ANNUAL
REPORT
F Y 2 0 2 0
Contents
Strategic
Report
6 GROUP OVERVIEW
8
CHAIRMAN’S STATEMENT
12 OUR VISION AND STRATEGY
14
HOW WE EXECUTE
OUR STRATEGY
• Protect the core, grow existing
brands & audiences
• Ongoing diversification
• Operating leverage
• The Future Playbook
22 LENS ONE - GLOBALLY
24 LENS TWO - DIVISIONALLY
26
LENS THREE - VERTICALLY
• Future Passions
• Future Living
• Future B2B
34
CHIEF EXECUTIVE’S REVIEW
38
RISKS AND UNCERTAINTIES
40
SUMMARY OF PRINCIPAL RISKS
44
HOW WE ENGAGE
WITH OUR STAKEHOLDERS
49
COVID-19 RESPONSE
50
CORPORATE RESPONSIBILITY
Financial
Review
56 FINANCIAL REVIEW
2 / FUTURE PLC
Ranvir Singh photographed for
Woman & Home magazine
ANNUAL
REPORT
F Y 2 0 2 0
Corporate
Governance
62
CHAIRMAN’S INTRODUCTION
64
GOVERNANCE FRAMEWORK
66 BOARD OF DIRECTORS
70
NOMINATION COMMITTEE
74
AUDIT AND RISK COMMITTEE
80
DIRECTORS’
REMUNERATION REPORT
84
DIRECTORS’ REMUNERATION POLICY
94
ANNUAL REPORT ON
REMUNERATION
104
DIRECTORS' REPORT
Financial
Statements
112 INDEPENDENT AUDITORS’ REPORT
120
CONSOLIDATED
INCOME STATEMENT
120
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
121
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
121
COMPANY STATEMENT
OF CHANGES IN EQUITY
122
CONSOLIDATED BALANCE SHEET
123
COMPANY BALANCE SHEET
124
CONSOLIDATED AND COMPANY
CASH FLOW STATEMENTS
125
NOTES TO THE CONSOLIDATED
AND COMPANY CASH FLOW
STATEMENTS
127
ACCOUNTING POLICIES
134
NOTES TO THE
FINANCIAL STATEMENTS
164
NOTICE OF ANNUAL
GENERAL MEETING
174
SHAREHOLDER INFORMATION
ANNUAL REPORT AND ACCOUNTS FY 2020 / 3
Strategic
Report
6 GROUP OVERVIEW
8
CHAIRMAN’S STATEMENT
12
OUR VISION AND STRATEGY
14
HOW WE EXECUTE
OUR STRATEGY
• Protect the core, grow existing
brands & audiences
• Ongoing diversification
• Operating leverage
• The Future Playbook
22 LENS ONE – GLOBALLY
24 LENS TWO – DIVISIONALLY
26
LENS THREE – VERTICALLY
• Future Passions
• Future Living
• Future B2B
34
CHIEF EXECUTIVE’S REVIEW
38
RISKS AND UNCERTAINTIES
40 SUMMARY OF
PRINCIPAL RISKS
44 HOW WE ENGAGE
WITH OUR STAKEHOLDERS
49 COVID-19 RESPONSE
50
CORPORATE
RESPONSIBILITY
4 / FUTURE PLC
Marcus Rashford
photographed for
FourFourTwo magazine
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ANNUAL REPORT AND ACCOUNTS FY 2020 / 5
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 2020.
Media division KPIs
Online users1 (million)
Event attendees (thousand)
FY 2020
FY 2019
FY 2018
FY 2017
281.8
181.0
118.0
49.0
FY 2020
FY 2019
FY 2018
FY 2017
100
151
155
76
Total global monthly online users to Future websites. Source: Google Analytics
Number of visitors to Future events includes 32 in-person events held virtually
1All figures are excluding forums as they are non-commercial websites for
in FY 2020 due to COVID-19.
which Future does not write content or actively manage or monetise. Previously
reported figures have been restated to exclude forums. FY 2020 forums only
online users are 17.1m (FY 2019: 25.3m). Online users figures from FY 2019 have
also been restated to exclude SmartBrief newsletter subscribers which have
been reclassified to email newsletters.
eCommerce transactions (million)
Email newsletter subscribers (million)
FY 2020
FY 2019
FY 2018
FY 2017
FY 2020
FY 2019
13.6
9.8
3.2
2.0
9.4
7.0
Number of transactions made via affiliate links on Future websites.
Total subscribers to Future email newsletters. Data available from FY 2019.
Magazine division KPIs
Total circulation (million)
Total subscribers (million)
FY 2020
FY 2019
FY 2018
FY 2017
3.8
1.5
1.3
1.0
FY 2020
FY 2019
FY 2018
FY 2017
1.5
0.9
0.9
0.5
Total of each magazine and bookazine circulation per issue.
Number of subscribers to Future magazines per issue.
6 / FUTURE PLC
Group Overview Strategic Report
Corporate KPIs
Revenue (£million)
Global audience (million)
FY 2020
FY 2019
FY 20182
FY 2017
Consolidated Group revenue.
339.6
221.5
130.1
84.4
FY 2020
FY 2019
FY 2018
FY 2017
393.6
269.2
193.4
85.6
Includes magazines and bookazines circulation, online users (excluding
forums), event attendees, social media followers (Twitter, Facebook and
YouTube) and newsletter subscribers.
Adjusted operating profit (£million)
FY 2020
FY 2019
FY 2018
FY 2017
93.4
52.2
18.5
8.9
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 currency option, and exceptional items, and any related tax effects.
Adjusted operating profit margin
Reported operating profit (£million)
FY 2020
FY 2019
FY 20182
FY 2017
28%
24%
14%
11%
FY 2020
FY 2019
FY 2018
FY 2017
Adjusted operating profit margin is adjusted operating profit as a
Consolidated statutory operating profit.
percentage of revenue.
Adjusted free cash flow (£million)
Free cash flow (£million)
FY 2020
FY 2019
FY 2018
FY 2017
96.0
53.7
17.4
15.3
FY 2020
FY 2019
FY 2018
FY 2017
Adjusted free cash flow is defined as adjusted operating cash inflow less
Free cash flow is defined as a statutory operating cash inflow less
capital expenditure. Adjusted operating cash inflow represents operating
capital expenditure.
cash inflow adjusted to exclude cash flows relating to exceptional items and
settlement of employer's social security costs on share-based payments, and
to include lease repayments following adoption of IFRS 16 Leases.
Adjusted diluted EPS (p)
FY 2020
FY 2019
FY 2018
FY 20173
Leverage
FY 2020
FY 2019
FY 2018
FY 2017
74.7
47.5
24.3
18.4
50.7
26.7
5.3
0.8
87.9
49.7
12.3
10.2
.60x
.74x
.86x
.91x
Adjusted diluted EPS represents adjusted profit after tax divided by the
For FY 2020 leverage is defined as debt as a proportion of EBITDA adjusted for
weighted average dilutive number of shares at the year end date.
the impact of IFRS 16 and including the 12-month trailing impact of acquired
businesses (in line with the Group’s bank covenants definition). For previous
years leverage is defined as total net debt divided by adjusted EBITDA.
Notes
2. FY 2018 restated for IFRS 15 Revenue from contracts with customers. 3. Restated for FY 2018 rights issue.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 7
Chairman’s
Statement
Richard Huntingford
Chairman
D ear Shareholders,
In this highly unusual and challenging
year, it is my pleasure to report that Future
has continued to thrive, with Future’s
content now read by one in three people in the UK and US.
Global audiences increased rapidly during FY 2020 from a
and scalable technology stack is critical in our ability to
respond to the changing media landscape; our
eCommerce capability gives our intent audience what they
need to be guided through online purchases, and our
advertising tech stack provides advertising clients with
high-value targeted audiences.
mix of underlying growth in audience engagement,
through new launches and acquisitions, and the increased
consumption of digital content during the pandemic.
Value-led business
As a value-led business, we are driven by our purpose and
This growth in audience has helped lead to another
defined by our values. We have continued this year to focus
exceptional year of results. Revenue for the year increased
on embedding our value-based culture. Our values support
by 53% to £339.6m, with organic revenue growth of 6%
our strategy and the way we execute it, so we rely on our
driven by strong organic Media revenue growth of 23%
Future Playbook to bring alignment in the way we behave
which offset the impact of COVID-19 on Magazines
and work. Despite the social, economic and environmental
revenue, which declined organically by 29%. Adjusted
challenges of this year beyond just the pandemic, we have
operating profit increased 79% to £93.4m. These results
seen the positive effects of our staff living our values. These
were delivered despite the unprecedented challenges
challenges have brought out the best in our staff; from
arising from the pandemic.
Clear strategy
The Group continues to successfully execute on the
innovative solutions to continuing to deliver high-quality
content and experiences to our communities and our
clients, to support and engagement of cultural change,
inclusion and diversity. We recognise that to continue the
strategy of being a global platform for specialist media,
success of the business we must continue to facilitate a
with scalable, diversified brands, and this has resulted in
value-led culture, encouraging and enabling our employees
strong financial performance and total shareholder return.
to operate in this way.
We maintain our focus on our purpose, which 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. The proven success of our strategy
makes it enduring. Our commitment to
producing high-quality content, delivered
across multiple platforms, helps us expand
the loyal communities and audiences we’ve
built up over many years.
With this content at our heart, the
Group has a diversified range of
revenue streams from
consumer direct
purchases, advertising,
eCommerce and
events. Our innovative
8 / FUTURE PLC
Stakeholder engagement
pages 44 to 48
As you will read later in this Annual Report,
our value-led culture was very much to the
fore in the boardroom, when the pandemic
unfolded, as we sought to understand, respond
to and balance the needs and priorities of our
different stakeholder groups, whose interests
and well-being are dependent on our decision-
making. I firmly believe that we got the balance
as fairly weighted as could have been
expected.
Challenging market
FY 2020 has been a year of significant
market challenges, from the COVID-19
Chairman’s Statement Strategic Report
pandemic to economic, social and political disruption,
and as we enter the financial year 2021 these challenges
Investing in growth
The Group has a clear acquisition strategy of buying
ABOVE: Barcroft
creates content
continue. Despite this uncertain backdrop, the Group has
businesses in which we can add value through our
for global
not just been resilient; it has thrived. This is evidenced by
diversified business model. Our acquisitions complement
platforms such
the financial and operational performance, which proves
and accelerate our organic growth, and we continually
as YouTube,
not only that our strategy is enduring and robust, but also
diversify by moving into adjacencies, new verticals, and
as well as
that our value-led culture is a differentiator in a
by building out our platform.
producing high-
challenging landscape.
The robustness of our business model - and ability to
end television
The Group initiated a three-pronged approach,
grow during difficult market conditions - means that we
for networks,
focusing on our employees, clients and stakeholders as
remain committed to our strategy to grow both
broadcasters
we considered how to lessen the impact of the pandemic.
organically and through acquisitions. During FY 2020 the
and streaming
We believe that our approach has proven successful and
Group has been able to continue to invest in growth, with
platforms.
enabled us to deliver our current results and maintain the
a number of new launches into new verticals and the
momentum into our new financial year. Future is a
successful completion of two acquisitions: Barcroft
global-first business, which congregates around a shared
Studios, in November 2019; and the transformational
culture and vision, not locations, and is able therefore to
acquisition of TI Media in April 2020. Our proven
pivot quickly to adapt to market conditions. We are used
integration model enabled us to integrate these
to working in a collaborative way across locations, so the
businesses in line with our investment case, despite the
move to homeworking had minimal impact on our ability
restrictions around office working. Since the period end,
to deliver to our audiences and customers. Our
we acquired CinemaBlend, in early October 2020.
diversified business model reduces risk and our unified
Barcroft Studios is a video production company with
processes and platforms allow us to serve our audience
expertise in monetising audiences through social media.
and clients in multiple ways.
Barcroft creates content for global platforms, including
“I want to thank the incredible team at Future who
have worked tirelessly and adapted to a new way
of working as the Group has continued to provide
high quality content to our communities. Once
again, Future has proven itself to be one of the most
innovative and agile media companies, and that is
reflected with this year’s excellent financial results.
The Group’s resilience against a challenging market
is testament to our strategy and our people.”
ANNUAL REPORT AND ACCOUNTS FY 2020 / 9
Snapchat and YouTube, as well as producing high-end
ABOVE: The
The Group also decided to invest in the creation of 150
original productions for networks, broadcasters and
streaming platforms, including Netflix, National
opportunities
to grow these
new roles across digital media and technology to support
the growth plans; this was announced in early October,
Geographic Channel, the BBC and Channel 4.
portfolios through
and is an investment in the region of £5-6m. This
TI Media is a UK-based, print-led consumer magazine
Future’s platform
investment in resource will support and accelerate our
and digital publisher, with deep industry heritage and a
of diversified
significant online audience growth potential.
portfolio of popular brands, including Country Life,
revenue streams,
Woman & Home, Decanter and Marie Claire. This exciting
as well as
acquisition has introduced to Future substantial new
growing the
People
At Future, we believe our people are our greatest asset.
specialist audiences, including women’s lifestyle, TV
brands globally,
Their commitment, integrity, resilience and flexibility have
entertainment, gardening, wine, golf and a number of
is significant and
enabled the Group to thrive in these more challenging
additional sports verticals, as well as growing the Group’s
has already borne
market conditions. They bring our values to life in the way
presence in home interest, cycling and country sports.
fruit.
they work and collaborate with each other. In addition, as
The opportunities to grow these portfolios through
Future’s platform of diversified revenue streams, as well
as growing the brands globally, is significant and has
already borne fruit, with new launches over the last few
months in gardening, TV viewing, outdoors, health and
women’s lifestyle. The Group also announced that
expected cost synergies of £20m per annum will be
the Group continues to expand through acquisition, which
brings changes to the business, our employees have
shown great resilience and adaptability throughout.
On behalf of the Board and our shareholders, I would
like to thank all our employees for their hard work,
dedication and continued passion to the Future cause
during FY 2020, which has been the driving force behind
achieved within 24 months, an increase from the £15m
the Group’s outstanding results.
initially identified. The delivery of these savings is
progressing well, with the Group already securing annual
cost synergies of over £20m, of which £3m has benefited
FY 2020. Both of these acquisitions bring an excellent
I would also like to make special mention of our Chief
Executive Zillah Byng-Thorne, and her executive
leadership team. The pandemic has highlighted the
difference between the large cohort of Chief Executives
opportunity for the Group to accelerate growth, in both its
deemed to be “good leaders” of the companies that they
global presence and also the continual development of the
run and the small pool of Chief Executives who are “truly
diversified platform business model. I am excited by the
opportunities that these acquisitions bring to the Group.
outstanding leaders”: Individuals who are able to respond
to the need for difficult, urgent and far-reaching decision-
On the 25 November 2020 the Group announced that
making and who, in hugely challenging times, lead with
we have agreed the terms of a recommended offer to
clarity, bravery, authenticity and empathy, whilst putting
acquire the entire issued and to be issued share capital of
the needs of others before their own. Zillah has shown
GoCo Group plc. We believe that the combination will
significantly strengthen the Group’s proposition of
seeking to address the growing consumer demand for
informed and value driven purchasing decisions enabled
by intent driven content.
herself to be just such a leader, supported magnificently
by her executive team.
How we create value for our stakeholders
pages 44 to 48
10 / FUTURE PLC
Chairman’s Statement Strategic Report
syndicate, so I would like to thank them for their
continued confidence in our strategy.
Board composition
We have a strong Board team in terms of experience,
entrepreneurial and ambitious spirit and business
acumen. It is important that we continue to build a
Board that is aligned to the Group’s culture and values,
and commensurate with the Group’s FTSE250 status
and growth ambitions. The three appointments we have
announced this year reflect this commitment.
In February 2020 we announced the appointment of
Meredith Amdur as an Independent Non-Executive
Director. Meredith is currently Chief Executive Officer of
Rhetorik, a leading data supplier to technology vendors.
She brings knowledge, understanding and experience
of the US media market, and especially digitally-led
environments.
As previously announced, Rachel Addison was
appointed as Chief Financial Officer of the Group,
Capital structure and dividends
The Group continues to be highly cash generative.
effective 1 June 2020. Rachel is a great addition to the
Future Board as we continue to strengthen and diversify
Adjusted free cash flow was 103% of adjusted operating
our collective acumen and experience. Rachel,
profit (FY 2019: 103%), with net debt of £62.1m at the
previously Chief Financial Officer at TI Media, has
end of the year. The Board’s policy is that leverage should
significant experience in the media market; I am
not exceed 1.5x, with an exception for acquisition spikes;
delighted to welcome her to the Board. Rachel takes the
our year end leverage was 0.6x. Therefore, the Board is
place of Penny Ladkin-Brand, who has stepped into her
delighted to propose an increased final dividend of 1.6p a
new role as Chief Strategy Officer. I would like to take
share (FY 2019: 1.0p), payable on 16 February 2021 to all
this opportunity to extend my thanks to Penny for her
shareholders on the register at the close of business on
guidance to the Board over the last five years as CFO.
15 January 2021. Our goal continues to be the
In September we announced the appointment of
implementation of a progressive dividend policy, and at
Mark Brooker as an Independent Non-Executive
the same time to balance shareholder returns and
Director with effect from 1 October 2020. I am delighted
investment in the company to support future growth and
to welcome Mark, who has a wealth of experience of
optimise value for shareholders.
executive and non-executive board roles; his insight and
Following the end of the year, the Group agreed a
understanding of platform-based businesses will hugely
£215m two year term loan in order to part-fund the
benefit the Group.
recommended offer for GoCo Group plc. In addition the
Group's £30m short dated COVID-19 facility was
cancelled. This ensures that the business has a balance
sheet and debt capacity in line with its objective of not
operating with leverage of more than 1.5x (outside of
Corporate Governance Section
pages 50 to 53
exceptional circumstances). In conjunction with this, and
as part of the viability assessment on page 43, the Board
Looking to the future
After such an exceptional year the Group faces the
undertook a detailed going concern review. This included
future with confidence. Our value-led culture,
reviewing the Group's forecasts and projections, after
outstanding team, resilient strategy and confident
applying a number of severe but plausible downside
investment in growth means this is an exciting time for
sensitivities to those projections, and assessing the
Future. I am confident that we will continue to deliver
headroom on the Group’s credit facilities. Future's
significant long-term value for shareholders.
diversified revenue model, and strong balance sheet,
which includes current headroom of over £100m on
available facilities at 30 September 2020 leave the Group
well positioned to continue to adapt to market conditions
in these uncertain times.
Richard Huntingford
Chairman
The continuing success of the Group and the
10 December 2020
transformative steps we have taken this year is reliant on
the support of our shareholders and our banking
ANNUAL REPORT AND ACCOUNTS FY 2020 / 11
Our Vision and Strategy
At Future, our success is the product of aligning our vision and strategy
within our organisation, and how we enforce the strategy.
Why we exist (Our Purpose)
“We change people’s lives through
sharing our knowledge and expertise
with others, making it easy and fun
for them to do what they want.”
Future is a global platform
for specialist media driven
by technology, with
diversified revenue streams
We create loyal communities and
fans of our brands by giving them a
place they want to spend their time
and meet their needs
At Future, we pride ourselves on the
We succeed by delivering content that connects
heritage of our brands and the loyalty of
with audiences, in areas in which we have expertise,
our communities.
recognising that in today’s media landscape
We are diversifying our
monetisation models to
create significant revenue
streams. We are focused on
three material revenue
types: Advertising,
Consumer Direct and Intent
Offering core expertise, we are the
providing the answers to our audience's needs is
We look to grow profitably and generate
trusted advisor, who helps enthusiasts
the first requirement if you want them to spend
cash returns, both organically and
follow their passion through
time with you.
through acquisitions, and aim to do this
high-quality content, innovative
As we strengthen our global reach across our
through diversifying our audience and
technology and unique experiences.
core verticals, we continue to be proud of the way
developing new sources of
we bring people together to enjoy shared passions
monetisation.
wherever they are in the world. Cultivating a highly
engaged audience that through our help we are able
to monetise is fundamental to everything that we
do, and we now reach a global audience of 393.6m
(FY 2019: 269.2m) through our websites, events,
social media and magazines.
12 / FUTURE PLC
Strategic Report
Our strategy is
underpinned by a
number of principles:
1 - Activators
Future is our first team and
content is our first thought
We are aligned on our strategy
and purpose. We call this the
“Future Playbook”
We have common goals. We call
this “what’s important right now”
We think about the long term as
well as the short. We call this
“horizon planning”
We operate a matrix, which means
we go slower to go faster. We use
responsibility assignment
matrices (RACIs) to help
We are diversified globally,
divisionally and vertically
We take the time to operate as a
lean and simple business
We are ambitious. We think in
terms of leaps not increments
We are also brilliant at the basics
and believe in marginal gains
We take calculated risks in some
areas, and we protect those risks
through adopting a “maximum
acceptable loss” approach
2 - Differentiators
We offer the easiest-to-access ‘how to’
advice wherever our audiences are
We have the most relevant review
content in the world
We demonstrate the value
of original content
We disrupt through platforms
We anticipate our customers’ needs
3 - Competitive essentials
We create meaningful relationships
with strategic partners
We blend human and artificial
intelligence
We have simple but brilliant
proprietary software
We know our customers
We have world-class Search
Engine Optimisation
ANNUAL REPORT AND ACCOUNTS FY 2020 / 13
We leverage our data
and analytics to drive
innovation and execution
of our strategy
We are expanding our global
reach through organic
growth, acquisitions
and strategic partnerships
We are a data-rich company, which
Investing in our business is a core part
uses data insight to better understand
of our strategy. That includes ensuring
and serve our audience, as well as
we invest in our core brands, technology
serving our commercial partners.
and people as well as looking to acquire
Through our data insight, we have
new assets. In determining what
launched new products across our
businesses we acquire we are keen to
verticals, like the innovation of our
ensure that they align with and enhance
proprietary new lead generation
our existing portfolio and further our
product - Falcon, and into new verticals
strategic vision. We look for scalable
where we see an opportunity, like the
brands that have loyal and specialist
launch of our pets vertical with
audiences that can be monetised in
PetsRadar.com.
different ways and that will add value to
the Group.
How we execute
our strategy
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We believe that strategy is about having
that by breaking our strategy down into
achieving a balance of more predictable
a series of intentional steps to help us
intentional steps we manage risk and
revenue streams, with increased
achieve our goal. Future’s vision is clear:
can adapt to changing landscapes in an
recurring revenues online to further
to be a global leader in helping people
agile way.
ensure stability in our business. As the
achieve their goals, utilising our expert
Annually we set out our key areas of
way we reach our audiences and how we
advice and content.
focus and what we want to do in order to
monetise them is experiencing
We use McKinsey’s Three Horizons of
ensure we achieve our overarching
disruption, we have ensured that our
Growth planning approach across the
strategic ambitions - we call this What’s
goals are focused on staying relevant for
organisation as a means of ensuring
Important Right Now. We have ensured
newer generations and new media
that each year our intentional steps
that our plan for FY 2021 has enough
models. To deliver operating leverage
achieve our ambitions. This approach
focus on the things which will continue
we are focused on continuing to
encourages our people to engage with
the success of the last three years.
optimise our centres of excellence,
the strategy in a meaningful and
Agreeing on the right priorities is key to
streamlined operational base and
relatable way and ensures that we
delivering on our strategic objectives
low-cost locations, while the continual
deliver a mix of performance today and
and we want to continue our growth
transition from print to online enables
investment in future performance. We
momentum through both organic
margin expansion.
believe this is critical to underpinning
growth in FY 2021 and growth plans for
We have three underlying pillars that
our longer-term growth. We also believe
FY 2022 and beyond. We will focus on
help us execute our strategy.
1. Protect the core, grow existing brands & audiences
As a purpose-focused company, we concentrate on
audiences buy premium products. Its content is highly
growing and leveraging our ecosystem of brands, as
flexible in that it can pivot to focus on premium products
these are the touchpoints in which we engage with our
outside of its core of technology and gadgets and cover
communities, making it easier for them to do the things
other verticals, such as premium men’s grooming, cars
they love. We have a combination of heritage and
and sports equipment.
acquired brands that help us expand market share
Future’s brands reach over 393.6m consumers and
within our verticals as well as allowing us to enter new
business decision-makers every month. By reaching 1 in
verticals and access new communities while continuing
3 internet users in the US and UK, we are one of the
to ensure we provide expertise in these areas. Our
leading media publishers across the UK, US and
brands help us deliver targeted highly qualified
Australia. This level of engagement gives us market-
audiences to our advertising and eCommerce partners.
leading positions in many of our verticals, Future is the
We continue to nurture our legacy brands by focusing
go-to media partner for specialist endemic advertisers,
on optimising their revenue streams and innovating
while this scale opens up further monetisation. For
content. For example, last financial year we expanded
example, our launch of the Totally Games video series,
the monetisation of our music brands by launching The
sponsored by Acer, utilises the best of our gaming
Guitarist of the Year competition, a new paid-entry
brands (Future Games Show, GamesRadar and our
awards event from GuitarWorld, GuitarPlayer and
games magazines) and Barcroft’s video monetisation
BassPlayer. This enabled us to leverage the
model. Overall, we have seen phenomenal online
relationships we had with our audiences across these
leading magazines, and websites, to create a truly
unique event. Future’s deep vertical knowledge and
audience growth of 56% year-on-year (excluding
forums4) to 281.8m, with 48% organic growth. Whilst
this growth was bolstered by the pandemic lockdown,
communities of special interest ensure that one of its
as people increasingly went online for entertainment,
unique selling points is the ability to create new brands
news and online shopping, the underlying online
from the relationships it has with other niche brands.
audience growth (adjusting for COVID-19 impact) was
For example, T3 is a lifestyle brand which helps
44%, with organic growth of 37%, as our content
14 / FUTURE PLC
42020 online audience to forums: 17.1m, -32% year-on-year.
How we execute our strategy
Strategic Report
continues to meet and exceed the need of our specialist
previously untapped territories such as the US. The
ABOVE: Live
audiences. Structurally, as there is an acceleration to
value of the vertical presence and expertise that came
Science’s
online, we are best placed to benefit from this as we
with this acquisition is already evident in our launches of
coverage of
develop our brands to serve our communities' needs;
new websites Gardening Etc, Fit & Well, What to Watch,
COVID-19
Live Science’s coverage of COVID-19 information and
Advnture, PetsRadar and My Imperfect Life - launched
information and
news helped our audience better understand the
within just five months of acquisition completion. The
news helped our
pandemic. Our B2B education brand Tech & Learning
speed with which we are able to grow in these acquired
audience better
produced a range of content about at-home education
verticals is a testament to the Group’s operating
understand the
including how-tos and tips such as our evergreen article
leverage built on standard practices and platforms and
pandemic.
“Free Online Learning Resources For Schools”.
flexible operating model, given that this all happened
We hold 23 market-leading positions online, in print
during the Spring pandemic lockdowns. We are already
and in events. We continue to focus on growing our
progressing the pipeline for migrating TI Media's
market share through organic means and through
websites onto our standard Vanilla web platform, with
acquisition. The right acquisitions for Future are ones
Homes & Gardens, Livingetc and Woman & Home all
where we believe we can uniquely create additional value
migrated. While the modular nature of our tech stack
while accelerating our strategy. Our acquired brands
means that those sites that are not yet migrated have
benefit from the standard processes and platforms of
benefited from being plugged into our ad tech stack,
our legacy brands allowing us to optimise their
Hybrid, and our eCommerce technology, Hawk, to drive
performance.
previously untapped advertising and eCommerce
The acquisition of TI Media in April 2020 has provided
revenues. This is what makes the TI Media acquisition so
us with an exceptional opportunity to move into new
exciting, as we apply our expertise in serving high-
verticals, such as women’s lifestyle, TV and wellness.
quality content specific to these communities’ needs,
Here we can further monetise these new communities
which is highly flexible in terms of reacting to current
by applying our platform business model to diversify the
trends, as well as our innovative and scalable technology
revenue streams and further grow the audience in
stack to enable us to fully monetise these communities.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 15
2. Ongoing diversification
We continue to focus on diversifying our business, by
works closely with UK content teams.
expanding into new monetisation streams and new verticals,
The success of this US-first strategy is evident in the
which we do organically and through acquisition. Our
growth of US online users to Whathifi.com. Having acquired
product offering has changed materially with over 240
What Hi-Fi in May 2018, a predominately UK-focused brand,
brands in the Group's portfolio, across 18 specialist audience
we focused on growing the website in the US using the steps
verticals, through innovative new launches, to acquisitions.
detailed above, this has resulted in US online users increasing
Diversification allows us to have a strong defence against the
by 479% to 2.1m in September 2020 compared to 366k in
impact of detrimental changes to any one revenue stream, as
September 2018.
evidenced by the way we pivoted to mitigate the impact of
Our acquisition of Barcroft Studios in November 2019,
the COVID-19 pandemic on magazines and events, and a
presented us with an excellent opportunity to build a new
strong offence by seeding longer term opportunities that
revenue stream in social media video production, which we
enable continued organic revenue growth. Diversification
recognise as an important growth area. Barcroft has
across verticals, revenue streams and global footprint also
significant expertise in effectively monetising video. To fully
accelerates our growth, making it a key driver of our strategy.
utilise this expertise and embed video monetisation into our
Future has operations across the UK and US but we are a
diversified business model, which we call the Future Wheel,
global-first company that reaches a global audience. The
we launched, in September 2020, Future Studios, a
growth of our US audience is a key part of our diversification
highly-skilled video production centre of excellence, which
strategy as we grow organically and through acquisition.
focuses on producing and distributing valuable original video
Revenue from the US is now at 49% of the Group's total
content.
revenue, following the acquisition of TI Media in April 2020.
On 25 November 2020 we announced that we had made a
We are focusing on launching .com brands, in particular
recommended offer for GoCo Group plc - a business which
utilising the strong brand equity and new verticals acquired
owns Gocompare.com, a leading price comparison site,
with TI Media, and growing these brand audiences in the US.
LookAfterMyBills.com, an energy automated switching site
The growth of Realhomes.com is one example of our ability
and Myvouchercodes.co.uk, a voucher deals site. This
to grow brands in this way. The Real Homes brand, when
acquisition, which is subject to shareholder approval, is one
acquired from Centaur in August 2017, was a UK-focused
that we believe is a compelling mix of complementarity and
print brand. We launched Realhomes.com a few months later
growth opportunity that will create substantial value for both
and since then traffic has continued to grow substantially,
sets of shareholders. The full details of the recommend offer
with 34% of online users now in the US and Canada.
are set out in the Rule 2.7 Announcement.
Similarly, we acquired Team Rock in February 2017 and
Through the acquisition, we expect to create a leading
subsequently launched Loudersound.com, which has seen
offering for consumers to help them save money more easily
significant growth globally and in the US.
by bringing together our depth of audience insight and reach
In order to grow online brands in the US, we take deliberate
with GoCo Group’s expertise in price comparison and
steps to adopt a US-first mindset. These steps include
financial services, underpinned by the proprietary
switching from .co.uk to .com, focusing keyword and critical
technology of both groups.
terms research on US traffic volumes, encouraging the use
For example, with the benefit of the GoCo Group’s
of US English over UK English, changing our social strategy to
technology, readers of Realhomes.com making a decision on
focus more on US peak hours, and where appropriate
home improvements will also have access to relevant energy
internationalise content. Internally, we ensure traffic targets
products and switching options within the same content,
are global, we conduct US relevance checks on new and
minimising friction for the reader and anticipating their
acquired websites, and ensure that the US audience team
purchasing needs, in the same way our Hawk technology
16 / FUTURE PLC
How we execute our strategy Strategic Report
advertising during the lockdown period, proving the
resilience of our strategy.
At the start of the financial year, we launched Future
Labs, an agile team that acts as an innovation incubator.
Future Labs has built a playbook that industrialises Horizon
3 strategic planning, by identifying opportunities that spark
change and then cost-effectively innovate the concept into
a minimum viable product. Projects are then incubated by
Labs until validated, and once a proven revenue stream,
successful projects graduate out of Labs and are integrated
into Future’s normal operations. This financial year Labs
has innovated a new lead generation technology, Falcon,
which captures in-market customer information generated
from our eCommerce sales and monetises it multiple times
at high cost-per-lead. We have already implemented the
Falcon widget onto 15 of our websites and continue to work
on adding it to the rest of our sites. With B2B as the core
focus for lead generation we have focused on implementing
Falcon on to B2B websites.
also provides details on the best products and prices.
The new verticals that have come from the TI Media
ABOVE: We
are focusing
acquisition provide significant eCommerce potential. For
on launching
We also ensure that we diversify within our revenue
example, the women’s lifestyle sector covers a multitude of
.com brands, in
streams by reducing reliance on any one partner. In terms
markets including beauty, fashion, wellness and homes.
particular utilising
of eCommerce partners we have a diversified retailer mix;
Wellness is a prime market for eCommerce, with fitness
the strong brand
in FY 2020 Amazon made up 30% of eCommerce revenue,
products ranging from at-home gym equipment to
equity and new
compared to 51% in FY 2017. Our partners cover numerous
weighing scales. The launch of our new website Fit & Well
verticals acquired
markets, which allows us to fully utilise them across all our
makes the most of this opportunity, combining the content
with TI Media,
verticals. Our Hawk technology means we are always able
expertise acquired with TI Media and Future’s eCommerce
and growing
to provide the best price in the market at any given time,
technology. Additionally, the TI Media acquisition has
these brands
and this also includes a stock availability feature. As a result
significantly increased our sports portfolio, a significantly
audiences in the
during the peak of the global lockdowns we were able to
large eCommerce market, off the back of which we have
US. The growth of
pivot results to where the products were available,
launched website Advnture. We’ve seen a significant
Realhomes.com
demonstrating the power of the diversified retailer base. As
increase in affiliate click throughs across all the TI Media
is one example of
our content is data-led we drive high-intent traffic to our
sites following the rollout of Hawk. Widget clicks have more
our ability to grow
eCommerce pages. Our eCommerce strategy is built on
than doubled from TI Media’s legacy system to our
brands in this way.
optimising all areas of the purchase funnel. By working to
eCommerce technology Hawk, and this should only
improve further as we execute on our eCommerce content
plan.
Diversified verticals enable us to grow our overall
audience faster, since we can reach a wider group of
improve all metrics, rather than focusing on one, we are
creating a multiplayer effect, driving significant revenue
growth.
At Future, we work closely with Google and other
strategic partners to constantly optimise and evolve our
potential readers. Further progress this year has led to 69%
Advertising Technology infrastructure. We have partnered
of revenue now coming from outside of the technology
with a number of leading global 'identity' organisations that
vertical, up from 63% in FY 2019.
allow us to maintain our ability to serve personalised
We place equal importance on growing our existing
advertising whilst protecting user privacy. Future operates
verticals to entering new ones. This is because, by owning a
across a number of highly verticalised areas generating
number of brands within the same vertical, we are able to
significant amounts of rich first party data of engaged and
implement our successful content strategy and ensure we
intent-based audience segments. This first party data,
meet all our audiences’ needs from Future brands.
which is completely unaffected by changes to third party
Diversification across multiple content verticals and brands
cookies, is already used in the delivery of advertising
reduces the risk of search engine algorithm updates
affecting overall traffic materially, as those changes tend to
be vertical-specific rather than broad.
campaigns. This detailed understanding of our audiences
enables superior targeting capabilities which allows for
advertisers to reach special interest audiences and their
In spite of the impact of the COVID-19 pandemic on the
purchase intents.
global economy, Future has performed strongly; our
diversified revenues help us to compensate for downturns
in any one revenue stream. We had to cancel three
significant in-person exhibitions this year and magazine
Future is well positioned to capitalise as buying strategies
evolve; buyers will look for the trusted first party rich
audiences that our portfolio delivers. The advertising
technology solutions we have implemented and continue to
sales were affected by the closure of high street stores, but
develop ensures we can transact in a multitude of ways to
we saw incredible uplift in both eCommerce and digital
deliver known and first party audiences at scale.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 17
3. Operating leverage
A number of core elements underpin our operating
leverage, from our internal systems and processes to the
diversification of our revenue streams. We continue to
focus on driving our Media revenues, which are higher
margin and subsequently improves our operating
leverage. An important part of our strategy for TI Media
brands is to grow their online presence.
At Future we ensure that we have standard core
processes and systems under a simplified business
structure, to ensure there is no duplication of costs.
These are our centres of excellence which range from
back-office functions to editorial practices. We have
created a number of Playbooks to ensure equal
standards of excellence within all areas of the business.
Our Playbooks are embedded into our People & Culture
site alongside key information such as people policies
and procedures our colleagues and managers need to
help them manage their people and career. Additionally,
we are working on rolling out Future University modules
focused on embedding the Playbooks into the way we
work.
In September 2020 we launched Future Studios, a new
meant we quickly adapted to hold a total of 32 virtual
ABOVE: Some
video centre of excellence, which unites expertise from
events and webinars between March and September this
of our biggest
Future and Barcroft Studios which we acquired in
year, including serving the games market with the Future
events, The
November last year. Future Studios focuses on producing
Gaming Show, since the largest games show of the year,
Photography
and distributing valuable original video content for
E3, could not go ahead. The PC Gaming Show was also a
Show, New York
internal clients across the Future family. We are investing
huge success, with an 18% year-on-year increase in
Week and three
increasingly in original video production, distribution and
advertising revenue. Our events team also reconfigured
Homebuilding
monetisation as 5G adoption will see average mobile
the Decanter World Wine Awards tasting event (usually
& Renovating
speeds exceed those experienced at home and this will
held over five days at ExCeL) to run in the office within all
Shows, were held
lead to an acceleration in video consumption.
appropriate guidelines across three weeks in August to
virtually this year.
Our philosophy around systemising, having structures
deliver £3m entry revenue. Some of our biggest events,
and repeatable processes means we are not reliant on
The Photography Show and New York TV Week, both
being in an office and we are able to pivot quickly. We
held virtually in September 2020, and three
believe that habit is the key driver of activity within any
Homebuilding & Renovating Shows, held virtually in July
organisation and so the rhythms and rituals are critical to
and September 2020, achieved over 32,300 attendees. It
driving behaviour. We completed the acquisition of TI
is a testament to the value of our content and our
Media in April 2020, more than doubling the number of
passionate communities that we continue to engage with
staff in the UK. It is a testament to these centres of
them whichever the platform.
excellence that we have been able to onboard these staff
We are a global-first company with a structure that
and progress swiftly with the integration despite all staff
means we can insource to the lowest cost locations. At
working from home and, largely, continuing to do so. In
Future, as a result of the global operating model, we are
order to onboard our TI Media colleagues remotely we
not pinned to local offices but are based around
created the Future University, an online training portal to
information sharing, virtual meetings and collaborative
share best practices, and held over 1,000 one-to-one
documents. Our tools, which were designed to be global
virtual meet and greets within just two weeks. Despite the
by their very nature, are digital and therefore can operate
acquisition completing during the Government-enforced
virtually. As a global-first company, we value continual
lockdown relating to COVID-19, we are exactly on track in
communication, particularly during the lockdown, and as
terms of integration.
such in addition to a number of other formats we hold
Due to the pandemic, we had to cancel a number of
monthly virtual “town hall” meetings with the Executive
in-person events. However, the flexibility of our business
Leadership Team for the entire company, utilising chat
operations and the ingenuity and dedication of our staff
technology for staff to ask questions directly.
18 / FUTURE PLC
How we execute our strategy Strategic Report
Future is a value-based, purpose-led company and as
continues to deliver revenue in FY 2020. While by
such, we aim to achieve cultural alignment between all
focusing on content that has the potential to drive the
our staff. Our culture is more democratic than
most revenue we attract intent traffic to our websites
hierarchical and this empowers our staff to make
which feeds our eCommerce revenue stream. Much of
decisions, streamlining the process and ensuring that
this content is “evergreen” in nature, which means that
great ideas come to the fore and we continue to innovate.
articles we paid for and published years ago are still
One of the core enablers of our operating leverage is
driving revenue for us today.
our approach to content creation. We write content once
Our flexible and scalable tech stack supports organic
and then publish multiple times. Revenue content
growth and acquisitions. 38 sites are now on our Vanilla
compounds over time; content paid for in prior years
web platform, two of which are TI Media sites (with an
Total Digital Revenue
- Stacked by Article Creation Financial Year (Excluding Mobile Nations)
End of FY 2019
2020
2019
2018
2017
2016
<2016
unknown year
8
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8
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additional TI Media site migrated since the end of the
financial year), while six new launches in the last six
months have been in relation to the brands developed as
a result of TI Media acquisition - My Imperfect Life,
Gardening Etc, Fit & Well, What to Watch, Advnture and
PetsRadar. We have a one platform approach with all
staff operating on common systems and swift transition
following integration. Implementing our tech stack onto
newly acquired websites enables Future to gain scale.
The successful implementation of our technology
stack and centres of excellence to our acquisitions of
Mobile Nations, SmartBrief, cycling brands and Barcroft
Studios, has resulted in revenue growth of 12%
year-on-year, on a full year FY 2019 proforma basis,
despite the challenges of the pandemic. Barcroft
receives a commission on advertising-based video on
demand revenue for their videos on social channels,
which has increased by 45% year-on-year, and
additionally, advertising-based video on demand
revenue we sell directly for the Group has increased by
Chart includes digital advertising and eCommerce revenue and excludes Mobile Nations because data is not available.
156% year-on-year.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 19
How we execute our strategy
THE FUTURE PLAYBOOK
We have created the Future Playbook, which is a guide for our staff on the "rules of the game" at work. We share
the Playbook with every new member of staff to ensure we are aligned on our strategy and how we execute it.
As a value-led business the Playbook plays a pivotal role in ensuring we have an aligned culture by including our
six values on how we behave. Providing staff with a clear guide to our values and our strategy ensures we are
focusing on the same goals. We move faster when we all pull in the same direction.
1
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.
3
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.
5
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.
20 / FUTURE PLC
2
Let's
do this
We take the best decisions we can
in the face of uncertainty. It makes
us think each decision through – then
we go for it. We commit to what we’ve
agreed and have the confidence to
persevere through tough times. But
we’re able to admit mistakes
because that helps us learn and
chart a new course when we
need to. That’s called
‘doing it right’.
4
It’s the
people in the
boat that matter
Having the right team in the boat is
mission critical. We are all successful
when we are self-motivated,
self-aware and self-disciplined. We
support each other, challenge each
other and have fun with each other.
We are determined to hire people
we can learn from and who
we would have as our
boss.
6
Results
matter –
success feels good
We love being successful. We
restlessly look to improve, be ever
creative, and commercial in our
ventures. Great results mean we are
able to align the needs and
expectations of our audiences,
communities, clients and
shareholders.
How we execute our strategy Strategic Report
The Future
Strategy
Wheel
ECOMMERCE
& LEAD GEN
ADVERTISING
PLATFORM AS
A SERVICE
CRM
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CONTENT
DATA
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CONTENT
PUBLISHING &
LICENSING
EVENTS &
INTEGRATED
MARKETING
NEWSTRADE
MEMBERSHIP
&
SUBS
Future’s Business Model
The Future Strategy Wheel
We have a clear purpose: to change people’s lives through sharing
Monetising the wheel
We continue to build on our Future Wheel, this year adding video and
knowledge and expertise with others, making it easy and fun for them
lead generation revenue streams. We have also made significant
to do what they want.
progress in monetising our brands and their content, organic and
Our strategy is aligned with fulfilling this purpose by building our
acquired, through the different revenue streams. The Future Wheel
global communities and increasing the ways in which we serve them
serves our audiences through online, events, print and video, ensuring
our content, in line with their needs. One of our key differentiators is
that we provide our content in the most useful way possible.
that we are part of our communities, meaning we enjoy sharing our
Our robust and scalable tech stack means that it is simple for us to
knowledge and expertise with our audience.
grow brands by adding new revenue streams. We have already
To ensure that our business model is truly diversified our strategy
introduced our eCommerce technology Hawk and our ad technology
of diversification is focused on three distinct elements:
Hybrid to the acquired TI Media websites. We also focus on making our
1. globally;
2. divisionally; and
3. vertically.
content as monetisable as possible by focusing on reusable content,
such as from magazine to online content and content that can be easily
translated to other geographic territories. This means we maximise
It is the combination of these three elements that drives the
our editorial teams’ efficiency as well as increasing the evergreen
success of our diversification strategy, as we are able to capitalise on
nature of our content for which revenue compounds over time.
all opportunities and win across all areas. Alongside this is our
We acquired Real Homes in July 2017. The brand was UK-focused
diversified business model, which we continue to build on in order to
with little digital reach. We transformed the brand by building out its
meet our audience’s needs in whichever way required. This is the
revenue streams into eCommerce, a video series, and re-launched the
Future Wheel.
website on our Vanilla platform with our ad tech stack implemented.
Additionally we significantly broadened its online reach outside the
UK; US online users to the website have grown from 7.1k online users
when it was re-launched in November 2017 to 456k online users in
September 2020.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 21
LENS ONE – GLOBALLY
Future's Markets
Our business model is global-first in that our content, processes and
systems are not fixed to where we operate geographically. We run
this global approach from our operations across two geographies.
US
We have substantial reach in the US and Canada,
reaching a total of 136.2m online users (excluding
forums). US operations consist of editorial, video
production, advertising sales and events across
websites, video, newsletters and magazines. The
largest part of our B2B content and operations are
based in the US, including SmartBrief which is based
in Washington DC. The US accounts for 49% of
Group revenue, and 57% of Group organic revenue,
driven by our US-first brand strategy.
Revenue £m5
Online users m6
No. of events
Circulation m
Subscribers m
FY 2020
FY 2019
167.7
136.2
30
0.4
0.4
118.8
91.0
31
0.6
0.5
5Revenue excludes intra-group revenues
6 Online users exclude forums. FY 2020 US & Can online users
to forums: 7.4m, -34% year-on-year. FY 2019 online users
restated due to re-classification of SmartBrief online newsletter
subscribers to email newsletters
UK
The UK operations include our Australia business,
which acts as a complete satellite branch. The UK
operations monetise all of our online audience
outside of the US and Canada. The UK is where the
majority of our consumer print magazines are
produced, as well as joint centres of excellence for
back office, including finance, HR and technology,
with facilities in Bath and Grenoble, France. The UK
also houses the Group’s licensing operation 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.
43% of Group organic revenue came from the UK
operations in 2020, which is a result of us focusing on
expanding our US audience. Total revenue in the UK
made up 51% of Group revenue, which is a reflection of
the UK-based TI Media acquisition.
Revenue £m5
Online users m7
No. of events
Circulation m
Subscribers m
FY 2020
171.9
FY 2019
102.7
58.5
20
3.4
1.1
30.3
25
0.9
0.4
7 Online users exclude forums and include online users from
UK 46.5m and AU & NZ 12.0m. Rest of World online users 87.1m
are not included
22 / FUTURE PLC
Lens one - globally Strategic Report
United States
United Kingdom
Number
of staff:
398
Offices:
New York and
Washington DC
Number
of staff:
1,600
Offices:
London, Bath,
Farnborough
OFFICE LOCATIONS8
France
Number
of staff:
15
Office:
Grenoble
Australia
Number
of staff:
24
Office:
Sydney
8Number of staff as at September 2020
ANNUAL REPORT AND ACCOUNTS FY 2020 / 23
LENS TWO – DIVISIONALLY
Media Division
CONTENT PUBLISHING
ECOMMERCE
& LEAD GEN
& LICENSING
EMAIL
ADVERTISING
NEWSLETTERS
PLATFORM AS
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A SERVICE
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& LEAD GEN
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SUBS
Our Media division consists of all revenue streams outside of magazines.
This includes eCommerce, digital advertising, events, lead generation,
newsletters and CRM, and digital licensing. Our digital advertising revenues are
generated from first party sold, programmatic and content solutions. eCommerce
revenues are where we receive a commission on sales made by our retail partners.
Lead generation revenues are generated from us matching our customers with
the right product suppliers, for which they pay per lead. Events and integrated
marketing revenue is generated from sponsorship and ticket sales to our
consumer and B2B events, as well as events we hold for our advertising partners
as part of creative solutions. Our CRM revenue streams are primarily generated
from SmartBrief which produces, and monetises through advertising and email
newsletters for our B2B partners.
Our Media division drives significant growth within our business as we focus on
delivering our content digitally. This is underpinned by our scalable tech stack
which allows us to accelerate online growth through eCommerce tech Hawk, ad
tech Hybrid, lead generation tech Falcon, email newsletter tech, as well as our
common web platform Vanilla. Additionally, the acquisition of Barcroft Studios in
November 2019 added an important new element to our Media division - that of
video production and monetisation.
Media revenues are now generated from 111 websites and 66 events (50 of
which were held this year) in the UK, US and Australia.
MEDIA KPIs
281.8m
online users
(excluding
forums)
181.0m in FY 20199
100k event
attendees,
both live
and virtual
151k in FY 2019
13.6m
eCommerce
transactions
9.8m in FY 2019
38 digital
licensing
partners
14 in FY 2019
98.7m social
media followers
52.0m in FY 2019
9.4m email
newsletter
subscribers
7.0m in FY 2019
24 / FUTURE PLC
92020 online users to forums: 17.1m, -32% year-on-year. FY 2019 online users restated due to
re-classification of SmartBrief online newsletter subscribers to email newsletters
Lens two - divisionallyNEWSTRADENEWSTRADE
Strategic Report
Magazine Division
CONTENT PUBLISHING
& LICENSING
ADVERTISING
CONTENT
PUBLISHING &
LICENSING
MEMBERSHIP &
SUBSCRIPTIONS
S
S
W
W
E
E
V
V
E
E
R
R
I
I
CONTENT
MAGAZINES
DATA
H
H
O
O
W
W
T
T
O...
O...
PLATFORM AS
A SERVICE
CRM
NEWSTRADE
ADVERTISING
NEWSTRADE
MEMBERSHIP
&
SUBS
The Magazine division is the home of our extensive range of specialist
MAGAZINE KPIs
magazines and bookazines both in print and digital format. Our
magazines are exported to many countries in addition to being sold in the UK
on the newsstand and through subscription. We have a portfolio of 115
magazines, which has increased this year due to the acquisition of TI Media in
April 2020. We have an extensive range of bookazines, and published 410
throughout FY 2020. Our total global circulation of magazines and
bookazines is 3.8m, up from 1.5m in FY 2019. Subscriptions make up 39% of
total circulation10 and we continue to focus on building engagement with our
readers to increase subscription sales.
We also have a strong print licensing revenue stream, where we generate
revenue from our specialised content. We have a total of 96 regular frequency
print licensing agreements across 28 countries.
Future Fusion, our in-house creative services agency, also sits within the
Magazine division and creates content and strategy for ambitious brands that
want to power up their own channels with effective content.
3.8m total
circulation10
1.5m in FY 2019
1.5m
subscribers
0.9m in FY 2019
115 magazines
published
78 in FY 2019
410 bookazines
published
568 in FY 2019
10Total of each magazine and bookazine circulation per issue.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 25
ECOMMERCE & LEAD GENEVENTS &INTEGRATEDMARKETINGEMAIL NEWSLETTERSEVENTS & EXPERIENTIALECOMMERCE & LEAD GEN£
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.
Our brands span three core verticals: Passions, Living, and B2B.
Reaching large
audiences across
diversified
verticals
394m
audience
reach11
26 / FUTURE PLC
11Sum of verticals does not equal total due to rounding
Lens three - vertically Strategic Report
Davina McCall photographed for
Woman & Home magazine
ANNUAL REPORT AND ACCOUNTS FY 2020 / 27
Future Passions
Our Passions core vertical is focused on consumer hobbies and interests. The word
passions reflects the high engagement of the audience in this core vertical. They are
passionate about their interests and as part of our communities we are too.
Tech Specialist
Our tech specialist portfolio includes
photography brands provide photography
and timely information. Live Science holds a
professionals, amateurs and enthusiasts
number one position in the UK and US. This
Future legacy brands like TechRadar, and
advice on how to improve their images, find
vertical is also the home of our new wellness
acquisitions such as What Hi-Fi, Tom’s
the best gear and get inspiration.
website Fit & Well, helping people live a better,
Hardware, Windows Central, Android Central
Our extensive design portfolio provides
healthier, happier and longer life. We have
and iMore. Each brand focuses on a distinct
insight and inspiration to professional
significant total audience reach of 56.2m with
niche within consumer technology and
designers and illustrators, sharing peer-to-
online users up 53% year-on-year (excluding
includes magazines, websites and events,
peer advice to help them be more successful.
forums).
reaching a total audience of 107.6m. Online
We are market-leading both in print and online
audience figures are 98.9m (excluding
in the UK and online in the US.
forums), up 27% year-on-year. Our expert,
We have seen strong growth in online
Sports
Our sporting brands combine expert
specialist content connects with users
audience to our photography and design
editorial with decades of heritage. We are
across the consumer spectrum, providing
portfolio, up 27% year-on-year (excluding
a trusted destination for a wide range of
accessible, informative technology news,
forums), with Digital Camera World in
sports enthusiasts, whatever their skill level,
reviews, how-tos and buying guides.
particular showing significant growth of 34%
from football to rugby, cycling to yachting.
Gaming & Entertainment
Our gaming & entertainment portfolio has
been the voice of authority and source of
(excluding the forum).
Music
We are the UK’s most extensive music
Our acquisition of TI Media significantly
boosted our sports portfolio and we took
the opportunity to combine editorial and
commercial expertise to launch a new sports
influence for gamers across digital, events
portfolio, with websites, magazines and
website Advnture in July 2020. Our sports
and print for over 30 years. Our content
events covering all genres, from rock to
brands have a total audience reach of 17m and
engages with a wide audience from hardcore
acoustic, drumming to electronic music.
our road cycling portfolio is market-leading in
gamers to casual and social gamers. Our
MusicRadar provides trusted gear reviews,
the UK. Online audience is up 217% year-on-
brands have a total audience reach of 62.3m
alongside current gear news and expert
year to 10.7m (excluding forums).
and an online audience of 44.6m (excluding
tuition. Our music audience is highly engaged
forums), up 67% year-on-year. Brands include
with 11.4m social media followers, and a total
GamesRadar, Future Games Summit and PC
online audience of 9.5m, up 32% year-on-year.
Gamer, the number one PC gaming website in
the UK, US and Australia.
Knowledge & Wellness
With expert editorial teams across history,
Homes & Gardens
Creating beautiful content for the home lover,
our home interest brands cover everything
from the vintage and classic to modern
interiors and home-building projects. With an
Photography & Design
Our photography portfolio is market leading -
science and technology, our knowledge
audience reach of 16.4m, across magazines,
portfolio provides engaging and authoritative
online and events we are the market leader
with our flagship photography website Digital
content for all ages. During the COVID-19
in home interest in the UK. Online audience
Camera World holding number one position
pandemic our science brand Live Science
is up 417% year-on-year to 6.8m (excluding
in the UK and number three in the US. Our
has been invaluable in providing accurate
forums).
BREAKOUT CASE STUDY
Launched in July 2020 Advnture.com is the home of outdoor buying advice,
providing expert guidance and inspiration for everyone taking part in outdoor
sports and activities. Advnture capitalises on the eCommerce opportunity
around outdoor gear and fully utilising content from our sports magazines.
