017, February 2018, May 2018, July 2018, November
2018, March 2019, May 2019, June 2019, August 2019, and following the year end, November 2019.
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.
For Executive Directors, annual bonuses for the year ending 30 September 2019 are to be paid 50% in cash in November 2019 and 50%
in Future shares, deferred for two years. See page 89 of the Remuneration report for further detail.
The last grant made under the DABS was in November 2018.
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.
24. 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
2019
£m
97.2
-
-
-
97.2
2018
£m
47.4
100.5
(3.3)
(47.4)
97.2
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
2019
£m
(0.3)
Group
2018
£m
(0.3)
The 110,439 (2018: 110,439) shares held by the EBT represent 0.1% (2018: 0.1%) of the Company’s issued share capital. The treasury
reserve is non-distributable.
141 / Future plc
Merger reserve
At 1 October
Premium arising on equity shares issued as consideration
At 30 September
Group
2019
£m
124.9
15.5
140.4
Company
2019
£m
15.9
15.5
31.4
Group
2018
£m
122.5
2.4
124.9
Company
2018
£m
13.5
2.4
15.9
An amount of £109.0m in the merger reserve arose in previous years 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 MoNa Mobile
Nations, LLC in March 2019 and SmartBrief, Inc. in July 2019. The movement in the prior 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.
25. 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, £1.3m (2018: £1.0m) contributions were made to these plans and at 30 September 2019 the outstanding balance due
to be paid over to the plans was £0.2m (2018: £0.4m).
26. Commitments and contingent liabilities
(a) Operating lease commitments
At 30 September 2019, 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
4.6
10.4
3.0
18.0
Other
£m
-
-
-
-
Total
2019
£m
4.6
10.4
3.0
18.0
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
Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2019 total £2.2m (2018: £2.1m).
During the year, £3.4m (2018: £2.1m) was recognised in the income statement in respect of operating lease rental payments and
£0.2m (2018: £0.3m) 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
During the year, a contingent liability of £43.9m was recognised for variable deferred contingent consideration on the acquisition of
MoNa Mobile Nations, LLC and £10.9m was recognised for variable deferred contingent consideration on the acquisition of SmartBrief,
Inc. Following the reporting date, the contingent consideration for MoNa Mobile Nations, LLC was agreed, with the deferred
consideration being settled 50% in shares, with 1,792,534 shares in Future plc being issued in October 2019 and 50% in cash payable
on 28 February 2020. See notes 28 and 30 for further details regarding the acquisitions.
(c) Capital commitments
There were no material capital commitments as at 30 September 2019 (2018: £nil).
Annual Report and Accounts 2019 / 142
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
27. Related party transactions
The Group had no material transactions with related parties in 2019 or 2018 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 £1.4m (2018: £0.9m) to subsidiary undertakings. The outstanding
balance owed at 30 September 2019 was £1.4m (2018: £0.9m). See note 21 for details.
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 88.
28. Acquisitions
Acquisition of Immediate Media titles
On 13 February 2019 Future Publishing Limited acquired two specialist consumer brands from Immediate Media, CyclingNews.com
and Procycling Magazine, for consideration of £1.65 million. Cycling News is the leading cycling news website in the UK, while
Procycling is the market-leading magazine within the professional cycling arena.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Customer lists
- Brands
Subscription liabilities
Deferred tax
Net assets acquired
Goodwill
Consideration:
Cash
Total consideration
Fair
value
0.1
0.7
(0.1)
(0.1)
0.6
1.1
1.7
1.7
1.7
The acquisition provides the Group with market-leading positions in the pro-cycling sector, complementing the Group’s specialist
media strategy and bringing organic growth opportunities.
143 / Future plc
Acquisition of MoNa Mobile Nations, LLC
On 1 March 2019 Future plc acquired MoNa Mobile Nations, LLC ("Mobile Nations"), a leading global digital publisher focused on
consumer electronics and based in the US. The initial cash consideration paid was $55 million with a further $5 million satisfied
through the issue of 615,166 new ordinary shares. In addition, a further variable deferred contingent consideration up to a total value
of $60 million could be paid, subject to meeting certain financial targets based on the year ending 31 March 2020. The table below
includes £29.3m as contingent consideration, which represents its fair value at the date of acquisition. At the reporting date, the
deferred consideration had increased to £43.9m ($55m) following agreement of the final amount payable on 11 October 2019 (see note
21). 100% of the voting equity interest was acquired.