28 / FUTURE PLC
Lens three - vertically Strategic Report
Brands include:
Vertical audience stats:
Total
circulation:12
1.3m
(up from
1.1m in
FY 2019)
Total online
users:
225.7m
(up from
153.6m in
FY 2019)13
Total events:
19 (down from
26 in FY 2019);
85.9k attendees
(down from 144k
in FY 2019)
Total social
media
followers:
64.1m
Market-leading positions: 19
Number 1 publisher in technology online in the UK
Number 1 in home interest in print and in homebuilding events in the UK
Number 1 space website in the US and UK
Number 1 music-making print publisher in the UK and US
Number 1 photo website and event in the UK
Number 1 in creative design online and in print in the UK and online in the US
Number 1 road cycling website in the UK
Number 1 hi-fi print publisher in the UK
Number 1 equestrian print publisher in the UK
Number 1 boating and yachting print publisher in the UK
Number 1 games print publisher in the UK
12 Total of each magazine and bookazine circulation per issue.
13 Excludes forums. 2020 Future Passions online users to forums:
13.6m, -30% year-on-year.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 29
Future Living
Our Future Living core vertical provides a focus on all things lifestyle and the way
we live. Home to many iconic brands Living has a digital-first, global headset.
Women’s Lifestyle
Our women’s lifestyle vertical
What to Watch in July 2020 and our
and inspirational events and competitions,
acquisition of website CinemaBlend in
design and lifestyle magazine Wallpaper,
inspires and entertains women in an
October 2020, furthers our digital presence
and tech lifestyle brands T3 and Tom’s
approachable and lively manner by focusing
and ensures that this vertical remains at the
Guide for tech innovation lovers as well
on the things that matter to them. This new
forefront of TV and film content.
as travel, fitness and style. The portfolio
vertical, established with the acquisition of
TI Media, includes iconic brands such as
Woman & Home and Marie Claire UK, the
Country Lifestyle
Our heritage country lifestyle print brands
also encompasses new launch PetsRadar,
a digital pets brand with a mission to help
the world’s pets lead happier, healthier and
portfolio has an audience reach of 21.3m
have a combined age of more than 400
longer lives. The portfolio has an audience
globally, including 12.1m online, up 45%
years. We are the UK’s leading country
reach of 42.1m across print, online and
year-on-year on a proforma basis. Launched
lifestyle portfolio with an audience reach
events. Online users are up 63% year-on-
in September 2020, website My Imperfect
of 2.1m, with online audience of 1.4m, up
year to 38.1m (excluding forums).
Life is an informative and relatable site
32% year-on-year on a proforma basis. Our
helping young millennial women navigate
diverse range of brands cover all countryside
the realities and demands of their lives
pursuits and interests from celebrating the
Real Life
Our real life vertical’s mission is to inspire the
today.
most beautiful countryside, finest houses
world through our amazing real life stories.
TV & Film
With a global audience reach of 4.9m,
our TV & film portfolio consists of iconic
and gardens, to caravanning, and shooting.
These brands position us at the forefront
Tech Lifestyle
Tech lifestyle is our newly created vertical,
of popular culture and allow us to reach
large and growing audiences through our
focused social and digital strategies. The
brands such as Total Film and SFX as well
opening up new opportunities to diversify
acquisition of Barcroft Studios in November
as heritage brands such as TV Times. The
our brands and reach larger audiences.
2019 introduced video and social strategy
portfolio covers TV listings, TV and film news
The portfolio includes Decanter, the UK’s
which is the linchpin of the real life vertical.
and reviews and exciting entertainment
leading wine media brand, providing
The portfolio reaches 19.8m social media
features. Our new launch of website
authoritative content, independent advice
followers.
BREAKOUT CASE STUDY
Website What to Watch was launched in
July 2020. The site harnesses the content,
expertise and broad audience reach
of Future’s TV entertainment brands,
helping users to binge smarter and guides
consumers through today’s confusing video
programming choices, advising them on the
services and gear they need.
30 / FUTURE PLC
Lens three - vertically Strategic Report
Brands include:
*acquisition post
period end
Vertical audience stats:
Total
circulation14: 2.2m
(up from 106k
in FY 2019)
Total online
users: 53.9m
(up from 25.2m
in FY 2019)15
Total social media
followers: 33.8m
Market-leading positions: 3
Number 1
Countryside &
county print
publisher in
the UK
Number 1
shooting print
publisher
in the UK
Number 1
wine magazine
in the UK
14 Total of each magazine and bookazine circulation per issue.
15 Excludes forums. 2020 Future Living online users to forums:
3.5m, -40% year-on-year.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 31
Brands include:
Future B2B
Our B2B portfolio includes many leading B2B publications,
websites and events. With a total audience reach of 9.6m, our B2B
brands connect audiences with expert content intelligently, effectively
and efficiently. The portfolio covers a diverse range of sectors including
education, telecommunications, AV, media and entertainment, and
technology.
Our B2B vertical takes full advantage of our diversified business model,
with revenue streams from newsletters, online advertising, print and
events. The acquisition of SmartBrief in July 2019 gave Future access to
new B2B sectors as well as expertise in newsletter monetisiation. This
expertise combined with Future’s centres of excellence in marketing and
advertising has resulted in a scalable and robust B2B business model.
Vertical audience stats:
Total
circulation16:
244k
(down from
313k in
FY 2019)
Total email
newsletter
subscribers:
6.6m
(up from
6.0m in
FY 2019)
Total
online
users: 2.16m
(up from
2.15m in
FY 2019)
Total
events:
31
(up from
30 events
in FY 2019)
Total
attendees
14.6k
(up from
7.2k in
FY 2019)
Market-leading positions: 1
Number 1
AV tech print
publisher in the US
16 Total of each magazine and bookazine circulation per issue.
BREAKOUT CASE STUDY
Response to COVID-19 pandemic: our B2B vertical showed its strength and
flexibility during the pandemic. The B2B events team quickly adapted to the
closure of live events to host a total of 24 virtual B2B events, with total attendees
of 12.3k. Additionally, the B2B editorial teams were quick to adapt content to
provide audiences with the most relevant and needed content, particularly in
the education portfolio which offered advice on at home teaching.
32 / FUTURE PLC
Lens three - vertically Strategic Report
SOURCES &
DEFINITIONS
Organic
Organic growth defined as the portfolio
at constant FX rates (i) excluding
acquisitions and disposals made during
FY 2019 and FY 2020 and (ii) including
the impact of closures and new
launches.
Online audience
Online audience is online users taken
from Google Analytics. Unless
otherwise stated, online users are the
monthly average for the year.
Online internet users reach
Online reach of internet users is taken
from comScore Media Metrix; UK
is as at July 2020, desktop age 6+
and mobile age 18+ and US is as at
September 2020, desktop age 2+ and
mobile age 18+.
Total audience reach
Audience reach consists of: the sum
of each magazine and bookazine
circulation per issue + monthly online
users (excluding forums) + event
attendees + newsletter subscribers
+ online subscribers + social media
followers (Twitter followers, Facebook
fans, YouTube subscribers and
Instagram followers).
Market positions
• Online market positions are based
on comScore online unique visitors
in relevant comScore categories and
competitive sets - July 2020 (UK),
September 2020 (US), desktop age 2+
and mobile age 18+.
• Print market positions are based on
newstrade copy sales (Oct 2019 -
September 2020) and ABC circulation
within ABC defined market sectors for
the period January-June 2020.
• Advertising market positions are
based on competitor ad spend from
MediaRadar (July 2019-June 2020).
ANNUAL REPORT AND ACCOUNTS FY 2020 / 33
Chief
Executive’s
Review
Zillah Byng-Thorne
Chief Executive
FY 2020. Despite the challenging market
T he Group achieved exceptional results in
changing market landscape to deliver content to our
resulting from the COVID-19 pandemic,
communities in different ways. The success has been
Future has thrived by taking advantage of the
to 74.7p (FY 2019: 47.5p).
The Group continues to increase the Media division
share of total revenues, and eCommerce and digital
advertising have had a phenomenal year in terms of
revenue, up organically 58% and 15% year-on-year
respectively. These revenue streams have benefited from
driven by Future’s value-led culture, which is aligned
the significant increase in our audience scale during the
throughout the business, resulting in agile and innovative
lockdown period, which accelerated the growth in people
staff who have adapted and thrived under challenging
consuming content and shopping online. While we
circumstances.
benefited from the impact of the growth during lockdown,
Group revenue has grown by 53% year-on-year to
what was particularly pleasing to see was exit audience
£339.6m (FY 2019: £221.5m), driven by a combination of
growth rates of 29% in September 2020, outlining the
organic growth and acquisitions, underpinned by
continued online audience growth (+56%) to 281.8m17
(48% organic growth). Group organic revenue grew by 6%
core underlying strength of the business outside of
lockdown. Media accounts for 70% of total revenue, and
proforma with full year TI Media financials it accounts for
(H1: 11%; H2: 1%) as our diversified strategy more than
58% of revenue. We are committed to driving Media
offset any impact of COVID-19. Organic Media growth was
revenue of TI Media brands to further increase the share of
strong at 23%, driven by eCommerce growth of 58% and
revenue from the Media division. Organic growth in the
digital advertising growth of 15% offsetting the impact of
Media division was partly offset by declines in Magazines
event cancellations, which declined organically by 43%.
organic revenue of 29%, reflecting the impact of store
Our Magazines division (21% of Group organic revenue)
closures during COVID-19.
was more impacted with organic revenue decline of 29%
Adjusted operating profit margin increased to 28% (FY
(H1: -12%; H2: -45%). Adjusted operating profit is up 79%
2019: 24%), driven by the increase in higher-margin Media
year-on-year to £93.4m, with adjusted diluted EPS up 57%
revenues. This growth is a reflection of our continued
“Our exceptional results demonstrate the continued
strength of our strategy, as well as the innovation,
fortitude and agility of our business, focused on
its purpose, delivered by its people. Despite
continued market uncertainty, we remain
well-positioned to continue our strong growth.”
34 / FUTURE PLC
17Excluding forums. 2020 forums only online users are 17.1m (2019: 25.3m).
Chief Executive’s Review Strategic Report
focus on improving operating leverage. Our efficient
operating model supported by a robust and scalable
ABOVE: The
addition of
audience growth this year, bolstered by the increase in
online activity during the pandemic lockdown period. Total
technology stack, as well as centres of excellence, provide
CinemaBlend
online users grew 56% year-on-year, with organic growth
a cost advantage, enabling us to invest more in new
innovation.
boosts our
presence in
of 48%. Additionally, 25 websites grew over 50% on a
proforma basis for acquisitions made in FY 2019 and
Future is a highly cash-generative business with strong
the TV & Film
FY 2020. We were able to adapt our content to suit the
adjusted free cash flow of 103% of adjusted operating
and Games &
needs of our audience, by producing COVID-19 related
profit (FY 2019: 103%), demonstrating the Group’s
Entertainment
content such as Live Science’s informative articles on the
continued focus on efficient working capital management
verticals,
pandemic, to buying guides for at-home office equipment
and operating leverage.
particularly in
and at-home education advice through our Tech &
the US.
Learning brand.
Our strategy and performance review
Our strategy remains clear and simple, to build a specialist
global media platform that drives intent, enabled by
technology and insight with scalable, diversified brands.
Our strategy continues to deliver despite macro
uncertainty, and we have been able to keep investing in our
ongoing growth whilst ensuring that we manage costs
effectively during the challenging macro environment. The
recommended offer for GoCo Group is in line with this
strategy and will create a leading specialist media
platform, providing consumers with insights, informing
them and enabling them to save money on their key
purchasing decisions.
Content is at the heart of what we do and this works
hand in hand with our technology and business model to
meet our audiences' changing needs. Over the last
financial year we have invested over £50m in content
creation, with editorial headcount now accounting for
around 46% of total workforce. As a result of our focus to
grow TI Media brands in the US and digitally, coupled with
our ongoing investment in new content areas, we
announced in October 2020 that we would be investing in
over 150 new positions in Editorial, Video and Engineering
this year.
Online we reach one in three people in the US and UK,
generating a total of 281.8m online users18. We hold 23
market-leading positions across 11 of our verticals and
As part of the development of our audience strategy we
launched eight new websites this financial year, six in the
last three months of the financial year. The strength of our
operating leverage means we were able to continue the
fast pace of our development pipeline, despite the impact
of COVID-19. Many of these new launches are in new
verticals, introduced by the TI Media acquisition. For
example, new website launches Advnture, Fit & Well,
Gardening Etc, PetsRadar, What to Watch and My
Imperfect Life utilise the content expertise of the TI Media
team in these verticals, while our scalable advertising and
eCommerce technology stack enables a strong path to
revenue growth.
We are significantly progressed with our strategy to
migrate the TI Media “.com” brands to our proprietary
Vanilla website platform which allows a standardised
approach to online content creation, ensuring it can be
reused, published in different languages and analysed
effectively. Woman & Home, Livingetc and Homes &
Gardens websites were all migrated during the Autumn. In
addition, as outlined above, our strategy to launch new
“.com” websites in pre-existing TI Media audience verticals
is well progressed. We are excited about the online
revenue potential of these new launches.
Through our Future Labs team, established earlier this
financial year, we have developed a new lead generation
technology, Falcon, as we seek to continue the
across online, print and events. We have seen phenomenal
diversification of our revenue streams and the expansion
18Online users for forums are 17.1 million, -32% year-on-year.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 35
of our technology stack. We have significant global
audience reach of 393.6m across all our channels and
Falcon will provide the opportunity to add a further
incremental revenue stream to our model.
Execution underpinned by values
We pride ourselves on being a values-led business that is
underpinned by its purpose of helping people through
sharing our knowledge and expertise. We are committed
to embedding our values throughout the business, as we
believe that businesses with strong cultures are the most
successful, particularly in times of market uncertainty. It is
a testament to the success of this approach and our
employees that we have delivered strong results this year;
their passion and ability to adapt and innovate during the
initial lockdown has meant that rather than simply survive
during these unprecedented times, we have thrived, while
also ensuring that we have continued to support our wider
stakeholder base.
Our values encompass the way we operate as a
business externally as well as internally, from our
ABOVE: Three
as a result of issues beyond their employment at Future,
commitment to sustainability to the inclusion and diversity
events which
may have suffered hardship.
of our workforce. We strive to create an inclusive culture
would normally
It has been important for us to support our
that embraces the breadth of experience that a truly
be held in March
communities during the pandemic. In the UK we allowed
diverse workforce can offer. We have launched our “I am
were cancelled,
all staff to take one day of leave per week to volunteer for
Future” Inclusion and Diversity initiative and the Future
and were instead
the NHS should they wish to. We considered it equally
Foundation which aims to help increase social mobility and
held virtually with
important for us to support our partners during these
support our most vulnerable. This included making
great success. A
times, as a consequence we launched a number of
financial donations towards the provision of free school
total of 32 virtual
initiatives including evolving the magazine distribution
meals in the UK. In response to Black Lives Matter, we
events were held
model to make it easier for warehouse and shop staff to
have committed to ten pledges to ensure we are equally
this year, which
handle our magazines safely, cancelling events swiftly to
representing black people - covering advertising, editorial
demonstrates the
minimise costs for partners, and processing customer
content & photography, to training and awareness and
flexibility of not
requested refunds promptly.
diversity targets, including ensuring our editorial
just our operating
At the start of the lockdown we did not know what lay
represents our communities.
model, but also
ahead and as a result, the business pivoted quickly to
our staff.
ensure it exercised financial restraint while assessing the
COVID-19 update
Our main focus is to protect our staff, clients and
stakeholders and as such we have taken a three-pronged
approach to navigate the challenges brought by the
COVID-19 pandemic.
wider impact of the pandemic on the business. The Board
and senior leaders, plus staff volunteers took up to 20%
pay cuts (see Director's Remuneration Report for more
details). Additionally, as a precaution, Future (and TI Media
pre-transfer) accessed £0.5m of UK Government support
The health and safety of our staff is our utmost priority
from the Coronavirus Job Retention Scheme. This
and so from the middle of March, we moved to globally
working from home ahead of local government enforced
lockdowns. Due to our global-first operating model, the
business was already set up for remote working and
therefore the change has been almost seamless. Our
colleagues have been outstanding and have adapted
quickly to the new environment. We place great
ensured that if the outcomes were more severe, we would
protect jobs at a time of great uncertainty.
It quickly became apparent that the impact of the
pandemic would be less material to the Group than first
anticipated. As a consequence, all employees (with the
exception of the Board who took a pay reduction during
March-May) were repaid their salary reductions, and full
importance on good communication, and so to adapt to
pay was restored. Similarly, all government support in the
the reduction in contact time, we have increased
communication frequency including weekly Chief
Executive letters, weekly leadership team calls, consisting
of around 100 colleagues, and virtual town halls, as well as
increasing mental health support including weekly virtual
yoga and mental health first aiders. During this time we
UK and US was repaid in full.
Overall the Group has performed very strongly during
the COVID-19 pandemic period. The two areas most
impacted by the pandemic were magazine sales and
events, reflecting the closure of high-street stores and
restrictions on holding in-person events. As a result, we
also set up a COVID-19 Hardship Fund for colleagues who,
cancelled 27 in-person events, which in FY 2019 delivered
36 / FUTURE PLC
Chief Executive’s Review
Strategic Report
£8.9m of revenue. For three of our larger events brands
Future Wheel and presents opportunities for the Group to
(The Photography Show, The National Homebuilding &
further monetise through video. In addition, by utilising
Renovating Franchise and New York City TV Week) we
Barcroft’s expertise in monetising and engaging with
pivoted to host these virtually with great success. The
social audiences, we are able to drive social media
Photography and Video Show was held at the end of
engagement across our other Future verticals and brands.
September with 16,890 attendees enjoying 175 seminars
In October 2020 we acquired CinemaBlend, a
and 130 exhibitors. A total of 32 virtual events were held
high-growth digital brand focused on the TV, film and
this year, contributing £1.4m of revenue, which
entertainment market, based in the US. The addition of
demonstrates the flexibility of not just our operating
CinemaBlend boosts our presence in the TV & Film and
model, but also our colleagues. We estimate the impact of
Games & Entertainment verticals, particularly in the US.
retail closures resulted in approximately £20m of lost
Additionally, the acquisition also provides an opportunity
magazine sales.
to accelerate the development of our recently launched
Despite the impact on retail, the lockdown period
website What to Watch by establishing a strong market
presented us with a valuable opportunity to trial new titles
position from which to grow both online brands, as well as
and launch into print media sectors that reflected the
benefiting from collaboration, content sharing and new
sudden shift in readers' interests. Market data highlighted
expertise.
a surge in popularity of topics such as well-being &
On the 25 November 2020 we announced that we have
mindfulness, hobbies, puzzles and pastimes, and we were
agreed the terms of a recommended offer for GoCo Group
able to respond with a number of new bookazines that
plc, the price comparison business, which values the
have proven to be popular with readers. The ability to
entire issued and to be issued share capital of GoCo Group
respond to our readers’ needs has been further reflected
at £594m on a fully diluted basis. We believe that the
in our bookazine sales channel, and as retail outlets
Combination will significantly strengthen the Future
globally have reopened these sales have recovered more
Group’s proposition of seeking to address the growing
quickly than magazines.
consumer demand for informed and value driven
purchasing decisions enabled by intent driven content. We
Acquisitions
A core part of our strategy is to buy and build where we
believe the Combination provides a truly unique
opportunity to capitalise on the combination of Future’s
identify assets which, we believe combined with Future,
deep audience insight with GoCo’s expertise in price
present a unique opportunity to add value. We have a
comparison and the proprietary technology of both the
systematic approach to all acquisitions, resulting in a
Future Group and the GoCo Group.
number of transactions to date being originated in-house.
We have made significant progress on the integration of TI
Media, which is now complete. The Finance and magazine
Current trading and outlook
The new financial year (FY 2021) has started well, and we
subscription systems have been migrated onto our
benefit from ongoing momentum from the organic
common platforms, and our ad stack and Hawk widgets
business as well as from acquisitions. Our online audience
have been integrated across all non-Vanilla websites,
continues to show strong growth, which was underpinned
alongside the migration of Homes & Gardens, Livingetc
by our recent successful Amazon Prime Day in October.
and Woman & Home websites to our web platform Vanilla.
We meet the ongoing challenges of the COVID-19
Delivery on synergies continues to progress well with
pandemic through our three-pronged approach focusing
£20m already secured ahead of earlier forecasts of £15m
on our employees, clients and stakeholders as we
per annum, of which £3m benefits our FY 2020 results.
consider how to lessen the impact to the business.
We continue to expect the cost to deliver the synergies to
The strength of our performance in FY 2020 combined
be in the region of £12m, of which £9.9m (being £9.1m
with the long-term fundamentals of growing global digital
restructuring and £0.8m impairment of the TI Media
advertising spend and eCommerce growth add to our
legacy finance system) is reflected in our FY 2020 results
confidence that, despite market uncertainty, we remain
as a charge to profit.
well-positioned to continue our strong growth.
In November 2019 we acquired Barcroft Studios for a
Our diversified strategy continues to offset the impacts
total consideration of £23.4m, of which 40% was satisfied
of the ongoing macro uncertainty, and, as a result, the
by the issue of shares, with the remainder paid in cash.
positive trends we have seen in FY 2020 are expected to
Barcroft is an award-winning TV and digital video
continue in FY 2021.
production company 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. Barcroft’s videos, which focus on real life
stories, are watched by millions. Now fully integrated, this
is an exciting acquisition as it has added another
significant new revenue stream in video production to the
Zillah Byng-Thorne, Chief Executive
10 December 2020
ANNUAL REPORT AND ACCOUNTS FY 2020 / 37
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.
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
In the current year and ongoing, in addition to its broad strategic
responsibilities, the Board:-
- twice annually reviews the principal and emerging risks faced by
the Group and approves the Group Risk Register.
- twice annually understands the impact of principal and emerging
risks and assesses the robustness of mitigations and internal
controls in place.
- annually approves the Group's Risk Appetite Statement.
The Board recognises that the appropriate management of risk is key
The Audit and Risk Committee reinforces the process further by
to the delivery of the Group’s strategic objectives and the continued
conducting ‘deep dive’ reviews, either on specific risks such as cyber
delivery of superior returns for all of our stakeholders (you can read
security, or through discussions with Executive Leadership Team
more about our key stakeholders on pages 44 to 48). As set out on
members to challenge their particular risk registers.
pages 12 and 21, we actively capitalise on the opportunities impacting
our industry to ensure that the Group remains well positioned to
deliver on the evolving needs of our audience.
The Board has overall responsibility for the risk management
Prioritising and reporting risks
The management of risk is embedded in the day-to-day operations of
framework and for ensuring that we manage risks appropriately.
the management teams. Key risk indicators are monitored through
Future takes its approach to the identification, evaluation and
monthly trading meetings and quarterly business reviews where any
mitigation of risk and uncertainty extremely seriously, and applies a
areas of opportunity or risks to the business are discussed as a
robust framework that embeds risk management throughout its
standing agenda item. Any changes are fed back to the Executive
organisation and across its operations. Whilst it is accepted that risk
Leadership Team (ELT), Audit and Risk Committee and the Board.
Risk management framework
Defence
Oversight
Third line
Second line
First line
Responsibility
Board
Controls Reviews
Leadership Team
Group Finance
Function
Actions
• 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 and Risk Committee
as part of its review of the
effectiveness of the system
of internal controls
• Monitors the adequacy
and effectiveness of
internal control and
risk management
systems
• Reports to the Audit
and Risk Committee
and Board on a regular
basis
• Prioritises Principal
• Maintains the risk
register & conducts
interviews with the
Executive Leadership
Team
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
• Implements risk
mitigation plans
38 / FUTURE PLC
Risks and uncertainties Strategic Report
Group-level risks are either derived from ‘top-down’ or ‘bottom-up’
review of a broad range of individual current strategic and operational
Our Principal Risks
The output from the above process is a summary of Principal Risks
risks. The ELT is responsible for identifying risks and working with the
that is set out in the table on pages 40 to 42 and summarised in the
Group Finance Director to capture them in the Group’s risk register.
heat map on page 42. The heat map sets out the relative likelihood of
All risks identified by the ELT are scored out of 5 (with 5 being the
the risk crystallising and the impact on the Group if the risk did
highest) in respect of three areas: the likelihood of the risk
crystallise – effectively the ‘gross’ risk score before considering the
crystallising, the impact if the risk does crystallise, and the strength
strength of any mitigation. The relative strength of the mitigation
of any mitigation in place (in respect of mitigation, a score of 1
available to the Group to combat each risk is depicted in the colour of
represents strong mitigation). A combined score is then calculated by
the risk on the heat map (green being strong, amber being average
multiplying each of these scores together (with 125 being the highest
and red being low mitigation). The symbol X has been included in the
possible score).
Summary of Principal Risks table overleaf to indicate principal risks
Each of these Group-level risks is then assessed by the Board in
emerging in FY 2020.
terms of its potential impact on the Group and its key stakeholders.
Each Principal Risk has been analysed according to its impact on
The Group prioritises risk mitigation actions by considering risk
both the Group’s existing business model, as set out in the ‘Future
likelihood and potential severity.
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 the website.
Emerging risk
Whilst Future operates in an evolving environment with several clear
Considering both the existing business model together with the
strategic direction of the Group, the Board carried out a robust
risks, it takes a pro-active and robust approach to identifying any new
assessment of long term viability, which included performing
risks, and evaluating and mitigating all known risks through a regular
sensitivity analysis and reverse stress-testing.
review process.
The symbol V has been included in the Summary of Principal Risks
Our internal controls seek to minimise the impact of risks, either by
table overleaf to indicate those that have been taken into account
reducing their likelihood or mitigating their impact, as explained
when performing the viability testing.
further in the Corporate Governance report on pages 74 to 77, and
during the year we have continued to develop those controls. 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 and Risk Committee as a standard
Changes to the Group’s risk
assessment in the year
As a result of the risk reviews undertaken during the current financial
agenda item for every meeting. There have been no significant
year, the risk below has been identified as a prior year Principal Risk
control failings or weaknesses identified during the year in respect of
that is no longer considered to be as significant due to improved
risk management. Climate change is not currently considered to be
mitigations and is therefore not included in the Summary of Principal
an emerging or a principal risk for the Group.
Risks table overleaf :-
Risk appetite
The Board recognises that continuing to deliver superior returns for
shareholders and other stakeholders is dependent upon accepting
a level of risk. Our risk appetite sets out how we balance risk and
opportunity in pursuit of our strategic objectives.
Zero tolerance
The Group has zero tolerance for risk which may impact:
• The safety of our people
• Our reputation and brand
• Our legal and regulatory compliance
Core business model
The Group has low tolerance
for risk in its core operations.
Strategy and vision
The Group accepts a moderate
level of risk in pursuing new
opportunities, including
potential new markets.
FY 2019 principal
risks not included in
FY 2020 assessment
Reason for reduction in risk rating
Acquisitions – the risk
that any acquisition
and its subsequent
integration fail to
create shareholder
value
The business has an established track
record of acquisitions and integrations
which has been further validated with
recent transactions. Additionally, in
FY 2020 the executive leadership team
was expanded to include a dedicated
M&A function.
M&A activity will continue to be
monitored as a risk but the Group does
not feel that it currently meets the
criteria for being a principal risk.
In addition, the prior year risk titled ‘reliance on ‘search’’ has been
incorporated into the new risk, reliance on third party distribution
platforms.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 39
Summary of Principal Risks
Gross Risk movement relative to prior year
Residual Risk movement relative to prior year
New Principal Risk
Risk
Personal data
V
Business Model link: iii, iv, vi, viii
Strategy link: 1, 3, 4
Risk
Staff – Key person risk
V
Business Model link: i-viii
Strategy link: 1-5
Risk
Cyber security and IT
Business Model link: i, ii, vi, vii, viii,
Strategy link: 1, 4
Description
Our future success will depend upon our
continued ability to identify, hire, develop,
motivate and retain highly skilled individuals
in both the UK and US, in our senior
management and technical teams.
The Group has a long standing CEO with
a successful track record in growing the
profitability of the business and maintaining
its strategic direction.
Mitigation
The Group has recruited several new senior
roles recently to provide additional strength
and depth to the leadership team, while
crucially transitioning to a new CFO during
the period.
The editorial and operational leadership
has been expanded with the TI acquisition.
In addition, during FY 2020 we created a
number of new executive leadership roles to
include, B2B MD, CSO, CMO and CPO.
Technology has been split from a single
role into two separate executive leadership
roles, with one of these roles focused
solely on our front-end website platform
development and technology.
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 plans) are in
place for key individuals.
Governance oversight
The Nomination Committee regularly
reviews Board succession planning and the
Board receives updates on senior talent
management programmes. You can read
more about the work of the Nomination
Committee on page 70.
Description
Cyber security covers the protection of our
devices, services, and networks and the
information stored within them from theft or
damage. A cyber security incident could result
in interruption to trading, damage to reputation
and financial penalties along with remediation
costs and diversion of management time.
Mitigation
Effective cyber security governance is in place
with regular Group steering meetings and a
dedicated role responsible for overseeing risk
and recommending actionable roadmaps to
improve information security procedures and
protections across the Group.
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.
All workstations are protected by antivirus
software which is kept up-to-date and
websites are subject to monthly vulnerability
assessments with any required remediation
being completed in a timely manner.
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 and New York.
Following 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.
Governance oversight
The Audit and Risk reviews Cyber Security
assessment reports, IT network management
and security reviews, and receives external
advisory guidance on key cyber risks. You can
read more about the work of the Audit and Risk
Committee on page 74.
Description
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.
Acquisitions increase the level of risk
relating to personal data due to the increased
volume of data being processed and the
requirement to migrate the data from legacy
systems and suppliers which may not be
operating with the same standards as Future
and its partners.
Mitigation
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.
Controls and contract provisions are
in place to ensure compliance with data
protection legislation and confirmation is
sought from all third parties who might be
involved in providing or processing data to
ensure they are also in compliance with such
legislation.
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.
Governance oversight
The Audit Committee regularly reviews
results of internal control reports and the
Board receives internal corporate governance
and compliance updates. You can read more
about our governance framework on page 64.
40 / FUTURE PLC
Summary of Principal Risks
Strategic Report
Key:
Link to Future's Business Model:
Link to our vision and strategy:
Long-term viability:
i. Advertising
ii. Content publishing & licensing
iii. Events and integrated marketing
iv. Membership & Subs
v. Newstrade
vi. CRM
vii. Platform as a service
viii. Ecommerce & lead Gen
1. A global specialist media platform
2. Fans of brands and loyal communities
3. Diversifying monetisation
4. Leveraging our data and analytics
5. Expanding global reach
V : Risk taken into account as part of the
Company’s long term viability assessment (see overleaf)
Mitigation:
Strong mitigation
Average mitigation
Low mitigation
Risk
Economic &
Geo-political uncertainty
V
Business Model link: i-viii
Strategy link: 3, 5
Risk
Digital Advertising market
changes
V
Business Model Link: i, ii, viii
Strategy link: 1-5
Description
Group performance could be adversely
impacted by factors beyond our control such
as the economic conditions and political
uncertainty in key markets.
The macroeconomic climate and
continued uncertainty surrounding the
impact of Brexit on the UK economy and the
US political landscape could lead to reduced
consumer spending and a related downturn
in advertising.
Mitigation
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 geographically and
continues to grow the diversity of its revenue
segments. This mitigates the impact of
political or economic stability in any particular
country or region.
The Group has demonstrated through the
ongoing pandemic that its diversified revenue
streams across different media have provided
a resilience to economic shocks.
In addition, the Group has focused on being
the market leader wherever possible, which
should result in more resilience in economic
downturns.
Governance oversight
The Chief Executive and Chief Financial
Officer present reviews and forecasts on the
impact of the macroeconomic environment
at each Board meeting. You can also read
more about this in the Strategic Report on
pages 6 to 53.
Description
Continuing changes to the digital advertising
landscape and changing user habits may impact
Future’s share of advertising market revenues and
advertising yield:
(i) the move to increased privacy standards
across the advertising ecosystem, may have
potential effects on yield from removing ‘targeted
personalised ads’;
(ii) the changing mix of media advert
consumption means that increasingly more users
are viewing adverts on mobile devices, which also
has a higher mix of video advertising formats.
Future needs to ensure that its advertisement
proposition stays relevant to ensure that it can
capitalise in these markets while maintaining a
premium yield;
(iii) the ability to compete for a share of
available advertising expenditures may be
more challenged as more traditional offline and
emerging media companies continue to enter the
online advertising market.
Mitigation
Future is a premium publisher with large market
shares of highly endemic audiences and as a
consequence advertising partners work with
Future because of the brands and audiences
it has. Future’s sales teams are trained to sell
the benefits associated with working with
Future (rather than acquiring advertising
programmatically).
Future has enhanced first party audience
capabilities with which it is currently targeting
advertiser’s campaigns with rich first party
audience data. This allows advertisers to hyper
target Future’s special interest user base and their
purchase intents. This first party data proposition
is completely unaffected by any third party cookie
changes.
Continued investment in Future’s Hybrid
technology ensures that Future drives the best
available audiences in the market.
The Group’s expansion of its video offering,
facilitated further by the acquisition of Barcroft
(specialist digital video production and social
channel distribution company) enables Future
to capitalise both on growing video advertising
demand and the social channel advertising
market.
Governance oversight
The Board receives updates on innovation and
reviews digital advertising risks as part of the
corporate plan process. You can also read more
about our Business Model and our approach
to Digital Advertising in the Strategic Report on
pages 6 to 53.
Risk
Reliance on third party
distribution platforms
V
Business Model Link: i, ii, viii
Strategy link: 1-5
Includes the prior year risk relating to reliance on 'search'
Description
We depend on our continued ability to market,
distribute and monetise our content through
search engines and social media platforms.
These platforms could decide not to market
or distribute some or all of our products and
services, change their terms and conditions of
use at any time and/or significantly increase
fees.
Changes in algorithms and strategies of
tech giants could materially impact traffic
and media revenues. For instance, search
engines can make changes to their ranking
algorithms, methodologies and design layouts
that could reduce the prominence of links to
websites offering our content and negatively
impact traffic.
Mitigation
Although Future has not been materially
impacted by any algorithm changes to date,
the Group is not complacent.
Future has a dedicated audience
development team who work to ensure Future
embeds best practice within its editorial and
technical teams.
The Group continues to invest in the
creation of expert quality content that meets
the needs of audiences including internal
critical review of our approach to, and success
in, delivering the information and advice our
users are searching for.
We continue to invest in our online
platforms to provide a secure environment
with strong user experience and are
committed to ensure that we adhere to online
advertising standards.
The Barcroft acquisition has strengthened
our expertise in distributing and monetising
content across a broader group of digital
platforms with which Future has strong
partnerships.
The Group’s recent diversification into B2B
helps drive a direct relationship with the end
customer and the Group continues to invest
in other direct sources to drive direct traffic.
Governance oversight
The Board discusses third party distribution
platforms with specific focus on the
investment needed. You can also read more
about our Business Model and how our
business is diversified in the Strategic Report
on pages 6 to 53.
continued overleaf:
ANNUAL REPORT AND ACCOUNTS FY 2020 / 41
Summary of Principal Risks continued
Risks
Reliance on key third party
service providers
V
Business Model Link: ii, v, viii
Strategy link: 1, 3
Risks
Pandemic
impact continues
V
Business Model link: i-viii
Strategy link: 3, 5
Description
Certain third parties are critical to the operations
of our businesses. A failure of one of our critical
third parties may cause disruption to business
operations, impact our ability to deliver products
and services and result in financial loss. The
reputation of our businesses may be damaged
by poor performance or a regulatory breach by
critical third parties.
Key third parties include:
• Printers and paper suppliers
• Magazine wholesalers and hauliers
• Data centre and cloud service providers
Mitigation
Robust continuity arrangements are in place for
disruption to key third parties.
Print options and contingency plans are
regularly assessed.
Our magazine wholesaler finances are kept
under constant review. Operational contingency
plans are in place to switch to alternative networks
should a failure occur in both wholesalers.
Future operates multiple data centres in order
to ensure resilience in key services and avoid
unplanned downtime or service disruption.
Operational and financial due diligence is
undertaken for any new key suppliers or material
changes. Contracts, service levels and outputs are
closely managed on an on-going basis for key third
party services.
Governance oversight
The Board regularly discusses the security of
supply and receives presentations from ELT
members in regard to their key suppliers where
the Board deems an update is required. You can
also read more about our Business Model and
how our business is diversified in the Strategic
Report on pages 6 to 53.
Description
Whilst Future’s trading results overall have proven
resilient during the pandemic period of FY 2020,
continuation of the pandemic may have longer
term impacts on other stakeholders such as
employees, customers, suppliers, the wider
economy and consequently the success of the
Group.
Mitigation
The safety of Future’s employees has been a
priority. All staff are supported in their need to
work from home according to their personal
circumstances.
Intra-company communication has continued
at regular intervals using accessible technology
- monthly town hall streaming of communication
to all staff including real time Q&A sessions, in
addition to listening sessions hosted by senior
business leaders.
Effort to keep in touch and maintain contact
with customers has been a focus with credit
extended to regular customers when necessary
to assist and ease pressure on their cash flows
during the recent periods of difficulty.
Supplier payments have continued to be made
in accordance with supplier payment terms.
Governance oversight
The Board has received regular updates on the
impact of COVID-19 on our people and on the
business and the mitigations being put in place
to protect them. You can read more about this on
page 49.
Risks
Media market disruption and
changing consumer habits
V
Business Model link: i, ii, viii
Strategy link: 1-5
Description
Failure to anticipate and respond to market
disruption and changing consumer habits
may affect demand for our products and
services and our ability to drive long-term
growth.
Mitigation
Future’s strategy priority is to stay relevant
for newer generations and new media
models.
The Group continues to grow its organic
audience and that of its acquired websites
through the investment in its editorial
content.
The Barcroft acquisition has extended
Future’s capability to access the high
growth market of VOD and social channel
content distribution in addition to extending
the Group’s capability to develop video
content on owned websites.
The Group continues to develop its
partnerships with digital app stores
to maximise distribution of its digital
subscription content.
Governance oversight
The Chief Executive provides the Board with
regular updates on market and competitor
activity. You can also read more about our
Business Model in the Strategic Report on
pages 6 to 53.
Principal Risks Heat Map
Strong mitigation
Average mitigation
Low mitigation
Gross Risk (before mitigation)
1. Personal data
2. Staff - Key person risk
3. Cyber security and IT
4. Economic & geo-political uncertainty
5. Digital advertising market changes
6. Reliance on third party distribution platforms
7. Reliance on third party service providers
8. Pandemic impact continues
9. Media market disruption and changing consumer habits
h
g
H
i
t
c
a
p
m
I
w
o
L
2
7
1
3
4
5
9
8
6
Low
Probability
High
42 / FUTURE PLC
Summary of Principal Risks
Strategic Report
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
once is considered to be remote) as well as running the impact of
the recommended offer for GoCo Group plc (where the acquisition
does not deliver the results that are expected and also where the
current strategy, which is outlined in pages 12-33. The Group’s
acquisition does not complete as a result of it not obtaining
prospects are assessed primarily through its annual long-term
shareholder approval), both separately, and with the combined
detailed planning process which considers profitability, the Group’s
downside scenario.
cash flows, committed facilities, liquidity and forecast funding
The scenarios have been modelled using the Group’s existing
requirement over the next three years. This exercise is completed
£135m RCF which runs to February 2023 and the £215m term loan
annually and was signed off by the Board in September 2020. As part
for the acquisition of GoCo Group plc which runs to November 2022
of this the Board considers the appropriateness of key assumptions,
and amortises at £20m per quarter from 30 June 2021. The £30m
taking into account the external environment and the Group’s
COVID-19 facility that was agreed in April 2020 has been cancelled
strategy.
and so has not been included in the modelling. As these facilities
expire within the three year time period we have assumed for the
The assessment period
A three-year period is used for the Group’s Viability Statement as this
purposes of this viability assessment that the Group will undertake a
further refinancing exercise to both ‘right-size’ and lengthen the
aligns with the length of the Group’s detailed plan, and this horizon
tenor on the Group’s facilities prior to their expiry.
most appropriately reflects the dynamic and changing media
The scenarios are hypothetical and purposefully severe with the
environment in which the Group operates.
aim of creating outcomes that have the ability to threaten the
viability of the Group. The Group has multiple control measures in
Assessing the Group’s viability
The viability of the Group has been assessed, taking into account the
place to prevent and mitigate the scenarios from taking place
Although each of the downside (and the combined) scenarios
Group’s current financial position, including external funding in place
result in increased leverage they all result in headroom over the
over the assessment period, and after modelling the impact of certain
existing bank facilities and covenants at all testing points (even
scenarios arising from the principal risks, which have the greatest
where none of the various options available to the Group in order to
potential impact on viability in that period.
maintain liquidity, such as reducing any non-essential capital and
A number of scenarios have been modelled, considered severe but
operating expenditure as well as not paying dividends, are utilised).
plausible, that encompass these identified risks. Whilst each of the
The results of the above stress testing showed that the Group
risks on pages 40 to 42 has a potential impact and has been
would be able to withstand the impact of these scenarios occurring
considered as part of the assessment, only those that represent
over the assessment period.
severe but plausible scenarios were selected for modelling. None of
these scenarios individually threaten the viability of the Group. The
assessment undertaken includes the impact of the recommended
Viability statement
Based on these severe but plausible scenarios, the Directors have
offer for GoCo Group plc.
a reasonable expectation that the Company will continue in
The scenarios have been run both individually and with 2) and 3)
operation and meet its liabilities as they fall due over the three-year
combined (as the combination of all downside scenarios occurring at
period considered.
Scenario
Associated Principal Risk(s)
Description
1) Data security
breach
1. Personal data
A serious data security or regulatory breach results in a significant
monetary penalty of €20m 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.
2) Significant Media
revenue reduction
2. Key person risk
5. Digital Advertising
6. Third party distribution platforms
9. Media market disruption and
changing consumer habits
This scenario assumes a significant reduction in eCommerce and
advertising revenues (net of direct cost reductions) compared to the
three year plan of 10% per annum. The scenario also assumes no bonus
payment in any of the next three years.
3) Significant
change in external
environment
4. Economic & geo-political
uncertainty
7. Third party service providers
8. Pandemic impact continues
This assumes a reduction in Events, Advertising and Magazine revenues
as well as a print margin decline and extended collection days and an
overseas third party distributor going bankrupt, resulting in bad debt
exposure and supply disruption.
The scenario also assumes no bonus payment in any of the next three years.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 43
Our Investors
Our Suppliers
Our People
Our Commercial
Partners
Our Audience
How we engage
with our stakeholders
Our purpose is to change people’s lives through sharing our knowledge
and expertise with others, making it easy and fun for them to do what they
want. Shared and enduring values are at the heart of any successful
organisation, and that’s why our core values underlie everything we do. In
order to create these values, it is important to first identify who our
stakeholders are, understand what matters to them, and how our
operations impact on them and their communities.
The Board is responsible for leading stakeholder
engagement, ensuring that we fulfil our obligations to
SECTION 172 STATEMENT
The Board of Directors of Future plc have always taken
those impacted by the business. We believe that
decisions for the long term, and collectively and
considering our stakeholders in key business decisions is
individually our aim is always to uphold the highest
not only the right thing to do, but is fundamental to our
standards of conduct. A broad range of stakeholders
ability to drive value creation over the longer term.
are important to the Group at local, regional and
In this section we identify our five key stakeholder
functional levels.
groups and have provided an overview of their interests,
Day-to-day engagement with our key stakeholders, and
their concerns and the ways in which the Board acted
other local stakeholder groups, is conducted at the level
with regard to these groups when taking its key strategic
and in a format best suited to the context. This may be
decisions throughout the year and what the Board has
locally, regionally or functionally, by the Board or senior
learned from these interactions having regard (among
management, depending on the stakeholder. Where the
other matters) to the factors set out in Section 172(1)(a)
Board does not engage directly with our stakeholders, it is
to (f) of the Companies Act 2006. The Board will
kept updated so Directors maintain an effective
sometimes engage directly with certain stakeholders on
understanding of what matters to our stakeholders and
particular issues, but the size and distribution of our
can draw on these perspectives in Board decision-making
stakeholders and of Future means that stakeholder
and strategy development. As the Board receives
engagement often takes place at an operational level,
presentations and makes decisions, we ensure that the
within the context of the Board's agreed strategy. In this
impact on any of these groups is considered. We
section we show how the Board engaged with each of our
periodically review which are our key stakeholder
key stakeholder groups, summarise the specific actions
relationships and examine how we engage with them. We
we took for stakeholder groups in response to the
also consider ways to ensure that we maintain open lines
COVID-19 pandemic and set out some case studies which
of communication with those stakeholder groups and
give more detail of how our stakeholders are considered
whether there are ways that the Board’s engagement can
when making specific decisions.
be improved to help us operate more effectively.
44 / FUTURE PLC
How we engage with our stakeholders Strategic Report
Our people
Our talented
and engaged
workforce are
committed to upholding
our values, enabling us
to deliver on our
promises and we
recognise that listening
to them and keeping
them engaged is
essential to that success
continuing.
You can read more
How the Board engaged in 2020
Workforce engagement has always been a key priority for the Board. Claire MacLellan, the
Chief Operating Officer who is responsible for global HR, attends Board meetings once a year
to give updates and an HR dashboard, showing key statistics, is reviewed at each Board
meeting. Our employee opinion survey formally captures their views and is a key part of how
we track engagement. During October 2019 the Board visited the New York office, and in
March the Bath office. In addition, in response to the challenges raised by the pandemic, we
held a number of live events via Google hangouts led by the executive team.
Feedback, suggestions and concerns from employees across the business are also
considered through channels such as town hall meetings and ELT listening sessions. The
Board receives regular updates on these topics.
The Board considered the impact of the TI Media acquisition on the existing Future
people, and how the TI Media people would integrate into the Future community, including
looking at the different approaches to furlough, best practice ways of working and the
impact on diversity.
What we learnt
Our people are proud to work at Future and are proud of Future’s response to COVID-19.
about how we invest and
Managing the integration of new businesses into Future’s culture is something that we do
reward our people on
page 50 and how the
Group engages,
including how we helped
them negotiate the
COVID-19 pandemic, on
page 50.
well (but there is always room for improvement).
Inclusion and Diversity is very important to our people and the education and awareness
programmes in this area are very much in demand. Mental well-being has been a key focus
area during the year, with many colleagues finding the loss of physical office space isolating.
What we are going to do in 2021
Listening, learning and responding to our people will continue to be a priority during the next
12 months. We have, as part of this, formalised our internal communications calendar to
ensure we have the opportunities to interact whilst the company works remotely.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 45
Our audience
We create fans of our
brands by giving them
a place where they
How the Board engaged in 2020
The Board receives regular audience insight reports throughout the year and we
looked at our audience needs at our Board strategy day. The impact of COVID-19 on
our ability to meet the needs of our audience and how this was addressed was
discussed as part of the broader COVID-19 response debate.
The Board considered how we can diversify our audience when discussing
want to spend their time and
acquisition opportunities. The demands and resource requirements to create
where they go to meet their
needs. They are central to our
business and without them we
would not exist.
You can read more about our
audience and how we have
continued to delight them on
pages 14 to 19.
scalable platforms were also discussed.
Cyber security risk discussions included a focus around ensuring that any
threats to our audience were quickly identified and mitigated. We are working
towards embedding the overriding GDPR principle of ‘data protection by design and
default’ in our organisation.
What we learnt
Our content has been a source of help and advice for hundreds of millions of people
each month, and this need was met even more so during the early period of the
pandemic and global lockdowns. Meanwhile our magazine readers have been eager
to access our content and have been turning to our subscriptions to ensure that
they can continue to access our content when the marketplace was disrupted.
What we are going to do in 2021
Looking ahead, the challenge is to ensure that the platforms we evolve and the
technology we use continues to meet the demands of our audience.
46 / FUTURE PLC
How we engage with our stakeholders Our commercial
partners
Working on our behalf,
our commercial partners
are a face for our
business. Ensuring they are
motivated to deliver good quality
work helps us deliver the best
service to our audience.
You can read more about our
commercial partners and how we
work with them on page 52.
Our suppliers
We believe it is important
that our suppliers are not
only price competitive but
also have a strong compliance,
quality, service, sustainability and
innovation ethos.
You can read more about our
suppliers and how we work with
them on page 52.
Our investors
Shareholders are the
owners of Future.
The Board places
great importance on having
positive relationships with all
shareholders and seeks to
ensure there is an appropriate
level of dialogue with them.
Strategic Report
How the Board engaged in 2020
The Board receives reports on how we have worked with our commercial partners
throughout the year, with a focus on key commercial events, ie CES, E3 or new
product launches.
The Board considered how we can build and improve on our existing commercial
partnerships when discussing acquisition opportunities.
What we learnt
By working with our commercial partners we can diversify our content
monetisation, reaching a wider audience whilst staying relevant to them.
Our unique relationship with many of our endemic advertisers meant that we were
able to host a number of virtual events with significant engagement in response to
the cancellation of the physical events.
What we are going to do in 2021
We will continue our engagement with our commercial partners, ensuring we are
adapting to their needs in this changing environment.
How the Board engaged in 2020
Engagement with suppliers is key to our values, ranging from our approach to
Modern Slavery (our statement can be found on our website), to the protection of our
other stakeholders' data, to name just a few. One of the key pillars supporting this
statement is our Supplier Code and we continue to engage with suppliers on this.
What we learnt
Compliance is key for our suppliers and visits to our key production suppliers and
processes ensure that we carry out the right due diligence to help them comply
and ensure the highest standards which are vital to keep slavery and human
trafficking out of our supply chain.
What we are going to do in 2021
We will continue our engagement with our suppliers, providing support and
guidance to ensure adherence with our Supplier Code.
How the Board engaged in 2020
We conduct extensive engagement with our institutional investors throughout the
year. Our AGM and investor presentations gives the Board the opportunity to
engage with investors on the running of their company, and to receive feedback.
The Board receives regular updates on investor communication activity, changes
to the shareholder register, analysis of share price performance and particular
investment themes such as environmental, social and corporate governance. In
addition, the feedback from shareholder / analyst interactions is shared with the
Board on a regular basis, via our Corporate Brokers.
What we learnt
Investors understand the strategy that underpins our future growth plans and are keen
to see the traction from these.
You can read more about the feedback we had from shareholders on the
implementation of our new remuneration policy for 2019/20 on page 84.
What we are going to do in 2021
We will continue to engage with our shareholders throughout 2021. We look forward
to welcoming shareholders, subject to there being no COVID-19 restrictions in place,
at our AGM in February where they will have an opportunity to meet the new Board
members, Rachel Addison and Mark Brooker, for the first time and vote on their
election and other resolutions.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 47
Stakeholder engagement case studies
COVID-19 response
Acquisition of TI Media
Workforce
The business implications of the
During the Board’s discussions on the
We continue to be a responsible employer
COVID-19 pandemic have been fast
acquisition of TI Media the Board gave
in our approach to our people, ensuring
moving and, at times, uncertain. A
extensive consideration to what the impact
we communicate and engage with them
summary of the various actions taken by
of the proposed acquisition would be on
regularly in a variety of ways and that the
the Group are shown on page 49. The
the various stakeholder groups. This
voice of the workforce is heard and taken
Board discussed the Group’s response
involved an appraisal of the financial
into account when making decisions.
and the impact on stakeholders, in
effects of the acquisition, the operational
The Board agreed a series of
particular our people, our audience and
risks involved in its integration, optimal
engagement initiatives to supplement the
our suppliers.
financing arrangements and regulatory
existing initiatives including:
risk relating to the Competition and
• arranging an annual workforce Q&A
Markets Authority. In addition, the Board
with the Board
considered the impact of the acquisition
• the Senior Independent Director to
on the employees of both Future and TI
continue to take the lead in
Media, particularly during the consultation
engagement across the locations
process with employees, the audience and
including attendance at the staff
suppliers, as well as the potential
conference.
consequences for existing shareholders.
48 / FUTURE PLC
How we engage with our stakeholders Strategic Report
COVID-19
response
This section provides a
snapshot of how we have
approached the COVID-19 crisis
since mid-March 2020. It also
directs you to sections of the
Annual Report where you can
find more detail on each of
these matters.
Our governance structure
(detailed on page 64) provided
a stable foundation from which
we could respond to the
changing situation, led by our
Executive Leadership Team. A
summary of our COVID-19
response is set out opposite.
OUR PEOPLE
Home working stipend .................................................................................... Page 50
Refund of pay cuts ................................................................................................Page 80
Hardship fund created ......................................................................................Page 50
Accelerated online training ...........................................................................Page 51
Facilitated NHS volunteering ......................................................................Page 36
Increased staff communications .............................................................Page 51
Mental health support ......................................................................................Page 50
OUR AUDIENCE
Created new COVID-relevant content .................................................Page 15
Created virtual events and webinars ...................................................Page 18
Trialled new titles and media ........................................................................Page 15
Accelerated processing of refunds ........................................................Page 36
OUR SUPPLIERS
Evolving the magazine distribution model to support
our supply chain and commercial partners ..................................Page 18
Extended credit where needed ................................................................Page 42
OUR INVESTORS
Continuing strong financial governance .......................................Page 54
Maintaining our dividend................................................................................... Page 11
OTHER
Repaid government support in full ........................................................Page 81
Board pay cut ...............................................................................................................Page 80
ANNUAL REPORT AND ACCOUNTS FY 2020 / 49
Corporate Responsibility
We are part of the audience and the community and we take this responsibility
very seriously. This section highlights what we are doing to make a positive impact
through our sustainability and stakeholder engagement strategies. Day-to-day
engagement with our key stakeholders, and other local stakeholder groups, is
conducted at the level and in a format best suited to the context.
Recycling and waste
management
Gender pay gap reporting
Payment practices
reporting
Charity and outreach
Future
ELT
Quarterly Townhall “Ask
me anything” sessions
“Ask Zillah” SlackChat
ELT listening sessions
Inclusion and diversity
Health & safety policy
Employee engagement
review
Modern slavery statement
Whistleblowing policy
Anti-bribery policy
Board
Our people
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
We are a people business first and foremost.
communicate our health and safety policy to all employees. In the
Our six company values underpin everything
UK, during the year to 30 September 2020, there were no fatalities
we do.
and one minor injury across all sites (2019: no fatalities and nine
Our colleagues are key stakeholders in the
minor injuries). There were no fatalities or injuries in the US or
success of our business and therefore their engagement has been a
Australia during the year (2019: nil). Our response to COVID-19 was
key priority in 2020. This year we have delivered a broad range of
swift and due to the strong technology infrastructures in place,
people initiatives, from ensuring that we are promoting a safe,
Future was able to quickly pivot to enable all of our colleagues to work
healthy and inspiring workplace to raising our game in creating a truly
remotely. We provided all colleagues with a stipend to support home
diverse and inclusive culture for all our colleagues.
working set ups and have taken key steps to develop our office
The measure of our success in this area is our colleague
spaces to be COVID-secure.
engagement. This year we have introduced a structured approach to
Wellbeing at Future doesn’t stop with physical safety. In 2020 we
gathering colleague feedback - our “What Matters” survey asks key
have taken a number of steps to ensure the mental and emotional
questions to help us understand how our colleagues are feeling and
wellbeing of our colleagues is supported.
put in place the relevant interventions. Engagement and
This year we have recruited and trained over 50 Mental Health
trust will continue to be priorities for us and in 2021 we will be
First Aiders across our UK sites to provide our colleagues with
building more frequent opportunities to listen and respond to our
resources and confidential support focusing around mental health.
colleague voice.
They run weekly drop in sessions and are available at any time via a
dedicated email account. We have a Colleague Assistance
Programme in each of our geographies which provides colleagues
Wellbeing, health and safety
At Future, prioritising health and colleague wellbeing is a critical part
with access to free and confidential support services such as a
qualified counsellor. In the US, we arranged a wellbeing gift in
of our company culture. By supporting our colleagues physically,
partnership with our healthcare provider to be delivered to our
mentally and emotionally they can be fulfilled in their career and give
colleagues’ doors during lockdown.
their best performance.
Staying connected is also critical to ensuring our colleagues'
50 / FUTURE PLC
Corporate Responsibility Strategic Report
wellbeing. We communicate regularly and leverage technology
platforms such as instant messaging and chats, video calling and
Development
2020 has seen Future welcome over 1,000 new colleagues into the
weekly newsletters to keep our colleagues in the know and to
business through acquisition and hiring. We have developed our
celebrate success. Our Executive Leadership Team hold quarterly
onboarding process which kicks in the moment someone says “yes” to
town hall sessions for all employees and extended leadership team
working at Future, leveraging innovative technology, to ensure new
meetings where we discuss key strategic initiatives and the
colleagues settle in quickly and can navigate our business successfully
performance of the business. All of these communication channels
from day one.
have been particularly important during the lockdowns enforced by
We have launched a new online learning portal called “Future
the COVID-19 pandemic.
2021 GOAL:
We will prioritize Colleague Voice and put in place robust
University” which gives colleagues access to bitesize learning
opportunities and have supported over 40 colleagues in the UK to
begin work-based professional qualifications which will support their
ongoing career at Future.
feedback mechanisms and reporting to continue to drive
Development at Future is underpinned by a simple yet robust
a culture of colleague engagement.
performance & potential model which ensures colleagues have regular
Inclusion and diversity
Creating a truly inclusive workplace starts with respect. By
1-2-1 and development meetings with their managers to discuss their
objectives, career aspirations and ongoing development requirements.
Our approach to development also extends to supporting outside of
Future. In 2020 we launched the Future Foundation which intends,
through investment of our time, expertise, resources and passion, to
appreciating and celebrating our differences we are creating a Future
provide the opportunity for disadvantaged children to reach their full
that is a more dynamic and inspiring place to be for our employees. We
potential. This year we have launched two programmes under the
are working hard to ensure that our workforce reflects the diverse
Foundation umbrella to provide mentoring, coaching and internships to
communities we serve, and that we create an inclusive culture where
disadvantaged students, inspiring them with the confidence and skills
each employee can truly be themselves at work. Through 2020 we
to pursue a career in media.
have really built momentum towards this goal of inclusion.
Throughout 2020 we have celebrated diversity in our organisation
through internal events, communications and training. This has
2021 GOAL:
Launch a global internship programme for disadvantaged
included monthly focuses on Women & Gender Equality, Pride and
young people which brings a new generation of skills and
Social Mobility. We are committed to educating our colleagues and
talents into the Future business.
raising awareness of diversity challenges. During Inclusion Week in
2020 the theme was Each One, Reach One with a series of
opportunities to learn about inclusion in many contexts and to share
our own inclusion stories.
In June 2020, we launched the Inclusion and Diversity Forum,
Policy on disability
The Group aims to ensure that when considering recruitment, training,
chaired by our Global CRO, Mike Peralta. We now have 30
career development, promotion or any other aspect of employment, no
ambassadors from across the global business involved in the forum,
employee or job applicant is discriminated against, either directly or
empowered to champion inclusion at Future and drive the agenda for
indirectly, on the grounds of disability.
change.
If an employee became disabled while in employment and as a result
Embracing diversity underpins our commitment to providing equal
was unable to perform their duties, we would make every effort to offer
opportunities to our current and potential employees and applying fair
suitable alternative employment and assistance with retraining.
and equitable employment practices. We codify this through our
Equality and Diversity Policy, our I&D Strategy and our values.
Male
Female
Board
Senior management
5
7
63%
47%
Direct reports
45
69%
3
8
20
37%
53%
31%
All Colleagues
1,032
50%
1,026
50%
2021 GOAL:
Gain accreditation as an Inclusive Employer through the
Our audience
Our strategy is to ensure we only ever have
experts creating content for us, to ensure
that we can meet our audiences’ needs. You
can read more on page 14 about how we
approached this during the year.
We actively seek to understand our audiences better than anyone,
leveraging this knowledge to help partners inform and optimise their
campaigns. We have developed a detailed understanding of our
ongoing development of our Inclusion & Diversity strategy.
readers using a wide range of tools including syndicated research,
web analytics and “The Illuminate Panel”, our proprietary reader
ANNUAL REPORT AND ACCOUNTS FY 2020 / 51
survey utility. This Audience Insight enables our partners to access
highly relevant and knowledgeable communities that will support the
success of their campaigns.
www.futureplc.com/modern-slavery-statement. You can read
more about how we work with our suppliers to ensure we operate in a
way that is ethically responsible and environmentally sustainable on
It is mission critical to Future to represent our audiences fully and
page 105.
so our Inclusion & Diversity ethos reaches into our approach to our
content. In 2020 we responded to the Black Lives Matters movement
with 10 pledges to ensure we are equally representing BAME people
2021 GOAL:
To ensure that legacy suppliers from acquisitions are
within our organisation and our content. This includes diversity
fully compliant with our Supplier Code.
targets within our imagery and contributor population and donating
advertising space on our digital platforms to support awareness
campaigns. In August 2020 we donated $500k of digital advertising
space to the Racial Injustice Campaign.
2021 GOAL:
Implement regular content audits to drive inclusive
content.
Our investors
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.
Our commercial
partners
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
We provide a premium, brand-safe
request by contacting the Chairman or Company Secretary. The
environment for our partners to access and
Executive Directors hold a series of meetings presenting the interim
engage valuable consumers across multiple touchpoints including
and annual results to those shareholders who request a meeting in
websites, social media, video, print and events. Through creative
order to update them on the progress of the business and gauge their
content-led campaigns and digital advertising solutions, we take our
views following the analyst presentations of the results, and host an
commercial partners closer to the audiences that matter.
annual capital markets day with various senior members of the
Future is a member of the Responsible Media Forum, a partnership
Group management team which has proven to be popular. The
between 25 leading global media companies to identify and take
Chairman offers to meet with key shareholders at least annually, and
action on the social and environmental challenges facing the sector.
during 2020 he met or spoke individually with the Company’s key
As part of the Forum we participate in identifying trends and areas for
shareholders. Hugo Drayton consulted with our largest shareholders
prioritisation based on sound research and robust discussions,
as part of our process of finalising the Remuneration Policy which
engage with stakeholders, campaigners, policy makers, academics
was approved by shareholders at the AGM in February 2020.
and peers; and run collaborative projects and events on key issues.
In order that all Directors are aware of the views of shareholders,
2021 GOAL:
Ensure thought leadership as the advertising industry
during meetings held with Directors or as reported to Directors
through the Company’s brokers, together with copies of analysts’
wrestles with the issues of user privacy.
notes, press articles and other relevant information.
each Board pack includes a note of views expressed by shareholders
2021 GOAL:
Ensure all investors are able to meet with management
or the Board at least twice in the year if they wish to.
Our suppliers
We engage with our suppliers to address
challenges and drive positive change
through our supplier code of conduct and
processes. 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:
52 / FUTURE PLC
Corporate Responsibility Strategic Report
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 2006. 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
Corporate Responsibility Report pages 50 to 52
Directors' Report, page 104
Corporate Responsibility Report, page 51
Corporate Governance Report, page 71
and Directors' Report, page 104
Human Rights
Slavery and Human Trafficking Policy
Corporate Responsibility Report, page 52
Social Matters
CSR Policy
Corporate Responsibility Report, page 50
Anti-corruption and anti-bribery
Anti-bribery and corruption policy,
Whistleblowing policy
Directors’ Report, page 104
Description of Principal Risks and
impact of business activity
Greenhouse Gas Emissions
Risk section, pages 38 to 42 and
Directors’ Report, page 106
Description of business model
Future strategy wheel
Strategic Report, page 21
Non-financial KPIs
Sources & Definitions
Strategic Report, pages 6 to 7,
Sources page 33
ANNUAL REPORT AND ACCOUNTS FY 2020 / 53
Financial
Review
56 FINANCIAL REVIEW
54 / FUTURE PLC
ANNUAL REPORT AND ACCOUNTS FY 2020 / 55
Financial
Review
Rachel Addison
Chief Financial Officer
Financial summary
The financial review is based primarily on a comparison of results for
Group revenue increased 53% or £118.1m to £339.6m (2019:
£221.5m), achieved organically (increase of 6% at constant currency
the year ended 30 September 2020 with those for the year ended
and actual currency) and through acquisition, with FY2019 and
30 September 2019. Unless otherwise stated, change percentages
FY2020 acquisitions net of disposals contributing £105.6m to
relate to a comparison of these two periods. Organic growth is
revenue growth in the year.
defined as the portfolio at constant FX rates (i) excluding acquisitions
UK revenue growth of 67% or £69.2m to £171.9m (2019: £102.7m)
and disposals made during FY 2019 and FY 2020 and (ii) including
included £64.0m of revenue from the TI Media acquisition and
the impact of closures and new launches.
£11.1m from the Barcroft acquisition. UK organic digital revenues
(which include digital display advertising and eCommerce) grew
FY2020
£m
FY2019
£m
strongly by 33%. UK events and magazine divisions were materially
impacted by the pandemic and total UK organic revenues declined
Revenue
Adjusted operating profit1
Adjusted profit before tax1
Operating profit
Profit before tax
Basic earnings per share (p)
Diluted earnings per share (p)
Adjusted basic earnings per share (p)1
Adjusted diluted earnings per share (p)1
339.6
93.4
90.9
50.7
52.0
46.4
45.4
76.3
74.7
221.5
52.2
50.3
26.7
12.7
9.9
9.3
50.1
47.5
1 Adjusted items are a non-GAAP measure. For further details refer to the section on
Alternative Performance Measures on page 59.
by 7%.
Performance has been strong in the US where growth of 41% or
£48.9m to £167.7m (2019: £118.8m) was boosted by underlying
organic growth of 19% and increased further by the inclusion of
£23.2m incremental year-on-year revenue from the SmartBrief
acquisition.
Media revenue increased by £82.4m or 53% and by 23%
organically despite the cancellation of in-person events due to the
COVID-19 pandemic. Organic digital advertising on platform revenue
grew 16% and organic eCommerce revenue was 58% ahead of
the prior year. Strong digital advertising and eCommerce revenue
growth has been the product of the effective monetisation of Future’s
The Directors believe that adjusted results provide additional useful
online audience. In the year, Future saw its online audience increase
information on the core operational performance of the Group, and
to 281.8m through the increased scale and diversification of the
review the results of the Group on an adjusted basis internally. See
Group, with organic audience growth of 48%.
page 59 for a reconciliation between adjusted and statutory results.
Magazine division revenue increased by 54% to £102.3m (2019:
Revenue
Digital display advertising on platform
Digital display advertising off platform
eCommerce
Events, digital licensing other online
Total Media
Print & digital content
Print advertising, licensing,
publisher services and other print
Total Magazines
Total revenue
56 / FUTURE PLC
Segment
UK
£m
31.6
11.2
24.5
12.5
79.8
70.2
21.9
92.1
171.9
US
£m
68.0
29.4
54.8
5.3
157.5
3.5
6.7
10.2
167.7
FY2020
£m
Total
£m
99.6
40.6
79.3
17.8
237.3
73.7
28.6
102.3
339.6
Segment
UK
£m
22.7
-
15.3
12.4
50.4
38.7
13.6
52.3
102.7
US
£m
57.8
8.5
31.9
6.3
104.5
4.1
10.2
14.3
118.8
FY2019
£m
Total
£m
80.5
8.5
47.2
18.7
154.9
42.8
23.8
66.6
221.5
YoY Var
24%
378%
68%
(5)%
53%
72%
20%
54%
53%
Organic
YoY Var
16%
(19)%
58%
(26)%
23%
(30)%
(27)%
(29)%
6%
Financial Review Financial Review
“The Group has demonstrated significant
resilience by delivering an exceptional set of
results in challenging circumstances with the
backdrop of the COVID-19 pandemic”
£66.6m), following the acquisition of TI Media. Magazine organic
replaced by depreciation of right-of-use assets (£3.7m in the year)
revenue performance declined by 29%, with the decline materially
impacted by store closures as a consequence of COVID-19.
and net finance costs on lease liabilities (£0.7m). Operating profit
has increased by £0.5m as a result of applying IFRS 16 Leases from 1
October 2019 compared to what would have been reported under IAS
Operating profit
Statutory operating profit increased by £24.0m to £50.7m (2019:
17, due to the charge being split between depreciation and interest,
with a decrease of £0.2m in total earnings. Prior periods have not
£26.7m) and statutory operating margin increased to 15% (2019:
been restated.
12%). Adjusted operating profit increased by £41.2m to £93.4m
(2019: £52.2m) with adjusted operating margin increasing to 28%
(2019: 24%), reflecting the strong growth of the Media division and
Earnings per share
FY 2020
FY 2019
the operating leverage provided by the increased scale of the Group.
Adjusted operating profit and margin
Basic earnings per share (p)
Adjusted basic earnings per share (p)
Diluted earnings per share (p)
46.4
76.3
45.4
74.7
9.9
50.1
9.3
47.5
28%
30%
Adjusted diluted earnings per share (p)
24%
m
£
£100.0
£90.0
£80.0
£70.0
£60.0
£50.0
£40.0
£30.0
£20.0
£10.0
£0.0
14%
11%
5%
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
25%
20%
15%
10%
5%
0%
Basic earnings per share are calculated using the weighted average
number of ordinary shares in issue during the year of 95.6m (2019:
82.2m), the increase reflecting the weighted impact of the issue
of 8.2m shares to fund the acquisition of TI Media, 1.8m to settle
the Mobile Nations deferred consideration, and 0.7m to fund the
acquisition of Barcroft Studios, as well as the issue of 3.8m shares to
settle vested share options.
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
associated social security costs, fair value movements on contingent
Adoption of IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 October 2019, resulting
in the recognition on the balance sheet of assets and liabilities relating
consideration (and unwinding of associated discount) and on the
currency option, exceptional items, amortisation of intangible assets
arising on acquisitions and any related tax effects. Adjusted profit
to leases previously accounted for as operating leases. On transition
after tax was £72.9m (2019: £41.2m).
the Group has applied 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 lease liabilities recognised within
Exceptional items
Exceptional costs amounted to £17.1m (2019: £3.4m) and relate
retained earnings. Comparative periods have not been restated.
largely to acquisition and restructuring related costs in respect
Adoption of the standard has resulted in an increase in reported
of the TI Media acquisition (£3.8m and £9.1m respectively),
assets of £16.0m, which includes a deferred tax asset of £0.7m,
SmartBrief integration costs of £0.1m, onerous property costs
and an increase in reported liabilities of £16.8m, with the balance of
of £1.8m, impairment of the TI Media legacy finance system of
£0.8m being recognised within retained earnings at 1 October 2019.
£0.8m and £1.5m loss on disposals relating to the sale of Amateur
On acquisition of TI Media, the Group recognised assets of £8.4m,
Photographer, WorldSoccer and Trustedreviews.com, as required by
which includes a deferred tax asset of £0.1m, and net liabilities of
the Competition and Markets Authority, as well as UK Cycling Events
£8.4m on the acquisition balance sheet.
Limited and International Craft & Hobby Fair Limited, following the
In the income statement the operating lease rent expense has been
acquisition of TI Media.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 57
TI Media restructuring costs charged in the year are associated
with realised acquisition synergy savings. Onerous property costs
Dividend
The Board is recommending a final dividend of 1.6p per share for the
relate to ongoing operating costs and the impairment of right-of-
year ended 30 September 2020, payable on 16 February 2021 to all
use assets in respect of the Bromsgrove and Bournemouth offices
shareholders on the register at close of business on 15 January 2021.
which were permanently closed following the onset of the COVID-19
pandemic.
Net finance costs and refinancing
The Group agreed a new £30m multi-currency Revolving Credit
Cash flow and net debt
Net debt at 30 September 2020 was £62.1m (2019: £40.3m)
reflecting the additional drawdown of debt to fund the TI Media
acquisition offset by strong cash generation.
Facility ("RCF") in April 2020. The RCF, which stood alongside
During the year, there was a cash inflow from operations of £91.9m
Future's existing debt facilities, was arranged in order to provide the
(2019: £53.7m) reflecting the Group’s strong trading performance.
Group with additional working capital headroom to maintain the
Excluding exceptional items, adjusted operating cash inflow was
underlying growth momentum of the combined business, whilst
£100.0m (2019: £57.7m). A reconciliation of cash generated from
navigating the impact of COVID-19. This facility has not been required
operations to adjusted free cash flow is included below:
(and has not been drawn) as at 30 September 2020 and has been
subsequently cancelled.
Net finance income of £2.8m was recognised in the year (2019:
net expense of £14.2m) which includes a £7.6m reduction in the fair
value of the contingent consideration payable for the SmartBrief
Cash generated from operations
FY2020
£m
FY2019
£m
91.9
53.7
acquisition offset by £1.1m arising on the unwinding of the associated
Cash flows related to exceptional items
discount on the contingent consideration and a £1.2m loss on the
Settlement of social security costs on share-based payments
8.0
4.0
currency option obtained to hedge the Group’s currency exposure to
the Mobile Nations earnout (settled in February 2020).
Net adjusted finance costs increased to £2.5m (2019: £2.1m)
which includes external interest payable of £1.8m reflecting the
Lease payments following adoption of IFRS 16 Leases
(3.9)
Adjusted operating cash inflow
Cash flows related to capital expenditure
4.0
-
-
100.0
57.7
(4.0)
(4.0)
96.0
53.7
drawdown of the core RCF to fund the TI Media acquisition and
Adjusted free cash flow
£0.4m in respect of the amortisation of issue costs relating to both
the Group’s original £135m facility and the additional £30m facility
that was agreed during the year. A further £0.8m of interest was
Other significant movements in cash flows include £4.0m
recognised in relation to lease liabilities (offset by £0.1m of interest
(2019: £4.0m) of capital expenditure, repayment of bank loans and
income on sublet properties) recognised following the adoption
overdraft (net of drawdowns and arrangement fees) of £75.7m (2019:
of IFRS 16. This is offset by £0.4m of finance income which was
net drawdown of £19.3m), payments of £75.8m (2019: £65.8m) to
generated whilst the Group was in a net cash position, following the
fund acquisitions (including disposals), proceeds from the issue of
receipt of placing proceeds ahead of the completion of the TI Media
shares (net of costs of share issue) of £101.0m (2019: £nil), and the
acquisition in April 2020 and the Group’s strong cash generation.
acquisition of own shares of £8.5m (2019: £nil). The Group paid a
Leverage at 30 September 2020 was 0.6x.
dividend in the year of £1.0m (2019: £0.4m). Foreign exchange and
Taxation
The tax charge for the year amounted to £7.7m (2019: £4.6m),
other movements accounted for the balance of cash flows.
Adjusted free cash flow increased to £96.0m (2019: £53.7m),
representing 103% of adjusted operating profit (2019: 103%),
comprising a current tax charge of £9.8m (2019: £7.0m) and a
reflecting the ongoing efficient cash management by the Group
deferred tax credit of £2.1m (2019: £2.4m). The current tax charge
and including a one-off operating cash benefit realised as a result of
arises in the UK where the standard rate of corporation tax is 19%
completing the TI Media acquisition mid-month.
and in the US where the Group pays a blended Federal and State tax
rate of 28%.
The Group’s adjusted effective tax rate is 19.8% (2019: 18%), which
Adjusted free cash flow
includes a credit of £1.5m arising on the part release of a provision
recognised for uncertain tax positions on the basis that certain tax
risks are now considered less likely to crystallise. Further information
is provided in the accounting policies and note 8.
The Group’s statutory effective tax rate is 15% (2019: 36%), with
the difference between the statutory rate and adjusted effective rate
being the impact of certain exceptional items being deductible for
tax purposes and the fair value gain on the SmartBrief contingent
consideration being non-taxable. This is significantly lower than the
FY2019 statutory effective rate, which was increased by the fair value
loss on the contingent consideration recognised in respect of the
Mobile Nations acquisition in the prior year.
£100.0
£80.0
£60.0
m
£
£40.0
£20.0
£0.0
58 / FUTURE PLC
£96.0m
£53.7m
£15.3m
£17.4m
£4.6m
FY 2016
FY 2017
FY 2018
FY 2019
FY 2020
Financial Review Financial Review
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
Alternative performance measures
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
projections, and assessing the headroom on the Group’s combined
Group. These measures are not defined by IFRS and are not intended
existing multicurrency Revolving Credit Facility (“RCF”) of £135
to be a substitute for IFRS measures.
million (following the subsequent cancellation of the £30m COVID-19
The Group presents adjusted operating profit and EPS, which
facility), and banking covenants after applying several severe but
are calculated as the statutory reported measures stated before
plausible downside scenarios to those projections as part of the
charges relating to share-based payments (relating to equity-settled
assessment made for the Viability Statement, provided on page 43.
share awards with vesting periods longer than 12 months), and
This assessment included various individual and combined scenarios
associated social security costs, fair value movements on contingent
both including the impact of the recommended offer for GoCo Group
consideration (and unwinding of associated discount) and on currency
plc and in the unlikely event that this did not complete as planned. None
option, exceptional items, amortisation of intangible assets arising
of these scenarios individually threaten the viability of the Group.
on acquisitions, and any related tax effects. EPS is used as a key
Even in the most extreme downside scenario modelled the Group
performance indicator for the Performance Share Plan. The table
would be able to operate well within the level of its current available
below reconciles the APMs to the statutory reported measures.
debt facilities and covenants.
The Directors also note that at the year end the Group had net
current liabilities of £34.3m (2019: £65.6m). This was primarily driven
Conclusion
The Group has had another transformational year following the
by the deferred income balance of £12.9m relating to events and
completion of the Barcroft and TI Media acquisitions and has
subscriptions, the FY2020 all staff profit pool which is accrued and
demonstrated significant resilience during the COVID-19 pandemic.
not paid until December 2020 and the nature of the TI Media business
The Group is well placed to achieve its ambitions for 2021 and beyond.
acquired in the year where the profile of cash receipts from wholesalers
The Strategic Report and the Financial Review are approved by the
is often ahead of payment of certain magazine related costs.
Board of Directors and signed on its behalf by:
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 2020.
Rachel Addison
Chief Financial Officer
10 December 2020
Revenue (£m)
Operating profit (£m)
Net finance (costs)/income (£m)
Other expense (£m)
Profit before tax (£m)
Tax (£m)
Profit after tax (£m)
Basic earnings per share (pence)
Diluted earnings per share (pence)
Statutory
339.6
50.7
2.8
(1.5)
52.0
(7.7)
44.3
46.4p
45.4p
Share-based
payments
Exceptional
items
Amortisation
of acquired
intangibles
Decrease in
fair value of
contingent
consideration
Unwinding
of discount
Fair value
loss on
currency
option
Tax impact
Adjusted
FY2020
-
5.5
-
-
5.5
-
5.5
5.8p
5.6p
-
15.6
-
1.5
17.1
-
17.1
17.9p
17.5p
-
21.6
-
-
21.6
-
21.6
22.6p
22.1p
-
-
(7.6)
-
(7.6)
-
(7.6)
(8.0)p
(7.8)p
-
-
1.1
-
1.1
-
1.1
1.2p
1.1p
-
-
1.2
-
1.2
-
1.2
1.3p
1.2p
-
-
-
-
-
(10.3)
(10.3)
(10.9)p
(10.4)p
339.6
93.4
(2.5)
-
90.9
(18.0)
72.9
76.3p
74.7p
FY2019
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
Revenue (£m)
Operating profit (£m)
Net finance (costs)/income (£m)
Other income (£m)
Profit before tax (£m)
Tax (£m)
Profit after tax (£m)
Basic earnings per share (pence)
Diluted earnings per share (pence)
221.5
26.7
(14.2)
0.2
12.7
(4.6)
8.1
9.9p
9.3p
-
9.0
-
-
9.0
-
9.0
11.0p
10.4p
-
3.4
-
-
3.4
-
3.4
4.1p
3.9p
-
13.1
-
-
13.1
-
13.1
-
-
11.7
-
11.7
-
11.7
15.9p
15.1p
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
52.2
(2.1)
0.2
50.3
(9.1)
41.2
50.1p
47.5p
ANNUAL REPORT AND ACCOUNTS FY 2020 / 59
Corporate
Governance
62 CHAIRMAN’S
INTRODUCTION
64 GOVERNANCE
FRAMEWORK
66 BOARD OF
DIRECTORS
70 NOMINATION
COMMITTEE
74
AUDIT AND RISK
COMMITTEE
80 DIRECTORS’
REMUNERATION
REPORT
84 DIRECTORS’
REMUNERATION POLICY
94 ANNUAL REPORT ON
REMUNERATION
104 DIRECTORS' REPORT
60 / FUTURE PLC
ANNUAL REPORT AND ACCOUNTS FY 2020 / 61
Chairman’s
Introduction
Richard Huntingford
Chairman
Dear fellow shareholder,
suppliers, financiers, the Government, and the communities
I am pleased to introduce our Corporate Governance
of which we are part.
Report for the year ended 30 September 2020. This report
Strong governance helps to cultivate a company culture
outlines how the Board has ensured that robust and
of integrity and stakeholder alignment, alongside corporate
appropriate governance procedures are in place to ensure
structures that improve leadership, accountability and
effective, entrepreneurial and prudent management of the
effectiveness. This brings a sharper focus to strategic
Company that will deliver the long-term sustainable
objectives and translates into better decision-making which,
success for the benefit of our shareholders and broader
in turn, drives competitive advantage and growth, resulting
stakeholders. You can read more about our approach to
in stronger corporate performance and a sustainable
this on pages 44 to 48.
business overall - something Future has fully embedded.
In this report, we set out our approach to corporate
The Board has maintained a strong focus during the year
governance and provide detail on the role of the Board of
on the Company’s short, medium and long-term strategic
Directors, followed by a more detailed focus on the work of
goals, including the integration of recent acquisitions with
each of the three key Board committees: the Audit and Risk
the Board closely monitoring the performance of acquired
Committee, the Nomination Committee and the
businesses against the investment theses prepared at the
Remuneration Committee. Together, these give a clear
time of their acquisition. This ensures that the Company has
insight into how we manage corporate governance
the right people in place to deliver on its strategy. During this
principles and processes within the Group.
period of continued growth, it is vital to ensure that the
Company’s governance processes are robust in order to
Our approach to corporate governance
Corporate governance does not mean ticking various
ensure that the business is protected and that all
stakeholders’ interests are taken into account.
legislative and regulatory boxes, but a thoughtful and
The emergence of the global COVID-19 pandemic
considered approach from the Board down to the
provided an unprecedented challenge to all companies, as
Company’s operations to identify and apply the principles
boards and senior management sought to understand the
of correct corporate governance.
implications of the pandemic for their companies and the
Corporate governance essentially involves balancing the
necessary steps to protect their businesses and their
interests of a company's many stakeholders, such as
stakeholders. The strong governance environment that
shareholders, senior management, staff, customers,
Future had in place as the COVID-19 crisis unfolded
“The strong governance environment that Future had
in place as the COVID-19 crisis unfolded undoubtedly
led to high-quality decision-making which ensured that
we maintained the strong business momentum we had
prior to the pandemic, whilst at the same time – and
most importantly – looking after the interests of all
our stakeholders, particularly our employees”
62 / FUTURE PLC
Chairman’s Introduction Corporate Governance
undoubtedly led to high-quality decision-making which
ensured that we maintained the strong business
Board changes since the year-end
Mark Brooker was appointed as an independent
momentum we had prior to the pandemic, whilst at the
Non-Executive Director on 1 October 2020. Mark has Board
same time – and most importantly – looking after the
level public listed company experience combined with
interests of all our stakeholders, particularly our employees.
platform-based expertise, and a successful track record
Further detail of how the Company responded to these
across a variety of operational, strategic and financial roles.
unprecedented times is set out throughout the report and is
summarised on page 49.
Culture and values and people
Our effective governance has fostered a strong company
Stakeholders
Consideration of the Group’s full range of stakeholders,
including our people, investors, our audience, strategic
partners, and suppliers, continued to be an integral part of
culture which is underpinned by a set of values of how we
the Board’s discussions and decision-making. An overview
behave that serve as guardrails to ensure that everyone
of the Board’s engagement activities with each of our key
stays focused on delivering our strategy, whilst staying true
stakeholder groups can be found on pages 44 to 48 of
to who we are. The Board recognises the importance of the
this report.
Company’s culture in achieving its goals (“results matter,
success feels good”), and has a key focus on setting this
culture, and ensuring that the necessary resources are in
place to allow our people to do the best jobs they can in
delivering 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. The two main focuses of the people and
culture team this year has been ensuring the overall welfare
of our employees throughout the COVID-19 pandemic, as
well as 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 is satisfied that the
approach toward engagement with the workforce described
in the Corporate Responsibility Report on pages 50 to 53 is
robust. This will be kept under review. As described on page
102 in the Remuneration Report, the pension contribution
rates for the Chief Executive are not, at the date of this
report, fully aligned to that available to the workforce,
although future reductions have been confirmed.
The Board has a number of opportunities to consider
cultural metrics, particularly in relation to its business as
usual reporting on people, our audience and during our
reviews of our key risks. Our culture is embedded in
everything we do at Future and when I visited sites
Richard Huntingford
Chairman of the Board
Compliance with the 2018 Code
The Company confirms that it has complied in full with the
provisions of the 2018 Code throughout the financial year.
BOARD LEADERSHIPS AND COMPANY PURPOSE
Promoting the long-term
sustainable success of the Company ..................................................Page 13
Generating value for shareholders ......................................................Page 44
Contributing to wider society ....................................................................Page 50
Purpose values and strategy and
how these and our culture are aligned .............................................Page 12
DIVISION OF RESPONSIBILITIES
Roles and responsibilities ................................................................................Page 64
(pre-pandemic ) and engage with colleagues I am proud to
COMPOSITION, SUCCESSION AND EVALUATION
see how colleagues embrace and understand this. You can
Nomination Committee Report ...............................................................Page 70
read more about this on page 50 to 53.
Board evaluation .......................................................................................................Page 69
Board changes during the year
Meredith Amdur was appointed as an independent
Non-Executive Director on 6 February 2020 and has
AUDIT, RISK AND INTERNAL CONTROL
Audit and Risk Committee report ...........................................................Page 74
in-depth knowledge and understanding of the US media
REMUNERATION
market and experience of digitally-led environments, along
with a strong network in North America.
Penny Ladkin-Brand stepped down from the position of
Chief Financial Officer, to assume the role of Chief Strategy
Officer on 1 June 2020 following completion of the TI Media
acquisition, at which time Rachel Addison joined the board
as Chief Financial Officer.
Annual Statement by the
Remuneration Committee Chair ............................................................Page 80
Remuneration at a glance and in context .....................................Page 83
Annual Report on Remuneration ...........................................................Page 94
ANNUAL REPORT AND ACCOUNTS FY 2020 / 63
Governance Framework
Stakeholders
The owners of the Company and the other stakeholder groups to whom the Board is responsible.
Board
The Board is collectively responsible for the long-term success of the Group and for ensuring leadership within a framework of
effective controls. The key roles of the Board are:
• setting the strategic direction of the Group;
• overseeing implementation of the strategy by ensuring that the Group is suitably resourced to achieve its strategic aspirations;
• providing entrepreneurial leadership within a framework of prudent and effective controls which enables risk to be assessed and
managed;
• ensuring that the necessary financial and human resources are in place for the Group to meet its objectives;
• reviewing the Group’s culture supported by its values; and
• other matters reserved for the Board can be found on the website at
https://investor.futureplc.com/investors/schedule-of-matters/
Chairman
Chief Executive
• Primarily responsible for overall
• Responsible for executive
Senior Independent
Director
operation, leadership and
governance of the Board.
management of the Group
• Provides a sounding board to the
as a whole.
Chairman.
• Leads the Board, sets the agenda
and promotes a culture of open
• Delivers strategic and commercial
• Leads the appraisal of the
objectives within the Board’s stated
Chairman’s performance with the
debate between Executive and
risk appetite.
other Non-Executive Directors
• Builds positive relationships with all
annually.
the Group’s stakeholders.
• Acts as intermediary for other
Directors, if needed.
• Available to respond to shareholder
concerns if contact through the
normal channels is inappropriate.
Non-Executive Directors. Ensures
that there is a focus on Board
succession plans to maintain
continuity of skilled resource.
• Provides advice and acts as a
sounding board.
• Ensures effective communication
with our shareholders.
Non-Executive Directors
• Contribute to developing our strategy.
• Scrutinise and constructively challenge the performance of management in the execution of our strategy.
• Bring their diverse expertise to the Board and Board Committees.
64 / FUTURE PLC
Governance Framework Corporate Governance
Board and Board Committees meeting and attendance
Richard Huntingford
Zillah Byng-Thorne
Rachel Addison3
Meredith Amdur4
Hugo Drayton
Penny Ladkin-Brand5
Alan Newman
Rob Hattrell
Board1
Nomination
Committee
Audit and Risk
Committee
Remuneration
Committee
General
meetings2
8 (8)
8 (8)
2 (2)
5 (5)
8 (8)
6 (6)
8 (8)
8 (8)
3 (3)
-
-
1 (1)
3 (3)
-
3 (3)
3 (3)
-
-
-
-
3 (3)
-
3 (3)
3 (3)
-
-
-
-
6 (6)
-
6 (6)
6 (6)
2 (2)
2 (2)
0 (0)
0 (0)
1 (2)
1 (2)
1 (2)
2 (2)
1. In addition to the eight Board meetings, four Board calls were held to discuss business matters that the Chairman and Group Chief Executive decided should be considered by the Board.
2. All Directors received papers for all meetings. Where Directors were unable to attend a meeting they had the opportunity to comment in advance and received a briefing on any decisions taken.
Hugo Drayton, Penny Ladkin-Brand and Alan Newman were unable to participate in the General Meeting held in November 2019 due to prior business commitments.
3. Rachel Addison was appointed to the Board on 1 June 2020.
4. Meredith Amdur was appointed to the Board on 6 February 2020.
5. Penny Ladkin-Brand resigned from the Board on 1 June 2020.
6. In addition to the scheduled meetings, the Senior Independent Director and the Non-Executive Directors meet once a year without the Chairman present in order to appraise his performance.
Principal Board Committees
Audit and Risk Committee
Remuneration Committee
Nomination Committee
• Oversees and monitors the Company’s
• Reviews and recommends the framework
• Reviews the structure, size and
financial statements, accounting
and policy for the remuneration of the
composition of the Board and its
processes and audits (internal and
Chairman, the Executive Directors, the
Committees.
external).
• Ensures that risks are carefully identified
and assessed, and that sound systems
Company Secretary and senior executives
in alignment with the Group’s reward
principles.
of risk management and internal control
• Considers the business strategy of the
are in place.
Group and how the remuneration policy
• Reviews matters relating to fraud and
reflects and supports that.
whistleblowing reports received.
• Reviews workforce remuneration and
• Identifies and nominates suitable
executive candidates to be appointed to
the Board and reviews the talent pool.
• Considers wider elements of succession
planning below Board level, including
diversity.
related policies and alignment of
incentives and rewards with culture, to
help inform setting of Directors’
remuneration policy.
• Consults with shareholders on the
remuneration policy.
SEE PAGE 74 FOR MORE INFORMATION
SEE PAGE 80 FOR MORE INFORMATION
SEE PAGE 70 FOR MORE INFORMATION
Executive Leadership Team
Considers Group-wide initiatives and priorities. Reviews the implementation of operational plans. Reviews changes to policies and
procedures and facilitates the discussion of the development of new projects. Reviews and prioritises principal risks.
Board standing committee
Disclosure Committee which oversees the Company’s compliance with its disclosure obligations.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 65
Board of Directors
Richard Huntingford
POSITION: Independent
Non-Executive Chairman
Zillah Byng-Thorne
POSITION:
Chief Executive
Rachel Addison
POSITION:
Chief Financial Officer
NATIONALITY: British
NATIONALITY: British
NATIONALITY: British
APPOINTED: December 2017 and
as Chairman in February 2018
APPOINTED: November 2013 and
as Chief Executive in April 2014
APPOINTED: June 2020
Meredith Amdur
POSITION:
Independent Non-Executive
NATIONALITY: American
APPOINTED: February 2020
Key skills and experience:
• Strong financial and
commercial expertise
• Wealth of finance experience
in large listed multinationals
External appointments:
Rachel was previously TI
Media’s Chief Finance Officer.
Before that she was managing
director of Trinity Mirror’s
Regional Media division and
CFO/COO and executive board
member of Local World Limited.
Education:
Rachel is a chartered
accountant and holds a BSc in
Economics from Loughborough
University.
Key skills and experience:
• Editorial and publishing
content
• Digital
• Technology platforms
• Advertising and brands
External appointments:
Meredith is currently Chief
Executive Officer of Rhetorik, a
leading data supplier to
technology vendors. She was
previously President and CEO of
Wanted Technologies, a
Canadian listed recruitment
data analytics provider, and has
held executive roles with
Microsoft, Deloitte and DirecTV.
Education:
Meredith holds a BA from the
University of North Carolina in
International Studies, an MSc
from the London School of
Economics in Politics and an
MBA in Business Administration
and Management from Cornell
University.
Key skills and experience:
• Has a strong track record in
developing and delivering
against successful strategy
• Focus on driving operational
excellence
• Is a proven people manager,
identifying and developing
talent at senior level
External appointments:
Non-Executive Director of GoCo
Group plc, Flutter
Entertainment plc and THG
Holdings plc. 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.
Education:
Zillah is a chartered
management accountant
(CIMA) and qualified treasurer
(ACT). She has an MA in
Management from Glasgow
University and an MSc in
Behavioural Change from
Henley Business School.
Key skills and experience:
• Provides strong leadership of
the Board in fulfilling its role of
overseeing the development and
delivery of Company strategy
• Ensures healthy debate and
appropriate support for, and
challenge of, executive
management in their delivery of
strategy by Non-Executive
Directors
• Provides leadership in
stakeholder relations
External appointments:
Non-Executive Director and
Chairman Designate of Unite
Group plc, Non-Executive Director
of JPMorgan Mid Cap Investment
Trust plc and The Bankers
Investment Trust plc. 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
Crown Place VCT plc from 2012 to
2020 and 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.
Education: Richard is a
chartered accountant (FCA),
having qualified with KPMG.
66 / FUTURE PLC
Board of Directors
Corporate Governance
Nomination
Committee
Remuneration
Committee
Audit and Risk
Committee
Committee
chair
Mark Brooker
POSITION:
Independent Non-Executive
Hugo Drayton
POSITION: Senior
Independent Non-Executive
Alan Newman
POSITION:
Independent Non-Executive
Rob Hattrell
POSITION:
Independent Non-Executive
NATIONALITY: British
NATIONALITY: British
NATIONALITY: British
NATIONALITY: British
APPOINTED: October 2020
APPOINTED: December 2014
APPOINTED: February 2018
APPOINTED: October 2018
Key skills and experience:
• Board roles, Executive and
Non-Executive, in public
companies
• UK and International
consumer and B2B businesses
• Digital platforms
External appointments:
Currently Non-Executive
Director at AA plc, Equiniti
Group plc and William Hill plc.
Mark was previously Chief
Operating Officer of Trainline
(formerly thetrainline.com)
where he had responsibility for
the UK and International
consumer and B2B businesses,
including the Marketing and
Product functions. Mark joined
Trainline from Betfair where he
also held the role of COO.
Prior to this, Mark spent 17
years in investment banking
advising UK companies on
equity capital raising and M&A,
latterly as a Managing Director
at Morgan Stanley.
Education:
Mark holds a Master’s degree in
Engineering, Economics and
Management from Oxford
University.
Key skills and experience:
• Advertising and marketing,
Key skills and experience:
• Corporate finance, accounting
technology, customer
behaviour, media, executive
leadership, business
development.
External appointments:
Hugo is a trustee of the British
Skin Foundation and is a regular
contributor to trade press and
publishing conferences. He
served as CEO of the advertising
technology business Inskin
Media from 2009-19. 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.
Education:
Hugo holds a BA in Latin
American Studies & French
from University College of
London.
and audit, executive
leadership, investor relations,
media, telecommunications
and technology, public
company leadership and
governance, strategy and
M&A.
External appointments:
Alan is Chief Financial and Chief
Operating Officer of Ebiquity plc
and Chairman of the Freud
Museum London. 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).
Education:
Alan is a chartered accountant
and has an MA in Modern
Languages (French and
Spanish) from Cambridge
University.
Key skills and experience:
• Digital platforms, eCommerce
and online sales, retail and
customer behaviour,
technology, business
development, executive
leadership.
External appointments:
Vice President, 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.
Education:
Rob graduated from Oxford
University with a degree in
Geography.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 67
Board activities
Focus area
Key stakeholders
Activities
Link to strategic priorities
Strategy
and
operations
(see Strategic
Report
starting on
page 4)
Leadership,
people and
culture
(see page 50)
Our people
• Applying the Board’s strategic understanding of
geopolitical and economic risks in international markets
to the Company’s challenges and opportunities.
• Considering acquisitions and divestments as identified
and determine appropriate course.
• Monitoring the performance of the Company against
agreed strategic objectives, including progress against
acquisition theses.
Our audience
Our commercial
partners
Our suppliers
Our investors
• Diversifying our
audience
• Scalable platform
• Continued
diversification of
content monetisation
• Ongoing investment
Our people
• Receiving an update on employee views and
• Ongoing investment
Our investors
• Ensuring the Company remains at the forefront of
engagement.
developing and embedding best practice in responsible
business behaviour.
• Maintaining and enhancing Future’s culture and values
and key policies and procedures and ensure these are
rolled out to existing and acquired businesses.
• Reviewing whistleblowing statistics, details of cases raised
through the Speak Up provision and related independent
investigations.
• Continuing to monitor senior executive talent
management and development plans to provide
succession for all key positions.
Finance
(see Strategic
Report on
page 4 and
Financial
Review on
page 54)
Our audience
• Reviewing and approving the Group budget.
• Scalable platform
Our commercial
partners
• Reviewing financial Key Performance Indicators (KPIs).
• Approving full year results, half year results, trading update
and the Annual Report.
Our suppliers
• Reviewing the Group’s dividend policy.
• Reviewing the key risks to the Group and the controls in
Our investors
place for their mitigation.
• Continued
diversification of
content monetisation
• Ongoing investment
• Considering and monitoring the Group’s risk appetite and
principal risks and uncertainties.
• Approving the viability and going concern statements.
• Reviewing and approving the tax strategy.
Our people
• Monitoring and reviewing the Company’s approach to
• Ongoing investment
Our suppliers
Our investors
corporate governance, its key practices and its ongoing
compliance with the 2018 Code.
• Reviewing the results from the internal Board
effectiveness evaluation.
• Approving updated Committees’ terms of reference.
• Continuing to keep key policies updated and monitor
ongoing compliance.
• Receiving and considering feedback from shareholder
engagement.
• Reviewing and approving the Modern Slavery statement.
Governance
(see page
60 of the
Governance
Report)
68 / FUTURE PLC
Governance Framework
Corporate Governance
Board evaluation
The Directors completed a detailed Board performance evaluation
Summary of performance evaluation
Following an internal performance evaluation carried out in 2019, the
questionnaire as part of the annual performance evaluation process.
following main objectives were identified for 2020, together with
Given the recent appointment of two additional Non-Executive
steps taken to address them.
Directors and a new Chief Financial Officer, the Board considered that
In 2020, an internal performance evaluation was again carried out,
an external evaluation would be more beneficial in 2021 once the
by way of questionnaire, identifying areas of strength and weakness.
newly appointed Directors are more firmly established, and that the
The questionnaire was structured to provide direct comparison with
2020 evaluation should therefore be carried out internally.
the previous year, allowing the Board to identify improving or
Each questionnaire was analysed and a summary of the results and
declining trends and monitor the effectiveness of the steps taken to
the Board’s performance was presented to the Board for discussion.
address the previous year’s findings. The 2020 performance
The Board considers this exercise to be of significant value, and focus
evaluation, which was discussed at the September 2020 Board
is placed on reviewing the quality of information provided to the
meeting, concluded that the Board is highly engaged with strong
Board at the Board’s discussions, the effectiveness of the Board, the
shareholder focus and clear alignment to vision and strategy, making
composition of the Board, including the skillset of the various
for constructive and challenging debate. There is a culture of open
Directors, highlighting whether there are any gaps in the breadth and
communication, mutual trust and respect for each other’s opinions
depth of the Board that should be addressed by the Nomination
and industry knowledge. The Board also agreed on the following
Leadership,
people and
culture
(see page 50)
Our people
• Receiving an update on employee views and
• Ongoing investment
Our investors
• Ensuring the Company remains at the forefront of
engagement.
Committee as part of its succession planning, and to ensure that the
actions for the forthcoming year:
Board is best placed to deliver on its strategic goals and ensure the
long term sustainable success of the Company.
2020 evaluation
Objectives for 2021
Steps to be taken during 2021
Utilising our skills
matrix as part of our
Board succession
planning.
• The Board’s contribution is dependent
on its ability to add strategic relevance,
diversity of perspective and governance
expertise. The Board will continue to
evolve its skills and diversity mix.
Reorganisation
of our Board
Committees and
their remits.
• To make certain changes to
membership of our Board Committees.
The aim of these changes is to make
the best use of Board talent.
Reviewing our
stakeholder
engagement
mechanisms in
relation to the 2018
Code.
• The interests of our stakeholders are
central to the way we operate as a
company. The Board will review the
ways in which we engage with them to
ensure that they facilitate dialogue and
that the interests of our stakeholders
are always considered in our decision
making.
Continuing to set
and monitor our
corporate culture.
• The Board will continue to ensure that
the policy, practices and behaviours
throughout the business are aligned
with the purpose, values and strategy of
Future.
The Board determined that, going forwards, a performance
evaluation should be carried out by an external facilitator once every
three years, as required by the 2018 Code, with the first performance
evaluation to be conducted by an external facilitator no later than
2021.
2019 evaluation
Objectives for 2020
Steps taken during 2020
Further diversity
on Board would be
welcome (especially
US media and UK
PLC experience).
Board to take
more proactive
role in succession
planning and
talent development
at ELT level, and
formalise approach
to workforce
engagement.
Review the schedule
of Board and
Committee meetings
to allow for fuller
discussions.
• Appointment of Meredith Amdur and
Mark Brooker.
• The approach to succession planning
was reviewed during the year.
• The Board asked the Nomination
Committee to review the talent
development plans for the ELT.
• The Board agreed its approach to
workforce engagement (see page 45
for more information).
• The meeting schedule was reviewed
and revised.
Promote
opportunities for
formal/technical
training and ensure
that regular updates
are provided on
technological
and business
developments.
• When a specific training need is
identified, where appropriate, such
training is delivered by the topic being
included at a Board meeting so that
all Directors can benefit. Alternatively,
training is delivered by way of formal
presentations, individual meetings and
site visits in order to learn more about
a particular initiative or project.
• Routine paper on horizon scanning.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 69
Focus area
Key stakeholders
Activities
Link to strategic priorities
Strategy
and
operations
(see Strategic
Report
starting on
page 4)
Our people
• Applying the Board’s strategic understanding of
• Diversifying our
geopolitical and economic risks in international markets
audience
to the Company’s challenges and opportunities.
Our commercial
and determine appropriate course.
• Considering acquisitions and divestments as identified
Our suppliers
acquisition theses.
• Monitoring the performance of the Company against
agreed strategic objectives, including progress against
• Scalable platform
• Continued
diversification of
content monetisation
• Ongoing investment
Our audience
partners
Our investors
developing and embedding best practice in responsible
business behaviour.
• Maintaining and enhancing Future’s culture and values
and key policies and procedures and ensure these are
rolled out to existing and acquired businesses.
• Reviewing whistleblowing statistics, details of cases raised
through the Speak Up provision and related independent
investigations.
• Continuing to monitor senior executive talent
management and development plans to provide
succession for all key positions.
• Considering and monitoring the Group’s risk appetite and
principal risks and uncertainties.
• Approving the viability and going concern statements.
• Reviewing and approving the tax strategy.
corporate governance, its key practices and its ongoing
compliance with the 2018 Code.
• Reviewing the results from the internal Board
effectiveness evaluation.
• Approving updated Committees’ terms of reference.
• Continuing to keep key policies updated and monitor
ongoing compliance.
• Receiving and considering feedback from shareholder
engagement.
• Reviewing and approving the Modern Slavery statement.
Finance
(see Strategic
Report on
page 4 and
Financial
Review on
page 54)
Our audience
• Reviewing and approving the Group budget.
• Scalable platform
Our commercial
partners
• Reviewing financial Key Performance Indicators (KPIs).
• Approving full year results, half year results, trading update
and the Annual Report.
Our suppliers
• Reviewing the Group’s dividend policy.
• Reviewing the key risks to the Group and the controls in
Our investors
place for their mitigation.
• Continued
diversification of
content monetisation
• Ongoing investment
Our people
• Monitoring and reviewing the Company’s approach to
• Ongoing investment
Governance
(see page
60 of the
Governance
Report)
Our suppliers
Our investors
Nomination Committee
Members
Since
Richard Huntingford .....................2017
(Chair)
Meredith Amdur ...............................2020
Mark Brooker .......................................2020 (From October 2020)
Zillah Byng-Thorne .........................2014
Hugo Drayton .....................................2015
Rob Hattrell ...........................................2018
Alan Newman .....................................2018
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. The
Committee’s first task was to
complete its search for an additional
Non-Executive Director with relevant
The Company Secretary, or nominee, acts as secretary
Amdur on 6 February 2020.
US media experience which led to the appointment of Meredith
to the Committee.
Details of individual Directors’ attendance can be
found on page 65.
Skills matrix
During the year, the Nomination Committee again reviewed and
analysed the composition of the Board and the specific skills and
attributes that each Director brings to the Board. A skills matrix,
Key objective of the Nomination Committee
The Nomination Committee supports the Board in
aligned to the Company’s strategy for long term sustainable success
has been developed, and each Director assessed against it.
Executive and Non-Executive succession planning.
Following this review, the Committee identified the need for an
Our key objectives as a Nomination Committee are:
additional Non-Executive Director with public company board
• To make sure the Board has individuals with the
necessary range of skills and knowledge and
diversity of experiences to lead the Company.
• To ensure that it is effective in discharging its
responsibilities and overseeing appropriately all
experience and knowledge and understanding of digital platform-
based businesses. Following a search process, this led to Mark
Brooker being appointed to the Board on 1 October 2020.
Succession planning
The Committee, on behalf of the Board, regularly assesses the
matters relating to corporate governance.
balance of Executive and Non-Executive Directors, and the
composition of the Board in terms of skills, experience, diversity and
capacity.
Key responsibilities
• Ensure succession plans are reviewed.
• Improve diversity on the Board and in the pipeline
for senior management roles.
For the appointments of Meredith Amdur and Mark Brooker,
Heidrick & Struggles were appointed to lead the search for the new
Non-Executive Director. Heidrick & Struggles do not have any other
connection with any of the Directors, or the Company. Working with
• Further strengthen the senior management team.
the Committee, Heidrick & Struggles developed a candidate
Key actions from 2019/20
• Board and Committee composition
• Board succession planning
Priorities for 2020/21
• Monitor Board composition for alignment of relevant
skills, experience and diversity to Company strategy.
• Approve the Board Diversity Policy.
• Oversight of the ELT's development and succession
planning.
70 / FUTURE PLC
specification and a drew up a shortlist of suitable candidates for the
additional Non-Executive Director role, each of which was subject to
a three stage process including interviews with all the Board
members.
The Chief Executive and Executive Leadership Team (ELT)
succession planning is a particular focus of the Committee. Whilst
the Committee and Board hope very much that the current Chief
Executive, Zillah Byng-Thorne, will continue to lead the Company for
the foreseeable future, the Committee felt it would be prudent to
engage an executive search firm, Russell Reynolds, to perform a
desk-top review of the external Chief Executive talent pool. In
addition, the Committee has continued to monitor the ELT and
senior management talent pool to ensure that succession planning
for business-critical roles is proactively reviewed. The Board
considered the implications of the new requirements relating to the
development of a diverse pipeline for succession for the Board and
the ELT contained within the 2018 Code.
Nomination Committee
Corporate Governance
Director induction programme example
We have a detailed Director induction programme which all new Board members participate in.
• Training on ethics
and other topics
• Briefed on outcomes
of most recent
effectiveness
review
• Meeting with
investors
• Meeting with
colleagues during
site visits
Effe ctiv e n e ss
A
c
c
o
u
n
t
a
b
ili
t
y
• Meeting senior
executives
• Site visits
(COVID-19
permitting)
L
e
a
d
e
r
s
h
i
p
R elatio n s w ith
sta k e h old ers
•
• Information
on the Group
budget and
strategy
• Last Annual Report
Board diversity policy
Our objective of driving the benefits of a diverse Board, senior
Independence
During 2019/20, the Committee reviewed the balance of skills,
management team and wider workforce is underpinned by our
experience and independence of the Board. For Non-Executive
strong culture of diversity and inclusion. The Board is developing a
Directors independence in thought and judgement is vital to
Diversity Policy, which is intended to be approved during 2020/21
facilitating constructive and challenging debate in the boardroom
and will be available on our website. The Policy will ensure that it
and is essential to the operational effectiveness of the Future
remains an effective driver of diversity in its broadest sense, having
Board and its committees.
due regard to gender, ethnicity, social background, skillset and
The Committee is satisfied that the external commitments of
breadth of experience.
the Board’s Chairman and members do not conflict with their
Diversity and inclusion have continued to be promoted across the
duties as Directors of the Company.
business with a number of initiatives, including education and
After the year-end, the Committee also considered the
capacity building, resource groups, talent acceleration and
Directors proposed for re-election by shareholders at the AGM.
development and leveraging data and analytics to help achieve our
Following discussion of the skills and contribution of each Director,
ambitions. You can read more about the work that has been done in
and in conjunction with the Board performance evaluation
this area and the benefits they bring to the Group on page 51.
conducted in September 2020, the Committee supports the
The Committee has focused on these areas for a number of years
proposed re-election of all Directors standing for re-election (or
and will continue to consider the various diversity factors set out in
election) at the AGM in 2021. In line with best practice, each
the 2018 UK Corporate Governance Code (the 2018 Code) and the
Committee member was excluded from approving the proposal
Hampton-Alexander and Parker Reports appropriately. We have
for their re-election (or election).
37% female representation on the Board. You can see more
information on the gender split across the Board, senior
management team and the Group as a whole on page 51.
Committee performance and effectiveness
The Committee’s performance was evaluated as part of the internal
Richard Huntingford
Chairman
effectiveness survey, as described on page 69. The review was
completed by all Committee members and no issues arose.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 71
Q&A with
Meredith Amdur
What
attracted you
to Future?
Great executive
ahead to manage and in fact exploit changes
like the end of cookies or the importance of
video is so critical. There is risk in getting too
comfortable and missing the next opportunity
leadership, its
to create entirely new solutions and lead the
ambition and its
market. Innovation is an over-used word, but
fundamental
platform and
content assets.
Future is the
media company I’d always hoped would
emerge - being truly technology and data
I’m a believer in remaining paranoid about
being blind-sided by the next big thing.
How did COVID-19 impact your
induction programme?
My onboarding had just started as the
driven, without de-valuing editorial and
COVID-19 alarm bells started to ring so I was
economically shrewd by building strong,
quickly thrust into the real time decisions
non-commoditized vertical specialised niches.
required to be made by the Board and
What skills do you bring to the
Board and why do you think they
are important?