The impact of the acquisition on the consolidated balance sheet was:
Intangible assets
- Brands
- Creative services relationships
- Software
- Other intangibles
Trade and other receivables
Trade and other payables
Net assets acquired
Goodwill
Consideration:
Equity shares
Cash
Consideration
Contingent consideration
Total consideration
Fair value
£m
23.8
3.2
1.4
1.7
2.5
(0.6)
32.0
43.6
75.6
4.3
42.0
46.3
29.3
75.6
The goodwill is attributable to significant further opportunities available through sharing of best practice and leveraging the Group's
specialist media platform. The brands will be amortised over a period of between 10 and 15 years, creative services relationships over a
period of eight years and other intangibles over three years. US intangibles, including goodwill, are expected to be deductible for tax
purposes.
Gross trade receivables were £2.5m, of which £2.5m on acquisition were expected to be recovered.
The acquisition enhances the Group’s market-leading position in consumer electronics and combine content, community and
commerce to deliver shopping enablement systems. The complementary brands acquired further diversify and strengthen the
Group’s presence in the US.
Included within the Group’s results for the year are revenues of £5.6m (after elimination of intra-group revenues) and a profit before
tax of £4.7m (excluding deal fees and acquired intangible amortisation) from MoNa Mobile Nations, LLC.
If the acquisition has been completed on the first day of the financial year, it would have contributed £8.9m of revenue (after
elimination of intra-group revenues) and profit before tax of £7.7m (excluding deal fees and acquired intangible amortisation) during
the year.
Annual Report and Accounts 2019 / 144
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
Financial
statements
28. Acquisitions (continued)
Acquisition of SmartBrief, Inc.
On 29 July 2019 Future plc acquired SmartBrief, Inc. ("SmartBrief"), a leading US based digital media publisher. The initial cash
consideration paid was $30.3 million (being the original agreed amount of $32.2m less working capital and debt like adjustments)
which includes a $4.6m payment to settle debt on acquisition, with a further $12.8 million satisfied through the issue of 1,027,492
new ordinary shares. In addition, a further deferred contingent consideration up to a total value of $20 million will be paid, subject to
meeting certain financial targets based on the year ending 31 July 2020. The Group has included £10.8m as contingent consideration
in the table below, which represents its fair value at the date of acquisition. At the reporting date, the contingent consideration had
increased to £10.9m, representing the impact of discounting (see note 21). The impact of the acquisition on the consolidated balance
sheet was:
Tangible assets
Intangible assets
- Subscriber base
- Brands
- Software
- Other intangible assets
Cash
Trade and other receivables
Trade and other payables
Financial liabilities - interest bearing loans and borrowings
Deferred tax
Net assets acquired
Goodwill
Consideration:
Equity shares
Cash
Consideration
Contingent consideration
Total consideration
Provisional
fair value
£m
0.4
10.6
2.8
2.6
2.5
2.3
5.7
(6.6)
(3.8)
(4.3)
12.2
31.4
43.6
11.6
21.2
32.8
10.8
43.6
The goodwill is attributable to opportunities to utilise the CRM solution for Future's existing B2B and B2C customers and through
combining back office functions. The subscriber base will be amortised over a period of seven years, the brands over three years and
other intangible assets over 10 years. US intangibles, including goodwill, are not expected to be deductible for tax purposes.
Gross trade receivables were £5.7m, of which £5.3m on acquisition were expected to be recovered.
The acquisition strengthens the Group’s presence in the US B2B market and expands our audience reach through targeted email
marketing and daily digital newsletters for business professionals, as well as enhancing the Group’s proprietary technology stack.
Included within the Group’s results for the year are revenues of £5.2m and a profit before tax of £1.0m (excluding deal fees, associated
integration costs, depreciation and amortisation) from SmartBrief, Inc.
If the acquisition has been completed on the first day of the financial year, it would have contributed £28.4m of revenue and profit
before tax of £4.3m (excluding deal fees, associated integration costs, depreciation and amortisation) during the year.
Following the acquisition, the legal form of the entity was changed from an Incorporation to an LLC.
The fair values included for the SmartBrief, Inc. acquisition are described as ‘provisional’ as it occurred within three months of the
balance sheet date and so further time is required in order to fully ascertain the fair value of assets and liabilities acquired and the
consideration is subject to customary adjustments on finalisation of completion accounts.
See note 5 for details of the total amount of acquisition and integration related costs recognised as exceptional items in respect of
these acquisitions.
145 / Future plc
Acquisition of Purch Group LLC – update to fair values
On 4 September 2018, Future US Inc. acquired 100% of the share capital of Purch Group LLC, as disclosed in the Annual Report for the
year ended 30 September 2018. An update to the fair value of the assets has been performed, as detailed below:
Intangible assets
- Customer relationships
- Brands
- Software
Trade and other receivables
Trade and other payables
Net assets acquired
Goodwill
Consideration:
Cash
Total consideration
Fair value
£m
12.2
21.9
2.8
10.9
(5.3)
42.5
57.3
99.8
99.8
99.8
The Purch acquisition occurred within one month of the 2018 balance sheet date and following the passage of time further
information has become available to the Directors which has enabled the calculation of the fair value of the assets and liabilities
acquired to be refined. As part of this exercise, assets previously identified as websites were re-categorised as brands to better reflect
the underlying nature of the intangible assets acquired.
Following the acquisition of MoNa Mobile Nations LLC, existing customer relationships of £5.0m between the two parties that had
been included as an identified intangible asset included in the original purchase price allocation exercise were reclassified to goodwill
– reflecting the fact that the relationship is now with an entity within the Future Group.
Annual Report and Accounts 2019 / 146
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements 29. Subsidiary undertakings
Details of the Company’s subsidiaries at 30 September 2019 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
Ascent Publishing Limited*
02561341
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*
HRB12567
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
MoNa Mobile Nations, LLC*
7277455
MoNa Network, LLC*
L16000161192
Mobile Nations, LLC*
L12000001404
MoNa Media Canada Ltd*
BC1198396
Active Junky Inc*
5341234
Purch Technologies Sarl*
84138050400016
Newbay Media LLC*
4208889
Purch Group LLC*
4560993
Sarracenia Limited
04582851
SmartBrief, LLC*
3072249
Country of
incorporation and
registered office
Nature of business
Holding %
Class of shares
England and Wales1
Non-trading
England and Wales1
Holding company
England and Wales1
England and Wales1
Publishing
Publishing
100
100
100
100
£1 Ordinary shares
£1 Ordinary shares
10p Ordinary shares
£1 Ordinary shares
England and Wales1
Holding company
87.5
1 pence Ordinary shares
USA2
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
USA7
Digital media publishing
USA7
Digital media publishing
USA7
Digital media publishing
Canada9
Digital media publishing
USA2
France
USA2
USA2
England and Wales1
Trading
Non-trading
Non-trading
Trading
Dormant
USA8
Digital Publishing
100
87.5
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Not applicable
€1 Ordinary shares
£1 Ordinary shares
₱ Ordinary shares
$1 Ordinary shares
€1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
£1 Ordinary shares
Not applicable
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 Registered office 360 Central Ave, Suite 800, St Petersburg, FL 33701
8 Registered office: 555 11th Street, Suite 600, Washington, DC 20004
9 Registered office: 201 Portage Avenue, Suite 1800, Winnipeg, MB R3B 3K6
Ascent Publishing Limited, Future Holdings 2002 Limited, Future Publishing Limited, FutureFolio Limited, NewBay Media UK Holdco
Limited and NewBay Media Europe 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.