A breadth of international, industry and
executive in how to manage the health and
viability of the business, supporting
management as it navigated very unsettled
waters, whilst also clearing the acquisition of
TI Media. I picked up my induction after the
functional experience relevant to the unique
dust settled and several major earnings and
mix of technology and editorial content for
integration hurdles already had been cleared.
both B2B and B2C audiences. My background
This staggering of the onboarding/induction
gives me a uniquely multi-disciplinary
experience provided a much more “real-time”
exposure to the growth opportunities and
pragmatic approach to the nature of the
challenges Future faces as it continues to
questions I posed and turned onboarding into
evolve.
more practical support.
What surprised you from the
induction?
The unusually strong alignment among both
What do you think is the biggest
opportunity?
I see massive opportunities in the B2B media
internal and external stakeholders, whom I
and data services space where content and
met as I got to know the Company. Often
intent data are so critical to the direct
when you peer under the hood of a firm, you
marketing formula. Future can continue to
find very different perceptions of what needs
diversify and build powerful two-sided
to happen and by whom. The induction
networks across the data-driven information
revealed a very coherent and consistent set of
values and aspirations.
and advertising marketspaces. With a
management rigour unique among
What do you think is the biggest
challenge?
Sustained success creates its own risk of
publishing companies, Future is poised to be a
major information and economic media hub
in North America and globally, thanks to the
power of its two greatest and eminently
expectation - continuing to meet and exceed
scalable strengths: tremendous first party
the market’s ever higher bar – but also of
editorial content across a range of professional
unanticipated external market risks of what
and consumer interest areas, combined with a
you don’t see coming if you’re only focused on
“digital and platform first” organizing
near term operations. That’s why working well
principle.
72 / FUTURE PLC
Nomination Committee Corporate Governance
ANNUAL REPORT AND ACCOUNTS FY 2020 / 73
Audit and Risk Committee
Dear Shareholder,
On behalf of the Audit
and Risk Committee, I
Members
Since
Alan Newman (Chair) ...............2018
am pleased to present
Meredith Amdur ...........................2020 (From October 2020)
its report for the year
ended 30 September
Hugo Drayton .................................2015
Rob Hattrell .......................................2018
2020. This report sets
(retired from the Committee in September 2020)
out how the Committee
has discharged its duties
in accordance with the
UK Corporate
Key objective of the Audit and Risk Committee
• To monitor the integrity of the Group’s financial reporting processes.
• To ensure that risks are carefully identified and assessed, and that
Governance Code 2018 (the 2018 Code) and its key
sound systems of risk management and internal control are in place.
activities and findings during the year.
We have continued to discuss and challenge the
assumptions and judgements made by management in
the preparation of published financial information and to
Key responsibilities
• Overseeing the accounting principles, policies and practices
adopted by the Group.
oversee the internal controls, including oversight of the
• Overseeing the external financial reporting and associated
external and internal audit processes.
announcements.
The Committee has an annual work plan linked to the
• Overseeing the appointment, independence, effectiveness and
Group’s financial reporting cycle, which ensures that it
remuneration of the Group’s external auditor, including the
considers all matters delegated to it by the Board. In
policy on the supply of non-audit services.
addition to its annual work plan, it reviewed the risk
• Conducting a competitive tender process for the external audit
associated with the TI Media acquisition and considered
when required.
the approach to how the internal audit should be
resourced.
• Reviewing the resourcing, plans and effectiveness of internal
audit, which is independent from the Group’s external auditor.
This year the Board undertook an internally-facilitated
• Ensuring the adequacy and effectiveness of the internal
review of the effectiveness of the Board and Board
control environment.
Committees, including this Committee, in accordance
with the requirements under the 2018 Code and you can
read more about this on page 69.
Alan Newman
Chairman of the Audit and Risk Committee
10 December 2020
“The Audit and
Risk Committee’s
primary objective
is to provide
effective financial
governance”
74 / FUTURE PLC
• Monitoring the Group’s risk management processes and performance.
• Ensuring the establishment and oversight of fraud prevention
arrangements and reports under the whistleblowing policy.
• Ensuring the Group’s compliance with the 2018 UK Corporate
Governance Code.
• Providing advice to the Board on whether the Annual Report and
Accounts, when taken as a whole, is fair, balanced and
understandable and provides all the necessary information for
shareholders to assess the Company’s performance, business
model and strategy.
Key actions from 2019/20
• Reviewed and challenged the application of accounting principles,
policies and practices to the annual and half year results
announcements and the Annual Report.
• Worked with PwC and Deloitte to plan the transition of
external auditor.
• Reviewed the effectiveness of internal audit and the Group’s
underlying control environment.
• Terms of reference of Committee revised to ensure
compliance with the 2018 Code.
Priorities for 2020/21
• Continue to monitor legislative and regulatory changes that may
impact the work of the Committee.
• Consider the impact of proposed audit industry changes.
• Consider a wider range of topics for Committee training.
Audit and Risk Committee Corporate Governance
Membership and meetings
During the year, the Committee met three times and met privately with
the external auditor once. Details of individual Directors’ attendance
• a review of the balance of good and bad news; and
• ensuring it correctly reflects:
• the Group’s position and performance as described on pages 54
can be found on page 65. In addition to the Committee members, the
to 59;
Chief Financial Officer, the Group Finance Director, Group Financial
Controller, and the external auditor attended parts of these meetings
by invitation. The Chairman of the Board and Chief Executive may also
• the Group’s business model, as described on page 21;
• the Group’s strategy, as described on pages 4 to 37.
attend meetings. The Company Secretary acts as Secretary to the
On the basis of this work together with the views expressed by the
Committee. The Chairman of the Committee holds regular meetings
external auditor, the Committee recommended, and in turn the Board
with the external auditors who have an opportunity to discuss matters
confirmed, that it could make the required statement that the Annual
with the Committee without management being present and also with
Report is ‘fair, balanced and understandable’.
the Chief Financial Officer (who has responsibility and custody of the
The Committee also received regular updates from the Chief
internal audit function).
Financial Officer on provisions made for litigation and the Committee
Meetings of the Committee are scheduled close to the end of the half
considered the appropriateness of the methodology applied.
and full year, as well as before the publication of the associated half and
full year financial reports, so as to ensure the Committee is informed
fully, and on a timely basis, on areas of significant risks and judgement.
Risk management
The Board has overall responsibility for determining the nature and
The Committee received sufficient, reliable and timely information
extent of its principal and emerging risks and the extent of the Group’s
from management to enable it to fulfil its responsibilities.
risk appetite, and for monitoring and reviewing the effectiveness of the
The Board has confirmed that it is satisfied that Committee
Group’s systems of risk management and internal control. Further
members possess an appropriate level of independence and depth of
details of the risk management objectives and process are on pages 38
financial and commercial, including sectoral, expertise. For the
to 39.
financial year ended 30 September 2020, Alan Newman was the
The principal risks and uncertainties facing the Company are
member of the Committee determined by the Board as having recent
addressed in the Strategic Report and in the table on pages 40 to 42.
and relevant financial experience.
Going concern and viability statements
The Committee reviewed the updated wording of the Group’s
longer-term viability statement, set out on page 43. To do this, the
The Board has delegated to the Committee the responsibility for
monitoring the effectiveness of the systems of risk management.
Internal control
The Board determines the objectives and broad policies of the Group
Committee ensured that the model used was consistent with the
and meets regularly, when a set schedule of matters which are required
approved three-year plan and that scenario and sensitivity testing
to be brought to it for decision is discussed. Overall management of the
aligned clearly with the principal risks of the Group. Committee
Group’s risk appetite, its tolerance to risk and discussion of key aspects
members challenged the underlying assumptions used and reviewed
of execution of the Group’s strategy remain the responsibility of the
the results of the detailed work performed. The Committee was
Board. The Board has delegated to the Audit and Risk Committee the
satisfied that the analysis supporting the viability statement had been
responsibility for establishing a system of internal controls appropriate
prepared on an appropriate basis. The Committee also reviewed the
to the business environments in which the Group operates.
going concern statement, set out on page 59 and confirmed its
satisfaction with the methodology, including appropriateness of
Key elements of this system include:
sensitivity testing.
- A clearly defined organisation structure for monitoring the conduct
and operations of the business.
Fair, balanced and understandable
The Committee considered whether the Annual Report is ‘fair,
- Clear delegation of authority throughout the Group, starting with
the matters reserved for the Board.
balanced and understandable’, in line with the requirements of the
- A formal process for ensuring that key risks affecting operations
2018 Code. The Committee members were consulted at various
across the Group are identified and assessed on a regular basis,
stages during the drafting process and gave input to the planning
together with the controls in place to mitigate those risks. Risk
process, as well as having the opportunity to review the Annual Report
consideration is embedded in decision-making processes at all
as a whole and discuss, prior to the November 2020 Committee
levels and the most significant risks are periodically reviewed by the
meeting, any areas requiring additional clarity or better balance in the
Board. The risk process is reviewed by the Audit and Risk
messaging.
In this respect the Committee focused on:
• a qualitative review of disclosures and a review of internal
consistency throughout the Annual Report and Accounts;
Committee.
- The preparation and review of comprehensive annual budgets.
- The monthly reporting of actual results and their review against
budget, forecasts and the previous year, with explanations obtained
• a review by the Committee of all material matters, as reported
for all significant variances.
elsewhere in this Annual Report and Accounts;
- The Finance Manual which outlines key control procedures and
• a risk-comparison review, which assesses the consistency of the
presentation of risks, and significant judgements throughout the
policies to apply throughout the Group. This includes clearly
defined policies and escalating authorisation levels for all
main areas of risk disclosure in this Annual Report and Accounts;
procurement activity including capital expenditure and investment,
ANNUAL REPORT AND ACCOUNTS FY 2020 / 75
Significant financial reporting judgements
The Committee considered the following issues relating to the financial statements during the year.
These include the matters relating to risks disclosed in the external auditor’s report:
Area of focus
Reporting issue
Role of the Committee
Conclusion / Action taken
Acquisition
accounting
As outlined on page 9 in the Strategic Report, the Group has completed
At the request of the Committee the Group engaged third party valuations
The Committee agreed with the judgements made by management in respect
a number of significant acquisitions during the year.
experts to assist in the preparation of the purchase price allocation exercises
of the acquisition accounting undertaken during the year and the presentation in
for the most significant acquisitions. The Committee has reviewed detailed
the Group’s results for the year ended 30 September 2020.
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 Barcroft and TI Media acquisitions, as well as the finalisation of the fair
values assigned to the SmartBrief acquisition.
Refer to note 28 on page 159 for further information in respect of the acquisition
accounting undertaken in the year.
Carrying value
of goodwill
and long lived
assets
The Group has goodwill and other intangibles totalling £493.6m on
Management prepared a detailed impairment assessment, which set out the
The Committee agreed that the CGUs used in the assessment (being UK and
the balance sheet at 30 September 2020. The level of intangibles
justification of continuing with the existing cash generating units (‘CGUs) of
US) continue to be appropriate, particularly in light of the level and swiftness
has increased significantly from the prior year due to the TI Media
UK and US in light of the TI Media acquisition and the significant expansion
of integration of TI Media (and historic acquisitions) onto Future’s systems and
acquisition. IAS 36 requires an impairment test to be performed
of the Group (for further details in respect of this judgement see page 133).
platform and the interdependency of revenues across the Group, both between its
for goodwill on an annual basis or where there is an indication of
This assessment concluded that no impairment was required for both the
brands and the Media and Magazine divisions.
impairment.
identified CGUs of the UK and US businesses at 30 September 2020.
The Committee challenged the CGUs identified and the detailed assessment
is required on the basis that there is significant headroom on both the UK and US
and the assumptions made, which included:
- Long-term growth rate to perpetuity UK: 3%, US: 3%
- EBITDA margins assumed UK: 31.0% to 40.0%, US: 26%
- Discount rate (post-tax) 7.8% (both UK and US)
Refer to note 12 on page 144 for further information in respect of the carrying
CGUs identified remain appropriate as the Group continues to evolve.
value of goodwill and long lived assets.
The Committee also agreed with management’s conclusion that no impairment
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 both the level
of headroom on goodwill and other indefinite lived intangibles and whether the
The
classification
of exceptional
items
Tax
Due to the significant acquisition-related activity a number of items
The Committee reviewed and challenged information provided by
The Committee agreed with the conclusion that these items should be separately
(such as acquisition or related integration and restructuring costs)
management explaining the nature and rationale for the inclusion of these
presented within exceptional items, given their nature and magnitude, and
totalling £17.1m are considered exceptional in nature.
items as exceptional and discussed them with the auditors. Refer to note 5 on
excluding them assists the users of the financial statements to better understand
page 137 for further information in respect of exceptional items.
the results of the core operations of the Group.
A provision for uncertain tax positions totalling £5.6m was recognised
The Committee discussed the net release of aspects of the provision for
The Committee agreed with the approach taken to release elements of
in 2019. In the year £1.5m has been released to the income statement
uncertain tax positions, noting developments in the Group's transfer pricing
the provision for uncertain tax positions that was recognised in 2019 on the
as particular areas of uncertainty have been resolved or reduced.
policies and tax authority engagement in FY 2020 and the reduction in the
basis that the risks associated with these elements of the provision are now
An additional £0.4m has been recognised in respect of acquired
perceived level of risk associated with aspects of the provision that had been
considered to be less likely than not to crystallise.
uncertain tax positions. The provision recognised on the balance
recognised previously.
sheet is now £4.5m. The main risks that continue to be provided for
are transfer pricing in both the US and the UK. The transfer pricing
risk arises because the group has material intra-group transactions
relating to the cross border licensing of platform technology and
brands. This risk represents £4.1m (FY 2019: £4.3m) of the Group's total
provision of £4.5m (FY 2019: £5.6m).
In the year an additional deferred tax asset of £14.2m has been
recognised as part of the TI Media acquisition accounting in respect of
historic UK tax losses and unused capital allowances. As this was part
of the opening balance sheet taken on from TI Media there was no
impact on the income statement of the initial recognition of this asset.
The Group utilised £3.6m in the year of previously recognised US tax
losses for which there is a remaining deferred tax asset of £3.1m on
the balance sheet as we believe that it is highly probable that these
will be utilised in the foreseeable future.
The Committee therefore agreed with the recommendation to reduce the
level of provision after applying the measurement principles of IFRIC 23.
The Committee also discussed the recognition of a deferred tax asset in
respect of TI Media and reviewed detailed papers prepared by management
as part of the work undertaken on acquisition accounting.
These papers set out relevant technical references and included forecasts
reflecting the profitability of TI Media as a standalone business.
IFRIC 23.
The analysis concluded that despite a forecast continued decline in magazine
revenues the TI Media business was still expected to generate significant
taxable profits (before any upside synergies arising as a result of the
combined business are considered) and therefore it was highly probable that
the TI Media ‘streamed’ profits will be sufficient to utilise the level of asset
recognised in the foreseeable future. Therefore the requirements set out in IAS
12 Income Taxes for the recognition of losses as an asset were satisfied.
The Committee agreed with the recognition of a deferred tax asset as part
of the TI Media acquisition accounting relating to losses and unused capital
allowances.
The Committee and management will continue to monitor the appropriateness
of these judgements in FY2021 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 the newly adopted
See page 127 for more information in respect of the impact of IFRIC 23.
Provision for
magazine
returns
The Marketforce business acquired with TI Media is a print distribution
The Committee challenged the provision calculations prepared by
The Committee agreed with the level of returns provision recognised by
business. Contracts with the newsstand wholesalers and international
management based on the review of relevant historic and recent returns
management, noting that a balanced and prudent approach had been taken in
distributors are on a sale or return basis. The claims window for which
experience and data. This demonstrated that the level of provision
respect of the level of provision recognised.
returns are permitted can extend to as long as 12 months in respect
recognised was appropriate.
of the export market and therefore a provision is made for estimated
unsold copies where the date for submitting returns claims has not
yet passed.
Refer to note (d) of the section Critical judgements in applying the Group's
accounting policies on 133.
At 30 September 2020 the Group’s total provision for returns was
£37.1m The provision is calculated based on the latest sales data
and, where not yet available, on latest sales forecasts and market
experience.
The returns provision is allocated against the receivable
ledger balance for each wholesaler / distributor, which is then
accounted for as appropriate in the balance sheet as either a net
debtor or a net creditor.
76 / FUTURE PLC
Audit and Risk Committee
Carrying value
of goodwill
and long lived
assets
The
classification
of exceptional
items
Tax
Area of focus
Reporting issue
Role of the Committee
Conclusion / Action taken
Acquisition
accounting
As outlined on page 9 in the Strategic Report, the Group has completed
At the request of the Committee the Group engaged third party valuations
The Committee agreed with the judgements made by management in respect
a number of significant acquisitions during the year.
experts to assist in the preparation of the purchase price allocation exercises
of the acquisition accounting undertaken during the year and the presentation in
for the most significant acquisitions. The Committee has reviewed detailed
the Group’s results for the year ended 30 September 2020.
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 Barcroft and TI Media acquisitions, as well as the finalisation of the fair
values assigned to the SmartBrief acquisition.
Refer to note 28 on page 159 for further information in respect of the acquisition
accounting undertaken in the year.
The Group has goodwill and other intangibles totalling £493.6m on
Management prepared a detailed impairment assessment, which set out the
The Committee agreed that the CGUs used in the assessment (being UK and
the balance sheet at 30 September 2020. The level of intangibles
justification of continuing with the existing cash generating units (‘CGUs) of
US) continue to be appropriate, particularly in light of the level and swiftness
has increased significantly from the prior year due to the TI Media
UK and US in light of the TI Media acquisition and the significant expansion
of integration of TI Media (and historic acquisitions) onto Future’s systems and
Corporate Governance
with larger capital projects, acquisitions and disposals requiring
Board approval. This framework is kept under periodic review.
- A formal controls framework that defines the key controls and the
specific risk that each of these key controls is designed to
mitigate.
- Appropriately qualified staff in our finance, legal and human
resource functions with business continuity plans to ensure that
all key roles have adequate cover.
- A regular timetable of internal controls reviews that include the
testing of key controls and walk-throughs of processes, reported
to the Audit and Risk Committee.
- Regular formal meetings between the Chief Executive, the Chief
Financial Officer and senior management to discuss strategic,
operational and financial issues.
The framework of internal control has continued to operate
acquisition. IAS 36 requires an impairment test to be performed
of the Group (for further details in respect of this judgement see page 133).
platform and the interdependency of revenues across the Group, both between its
throughout the COVID-19 pandemic.
for goodwill on an annual basis or where there is an indication of
This assessment concluded that no impairment was required for both the
brands and the Media and Magazine divisions.
impairment.
identified CGUs of the UK and US businesses at 30 September 2020.
The Committee challenged the CGUs identified and the detailed assessment
is required on the basis that there is significant headroom on both the UK and US
The Committee also agreed with management’s conclusion that no impairment
Refer to note 12 on page 144 for further information in respect of the carrying
CGUs identified remain appropriate as the Group continues to evolve.
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 both the level
of headroom on goodwill and other indefinite lived intangibles and whether the
and the assumptions made, which included:
- Long-term growth rate to perpetuity UK: 3%, US: 3%
- EBITDA margins assumed UK: 31.0% to 40.0%, US: 26%
- Discount rate (post-tax) 7.8% (both UK and US)
value of goodwill and long lived assets.
Due to the significant acquisition-related activity a number of items
The Committee reviewed and challenged information provided by
The Committee agreed with the conclusion that these items should be separately
(such as acquisition or related integration and restructuring costs)
management explaining the nature and rationale for the inclusion of these
presented within exceptional items, given their nature and magnitude, and
totalling £17.1m are considered exceptional in nature.
items as exceptional and discussed them with the auditors. Refer to note 5 on
excluding them assists the users of the financial statements to better understand
page 137 for further information in respect of exceptional items.
the results of the core operations of the Group.
A provision for uncertain tax positions totalling £5.6m was recognised
The Committee discussed the net release of aspects of the provision for
The Committee agreed with the approach taken to release elements of
in 2019. In the year £1.5m has been released to the income statement
uncertain tax positions, noting developments in the Group's transfer pricing
the provision for uncertain tax positions that was recognised in 2019 on the
as particular areas of uncertainty have been resolved or reduced.
policies and tax authority engagement in FY 2020 and the reduction in the
basis that the risks associated with these elements of the provision are now
An additional £0.4m has been recognised in respect of acquired
perceived level of risk associated with aspects of the provision that had been
considered to be less likely than not to crystallise.
uncertain tax positions. The provision recognised on the balance
recognised previously.
sheet is now £4.5m. The main risks that continue to be provided for
are transfer pricing in both the US and the UK. The transfer pricing
risk arises because the group has material intra-group transactions
relating to the cross border licensing of platform technology and
brands. This risk represents £4.1m (FY 2019: £4.3m) of the Group's total
provision of £4.5m (FY 2019: £5.6m).
In the year an additional deferred tax asset of £14.2m has been
recognised as part of the TI Media acquisition accounting in respect of
historic UK tax losses and unused capital allowances. As this was part
of the opening balance sheet taken on from TI Media there was no
impact on the income statement of the initial recognition of this asset.
The Group utilised £3.6m in the year of previously recognised US tax
losses for which there is a remaining deferred tax asset of £3.1m on
the balance sheet as we believe that it is highly probable that these
will be utilised in the foreseeable future.
The Committee therefore agreed with the recommendation to reduce the
level of provision after applying the measurement principles of IFRIC 23.
The Committee also discussed the recognition of a deferred tax asset in
respect of TI Media and reviewed detailed papers prepared by management
as part of the work undertaken on acquisition accounting.
These papers set out relevant technical references and included forecasts
reflecting the profitability of TI Media as a standalone business.
The analysis concluded that despite a forecast continued decline in magazine
revenues the TI Media business was still expected to generate significant
taxable profits (before any upside synergies arising as a result of the
combined business are considered) and therefore it was highly probable that
the TI Media ‘streamed’ profits will be sufficient to utilise the level of asset
recognised in the foreseeable future. Therefore the requirements set out in IAS
12 Income Taxes for the recognition of losses as an asset were satisfied.
The Committee agreed with the recognition of a deferred tax asset as part
of the TI Media acquisition accounting relating to losses and unused capital
allowances.
The Committee and management will continue to monitor the appropriateness
of these judgements in FY2021 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 the newly adopted
IFRIC 23.
See page 127 for more information in respect of the impact of IFRIC 23.
Provision for
magazine
returns
The Marketforce business acquired with TI Media is a print distribution
The Committee challenged the provision calculations prepared by
The Committee agreed with the level of returns provision recognised by
business. Contracts with the newsstand wholesalers and international
management based on the review of relevant historic and recent returns
management, noting that a balanced and prudent approach had been taken in
distributors are on a sale or return basis. The claims window for which
experience and data. This demonstrated that the level of provision
respect of the level of provision recognised.
returns are permitted can extend to as long as 12 months in respect
recognised was appropriate.
of the export market and therefore a provision is made for estimated
unsold copies where the date for submitting returns claims has not
Refer to note (d) of the section Critical judgements in applying the Group's
accounting policies on 133.
yet passed.
experience.
At 30 September 2020 the Group’s total provision for returns was
£37.1m The provision is calculated based on the latest sales data
and, where not yet available, on latest sales forecasts and market
The returns provision is allocated against the receivable
ledger balance for each wholesaler / distributor, which is then
accounted for as appropriate in the balance sheet as either a net
debtor or a net creditor.
Internal audit
Internal control reviews are conducted by the Group's central
finance function which are presented to the Committee. The annual
internal control review plan is approved by the Committee at the
beginning of the financial year and any significant issues identified
within internal control review reports are considered in detail by the
Committee along with the remediation plans to resolve those issues.
Progress against the plan and actions from previous internal control
review papers are monitored by the Committee throughout the year.
The effectiveness of the internal audit function is assessed annually
by the Audit and Risk Committee.
There are a number of key financial processes that are reviewed
every year covering the controls over our bank accounts, payroll and
the debtors ledger. In addition to these standing reviews there were
specific reviews conducted at the request of the Committee in FY
2020 relating to the revenue recognition for online advertising
income and to the usage across the business of corporate credit/
debit cards.
Each of the internal control review reports presented to the
Committee in FY 2020 were assessed to have a moderate assurance
level indicating that there were no significant weaknesses or failings
in the control environment but that some improvements were
required to enhance the effectiveness of the existing controls. The
Committee and the Board are satisfied that these systems operate
effectively in all material respects and with material weaknesses
remediated in a timely fashion.
The Committee regularly considers the level of internal audit
resources to ensure it is appropriate to provide the right level of
assurance over the principal risks and controls throughout the
Group. Following the acquisitions in FY 2020, which have further
diversified revenue streams and added considerable complexity and
scale to the business, the Committee has decided that the Group has
reached a scale where a dedicated internal audit function is
appropriate and will trial an outsourced provider to conduct internal
controls reviews in FY 2021. The basic framework of conducting
standing controls reviews over key financial process and specific
reviews at the request of the Committee will remain in place and the
outsourced internal audit provider will conduct these reviews
following their appointment and report directly to the Chair of the
Audit and Risk Committee.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 77
External audit independence
The Committee is responsible for reviewing the independence of the
Assessment of audit process
The scope of the external audit is formally documented by the auditor.
Company’s external auditor, PricewaterhouseCoopers LLP (PwC),
They discuss the draft proposal with management before it is referred
agreeing the terms of engagement with them and the scope of their
to the Committee who reviews its adequacy and holds further
audit. PwC has a policy of partner rotation, which complies with
discussions with management and the auditor before final approval.
regulatory standards, and, in addition, PwC has a structure of peer
In respect of the financial year ended 30 September 2020, the
reviews for its engagements, which are aimed at ensuring that its
Committee assessed the performance and effectiveness of the
independence is maintained.
external auditor, as well as their independence and objectivity, on the
Maintaining an independent relationship with the Company’s
basis of meetings and a questionnaire-based internal review which was
external auditor is a critical part of assessing the effectiveness of the
completed by the Committee members and regular attendees to the
audit process. European Union legislation on permitted non-audit
Committee. The summary of the results of the questionnaire has been
services came into effect from 17 June 2016 which introduced a
reviewed by the Committee.
permitted non-audit services fee cap for certain services of 70% of the
average audit fee over a consecutive three-year period. This cap came
into effect for the Group in the financial year ended 30 September
Audit tender and appointment
As announced last year, following a tender process, the Audit and Risk
2020. The Committee has agreed the Group’s policy on non-audit fees,
Committee recommended, and the Board agreed to recommend to
and this was reviewed by the Committee during the year ended 30
shareholders, that Deloitte LLP be appointed to succeed PwC (who had
September 2020. The Committee also regularly reviews the level of
held office since 1999) as the Company's auditors. However, given the
audit and non-audit fees paid to PwC. The key principles of the policy on
high level of acquisition integration activities and the impending change
non-audit services are:
• The Committee has approved a list of all permitted non-audit
services which are allowed under UK statutory legislation and
in Chief Financial Officer in 2019/20, the proposed change of auditor
was deferred until the year ending 30 September 2021. A resolution to
appoint Deloitte LLP as auditors for the year ending 30 September
complies with the European Union Directive on audit and non-audit
2021 is being proposed to shareholders at the Company's AGM to be
services. Permitted services include audit-related services such as
held on Wednesday 10 February 2021. You can read more about this in
reviews of interim financial information or any other review of
the Notice of AGM on page 164. The Company has complied with the
financial statements required by law to be audited.
provisions of the Competition and Markets Authority’s Order for FY
• The Audit and Risk Committee updated its policy to ensure that
2020 in respect to audit tendering and the provision of non-audit
non-audit services listed in appendix B of the FRC's revised Ethical
services.
Standard 2019 are not offered to the external auditor.
• Any service that is on the list, if in excess of £100,000, requires the
approval of the Committee.
During 2019/20, the external auditor provided services in relation to
Assessment of the effectiveness of the
Committee
The Committee effectiveness in respect of the year ended 30
the Group’s interim and year end results and Reporting Accountant
September 2020 was evaluated as part of the internal review described
services in respect of the prospectus that was prepared for the TI
on page 69. The key issues that were identified in the previous year’s
Media acquisition. The external auditor has also confirmed to the
assessment were discussed by the Committee to ensure these were
Committee that they did not provide any other non-audit and additional
adequately addressed and the Chairman provided an update where
services and that they have not undertaken any work that could lead to
appropriate.
their objectivity and independence being compromised.
The non-audit services supplied by the external auditor can be found
in note 4 of the financial statements and the total fees incurred for
services which must be provided within the 70% fee cap totalled
£146,000. This was below the permitted fees of £150,000 (being 70%
Looking forward
As well as the regular cycle of matters that the Committee schedules
for consideration each year, we are planning over the next 12 months to:
• Continue to monitor legislative and regulatory changes that may
of the average audit fee for the previous three financial years), and so in
impact the work of the Committee.
compliance with the FRC’s Revised Ethical Standard 2019. The
non-audit services primarily relate to Reporting Accountant
• Consider the impact of proposed audit industry changes.
• Consider a wider range of topics for Committee training.
procedures in respect of acquisitions where a prospectus was required
and in each instance the Committee considered and approved the use
The Committee’s report was approved by a Committee of the Board of
of the external auditor for these services. In the case of each
Directors on 10 December 2020 and signed on its behalf by:
engagement, it was considered appropriate to engage PwC for the
work because of their existing knowledge and experience from prior
Group engagements. The Committee discussed with, and received
confirmation from, the external auditor that the audit team have not
relied on any of the work performed in the Reporting Accountant roles
undertaken as part of the audit and their objectivity and independence
has been safeguarded.
The lead partner is rotated every five years. Katharine Finn was
appointed as the lead audit engagement partner in 2018.
78 / FUTURE PLC
Alan Newman
Chairman of the Audit Committee
10 December 2020
Audit and Risk Committee Corporate Governance
ANNUAL REPORT AND ACCOUNTS FY 2020 / 79
Directors'
Remuneration
Report
Hugo Drayton
Chair of the Remuneration Committee
Members
Hugo Drayton (Chair) .............2015
Since
Dear Shareholder,
On behalf of the Board, I am delighted to present the Directors’
Remuneration Report for the financial year ended 30 September 2020.
Mark Brooker.................................2020 (from October 2020)
As in previous years, this report is split into three sections: (a) this
Alan Newman ............................... 2018 (retired from the
Annual Statement; (b) the Policy Report, setting out the Group’s
Committee in September 2020)
Remuneration Policy (“Policy”) for Executive and Non-Executive
Rob Hattrell .....................................2018
Directors; and (c) the Implementation Report, setting out details of
Directors’ remuneration for the financial years ended 30 September
Other Directors and executives, including Richard
2020 and ending 30 September 2021.
Huntingford (Board Chairman), Meredith Amdur (Non-
Executive Director), Zillah Byng-Thorne (Chief Executive)
and Claire MacLellan (Chief Operating Officer) have been,
Performance and Reward in 2020
The COVID-19 pandemic has disrupted many people, businesses and
from time to time, invited to attend meetings of the
communities in recent months, and looks set to remain a very real
Committee. The Company Secretary, or nominee, acts as
challenge into 2021 and beyond. Faced with such uncertainty, I would
secretary to the Committee. No individuals are involved in
like to start this letter by recognising our brilliant employees across the
decisions relating to their own remuneration.
globe, who have shown great agility in adapting to new ways of working,
Details of individual Directors’ attendance can be found
while ensuring that Future has continued to provide new routes to
on page 65.
Key objective of the Remuneration Committee
Our objective is to have a fair, equitable and competitive
connect with our communities, and to reach new audiences in
innovative ways. This resilience and hard work has ultimately delivered
another year of stellar financial and operational performance, of which
we should all be proud.
total reward package that supports our vision; and to
At the onset of the pandemic, Future took decisive action to ensure
ensure rewards are performance-based and reinforce
the business was sustainable, including the creation of virtual events
long-term shareholder value creation.
and modifying the subscription distribution model to allow audiences
Key responsibilities
• Designing the remuneration policy.
• Implementing the remuneration policy.
• Ensuring the competitiveness of reward.
• Designing the incentive plans.
• Setting remuneration for the Executive Directors and
Board Chairman.
to access content on all digital platforms. To safeguard the health and
safety of our colleagues, all staff moved to work-from-home in
mid-March, with increased communication and touchpoints
established – including weekly CEO letters and virtual town halls, which
included an increased focus on mental wellbeing – to ensure a
continued strong team ethos. In response to feedback around the
increased costs of home-working, the Group established a work-from-
home stipend for all employees, while a hardship fund was put in place
• Overseeing all share awards across the Group.
for any employees facing financial difficulty due to the pandemic.
Key actions from 2019/20
• Engaged with shareholders around proposed
Remuneration policy changes
As part of the initial cost saving measures, the Senior Management
team and Board volunteered 20% reductions to their salaries and fees
over the period March to May. The reduction in pay was returned to the
Senior Management Team in H2 2020 while the Board agreed to forgo
• Terms of reference of Committee revised to ensure
their loss of earnings. All TI Media employees also took tiered salary
compliance with the 2018 Code
reductions based on reduced hours for a limited period. These
Key actions from 2020/21
• Ensure the Remuneration Policy is implemented to align
with business strategy and culture
reductions were paid back to all employees. A number of employees
were furloughed across Future and TI and have since been offered the
opportunity to return to work, and all temporary reductions in pay have
been topped up. A small amount of Government support was received
• Continue to monitor remuneration practice across the
from the UK Coronavirus Job Retention Scheme and from the
Company as a whole, keeping abreast of market practice
80 / FUTURE PLC
Directors' Remuneration Report Corporate Governance
equivalent US Government fund by Future (and by TI Media pre-
50%), and are subject to a two-year holding period that follows the
transfer), and this has been fully repaid.
three-year vesting period. Further details are included on page 88.
Highlights from our full-year results include strong adjusted diluted
The Committee is satisfied that overall pay outcomes in respect of
EPS growth of 57% to 74.7 pence per share and an increase in adjusted
the year ended 30 September 2020 are appropriate and reflect
operating profit of 79%, to £93.4m. This performance continues to be
Future’s continued exceptional financial and operational performance.
underpinned both by investment in our core businesses and our
The annual bonus outcome for the year reflects another strong year of
strategic acquisitions, to drive further growth. Following CMA approval,
profit growth, while vesting of awards granted under the PSP in
in April Future completed its largest acquisition to date – TI Media –
November 2017 reflects strong longer-term financial, value creation for
with strong progress made over the remainder of the year in welcoming
shareholders over the performance period. More broadly, the
new colleagues, following the TUPE transfer in June, and leveraging
Committee is satisfied with the Group’s decisive response to the
their strong portfolio of brands. The Board is excited by the long-term
COVID-19 pandemic and the impact this had on the experience of all
prospects of the acquisition, and in particular by the potential for
key Future stakeholders during the year – including shareholders,
introducing new revenue models and further expanding the Group’s
employees and customers. The Committee has therefore not
reach outside the UK.
exercised any discretion in relation to the outcome of the variable pay
Reflecting this continued strong financial and operational
schemes, or to overall remuneration levels.
performance, the Committee approved maximum bonus payments for
Zillah Byng-Thorne, Penny Ladkin-Brand and Rachel Addison, with the
bonuses for Penny and Rachel pro-rated to reflect their respective 8
AGM outcome and actions arising
You will recall that following a detailed consultation with major
months and 4 months on the Board in the role of Chief Financial Officer.
shareholders, we submitted our Policy to shareholders at our last AGM,
50% of the bonuses earned for FY 2020 will be paid in cash, and 50%
receiving 83.20% of votes in favour. We were pleased that a significant
will be deferred in Future plc shares for 2 years. Further details are
majority of shareholders supported the revised arrangements, which
included on page 96. A similar, full payout of the Group-wide profit pool
aimed to reflect Future’s extraordinary growth and our admission to a
is planned in December 2020, reflecting our strong belief that all
Premium Listing and the FTSE250. The current remuneration
employees should share in the outstanding performance to which they
structure remains clear, simple, and appropriately aligned with the
have contributed.
Company’s strategy, risk appetite and culture. This direction and clarity
Performance conditions attached to PSP awards, made to Executive
will be further enhanced by a new, all-company Value Creation Plan,
Directors in November 2017, were tested to 30 September 2020. Over
which is fully aligned with shareholders’ interests, and benefits every
the performance period, the Company’s share price and EPS (each
employee in the business.
representing 50% of the award) significantly exceeded the targets set
The Committee is pleased to report that a majority of shareholders
at grant. Accordingly, these shares vested in full in November 2020.
voted in favour of the Implementation Report. Noting that overall
Further details, including the value of these awards, are included on
shareholder support was below 80%, the Committee looked into the
page 97.
votes received and, as noted in a 19 June 2020 update, understands
As outlined in last year’s report, Executive Directors were granted
that the main reasons for dissent were related to actual CEO
awards under the PSP on 25 November 2019 (for Rachel Addison 1
remuneration and the proposed increase in CFO remuneration for
June 2020), representing 200% of salary for the CEO and 167% of
FY 2020. In respect of actual CEO remuneration, the Committee notes
salary for the CFO. These awards will vest, subject to the achievement
that these outcomes were delivered as a result of Company
of stretching absolute TSR and EPS growth targets (each weighted
performance over the preceding three years, and in accordance with
CONTEXT OF THE
COMMITTEE’S
DECISIONS
Group adjusted operating
profit £93.4 million
2019 £52.2 million
Adjusted free cash flow
£96.0 million
2019 £53.7 million
Adjusted diluted
EPS 74.7 pence
2019 47.5 pence
Global audience
393.6 million
2019 269.2 million
Historical TSR performance
Growth in the value of a hypothetical £100 holding over the 10 years to 30 September 2020
£1,000
£900
£800
£700
£600
£500
£400
£300
£200
£100
£0
0
1
0
2
r
e
b
m
e
t
p
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S
0
3
t
a
d
e
t
s
e
v
n
i
0
0
1
£
f
o
e
u
a
V
l
Sep 10
Sep 11
Sep 12
Sep 13
Sep 14
Sep 15
Sep 16
Sep 17
Sep 18
Sep 19
Sep 20
Future FTSE250 Index (excl. investment trusts) FTSE All-Share Media Index
ANNUAL REPORT AND ACCOUNTS FY 2020 / 81
the prevailing remuneration policy, as approved by shareholders. In
remain focused on the execution of the Group’s ambitious long-term
respect of the CFO’s remuneration, these changes are consistent with
goals, and to be aligned to, and rewarded for, delivering further
the approved Policy and reflect the need to focus and reward our
market-leading results for our investors, while retaining expertise
critical senior talent over the next phase of the Company’s
within the Group in the years ahead.
development. In conclusion, the Committee considers that the main
Reflecting the entrepreneurial and ambitious culture on which
reasons for the dissenting vote against the Implementation Report are
Future’s recent success is based, our proposed solution is the
addressed by the Remuneration Policy, and that no further actions are
implementation of a new Value Creation Plan (VCP), in which Future’s
required at this time. We continue to welcome feedback from our
employees – including Executive Directors - will participate and share
shareholders and, in accordance with our Terms of Reference, will
in the value created for shareholders (above a hurdle rate of return)
continue to keep all elements of Executive Director remuneration under
over the next three to five years. The value and focus of the proposed
periodic review. Recognising the fast pace of change and continued
VCP is instrumental in harnessing the very best talent, in order to
success that Future continues to deliver and strive for, we will submit a
achieve Future’s collective long-term goals.
revised Remuneration Policy for shareholder approval at the
The Committee engaged with Future’s 15 largest shareholders as
forthcoming February 2021 AGM (the rationale and details are
part of its consultation on the proposed VCP arrangements; I would like
explained below).
to thank those who made time to provide the valuable input which
helped to shape the final design of the plan. We are confident that the
Board changes
As announced in October 2019, Penny Ladkin-Brand served as Chief
plan represents the best interests of all stakeholders and further
enhances our pay-performance linkage. In addition to the VCP, and
Financial Officer through the completion of the acquisition of TI Media
building on feedback received as part of the consultation, we are
after which, on 1 June 2020, she stepped down from the Board and
proposing a number of further best practice changes to the Policy.
assumed the role of Chief Strategy Officer. As a continuing employee,
These include: a material increase to in-post shareholding guidelines;
Penny retained all interests in outstanding share incentives, which will
the introduction of post-employment shareholding guidelines aligned
remain subject to the original performance conditions and vesting
with the Investment Association’s Principles on Remuneration; and an
timeframes. These awards were pro-rated to reflect her new
accelerated timeframe for aligning the Chief Executive’s pension
responsibilities. Details of the adjustment are shown in the table on
contribution with the wider workforce. Full details of the proposed VCP
page 101.
are set out on page 103, with other changes to the Policy set out in the
Rachel Addison took on the role of Chief Financial Officer on 1 June
Policy Table on pages 86 to 87.
2020, with her remuneration arrangements in line with the prevailing
Other decisions in relation to 2021 remuneration
Remuneration Policy and consistent with those of her predecessor,
Effective 1 October 2020, the Chief Executive’s salary will be
namely; a salary of £350,000; a pension contribution aligned with the
increased by 21% to £575,000, the first review of her salary since 2018.
majority of UK employees at 6% of salary; a maximum annual bonus
This increase reflects the Committee’s assessment of Zillah’s
opportunity of 150% of salary, which is pro-rated for time served in her
individual performance in role, her leadership in delivering exceptional
first year; and eligibility for an annual award under the PSP. Rachel was
results for our shareholders, and more generally the increase in size,
granted a pro-rated award of 17,222 shares under the PSP on 1 June
complexity and geographical spread of the Group in recent years.
2020, which will vest based on the same three-year EPS and absolute
Further details on the background to this change are included on page
TSR targets set out in last year’s report.
102 of this Report. The Committee observes first-hand the dedication
Finally, during the year we were also pleased to welcome two new
and time that Zillah gives to her role, and strongly believes that the
Non-Executive Directors to the Future plc Board: Meredith Amdur, with
increase positions the resulting salary level appropriately against the
effect from 6 February 2020; and Mark Brooker, with effect from 1
market. Reflecting the level of increase, the Committee has agreed that
October 2020. Mark joined the Remuneration Committee from the
this salary level will remain fixed for at least the next two years.
date of his appointment. Fees paid to Meredith and Mark are in line with
In line with our commitment in the Remuneration Policy approved by
the fees paid to the other Non-Executive Directors, as disclosed on
shareholders in 2020, the Chief Executive’s pension benefit will be
page 103, and in accordance with our Policy.
reduced to match the benefit of the wider workforce in two stages from
15% to 6% by 2022 (to 10.5% of salary in January 2021 and to 6% of
Looking ahead: remuneration in 2021
Future’s strategy is to deliver exceptional results: on-going investment
salary in January 2022). The Chief Financial Officer will receive an
inflationary pay rise of 1.5% in January 2021, in line with the wider
in organic growth, to cement our market leadership positions and
workforce, whilst her pension contribution will remain at 6% of salary,
develop lead generation revenues, has been successfully paired with
in line with that available to other Future employees.
targeted, value-generating acquisitions, to diversify our content
The annual bonus will operate on the same basis as last year, with
offering, revenue streams and geographic reach. While the COVID-19
maximum opportunities of 200% and 150% of salary for the CEO and
pandemic continues to disrupt, the Board remains confident in Future’s
CFO respectively, and performance assessed against adjusted
ability to deliver further growth, through effective execution and agility
operating profit. Subject to shareholder approval, the VCP will replace
in our response to the evolving media landscape.
participation in the PSP for the next three years, adding new clarity and
Future’s senior management and staff drive the delivery of our
simplicity to the long-term incentives for the Executive Directors (and,
ambitious strategy, and therefore the Committee has considered, at
indeed, our other employees).
length, how best to incentivise, motivate and retain Future’s workforce,
Full details of our approach to executive remuneration in FY 2021 are
for the benefit of all of our stakeholders. Our aim is for colleagues to
included on pages 94 to 103.
82 / FUTURE PLC
Directors' Remuneration Report Corporate Governance
Workforce pay considerations
The Committee takes an active role in monitoring pay and practices
groups, and a partnership with Inclusive Employers, to support the
delivery of a programme of training and education across the Group.
across the wider workforce, and considers this information when
We are pleased with the continued progress made in this area during
determining the remuneration of Executive Directors. This included the
the year and look forward to further development over the coming
US Employee Share Plan programme which is being launched in 2021.
years.
You will see more information about this in the AGM notice on page 164,
as the rules are being put to shareholders for approval. Reflecting her
role in the Group’s People and Culture agenda, the Chief Operating
Conclusion
It is a huge privilege to collaborate with the talented Executive and
Officer, Claire MacLellan, is invited to attend Committee meetings on a
Non-Executive team at Future. Future’s restless ambition for
regular basis to provide updates on workforce initiatives and to offer an
responsible growth continues to create an exciting corporate
employee perspective on the Committee’s decision-making process.
environment. This year’s acquisition of TI Media delivers further
This year, for the first time under the revised reporting regulations,
opportunities for diversification and new success, on behalf of Future’s
we have disclosed ratios of CEO pay to the wider population, shown on
shareholders, and all its stakeholders.
page 99. We will monitor the headline ratios – as well as ratios of salary
I would like to thank Future’s shareholders, many of whom I have
and pay, excluding long-term incentives – as part of our overall
engaged with this year; above all I would like to pay tribute to the whole
deliberations on future executive remuneration, and provide further
Future workforce, for the positive, caring and creative way they have
commentary on this area in subsequent reports.
faced the multiple challenges of this unprecedented year. The scene is
Finally, the Committee continues to consider and embrace equality
set for further growth and success.
and diversity in the workforce. Details of our gender diversity across
the Group are provided on page 51, with the Committee noting a
headline reduction in the median gender pay gap for 2019/20. We
remain confident in the Group’s long-term commitment to building a
diverse, inclusive and gender-balanced workforce, through on-going
initiatives such as the formation of a colleague Inclusion & Diversity
Hugo Drayton
Chair of the Remuneration Committee
forum, development of internship programmes for under-represented
10 December 2020
Remuneration at a glance
This table sets out a summary of how the remuneration policy will apply during FY 2021:
Remuneration element
Application of the remuneration policy
Base salary
See page 102 for more details
Pensions and benefits
See page 102 for more details
Annual bonus
See page 103 for more details
Value Creation Plan
See page 103 for more details
The Chief Executive’s salary will increase by 21% on 1 October 2020, fixed for a period of two
years. The Chief Financial Officer will receive an inflationary pay rise of 1.5%, in line with the
wider workforce, in January 2021.
• Chief Executive £575,000
• Chief Financial Officer £355,250
Future annual inflationary pay rises for Executive Directors are in line with the wider workforce.
In line with our commitment in the Remuneration Policy approved by shareholders at the AGM
in 2020, the Chief Executive’s pension benefit will be reduced to match the benefit of the wider
workforce. The current (15% of salary) benefit will reduce to 6% in two stages by January 2022.
There is no change to the Chief Financial Officer’s pension or benefits.
• Chief Executive 15% of salary, reducing to 10.5% in January 2021
• Chief Financial Officer 6% of salary (in line with the wider workforce)
No changes to maximum award levels of:
• Chief Executive - 200% of salary
• Chief Financial Officer - 150% of salary
Bonus to be paid: 50% in cash in November 2021; and 50% in Future shares, deferred for two years.
The performance measures for FY 2021 are based solely on adjusted operating profit, adjusting
for any material acquisitions, as required.
New Plan, replacing the PSP, subject to shareholder approval:
One-off award of units rewarding employees with a percentage of any shareholder value
created over the next three to five years, above a hurdle rate of return of 10% per annum.
Units vest based on value created in terms of £ Total Shareholder Return (TSR) and are
converted to Future shares.
For Executive Directors, vested shares shall be required to be held until the fifth anniversary of
the date of grant.
Performance Share Plan
See page 103 for more details
Subject to approval of the VCP, no further awards will be made to existing Executive Directors
under the PSP over the life of this Policy.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 83
2020 outcomes
Performance
Measure
Annual Bonus
EBITDA
Overall
PSP1
Adjusted EPS
Share price
Overall
Threshold3
£m
Target3
£m
Maximum3
£m
Actual
% weighting
% of maximum
achieved
65.9
67.6
76.0
101.9
100%
23.0p
400p
-
-
26.0p
450p
74.7p
1,505p2
50%
50%
100%
100%
100%
100%
100%
1 Representing 100% of LTIP awards granted in November 2017, vesting of which was dependent on adjusted EPS and share price performance to 30 September 2020. See page 97 for further details.
2 Based on the average share price for any 90 day period from the date of the grant of the award up to and including the last day of FY 2020.
3 Awards vest on a straight-line basis between threshold, target and maximum performance. For threshold performance, 25% of the maximum award vests for the annual bonus and PSP respectively.
Adjustments are made to targets for material acquisitions, being those that contribute EBITDA of more than 15% of the total Group’s EBITDA for the relevant financial year. Acquisitions in the year did not
meet this threshold, therefore no adjustment to targets was made (however, if an adjustment had been made then the bonus would still have paid out in full, due to the level of performance in the year).
This report has been prepared in accordance with the provisions of the
Payments to past directors (page 100); Payments for loss of office
Companies Act 2006, and Schedule 8 of the Large and Medium-sized
(page 100); and the statement of directors’ shareholdings and share
Companies and Groups (Accounts and Reports) Regulations 2008 (as
interests (page 100). The remaining sections of the report are not
amended). It also meets the requirements of the UK Listing Authority’s
subject to audit.
Listing Rules and the Disclosure and Transparency Rules.
The Committee is seeking shareholder approval for a new
In accordance with the Regulations, the following sections of the
remuneration policy at the 2021 AGM. The principal changes compared
Remuneration Report are subject to audit: the single total figure of
to the previously approved policy are identified in the relevant sections
remuneration for Directors and accompanying notes (page 95);
below and relate primarily to the introduction of a new Value Creation
Scheme interests awarded during the financial year (page 97);
Plan (VCP) as well as a number of best practice features.
Directors’ Remuneration Policy
The Group aims to balance the need to attract, retain and motivate
remuneration is linked to Group performance.
Executive Directors and other senior executives of an appropriate
calibre, with the need to be cost effective, while at the same time
• Remuneration packages and employment conditions of Executive
rewarding exceptional performance. The Committee has designed a
Directors should be considered in conjunction with both those of key
remuneration policy that balances those factors, taking account of
senior managers (keeping succession planning in mind) and all
prevailing best practice, investor expectations and the level of
employees in the Group, in order to achieve a consistent
remuneration and pay awards made generally to employees of the
remuneration policy across the Group.
Group.
In determining the level and make-up of Executive Directors’
• The Committee should retain overarching discretion to adjust
remuneration, the Committee carefully considers the following
performance-related elements of remuneration, to ensure alignment
principles:
of pay with performance, and that there is no reward for failure –
whether financial or operational.
• Remuneration packages offered to Executive Directors should be
competitive with those available for comparable roles in high-growth
• Executive Director remuneration should support the strategy, values
companies and companies operating in similar markets, on a similar
and culture of the Group. Pay should be simple and easy to
scale and with a similar culture to Future. They should be sufficiently
understand, with all aspects clear and openly communicated to
competitive to attract, retain and motivate high calibre Directors to
stakeholders and in alignment with pay philosophies across the
perform at the highest levels, while at the same time ensuring that
Group.
recruitment and remuneration expenditure is not excessive and that
remuneration does not encourage excessive risk-taking.
The 2018 UK Corporate Governance Code sets out principles against
which the Committee should determine the Policy for executives. A
• The interests of Executive Directors should be aligned with those of
summary of the principles and how the revised Remuneration Policy
shareholders by ensuring that a significant proportion of
reflects these is set out below.
84 / FUTURE PLC
Directors' Remuneration Policy Corporate Governance
Principle
Approach
Clarity
Remuneration arrangements should
be transparent and promote effective
engagement with shareholders and
the workforce.
The Committee operates a consistent remuneration approach that
is well-understood internally and externally. Major shareholders were
consulted on proposed revisions to the Policy.
Simplicity
Remuneration structures should avoid
complexity, and their rationale and
operation should be easy to understand.
Although the VCP is not common market practice, the Committee
believes that the structure of the scheme is simple, providing
participants with a share of value created above an absolute TSR
hurdle. Other elements of remuneration are market-standard.
Risk
Remuneration arrangements should ensure
reputational and other risks from excessive
rewards, and behavioural risks that can arise
from target-based incentive plans, are
identified and mitigated.
Each year, incentive targets will be set which the Committee believes
are stretching and achievable within the risk-appetite set by the
Board. The Committee retains discretion to override formulaic
incentive outcomes in the event that this would produce a result
inconsistent with the Company’s remuneration principles.
All variable incentives incorporate malus and clawback. These
provisions allow the Committee to reduce the outcomes, potentially
down to zero, in cases of material financial misstatement, calculation
error, fraud or gross misconduct. The Committee believes that these
triggers are appropriately wide-ranging and has worked to ensure
they are enforceable.
Predictability
The range of possible values of rewards to
individual Directors and any other limits or
discretions should be identified and
explained at the time of approving the policy.
The Committee maintains clear caps on incentive opportunities and
will use its available discretion if necessary. The proposed VCP includes
an aggregate cap for all participants for each tranche.
Proportionality
The link between individual awards, the
delivery of strategy and the long-term
performance of the Company should be
clear. Outcomes should not reward poor
performance.
The Committee ensures performance metrics are clearly aligned with
the Group’s strategy each year, maintaining an appropriate balance
between base pay, short and long-term incentive opportunities.
Targets are set to be stretching but achievable, within the Board’s risk
appetite.
Alignment to culture
Incentive schemes should drive behaviours
consistent with Company purpose, values
and strategy.
Incentive schemes are periodically reviewed by the Committee to
ensure they remain consistent with the Group’s purpose, values and
strategy.
The proposed VCP is an all-employee scheme, which reflects the
entrepreneurial and ambitious culture of the Group, and provides
Future’s employees with the opportunity to share in the value created
for shareholders over the next three to five years.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 85
This section of the report sets out the policy for Executive Directors,
which the Company is asking shareholders to approve at the
February 2021 AGM. It is intended that the revised policy will come
into effect from that date, for a period of no more than three years.
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).
Element
Operation
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.
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.
Pension
The Company shall make a contribution up to a maximum percentage of basic annual salary.
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.
Performance-
related bonus
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 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.
Objective & link to
strategy
To recruit, retain and
motivate individuals of
high calibre, and reflect
the skills, experience
and contribution of the
relevant Director.
To ensure broad
competitiveness with
market practice.
To ensure alignment
with the wider
workforce and broad
competitiveness
with market practice.
To encourage share
ownership by employees
and align their interests with
those of the shareholders.
Designed to reward
delivery of shareholder
value and
implementation of the
Group’s strategy.
One-off award of units rewarding Future employees (including Executive Directors) with a percentage of
additional shareholder value created over the next three to five years, above a hurdle.
Units vest based on value created in terms of £ Total Shareholder Return (TSR) and are converted to
Future shares.
The VCP comprises three equal tranches, based on performance measured over three periods, from
1 October 2020 to: 30 September 2023; 30 September 2024; and 30 September 2025. For Executive
Directors, any shares that vest will be required to be held until the fifth anniversary of grant at the earliest.
Awards under the VCP are subject to malus and clawback provisions, further details of which are included
as a note to the policy table.
Designed to align
the interests of Future
employees and
shareholders, by
incentivising the
delivery of exceptional
shareholder returns
over the long-term.
Value
Creation
Plan (VCP)
Subject to shareholder approval of the VCP, no further awards will be granted under the long-term share-based incentive (PSP) to
current Executive Directors during the life of this Policy. Details of the PSP, under which there are a number of awards outstanding, are
included below, for the purpose of transparency. In the event that a new Executive Director is appointed joins when the performance
period(s) of the VCP is materially completed, the Committee reserves the right to make an award under the PSP on the terms set out
in the Policy table, instead of under the VCP – see approach to recruitment remuneration section on page 91.