147 / Future plc
30. Post balance sheet events
MoNa Mobile Nations, LLC contingent consideration
On 11 October 2019 the Group announced the acceleration of the payment of the contingent consideration in respect of MoNa Mobile
Nations, LLC, which the Group acquired on 1 March 2019 (see note 28). With the attainment of the financial targets for the year ended
March 2020 likely to be above the top end of the earn out range, a total contingent consideration of $55m has been agreed, split
equally between cash and the issuance of new shares in Future plc. The cash element ($27.5m) will be paid on 28 February 2020 and
1,792,534 new shares were issued in October 2019 representing the balance of the payment (see note 28).
This move recognises the achievement of certain financial targets ahead of the anticipated timeframe and will enable the businesses
to work together to deliver additional benefits across the combined Group.
Acquisition of TI Media
On 30 October 2019 the Group announced the proposed acquisition of TI Media for a total consideration of £140 million in cash. TI
Media is a UK-based, print-led consumer magazine and digital publisher with deep industry heritage and a portfolio that incorporates
41 brands including Decanter, Country Life, Wallpaper* and Woman & Home. TI Media brings to Future a presence in the Wine, Golf,
Equestrian, Country Living, TV Listings and Gardening verticals and deepens and extends Future's strength and position in Home,
Cycling, Consumer Technology and Country Sports. The acquisition will be funded by a placing of 8,184,906 new ordinary shares with
the balance being settled by increasing the Group’s debt facilities to £135 million with the drawdown of an additional £45 million
through exercise of the accordion option.
Acquisition of Barcroft Studios
On 14 November 2019, Future signed a contract to purchase Barcroft Studios, a small independent studio that creates original content,
which is then published on a variety of owned and operated social sites in addition to being distributed across mass media channels.
The deal was completed on 30 November 2019. Total consideration is £23.5m (9.4x multiple of last 12 months EBITDA) of which 40%
was satisfied by the issue of 686,497 consideration shares.
Annual Report and Accounts 2019 / 148
Strategic reportFinancial ReviewCorporate GovernanceFinancial Statements
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 twenty first Annual General Meeting of Future plc will be held on 5 February 2020 at
Future’s London office, 1-10 Praed Mews, London W2 1QY at 10:30am at which the following resolutions numbered 1 to
14 will be proposed as ordinary resolutions, and resolutions numbered 15 to 18 will be proposed as special resolutions.
Ordinary Business
11. To reappoint
Ordinary resolutions
1.
2.
To receive and adopt the audited
financial statements of the Company
for the financial year ended 30
September 2019 and the reports of
the Directors and the auditors (the
“Annual Report”).
To approve the Directors’
remuneration implementation
report as set out in pages 87 to 96 of
the Annual Report of the Company
for the financial year ended 30
September 2019.
3. To approve the amendments to the
Remuneration policy for the three
year period commencing on 1
October 2019 as set out in pages 78
to 86 of the Annual Report of the
Company.
PricewaterhouseCoopers
LLP, Chartered Accountants and
Registered Auditors, as auditors of
the Company to hold office until
the conclusion of the next General
Meeting at which accounts are laid
before the Company.
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:
4. To declare a final dividend upon the
recommendation of the Directors for
the year ended 30 September 2019
of 1.0p per ordinary share payable on
14 February 2020 to shareholders on
the register at the close of business
on 17 January 2020.
5. To re-elect as a Director Alan Newman.
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 £9,801,426
(such amount to be reduced by the
nominal amount of any relevant
securities allotted under paragraph
13.2 below):
6. To re-elect as a Director Rob Hattrell.
(a) to holders of Ordinary shares in the
capital of the Company in proportion
(as nearly as may be practicable) to
their respective holdings of Ordinary
shares in the capital of the Company;
and
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 £4,900,713
(such amount to be reduced by
the nominal amount of any equity
securities allotted under paragraph
13.1 above in excess of £4,900,713
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
4 May 2021 (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) to holders of any other equity
(b) make political donations to political
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
organisations other than political
parties not exceeding £50,000 in
total; and
7. To re-elect as a Director Richard
Huntingford.
8. To re-elect as a Director Zillah
Byng-Thorne.
9.
To re-elect as a Director Penny
Ladkin-Brand.
10. To re-elect as a Director Hugo
Drayton.
149 / Future plc
(c) incur political expenditure not
exceeding £50,000 in total,
during the period beginning with
the date of the passing of this
resolution and ending following the
conclusion of the Company’s next
Annual General Meeting or, if earlier,
on 4 May 2021.
Special resolutions
case, prior to its expiry the Company
may make offers, and enter into
agreements, which would, or might,
require equity securities to be
allotted (and treasury shares to be
sold) after the authority expires and
the Board may allot equity securities
(and sell treasury shares) under any
such offer or agreement as if the
authority had not expired.
15. That, 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 £735,107;
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
£735,107
such authority to expire at the end of
the next AGM of the Company or, if
earlier, at the close of business on
4 May 2021 (unless previously
revoked or varied by the Company
in General Meeting) but, in each
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
4 May 2021 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.
18. That article 13.3 of the Articles of
Association of the Company be and
is hereby deleted and replaced with
the following:
The remuneration of the Directors
for their services as such (excluding
amounts payable under other
provisions of these Articles) shall be
determined by the Board but shall
not exceed in aggregate the sum of
£600,000 per annum or such greater
sum as the Company may from
time to time determine by ordinary
resolution. Such sum (unless
otherwise directed by ordinary
resolution of the Company) shall
be divided amongst the directors
in such proportions and in such
manner as the Board may determine
or, failing such determination,
equally.
On behalf of the Board
Timothy Maw
Company Secretary
4 December 2019
Annual Report and Accounts 2019 / 150
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 Monday 3
February 2020 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
151 / Future plc
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 4
December 2019 (being the last
business day prior to the publication
of this notice) the Company’s issued
share capital consisted of 98,014,275
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 98,014,275.
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 Monday
3 February 2020 or, if this meeting is
adjourned, in the register of members
48 hours before the time of any
adjourned meeting, shall be entitled
to attend and vote at the meeting
in respect of the number of shares
registered in their name at that time.
Changes to entries on the Register
after 6pm on Monday 3 February 2020
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
as to be received by the issuer’s agent
(ID 3RA50) by 10:30am on Monday
3 February 2020 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.
Revoking a proxy
(a) answering the question would
interfere unduly with the preparation
for the meeting or involve the
disclosure of confidential information;
(b) the answer has already been given on
a website in the form of an answer to
a question; or
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:
(c) it is undesirable in the interests of
the Company or the good order of
the meeting that the question be
answered.
Computershare Investor Services PLC,
The Pavilions, Bridgwater Road,
Bristol BS99 6ZY.
Members’ right to require
circulation of a resolution to be
proposed at the AGM
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
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:
14. Under section 319A of the Act, the
(a) it may not require the members
Company must answer any question
you ask relating to the business being
dealt with at the meeting unless:
making the request to pay any
expenses incurred by the Company in
complying with the request;
Annual Report and Accounts 2019 / 152
Notice of
Annual
General
Meeting
(b) it must forward the statement to the
Company’s auditors no later than the
time the statement is made available
on the Company’s website; and
(c) the statement may be dealt with as
part of the business of the AGM.
The request:
out the grounds for the request;
(iv) must be authenticated by the person
or persons making it; and
(v) must be received by the Company not
later than six weeks before the date of
the AGM;
(d) in the case of a request made in hard
copy form, such request must be:
(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
153 / Future plc
Investor information
For enquiries of a general nature regarding the Company and for investor relations
enquiries please contact Timothy Maw 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 2019 / 154
Directors and advisers
Directors
Advisers
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
Aurora
Finzels Reach
Counterslip
Bristol BS1 6BX
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Financial calendar
Annual General Meeting
5 February 2020
Half-year end
31 March 2020
Announcement of
interim results
May 2020
Financial year-end
30 September 2020
Announcement of
annual results
November 2020
Richard Huntingford
Independent Non-Executive Chairman
Zillah Byng-Thorne
Chief Executive
Penny Ladkin-Brand
Chief Financial Officer
Hugo Drayton
Independent Non-Executive Director
Alan Newman
Independent Non-Executive Director
Rob Hattrell
Independent Non-Executive Director
Timothy Maw
Company Secretary
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
155 / Future plc
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 2019 / 156
"If everyone is
moving forward
together then
success takes care
of itself"
Henry Ford