Long-term
share-based
incentive
(PSP)
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 in the
medium-to-long term.
such lower level as determined by the Committee) for the first cycle, 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 initial
grant values. The overall cap is therefore 400% of salary.
Awards expressed as a fixed number of shares, worth up to 200% of salary (or
provided they are not deemed to be commercially sensitive.
to shareholder
86 / FUTURE PLC
Max. potential value
Performance measures
Policy changes
for FY 2021
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.
Not applicable.
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
prevailing market rates for such cover.
Not applicable.
Total cost annually shall not exceed 15% of basic annual salary.
Pension contributions for the Chief Executive will be aligned with the broader
workforce rate by 1 January 2022.
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).
Not applicable.
The maximum participation levels for all-employee share plans will be the
limits set out in UK tax legislation.
Not applicable.
None
None
None
None
For both the Chief Executive and Chief Financial Officer the
Committee retains discretion to vary the potential total maximum
the measures and their relative weightings are disclosed
bonus, the weighting of the variable elements and the stretch of the
annually in the Directors’ remuneration report with
targets in order to incentivise or recruit Executive Directors, provided
the targets disclosed, provided they are not deemed
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.
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.
None
The performance measures' relative weightings and
targets are set annually by the Committee. Details of
Target performance will typically deliver up to 50% of maximum
bonus, with threshold performance typically paying up to 25% of
maximum bonus.
To the extent that performance exceeds the hurdle on a measurement
date, participants share 3.33% of the shareholder value created above
the hurdle, subject to an overall cap of £95m per tranche.
Total units awarded will be 980,000 per tranche of which the
CEO’s allocation is 140,000 per tranche and the CFO’s allocation is
63,000 per tranche. The remaining units will be allocated to Future’s
employees, with a small pool reserved for future hires and promotions.
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.
Units vest based on value created in terms of £ TSR, being
the growth in Future’s market capitalisation plus net
equity cashflows to shareholders (i.e. dividends plus share
buybacks, less share issues), over and above a hurdle rate
of return of 10% per annum.
Future’s starting market capitalisation is based on the spot
closing price of a share on 30 September 2020.
Value created at each measurement date will be calculated
with reference to the average closing return index over the
three months ending on that date.
To the extent that performance does not exceed the hurdle
on a measurement date, the relevant tranche will lapse in
full, immediately. There will be no re-testing allowed.
The ultimate release of any shares will be subject to the
Committee satisfying itself that the recorded outcome is a
fair reflection of the underlying business performance over
the period.
New Plan and
policy element
which will
replace the PSP
for current
Executive
Directors,
subject to
shareholder
approval.
Performance targets are set annually by the Committee and
No change.
disclosed annually in the Directors’ remuneration report,
However, subject
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.
Under each measure, threshold performance will generally
result in up to 25% of maximum vesting for that element.
Awards are subject to a mandatory two-year holding period
following the end of a three-year vesting period.
approval for the
VCP, no further
awards will be
granted under the
PSP to current
Executive
Directors during
the life of
this Policy.
Directors' Remuneration Policy Element
Operation
Max. potential value
Performance measures
Policy changes
for FY 2021
Corporate Governance
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.
Not applicable.
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
prevailing market rates for such cover.
Not applicable.
Total cost annually shall not exceed 15% of basic annual salary.
Pension contributions for the Chief Executive will be aligned with the broader
workforce rate by 1 January 2022.
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).
Not applicable.
The maximum participation levels for all-employee share plans will be the
limits set out in UK tax legislation.
Not applicable.
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.
To the extent that performance exceeds the hurdle on a measurement
date, participants share 3.33% of the shareholder value created above
the hurdle, subject to an overall cap of £95m per tranche.
Total units awarded will be 980,000 per tranche of which the
CEO’s allocation is 140,000 per tranche and the CFO’s allocation is
63,000 per tranche. The remaining units will be allocated to Future’s
employees, with a small pool reserved for future hires and promotions.
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.
Units vest based on value created in terms of £ TSR, being
the growth in Future’s market capitalisation plus net
equity cashflows to shareholders (i.e. dividends plus share
buybacks, less share issues), over and above a hurdle rate
of return of 10% per annum.
Future’s starting market capitalisation is based on the spot
closing price of a share on 30 September 2020.
Value created at each measurement date will be calculated
with reference to the average closing return index over the
three months ending on that date.
To the extent that performance does not exceed the hurdle
on a measurement date, the relevant tranche will lapse in
full, immediately. There will be no re-testing allowed.
The ultimate release of any shares will be subject to the
Committee satisfying itself that the recorded outcome is a
fair reflection of the underlying business performance over
the period.
None
None
None
None
None
New Plan and
policy element
which will
replace the PSP
for current
Executive
Directors,
subject to
shareholder
approval.
Objective & link to
strategy
To recruit, retain and
motivate individuals of
high calibre, and reflect
the skills, experience
and contribution of the
relevant Director.
To ensure broad
competitiveness with
market practice.
To ensure alignment
with the wider
workforce and broad
competitiveness
with market practice.
To encourage share
ownership by employees
and align their interests with
those of the shareholders.
Basic annual salary is paid in 12 equal monthly instalments during the year and is reviewed annually.
Basic annual
salary
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.
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.
Pension
The Company shall make a contribution up to a maximum percentage of basic annual salary.
All-employee
share plans
as other employees.
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
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.
Performance-
related bonus
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 vest two years after the award date.
Designed to reward
delivery of shareholder
value and
implementation of the
Group’s strategy.
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.
One-off award of units rewarding Future employees (including Executive Directors) with a percentage of
additional shareholder value created over the next three to five years, above a hurdle.
Units vest based on value created in terms of £ Total Shareholder Return (TSR) and are converted to
Future shares.
Value
Creation
Plan (VCP)
The VCP comprises three equal tranches, based on performance measured over three periods, from
1 October 2020 to: 30 September 2023; 30 September 2024; and 30 September 2025. For Executive
Directors, any shares that vest will be required to be held until the fifth anniversary of grant at the earliest.
Awards under the VCP are subject to malus and clawback provisions, further details of which are included
as a note to the policy table.
Designed to align
the interests of Future
employees and
shareholders, by
incentivising the
delivery of exceptional
shareholder returns
over the long-term.
Long-term
share-based
incentive
(PSP)
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 in the
medium-to-long term.
Awards expressed as a fixed number of shares, worth up to 200% of salary (or
such lower level as determined by the Committee) for the first cycle, 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 initial
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.
Under each measure, threshold performance will generally
result in up to 25% of maximum vesting for that element.
Awards are subject to a mandatory two-year holding period
following the end of a three-year vesting period.
No change.
However, subject
to shareholder
approval for the
VCP, no further
awards will be
granted under the
PSP to current
Executive
Directors during
the life of
this Policy.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 87
Performance measure selection and approach
to target setting
Measures used under the performance-related bonus are selected
Shareholding guidelines
The Committee strongly believes in aligning the interests of Executive
Directors and shareholders. Shareholding guidelines were formalised
annually to reflect the Group’s main short-term objectives and can
in 2018, which require Executive Directors to acquire and maintain a
reflect both financial and non-financial priorities, as appropriate.
holding of Future shares (excluding shares that remain subject to
The Committee considers that adjusted operating profit
performance conditions), within five years of appointment. Reflecting
(previously EBITDA) is an important and recognised measure of the
feedback received from shareholders as part of the most recent
Company’s performance that reinforces the strategic objective of
consultation, the shareholding guideline will be increased with effect
profitable growth. The use of £ TSR in the new VCP is directly aligned
from 2021 to 400% of salary in respect of the Chief Executive and to
with the interests of shareholders, and ensures that Executive
300% of salary in respect of the Chief Financial Officer (previously
Directors are rewarded only if they deliver material shareholder
200% of salary for both Executive Directors). Details of the Executive
returns over the longer-term. More generally, the focus on absolute
Directors’ current shareholdings are provided in the Implementation
performance measures reflects the Company’s unique business
Report on page 100.
structure and lack of direct competitors, which would make
Also building on feedback received as part of our shareholder
comparisons (and therefore target setting) difficult.
consultation programme, the Committee has reconsidered the
Targets applying to the performance-related bonus are reviewed
introduction of post-employment guidelines. It is our intention that
annually, based on a number of internal and external reference points.
from 2021, Executive Directors will normally be expected to maintain
Performance targets are set to be stretching but achievable, with
a holding of Future shares for a period after their employment with the
regard to the particular strategic priorities and the economic
Company. This shareholding guideline will be equal to the lower of an
environment in a given year. Targets are typically not disclosed in
Executive Directors’ actual shareholding at the time of their departure
advance due to commercial sensitivity but will typically be
and the shareholding requirement in effect at the date of their
retrospectively disclosed in full, following the year-end, to the extent
departure, with such shares to be held for a period of at least two
that such commercial sensitivity concerns no longer apply.
years from the date of ceasing to be an Executive Director. The
Targets applying to the VCP are disclosed prospectively in the table
specific application of this shareholding guideline will be at the
above. The hurdle rate of 10% per annum is considered to be between
Committee’s discretion.
median and upper quartile, compared to the historical returns of
FTSE250 constituents, with capping of the scheme requiring
performance significantly above upper decile performance.
Remuneration for other employees
All employees of the Group receive a basic annual salary, benefits,
Malus and clawback
Payments and awards under the performance-related bonus, PSP
and VCP 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
pension and annual bonus (subject to financial performance). The
vesting. Circumstances in which malus and clawback may be applied
maximum value of remuneration packages is based on the seniority
include a material misstatement of the Company’s financial accounts,
and responsibilities of the relevant role. A key feature of the new VCP
fraud or gross misconduct on the part of the award-holder or an error
is that a much broader group of employees (in comparison to the
in calculating the award vesting outcome.
PSP) will be awarded units under the plan to enable them to share in
Participants in the performance-related bonus, PSP and VCP are
the value created for shareholders above a stretching hurdle,
required to acknowledge their understanding and acceptance of the
supporting alignment not only with the interests of shareholders, but
malus and clawback provisions as a pre-condition to participating in
also alignment of interests across the employee population.
these plans. The Committee is satisfied that the malus and clawback
provisions are appropriate and enforceable.
88 / FUTURE PLC
Directors' Remuneration Policy Corporate Governance
Pay for performance scenarios
The charts below provide an illustration of the potential future reward
The ‘Target’ scenario reflects fixed remuneration as above, plus
performance-related bonus payout of 50% of maximum. No VCP
opportunities for the Chief Executive and Chief Financial Officer, and
value is shown for this scenario, reflecting the stretching £ TSR hurdle
the potential split between the different elements of remuneration
rate of 10% per annum - which is higher than the threshold absolute
under three different performance scenarios: ‘Minimum’, ‘Target’,
TSR target applying to previous PSP awards (and achievement of
‘Maximum.
which would result in £nil payout under the VCP).
Potential reward opportunities are based on Future’s remuneration
The ‘Maximum’ scenario includes fixed remuneration and full payout
policy, applied to the base salary effective 1 October 2020. The
of the performance-related bonus. The value of the VCP shown is
performance-related bonus is based on the maximum opportunities
based on an accounting fair value assessment as at 1 October 2020,
set out under the remuneration policy for normal circumstances. Note
with the resulting value amortised over three years.
that VCP awards will vest in tranches after three, four and five years
The Companies (Miscellaneous Reporting) Regulations 2018 require
(and are thereafter subject to a holding period, bringing the total time
a fourth scenario, showing the value at maximum assuming share
to release to five years from grant). As the VCP is intended to replace
price growth of 50% for the purpose of long-term incentive awards.
the PSP for at least the next three years, the values shown reflect the
We have chosen not to illustrate this scenario above since the value of
aggregate value of the VCP amortised over three years.
the VCP is dependent on share price growth above a hurdle of 10% per
The ‘Minimum’ scenario reflects base salary, pension and benefits
annum. 50% share price growth over the maximum five-year
(i.e. fixed remuneration) which are the only elements of the Executive’s
performance period equates to c.8.4% per annum growth and would
remuneration packages not linked to performance.
generate no value to participants under this scheme.
Zillah Byng-Thorne
Rachel Addison
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
R
4000
3000
2000
1000
0
£3,297
45.1%
34.9%
2000
1500
1000
)
0
0
0
£
(
n
o
i
t
a
r
e
n
u
m
e
R
500
£383
£1,578
42.4%
33.3%
£646
40.7%
£1,234
46.6%
£659
100%
53.4%
20.0%
100%
59.3%
24.3%
Minimum
On-target
Maximum
Minimum
On-target
Maximum
0
Fixed remuneration Performance-related bonus VCP
Fixed remuneration Performance-related bonus VCP
FY 2021 remuneration assumptions
Executive Director
Salary
Pension
Benefits
Zillah Byng-Thorne
£575,000
11.6%1
£17,000
Rachel Addison
£350,000
6.0%
£12,000
1 Zillah Byng-Thorne's pension is based on 15% of salary for 3 months and 10.5% of salary for 9 months of the financial year.
Maximum
performance-
related bonus
Amortised fair
value VCP valuation
200%
150%
£1,487,971
£669,587
ANNUAL REPORT AND ACCOUNTS FY 2020 / 89
Policy table for 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 FY21
Not applicable.
None.
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 103.
Aggregate fees
paid to Non-Executive
Directors are subject
to the limits set out in
the Articles of
Association.
90 / FUTURE PLC
Directors' Remuneration Policy Corporate Governance
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
Salary
Benefits
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.
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.
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.
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.
Maximum %
of salary
n/a
n/a
n/a
Performance-
related bonus
The structure described in the Policy table 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.
200%
Share incentive
schemes
The VCP is intended to be the primary long-term incentive
arrangement under the new Policy. New appointees will typically
receive awards on the same terms as other executives, as described in
the Policy table, taking into account the proportion of the performance
period remaining and the level of shareholder value already created
under the scheme.
In the event that a new appointee joins when the performance
period(s) of the VCP is materially completed, the Committee reserves
the right instead to make an award under the PSP on the terms set out
in the Policy table.
VCP: Individual limit of 140,000 units
per tranche, subject to aggregate
plan limit of 980,000 units per
tranche
PSP: Fixed number of shares, with a
face value of up to 400% of salary
(where used)
In determining an appropriate remuneration package, the
addition to the remuneration structure outlined in the table above. In
Remuneration Committee will take into consideration all relevant
doing so, the Committee will consider relevant factors including time
factors (including quantum, nature of remuneration and the
remaining until vesting, any performance conditions attached to
jurisdiction from which the candidate was recruited) to ensure that
these awards and the likelihood of such conditions being met. Any
arrangements are in the best interests of both the Company and its
such buy-out awards would typically be made under the existing
shareholders.
performance-related bonus and PSP schemes, although in
The Committee may make an award in respect of a new
exceptional circumstances the Committee may use the exemption
appointment to buy out incentive arrangements forfeited on leaving a
permitted within the Listing Rules. Any buy-out awards would have a
previous employer on a like-for-like basis, which may be awarded in
fair value no higher than that of the awards forfeited.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 91
Internal Executive Director appointment
In cases of appointing a new Executive Director by way of internal
promotion, the Remuneration Committee and Board will be
In a leaver event, the following payments may also be made to
departing Executive Directors:
consistent with the policy for external appointees detailed above.
1. Any share-based entitlements granted to an Executive Director
Where an individual has contractual commitments made prior to their
under Company share plans will be determined based on the
promotion to Executive Director level, the Company will continue to
relevant plan rules. In certain prescribed circumstances, such as
honour these arrangements.
Non-Executive Directors
In recruiting a new Non-Executive Director, the Remuneration
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 and VCP, for good leavers,
awards will normally be reduced pro-rata to reflect the proportion
Committee will use the policy as set out in the table on page 90.
of the vesting period actually served and tested for performance at
Service contracts and loss of office payments
Copies of Directors’ service agreements and letters of appointment are
the end of the original performance period. Vested PSP and VCP
awards which are subject to an additional holding period will
typically be retained and released at the end of the holding period,
available for inspection on request at the Company’s registered office.
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.
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.
Executive Directors
In summary, the contractual provisions for current Executive
Directors are as follows:
Contract
provision
Notice
periods
Policy
Details
Director or Company
shall be entitled to
serve 6 months’ notice
(in Rachel Addison’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.
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.
Compensation
for loss of
office
Director shall be entitled
to receive up to 6 months’
salary (in Rachel
Addison’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).
92 / FUTURE PLC
Directors' Remuneration Policy Corporate Governance
External appointments
Executive Directors are encouraged to hold a Non-Executive role in
Consideration of shareholder views
The Remuneration Committee considers shareholder feedback
addition to their full-time position in order to broaden their
received as part of any discussions with shareholders and consults
experience, and may retain any fees received in respect of such roles.
with shareholders on specific matters as and when appropriate.
All appointments must first be agreed by the Committee and must
As part of its work during 2020, the Remuneration Committee
not represent a conflict to their current role. In the case of Zillah
consulted with Future’s 15 largest shareholders to seek their views on
Byng-Thorne, it was agreed at the time of her appointment that she
the proposed changes to the Remuneration Policy, as well as
could hold three Non-Executive roles in addition to her position as
remuneration at Future more broadly. The Committee is grateful for
Chief Executive. Zillah Byng-Thorne has agreed not to replace any of
those investors who actively participated in the consultation and we
her Non-Executive positions as they time mature. In the case of
welcome the feedback received, which has been used to finalise the
Rachel Addison, the Committee has agreed that she may hold up to
VCP proposals and to inform other best-practice changes to the
two Non-Executive roles in order to gain further experience to
Policy. We are confident that the Policy continues to reflect good
support her first PLC Board role.
practice while also supporting Future in attracting, retaining and
In respect of positions at listed companies, during the financial year
motivating the Executive Directors and dedicated employees who are
ended 30 September 2020, Zillah Byng-Thorne served as a Non-
integral to the delivery of our long-term strategy. The Committee will
Executive Director at Flutter Entertainment plc, GoCo Group plc and
continue to monitor trends and developments in corporate
THG Holdings plc for which she retained total fees of £206,830
governance and market practice to ensure the structure of the
(compared to £177,000 in 2019). Penny Ladkin-Brand is a
executive remuneration remains appropriate.
non-executive director of Next 15 Communications Group plc for
which, during the period from 1 October 2019 to 1 June 2020, she
retained fees of £29,800. Rachel Addison does not currently hold any
outside directorships.
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.
The Committee and the full Board is made aware of, and consulted
on, the Company’s Human Resources strategy and takes seriously its
obligation to have a greater degree of oversight on the operation of
fair pay policies elsewhere in the Group.
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, and the Group operates a
Share Incentive Plan in order to encourage active employee share
ownership.
Subject to shareholder approval, the Value Creation Plan will offer
employees of the Group the opportunity to benefit from the value
created by their efforts in delivering Future’s ambitious strategy over
the next three to five years. Under the scheme, employees will receive
a number of units based on seniority, with a small pool reserved for
future joiners, and for significant promotions during the performance
period.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 93
Annual Report
On Remuneration
The following report provides details of how the Directors’ Remuneration Policy was
applied for the year ended 30 September 2020 and how the Committee intends to
apply the Policy in the year ending 30 September 2021.
Governance
The Committee is responsible for determining the overall remuneration
Shareholder voting
The following table shows the results of the binding vote on the FY
policy of the Group, and in particular for:
2019 Policy Report and the advisory vote on the FY 2019
• Determining the appropriate basic annual salaries, incentive
Implementation Report at the 2020 Annual General Meeting:
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).
Advisers
The Committee is informed of key developments and best practice in
Remuneration
Report FY 2019
Remuneration
Policy FY 2019
58,254,355
75.09%
19,324,119
24.91%
64,571,026
83.20%
13,039,300
16.80%
77,578,474
77,610,326
For (including
discretionary)
Against
Total votes cast
(excluding
withheld votes)
Votes withheld
5,149,500
5,117,648
the field of remuneration and obtains advice from independent external
The Company published a statement on its website on 19 June
consultants, when required, on individual remuneration packages and
2020 noting its understanding that the main reasons for the voting
executive remuneration practices in general. The Committee retained
outcome in relation to the FY 2019 Remuneration Report were
Mercer as its independent consultants during the year. Fees paid to
related to the CEO’s remuneration, and the percentage increase in
Mercer for services provided to the Committee during the financial year
CFO remuneration. The Board acknowledges these views, noting
were £27,900 (2019: £45,890) on the basis of time and materials.
that these outcomes were delivered as a result of Company
Following their appointment as remuneration consultants during 2019,
performance over the preceding three years, and in accordance
services provided to the Committee by Mercer have included
with the prevailing Remuneration Policy, as approved by
supporting the review of the Remuneration Policy, regulatory guidance,
shareholders.
advice on shareholder trends and consultation support.
The Committee continues to monitor evolving best practice on
Mercer does not provide any other services to the Group or any of the
remuneration matters, and welcomes dialogue with shareholders
Directors and the Committee is satisfied that Mercer remains
on an ongoing basis.
independent. 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.
Context to remuneration decisions
The Committee’s decision-making this year has taken into account
a range of internal and external factors, including the Group’s
response to COVID-19 and the experience of our stakeholders
during this period.
As outlined in the Annual Statement, Future took decisive action
early on during the pandemic to ensure the business was
sustainable and set up for success. The business has acted in line
with the s172 governance guidelines while continuing to deliver
exceptional results for shareholders. In particular, the Committee
has also been mindful that:
• Although a small amount of Government support was received
from the Coronavirus Job Retention Scheme by Future (and by
94 / FUTURE PLC
Directors' Remuneration Policy Corporate Governance
TI Media before it was acquired by Future) and from the equivalent
• Staff will be paid full profit pool bonus for the year, and annual pay
US Government fund this has been repaid in full.
rises for all employees are being budgeted as normal.
• No staff had pay cuts (they were all refunded) with only the Chief
Executive & Non-Executive Directors having a year-on-year pay
• We provided extended credit to suppliers when requested.
• While we removed c.200 roles as a result of the TI Media
reduction in the reporting period.
integration, this was not COVID-19 related but as a direct result of
• Shareholder guidance was maintained throughout the period, and
the acquisition. Around 50 roles were removed due to the impact
two upgrades provided.
• Dividends were maintained.
• Leverage decreased during the period.
of the change to our business model because of COVID-19,
however we expect to have net increased headcount due to online
editorial investments.
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 2020:
£'000
Executive Directors
Zillah Byng-Thorne
Penny Ladkin-Brand5
Rachel Addison6
Non-Executive Directors
Richard Huntingford
Meredith Amdur7
Hugo Drayton
Rob Hattrell
Alan Newman
Total
Notes:
Year
ended 30
September
(A) Basic
salary
or fees8
(B)
Taxable
benefits1
(C)
Annual
bonus3
(D)
PSP4
(E)
Pension
benefit2
Total
single
figure
(A+B+E)
Total
fixed
(C+D)
Total
variable
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
455
475
249
325
117
-
142
120
36
-
63
53
46
45
53
50
17
17
10
15
4
-
-
-
-
-
-
-
-
-
-
-
950
713
350
344
175
-
-
-
-
-
-
-
-
-
-
-
2,195
4,402
1,509
3,144
-
-
-
-
-
-
-
-
-
-
-
-
68
71
33
41
9
-
-
-
-
-
-
-
-
-
-
-
3,685
5,678
2,151
3,869
305
-
142
120
36
-
63
53
46
45
53
50
540
563
292
381
130
-
142
120
36
-
63
53
46
45
53
50
3,145
5,115
1,859
3,488
175
-
-
-
-
-
-
-
-
-
-
-
1,161
1,068
31
32
1,475
1,057
3,704
7,546
110
112
6,481
9,815
1,302
1,212
5,179
8,603
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. Zillah Byng-Thorne, Penny Ladkin-Brand and Rachel Addison 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 96.
4. The PSP figures are consistent with the approach taken in previous reports, i.e. awards are captured in the year that performance periods have ended (see page 97 for further details). 2020 figure:
relates to 100% of the PSP awards granted on 25 November 2017 which vested on 25 November 2020 following the achievement of the share price target and adjusted EPS target for the three-year
period ended 30 September 2020. The value of these awards has been calculated using the spot closing price on vest date of 1,634p. Further details relating to the PSP are set out on page 97. 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.
5. Penny Ladkin-Brand stepped down from the Board on 1 June 2020. Penny’s remuneration for 2019 and 2020 was higher than her annualised package. In 2019 Penny was on maternity leave for two
and a half months of the year, and the 2019 figure above includes accrued holiday pay (paid to her on her return in 2019) as well as a maternity leave/return to work payment in 2019 and 2020 in line
with the Group’s maternity policy.
6. Rachel Addison was appointed to the Board as Chief Financial Officer on 1 June 2020. Her remuneration arrangements are in line with the prevailing Remuneration Policy and consistent with those of
her predecessor, namely; a salary of £350,000; a pension contribution aligned with the majority of UK employees at 6% of salary; a maximum annual bonus opportunity of 150% of salary, which is
pro-rated for time served on the Board in her first year; and eligibility for an annual award under the PSP. Rachel was granted a pro-rated award of 17,222 shares under the PSP on 1 June 2020.
7. Meredith Amdur was appointed to the Board on 6 February 2020 and is US-based. During FY 2020 Meredith received US$48,000 as remuneration (Sterling equivalent shown in the table above).
8. The CEO, CFO and Non-Executive Director salaries and fees were reduced by 20% in March (half of month), April and May 2020 due to the COVID-19 pandemic. The amounts waived were as follows:
Zillah Byng-Thorne £20,218; Penny Ladkin-Brand £14,897; Richard Huntingford £5,108; Meredith Amdur $2,000; Hugo Drayton £1,915; Rob Hattrell £1,915; and Alan Newman £1,915.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 95
Incentive outcomes for the year ended 30 September 2020
Performance-related bonus
(Annual Bonus Scheme)
During 2020, the Company operated a profit pool bonus for all
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
employees across the Group, including the Executive Directors. This
outperformance above this level.
profit pool comprised 100% of the Executive Director bonus
Actual adjusted EBITDA performance for the year of £101.9m
opportunity for FY 2020, and was subject to outperformance of the
significantly exceeded the stretch target of £76.0m (which was 39%
EBITDA budget set. EBITDA refers to adjusted earnings before
growth on the prior year), resulting in a formulaic outcome of 134% of
interest, tax, depreciation and amortisation.
maximum for this element. Adjustments can be made to targets for
Maximum opportunities were 200% of salary for the Chief
material acquisitions, defined as those that contribute EBITDA of more
Executive and 150% of salary for the Chief Financial Officer. The profit
than 15% of the total Group’s EBITDA for the relevant financial year.
pool pays out a fixed amount of cash for the majority of employees
Acquisitions in the year did not meet this threshold, therefore no
based on delivering EBITDA performance above Budget. In addition to
adjustment to targets was made. The Committee would note, however,
the profit pool component, which accounts for 25% of the Chief
that if an adjustment had been made then the bonus would still have
Executive’s bonus opportunity (worth 50% of salary), a further
paid out in full due to the level of over-performance in the year.
Performance
measure
Annual bonus
EBITDA
Overall
Threshold
£m
Target
£m
Maximum
£m
Actual
£m
%
weighting
% of maximum
achieved
65.9
67.6
76.0
101.9
100%
100%
100%
Accordingly, all Executive Directors earned 100% of their respective
Group during the year, the exceptional shareholder returns
opportunities under the annual bonus for the year. The annual bonus
generated, and the strong and effective leadership demonstrated by
payments for Penny Ladkin-Brand as outgoing Chief Financial Officer,
the Executive Directors.
and for Rachel Addison as incoming Chief Financial Officer, were
In accordance with the Remuneration Policy, 50% of these bonus
pro-rated to reflect their respective periods in role (8 months and 4
amounts have been paid in cash, with the remaining 50% to be
months). In confirming this outcome, the Committee took into
converted to Future shares and deferred for 2 years.
account the broader financial and operational performance of the
Executive
Base Salary
Maximum
opportunity
(% salary)
Performance
outcome (%
of maximum)
Pro-rating
(% of year
served)
Bonus
outcome £
…of which
cash £
…of which
shares
Zillah Byng-Thorne
£475,000
200%
100%
100%
£950,000
£475,000
£475,000
Penny Ladkin-Brand
£350,000
150%
100%
66.7%
£350,000
£175,000
£175,000
Rachel Addison
£350,000
150%
100%
33.3%
£175,000
£87,500
£87,500
96 / FUTURE PLC
Annual Report On Remuneration Corporate Governance
Performance Share Plan (PSP)
Awards vesting on performance to
30 September 2020
Vesting of awards made on 24 November 2017 was dependent on two
equally-weighted performance conditions – adjusted diluted EPS and
share price – assessed over the performance period, as follows:
Measure
Targets
Outcome
Vesting
EPS for year
ended
30 September
2020
0% vesting
below 23p
25% vesting
for 23p
100% vesting
for 26p
Straight-line vesting
between these points
0% vesting
below 400p
25% vesting
for 400p
100% vesting
for 450p
Straight-line vesting
between these points
Share Price
(average
share price
performance
for any 90-day
period from
the date of
grant to 30
September
2020)
74.7p
100%
1,505p
100%
Awards granted during the year to
30 September 2020
During FY 2020, the following awards under the PSP were granted to
the Executive Directors:
Executive
Director
Date of
award
Face value
(% of
salary)
Number
of shares1
Vesting
date
Zillah
Byng-Thorne
25 Nov
2019
200%
of salary
67,185
Penny
Ladkin-Brand
25 Nov
2019
167%
of salary
41,3372
Rachel
Addison
1 Jun
2020
167%
of salary
17,222
25 Nov
2022
25 Nov
2022
31 May
2023
1 Awards converted into shares using the share price preceding the relevant grant date
(£14.14 for awards made to Zillah Byng-Thorne, Penny Ladkin-Brand and Rachel
Addison with Rachel’s award pro-rated for her time as CFO).
2 The award made to Penny Ladkin-Brand was subsequently pro-rated for her time as
CFO and reduced to 27,654 shares.
The three-year period over which performance will be measured
began on 1 October 2019 and will end on 30 September 2022. Any
awards vesting for performance will be subject to an additional
two-year holding period, during which malus and clawback provisions
will apply.
Vesting of these awards is dependent on two equally-weighted
measures over the three-year performance period: adjusted diluted
earnings per share (EPS) and absolute TSR. There is no retest
As with the annual bonus, in confirming this outcome the Committee
provision. Details of the vesting schedules are provided below:
took into account the broader financial and operational performance
of the Group over the three-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 450p
representing c.170% growth on the trailing 30-day average share price
to 1 October 2017, and adjusted EPS maximum target of 26.0p
representing a 12% increase on 30 September 2017 EPS of 23.2p.
Shares
subject
to award
Performance
outcome
(% of
maximum)
Share price
on vesting
(spot
closing
price on
vest date)
PSP
outcome
134,345
100%
1,634p
£2,195,197
92,363
100%
1,634p
£1,509,211
Executive
Zillah
Byng-Thorne
Penny
Ladkin-Brand
Measure
Weighting % Targets
EPS for year
ending
30 September
2022
Absolute TSR
(% growth
between the
average of the
three months to
30 September
2019 and average
of the three
months to 30
September 2022)
0% vesting below 56p
25% vesting for 56p (7% CAGR)
50% vesting for 62p (10% CAGR)
50%
50%
100% vesting for 71p
or above (16% CAGR)
Straight-line vesting
between these points
0% vesting below
6% per annum
25% vesting for
6% per annum
100% vesting for
15% per annum
Straight-line vesting
between these points
The value attributable to share price appreciation above the share
maximum opportunity under the PSP to 200% and 167% of salary
price at the date of grant (325p) was c.£1.8m and c.£1.2m for Zillah
for the Chief Executive and Chief Financial Officer respectively, and
Byng-Thorne and Penny Ladkin-Brand respectively (c.80% of the
consistent with our commitment that full vesting will require
total value reported). The Committee has not exercised any
continued exceptional performance over the next three years.
discretion in respect of this share price appreciation.
Awards granted under the DABS during the year were disclosed in
The performance targets were set reflecting the increase in
last year’s report.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 97
Pension entitlements (audited)
The only element of remuneration that is pensionable is basic annual
Review of past performance
Alignment of reward and Total Shareholder Return: Rebased to
salary. During the year ended 30 September 2020, employer’s
Future plc as of 1 October 2010
pension contributions were payable to the Executive Directors as a
salary supplement, at a rate of 15% of salary for the Chief Executive
This graph shows a comparison of Future’s total shareholder return
and Penny Ladkin-Brand and 6% of salary for Rachel Addison
(share price growth plus dividends) with that of the FTSE All-Share
(aligned with the majority of UK employees, as set out in the FY 2020
Media Index and the FTSE250 Index (excluding investment trusts).
Remuneration Policy). This additional cash payment is not included in
The FTSE All-Share Media Index was selected as it provides a
determining their entitlement to any performance-related bonus,
comparison of Future’s performance relative to the other companies
share-based incentive or pension. The Company had no liability in
in its sector, whilst the FTSE250 Index is shown to reflect the Group
respect of the Executive Directors’ pensions as at 30 September
having moved up to a Premium Listing and its inclusion in the
2020. Normal retirement age under the scheme rules is 75.
FTSE250 index during 2019.
Historical TSR performance
Growth in the value of a hypothetical £100 holding over the 10 years to 30 September 2020
0
1
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
£1,000
£900
£800
£700
£600
£500
£400
£300
£200
£100
£0
Sep 10
Sep 11
Sep 12
Sep 13
Sep 14
Sep 15
Sep 16
Sep 17
Sep 18
Sep 19
Sep 20
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
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
CEO single figure of
remuneration £’000
Annual Bonus as %
of Maximum
PSP Vesting
(% of maximum)
Notes:
£546
£430
£331
£3064
£471
£347
£5,4257
£10,8817
£5,678
£3,685
0%
50%
0%
20%
36%
0%5
88%6
100%
100%
100%
100%1
0%2
0%2
0%3
0%3
0%3
100%
100%
100%
100%
1. 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.
2. 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.
3. 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.
4. 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.
5. Zillah Byng-Thorne waived her performance-related bonus for 2016.
6. 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.
7. Figures restated to reflect the share price at date of vest for PSP awards granted in November 2016 and February 2017.
98 / FUTURE PLC
Annual Report On Remuneration
Corporate Governance
Director1
Executive Directors
Zillah Byng-Thorne
Rachel Addison
Non-Executive Directors
Richard Huntingford
Meredith Amdur
Hugo Drayton
Rob Hattrell
Alan Newman
Former Directors
Penny Ladkin-Brand (annualised)5
All employees6
Notes:
Basic
salary/fee2
Taxable
benefits Bonus3
(4)%
n/a
18%
n/a
21%4
3%
6%
17%
(1)%
0%
n/a
n/a
n/a
n/a
n/a
n/a
0%
3%
33%
n/a
n/a
n/a
n/a
n/a
n/a
53%
0%
Percentage change in remuneration
of Directors and employees
The Committee has previously monitored year-on-year
changes between the movement in salary, benefits and
annual bonus for the CEO between the current and previous
financial year compared with that of employees. As required
under the revised reporting regulations, this analysis has now
been expanded to cover each Executive Director and
Non-Executive Director and will be built up over time to display
a five-year history.
The analysis is based on the average earnings per employee
in order to avoid distortions to the Group’s total wage bill
because of the movements in the number of employees. The
comparator group used is all Future employees.
the increased fee for serving as the Senior Independent Director (from £7,500 to
1 Changes in Directors and roles during the 2019/20 financial year were as follows:
£10,000) and the increased fee for serving as the Chair of the Remuneration Committee
• Penny Ladkin-Brand stepped down from the Board on 1 June 2020
(from £5,000 to £10,000) as disclosed in the Directors’ Report on Remuneration for the
• Rachel Addison was appointed to the Board as Chief Financial Officer on 1 June 2020.
year ended 30 September 2019.
• Meredith Amdur was appointed to the Board on 6 February 2020
5 Penny Ladkin-Brand's salary, taxable benefits and bonus have been annualised, to
2 Salary/fees for FY 2020 reflect the voluntary temporary reductions of 20% in March (half
reflect the remuneration she would have received if she had remained as Chief Financial
of month), April and May 2020
Officer until 30 September 2020, to aid comparability with prior year.
3 The figures shown are reflective of any bonus earned during the respective financial
6 The decrease in all-employee remuneration is due to a change in geographic mix of the
year. Non-Executive Directors are not eligible to participate in the bonus scheme.
employee population along with differing contractual terms within TI Media, along with
4 The increase for Hugo Drayton reflects the increased base fee (from £45,000 to £55,000,
a higher proportion of employees now being based in the UK rather than the US.
Relative importance of spend on pay
The relative importance of spend on pay for the business is shown in the table below.
Group pay:
£104.0m
(+43%)
Group operating costs
excluding Group pay &
exceptional costs:
£169.3m (+43%)
Capital expenditure:
£4.0m (nil%)
Distributions to
shareholders:
£1.6m (+57%)
EBT share
purchase:
£8.5m
Group pay:
£72.7m
Group operating costs
excluding Group pay &
exceptional costs: £118.7m
Capital expenditure:
£4.0m
Distributions to
shareholders
£1.0m
0
2
0
2
9
1
0
2
0.0
50.0
100.0
150.0
200.0
250.0
300.0
The table above 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,
EBT share purchase, and distributions to shareholders. These are considered to be the areas of material outgoings for the Group relating to core
performance. Note that the Group expects cost synergies on the acquisition of TI Media of £20m per annum (see page 10 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 FY 2019 and FY 2020 financial years being, respectively, (i) the 1.0p final dividend for the FY 2019 financial year paid in
February 2020; and (ii) the 1.6p final dividend proposed for the FY 2020 financial year, payable in February 2021. The dividend figure of £1.6m in the
chart above is based on the issued share capital of 98.0m at 30 September 2020.
CEO pay ratio
UK reporting regulations require companies with 250 employees or
benefits, pension contributions (for CEO figure), and the value received
from incentive plans. On average the Future plc Group employed 1,196
more to publish information on the pay ratio of the Group CEO to UK
UK employees during the financial year ended 30 September 2020.
employees. In line with this requirement, the table below shows the ratio
The Committee has opted to use data already available from the
of CEO total pay to that of three employees indicative of lower quartile
gender pay reporting as the basis for identifying employees at P25, P50
(P25), median (P50) and upper quartile (P75) pay received during the
and P75 (‘Option B’ ). This excludes pension. We believe this provides a
financial year ended 30 September 2020 and includes basic salary,
reasonable estimate for employees' pay at these levels within the
Financial year
Calculation
methodology
Lower
quartile
(P25)
Median
(P50)
Upper
quartile
(P75)
2020
Option B
107:1
84:1
66:1
organisation.
Individuals positioned at each quartile were identified using the most
recent gender pay gap data from 5 April 2020. Total full-time equivalent
remuneration for each of these individuals was then calculated on the
same basis as used in the single figure table for the Chief Executive. All
figures are total amounts paid to full-time employees covering the whole
ANNUAL REPORT AND ACCOUNTS FY 2020 / 99
2020 financial year. Total compensation figures have been checked
to ensure the employees identified are representative of pay at these
levels in the organisation. The data points are reflective of our
Payments to past Directors (audited)
Former Chief Financial Officer - Penny Ladkin-Brand
Penny stepped down as CFO and from the Board of Directors on 1
Company structure and types of roles across the organisation and
June 2020. Penny remains an employee of Future, in her new role as
accordingly the Committee believes the median pay ratio for 2020 is
Chief Strategy Officer (CSO). As Group CSO, Penny’s remuneration is
consistent with the pay, reward and progression policies for the
determined in line with the policy that applies to other Executive
Company’s UK employees taken as a whole.
Committee members. Penny retains an interest in the PSP awards
A summary of the salaries and total single figures of remuneration
granted to her in connection with her former role as CFO (albeit the
for the relevant individuals is included in the table below:
award levels were reduced with her agreement to reflect her new
Pay level
Chief
Executive
Lower
quartile
(P25)
Median
(P50)
Upper
quartile
(P75)
Salary
£455,032
£25,000
£31,919
£40,765
Single figure of
remuneration
£3,685,445
£34,457
£43,992
£56,165
role). See pages 102 for details of the DABS award in the year and
page 97 for details of the PSP awarded and pro-rated during the year.
Payments for loss of office (audited)
During the financial year to 30 September 2020 no payments were
made to Directors in respect of loss of office.
Statement of Directors’ shareholding and share interests (audited)
The Company has a policy on share ownership by Executive Directors
at 30 September 2020, Zillah Byng-Thorne had a holding of 269,569
which requires that any such Director should accumulate a holding in
shares which, at the share price on the same date, were worth
shares over a five-year period from appointment where the value of
£5,235,030 (1,102% of salary).
those shares represents at least two times salary. Zillah Byng-Thorne
In respect of Penny Ladkin-Brand, the period commenced on 3
currently meets this requirement, as did Penny Ladkin-Brand prior to
August 2015 and would have ended on 2 August 2020. As at 1 June
stepping down from the Board on 1 June 2020. Rachel Addison, who
2020, the date upon which she stepped down from the Board, Penny
was appointed to the Board on 1 June 2020, does not yet meet this
Ladkin-Brand had a holding of 188,262 shares which, at the share
requirement. Subject to the approval of the new Remuneration Policy,
price on the same date, were worth £2,454,936 (701% of salary).
this shareholding requirement will increase from 200% to 400% of
In respect of Rachel Addison, the period commenced on 1 June
salary in respect of the Chief Executive and from 200% to 300% of
2020, the date upon which she joined the Board. As at 30 September
salary in respect of the Chief Financial Officer with effect from the
2020, Rachel Addison held no shares in the Company. Following the
2021 AGM.
year end Rachel Addison purchased 2,798 shares on 2 December
In respect of Zillah Byng-Thorne, the relevant five-year period
2020 at a share price of £17.74.
commenced on 1 November 2013 and ended on 31 October 2018. As
Directors’ shareholdings (audited)
Directors in office at
30 September 2020
Executive2
Zillah Byng-Thorne3
Rachel Addison4
Non-Executive
Richard Huntingford
Alan Newman
Hugo Drayton6
Rob Hattrell
Meredith Amdur5
Total
Notes:
1. All holdings are beneficial.
Balance as at
30 September
20191
Purchases
during
the year
Share scheme
exercises during
the year
Sales
during
the year
Balance as at
30 September
20201
247,205
-
24,500
8,750
-
-
-
22,364
1,045,344
(1,045,344)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
269,569
-
24,500
8,750
-
-
-
280,455
22,364
1,045,344
(1,045,344)
302,819
2. Details of the share options and awards for Executive Directors are set out on page 101. No such options or awards are granted to Non-Executive Directors.
3. On 26 November 2019, following the full vesting of the PSP award granted on 23 November 2016 and 2 February 2017, Zillah Byng-Thorne received 1,045,344 Ordinary shares. Zillah Byng-Thorne sold
1,045,344 Ordinary shares on 26 November 2019 at a price of £14.00 per Ordinary share, and purchased 11,962 Ordinary shares at a price of £12.54 per share on 3 December 2019 and a further 8,387
Ordinary shares at a price of £11.84 per Ordinary share on 7 February 2020. Max Thorne (husband of Zillah Byng-Thorne) purchased 1,250 Ordinary shares at a price of £15.1895 per Ordinary share on 26
November 2019, and a further 765 Ordinary shares at a price of £11.73 per Ordinary share on 7 February 2020.
Following the year end Zillah Byng-Thorne purchased 4,835 shares on 30 November 2020 at a share price of £16.80, and Max Thorne purchased 1,180 shares on the same date at a share price of £16.84.
4. Rachel Addison was appointed to the Board on 1 June 2020. Following the year end Rachel Addison purchased 2,798 shares on 2 December 2020 at a price of £17.74.
5. Meredith Amdur was appointed to the Board on 6 February 2020. Following the year end Meredith Amdur purchased 385 shares on 2 December 2020 at a price of £18.07.
6. Following the year end Hugo Drayton purchased 2,376 shares on 30 November 2020 at a share price of £16.75.
7. Mark Brooker, who was appointed to the Board after the year end, purchased 1,500 shares on 1 December 2020 at a share price of £17.46.
100 / FUTURE PLC
Annual Report On Remuneration
Corporate Governance
Executive Director shareholdings
0%
200%
400%
600%
800%
1000%
1200%
Zillah
Byng-Thorne
Rachel
Addison
Required holding
Required holding
Actual holding (1,102% of salary)
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
Rachel
Addison
Total
Notes:
Date of
grant
Earliest
exercise
date
Expiry
date
Exercise
price per
share (p)
Balance
at
1 Oct 20191
Granted
during
the year3
Lapsed
during
the year
23 Nov 16
23 Nov 19
23 Nov 26
Nil
622,672
02 Feb 17
23 Nov 19
02 Feb 27
Nil
622,672
24 Nov 17
24 Nov 207
24 Nov 27
Nil
134,345
23 Nov 18
22 Nov 212
23 Nov 28
Nil
196,687
-
-
-
-
25 Nov 19
24 Nov 222
25 Nov 29
Nil
-
67,185
1,576,376
67,185
23 Nov 16
23 Nov 19
23 Nov 26
Nil
444,765
02 Feb 17
23 Nov 19
02 Feb 27
Nil
444,765
24 Nov 17
24 Nov 207
24 Nov 27
Nil
92,363
23 Nov 18
22 Nov 212
23 Nov 28
Nil
95,083
-
-
-
-
-
-
-
-
-
-
-
-
-
(18,739)⁶
25 Nov 19
24 Nov 222
25 Nov 29
Nil
-
41,337
(13,683)⁶
Vested and
exercised
during the
year4
Balance
at 30
Sept
2020
(622,672)⁵
-
(422,672)⁵
200,000
-
-
-
134,345
196,687
67,185
(1,045,344)
598,217
(444,765)⁵
-
(380,235)⁵
64,530
-
-
-
92,363
76,344
27,654
01 Jun 20
31 May 232
01 Jun 30
Nil
1,076,976
41,337
(32,422)
(825,000)
260,891
-
-
17,222
17,222
-
-
-
-
17,222
17,222
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 prior to that date were therefore increased accordingly, as detailed in the Company’s 2018 Annual Report.
2. Awards granted since November 2018 are subject to a mandatory 2-year holding period following vesting.
3. Details of awards granted in the year are set out on page 97.
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 the FY 2019 year end on 23 November 2019. On 26 November 2019 Zillah Byng-Thorne
exercised a total of 1,045,344 and Penny Ladkin-Brand exercised a total of 550,000. On 31 July 2020 Penny Ladkin-Brand exercised an additional 275,000. The award granted on 23
November 2016 is fully exercised for both Zillah and Penny. For the award granted on 2 February 2017, Zillah Byng-Thorne has an unexercised amount of 200,000 shares and Penny
Ladkin-Brand has an unexercised amount of 64,530 shares. The award granted on 2 February 2017 is fully vested for both Zillah and Penny.
6. Penny’s November 2018 and November 2019 awards were pro-rated to 1 June 2020 to reflect her time as Chief Financial Officer.
7. There have been no changes in these interests since the year-end. During the year the Committee extended the vesting period of certain awards from 24 November 2020 to 25
November 2020 to ensure that they did not vest during a closed period. All outstanding awards were converted to nil-cost options as at 20 November 2020.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 101
DABS
Director
Zillah Byng-Thorne
Total
Date of grant
End of
deferral period
Balance at
1 Oct 2019
Granted
during the year
Released
during the year
Balance at
30 Sept 2020
25 Nov
2019
24 Nov
2021
-
-
-
-
25,194
25,194
12,155
12,155
-
-
-
-
25,194
25,194
12,155
12,155
Penny Ladkin-Brand
25 Nov
2019
24 Nov
2021
Total
Dilution
Awards under Future plc incentive plans may be satisfied by
or reissue of treasury shares under a plan, when aggregated with
awards under all of a company’s other schemes, must not exceed
treasury shares or the issue of new shares or the purchase of shares
10% of the issued ordinary share capital (adjusted for share
in the market.
issuance and cancellation) in any rolling ten-year period. As at 30
Under Investment Association guidelines, the issue of new shares
September 2020 this limit had not been exceeded (6.7%).
Implementation of remuneration policy
in the year to 30 September 2021
As outlined earlier in this report, the Remuneration Committee is
and the significant increases in size, complexity and geographical
proposing changes to the Remuneration Policy principally related to
spread of the Group in recent years. Since the previous review:
the introduction of a new Value Creation Plan for Future employees.
adjusted operating profit has grown from £19m to £93m; Future’s
Subject to shareholder approval at the Company’s AGM on 10
global audience has doubled, from 193m to almost 400m; and total
February 2021, the Committee intends to implement the policy as
Group employees have also doubled, from 1,000 to over 2,000 staff.
follows during the year to 30 September 2021.
Furthermore, during the interim, Future plc has entered the FTSE250,
and is now a premium listed company. In recognition of the increase,
Basic salary
When reviewing salary levels, the Committee takes into account a
the Committee has agreed that this salary level will remain fixed for
the next two years, and will be reviewed again no earlier than 2022.
number of internal and external factors, including the performance of
There will be an annual inflationary pay rise in line with the wider
Future during the year, external market data, historic increases made
workforce, of 1.5%, awarded to Rachel Addison with effect from 1
to the individual and, to ensure a consistent approach, the salary
January 2021.
review principles applied to the rest of the organisation.
The Chief Executive’s salary was last reviewed in 2018. We
committed to a pay freeze in 2019, and announced that we would
Pension and benefits
Zillah Byng-Thorne’s pension benefit will be reduced to match the
review the salary in 2020, as part of our published Remuneration
benefit of the wider workforce over the next two years. The current 15%
Policy. As part of this review, we took independent advice, and studied
of salary rate will be reduced to 6% of salary, in two stages (to 10.5% of
equivalent market roles. Zillah Byng-Thorne was awarded an increase
salary in January 2021, and to 6% of salary in January 2022). Rachel
of 21% with effect from 1 October 2020. This increase reflects the
Addison will continue to receive a pension contribution of up to 6% of
Committee’s assessment of Zillah’s individual performance in role,
salary (in line with that available to the wider workforce) or an equivalent
her leadership in delivering exceptional results for our shareholders,
cash allowance. No changes are proposed to the benefits provided.
Director
Base salary from
1 October 2019
Base salary from
1 October 2020
Base salary from
1 January 2021
Percentage increase
Zillah Byng-Thorne
£475,000
£575,000
-
Rachel Addison1
£350,000
-
£355,250
21.0%
1.5%
1. from appointment as Chief Financial Officer on 1 June 2020
102 / FUTURE PLC
Annual Report On Remuneration
Corporate Governance
Annual bonus
For FY 2021, the Company will continue to operate a profit pool
• Any shares awarded in respect of the second tranche
(measurement date 30 September 2024) will be subject to a
bonus for all employees across the Group, including the Executive
mandatory one-year holding period
Directors on a similar basis to that operated for FY 2020. The
maximum opportunity will remain at 200% of salary for the Chief
Executive and 150% of salary for the Chief Financial Officer, with
payouts linked to delivering adjusted operating profit performance
• Any shares awarded in respect of the final tranche (measurement
date 30 September 2025) will vest on the fifth anniversary of grant
• The ultimate release of any shares will be subject to the Committee
satisfying itself that the recorded outcome is a fair reflection of the
above Budget. Specific performance targets for the Annual Bonus
underlying business performance over the period
are not disclosed due to their commercial sensitivity, however it is
the Committee’s intention that these will be disclosed
Under the proposed scheme, a total of 980,000 units will be
retrospectively in next year’s report. In accordance with the Policy,
allocated to employees or reserved in case of future hires and/or
50% of any bonus earned will be deferred in Future shares for 2
significant promotions. Subject to shareholder approval of the VCP,
years under the DABS.
Zillah Byng-Thorne will receive an award of 140,000 units in each
tranche and Rachel Addison will receive an award of 63,000 units in
Long-term incentive
Subject to shareholder approval of the new Remuneration Policy,
each tranche.
Executive Directors and other employees will be granted units under
the new Value Creation Plan, replacing participation in the PSP until
2023. Operation of the VCP is outlined in the Policy Table on page
Fees for Non-Executive Directors and the
Chairman
Non-Executive Directors do not participate in any of the Company’s
86, with the key features as follows:
share incentive arrangements, nor do they receive any benefits. Fees
• One-off award of units providing Future's employees with a
Committee, and those for the Non-Executive Directors set by the
percentage of additional shareholder value created
Board as a whole.
(denominated in Future plc shares) over the next 3-5 years,
The rates for the Chairman’s and Non-Executive Directors’ fees,
above a hurdle
which are unchanged at 1 October 2020 are:
are reviewed annually, with the Board Chair’s fees set by the
• Units will vest based on value created in terms of £ Total
Shareholder Return (TSR), being the growth in Future’s market
capitalisation plus net equity cashflows to shareholders (i.e.
dividends plus share buybacks, less share issues), over and
above a hurdle rate of return of 10% per annum
• Future’s starting market capitalisation (£1,903m) is based on
the spot closing price of a share on 30 September 2020 (£19.42)
Base fees
Fees effective
from
1 October 2019
Fees effective
from
1 October 2020
• The VCP comprises three equal tranches, based on
performance measured over three periods, from 1 October
2020 to: 30 September 2023; 30 September 2024; and 30
September 2025
• Value created at each measurement date will be calculated with
reference to the average closing return index over the three
months ending on that date
• To the extent that performance exceeds the hurdle on a
measurement date, participants will share 3.33% of the
additional shareholder value created above the hurdle
• Participants will be allocated an individual share of this amount,
reflecting the number of units they hold. These amounts will be
converted into a number of Future plc shares, based on the
share price at the relevant vesting date
• The aggregate additional shareholder value created and
allocated to participants is capped at £95m per tranche
Board Chair
£200,000
£200,000
Non-Executive
Director1
Additional fees
Senior Independent
Director
Audit and Risk
Committee Chair
Remuneration
Committee Chair
£55,000
£55,000
£10,000
£10,000
£10,000
£10,000
£10,000
£10,000
1.MeredithAmdurispaidinUS$andforFY2021thiswillbesubjecttoafixedexchangerate
of £1 = US$1.30.
• To the extent that performance does not exceed the hurdle on a
Approved by the Board and signed on its behalf by
measurement date, the relevant tranche will lapse in full,
immediately. There will be no re-testing allowed
Additionally, for Executive Directors:
• Any shares awarded in respect of the first tranche
Hugo Drayton
(measurement date 30 September 2023) will be subject to a
Chair of the Remuneration Committee
mandatory two-year holding period
10 December 2020
ANNUAL REPORT AND ACCOUNTS FY 2020 / 103
Directors' Report
Future plc is the holding company of the Future group of companies (the Group).
election or re-election at the forthcoming
movements in the Company’s issued share
Annual General Meeting
The Company’s twenty second Annual
General Meeting will be held at 10:30am on
Wednesday 10 February 2021 at Future’s
AGM.
capital during the year, are shown in note 22
to the financial statements. The Company
has one class of ordinary shares with a
nominal value of 15 pence each (Ordinary
Shares), which does not carry the right to
London office at 1-10 Praed Mews, London,
W2 1QY. The resolutions and explanatory
Directors Powers
The Board manages the business of the
notes are set out in the Notice of Annual
Company under the powers set out in the
receive a fixed income. Each share carries
General Meeting on pages 164-171.
Company’s Articles of Association. The
the right to one vote at general meetings of
Corporate Governance
statement
The Corporate Governance statement,
Company’s Articles of Association can only
the Company. There are no restrictions or
be amended, or new Articles adopted, by a
agreements known to the Company that
resolution passed by shareholders in a
may result in restrictions on share transfers
general meeting by at least three quarters
or voting rights in the Company. There are
of the votes cast.
no specific restrictions on the size of a
prepared in accordance with rule 7.2 of the
Further discussion of the Board’s
holding, on the transfer of shares, or on
Financial Conduct Authority’s Disclosure
activities, powers and responsibilities
voting rights, all of which are governed by
Guidance and Transparency Rules,
appears within the Corporate Governance
the provisions of the Articles of Association
comprises of the following sections of the
Report on page 68 of this Annual Report.
and prevailing legislation.
Annual Report: the Strategic Report; the
Information on compensation for loss of
Shareholder authority for the Company
Corporate Governance Report; the Audit
office is contained in the Directors’
to allot Ordinary Shares up to an aggregate
and Risk Committee Report; the
Remuneration Report on page 92 of this
nominal amount of £735,107 was granted at
Nomination Committee Report; the
Annual Report.
Remuneration Committee Report; together
with this Directors’ Report. As permitted by
legislation, some of the matters required to
be included in the Directors’ Report have
been included in the Strategic Report by
Directors’ conflicts of
interests
The Company has procedures in place for
the 2019 AGM. The issued share capital of
the Company at 30 September 2020 was
approximately £14,702,243.25 divided into
98,014,955 Ordinary Shares.
Since 30 September 2020, 145 new
shares have been issued as a result of the
cross reference including details of the
managing conflicts of interest. Should a
exercise of share options by the Company’s
Group’s financial risk management
Director become aware that they, or any of
share option scheme participants and the
objectives and policies, business review,
their connected parties, have an interest in
total issued share capital at 10 December
future prospects and environmental policy.
an existing or proposed transaction with
2020 is 98,015,100 Ordinary Shares. The
Directors
The names and biographical details of the
the Company, they should notify the Board
Company’s Ordinary Shares are listed on
in writing or at the next Board meeting.
the London Stock Exchange. The register of
Internal controls are in place to ensure that
shareholders is held in the UK.
any related party transactions involving
current Directors are shown on pages 66 to
Directors, or their connected parties, are
67 of this Annual Report. Particulars of
conducted on an arm’s length basis.
their emoluments and beneficial and
Directors have a continuing duty to update
Political donations
No contributions were made to political
non-beneficial interests in shares are given
any changes to these conflicts.
parties during the year (2019: £Nil).
in the Directors’ Remuneration Report on
page 94 and 102.
The appointment and removal of
Directors is governed by the Company’s
Directors’ indemnities
The Company had Directors’ and Officers’
Whistleblowing procedure
Articles of Association, the 2018 Code and
liability insurance cover in place
the Companies Act 2006. The Directors
throughout the year.
may, from time to time, appoint one or
more Directors. In the interests of good
governance and in accordance with the
provisions of the 2018 Code, all Directors
Share capital
Details of the Company’s issued share
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
will retire and submit themselves for
capital, together with details of the
to acting professionally, fairly and with
104 / FUTURE PLC
Directors' Report
Corporate Governance
Substantial interests
Information provided to the Company pursuant to the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules
(DTRs) is published on a Regulatory Information Service and on the Company’s website. The following information has been
received, in accordance with DTR 5, from holders of notifiable interests in the Company’s issued share capital.
Shareholder
Aberforth Partners LLP
Standard Life Aberdeen plc
BlackRock Inc
JPMorgan Asset Management Holdings Inc.
Old Mutual Global Investors (UK) Ltd
Jupiter Fund Management Plc
Ameriprise Financial, Inc. and its group
Invesco Ltd
AXA Investment Managers
Oberweis Asset Management, Inc.
As at
30 September 2020
As at
10 December 2020
Nature of holding
10.88%
10.77%
6.56%
6.11%
5.68%
5.55%
5.007%
4.87%
3.81%
3.71%
10.88%
Below 10%
Below 5%
6.11%
5.68%
5.55%
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
5.007%
Direct and indirect
4.87%
3.81%
3.71%
Indirect
Indirect
Indirect
* % holding based on total number of shares in issue at the time of respective notification.
The Company has not been notified of any other substantial interests in its securities. The Company’s substantial shareholders do
not have different voting rights. The Group, so far as is known by the Company, is not directly or indirectly owned or controlled by
another corporation or by any government.
integrity in all our business dealings and
In addition, to ensure Future is adopting
and socio-economic standards. Our paper
relationships wherever we operate, and we
best practice with anti-corruption
mills and paper merchants all hold full FSC
are implementing and enforcing effective
legislation, and to promote transparency, a
(Forest Stewardship Council) certification
systems to counter bribery and corruption.
Review Kit, Trips and Gifts Log is in place to
and accreditation, showing our
We have whistleblowing, anti-bribery and
track the whereabouts of products sent to
commitment to sourcing paper supplies
corruption policies which are updated
us for review and the acceptance of gifts
from sustainable sources.
regularly and published on our intranet. The
and trips by our employees. We also have in
whistleblowing policy is designed to
place an Editorial Ethics Committee which
encourage employees to report, in good
monitors the approach to gifts and reviews
faith, any genuine suspicions of fraud,
trips to ensure not only are we legally
Recycling of unsold
magazines and gifts
The Group is strongly incentivised to
bribery, malpractice, modern slavery and
compliant, but that we also comply with our
minimise the number of unsold magazines
human trafficking. Concerns may be raised
own ethical and editorial standards.
and we employ sophisticated techniques to
according to a stated escalation process
from an individual’s line manager, via their
head of department, Head of People
Reducing waste
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
Operations, to the Head of Legal and then to
the Board of Directors, including the Senior
Independent Director. Concerns may also
Sourcing paper
Paper is the largest raw material we use as a
schools and hospitals. We also support the
Professional Publishers Association’s
be raised completely anonymously by post.
Group. We work hard to make sure that
initiative encouraging readers to recycle
The whistle-blowing policy is also designed
whatever we consume, we do it in a way that
their magazines after use, and are now full
to ensure that any employee who raises a
is ethically responsible and environmentally
members of the OPRL (On-Pack-Recycling-
genuine concern is protected. During the
sustainable. Our paper is sourced and
Label) Scheme which provides full access
year, no issues of concern were raised via
produced from sustainable, managed
to and use of correct recycling labelling,
any of the whistleblowing channels.
forests, conforming to strict environmental
instructing consumers how to responsibly
ANNUAL REPORT AND ACCOUNTS FY 2020 / 105
disposed of in accordance with WEEE
The combustion of fuel:
(Waste Electrical and Electronic Equipment
gas for heating and fuel for
Directive) regulations.
vehicles (Scope 1)
recycle or dispose of our magazines and
packaging. Gifts on our unsold copies are
incinerated to create further energy, and
any magazine gifts containing electronic
components are removed and responsibly
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 were wrapped in
paper rather than plastic from January
2020 onwards.
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. Last year we
introduced a new food waste recycling
facility in our Bath office in the UK and had
planned to roll it out to other offices. We
worked with our waste provider to complete
quarterly reporting to trace waste usage
more efficiently and monitor progress on
reducing our waste that is sent to landfill.
Before the offices were closed we were
recycling 50% of waste.
Streamlined Energy & Carbon
Report (SECR) Summary
In accordance with the Companies Act
Global tonnes CO2e
emissions from
2018
2019
2020
UK
US
Australia
TOTAL
UK
US
The purchase of electricity:
heat, steam or cooling by the
Group for its own use (Scope 2)
Australia
Location Based
The purchase of electricity: heat,
steam or cooling by the Group
for its own use (Scope 2)
Market Based
TOTAL
UK
US
Australia
TOTAL
Total Emissions (tCO2e)
- Location Based
Total Emissions (tCO2e)
- Market Based
97
-
-
97
331
3
-
334
-
-
-
-
96
-
-
96
298
205
-
503
-
-
-
-
106
2
1
109
235
34
-
269
337
34
-
371
431
599
378
-
-
480
Total Revenue (£m)
£130.1m £221.5m £339.6m
Intensity Ratio (tCO2e per £1m)
– Location Based
3.3
2.7
1.1
Underlying global kWh
energy use from
The combustion of fuel:
gas for heating and fuel
for vehicles (Scope 1)
The purchase of electricity:
heat, steam or cooling by the
Group for its own use (Scope 2)
Total Energy (kWh)
Total Revenue (£m)
Intensity Ratio (kWh per £1m)
UK
US
Australia
TOTAL
UK
US
Australia
TOTAL
2020
Total (kWh)
549,946
8,854
5,144
563,944
1,008,372
83,247
-
1,091,619
1,655,563
£339.6m
4,875.04
2006 (Strategic Report and Directors’
Notes:
1 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/850130/
Env-reporting-guidance_inc_SECR_31March.pdf
2 https://ghgprotocol.org/
3 https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2020
4 Source: IEA (2019) Emission Factors (https://www.iea.org/t_c/termsandconditions/)
Report) Regulations 2013 (‘the 2013
Regulations’) and the Companies
(Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report)
Regulations 2018 (‘the 2018 Regulations’)
we have reported our Streamlined Energy
106 / FUTURE PLC
Directors' Report Corporate Governance
and Carbon Report disclosure for 2020,
The Board’s policy is that dividends
Directors’ Report, and which is
covering the period 1 October 2019 to 30
should be covered at least four times by
incorporated by reference, including
September 2020.
adjusted earnings per share and free
information required in accordance with
Methodology
We have used the Environmental
cashflow. The Company’s Employee
the UK Companies Act 2006 and Listing
Benefit Trust (EBT) waives its entitlement
Rule 9.8.4R, can be located as follows:
to any dividends. The Board is
Reporting Guidelines: Including
recommending a final dividend for the year
This Directors’ Report was approved by
streamlined energy and carbon reporting
of 1.6p per share (2019: 1.0p per
order of the Board.
guidance and Greenhouse Gas Protocol
share) to shareholders recorded on the
On behalf of the Board
methodology for compiling this GHG data
register at the close of business on 15
and have included all required emissions
January 2021. The Ordinary Shares will
sources. GHG emissions factors have been
become ex-dividend on 14 January 2021.
sourced and applied from BEIS conversion
factors for Greenhouse Gas emissions, the
equivalent reports on non-UK properties
used the CO2e factors provided by the
International Energy Agency (“IEA”) for
Significant agreements
The provisions of the European Directive
on Takeover Bids (as implemented in the
Rachel Addison
Company Secretary
10 December 2020
emissions associated with electricity
UK in the Companies Act 2006) require
consumption. As a Group with only
the Company to disclose any significant
office-based activities and no
agreements which take effect, alter or
manufacturing activities, under the GHG
terminate upon a change of control of the
Protocol Corporate Standard, emissions
Company. In common with many other
fall under Scope 1 (combustion of fuel) and
companies, the Group’s bank facility is
Scope 2 (purchase of electricity).
terminable upon change of control of the
Energy Efficiency Action Taken
In the period covered by the report the
Company. In common with market
practice, awards under certain of the
Group’s long-term incentive plans (details
Company has completed installation of
of which are set out in the Directors’
LED lighting in its Bath & London offices
remuneration report on pages 94 to 103)
and it is anticipated this will reduce energy
will vest or potentially be exchangeable
Subject matter
usage by approximately 20%. The
into awards over a purchaser’s share
company has also made alterations to
capital upon change of control of the
optimise BMS settings to reduce energy
Company. There is also a change of control
usage across sites. During the next
provision in the service agreements of the
financial year the company will be
two Executive Directors, exercisable within
completing TM44 surveys at all sites and
three months of a change of control by
will act on the results accordingly.
the Company or on one month’s notice
Intensity Ratio
We are using ‘Tonnes per £1 million
revenue’. Our GHG emissions CO2e
intensity has decreased from 2.7 tonnes
CO2e per £m in 2019 to 1.1 tonnes CO2e per
£m 2020, which is a decrease of 59%.
by the Executive to expire no later than
three months from the date of the
change of control.
Disclosure of information to
the auditor
The Directors who held office at the date of
Office closures due to COVID-19
COVID-19 has had a large impact on our
approval of this Directors’ Report confirm
that, so far as they are aware, there is no
kWh usage as offices have been shut for
relevant audit information of which the
periods of time due to government
Company’s auditor is unaware, and each
lockdowns.
Results and dividends
The results of the Group are shown on
page 120 and movements in reserves are
set out in note 24 to the financial
statements.
Director has taken all reasonable steps to
ascertain any relevant audit information
and to ensure that the Company’s auditor
is aware of that information.
Other information
Other information relevant to this
Important events since
the financial year-end
Likely future developments
in the business
Research and development
Information on
financial instruments
Internal control and risk
management systems in
relation to the process for
preparing consolidated
accounts
Employment of
disabled persons
Employee involvement
Stakeholder engagement
Information on branches
Diversity policy
Page
163
11
13
58
75
51
50
44
162
51
ANNUAL REPORT AND ACCOUNTS FY 2020 / 107
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulation.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
Company law requires the Directors to prepare financial
information necessary for shareholders to assess the Group’s and
statements for each financial year. Under that law the Directors have
Company’s position and performance, business model and strategy.
prepared the Group and Company financial statements in
accordance with International Financial Reporting Standards (IFRSs)
Each of the Directors, whose names and functions are listed in the
as adopted by the European Union. In preparing the group financial
Corporate Governance report confirm that, to the best of their
statements, the Directors have also elected to comply with IFRSs,
knowledge:
issued by the International Accounting Standards Board (IASB).
Under company law, Directors must not approve the financial
• the Group and Company financial statements, which have been
prepared in accordance with IFRSs as adopted by the European
statements unless they are satisfied that they give a true and fair
Union and IFRSs issued by IASB, give a true and fair view of the
view of the state of affairs of the Group and Company and of the profit
assets, liabilities, financial position and profit of the Group and
or loss of the Group for that period. In preparing the financial
loss of the Company; and
statements, the Directors are required to:
• the Strategic Report includes a fair review of the development
and performance of the business and the position of the Group
• select suitable accounting policies and then apply them
and Company, together with a description of the principal risks
consistently;
and uncertainties that it faces.
• state whether applicable IFRSs as adopted by the European
Union and IFRSs issued by IASB have been followed, subject to
In the case of each Director in office at the date the Directors’ Report
any material departures disclosed and explained in the financial
is approved:
statements;
• so far as the Director is aware, there is no relevant audit
• make judgements and accounting estimates that are reasonable
information of which the Group’s and Company’s auditors are
and prudent; and
unaware; and
• prepare the financial statements on the going concern basis
• they have taken all the steps that they ought to have taken as a
unless it is inappropriate to presume that the Group and
Director in order to make themselves aware of any relevant audit
Company will continue in business.
information and to establish that the Group’s and Company’s
auditors are aware of that information.
The Directors are also responsible for safeguarding the assets of
This responsibility statement was approved by the Board of
the Group and Company and hence for taking reasonable steps for
Directors on 10 December 2020 and is signed on its behalf by:
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’s 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’
Zillah Byng-Thorne
Chief Executive
Remuneration Report comply with the Companies Act 2006 and, as
10 December 2020
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.
108 / FUTURE PLC
Directors' Report Corporate Governance
ANNUAL REPORT AND ACCOUNTS FY 2020 / 109
Financial
Statements
112
INDEPENDENT
AUDITORS' REPORT
120
CONSOLIDATED
INCOME STATEMENT
120
CONSOLIDATED
STATEMENT OF
COMPREHENSIVE
INCOME
121
CONSOLIDATED
STATEMENT OF
CHANGES IN EQUITY
121
COMPANY STATEMENT
OF CHANGES IN EQUITY
122
CONSOLIDATED
BALANCE SHEET
123
COMPANY
BALANCE SHEET
124
CONSOLIDATED AND
COMPANY CASH
FLOW STATEMENTS
125
NOTES TO THE
CONSOLIDATED AND
COMPANY CASH
FLOW STATEMENTS
127
ACCOUNTING POLICIES
134
NOTES TO THE
FINANCIAL STATEMENTS
110 / FUTURE PLC
ANNUAL REPORT AND ACCOUNTS FY 2020 / 111
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 2020 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 2020; the Consolidated income statement, the 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 the Directors’ Report, we have provided no non-audit services to the group or the company in
the period from 1 October 2019 to 30 September 2020.
Our audit approach
Overview
Overall group materiality: £2,605,000 (2019: £1,363,000), based on 5% of profit before
tax.
Overall company materiality: £4,334,000 (2019: £2,408,000), 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 three
components 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)
112 / FUTURE PLC
Financial Statements
The valuation of goodwill and other intangibles (Group)
Accounting for uncertain tax provisions (Group)
The valuation of newstrade returns provision (Group)
Impact of COVID-19
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. The group
engagement team shared this risk assessment with the component auditors so that they could include appropriate audit
procedures in response to such risks in their work. 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, newstrade return provision, 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.
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 the acquisition of Barcroft Studios and
TI Media. Refer to note 28 for further information.
During the year, the Group completed its acquisition of
Barcroft Studios and TI Media. We focussed on the
accounting for these transactions because they are material
to the consolidated financial statements of the Group and
because there is a degree of judgement in the identification
and valuation of the assets and liabilities acquired.
Our work over the accounting for 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.
Based on our understanding of the acquired businesses,
assessed whether all assets and liabilities had been
appropriately identified. We also considered any
ANNUAL REPORT AND ACCOUNTS FY 2020 / 113
Key audit matter
How our audit addressed the key audit matter
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, particularly the discount rates, the royalty
rates and the attrition rates.
We re-performed the calculation of goodwill.
We assessed the adequacy 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.
Based on the work performed we found that the fair value of
the acquired assets and liabilities was supported by the
evidence obtained and that the accounting for the acquisitions
was appropriate.
The classification of exceptional items (£17.1 million (2019:
£3.4 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.
We tested the classification of exceptional items by
examining supporting information such as invoices,
payslips, announcements or correspondence in respect of the
restructuring and relevant provision calculations. For each
item tested we considered the nature of the item and the
appropriateness of the classification as exceptional.
Exceptional items primarily consist of acquisition related
costs, restructuring costs and onerous property 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.
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.
The valuation of goodwill and other intangibles £493.6m
(2019: £329.0 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.
Other intangibles have arisen from the acquisition of
businesses where the acquired assets have been separately
identified using the purchase price model. Other intangibles
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).
We focused on this area as there is a risk that brands,
Our work to address the valuation of goodwill was supported
by our in-house valuation experts and included the following
procedures:
We obtained management’s value in use cash flows
underpinning their goodwill impairment assessment
and tested the mathematical accuracy and reviewed
the key assumptions such as discount rates, long term
growth rates and EBITDA margins.
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 margins continued to remain the key
assumption to which the impairment assessment was
most sensitive. We also considered to what level the
EBITDA margins would need to deteriorate in order to
indicate impairment.
114 / FUTURE PLC
Financial Statements
Key audit matter
How our audit addressed the key audit matter
websites or other amortised assets are no longer used
following initial acquisition.
These balances remain material and it is possible that
material amortised intangibles may no longer be generating
cash flows, resulting in an impairment to their valuation. The
impact of COVID-19 on the business may also have led to an
impairment trigger.
Accounting for uncertain tax provisions
The Group is subject to tax laws in a number of jurisdictions,
primarily the US and UK and subject to periodic challenges
by local tax authorities on a range of tax matters during the
normal course of business, including transfer pricing, direct
and indirect taxes and transaction related tax
matters. Where the amount of tax payable is uncertain, the
Group establishes provisions based on management’s
judgement of the likelihood of settlement being required.
In particular, the Group has material intra-group
transactions relating to the cross-border licensing of
platform technology and brands which give rise to transfer
pricing risk. These have needed to keep pace with the rapid
increase in profits over the past 3 years. The net result is that
the group has recognised a material centrally held provision
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.
We focused on the judgements made by management in
assessing the likelihood of potentially material exposures and
the estimates used to determine such provisions where
required, which could materially impact the amounts
recorded in the Group financial statements.
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.
In respect of the other intangibles
We reviewed management’s assessment of whether
there were impairment triggers (such as closure of
magazine titles, or the impact of COVID-19 on the
events business) and considered whether their views
were supported by the evidence in the business.
We selected a sample of other intangible assets and
performed testing to ensure they are still used in the
business and whether assets are generating sufficient
cashflows to support the carrying value.
We also considered the adequacy of the disclosures
with regards to goodwill and intangible assets.
Based on the work performed, we found that the methods
used in the impairment assessment of goodwill and other
intangibles 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 with our
in-house transfer pricing specialists to gain an
understanding of the current status of tax
assessments and investigations and to monitor
legislative development.
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.
Based on the work performed we concluded that the
provision falls within a reasonable range of estimates.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 115
Key audit matter
The valuation of newstrade returns provisions
Magazine newsstand revenue is recognised at the date that
the related publication goes on sale where the Group is the
publisher. The amount of revenue recognised is based on the
number of issues printed and an estimate of the number of
returns.
Where the Group is the wholesaler (Marketforce), while
revenue is based on the margin earned rather than the gross
price of the magazine, the estimate of the number of returns
is still a significant judgement.
We focused on this area because of the inherent subjectivity
in estimating the number of returns and because of the
significance of Magazine revenue to the Group’s reported
result, particularly in light of the acquisition of TI Media and
the Marketforce business. Changes to the estimated number
of returns could have a material impact on Magazine revenue.
How our audit addressed the key audit matter
Our work to address the valuation of the provision included
the following procedures:
We assessed whether the estimated number of
returns was reasonable by comparing the estimate to
historical trends and by considering the accuracy of
management’s forecasting in the past.
We considered whether there had been any change
to the types of magazines sold or changes to the
market environment, which could increase the level
of uncertainty in the estimate, particularly the
impact of COVID-19.
We also examined the number of returns processed
after the year-end where available and compared
that data to the level of returns forecast by
management.
Based on the work performed, we found that the methods
and assumptions used to estimate the number of returns
were appropriate and that the provision was supported by
the evidence obtained.
Impact of COVID-19
The COVID-19 pandemic is considered to have a potential
impact on certain aspects of the financial statements. The
areas which might be expected to be impacted by COVID-19
are as set out below:
Impairment of goodwill and other intangibles
Recoverability of accounts receivable
Going concern and viability
Disclosure of the impact on the business
We have also incorporated the guidance for auditors
issued by the FRC regarding COVID-19 and applied this
where appropriate.
We have considered the impact of COVID-19 on various
areas of the Annual Report and performed procedures to
address the risk around the impact of COVID-19.
We have set out our responses to the risk in respective areas
of the financial statements as below:
Recoverability of accounts receivable:
o We have considered the adequacy of provisions for
impairment of accounts receivable, considering post
year end cash receipts, testing IFRS 9 provisions, and
considering the history of collections of accounts
receivable since the start of pandemic
restrictions. We considered the evidence supported
management’s decision to increase the provision.
Impairment of goodwill and other intangibles:
o We have reviewed and challenged management's
impairment trigger assessment in respect of other
intangibles.
o We have considered the impact of COVID-19 on future
cash flows supporting the carrying value of goodwill as
set out above.
Going concern and viability:
o We have considered the impact on cash flows
supporting the going concern assertion, including the
impact on bank covenants and forecast covenant
compliance.
Disclosure of impact in the financial statements:
o We have audited the disclosures provided in the
financial statements and assessed the reasonableness
of such disclosures. As a result of the procedures
performed, we consider that the disclosures are
reasonable and appropriate.
Overall, we consider management’s assessment of the impact
of COVID-19 on the financial statements to be reasonable.
116 / FUTURE PLC
Financial Statements
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.
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
£2,605,000 (2019: £1,363,000).
£4,334,000 (2019: £2,408,000).
How we determined it
5% of profit before tax.
1% of total assets.
Rationale for
benchmark applied
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 £1,500,000 to reflect its
allocation of materiality for the purpose of
the Group audit.
Profit before tax is a generally accepted
benchmark for determining materiality in a
profit oriented business and this year we
concluded that this was the most appropriate
benchmark to use. In the prior year, we
concluded that adjusted EBITDA was the
most appropriate benchmark to determine
materiality, considering the scale of the
business and the impact of the Group’s
ongoing acquisition and integration activities
on profit before tax. As acquired businesses
are integrated and profits grow to
“normalised” levels, we re-evaluated our
benchmark in the current year.
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 £1,100,000 and £2,605,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£130,000 (Group audit) (2019: £68,000) and £130,000 (Company audit) (2019: £68,000) 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 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 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.
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
ANNUAL REPORT AND ACCOUNTS FY 2020 / 117
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006
(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).
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 2020 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)
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 38-42 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 43 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 108, 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 76-77 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)
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 108, 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
118 / FUTURE PLC
Financial Statements
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 22 years, covering the years ended 31 December 1999 to 30 September 2020.
Katharine Finn (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
10 December 2020
ANNUAL REPORT AND ACCOUNTS FY 2020 / 119
2020
Non -GAAP
Adjusted
results
£m
Adjusting
items
£m
Statutory
results
£m
339.6
-
339.6
(246.2)
(42.7)
(288.9)
Non -GAAP
Adjusted
results
£m
221.5
(169.3)
93.4
0.5
(3.0)
(2.5)
-
90.9
(18.0)
72.9
(42.7)
7.6
(2.3)
5.3
(1.5)
(38.9)
10.3
(28.6)
50.7
8.1
(5.3)
2.8
(1.5)
52.0
(7.7)
44.3
52.2
-
(2.1)
(2.1)
0.2
50.3
(9.1)
41.2
Note
1, 2
3
1
7
7
1
8
2019
Adjusting
items
£m
-
(25.5)
(25.5)
0.8
(12.9)
(12.1)
-
(37.6)
4.5
(33.1)
Statutory
results
£m
221.5
(194.8)
26.7
0.8
(15.0)
(14.2)
0.2
12.7
(4.6)
8.1
Note
10
10
2020
pence
46.4
45.4
2019
pence
9.9
9.3
2020
£m
44.3
(8.3)
(8.3)
36.0
2019
£m
8.1
8.3
8.3
16.4
Consolidated income statement
for the year ended 30 September 2020
Revenue
Net operating expenses
Operating profit
Finance income
Finance costs
Net finance income/(costs)
Other (expense)/income
Profit before tax
Tax charge
Profit for the year attributable to owners of the parent
See page 128 and note 10 for a reconciliation between adjusted and statutory results
.
Earnings per 15p Ordinary share
Basic earnings per share
Diluted earnings per share
Consolidated statement of comprehensive income
for the year ended 30 September 2020
Profit for the year
Items that may be reclassified to the consolidated income statement
Currency translation differences
Other comprehensive (loss)/income 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.
120 / FUTURE PLC
Financial Statements
Financial Statements
Consolidated statement of changes in equity
for the year ended 30 September 2020
Group
Balance at 1 October 2018
Profit for the year
Currency translation differences
Other comprehensive income for the year
Total comprehensive income for the year
Share capital issued during the year
Share schemes
- Value of employees’ services
- Deferred tax on options
Dividends paid to shareholders
Balance at 30 September 2019
Retained earnings impact of adopting IFRS 16
Restated balance at 1 October 2019
Profit for the year
Currency translation differences
Other comprehensive loss for the year
Total comprehensive income for the year
Share capital issued during the year
Acquisition of own shares
Share schemes
- Value of employees’ services
- Current tax on options
- Deferred tax on options
Dividends paid to shareholders
Balance at 30 September 2020
Issued share
capital
£m
Note
Share
premium
account
£m
12.2
97.2
Treasury
reserve
£m
Retained
earnings/
(losses)
£m
(0.3)
(61.4)
Merger
reserve
£m
124.9
-
-
-
-
15.5
-
-
-
140.4
-
140.4
-
-
-
-
30.5
-
-
-
-
-
-
-
-
-
-
-
-
(0.3)
-
(0.3)
-
-
-
-
-
(8.5)
-
-
-
-
-
-
-
22, 24
0.3
6
14
9
22, 24
24
6
14
9
-
-
-
12.5
-
12.5
-
-
-
-
2.2
-
-
-
-
-
-
-
-
-
-
-
-
97.2
-
97.2
-
-
-
-
99.8
-
-
-
-
Company statement of changes in equity
for the year ended 30 September 2020
Company
Balance at 1 October 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
Loss for the year
Total comprehensive loss for the year
Share capital issued during the year
Acquisition of own shares
Share schemes
- Value of employees’ services
- Deferred tax on options
Dividends paid to shareholders
Balance at 30 September 2020
-
14.7
-
197.0
-
170.9
-
(8.8)
Issued share
capital
£m
Note
22, 24
9
22, 24
12.2
-
-
0.3
-
-
-
12.5
-
-
2.2
-
-
-
Share
premium
account
£m
97.2
-
-
-
-
-
-
97.2
-
-
99.8
-
-
-
9
-
14.7
-
197.0
Merger
reserve
£m
15.9
-
-
15.5
-
-
-
31.4
-
-
30.5
-
-
-
-
61.9
Total
equity
£m
172.6
8.1
8.3
8.3
16.4
15.8
3.4
5.6
(0.4)
213.4
(0.8)
212.6
44.3
(8.3)
(8.3)
36.0
132.5
(9.1)
5.6
8.4
(3.7)
(1.0)
381.3
Total
equity
£m
180.5
(1.6)
(1.6)
15.8
3.4
2.3
(0.4)
200.0
(6.5)
(6.5)
132.5
(0.6)
5.6
(3.9)
(1.0)
326.1
8.1
8.3
8.3
16.4
-
3.4
5.6
(0.4)
(36.4)
(0.8)
(37.2)
44.3
(8.3)
(8.3)
36.0
-
(0.6)
5.6
8.4
(3.7)
(1.0)
7.5
Retained
earnings
£m
55.2
(1.6)
(1.6)
-
3.4
2.3
(0.4)
58.9
(6.5)
(6.5)
-
(0.6)
5.6
(3.9)
(1.0)
52.5
ANNUAL REPORT AND ACCOUNTS FY 2020 / 121
Consolidated balance sheet
as at 30 September 2020
Assets
Non-current assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - other
Investments
Deferred tax
Total non-current assets
Current assets
Inventories
Corporation tax recoverable
Trade and other receivables
Cash and cash equivalents
Financial asset - derivative
Finance lease receivable
Total current assets
Total assets
Equity and liabilities
Equity
Issued share capital
Share premium account
Merger reserve
Treasury reserve
Retained earnings/(losses)
Total equity
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings
Lease liability due in more than one year
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
Lease liability due within one year
Deferred consideration
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2020
£m
2019
£m
11
12
12
14
15
16
21
21
1
22
24
24
24
18
14
19
20
21
18
17
21
1
20.9
309.7
183.9
-
1.0
515.5
0.7
1.7
72.4
19.3
-
1.6
95.7
611.2
14.7
197.0
170.9
(8.8)
7.5
381.3
73.6
18.7
2.5
5.1
-
-
99.9
7.8
116.2
-
6.0
-
130.0
229.9
611.2
2.5
218.7
110.3
0.2
3.7
335.4
-
1.1
41.9
6.6
1.4
-
51.0
386.4
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
The financial statements on pages 120 to 163 were approved by the Board of Directors on 10 December 2020 and signed on its
behalf by:
Richard Huntingford
Chairman
Rachel Addison
Chief Financial Officer
122 / FUTURE PLC
Financial Statements Company balance sheet
as at 30 September 2020
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
Financial Statements
Note
2020
£m
2019
£m
13
14
15
16
21
22
24
24
18
18
17
356.3
1.2
357.5
72.6
0.1
-
72.7
430.2
14.7
197.0
61.9
52.5
326.1
73.6
73.6
4.3
26.2
-
30.5
104.1
430.2
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
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 £6.5m (2019: £1.6m).
The financial statements on pages 120 to 163 were approved by the Board of Directors on 10 December 2020 and signed on its
behalf by:
Richard Huntingford
Chairman
Rachel Addison
Chief Financial Officer
Future plc
03757874
ANNUAL REPORT AND ACCOUNTS FY 2020 / 123
Consolidated and Company cash flow statements
for the year ended 30 September 2020
Cash flows from operating activities
Cash generated from/(used in) operations
Interest paid
Interest paid on lease liabilities
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 subsidiaries, magazine titles and websites
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
Acquisition of own shares
Drawdown of bank loans
Repayment of bank loans
Drawdown of overdraft
Bank arrangement fees
Repayment of principal element of lease liabilities
Settlement/(purchase) of derivative
Dividends paid
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Group
2020
£m
91.9
(1.4)
(0.7)
(8.4)
81.4
(0.9)
(3.1)
(0.1)
(73.5)
(2.2)
-
(79.8)
104.4
(3.4)
(8.5)
142.1
(220.7)
3.5
(0.6)
(3.9)
0.2
(1.0)
12.1
13.7
6.6
(1.0)
19.3
Company
2020
£m
(4.1)
(1.6)
-
-
(5.7)
-
-
-
-
-
(130.3)
(130.3)
104.4
(3.4)
-
142.1
(109.9)
4.3
(0.6)
-
0.2
(1.0)
136.1
0.1
-
-
0.1
Group
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
Company
2019
£m
(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
-
-
124 / FUTURE PLC
Financial Statements Financial Statements
Notes to the Consolidated and Company cash flow statements
for the year ended 30 September 2020
A. Cash generated from/(used in) 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 and impairment charge
Amortisation of intangible assets and impairment charge
Share schemes
- Value of employees’ services
Reversal of impairment
Net finance (income)/costs
Tax charge/(credit)
Loss/(gain) on the sale of operations
Cash generated from/(used in) operations before changes
in working capital and provisions
Movement in provisions
Decrease in inventories
Decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from/(used in) operations
Group
2020
£m
44.3
6.9
25.1
5.6
-
(2.8)
7.7
1.5
88.3
-
0.5
2.6
0.5
91.9
Company
2020
£m
(6.5)
-
-
-
(0.1)
3.0
(0.6)
-
(4.2)
-
-
-
0.1
(4.1)
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)
B. Analysis of net debt
Group
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net debt
1 October
2019
£m
6.6
(4.3)
(42.6)
(40.3)
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
Cash flows
£m
On acquisition
£m
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2020
£m
(15.5)
(3.5)
78.7
59.7
1 October
2018
£m
6.4
(8.5)
(15.7)
(17.8)
1 October
2019
£m
-
-
(42.6)
(42.6)
29.2
-
(111.0)
(81.8)
-
-
0.2
0.2
(1.0)
-
1.1
0.1
19.3
(7.8)
(73.6)
(62.1)
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
2020
£m
0.1
(4.3)
(32.3)
(36.5)
-
-
0.2
0.2
-
-
1.1
1.1
0.1
(4.3)
(73.6)
(77.8)
ANNUAL REPORT AND ACCOUNTS FY 2020 / 125
Company
Cash and cash equivalents
Debt due within one year
Debt due after more than one year
Net debt
C. Reconciliation of movement in net debt
1 October
2018
£m
0.3
(8.5)
(15.7)
(23.9)
Net debt at start of year
Increase/(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
Cash flows
£m
(0.3)
8.5
(23.5)
(15.3)
Group
2020
£m
(40.3)
13.7
(35.8)
0.2
0.1
(62.1)
Other non-cash
changes
£m
Exchange
movements
£m
30 September
2019
£m
-
-
(0.5)
(0.5)
Company
2020
£m
(42.6)
0.1
(36.6)
0.2
1.1
(77.8)
-
-
(2.9)
(2.9)
Group
2019
£m
(17.8)
(2.5)
(19.3)
(0.5)
(0.2)
(40.3)
-
-
(42.6)
(42.6)
Company
2019
£m
(23.9)
(0.3)
(15.0)
(0.5)
(2.9)
(42.6)
Group
Financial assets
1 October
2019
£m
Financing
cash flows
£m
Share issue
£m
Acquisitions
£m
Changes in
fair values
and
unwinding
of discount
£m
Adoption
of IFRS 16
Leases
£m
Exchange
movements
£m
Other
non cash
movements
£m
30 September
2020
£m
Trade and other receivables (net)
Cash and cash equivalents
Finance lease receivable
Financial asset - derivative
36.0
6.6
-
1.4
(6.2)
(15.5)
(0.1)
(0.2)
Total financial assets
44.0
(22.0)
Financial liabilities
Trade and other payables
Current borrowings
Non-current borrowings
Deferred consideration
Contingent consideration
Total financial liabilities
Net financial assets and liabilities
(53.8)
(4.3)
(42.6)
(43.9)
(10.9)
(155.5)
(111.5)
(0.5)
(3.5)
78.7
21.4
3.6
99.7
77.7
-
-
-
-
-
-
-
-
21.8
-
21.8
21.8
29.2
29.2
-
-
58.4
(49.8)
-
(111.0)
-
-
(160.8)
(102.4)
-
-
-
(1.2)
(1.2)
-
-
-
(0.3)
6.8
6.5
5.3
-
-
1.8
-
1.8
0.4
-
-
-
-
0.4
2.2
(0.3)
(1.0)
-
-
(1.3)
(1.1)
-
1.1
1.0
0.5
1.5
0.2
-
-
(0.1)
-
(0.1)
-
-
0.2
-
-
0.2
0.1
58.7
19.3
1.6
-
79.6
(104.8)
(7.8)
(73.6)
-
-
(186.2)
(106.6)
Group
Financial assets
Trade and other receivables (net)
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
126 / FUTURE PLC
1 October
2018
£m
Financing
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)
Financial Statements
Financial Statements
Accounting policies
Compliance statement and basis of preparation
Future plc (the Company) is incorporated and registered in the United Kingdom and is a public company limited by shares. The address of the
Company’s registered office and its registered number are given on pages 123 and 174. 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 2020, 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 2020 Annual Report
are set out on pages 127 to 133. 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 contingent and
deferred consideration, 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 108.
New or revised accounting standards
and interpretations adopted in the
year
The following standards and amendments
became effective in the year:
- IFRS 16 Leases;
- IFRIC 23 Uncertainty over income tax
£16.8m, with the balance of £0.8m being
to the repayment of interest presented
recognised within retained earnings at
within cash flows from operating activities.
1 October 2019.
Payments relating to short-term and
In the income statement the operating
low-value leases will continue to be included
lease rent expense has been replaced by
in cash flows from operating activities.
depreciation of right-of-use assets and
The Group’s accounting policy for leases
finance costs on lease liabilities.
under IFRS 16 is as follows:
treatments;
The Group has taken advantage of the
Property leases are recognised on the
- amendment to IFRS 9 Prepayment features
following practical expedients on transition
balance sheet as a right-of-use asset and
with negative compensation and
modifications of financial liabilities; and
- amendments as a result of Annual
Improvements 2015-2017 Cycle.
There has been no material impact from
to:
corresponding lease liability at the date the
• r ely on our assessment of where leases
leased asset is available for use. Lease
exist under current reporting standards
IAS 17 Leases and IFRIC 4 Determining
Whether an Arrangement Contains a
Lease;
liabilities are measured at the present value
of payments less lease incentives receivable.
Right-of-use assets are measured equal to
the value of the lease liability plus restoration
the adoption of new standards, amendments
• exclude low-value leases;
costs.
to standards or interpretations which are
• exclude short-term leases, being those
Lease payments are discounted using the
relevant to the Group, other than as set out
with a term of 12 months or less from 1
interest rate implicit in the lease (for leases
below.
October 2019;
existing on transition the incremental
The Group has adopted IFRS 16 Leases
from 1 October 2019, resulting in the
recognition on balance sheet of assets and
liabilities relating to leases previously
accounted for as operating leases. On
• 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
borrowing rate).
Short-term and low-value leases (as
defined by IFRS 16) are recognised on a
straight-line basis as an expense in the
income statement.
transition the Group has applied the
to performing an impairment review;
Finance costs are charged to the income
modified retrospective approach, with the
• use hindsight when determining the
statement over the lease term, at a constant
right-of-use asset measured as if IFRS 16 had
lease term where the contract includes
periodic rate of interest. Right-of-use assets
always applied and the difference between
options to extend or terminate; and
are depreciated over the lease term on a
lease assets and lease liabilities recognised
• exclude initial direct costs from the
straight-line basis. Each lease payment is
within retained earnings. Comparative
measurement of the right-of-use asset.
allocated between the liability and finance
periods have not been restated.
Although there is no change to actual cash
cost.
Adoption of the standard has resulted in
outflows, under IFRS 16 repayments relating
an increase in reported assets of £16.0m,
to the principal portion of the lease liability
which includes a deferred tax asset of £0.7m,
are presented within cash flows from
IFRIC 23 Uncertainty over income tax
treatments provides guidance and clarifies
how to apply the recognition and
and an increase in reported liabilities of
financing activities and the portion relating
measurement requirements in IAS 12
ANNUAL REPORT AND ACCOUNTS FY 2020 / 127
Income taxes where there is uncertainty over
income tax treatments. IFRIC 23 has been
payment expenses (relating to equity-
using the standard rate of corporation tax in
settled share awards with vesting periods
the relevant jurisdiction.
applied in the measurement of the provision
longer than 12 months), together with
A reconciliation of adjusted operating
recognised. The adoption of the standard
associated social security costs, are
profit to profit before tax is shown below:
has not had a material impact on the
excluded from the adjusted results of the
financial statements. For more detail about
Group as the Directors believe they result
the provision for uncertain tax positions, see
in a level of charge that would distort the
the ‘critical judgements’ section on page 133.
user’s view of the core trading
New accounting standards,
amendments and interpretations
that are issued but not yet applied by
the Group
Certain new standards, amendments and
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
interpretations to existing standards have
item, or its size, is material and not
been published that are mandatory for
related to the core underlying trading of
accounting periods beginning on or after
the Group so as to assist the user of the
1 October 2020 and which the Group has
financial statements to better
chosen not to adopt early. These include the
understand the results of the core
following standards which are relevant to the
operations of the Group. Details of
Group:
exceptional items are shown in note 5.
- amendment to IFRS 3 Clarifying the
- Amortisation of acquired intangible
definition of a business;
assets – the amortisation charge for
- amendment to IAS 1 Definition of Material
those intangible assets recognised on
and Classification of liabilities;
business combinations is excluded from
Adjusted operating profit
Adjusted finance costs
Other income
2020
£m
93.4
(2.5)
-
2019
£m
52.2
(2.1)
0.2
Adjusted profit before tax
90.9
50.3
Adjusting items:
Share-based payments
(including social
security costs)
(5.5)
(9.0)
Exceptional items (note 5)
(17.1)
(3.4)
Amortisation of acquired
intangibles (note 12)
(21.6)
(13.1)
Decrease/(increase) in
fair value of contingent
consideration
7.6
(11.7)
Unwinding of discount
(1.1)
(1.2)
Fair value (loss)/gain on
currency option
(1.2)
0.8
Profit before tax
52.0
12.7
- IAS 8 Definition of Material;
- IAS 37 Costs to include when assessing
the adjusted results of the Group since
they are non-cash charges arising from
A reconciliation of cash generated from
whether a contract is material;
non-trading investment activities. As
operations to adjusted free cash flow is
- amendment to IFRS 7, IFRS 9 and
IFRS 16 Amendments regarding
pre-replacement issues in the context of
the IBOR reform; and
such, they are not considered to be
shown below:
reflective of the core trading
performance of the Group.
- Change in the fair value of contingent
- Annual Improvements to IFRS Standards
consideration - the Group excludes the
2018-2020 Cycle.
remeasurement of these acquisition-
The Group does not expect that the
related liabilities from its adjusted results
standards and amendments issued but not
as the impact of remeasurement can
yet effective will have a material impact on
vary significantly depending on the
results or net assets.
Presentation of non-statutory
measures
The Directors believe that adjusted results
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
and adjusted earnings per share provide
the relevant discount rate to apply.
Cash generated from
operations
Cash flows related to
exceptional items
Settlement of social
security costs on share
based payments
Lease payments following
adoption of IFRS 16 Leases
Adjusted operating cash
inflow
Cash flows related to
capital expenditure
2020
£m
2019
£m
91.9
53.7
8.0
4.0
4.0
(3.9)
-
-
100.0
57.7
(4.0)
(4.0)
additional useful information on the core
Excluding these items ensures
Adjusted free cash flow
96.0
53.7
operational performance of the Group to
comparability with prior years.
shareholders, and review the results of the
- Changes in the fair value of currency
A reconciliation between adjusted and
Group on an adjusted basis internally. The
option - the Group has excluded this from
statutory earnings per share measures is
term ‘adjusted’ is not a defined term under
its adjusted results as the option was
shown in note 10.
IFRS and may not therefore be comparable
acquired in order to hedge USD exposure
with similarly titled profit measurements
to acquisition-related contingent
reported by other companies. It is not
consideration and does not relate to the
intended to be a substitute for, or superior to,
core underlying trading performance of
IFRS measurements of profit.
the Group.
Basis of consolidation
The consolidated financial statements
incorporate the financial statements of
Adjustments are made in respect of:
The tax related to adjusting items is the
Future plc (the Company) and its subsidiary
- Share-based payments – share-based
tax effect of the items above, calculated
undertakings. Subsidiaries are all entities
128 / FUTURE PLC
Financial Statements Financial Statements
controlled by the Group. Control exists when
simultaneously receives and consumes the
the Group is either exposed to or has the
benefits of the contract, revenue is
Foreign currency translation
rights to variable returns from its
recognised over time. Otherwise, revenue is
involvement with the entity and has the
recognised at a point
ability to affect those returns through its
in time.
power over the entity. Subsidiaries are fully
Revenue comprises the transaction price
(a) Functional and presentation
currency
Items included in the financial statements of
consolidated from the date on which control
of the contract, being consideration received
each of the Group’s entities are measured
is transferred to the Group. They are
or receivable for the sale of goods and
using the currency of the primary economic
deconsolidated from the date that control
services in the ordinary course of the
environment in which the entity operates
ceases. The purchase method of accounting
Group’s activities. Revenue is shown net of
(‘the functional currency’). The consolidated
is used to account for the acquisition of
value-added tax, estimated returns, rebates
financial statements are presented in
subsidiaries by the Group.
and discounts, which includes retail
sterling, which is the Group’s presentation
The cost of an acquisition is measured as
promotion costs and advertising rebates,
currency.
the fair value of the assets given, equity
and after eliminating sales within the Group.
instruments issued and liabilities incurred or
For print and digital magazine newstrade
assumed at the date of exchange, and
and subscription revenue, and digital
(b) Transactions and balances
Foreign currency transactions are translated
includes the fair value of any asset or liability
advertising revenues and expenses, revenue
into the functional currency using the
resulting from a contingent consideration
is recognised as the amount paid by the end
exchange rate prevailing at the date of the
arrangement. Acquisition-related costs are
consumer, rather than the amount remitted
transaction. Foreign exchange gains and
expensed as incurred. Identifiable assets
by the agent.
losses resulting from the settlement of such
acquired and liabilities and contingent
Related commissions paid to agents are
transactions and from the translation at
liabilities assumed in a business combination
recognised as an expense within cost of
balance sheet exchange rates of monetary
are measured initially at their fair values at
sales.
assets and liabilities denominated in foreign
the acquisition date. The excess of the cost
The following recognition criteria also
currencies are recognised in the income
of acquisition over the fair value of the
apply:
statement, with exchange differences arising
Group’s share of the identifiable net assets
- eCommerce revenue is recognised at the
on trading transactions being reported in
acquired is recorded as goodwill.
time of the related product sale.
operating profit and with those arising on
Inter-company transactions, balances and
- Magazine newsstand circulation, print
financing transactions reported in net
unrealised gains on transactions between
subscription and advertising revenue is
finance costs unless, as a result of cash flow
Group companies are eliminated.
recognised according to the date that the
hedging, they are reported in other
Unrealised losses are also eliminated but
related publication goes on sale.
comprehensive income.
are considered an impairment indicator of
- Online advertising revenue is recognised
the asset transferred. Accounting policies of
over the period during which the adverts
subsidiaries have been changed where
are served.
(c) Group companies
The results and financial position of all the
necessary to ensure consistency with the
- Revenue from the sale of digital
Group entities that have a functional
policies adopted by the Group.
magazine subscriptions is recognised
currency different from the presentation
uniformly over the term of the
currency are translated into the presentation
subscription.
currency as follows:
Segment reporting
The Group is organised and arranged
- Event income is recognised when the
event has taken place.
primarily by geographical segment. The
- Licensing revenue is recognised on the
Group also uses a sub-segment split of
supply of the licensed content.
Media and Magazines for further analysis.
- Publisher services revenue is recognised
Operating segments are reported in a
when the issues are distributed to
manner consistent with the internal
wholesalers.
reporting provided to the Chief Operating
- Revenue from broadcaster productions
(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
Decision Makers who are considered to be
is recognised over the period of
equity.
the Executive Directors of Future plc.
development in line with expenditure
Revenue recognition
Revenue from contracts with customers is
incurred.
On consolidation, exchange differences
- Other revenue is recognised at the time
arising from the translation of the net
of sale or provision of service.
investment in foreign operations, and of
borrowings and other currency instruments
recognised in the income statement in line
The right of return is considered to be
designated as hedges of such investments,
with the five-step model in IFRS 15, to reflect
variable consideration. The probable amount
are taken to shareholders’ equity. When a
the pattern of transfer of goods and services
of expected returns is estimated using the
foreign operation is sold, exchange
to the customer. Revenue is recognised in
most-likely amount method and accounted
differences that were recorded in equity are
the income statement when control passes
for as a reduction in revenue.
recognised in the income statement as part
to the customer. If the customer
of the gain or loss on sale.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 129
Employee benefits
(c) Bonus plans
The Group recognises a liability and an
expense for bonuses taking into
ended 30 September 2019 the following
accounting policy under IAS 17 Leases was
applied:
(a) Pension obligations
The Group has a number of defined
consideration the profit attributable to the
Leases in which the Group assumes
Company’s shareholders after certain
substantially all the risks and rewards of
contribution plans. For defined contribution
adjustments. The Group recognises a
ownership of the leased assets were
plans the Group pays contributions into a
provision where contractually obliged or
classified as finance leases. All other leases
privately administered pension plan on a
where there is a past practice that has
were classed as operating leases. Assets
contractual or voluntary basis. The Group
created a constructive obligation.
held under finance leases were included
has no further payment obligations once the
contributions have been paid. Contributions
are charged to the income statement as they
are incurred.
Leases
Property leases are recognised on the
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 were
(b) Share-based compensation
The Group operates a number of share-
balance sheet as a right-of-use asset and
depreciated over their estimated economic
corresponding lease liability at the date the
lives or the finance lease period, whichever
leased asset is available for use. Lease
was the shorter. The corresponding liability
based compensation plans.
liabilities are measured at the present value
was recorded within borrowings. The interest
The fair value of the employee services
of payments less lease incentives receivable.
element of the rental costs was charged
received in exchange for the grant of the
Right-of-use assets are measured equal to
against profits over the period of the lease
awards is recognised as an expense. The
the value of the lease liability plus restoration
using the actuarial method. Payments made
total amount to be expensed over the
costs.
under operating leases (net of any incentives
appropriate service period is determined by
Lease payments are discounted using the
received from the lessor) were charged to
reference to the fair value of the awards. The
interest rate implicit in the lease (for leases
the income statement on a straight-line basis
calculation of fair value includes
existing on transition the incremental
over the period of the lease.
assumptions regarding the number of
borrowing rate).
cancellations and excludes the impact of any
Short-term and low-value leases (as
non-market vesting conditions (for example,
defined by IFRS 16) are recognised on a
earnings per share). Non-market vesting
straight-line basis as an expense in the
Tax
Tax on the profit or loss for the year
conditions are included in assumptions
income statement.
comprises current tax and deferred tax. Tax
about the number of awards that are
Finance costs are charged to the income
is recognised in the income statement
expected to vest. At each balance sheet date,
statement over the lease term, at a constant
except to the extent that it relates to items
the Group revises its estimates of the
periodic rate of interest. Right-of-use assets
recognised directly in equity in which case it
number of awards that are expected to vest.
are depreciated over the lease term on a
is recognised in equity.
It recognises the impact of the revision of
straight-line basis. Each lease payment is
Current tax is payable based on taxable
original estimates, if any, in the income
allocated between the liability and finance
profits for the year, using tax rates that have
statement, with a corresponding adjustment
cost.
been enacted or substantively enacted at the
to equity for equity-settled awards and
Where the Group is a lessor, where the
balance sheet date, along with any
liabilities for cash-settled awards.
lease transfers substantially all the risks and
adjustment relating to tax payable in
The grant by the Company of share
rewards of ownership to the lessee it is
previous years. Management periodically
awards to the employees of subsidiary
classified as a finance lease. All others are
evaluates items detailed in tax returns where
undertakings is treated as a capital
accounted for as operating leases. Where
the tax treatment is subject to interpretation.
contribution. The fair value of employee
the Group is an intermediate lessor, the
Taxable profit differs from net profit in the
services received, measured by reference to
sublease is classified as a finance or
income statement in that income or expense
the grant date fair value, is recognised over
operating lease by reference to the right-of-
items that are taxable or deductible in other
the vesting period as an increase to
use asset arising from the head lease.
years are excluded – as are items that are
investment in subsidiary undertakings, with
Amounts due from lessees under finance
never taxable or deductible. Current tax
a corresponding credit to equity in the
leases are recognised as receivables at the
assets relate to payments on account not
Company’s financial statements.
amount of the net investment in the leases.
offset against current tax liabilities.
Shares in the Company are held in trust to
Finance lease income reflects a constant
Deferred tax is provided for in full, using
satisfy the exercise of awards under certain
periodic rate of return on the Group’s net
the liability method, on temporary
of the Group’s share-based compensation
investment outstanding. Rental income from
differences arising between the tax bases of
plans and exceptional awards. The trust is
operating leases is recognised on a
assets and liabilities and their carrying
consolidated within the Group financial
straight-line basis over the term of the
amounts in the consolidated financial
statements. These shares are presented in
relevant lease.
statements. However, deferred tax is not
the consolidated balance sheet as a
deduction from equity at the market value on
The Group has adopted IFRS 16 Leases
from 1 October 2019. Comparative periods
accounted for if it arises from initial
recognition of an asset or liability in a
the date of acquisition.
have not been restated and for the year
transaction other than a business
130 / FUTURE PLC
Financial Statements Financial Statements
combination that at the time of the
the financial statements in the period in
eCommerce technology and other
transaction affects neither accounting nor
which they are approved.
taxable profit or loss. Deferred tax is
determined using tax rates (and laws) that
‘magazine and website related’
intangibles
Magazine and website related intangible
have been enacted or substantively enacted
by the balance sheet date and are expected
Property, plant and equipment
Property, plant and equipment is stated at
assets have a finite useful life and are stated
at cost less accumulated amortisation.
to apply when the related deferred tax asset
cost (or deemed cost) less accumulated
Assets acquired as part of a business
is realised or the deferred tax liability is
depreciation and impairment losses. Cost
combination are initially stated at fair value.
settled in the appropriate territory.
includes expenditure that is directly
Amortisation is calculated using the
Deferred tax assets are recognised to the
attributable to the acquisition of the items.
straight-line method to allocate the cost of
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
Depreciation
Depreciation is calculated using the
these intangibles over their estimated useful
lives (typically between one and fifteen
years).
Expenditure incurred on the launch of new
differences arising on investments in
straight-line method to allocate the cost of
magazine titles is recognised as an expense
subsidiaries, except where the timing of the
property, plant and equipment less residual
in the income statement as incurred.
reversal of the temporary difference is
value over estimated useful lives, as follows:
controlled by the Group and it is probable
• Land and buildings – 50 years or period
(c) Computer software and website
that the temporary difference will not reverse
of the lease if shorter.
in the foreseeable future.
• Plant and machinery – between one and
Certain deferred tax assets and liabilities
five years.
development
Non-integral computer software purchases
are stated at cost less accumulated
are offset against each other where they
• Equipment, fixtures and fittings
amortisation. Costs incurred in the
relate to the same jurisdiction and there is a
– between one and five years.
development of new websites are capitalised
legally enforceable right to offset.
• Right-of-use assets – lease term.
only where the cost can be directly attributed
Uncertain tax positions are provided for
The assets’ residual values and useful lives
to developing the website to operate in the
under IAS 12, with due consideration for the
are reviewed, and adjusted if appropriate, at
manner intended by management and only
interpretive guidance in IFRIC 23. Each
each balance sheet date. An asset’s carrying
to the extent of the future economic benefits
uncertain tax treatment is considered either
amount is written down immediately to its
expected from its use. These costs are
separately or together with other uncertain
recoverable amount if the asset’s carrying
amortised on a straight-line basis over their
positions in the same jurisdiction, depending
amount is greater than its estimated
estimated useful lives (between one and
on which approach better predicts the
recoverable amount.
three years). Costs associated with
resolution of the uncertainty. The effect of
Gains and losses on disposals are
maintaining computer software or websites
the uncertainty is measured with reference
determined by comparing proceeds with
are recognised as an expense as incurred.
to the expected value, i.e. the sum of the
carrying amounts. These are included in the
probability-weighted amounts in a range of
income statement.
possible outcomes. The expected value
better predicts the resolution of the
uncertainty where there is a range of
Intangible assets
possible outcomes.
Impairment tests and
Cash-Generating Units (CGUs)
A CGU is defined as the smallest identifiable
group of assets that generates cash inflows
Deferred tax in business
combinations
In business combinations, deferred tax is
(a) Goodwill
Goodwill represents the difference between
that are largely independent of the cash
inflows from other assets or groups of
the cost of the acquisition and the fair value
assets.
of net identifiable assets acquired.
Goodwill is not amortised but tested for
calculated at the date of acquisition. Where
Goodwill is stated at cost less any
impairment at least once a year or more
the fair value (and therefore the acquisition
accumulated impairment losses. Goodwill is
frequently when there is an indication that it
accounting value) of assets acquired is
allocated to appropriate cash generating
may be impaired. Therefore, the evolution of
different from its tax base, a deferred tax
units (those expected to benefit from the
general economic and financial trends as well
asset or liability is recognised on the
business combination) and it is not subject to
as actual economic performance compared
temporary difference. The tax base is
amortisation but is tested annually for
to market expectations represent external
dependent on the expected tax deductions
impairment.
available in the applicable jurisdiction over
indicators that are analysed by the Group,
together with internal performance
the life of the asset.
(b) Titles, trademarks, customer lists,
indicators, in order to assess whether an
brands, subscriber databases, creative
impairment test should be performed more
services relationships, publishing
than once a year.
Dividends
All dividend distributions to the Company’s
rights, customer relationships,
advertising relationships, non-
IAS 36 Impairment of Assets requires
these tests to be performed at the level of
shareholders are recognised as a liability in
compete agreements, content,
each CGU or group of CGUs likely to benefit
ANNUAL REPORT AND ACCOUNTS FY 2020 / 131
from acquisition-related synergies, within an
loss on disposal. The goodwill allocated to
liabilities unless the Group has an
operating segment.
the disposal is measured on the basis of the
unconditional right to defer settlement of the
Any impairment of goodwill is recorded in
relative profitability of the operation
liability for at least 12 months after the
the income statement as a deduction from
disposed and the operations retained.
balance sheet date.
operating profit and is never reversed
subsequently.
Other intangible assets with a finite life are
amortised and are tested for impairment
Inventories
Inventories are stated at the lower of cost
Provisions
Provisions are recognised when the Group
only where there is an indication that an
and net realisable value. For raw materials,
has a present legal or constructive obligation
impairment may have occurred.
cost is taken to be the purchase price on a
as a result of past events, and it is more likely
first in, first out basis. For finished goods,
than not that an outflow of resources will be
cost is calculated as the direct cost of
required to settle the obligation.
Recoverable amount
To determine whether an impairment loss
production. It excludes borrowing costs. Net
Provisions are measured at the Directors’
realisable value is the estimated selling price
best estimate of the expenditure required to
should be recognised, the carrying value of
in the ordinary course of business, less
settle the obligation at the balance sheet
the assets and liabilities of the CGUs or
applicable variable selling expenses.
date, and are discounted to present value
groups of CGUs is compared to their
recoverable amount.
where the effect is material.
Carrying values of CGUs and groups of
CGUs tested include goodwill and assets
Trade and other receivables
Trade and other receivables are initially
with finite useful lives (property, plant and
recognised at fair value and subsequently
equipment, intangible assets and net
measured at amortised cost using the
Derivative financial instruments and
hedging activities
The Group uses derivative financial
working capital).
effective interest method, less a loss
instruments to reduce exposure to foreign
The recoverable amount of a CGU is the
allowance. The Group applies the IFRS 9
exchange and interest rate risks and
higher of its fair value less costs to sell and
simplified approach to measuring expected
recognises these at fair value in its balance
its value in use. Fair value less costs to sell is
credit losses, which uses a lifetime expected
sheet. For instruments for which hedge
the best estimate of the amount obtainable
loss allowance for all trade receivables.
accounting is applied, gains and losses are
from the sale of an asset in an arm’s length
Expected loss rates, calculated based on
taken to equity. Any changes to the fair value
transaction between knowledgeable, willing
historical credit losses, are applied to trade
of derivatives not hedge accounted for are
parties, less the costs of disposal. This
receivables grouped based on days past due.
recognised in the income statement. Any
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
Cash and cash equivalents
Cash and cash equivalents include cash in
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
and conditions.
hand and deposits held on call with banks.
accordingly under IFRS 9. In accordance with
Value in use is the present value of the
Bank overdrafts are shown within
its treasury policy, the Group does not hold
future cash flows expected to be derived
borrowings in current liabilities on the
or issue any derivative financial instruments
from the CGUs or group of CGUs. Cash flow
balance sheet.
for trading purposes.
projections are based on economic
assumptions and forecast trading conditions
drawn up by the Group’s management, as
follows:
Trade and other payables
Trade and other payables are initially
Where hedge accounting is not applied,
changes in fair value of derivative financial
instruments are recognised within profit or
loss.
• cash flow projections are based on
recognised at fair value and subsequently
three-year business plans;
measured at amortised cost.
• cash flow projections beyond that
time frame are extrapolated by
applying a country-specific growth
rate to perpetuity for both the US and
Borrowings
Borrowings are recognised initially at fair
Investments
The Company’s investments in subsidiary
undertakings are stated at the fair value of
consideration payable, including related
the UK; and
value, net of transaction costs incurred.
acquisition costs, less any provisions for
• the cash flows obtained are discounted
Borrowings are subsequently stated at
impairment.
using appropriate rates for the business
amortised cost with any difference between
and the territories concerned.
the proceeds (net of transaction costs) and
If goodwill has been allocated to a CGU
the redemption value recognised in the
Exceptional items
The Group considers items of income and
and an operation within that CGU is disposed
income statement over the period of the
expense as exceptional and excludes them
of, the goodwill associated with that
borrowings using the effective interest
from the adjusted results where the nature of
operation is included in the carrying amount
method.
the item, or its size, is material and not
of the operation in determining the profit or
Borrowings are classified as current
related to the core underlying trading of the
132 / FUTURE PLC
Financial Statements
Financial Statements
Group so as to assist the user of the financial
(c) Identification of cash generating
been calculated by modelling different
statements to better understand the results
of the core operations of the Group. Details
units for goodwill impairment testing
Judgement is applied in the identification of
scenarios of adjustments to transfer pricing
charges by the UK and US tax authorities and
of exceptional items are shown in note 5.
cash-generating units (“CGUs”). Given the
assigning probabilities to those scenarios. By
Critical accounting assumptions,
judgements and estimates
The preparation of the financial statements
speed of integration of acquisitions and the
their nature, the models are subjective
interdependency of revenues across the
assessments and judgement is required in
Group, both between its brands, the Media
assessing the scenarios and probabilities to
and Magazine sub-segments and globally the
apply. Although the Directors continue to
Directors remain comfortable with
believe that Future’s transfer pricing is
under IFRS requires the use of certain critical
identification of the UK and the US as the
robust, its position as a digital media
accounting assumptions and requires
primary CGUs used in impairment testing.
business and the increasing attention on
management to exercise its judgement and
to make estimates in the process of applying
the Group’s accounting policies.
Key sources of estimation
uncertainty
The following are areas of key sources of
transfer pricing as it relates to cross border
taxation of the digital economy creates
uncertainty.
Critical judgements in applying the
Group’s accounting policies
The areas where the Board has made critical
estimation uncertainty that may have a
(b) Valuation of acquired intangible
significant risk of causing a material
adjustment to the carrying amounts of
assets
Acquisitions may result in the recognition of
judgements in applying the Group’s
assets and liabilities within the next financial
intangible assets, such as titles, trademarks,
accounting policies (apart from those
year:
involving estimations which are dealt with
separately below) are:
(a) Taxation
Where tax exposures can be quantified, a
customer lists, subscriber databases,
creative services relationships, content,
advertising relationships, customer
relationships, publishing rights, non-compute
(a) Accounting for acquisitions
Management applies judgement in
provision is made based on best estimates
agreements and eCommerce technology.
and the judgement of the Directors. Details of
These assets are valued using a discounted
accounting for acquisitions, including
the provision for uncertain tax positions in
cash flow model, Multi-period Excess
identifying assets arising from the
application of IFRS 3 Business combinations,
undertaking Purchase Price Allocation
relation to material tax exposures are
Earnings Method (“MEEM”), or a relief from
discussed below. As the ultimate resolution
royalty method. In applying these valuation
of tax exposures usually occurs at a point in
methods, a number of key assumptions are
exercises to allocate value between assets
time, and given the inherent uncertainties in
made in respect of discount rates, growth
acquired, including the allocation between
assessing the outcomes of these exposures,
rates, royalty rates and the estimated life of
intangible assets and goodwill, and valuing
there could, in future periods, be
intangibles. During the year, such estimates
contingent consideration. See note 28 for
adjustments to these provisions that have a
have been made regarding the Barcroft
further detail.
material positive or negative effect on our
Studios and TI Media acquisitions. See notes
results in any particular period. Provisions for
12 and 28 for further details.
(b) Exceptional items
Due to the significant acquisition-related
tax contingencies require the Directors to
make estimates and judgements with
activity, there are a number of items which
respect to the ultimate outcome of a tax
(c) Carrying value of goodwill
The Group uses forecast cash flow
require judgement to be applied in
audit, and actual results could vary from
information and estimates of future growth
determining whether they are exceptional in
these estimates.
to assess whether goodwill is impaired. Key
nature. In the current year these relate
In the current year, the uncertain tax
assumptions include the EBITDA margin
largely to acquisition and restructuring
positions of the Group have been reviewed,
allocated to each CGU, the growth rate to
related costs in respect of the TI Media
and uncertain tax positions have been
perpetuity and the discount rate. If the
acquisition (£3.8m and £9.1m respectively),
released as the uncertainty has been
results of an operation in future years are
SmartBrief integration costs of £0.1m,
resolved or the risk reduced. The year end
adverse to the estimates used for
onerous property costs of £1.8m,
provision is £4.5m (2019: £5.6m), of which
impairment testing, impairment may be
impairment of the TI Media legacy finance
£4.1m (2019: £4.3m) relates to transfer
triggered at that point. Further details,
system of £0.8m and £1.5m loss on
pricing risks, and £0.4m (2019: £0.5m)
including sensitivity testing, are included
disposals relating to the sale of Amateur
relates to uncertain tax positions in acquired
within note 12.
Photographer, WorldSoccer and
businesses. The Group's transfer pricing
Trustedreviews.com, as required by the
uncertainties arise because the Group has
Competition and Markets Authority, as well
material intra-group transactions relating to
(d) Provision for returns
Where there is a right of return, the Group
as UK Cycling Events Limited and
the cross-border licensing of platform
provides for estimated unsold copies of
International Craft & Hobby Fair Limited,
technology and brands, which have
magazines sold via newsstand wholesalers
following the acquisition of TI Media, see
increased year on year to keep pace with the
and distributors. Provisions require the use of
notes 5 and 28 for further detail.
rapid increase in Group profits. The Group's
estimates and judgements, and actual
estimate of the transfer pricing exposure has
results could vary from these estimates.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 133
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
79.8
157.5
237.3
92.1
10.2
102.3
2020
Total
£m
171.9
167.7
339.6
Sub-segment
Media
£m
Magazines
£m
50.4
104.5
154.9
52.3
14.3
66.6
2019
Total
£m
102.7
118.8
221.5
Transactions between segments are carried out at arm’s length.
(ii) Segment adjusted operating profit
Adjusted operating profit is used by the Executive Directors to assess the performance of each segment. Operating profit 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 intra-group adjustments on the adjusted operating profit for the UK and US segments:
Segment:
UK
US
Total
Underlying adjusted
operating profit
£m
Intra-group
adjustments
£m
Adjusted
operating profit
£m
Underlying adjusted
operating profit
£m
Intra-group
adjustments
£m
Adjusted
operating profit
£m
2020
2019
10.6
82.8
93.4
48.5
(48.5)
-
59.1
34.3
93.4
10.7
41.5
52.2
18.4
(18.4)
-
29.1
23.1
52.2
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 operating profit to profit before tax is provided as follows:
Total segment adjusted operating profit
Share-based payments (including social security costs)
Amortisation of acquired intangibles
Exceptional items (note 5)
Net finance income/(costs)
Other (expense)/income
Profit before tax
2020
£m
93.4
(5.5)
(21.6)
(15.6)
2.8
(1.5)
52.0
2019
£m
52.2
(9.0)
(13.1)
(3.4)
(14.2)
0.2
12.7
134 / FUTURE PLC
Financial Statements
Financial Statements
Segment assets
Segment liabilities
Segment net assets
2020
£m
2019
£m
2020
£m
2019
£m
2020
£m
2019
£m
269.7
341.5
611.2
123.3
263.1
(192.5)
(37.4)
(97.3)
(75.7)
386.4
(229.9)
(173.0)
77.2
304.1
381.3
26.0
187.4
213.4
Non-current assets
Additions to
non-current assets
Depreciation
and amortisation
Exceptional
items
2020
£m
2019
£m
2020
£m
2019
£m
293.1
221.4
514.5
98.5
233.2
331.7
216.7
7.7
224.4
4.1
130.7
134.8
2020
£m
14.1
16.0
30.1
2019
£m
7.2
8.2
15.4
2020
£m
17.0
0.1
17.1
2019
£m
1.4
2.0
3.4
(iii) Segment assets and liabilities
Segment:
UK
US
Total
(iv) Other segment information
Segment:
UK
US
Total
The non-current assets in the table above exclude deferred tax.
Other than the items disclosed above and a share-based payments charge (excluding social security costs) of £5.9m (2019: £3.9m)
there were no other significant non-cash expenses during the year.
(b) Business segment
(i) Gross profit by business segment
Sub-segment
2020
Sub-segment
Media
£m
Magazines
£m
Other
£m
Add back
distribution
expenses
£m
Total
£m
Media
£m
Magazines
£m
Other
£m
Add back
distribution
expenses
£m
Segment:
UK
US
Total
65.0
138.9
203.9
56.4
6.4
62.8
(59.5)
(43.8)
(103.3)
11.5
1.7
13.2
73.4
103.2
176.6
42.5
84.7
127.2
32.8
8.6
41.4
(35.2)
(33.9)
(69.1)
4.5
2.5
7.0
2019
Total
£m
44.6
61.9
106.5
Revenue of £43.4m arose from sales to the Group’s largest single customer which operates as an intermediary for digital advertising
customers (2019: £38.2m). 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 applies IFRS 15 Revenue from contracts with customers. 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 FY 2020 / 135
Revenue
stream
Nature, timing and satisfaction of
performance obligations
Revenue recognition
Online
advertising
revenue
Future operates a number of websites with advertising
space on their webpages which are sold via first party and
programmatic/third 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.
Principal vs agent considerations mean
revenue under certain contracts is recognised
on a gross basis.
eCommerce
revenue
The Group earns commission when purchases are made
directly from third 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.
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.
Subscriptions of magazines are sold online, with
subscribers 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.
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.
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.
Principal vs agent considerations mean
revenue under certain contracts is recognised
on a gross basis.
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.
Principal vs agent considerations mean
revenue under certain contracts is recognised
on a gross basis.
Future holds a number of events throughout the year,
including shows and awards events, held physically and
virtually. Revenue arises from the following:
- 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.
Licence 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).
The Martketforce business is a distributor for magazines, and
was acquired as part of the acquisition of TI Media in April 2020.
Performance obligations are satisfied at a point in time, when
the issues go on sale.
Television programming content is developed and produced
for public broadcast.
Performance obligations are satisfied over the period of the
development in line with expenditure incurred.
Cash collected in advance is deferred, with
revenue recognised at a point in time when the
event takes place.
Revenue is recognised on the supply of the
licensed content, based on usage.
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.
Revenue is recognised over time, with the input
method used to reflect the transfer of control to
the customer.
Print and
digital
magazine
subscriptions
Magazine
newsstand
circulation
and
advertising
revenue
Event income
Licensing
revenue
Publisher
services
revenue
Broadcaster
productions
136 / FUTURE PLC
Financial Statements
Financial Statements
The table below disaggregates revenue according to the timing of satisfaction of performance obligations:
Total revenue
Over time
£m
12.3
Point in time
£m
Total revenue
£m
327.3
339.6
Over time
£m
6.4
Point in time
£m
Total revenue
£m
215.1
221.5
2020
2019
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
4. FEES PAID TO AUDITORS
Adjusted
results
£m
(163.0)
(13.2)
(3.2)
-
(5.8)
(2.7)
(58.3)
(246.2)
Adjusting
items
£m
-
-
(5.5)
(15.6)
-
(21.6)
-
(42.7)
2020
Statutory
results
£m
(163.0)
(13.2)
(8.7)
(15.6)
(5.8)
(24.3)
(58.3)
(288.9)
Adjusted
results
£m
(115.0)
(7.0)
(1.2)
-
(0.9)
(1.4)
(43.8)
(169.3)
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
Total fees
Adjusting
items
£m
-
-
(9.0)
(3.4)
-
(13.1)
-
(25.5)
2020
£m
0.43
0.04
0.47
0.29
0.76
2019
Statutory
results
£m
(115.0)
(7.0)
(10.2)
(3.4)
(0.9)
(14.5)
(43.8)
(194.8)
2019
£m
0.28
0.02
0.30
0.54
0.84
1 Other assurance services in the current year relate to fees in relation to the TI Media acquisition, and in the prior year to the return to a Premium Listing and advisory services for the Mobile
Nations acquisition and TI Media acquisition.
5. EXCEPTIONAL ITEMS
Acquisition and integration related costs
Restructuring and redundancy costs
Vacant property provision movements
Impairment of assets
Premium listing costs
Total operating charge
Disposals
Total charge
2020
£m
3.9
9.1
1.8
0.8
-
15.6
1.5
17.1
2019
£m
2.5
-
0.1
-
0.8
3.4
-
3.4
The acquisition and integration related costs represent expenses incurred in respect of the acquisition of TI Media (£3.8m), and the
finalisation of the integration of SmartBrief (£0.1m), which was acquired in July 2019. Restructuring and redundancy costs relate to
the integration of the TI Media acquisition. An impairment of £0.8m relates to the TI Media legacy finance system which is no longer
required following the integration, and the £1.5m loss on disposals relates to the sale of Amateur Photographer, WorldSoccer, and
Trustedreviews.com, as required by the Competition and Markets Authority, as well as UK Cycling Events Limited and International
Craft & Hobby Fair Limited, following the acquisition of TI Media. Vacant property costs of £1.8m relate to ongoing operating costs
and the impairment of right-of-use assets in respect of the Bromsgrove and Bournemouth offices which were permanently closed
following the onset of the COVID-19 pandemic.
Further details of the acquisitions are shown in note 28.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 137
6. EMPLOYEE COSTS
Wages and salaries
Social security costs
Other pension costs
Share schemes
- Value of employees’ services1
- Employer’s social security costs on share options
Total employee costs
Group
2020
£m
90.6
8.2
2.4
5.9
2.8
Company
2020
£m
1.5
-
-
-
-
109.9
1.5
1 In the current year, £5.6m (2019: £3.4m) relates to equity-settled and £0.3m (2019: £0.5m) to cash-settled share based payments.
Average monthly number of people (including Directors)
Production
Administration
Total
Group
2020
No.
1,303
333
1,636
Company
2020
No.
-
7
7
Group
2019
£m
60.0
5.2
1.3
3.9
6.2
76.6
Group
2019
No.
770
219
989
At 30 September 2020, the actual number of people employed by the Group was 2,037 (2019: 1,225). In respect of our reportable
segments 1,639 (2019: 750) were employed in the UK and 398 (2019: 475) were employed in the US.
Key management personnel compensation
Salaries and other short-term employee benefits
Post employment benefits
Share schemes
- Value of employees’ services
- Employer’s social security costs on share options
Total
Group
2020
£m
2.6
0.1
1.0
1.0
4.7
Company
2020
£m
1.5
-
-
-
1.5
Group
2019
£m
1.9
0.1
0.5
3.1
5.6
Company
2019
£m
1.2
-
-
-
-
1.2
Company
2019
No.
-
6
6
Company
2019
£m
1.2
-
-
-
1.2
Key management personnel are deemed to be the members of the Board of Future plc. It is this Board which has responsibility for
planning, directing and controlling the activities of the Group.
Zillah Byng-Thorne, Penny Ladkin-Brand and Rachel Addison were paid by Future Publishing Limited, a subsidiary company, for their
services. In 2020 £0.7m (2019: £0.6m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne,
£0.3m (2019: £0.3m) was recharged in respect of Penny Ladkin-Brand, and £0.2m (2019: £nil) was recharged in respect of Rachel
Addison. 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 80 to 103. The
highest paid Director during the year was Zillah Byng-Thorne (2019: Zillah Byng-Thorne) and details of her remuneration are shown on
page 95.
138 / FUTURE PLC
Financial Statements
7. FINANCE INCOME AND COSTS
Interest receivable on interest-bearing loans and borrowings
Interest receivable on lease liabilities
Adjusted finance income
Decrease in fair value of contingent consideration
Fair value gain on currency option
Total reported finance income
Interest payable on interest-bearing loans and borrowings
Amortisation of bank loan arrangement fees
Interest payable on lease liabilities
Adjusted finance costs
Increase in fair value of contingent consideration
Fair value loss on currency option
Unwinding of discount on contingent consideration
Total reported finance costs
Financial Statements
2020
£m
0.4
0.1
0.5
7.6
-
8.1
(1.8)
(0.4)
(0.8)
(3.0)
-
(1.2)
(1.1)
(5.3)
2019
£m
-
-
-
-
0.8
0.8
(1.5)
(0.6)
-
(2.1)
(11.7)
-
(1.2)
(15.0)
Net finance income/(costs)
2.8
(14.2)
The Group agreed a new £30 million multi-currency Revolving Credit Facility ("RCF") in April 2020. The RCF, which stands alongside
Future's existing debt facilities, was arranged in order to provide the Group with additional working capital headroom to maintain
the underlying growth momentum of the combined business, whilst navigating the impact of COVID-19. This facility has not been
required (and has not been drawn) as at 30 September 2020 and has been subsequently cancelled.
The £7.6m decrease (2019: £11.7m increase) in fair value of contingent consideration arose in respect of the SmartBrief, Inc. acquisition
(2019: MoNa Mobile Nations, LLC acquisition). During the year the fair value of the contingent consideration was finalised at £3.6m
($4.6m) and was paid in September 2020. Similarly, £1.1m (2019: £1.2m) arose from unwinding of the discount on the contingent
consideration in the year, of which £0.8m relates to the acquisition of SmartBrief and £0.3m to Mobile Nations. See note 21 for further
details.
8. TAX ON PROFIT
The tax charged in the consolidated income statement is analysed below:
Corporation tax
Current tax on the profit for the year
Adjustments in respect of previous years
Current tax charge
Deferred tax origination and reversal of temporary differences
Current year charge/(credit)
Adjustments in respect of previous years
Deferred tax credit
Total tax charge
2020
£m
9.7
0.1
9.8
0.4
(2.5)
(2.1)
7.7
2019
£m
7.5
(0.5)
7.0
(3.2)
0.8
(2.4)
4.6
ANNUAL REPORT AND ACCOUNTS FY 2020 / 139
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% (2019: 19%)
Losses not previously recognised
Provision for uncertain tax positions
Expenses not deductible for tax purposes
Share-based payments
Non-taxable gain on deferred consideration
Effect of different rates of subsidiaries operating in other jurisdictions
Difference in tax rates
Adjustments in respect of previous years
Total tax charge
2020
£m
52.0
9.9
-
(1.5)
0.9
0.1
(1.9)
2.7
(0.1)
(2.4)
7.7
2019
£m
12.7
2.4
(6.6)
5.2
3.5
(0.1)
-
(0.2)
0.1
0.3
4.6
The Directors have assessed the Group’s uncertain tax positions and have released £1.5m in the year on the basis that certain tax
risks are now considered less likely to cystallise. Following this release (and the recognition of an additional provision of £0.4m from
acquired businesses which has not impacted the consolidated income statement) the Group has an overall provision for uncertain tax
positions of £4.5m.
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)
2020
98.0
1.0
(1.0)
2019
83.6
0.5
(0.4)
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 2019 was paid on 14 February 2020. On 24 November 2020 the
Board proposed a dividend of 1.6p per share in respect of the year ended 30 September 2020, which subject to shareholder consent at
the AGM, will be paid on 16 February 2021 to shareholders on the register at close of business on 15 January 2021.
140 / FUTURE PLC
Financial Statements
Financial Statements
10. EARNINGS PER SHARE
Adjusted results
pence
Adjusting items
pence
Statutory results
pence
Adjusted results
pence
Adjusting items
pence
Statutory results
pence
2020
2019
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
76.3
74.7
(29.9)
(29.3)
46.4
45.4
50.1
47.5
(40.2)
(38.2)
9.9
9.3
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 in the prior year 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 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, and exceptional items and any related tax effects.
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)
(Decrease)/increase in fair value of contingent consideration (£m)
Unwinding of discount (£m)
Fair value loss/(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)
(Decrease)/increase in fair value of contingent consideration (pence)
Unwinding of discount (pence)
Fair value loss/(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)
(Decrease)/increase in fair value of contingent consideration (pence)
Unwinding of discount (pence)
Fair value loss/(gain) on currency option (pence)
Tax effect of the above adjustments (pence)
Adjusted diluted earnings per share (pence)
2020
44.3
5.5
17.1
21.6
(7.6)
1.1
1.2
(10.3)
72.9
2019
8.1
9.0
3.4
13.1
11.7
1.2
(0.8)
(4.5)
41.2
95,553,034
2,026,649
82,190,827
4,536,480
97,579,683
86,727,307
46.4
76.3
45.4
74.7
46.4
5.8
17.9
22.6
(8.0)
1.2
1.3
(10.9)
76.3
45.4
5.6
17.5
22.1
(7.8)
1.1
1.2
(10.4)
74.7
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
ANNUAL REPORT AND ACCOUNTS FY 2020 / 141
11. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 October 2018
On acquisition
Additions
At 30 September 2019
On acquisition
Additions
Adoption of IFRS 16 Leases
Exchange adjustments
At 30 September 2020
Accumulated depreciation
At 1 October 2018
On acquisition
Charge for the year
At 30 September 2019
Charge for the year
Impairment
At 30 September 2020
Net book value at 30 September 2020
Net book value at 30 September 2019
Net book value at 1 October 2018
Land and
buildings
£m
Plant and
machinery
£m
Equipment,
fixtures and
fittings
£m
Right-of-use
lease assets
£m
1.0
0.4
0.2
1.6
1.9
0.3
-
-
3.8
(0.4)
(0.2)
(0.1)
(0.7)
(0.3)
-
(1.0)
2.8
0.9
0.6
4.5
0.5
1.1
6.1
0.5
0.6
-
-
7.2
(3.7)
(0.3)
(0.7)
(4.7)
(1.2)
-
(5.9)
1.3
1.4
0.8
0.7
0.2
-
0.9
0.5
-
-
-
1.4
(0.4)
(0.2)
(0.1)
(0.7)
(0.2)
-
(0.9)
0.5
0.2
0.3
-
-
-
-
8.3
-
13.5
(0.3)
21.5
-
-
-
-
(4.1)
(1.1)
(5.2)
16.3
-
-
Total
£m
6.2
1.1
1.3
8.6
11.2
0.9
13.5
(0.3)
33.9
(4.5)
(0.7)
(0.9)
(6.1)
(5.8)
(1.1)
(13.0)
20.9
2.5
1.7
Right-of-use assets relate to property leases. The impairment in the year of £1.1m, and an accelerated charge within the depreciation
line of £0.4m, relate to properties which became vacant during the year.
Depreciation is included within administration expenses in the consolidated income statement.
Adoption of IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 October 2019, resulting in the recognition on balance sheet of assets and liabilities
relating to property leases previously accounted for as operating leases. On transition the Group has applied 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 lease liabilities recognised within retained earnings. Comparative periods have not been restated.
The balance sheet impact at transition on 1 October 2019 is included in the table below:
Right-of-use assets
Finance lease receivables (net investment in subleases)
Deferred tax asset
Total assets
Lease liabilities due within one year
Lease liabilities due in more than one year
Net release of provisions for vacant property and dilapidations
Derecognition of lease incentive
Total liabilities
Retained earnings reduction on transition
142 / FUTURE PLC
1 October 2019
£m
13.5
1.8
0.7
16.0
(4.6)
(13.0)
0.4
0.4
(16.8)
(0.8)
Financial Statements Financial Statements
Lease liabilities were measured at the present value of remaining lease payments, discounted using the incremental borrowing rate
on 1 October 2019 on a lease-by-lease basis.
Although there is no change to actual cash outflows, under IFRS 16 repayments relating to the principal portion of the lease liability
are 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.
Acquisition of TI Media – IFRS 16 impact
IFRS 16 was applied to the leases acquired with TI Media. The following assets and liabilities were recognised on the balance sheet
acquired:
Right-of-use assets
Deferred tax asset
Total assets
Lease liabilities due within one year
Lease liabilities due in more than one year
Net release of provisions for vacant property and dilapidations
Derecognition of lease incentive
Total liabilities
Retained earnings reduction on transition
Post-transition impact of IFRS 16
20 April 2020
£m
8.3
0.1
8.4
(2.4)
(9.5)
1.9
1.6
(8.4)
-
Following the adoption of IFRS 16 Leases, the Chief Operating Decision Maker (“CODM”) reviews adjusted operating profit as a key
financial metric, rather than adjusted EBITDA, to include depreciation on right-of-use assets. There has been an increase in operating
profit in the period of £0.5m as a result of applying the standard, due to the charge being split between depreciation and interest,
with a decrease of £0.2m in total earnings. The income statement impact for the year to 30 September 2020 is included in the table
below:
Rent expense
Depreciation
Interest payable
Interest receivable
Total
Year to 30 September 2020
Applying
IFRS 16
£m
Applying previous accounting
standard IAS 17
£m
-
3.7
0.8
(0.1)
4.4
4.2
-
-
-
4.2
ANNUAL REPORT AND ACCOUNTS FY 2020 / 143
12. INTANGIBLE ASSETS
Group
Cost
At 1 October 2018
Additions through business combinations
Other additions
Adjustments to fair value on prior year acquisitions
Disposal
Exchange adjustments
At 30 September 2019
Additions through business combinations
Other additions
Exchange adjustments
At 30 September 2020
Accumulated amortisation and impairment
At 1 October 2018
Charge for the year
Exchange adjustments
At 30 September 2019
Charge for the year
Impairment
Exchange adjustments
At 30 September 2020
Net book value at 30 September 2020
Net book value at 30 September 2019
Net book value at 1 October 2018
Goodwill
£m
Acquired
intangibles
£m
364.0
78.1
-
39.2
(0.2)
3.6
484.7
97.2
-
(7.6)
574.3
(264.2)
-
(1.8)
(266.0)
-
-
1.4
(264.6)
309.7
218.7
99.8
121.6
51.6
-
(37.8)
-
5.1
140.5
94.3
-
(4.3)
230.5
(20.1)
(13.1)
(0.4)
(33.6)
(21.6)
-
1.5
(53.7)
176.8
106.9
101.5
Other
£m
20.0
0.1
2.6
-
-
0.5
23.2
4.2
3.1
(0.5)
30.0
(17.9)
(1.4)
(0.5)
(19.8)
(2.7)
(0.8)
0.4
(22.9)
7.1
3.4
2.1
Total
£m
505.6
129.8
2.6
1.4
(0.2)
9.2
648.4
195.7
3.1
(12.4)
834.8
(302.2)
(14.5)
(2.7)
(319.4)
(24.3)
(0.8)
3.3
(341.2)
493.6
329.0
203.4
Acquired intangibles relate mainly to brands, subscriber databases, trademarks, advertising relationships, creative services
relationships, customer relationships, publishing rights, content, non-compete agreements and customer lists. These assets are
amortised over their estimated economic lives, typically ranging between one and fifteen years. See accounting policy on page 131 for
further details.
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.
The impairment in the year of £0.8m relates to the TI Media legacy finance system.
Amortisation is included within administration expenses in the consolidated income statement.
Impairment assessments for goodwill
The net book value of goodwill at 30 September 2020 consists of £170.9m (2019: £73.9m) relating to the UK and £138.8m (2019:
£144.8m) relating to the US. The basis for calculating recoverable amounts is described in the accounting policies on page 132.
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.
As detailed in the accounting policies on pages 131, 132 and 133 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 overleaf:
144 / FUTURE PLC
Financial Statements
At 30 September 2020
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 2019
Basis of recoverable amount
Source used
Growth rate to perpetuity
EBITDA margins assumed*
Post-tax discount rate
Pre-tax discount rate
Financial Statements
UK
US
Value in use
Three-year plans
Discounted cash flow
3.0%
31.0% to 40.0%
7.8%
8.3%
Value in use
Three-year plans
Discounted cash flow
3.0%
26.0%
7.8%
9.6%
UK
US
Value in use
Three-year plans
Discounted cash flow
Value in use
Three-year plans
Discounted cash flow
nil%
24.0% to 33.0%
8.2%
10.6%
3.0%
19.0% to 21.0%
8.2%
10.6%
* 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 three-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 three-year plan
(based on past performance and management’s expectations for the future), adjusted to include
intra-group 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.
Sensitivity of recoverable amounts
At 30 September 2020 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 £1,595.4m and £383.8m
respectively. A change of plus 50 basis points in the post-tax discount rate would decrease the recoverable amount of the UK business
by £175.9m and the US business by £56.6m. A change of minus 50 basis points in the post-tax discount rate would increase the
recoverable amount of the UK business by £216.9m and the US business by £69.8m.
The Group has conducted sensitivity analysis of the impairment testing and has concluded that any reasonably possible change would
not result in an impairment of goodwill for either CGU.
Goodwill is not considered to be impaired at 30 September 2020.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 145
13. INVESTMENTS IN GROUP UNDERTAKINGS
Company
Shares in Group undertakings
At 1 October
Additions
At 30 September
2020
£m
142.2
214.1
356.3
2019
£m
123.6
18.6
142.2
Additions of £214.1m include a £173.9m 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 TI Media acquisition and
£21.8m as a result of the approach to funding the Mobile Nations acquisition.
The remaining additions of £5.6m 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, and capitalisation of a further
£12.8m of amounts owed to the Company by other Group companies.
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 2018
Acquisitions
Credited to income statement
Credited to equity
Exchange adjustment
At 30 September 2019
Impact of adopting IFRS 16 Leases
Restated at 30 September 2019
Acquisitions
Credited to income statement
Charged to equity
At 30 September 2020
Intangible
assets
£m
Share-based
payments
£m
Temporary
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
Provision for
uncertain tax
positions
£m
(4.9)
(4.8)
(0.7)
-
(0.2)
(10.6)
-
(10.6)
(18.0)
2.8
-
(25.8)
2.4
-
0.2
5.6
-
8.2
-
8.2
-
0.6
(3.7)
5.1
0.2
-
0.1
-
-
0.3
0.7
1.0
2.0
1.2
-
4.2
0.6
-
(0.1)
-
-
0.5
-
0.5
6.0
0.2
-
6.7
1.9
-
4.7
-
0.1
6.7
-
6.7
6.1
(3.9)
-
8.9
-
-
(1.8)
-
-
(1.8)
-
(1.8)
-
1.2
-
(0.6)
Total
£m
0.2
(4.8)
2.4
5.6
(0.1)
3.3
0.7
4.0
(3.9)
2.1
(3.7)
(1.5)
Certain deferred tax assets and liabilities will reverse within 12 months of the year end. The following sets out the expected reversal profile:
Within one year
More than one year
At 30 September 2020
Intangible
assets
£m
Share-based
payments
£m
Temporary
differences
£m
Depreciation vs
tax allowances
£m
Tax losses
£m
(3.0)
(22.8)
(25.8)
-
5.1
5.1
3.5
0.7
4.2
1.8
4.9
6.7
4.5
4.4
8.9
Provision for
uncertain tax
positions
£m
-
(0.6)
(0.6)
Total
£m
6.8
(8.3)
(1.5)
Certain deferred tax assets and liabilities have been offset against each other where they relate to the same jurisdiction. The following
is the analysis of deferred tax balances after offset for balance sheet purposes:
Deferred tax assets
Deferred tax liabilities
Net deferred tax (liability)/asset
2020
£m
1.0
(2.5)
(1.5)
2019
£m
3.7
(0.4)
3.3
As at 30 September 2020 the Group has unrecognised capital losses totalling £4.9m (2019: £4.9m) and £0.7m of tax losses (2019: £nil).
These all arise in the UK.
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.
146 / FUTURE PLC
Financial Statements
Financial Statements
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 £1.2m (2019: £4.5m) 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 2020 (2019: £nil).
15. TRADE AND OTHER RECEIVABLES
Current assets:
Trade receivables
Allowance for impairment of trade receivables
Trade receivables net
Amounts owed by Group undertakings
Other receivables
Prepayments and accrued income
Total
Group
2020
£m
59.5
(6.6)
52.9
-
5.8
13.7
72.4
Company
2020
£m
-
-
-
72.6
-
-
72.6
Group
2019
£m
38.6
(3.2)
35.4
-
0.6
5.9
41.9
Company
2019
£m
-
-
-
94.7
-
-
94.7
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
The Group applies the simplified approach to recognise lifetime credit losses for trade receivables. A breakdown of the ageing is set
out below:
Past due
0-30 days
31-60 days
61-90 days
91+ days
Total
Group
2020
£m
4.7
2.2
1.8
2.3
11.0
As at 30 September 2020, trade receivables of £6.6m (2019: £3.2m) were impaired and provided for. The individually impaired
receivables mainly relate to non-UK wholesalers in the newsstand distribution business and advertising customers.
The movement in the Group allowance for impairment of trade receivables during the year is as follows:
Provision
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
2020
£m
3.2
1.3
2.5
(0.4)
6.6
Group
2019
£m
3.6
1.4
1.3
2.0
8.3
Group
2019
£m
3.3
0.5
0.8
(1.4)
3.2
Trade receivables are written off to administration expenses where there is not a reasonable expectation of recovery. The primary
indicator that there is not reasonable expectation of recovery would be a customer's liquidation but there are also instances where
legal proceedings and/or debt recovery have not succeeded. Receivables written off during the year included amounts provided for in
full on prior acquisitions.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance
for all trade receivables. To measure the expected credit losses trade receivables are grouped by trading subsidiaries. The expected
losses are based on historical credit losses for the 24 months in the period to 30 September 2020. The calculation for the current year
has been amended to reflect an increased reserve due to macroeconomic uncertainties prevalent at this moment with the global
pandemic and specific reserving for acquired entities where the historical records for credit losses are not available.
The expected loss rate and the related allowance for impairment of trade receivables is split by ageing category as follows:
2020
Gross carrying amount of trade receivables (£m)
Allowance for impairment of trade receivables (£m)
Expected loss rate
Current
0-30 days
31-60 days
61-90 days
90+ days
43.0
1.1
2.6%
5.4
0.7
2.7
0.5
2.5
0.7
5.9
3.6
13.0%
18.5%
28.0%
61.0%
Total
59.5
6.6
ANNUAL REPORT AND ACCOUNTS FY 2020 / 147
2019
Gross carrying amount of trade receivables (£m)
Allowance for impairment of trade receivables (£m)
Expected loss rate
Current
0-30 days
31-60 days
61-90 days
90+ 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%
Total
38.6
3.2
Credit risk
Credit checks are required for both new and existing accounts where trading exceeds a risk based de minimis 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 £7.2m (2019: £38.6m) 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.
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
2020
£m
19.3
Company
2020
£m
0.1
Group
2019
£m
6.6
Company
2019
£m
-
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 counterparties before selecting them by the use
of external credit ratings. 99.8% of the Group's cash and cash equivalent balance was held with counterparties with a minimum S&P
credit rating of A-. The remaining 0.2% related to cash and 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
Group
2020
£m
25.4
-
6.3
8.6
75.9
116.2
Company
2020
£m
-
25.9
-
0.1
0.2
26.2
Group
2019
£m
3.4
-
8.2
2.3
48.5
62.4
Company
2019
£m
-
-
-
-
0.2
0.2
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.
The amounts owed to Group undertakings are interest-free without any terms for repayment.
18. FINANCIAL LIABILITIES – INTEREST-BEARING LOANS AND BORROWINGS
Non-current liabilities
Sterling revolving loan
US dollar revolving loan
Total
148 / FUTURE PLC
Interest rate at
30 September
2020
Interest rate at
30 September
2019
1.8%
1.9%
2.5%
3.8%
Group
2020
£m
66.6
7.0
73.6
Company
2020
£m
66.6
7.0
73.6
Group
2019
£m
14.3
28.3
42.6
Company
2019
£m
14.3
28.3
42.6
Financial Statements
Current liabilities
Interest rate at
30 September
2020
Interest rate at
30 September
2019
Multi-currency overdraft
2.01%
2.59%
Total
The interest-bearing loans are repayable as follows:
Within one year
Between two and five years
Total
Financial Statements
Group
2020
£m
7.8
7.8
Group
2020
£m
7.8
73.6
81.4
Company
2020
£m
4.3
4.3
Company
2020
£m
4.3
73.6
77.9
Group
2019
£m
4.3
4.3
Group
2019
£m
4.3
42.6
46.9
Company
2019
£m
-
-
Company
2019
£m
-
42.6
42.6
During the period the Group agreed a new £30m multi-currency Revolving Credit Facility ("RCF"), which stands alongside Future's
existing debt facilities (of £135m which mature in February 2023). This facility was arranged in order to provide the Group with additional
working capital headroom to maintain the underlying growth momentum of the combined business, whilst navigating the impact of
COVID-19. This facility has not been required (and has not been drawn) as at 30 September 2020 and has been subsequently cancelled.
All material companies in the Group are guarantors to the facilities and the availability of the facilities is subject to certain covenants.
Total fees relating to the new facility amounted to £0.2m 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 facilities for sterling denominated loans is calculated as the cost of one-month LIBOR (currently
approximately 0.04%) plus an interest margin of between 1.75% and 3.0%, dependent on the level of Leverage.
Interest payable under the facilities for the US dollar denominated loan is calculated as the cost of one-month USD LIBOR (currently
approximately 0.14%) plus an interest margin of between 1.75% and 3.0%, dependent on the level of Leverage.
As the term of facilities 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. Bank EBITDA is
calculated on a consistent GAAP basis with reported EBITDA adjusted for the impact of IFRS 16 Leases.
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
The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months and the covenant position at
30 September 2020 is set out in the following table:
Net debt/Bank EBITDA
Bank EBITDA/Interest
30 September 2020
30 September 2019
Covenant 2020
Covenant 2019
0.6 times
38.8 times
1.0 times1
24.1 times
< 3.0 times
> 4.0 times
< 3.0 times
> 4.0 times
1 This is higher than leverage of 0.74 on page 7 due to MoNa Mobile Nations deferred consideration being included as debt in the bank
covenant calculations.
The Group had drawn down £7.8m on its interest-bearing overdraft at 30 September 2020 (30 September 2019: £4.3m). 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 a net cash position of £8.6m and total cash balance, including non-pool accounts of £11.5m.
19. PROVISIONS
Group
At 1 October
Adoption of IFRS 16 Leases
On acquisition
Charged in the year
Utilised in the year
Released in the year
At 30 September
Property
2020
£m
2.1
(0.4)
3.8
0.8
(1.2)
-
5.1
Property
2019
£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 five years.
Provisions for the Company were £nil (2019: £nil).
ANNUAL REPORT AND ACCOUNTS FY 2020 / 149
20. OTHER NON-CURRENT LIABILITIES
Group
Other payables
Group
2020
£m
-
Group
2019
£m
0.4
Other payables consisted mainly of a property lease incentive which was derecognised on transition to IFRS 16 Leases (see note 11 for
further details).
21. FINANCIAL INSTRUMENTS
The Group applies IFRS 9 Financial Instruments. For the Group’s financial assets, the following table shows the measurement
categories under IFRS 9:
Financial asset
Cash and cash equivalents
Trade and other receivables
Derivative – purchased option
IFRS 9 classification
Amortised cost
Amortised cost
Fair value through profit or loss
There has not been a significant impact on the carrying amounts of assets held. All financial assets and liabilities are classed as level 1.
Deferred and contingent consideration
At 30 September 2019 deferred consideration of £43.9m related to the acquisition of MoNa Mobile Nations, LLC (“MoNa”). The MoNa
deferred consideration was settled in the period with around 50% being issued in shares (1,792,534 shares in Future plc issued in
October 2019), and around 50% (£21.4m) in cash (which was paid on 28 February 2020).
At 30 September 2019 contingent consideration of £10.9m related to the acquisition of SmartBrief, LLC (“SmartBrief”). Following the
completion of the earnout period on 31 July 2020 the fair value of the contingent consideration was finalised at £3.6m ($4.6m) and
paid in September 2020. This resulted in a fair value gain of £7.6m in the year (after discounting of £0.8m) being recognised in the
income statement.
Financial asset - derivative
In the comparative period, a derivative foreign currency option to buy $30m in June 2020 was acquired in order to hedge the currency
exposure arising on the MoNa contingent consideration. Following the acceleration of settlement of contingent consideration for
MoNa, the currency option was closed out early, resulting in a fair value loss of £1.2m being charged to the income statement in the
year. There were no transfers between levels in the current or prior period.
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
15
15
16
17
18
18
Amortised
cost
£m
Total carrying
value
£m
1.6
52.9
5.8
19.3
79.6
(25.4)
(79.4)
(7.8)
(73.6)
(186.2)
1.6
52.9
5.8
19.3
79.6
(25.4)
(79.4)
(7.8)
(73.6)
(186.2)
2020
Total fair
value
£m
1.6
52.9
5.8
19.3
79.6
(25.4)
(79.4)
(7.8)
(73.6)
(186.2)
Group
Finance lease receivable
Trade receivables net
Other receivables
Cash and cash equivalents
Total financial assets
Trade payables
Other liabilities
Current borrowings
Non-current borrowings
Total financial liabilities
150 / FUTURE PLC
Financial Statements
Financial Statements
Note
15
15
16
17
18
18
Note
15
16
17
18
18
Note
15
17
18
Amortised
cost
£m
-
35.4
0.6
6.6
42.6
(3.4)
(50.4)
(4.3)
-
-
(42.6)
(100.7)
Fair value
through profit
or loss
£m
Total carrying
value
£m
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
£m
72.6
0.1
72.7
(26.2)
(4.3)
(73.6)
(104.1)
Total carrying
value
£m
72.6
0.1
72.7
(26.2)
(4.3)
(73.6)
(104.1)
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)
2020
Total fair
value
£m
72.6
0.1
72.7
(26.2)
(4.3)
(73.6)
(104.1)
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
The Company’s financial assets and liabilities are set out below:
Company
Other receivables
Cash and cash equivalents
Total financial assets
Other liabilities
Current borrowings
Non-current borrowings
Total financial liabilities
Company
Financial asset - derivative
Other receivables
Total financial assets
Other liabilities
Non-current borrowings
Total financial liabilities
In both the Group and Company tables total financial liabilities are shown net of unamortised costs which amounted to £0.9m (2019: £0.7m).
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.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 151
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 2020
Currency:
Sterling
US Dollar
Euro
AU Dollar
Other
Total
At 30 September 2019
Currency:
Sterling
US Dollar
Euro
AU Dollar
Other
Total
Financial assets
Financial liabilities
Non-
interest
bearing
£m
10.6
57.9
4.3
3.7
3.1
79.6
10.8
31.1
0.6
1.1
0.4
44.0
Floating
rate
£m
Non-
interest
bearing
£m
Net financial
(liabilities)/
assets
£m
Total
£m
(74.4)
(7.0)
-
-
-
(95.0)
(8.0)
(0.5)
(1.0)
(0.3)
(169.4)
(15.0)
(0.5)
(1.0)
(0.3)
(158.8)
42.9
3.8
2.7
2.8
(81.4)
(104.8)
(186.2)
(106.6)
(18.6)
(28.3)
-
-
-
(35.6)
(71.8)
(0.4)
(0.7)
(0.1)
(54.2)
(100.1)
(0.4)
(0.7)
(0.1)
(43.4)
(69.0)
0.2
0.4
0.3
(46.9)
(108.6)
(155.5)
(111.5)
Total
£m
10.6
57.9
4.3
3.7
3.1
79.6
10.8
31.1
0.6
1.1
0.4
44.0
The profit after tax impact reflects the foreign exchange differences that could arise following the retranslation of balances denominated
in currencies other than the functional currency of the entity to which they relate. The retained earnings impact reflects the currency
translation differences that would arise directly in equity upon retranslation of the Group’s US subsidiaries on consolidation. The method
of estimation involves assessing the translation impact of the US Dollar.
Interest rate risk
Details of the interest rates on borrowings as at 30 September 2020 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 2020 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 2020, 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 £0.3m (2019: £0.2m).
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
152 / FUTURE PLC
Financial Statements
Financial Statements
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 acquisition. Following the acceleration of settlement of contingent
consideration for MoNa, the currency option was closed out early, resulting in a fair value loss of £1.2m being charged to the income
statement in the year.
It is estimated that, with all other variables held equal (in particular other exchange rates), a general change of 10 percent in the value of
the US Dollar against Sterling would have had the following impact on the Group’s current year profit after tax and on retained earnings:
2020 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 shareholders' funds if Currency 1 strengthens against Currency 2
Impact on shareholders' funds if Currency 1 weakens against Currency 2
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 shareholders' funds if Currency 1 strengthens against Currency 2
Impact on shareholders' funds if Currency 1 weakens against Currency 2
GBP/USD
10%
1.4
(1.4)
19.1
(19.1)
GBP/USD
10%
0.2
(0.2)
13.7
(13.7)
The profit after tax impact reflects the foreign exchange differences that could arise following the retranslation of balances
denominated in currencies other than the functional currency of the entity to which they relate. The retained earnings impact
reflects the currency translation differences that would arise directly in equity upon retranslation of the Group’s US subsidiaries on
consolidation. The method of estimation involves assessing the translation impact of the US dollar.
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 2020
Trade payables
Other liabilities
Borrowings
Total financial liabilities
30 September 2019
Trade payables
Other liabilities
Borrowings
Deferred consideration
Contingent consideration
Total financial liabilities
Less than
one year
£m
(25.4)
(79.4)
(7.8)
(112.6)
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
-
-
-
-
-
-
(73.6)
(73.6)
-
-
-
-
Less than
one year
£m
Between one
and two years
£m
Between two
and five years
£m
Over five
years
£m
(3.4)
(50.4)
(4.3)
(43.9)
-
(102.0)
-
-
-
-
(10.9)
(10.9)
-
-
(42.6)
-
-
(42.6)
-
-
-
-
-
-
Total
£m
(25.4)
(79.4)
(81.4)
(186.2)
Total
£m
(3.4)
(50.4)
(46.9)
(43.9)
(10.9)
(155.5)
ANNUAL REPORT AND ACCOUNTS FY 2020 / 153
22. ISSUED SHARE CAPITAL
Allotted, issued and fully paid Ordinary shares of 15p each
At beginning of year
Share placing to fund acquisition
Issued as consideration for acquisition
Share scheme exercises
Share Incentive Plan matching shares
At end of year
Number of
shares
83,595,421
8,184,906
2,479,031
3,754,818
779
98,014,955
2020
£m
12.5
1.2
0.4
0.6
-
14.7
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
On 15 October 2019, the Company issued 1,792,534 Ordinary shares with a value of £21.8m (share price of £12.18) as consideration for
the deferred consideration due on the acquisition of MoNa Mobile Nations, LLC.
On 5 November 2019, the Company issued 8,184,906 Ordinary shares with a value of £104.4m (share price of £12.75) issued as a placing
in order to fund the acquisition of TI Media.
On 29 November 2019, the Company issued 686,497 Ordinary shares with a value of £9.1m (share price of £13.22) as consideration for
the acquisition of Barcroft Studios.
Further details of acquisitions are shown in note 28.
During the year 3,754,818 Ordinary shares with a nominal value of £563,223 were issued by the Company pursuant to share scheme
exercises and a further 779 Ordinary shares were issued under the Share Incentive Plan for a combined total cash commitment of £nil,
as detailed in note 23.
23. SHARE-BASED PAYMENTS
The income statement charge for the year for share-based payments (and related social security costs) was £8.7m (2019: £10.1m),
of which £5.5m (2019: £9.0m) is included in ‘adjusting items’ in the income statement (see page 128 for a reconciliation of adjusting
items). 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
Cancelled
Outstanding at 30 September
Exercisable at 30 September
2020
Number of
options/awards
2020
Weighted average
exercise price
2019
Number of
options/awards
2019
Weighted average
exercise price
5,227,036
705,849
(3,682,585)
(193,493)
2,056,807
274,193
£0.000
£0.000
£0.000
£0.000
£0.000
£0.000
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
The weighted average share price at the date of exercise of share options and other share incentive awards during the year was
£13.829 (2019: £5.916).
154 / FUTURE PLC
Financial Statements
Financial Statements
For options and other share incentive schemes outstanding at 30 September the weighted average exercise prices and remaining
contractual lives are as follows:
Number of options/awards
Weighted average remaining
contractual life in years
2020
2019
2020
2019
PSP
November 2016
February 2017
November 2017
February 2018
November 2018
March 2019
May 2019
June 2019
August 2019
November 2019
February 2020
June 2020
July 2020
September 2020
DABS
November 2015
November 2019
-
271,530
504,521
26,122
668,491
-
77,322
16,992
-
307,095
50,000
17,222
75,000
2,500
2,663
37,349
1,749,634
2,005,190
504,521
64,611
691,759
13,393
161,179
16,992
17,094
-
-
-
-
-
2,663
-
Total outstanding at 30 September
2,056,807
5,227,036
The weighted average exercise price for share options outstanding at 30 September 2020 is £nil (2019: £nil).
The fair value per share for grants made during the year and the assumptions used in the calculation are as follows:
-
-
-
-
1
2
2
2
2
2
2
3
3
2
-
1
2
PSP
PSP
PSP
PSP
-
-
1
1
2
2
3
3
3
-
-
-
-
-
-
-
1
2020
PSP
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 – TSR element3
Fair value – EPS element4
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 element3
Fair value – EPS element4
25 Nov 2019
5 Feb 2020
1 Jun 2020 08 Jul 2020 21 Sep 2020
£14.8000
£11.8800
£13.0400
£12.2600
£18.3200
-
3
47%
3
3
-
3
47%
3
3
-
3
58%
3
3
-
3
58%
3
3
0.47%
0.08%
£12.4000
£10.0000
£14.8000
0.43%
0.08%
£9.2219
£6.5638
£11.8800
0.00%
0.08%
£10.5863
£8.1326
£13.0400
0.00%
0.08%
£9.7798
£7.2995
£12.2600
PSP
PSP
PSP
PSP
-
2
60%
2
2
0.00%
0.08%
£16.1972
£14.0742
£18.3200
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
45%
3
3
0.79%
-
£3.9010
£2.6619
£5.1400
-
3
45%
3
3
0.79%
-
£5.6070
£3.8540
£7.360
-
3
46%
3
3
0.69%
-
£6.4290
£4.4081
£8.4500
-
3
46%
3
3
0.51%
-
£9.8648
£7.9595
£11.7700
-
3
47%
3
3
0.33%
-
£8.1741
£6.2082
£10.1400
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 TSR and share price performance, the Group has used a Monte Carlo model to determine the fair value.
3. 50% of PSP grants which have market-based performance criteria have been valued using a Model Carlo model.
4. 50% of PSP grants which have non-market based performance criteria have been valued using a Black-Scholes model.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 155
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”), and Total Shareholder Return (”TSR”) (in prior years, 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 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 straight line 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.
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 straight line basis between the
threshold and maximum for both elements.
Performance criteria in respect of awards granted during the year ended 30 September 2020:
Performance metrics are weighted 50% on the Group’s adjusted EPS and 50% on the Company’s TSR. The threshold entry point of
25% vesting for the EPS element requires a 7% CAGR, with 100% vesting at 16% CAGR. The threshold entry point of 25% vesting for the
TSR element requires 6% CAGR, with 100% vesting at 15% CAGR. Vesting will be on a straight line basis between the threshold and
maximum for both elements.
Grants were made under the PSP in November 2018, March 2019, May 2019, June 2019, August 2019, November 2019, February 2020,
June 2020, July 2020 and September 2020.
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.
For Executive Directors, annual bonuses for the year ending 30 September 2020 are to be paid 50% in cash in November 2020 and
50% in Future shares, deferred for two years. See page 96 of the Directors' Remuneration Report for further detail.
The last grant made under the DABS was in November 2019.
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.
156 / FUTURE PLC
Financial Statements Financial Statements
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
At 30 September
2020
£m
97.2
103.2
(3.4)
197.0
2019
£m
97.2
-
-
97.2
During the year 8,184,906 shares were issued at a premium of £103.2m, less share issue costs of £3.4m, to fund the acquisition of TI
Media. See note 28 for further details.
Merger reserve
At 1 October
Premium arising on equity shares issued as consideration
At 30 September
Group
2020
£m
140.4
30.5
170.9
Company
2020
£m
31.4
30.5
61.9
Group
2019
£m
124.9
15.5
140.4
Company
2019
£m
15.9
15.5
31.4
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 of £30.5m relates to the premium on shares issued as consideration for the settlement of deferred
consideration on the acquisition of MoNa Mobile Nations in October 2019 of £21.5m, and for the acquisition of Barcroft Studios in
November 2019 of £9.0m (2019: acquisition of MoNa Mobile Nations, in March 2019 and SmartBrief, in July 2019).
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
Acquisition of own shares
At 30 September
Group
2020
£m
(0.3)
(8.5)
(8.8)
Group
2019
£m
(0.3)
-
(0.3)
During the year the Company purchased 631,477 of its own shares to fund the future vesting of share options, at a total value of £8.5m.
The 814,065 (2019: 110,439) shares held by the EBT represent 0.8% (2019: 0.1%) of the Company’s issued share capital. The treasury
reserve is non-distributable.
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 Trust 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, £2.4m (2019: £1.3m) contributions were made to these plans and at 30 September 2020 the outstanding balance due
to be paid over to the plans was £0.3m (2019: £0.2m).
ANNUAL REPORT AND ACCOUNTS FY 2020 / 157
26. COMMITMENTS AND CONTINGENT LIABILITIES
(a) Operating lease commitments
Following the adoption of IFRS 16 Leases, future minimum sub-lease receipts expected under non-cancellable operating subleases at
30 September 2020 total £1.1m (2019: £2.2m).
During the year, £0.8m was recognised in the income statement in respect of operating lease rental payments for short-term and
low-value leases (2019: £3.4m was recognised in respect of total operating leases before the adoption of IFRS 16 Leases), and £0.1m
(2019: £0.2m) was recognised in respect of sub-lease receipts.
The Group also leases equipment under non-cancellable operating lease agreements.
(b) Contingent liabilities
There were no material contingent liabilities as at 30 September 2020. In the comparative period, a contingent liability of £43.9m was
recognised for variable deferred consideration on the acquisition of MoNa Mobile Nations, LLC (“MoNa”) and £10.9m was recognised
for variable deferred contingent consideration on the acquisition of SmartBrief, Inc. The MoNa deferred consideration was settled in
the period with around 50% being issued in shares (1,792,534 shares in Future plc issued in October 2019), and around 50% (£21.4m) in
cash (which was paid on 28 February 2020). The variable deferred contingent consideration for SmartBrief, LLC was settled at £3.6m
($4.6m) in September 2020.
(c) Capital commitments
There were no material capital commitments as at 30 September 2020 (2019: £nil).
27. RELATED PARTY TRANSACTIONS
The Group had no material transactions with related parties in 2020 or 2019 which might reasonably be expected to influence
decisions made by users of these financial statements.
During the year, the Company had management fees and recharges payable of £3.2m (2019: £1.4m) to subsidiary undertakings. The
outstanding balance owed at 30 September 2020 was £3.2m (2019: £1.4m). 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 95.
158 / FUTURE PLC
Financial Statements Financial Statements
28. ACQUISITIONS
Acquisition of Barcroft Studios
On 30 November 2019, Future Holdings 2002 Limited (a wholly owned direct subsidiary of Future plc) acquired 100% of the equity
in Barcroft Studios Limited (“Barcroft”), a small independent studio that creates original content, which is published on a variety of
owned and operated social sites and distributed across mass media channels. Total consideration was £23.4m, of which 40% was
satisfied by the issue of 686,497 shares, with the remaining £14.3m paid in cash.
The impact of the acquisition on the consolidated balance sheet was:
Tangible assets
Intangible assets
- Brands
- Customer relationships
- Content
- Non-compete
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Financial liabilities - interest-bearing loans and borrowings
Deferred tax
Net assets acquired
Goodwill
Consideration:
Cash
Equity shares
Total consideration
Fair value
£m
0.5
4.5
2.7
3.1
0.6
2.0
3.0
(3.3)
(0.2)
(2.1)
10.8
12.6
23.4
14.3
9.1
23.4
The acquisition has further diversified the Group’s revenues with the addition of video production expertise, and goodwill is
attributable to the opportunities that exist to further monetise the Group’s existing brands through video. The intangibles recognised,
including goodwill, are not expected to be deductible for tax purposes.
Included within the Group’s results for the period are revenues of £11.1m and a profit before tax of £2.1m from Barcroft (excluding deal
fees, associated integration costs, acquired intangible amortisation and depreciation which is not separately identifiable for acquired
fixed assets).
If the acquisition had been completed on the first day of the financial year, it would have contributed £14.0m of revenue and a profit
before tax of £2.7m (excluding deal fees, associated integration costs, acquired intangible amortisation and depreciation which is not
separately identifiable for acquired fixed assets) during the period.
Gross trade receivables were £2.1m, of which £2.0m on acquisition were expected to be recovered.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 159
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.
On 16 March 2020, it was announced that the CMA had found that the purchase of TI Media did not raise competition concerns,
subject to the sale of three closely competing products: WorldSoccer; Amateur Photographer; and the technology website
Trustedreviews.com. The Group subsequently agreed the sales of WorldSoccer and Amateur Photographer to Kelsey Media, and
Trusted Reviews to Incisive Media, which completed in May 2020.
The acquisition was completed on 20 April 2020. The acquisition was part funded by raising proceeds of £104.4m, net of costs of
£3.4m, through a placing of 8,184,906 new ordinary shares in November 2019, with the balance being settled through exercise and
subsequent drawdown on the Group’s £45m accordion option on the RCF.
The impact of the acquisition on the consolidated balance sheet was:
Tangible assets
- IFRS 16 right-of-use assets
- Other tangible assets
Intangible assets
- Publishing rights
- Subscriber database
- Customer relationships
- Content
- Software
Cash and cash equivalents
Inventories
Trade and other receivables
Trade and other payables
Non-current liabilities
- Long term liability
- IFRS 16 lease liability
- Other non-current liabilities
Deferred tax
Net liabilities acquired
Goodwill
Consideration:
Cash
Total consideration
Fair value
£m
8.3
2.8
75.0
3.4
3.3
1.6
4.2
27.2
1.1
36.8
(51.3)
(110.8)
(11.9)
(8.5)
(2.3)
(21.1)
84.4
63.3
63.3
63.3
The consideration in the table above excludes debt acquired of £110.8m and is also gross of cash acquired of £27.2m which in total
amounts to £146.9m. This calculates higher than the £140m price disclosed due to the timing of the acquisition being mid-month
when the cash and cash equivalents are lower than at a month end close, this however also results in a one-off operating cash benefit.
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. Goodwill is attributable to
the synergies of the combined Group and the opportunities that exist to further monetise TI Media’s existing brands. The intangibles
recognised, including goodwill, are not expected to be deductible for tax purposes.
Included within the Group’s results for the period are revenues of £64.0m and an adjusted operating profit of £11.1m from TI Media
(excluding deal fees, associated integration costs, acquired intangible amortisation and depreciation which is not separately
identifiable for acquired fixed assets).
If the acquisition had been completed on the first day of the financial year, it would have contributed £153.2m of revenue and an
adjusted operating profit of £23.8m (excluding closed and divested titles and subsidiaries, deal fees, associated integration costs,
acquired intangible amortisation and depreciation which is not separately identifiable for acquired fixed assets) during the period.
Gross trade receivables were £16.3m, of which £15.1m on acquisition were expected to be recovered.
The deferred tax liability in the table above of £2.3m includes a deferred tax asset on acquisition of £14.2m (in respect of historic
TI Media tax losses, corporate interest restriction losses and capital allowances), net of a deferred tax liability arising on acquired
intangible assets of £16.5m.
160 / FUTURE PLC
Financial Statements Financial Statements
Acquisition of SmartBrief, LLC – update to fair values and settlement of contingent consideration
In the prior year on 29 July 2019 Future plc acquired SmartBrief, Inc. (following the acquisition, the legal form of the entity was changed
from an Incorporation to an LLC). An update to the fair value of the assets has been performed, with no change to the values previously
disclosed other than an increase of £0.3m in the deferred tax liability. Fair values are detailed below and are now considered to be final:
Tangible assets
Intangible assets
- Subscriber base
- Brand
- 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
Fair value
£m
0.4
10.6
2.8
2.6
2.5
2.3
5.7
(6.6)
(3.8)
(4.6)
11.9
31.7
43.6
11.6
21.2
32.8
10.8
43.6
Following the end of the earnout period on 30 July the contingent consideration was settled at a final value of £3.6m ($4.6m). See
note 21 for further detail.
MoNa Mobile Nations, LLC – settlement of deferred 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. Total contingent consideration of $55m was settled in the period with around
50% being issued in shares (1,792,534 shares in Future plc issued in October 2019), and around 50% (£21.4m) in cash (which was paid
on 28 February 2020). See notes 21, 22 and 24 for further detail.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 161
29. SUBSIDIARY UNDERTAKINGS
Details of the Company’s subsidiaries at 30 September 2020 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.
Country of incorporation
and registered office
Nature of business
Holding %
Class of shares
England and Wales1
Non-trading
100
£1 Ordinary shares
England and Wales1
England and Wales1
Video content
production
Video content
production
100
100
England and Wales1
Holding company
100
£1 Ordinary shares
10 pence A Ordinary shares
10 pence B Ordinary shares
£0.001 A Ordinary shares
£0.001 B Ordinary shares
£0.001 C Ordinary shares
£0.001 D Ordinary shares
£1 A Ordinary shares
£1 B Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
10 pence Ordinary shares
£1 Ordinary shares
100
100
100
100
100
European Magazines Limited*
02197708
England and Wales1
Magazine and
online publishing
England and Wales1
Dormant
England and Wales1
Holding company
England and Wales1
Publishing
England and Wales1
Publishing
England and Wales1
Holding company
87.5
1 pence Ordinary shares
England and Wales2
Dormant14
England and Wales1
Dormant
England and Wales2
Dormant14
England and Wales2
Dormant14
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
Non-trading
England and Wales1
Dormant
100
100
100
100
100
100
100
100
100
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
£1 Ordinary shares
England and Wales2
Dormant14
100
£1 Ordinary shares
England and Wales1
Holding company
100
£1 Ordinary shares
England and Wales1
Dormant
100
£1 Ordinary shares
Australia3
Comparison shopping
Canada4
Digital media
publishing
Czech Republic5
Non-trading
France6
Non-trading
100
100
100
100
$1 Ordinary shares
Not applicable
CZK 1 Ordinary shares
Not applicable
Company name and registered number
Ascent Publishing Limited*
02561341
Barcroft Media Limited*
04826405
Barcroft Productions Limited*
07661595
Barcroft Studios Limited*
09432842
EX TRL Limited*
04835255
Future Holdings 2002 Limited
04387886
Future Publishing Limited*
02008885
Future Publishing (Overseas) Limited*
06202940
Future Publishing Holdings Limited
03430449
Mareve Limited*
05901325
Marketforce (U.K.) Limited*
00499150
Mousebreaker Limited*
04750365
New Musical Express Limited*
01576443
Sapphire Bidco Limited*
11157309
Sapphire Holdco Limited*
11157282
Sapphire Midco Limited*
11157151
Sapphire Topco Limited*
11157141
Sarracenia Limited
04582851
The Essentials Publishing
Company Limited*
01493149
TI Media Limited*
00053626
Time Inc. (UK) Property
Investments Limited*
09759756
Next Commerce Pty Limited*
113 146 786
MoNa Media Canada Limited*
BC1198396
Future Publishing s.r.o.*
09393951
Purch Technologies Sarl*
84138050400016
162 / FUTURE PLC
Financial Statements Financial Statements
Company name and registered number
Future Verlag GmbH*
HRB12567
Pricepanda Group GmbH*
HRB138471B
Windsor Support Services Private
Limited*
U74999DL2011FTC217990
Next Commerce Philippines Inc*
CS201517783
MoNa Mobile Nations, LLC*
7277455
Future US, Inc*
1513070
Newbay Media LLC*
4208889
Purch Group LLC*
4560993
SmartBrief, LLC*
3072249
Country of incorporation
and registered office
Nature of business
Holding %
Class of shares
Germany7
Non-trading
87.5
€1 Ordinary shares
Germany8
Dormant
100
€1 Ordinary shares
India9
Dormant
100
Rand 10 equity shares
Philippines10
Dormant
USA11
USA12
USA12
USA12
Digital media
publishing
Publishing
Non-trading
Trading
USA13
Digital publishing
100
100
100
100
100
100
₱ Ordinary shares
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
1 Registered office: Quay House, The Ambury, Bath, BA1 1UA, England
8 Registered office: Charlottenstraße 4, 10969 Berlin, Germany
2 Registered office: 3rd Floor, 161 Marsh Wall, London, E14 9AP, England
9 Registered office: Dpt 610, Prime Towers F 79-80, Okhla Industrial Area,
3 Registered office: Suite 3, Level 10, 100 Walker Street, North Sydney,
Phase 1 New Delhi New Delhi DL 110020 India
NSW 2060, Australia
10 Registered office: 2/F GC Corporate Plaza, 150 Legaspi Street, Legaspi Village,
4 Registered office: 1800-355 St Burrard, Vancouver Colombie
Makati, Manila, Philippines
Britannique V6C2G8, Canada
11 Registered office: 360 Central Ave, Suite 800, St Petersburg, FL 33701, USA
5 Registered office: Holečkova 100/9, Smíchov, 150 00 Praha 5, Czech Republic
12 Registered office: 11 West 42nd Street, New York, NY 10036, USA
6 Registered office: 195 Avenue Charles de Gaulle 92200 Neuilly-sur-Seine, France
13 Registered office: 555 11th Street, Suite 600, Washington, DC 20004, USA
7 Registered office: c/o Poruba GbR, Clemensstraße 32, 80803 Munich, Germany
14 Company was voluntarily struck off on 13 October 2020
Ascent Publishing Limited, Future Holdings 2002 Limited, Future Publishing Limited, TI Media Limited, Sapphire Bidco Limited, Sapphire
Midco Limited, Sapphire Holdco Limited, Sapphire Topco Limited, Barcroft Studios Limited, Barcroft Productions Limited, Barcroft Media
Limited, European Magazines Limited, Time Inc. (UK) Property Investments Limited and EX TRL Limited are exempt from the requirement
to file audited financial statements by virtue of Section 479A of the Companies Act 2006. Sarracenia Limited and Marketforce (U.K.) Limited
are exempt from the requirement to file audited financial statements by virtue of Section 480 of the Companies Act 2006.
30. POST BALANCE SHEET EVENTS
Acquisition of CinemaBlend
On 2 October 2020, Future US, Inc. acquired CinemaBlend, a premium digital entertainment publisher based in the US. CinemaBlend is a
high-growth digital brand focused on the TV, film and entertainment market. Through its website, podcast series, social media channels
and newsletters, CinemaBlend provides a platform for enthusiasts and casual fans to discover, explore and discuss films and TV shows,
both on streaming services such as Netflix and linear TV such as HBO.
Total consideration paid was $12.75m ($13.5m net of a working capital adjustment of $0.75m, 7.5x multiple of expected FY 2020 contribution).
As the acquisition completed shortly after the reporting date, the fair values of the intangible assets acquired are in the process of being
determined.
Recommended offer for GoCo Group plc
On 25 November 2020, the Group announced a recommended offer for GoCo Group plc (“GoCo”) for total consideration of around £594m
comprising around £450m in equity (via the issue of 22.9m Future plc shares), and £144m in cash, funded by increasing the Group’s debt
facilities through a £215m two year term loan. In addition the Group’s £30m short dated COVID-19 facility has been cancelled. On
completion the Group will have total facilities of £350m.
The recommended offer will significantly strengthen the Group’s proposition of seeking to address the growing consumer demand for
informed and value driven purchasing decisions enabled by intent driven content, and provides a unique opportunity to capitalise on the
combination of the Group’s deep audience insight with GoCo’s expertise in price comparison and the proprietary technology of both the
Future Group and the GoCo Group.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 163
Notice of Annual General Meeting
Notice is given that the Annual General Meeting of Future plc will be held at
1-10 Praed Mews, London, W2 1QY on Wednesday 10 February 2021 at 3:30pm
to consider and, if thought fit, pass the following resolutions:
Ordinary Resolutions (1-18)
Company to hold office until the
section 366 of the Companies Act 2006
conclusion of the next general meeting at
to:
1.
To receive and adopt the Annual Report
which accounts are to be laid before the
a)
make political donations to political
including the audited financial statements
Company.
for the year ended 30 September 2020.
parties and/or independent election
candidates not exceeding £50,000 in
14. To authorise the Audit and Risk
total;
2.
To declare a final dividend for the year
Committee to decide the remuneration of
b)
make political donations to
ended 30 September 2020 of 1.6p per
the Auditor.
ordinary share payable on 16 February
political organisations other than
political parties not exceeding
2021 to shareholders on the register at the
15. That: a. the Directors be authorised, for
£50,000 in total; and
close of business on 15 January 2021.
the purposes of section 551 of the
c)
incur political expenditure not
Companies Act 2006 (the ’Act’), to allot
exceeding £50,000 in total,
3.
To approve the amendments to the
shares in the Company or grant rights to
during the period beginning with
Remuneration Policy for the three year
subscribe for, or convert any security into,
the date of the passing of this
period commencing on 1 October 2020 as
shares in the Company: (i) in accordance
resolution and ending following
set out in pages 84 to 93 of the Annual
with article 3 of the Company's Articles of
the conclusion of the Company's
Report of the Company
Association, up to a maximum nominal
next Annual General Meeting or, if
amount of £4,851,747.45 (such amount to
earlier, on 10 May 2022.
4.
To approve the Directors' Remuneration
be reduced by the nominal amount of any
Report set out on pages 80 to 84 and
equity securities (as defined in section
17. That the rules of the Future plc Employee
pages 94 to 103 (inclusive) in the
560 of the Act) allotted under paragraph
Stock Purchase Plan (the 'US Plan')
Annual Report.
(ii) below in excess of £9,703,494.90); and
referred to in the Explanatory Notes to
(ii) comprising equity securities ( as
this resolution and produced in draft to
5.
To re-elect Richard Huntingford as a
defined in section 560 of the Act), up to a
this meeting and, for the purpose of
Director of the Company.
maximum nominal amount of
identification, initialled by a Director, be
£9,703,494.90 (such amount to be
approved and that the Directors of the
6.
To re-elect Zillah Byng-Thorne as a
reduced by any shares allotted or rights
Company be authorised to make any
Director of the Company.
granted under paragraph (i) above) in
changes they consider necessary or
connection with an offer by way of a rights
desirable to the rules of the US Plan to
7.
To elect Rachel Addison as Director of the
issue; b. this authority shall expire at the
take account of the requirements of
Company
conclusion of the next Annual General
section 423 of the US Internal Revenue
Meeting of the Company after the passing
Code, as amended, and to address any
8.
To elect Meredith Amdur as a Director of
of this resolution, or, if earlier, at the close
applicable US securities laws
the Company.
of business on 10 May 2022; and c. all
requirements.
previous unutilised authorities under
9.
To elect Mark Brooker as a Director of the
section 551 of the Act shall cease to have
18. That
Company.
effect (save to the extent that the same
a) the rules of the Future plc Value
10. To re-elect Hugo Drayton as a Director of
of the Act by reason of any offer or
produced to the meeting and initialled
the Company.
agreement made prior to the date of this
by the Chair of the meeting for the
are exercisable pursuant to section 551(7)
Creation Plan (the 'VCP’) in the form
11. To re-elect Rob Hattrell as a Director of the
shares to be allotted or rights to be
terms of which are summarised on
resolution which would or might require
purposes of identification, the principal
Company.
granted on or after that date).
12. To re-elect Alan Newman as a Director of
16. To authorise the Company, and all
page 103, be and are hereby approved
and the Directors be and are generally
authorised to adopt the VCP and to do
the Company.
companies that are its subsidiaries, at any
all acts and things that they consider
time during the period for which this
necessary or expedient to give effect
13. To appoint Deloitte LLP as Auditor of the
resolution has effect for the purposes of
to the VCP; and
164 / FUTURE PLC
Notice of Annual General Meeting
Notice of Annual General Meeting
b)
the Directors be and are hereby
by depository receipts or by virtue
acquisition or other capital
authorised to adopt further sub-plans
of any other matter whatsoever.
based on the VCP but modified to take
(ii) otherwise than pursuant to
account of local tax, exchange control
sub-paragraph (i) above, the
or securities laws in overseas
territories, provided that any cash or
shares made available under such
further sub-plans are treated as
allotment or sale of equity
securities having a nominal
amount not exceeding in
aggregate £735,113.25; and
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;
counting against any limits on
(c) this authority shall expire at the
b) this power shall expire at the
participation in the VCP.
conclusion of the next Annual General
conclusion of the next Annual
SPECIAL RESOLUTIONS (19-22)
Special Resolutions 19
19. That
Meeting of the Company after the
General Meeting of the Company
passing of this resolution or, if earlier,
after the passing of this resolution
at the close of business on 10 May
or, if earlier, at the close of business
2022.
on 10 May 2022; and
a)
the Directors be given power,
(d) the Company may, before this power
c) the Company may, before this
pursuant to section 570 of the
expires, make an offer or enter into an
power expires, make an offer or
Companies Act 2006, (the ‘Act’):
agreement which would or might
enter into an agreement which
i)
subject to the passing of
require equity securities to be allotted
would or might require equity
resolution 15 to allot equity
after it expires and the Directors may
securities to be allotted after it
securities (as defined in section
allot equity securities in pursuance of
expires and the Directors may allot
560(1) of the Act) for cash
pursuant to the authority
conferred on them by that
resolution; and
ii)
to sell equity securities (as defined
such offer or agreement as if this
power had not expired.
Special Resolution 20
20. That:
in section 560(1) of the Act) held
a)
in addition to any authority granted
equity securities in pursuance of
such offer or agreement as if this
power had not expired.
Special Resolution 21
21. That, in accordance with the Company's
by the Company as treasury
shares (as defined in section
724(5) of the Act) for cash,
in either case as if section 561 of the
Act did not apply to the allotment or
sale.
b)
the power under paragraph (a) above
shall be limited to:
under resolution 19, the Directors be
Articles of Association, a general meeting
given power:
(other than an Annual General Meeting)
i)
subject to the passing of
may be called on not less than 14 clear
resolution 15, to allot equity
days' notice.
securities (as defined in section
560(1) of the Companies Act
2006 (the ‘Act’)) for cash
pursuant to the authority
Special Resolution 22
22. That the Articles of Association produced
to the meeting and initialled by the
(i) the allotment of equity securities
conferred on them by that
Chairman of the meeting for the purpose
in connection with a rights issue,
open offer or other pre-emptive
offer (but in the case of the
authorization granted under
resolution 15.a.ii, such powers
shall be limited to a rights issue
only) in favour of holders of
resolution under section 551 of
of identification be adopted as the new
the Act; and
Articles of Association of the Company in
ii)
to sell equity securities (as
substitution for, and to the exclusion of,
defined in section 560(1) of the
the existing Articles of Association.
Act) held by the Company as
treasury shares (as defined in
section 724(5) of the Act) for
ordinary shares in proportion (as
cash, in either case as if section
nearly as practicable) to the
respective numbers of ordinary
561 of the Act did not apply to the
allotment or sale, but this power
EXPLANATION
OF RESOLUTIONS
shares held by them on the record
shall be:
date for such allotment, but
subject to such exclusions or
other arrangements as the
Directors may deem fit to deal
A. limited to the allotment of
equity securities up to a
Ordinary resolutions
For each of the following resolutions to be
maximum nominal amount of
passed, more than half of the votes cast must
£735,113.25; and
be in favour of the resolution.
with fractional entitlements, legal
B. used only for the purposes of
or practical difficulties which may
financing (or refinancing, if the
arise under the laws of any
overseas territory, the
requirements of any regulatory
body or stock exchange or by
authority is to be used within
six months after the original
Resolution 1:
RECEIPT OF ANNUAL REPORT
The Directors present to shareholders at the
transaction) a transaction
AGM the Reports of the Directors and Auditor
which the Board of the
and the financial statements of the Company
virtue of shares being represented
Company determines to be an
for the year ended 30 September 2020.
ANNUAL REPORT AND ACCOUNTS FY 2020 / 165
Resolution 2:
This resolution seeks shareholder approval to
Ambur and Mark Brooker are standing for
calculated as at 10 December 2020;
election for the first time at this AGM.
and
pay a final dividend of 1.6p per ordinary share
In accordance with the recommendations
b.
allot ordinary shares on a preemptive
for the year ended 30 September 2020. The
of the UK Corporate Governance Code, every
basis by way of a rights issue to
dividend, if approved, will be payable on 16
Director is required to retire from office at
ordinary shareholders up to a
February 2021 to shareholders on the register
every AGM. Any Director eligible, in
maximum nominal amount (including
at the close of business on 15 January 2021.
accordance with the Company's articles of
any shares allotted under the
Resolution 3:
APPROVAL OF THE
DIRECTORS' POLICY
Resolution 3 seeks shareholder approval for
association (the 'Articles'), may stand for
paragraph above) of £9,703,494.90
re-election.
representing approximately two thirds
The Company's Chairman confirms that,
(66.67 per cent) of the Company's
following the evaluation process, as described
existing issued share capital and
on page 69, the performance of each Director
calculated as at 10 December 2020.
the amendments to the Directors'
standing for re-election and election continues
The Directors have no present intention of
Remuneration Policy for the three year period
to be effective and that they have each
allotting shares under this resolution, but
commencing 1 October 2020 which is
demonstrated a strong commitment to their
believe that the flexibility allowed by this
proposed within the Directors’ Remuneration
role.
Report set out on pages 84 to 93 of the Annual
Report.
Resolution 4:
APPROVAL OF THE DIRECTORS’
REMUNERATION REPORT
Resolution 4 seeks shareholder approval for
Resolutions 13-14:
APPOINTMENT OF AUDITOR
AND AUDITOR’S
REMUNERATION
An independent auditor is required to be
resolution may assist them in taking
advantage of business opportunities as they
arise.
If they do exercise this authority, the
Directors intend to follow best practice as
recommended by the Investment Association.
As at 10 December 2020 the Company does
appointed at each general meeting at which
not have any shares in treasury.
the Directors' Remuneration Report on pages
accounts are presented to shareholders.
80 to 84 and pages 94 to 103 of the Annual
Under Resolution 13 the Directors propose to
Report. The FY 2020 annual report on
appoint Deloitte LLP as the Company's
Resolution 16
It remains the policy of the Company not to
remuneration gives details of the
independent auditor. More information about
make political donations or to incur political
implementation of the Company's
the decision to appoint Deloitte LLP can be
expenditure, as those expressions are
Remuneration Policy, approved by
found in the Audit and Risk Committee report
normally understood. However, following
shareholders at the AGM in February 2020, in
on page 78.
broader definitions introduced by the Act, the
terms of the payments and share awards
Resolution 14 seeks shareholder
Directors continue to propose a resolution
made to the Directors in connection with their
authorisation for the Audit and Risk
designed to avoid inadvertent infringement of
performance and that of the Company during
Committee to decide the Auditor's fee, which
these definitions.
the year ended 30 September 2020.
is standard practice.
It also gives details of how the Company
The Act requires companies to obtain
shareholders' authority for donations to
intends to apply the Remuneration Policy in
practice for FY 2021. This vote is advisory and
the Directors' entitlement to remuneration is
Resolution 15:
AUTHORITY TO ALLOT SHARES
At the AGM last year, the Directors were given
registered political parties and other political
organisations totalling more than £5,000 in
any 12-month period, and for any political
not conditional on it.
the authority to allot shares without the prior
expenditure, subject to limited exceptions.
The Company's Auditor during the year,
consent of shareholders for a period expiring
The definition of donation in this context is
PricewaterhouseCooper LLP, has audited
at the conclusion of the 2021 AGM or, if earlier,
very wide and extends to bodies such as those
those parts of the Directors' Remuneration
on 4 May 2021. It is proposed to renew this
concerned with policy review, law reform and
Report that are required to be audited and
authority and to authorise the Directors under
the representation of the business
their report may be found on pages 112 to 119
section 551 of the Companies Act 2006 to
community. It could also include special
of the Annual Report.
allot ordinary shares or grant rights to
interest groups, such as those involved with
Resolutions 5-12:
ELECTION AND RE-ELECTION
OF DIRECTORS
A biography of each Director, including a
subscribe for or convert any security into
the environment, which the Company and its
shares in the Company for a period expiring at
subsidiaries might wish to support, even
the conclusion of the 2022 AGM or, if earlier,
though these activities are not designed to
close of business on 10 May 2022.
support or to influence support for any
This resolution, which follows the guidelines
particular political party.
description of the skills and experience they
issued by the Investment Association, will
contribute to the Board, appears on pages 66
allow the Directors to:
to 67 of the Annual Report and is also available
on the Company’s website at www.futureplc.
com/who-we-are/.
a.
allot ordinary shares up to a maximum
nominal amount of £4,851,747.45
Resolution 17
US STOCK OPTION PLAN
The Company’s Board of Directors (the
representing approximately one third
'Board) has approved the Future plc Employee
Having been appointed directors since the
(33.33 per cent) of the Company's
Stock Purchase Plan intended to be made
AGM in 2020, Rachel Addison, Meredith
existing issued share capital and
available to employees who are employed and
166 / FUTURE PLC
166 / FUTURE PLC ANNUAL 2020
Notice of Annual General Meeting
Notice of Annual General Meeting
resident in the US (the 'US Plan'). The US Plan
set aside a portion of their compensation for
If the purchase of shares relates only to new
is intended to be qualified under section 423 of
purchases of shares under the US Plan) if it
issue shares, then the price per share payable
the US Internal Revenue Code of 1986, as
determines that the termination of the Saving
on exercise must also not be less than the
amended (the 'US Code'), that provides a tax
Period or of the US Plan in its entirety is in the
nominal value of a share. If a participating
favourable regime for participants in the US
best interests of the Company and its
employee in the US Plan ceases employment
Plan. One of the requirements for this
shareholders. In addition, to the extent
prior to the end of the Savings Period, then
favourable tax treatment is shareholder
necessary to comply with section 423 of the
savings will be returned and no share
approval of the US Plan. It is the Board's
US Code (or any successor rule or provision or
purchase will take place.
understanding that the US Plan will benefit our
any other applicable law, regulation or stock
shareholders as a result of our employees'
exchange rule), the Company will seek to
Summary of US Federal Income Tax
increased interest in the Company's success.
obtain shareholder approval for modifications
Consequences to Participating
No purchase rights will be granted under the
made to the US Plan.
US Plan, and no shares will be issued under
the US Plan, unless and until the US Plan is
approved by our shareholders. The Board
Eligibility
Without limitation, the US Plan may be used
Employees
The following is a summary of the federal
income tax consequences of transactions
under the US Plan. The summary is general in
recommends that shareholders vote 'FOR' the
for employees employed and resident in the
nature and is not intended to cover all the
proposal to approve the US Plan.
US who have completed three months service.
income tax consequences that may apply to a
The following is a summary of the provisions
particular participating employee. The
of the US Plan assuming the shareholders
approve this proposal. A copy of the US Plan
Offerings
Ordinary shares in Future plc will be offered
provisions of the US Code and regulations
thereunder relating to these matters are
rules will be available for inspection during
under the US Plan to participating employees
complicated, may change, and their impact in
normal business hours (Saturdays, Sundays
during Savings Periods (which will generally
any one case may depend upon the particular
and public holidays excepted) at the registered
consist of two six month Savings Periods
circumstances. Further, this summary does
office of the Company up until the close of the
during each calendar year).
not discuss the income tax consequences of
AGM. A copy can be requested from the
The Remuneration Committee may, in its
the death of a participating employee, net
Company Secretary.
discretion, modify the terms of future offering
investment income, or the provisions of any
periods.
income tax laws of any municipality or state in
Overall Plan limits
The US Plan may operate over new issue
Employees who participate in the US Plan
which a participant may reside.
can elect to save between 1% and 10% of
The description is based on current US
shares, treasury shares or shares purchased
salary, to be used for purchases of shares. No
federal income tax laws, rules and regulations,
in the market. In any ten calendar year period,
participant under the US Plan may purchase
which are subject to change, and does not
the Company may not issue (or grant rights to
more than $25,000 of shares in any calendar
purport to be a complete description of the
issue) more than 10 per cent of the issued
year (based upon the fair market value of the
federal income tax aspects of the US Plan.
ordinary share capital of the Company under
shares on the Grant Date, which is generally
The US Plan is intended to qualify as an
the US Plan and any other employee share
the first business day of the Savings Period).
'employee stock purchase plan' within the
plan adopted by the Company. Treasury
The Remuneration Committee may set a
meaning of section 423 of the US Code. Under
shares will count as new issue shares for the
lower limit in relation to any particular Savings
this type of plan, no taxable income will be
purposes of these limits so long as this is
Period and has currently set a limit on funds
reportable by an employee participating in the
required under institutional shareholder
that participating employees can use for
US Plan as a result of the purchase of shares at
guidelines.
purchases of shares under the US Plan to
a discount. A participating employee member
Administration of the US Plan
The Board has designated its Remuneration
Committee to act as the administrator of the
Purchase Price of Shares
Under the US Plan, at the end of each six
US$7,000 per year.
will, however, recognise taxable income in the
year in which the shares purchased under the
US Plan are sold or otherwise disposed of. A
sale or other disposition of shares purchased
US Plan. Notwithstanding the immediately
month Savings Period shares are bought
under the US Plan will generally be a
preceding sentence, the Board may at any
automatically for participants at a discount
'Disqualifying Disposition' if it is made within
time vest in the Board any authority or duties
price which is the lesser of:
two years after the first day of the Savings
for administration of the US Plan.
(A) 85% of the average closing price
Period pursuant to which the shares were
derived from the Daily Official List of
bought. If the participating employee makes a
Amendment or Termination
the London Stock Exchange on the
Disqualifying Disposition of shares purchased
of the US Plan
The Board may at any time and for any reason
first business day of the Savings
under the US Plan, the excess of the fair
Period; and
market value of the purchased shares on the
terminate or amend the US Plan but no
(B) 85% of the average closing price
date of purchase over the purchase price
amendment or termination of the US Plan will
derived from the Daily Official List of
actually paid by the Participating employee on
affect options previously granted, although
the London Stock Exchange on the
the purchase date will be treated as ordinary
the Board can terminate a Savings Period (the
last business day of the Savings
income of the participating employee at the
period during which participants in the Plan
Period.
time of such Disqualifying Disposition. Any
ANNUAL REPORT AND ACCOUNTS FY 2020 / 167
additional gain (or loss) on the Disqualifying
which includes a duly authorised committee of
non-financial performance of the Group over
Disposition will be a capital gain (or loss) to the
the Board.
employee (either long or short-term
depending on how long the shares have been
held). If the participating employee disposes
Eligibility
Any employee of the Group (including an
the vesting period, or that it is not appropriate
in the context of unexpected or unforeseen
circumstances, or there is any other reason
the Board considers relevant, in each case
of shares purchased under the US Plan after
executive director) is eligible to participate at
taking into account factors the Board
satisfying the two-year holding period outlined
the Board’s discretion.
considers relevant.
above (a 'Qualifying Disposition'), then the
participating employee will realise ordinary
income in the year of the Qualifying
Disposition equal to the lesser of (i) the
amount by which the fair market value of the
shares on the date of disposition exceeds the
purchase price actually paid for such shares or
Form of Awards
Awards under the VCP will be in the form of a
Individual Limits
The maximum number of units which can be
conditional right to receive ordinary shares in
the capital of the Company (“Shares”) at no
cost to the participant (“Award”), calculated
by reference to the value of units. Units will
awarded under the VCP to any one participant
in respect of any tranche cannot exceed
140,000 units.
(ii) 15% of the fair market value of the shares
have a value depending on the VCP value at
on the first business day of the Savings Period
the relevant measurement date (see below).
pursuant to which the shares were purchased.
Overall Limits
The rules of the VCP provide that the total
number of Shares which may be issued under
This amount of ordinary income will be added
to the basis in the shares and any gain (or loss)
Grant of Awards
Awards may only be granted within the 42 day:
the VCP may not exceed five per cent of the
issued ordinary share capital of the Company
recognised upon a disposition of such shares
period following the approval of the VCP by the
on any Measurement Date.
will be a long-term capital gain (or loss).
Company’s shareholders (the “Shareholders”),
The Board must not grant an Award that
The preceding is based on current federal
the announcement of the Company’s results
would cause the number of Shares which may
tax laws and regulations, which are subject to
for any period, any day on which a restriction
be issued under the VCP and under any other
change, and does not purport to be a
on the grant of Awards is lifted, or on any day
employees’ share VCP adopted by the
complete description of the federal income tax
on which the Board determines that
Company to exceed 10% of the issued
aspects of the US Plan. A participant may also
exceptional circumstances exist which justify
ordinary share capital of the Company from
be subject to state and local taxes.
the grant of Awards. No Awards may be
time to time.
Plan Benefits. Future benefits available
granted more than five years after the approval
under the US Plan are subject to the
of the VCP by the Shareholders.
participation level of our employees and to our
Settlement
The Board may, in its discretion, decide to
share price at the time of any purchases and
therefore are not determinable at this time.
Vesting
Awards may vest in three tranches shortly
satisfy an Award with a cash payment equal to
the market value of some or all of the Shares
after 30 September 2023, 30 September
that the participant would have received had
Resolution 18:
VALUE CREATION PLAN
The Company’s Board of Directors (the
2024 and 30 September 2025 (the
“Measurement Dates”) if the Board
determines that the VCP value on those
'Board) has approved the Future plc Value
Measurement Dates is greater than nil. If the
the Award been satisfied with Shares.
Dividend Equivalents
Participants will not, in relation to the Shares in
Creation Plan (‘VCP’) intended to be made
VCP value is nil on any of those dates the
respect of which an Award Vests, receive any
available to employees of the Group. It is the
relevant tranche will lapse immediately.
additional Shares or cash payments in lieu of
Board's understanding that the VCP will
The VCP will have a value on each
any dividends that would have been paid on
benefit our shareholders as a result of our
Measurement Date equal to 3.33% of the
those Shares over the period between the
employees' increased interest in the
growth in the market capitalisation of the
grant of the Award and the relevant
Company's success. The Board recommends
Company on that date. For these purposes the
Measurement Date
that shareholders vote 'FOR' the proposal to
market capitalisation will be calculated based
approve the VCP.
on the additional shareholder value created
The following is a summary of the provisions
above a hurdle rate of return of 10% per
Malus and Clawback
It is intended that reduction and recovery
of the VCP assuming the shareholders
annum over the plan period.
provisions will apply to Awards granted to the
approve this proposal. A copy of the VCP rules
The Board may amend or substitute the
Executive Directors and other selected senior
will be available for inspection during normal
VCP value calculation if one or more events
executives. In certain circumstances the
business hours (Saturdays, Sundays and
occur which cause the Board to consider that
Board may: reduce an Award (to zero if
public holidays excepted) at the registered
an amended or substituted VCP value
appropriate) or impose additional conditions
office of the Company up until the close of the
calculation would be more appropriate and
on those Awards to the extent that Shares
AGM. A copy can be requested from the
would not be materially less difficult to satisfy.
and/or cash have not yet been delivered in
Company Secretary.
The Board may adjust the vesting level
satisfaction of the Award; or if Shares and/or
Operation
The VCP will be administered by the Board,
calculated as a result of the VCP value on any
cash have been delivered in satisfaction of
Measurement Date, if it considers that it does
those Awards, require that the participant
not reflect the underlying financial or
either return some or all of the Shares
168 / FUTURE PLC
Notice of Annual General Meeting Notice of Annual General Meeting
acquired pursuant to the Award or make a
cessation for reasons of gross misconduct, in
obtained in the case of any amendment which
cash payment to the Company in respect of
which case that Award will lapse immediately),
is made to the advantage of eligible employees
the Shares or cash delivered.
continue and be satisfied in accordance with
and/or participants and relates to the
The Board will retain the discretion to
the rules of the VCP.
calculate the amount of Shares or cash,
provisions relating to eligibility, individual or
overall limits, the basis for determining the
including whether or not to claw back such
amount, gross or net of any tax or social
Corporate Events
In the event of a change of Control of the
entitlement to, and the terms of, awards, the
adjustments that may be made in the event of
security contributions applicable to the
Company, Awards will vest early. The extent to
any variation to the share capital of the
Award.
which any unvested Awards vest will be
Company and/or the rule relating to such prior
The Board may operate these recovery
determined by the Board, taking into account
approval.
provisions where, during the period ending on
the relevant VCP value and any adjustment
There are, however, exceptions to this
the third anniversary of the Measurement
they consider appropriate as referred to
requirement to obtain Shareholder approval
Date, there has been: a material misstatement
above.
for any minor amendments to benefit the
of the financial results of the Company or of
Alternatively, the Board may permit Awards
administration of the VCP, to take account of
any Group Member; an error in assessing the
to be exchanged for equivalent awards of
the provisions of any legislation, or to obtain or
VCP value applicable to the Award or in the
shares in a different company (including the
maintain favourable tax, exchange control or
information or assumptions on which the
acquiring company). If the change of control is
regulatory treatment for any participant or
Award was granted or vests; a material failure
an internal reorganisation of the Group (or if
member of the Group.
of risk management, fraud or material
the Board so decides), participants may be
financial irregularity in any Group Member or a
required to exchange their Awards.
relevant business unit for which participant
If other corporate events occur such as a
Non-transferability
Awards are not transferable other than to the
was responsible; serious reputational damage
winding-up of the Company, demerger,
participant’s personal representatives in the
to any Group Member or a relevant business
delisting, special dividend or other event
event of his or her death.
unit caused by the participant; serious
which, in the Board’s opinion, may materially
misconduct or material error on the part of the
affect the current or future value of Shares,
participant; a material corporate failure or a
the Board may determine that Awards will vest
Benefits not Pensionable
Benefits received under the VCP are not
material safety failure in any Group Member or
on the same basis as for a change of control.
pensionable.
a relevant business unit in which the
participant has participated; and (until the
vesting date of Awards only) a material
Variation of Capital
If there is a variation of the share capital of the
Overseas Plans
The Board may, at any time, establish further
downturn in the financial performance of any
Company or in the event of a demerger,
plans based on the VCP for overseas
member of the Group or relevant business
delisting, special dividend or other event which
territories. Any such plans will be similar to the
unit; or any other circumstances which the
in the Board’s opinion may materially affect
VCP but may be modified to take account of
Board in its discretion considers to be similar
the current or future value of Shares, the
local tax, exchange control or securities laws.
in their nature or effect.
Board may make such adjustments to the
Any Shares made available under such further
VCP Value or the number of units or Shares
overseas VCPs must be treated as counting
Cessation of Employment
subject to Awards, as it considers appropriate.
against the limits on individual and overall
Unvested Awards:
If a Participant ceases to hold office or
employment with the Group (“Group
Rights Attaching to Shares
Shares issued and/or transferred under the
Employment”) prior to the vesting date of an
VCP will not confer rights on any participant
participation under the VCP.
Termination
No Awards may be granted more than five
Award due to a good leaver reason (e.g. death,
until that participant has received the
years after approval of the VCP by the
disability, ill-health, injury, redundancy,
underlying Shares. Any Shares allotted will
Shareholders.
retirement or any other reason the Board
rank equally with Shares then in issue (except
determines), the outstanding units under the
for rights arising by reference to a record date
Award will, unless the Board in its absolute
prior to their issue).
discretion determines otherwise, be reduced
on a time pro-rata basis. Ceasing Group
Employment for any other reason will result in
Amendment
The Board may, at any time, amend the
unvested awards lapsing.
provisions of the VCP in any respect except
The units resulting from lapsed Awards will
that no amendment to the material
be available for the grant of new Awards.
disadvantage of existing rights of participants
Vested Awards:
If a participant ceases Group Employment
will be made without the amendment having
been approved by the majority of affected
participants.
Special Resolutions
For each of the following resolutions to be
passed, at least 75 per cent of the votes cast
must be in favour of the resolution.
Resolution 19:
DIRECTORS’ GENERAL
POWERS TO DISAPPLY
PRE-EMPTION RIGHTS
At last year's meeting, a special resolution was
passed, under sections 570 and 573 of the
after an Award has vested, but before it has
The prior approval of the Shareholders at a
Companies Act 2006, empowering the
been satisfied, their Award will (other than
general meeting of the Company must be
Directors to allot equity securities for cash
ANNUAL REPORT AND ACCOUNTS FY 2020 / 169
without a prior offer to existing shareholders.
a.
limited to the allotment of equity
authority be renewed. The authority granted
It is proposed that this authority also be
securities or sale of treasury shares
by this resolution, which will be proposed as a
renewed. If approved, the resolution will
up to a nominal amount of
special resolution, if passed, will be effective
authorise the Board to allot equity securities
£735,113.25 which represents
until the Company's next Annual General
(as defined in the Companies Act 2006) for
approximately five per cent of the
Meeting, when it is intended that a similar
cash and/or to sell ordinary shares held by the
issued share capital of the Company
resolution will be proposed.
Company as treasury shares for cash as if
as at 10 December 2020: and
Note, that if a general meeting is called on less
section 561 of the Companies Act 2006 did
b.
used only for the purposes of
than 21 clear days' notice, the Company will
not apply. The authority is limited to:
financing (or refinancing, if the
arrange for electronic voting facilities to be
a.
allotments for rights issues and
authority is to be used within six
available to all shareholders. The flexibility
other pre-emptive issues; and
months after the original transaction)
offered by this resolution will be used where,
b.
allotments of equity securities or sale
a transaction which the Board
taking into account the circumstances, and
of treasury shares (otherwise than
determines to be an acquisition or
noting the recommendations of the UK
under paragraph (a) above) up to a
other capital investment of a kind
Corporate Governance Code, the Directors
nominal amount of £735,113.25,
contemplated by the Statement of
consider this appropriate in relation to the
which represents approximately 5 per
Principles on Disapplying Pre-
business of the meeting and in the interests of
cent of the issued share capital of the
Emption Rights published by the
the Company and shareholders as a whole.
Company as at 10 December 2020.
Pre-Emption Group and which is
The Directors do not intend to issue more
announced at the same time as the
than 7.5 per cent of the issued share capital of
allotment, or has taken place in the
the Company for cash on a non preemptive
preceding six month period and is
Resolution 22:
ARTICLES OF ASSOCIATION
This resolution seeks shareholder approval to
basis in any rolling three-year period (other
disclosed in the announcement of the
adopt the New Articles reflecting
than in connection with an acquisition or
allotment.
developments in market practice since the
specified capital investment, as described in
Resolution 20 seeks to renew this authority
Company's Articles were last amended in
the Pre-emption Group's Statement of
until the conclusion of the next Annual
2017. Due to the nature of the changes, the
Principles) without prior consultation with
General Meeting or, if earlier, the close of
Company is proposing the adoption of the
shareholders and the Investment Committees
business on 10 May 2022. Prior to its expiry
New Articles rather than amendments to the
of the Investment Association and the
the Company may make offers, and enter into
current Articles. The principal changes being
Pensions and Lifetime Savings Association.
agreements, which would or might, require
proposed in the New Articles are summarised
Resolution 19 will be proposed as a special
equity securities to be allotted (and treasury
below.
resolution to renew this authority until the
shares to be sold) after the authority expires
A copy of the current Articles and the New
conclusion of the next Annual General
and the Board may allot equity securities (and
Articles, marked to show all changes
Meeting or, if earlier, the close of business on
sell treasury shares) under any such offer or
proposed, will be available for inspection
10 May 2022. Prior to its expiry, the Company
agreement as if the authority had not expired.
during normal business hours (Saturdays,
may make offers, and enter into agreements,
The maximum nominal value of equity
Sundays and public holidays excepted) at the
which would or might require equity securities
securities which could be allotted if the
registered office of the Company up until the
to be allotted (and treasury shares to be sold)
authorities granted in resolutions 19 and 20
close of the AGM. A copy can be requested
after the authority expires and the Board may
were both used would be £1,470,226.50,
from the Company Secretary.
allot equity securities (and sell treasury
which represents approximately 10 per cent of
shares) under any such offer or agreement as
the issued share capital of the Company as at
if the authority had not expired.
10 December 2020.
General meetings
The New Articles provide that the Company
may hold 'hybrid' general meetings (including
annual general meetings) to allow members to
attend and participate in the business of the
meeting by attending a physical location or by
attending remotely by means of an electronic
Resolution 20
DIRECTORS' POWERS TO
DISAPPLY AN ADDITIONAL
FIVE PER CENT PRE-EMPTION
RIGHTS
In line with the advice published by the
Resolution 21:
NOTICE OF GENERAL
MEETINGS
The notice period for general meetings, as
governed by the Companies Act 2006, is 21
facility. Voting at hybrid meetings will, by
days. The notice can be less if the
default, be decided on a poll. Hybrid meetings
Pre-Emption Group and in addition to any
shareholders approve a shorter notice period,
may be adjourned in the event of a
authority granted under Resolution 19, this
however it cannot be shorter than 14 clear
technological failure.
resolution, to be proposed as a special
days. AGMs cannot be held at shorter notice
The New Articles allow the Company, where
resolution, will, if passed, authorise the
and must always be held on at least 21 clear
appropriate, to postpone general meetings
Directors to allot equity securities and/or sell
days' notice.
and/or change the electronic facilities after
ordinary shares held by the Company as
At last year's AGM, shareholders
notice of the meeting has been issued if it
treasury shares for cash, as if section 561 of
authorised the calling of general meetings
considers that holding the meeting would be
the Companies Act 2006 did not apply to any
other than an AGM on not less than 14 clear
impractical or unreasonable in the
such allotment or sale. This authority will be:
days' notice and it is proposed that this
circumstances.
170 / FUTURE PLC
Notice of Annual General Meeting
Notice of Annual General Meeting
These changes were introduced to provide
the Board greater flexibility to align with
ATTENDANCE AT THE AGM
2. The Company is closely monitoring
these notes and the notes to the proxy form,
signed and returned so as to be received by
technological advances, changes in investor
developments relating to the current outbreak
the Company's Registrars:
sentiment and evolving best practice,
of COVID-19, including the related public health
Computershare Investor Services PLC,
particularly in light of the outbreak of COVID-19.
guidance and legislation issued by the
The Pavilions,
In line with the views expressed by the
Government. The health of our shareholders,
Bridgwater Road,
Investment Association and Institutional
employees and other stakeholders remains
Shareholder Services, the changes will not
extremely important to us and, accordingly,
Bristol
BS99 6ZY
permit meetings to be held solely by electronic
the Future Board may need to take further
not later than 3:30pm on 8 February 2021
means, so a physical meeting will still be
steps to comply with COVID-19 regulations
being two business days before the time
required. (If Government guidance or health
and guidance, including any future
appointed for the holding of the meeting. If you
regulations make any form of physical general
compulsory ‘Stay At Home’ measures which
submit more than one valid proxy
meeting inadvisable or not allowed, the
may be introduced by the UK Government.
appointment, the appointment received last
Company can still use overriding temporary
Should such measures be in place at the time
before the latest time for the receipt of proxies
changes to the law to allow virtual only
of the General Meeting, or if similar restrictions
will take precedence.
meetings.) In deciding whether to hold a hybrid
are in place to protect the safety of the people
general meeting in future, the Company will
attending the General Meeting or any of the
have regard to the views of shareholders and
Company’s stakeholders, then shareholders,
institutional governance bodies at the relevant
advisers and other guests may not be allowed
ELECTRONIC
APPOINTMENT OF PROXIES
4. As an alternative to completing the
time.
to attend the General Meeting in person and
printed proxy form, you may appoint a proxy
Various other consequential amendments
anyone seeking to attend the meeting will be
electronically by visiting the following website:
have been made to the New Articles.
refused entry. No guests will be permitted and
www.investorcentre.co.uk/eproxy.
there will be no refreshments served at the
You will be asked to enter the Control
Untraced shareholders
The New Articles amend the position of
AGM.
Number, the Shareholder Reference Number
If you are attending the meeting in person,
(SRN) and PIN as printed on your proxy form
untraced shareholders. Rather than requiring
please bring the attendance card attached to
and to agree to certain terms and conditions.
the Company to take out two newspaper
your form of proxy and arrive at Future's
To be effective, electronic appointments must
advertisements, the New Articles require the
London office, 1-10 Praed Mews, London, W2
have been received by the Company’s
Company to use reasonable efforts to trace the
1QY, in sufficient time for registration.
Registrars not later than 3:30pm on 8
shareholder. These changes reflect best
We will keep you updated should the plans
February 2021.
practice and provide the Company with
for our AGM change in light of future
appropriate flexibility when trying to locate
developments. Any change to the location,
untraced shareholders.
time or date of our AGM will be communicated
NUMBER OF SHARES IN ISSUE
5. As at the close of business on 10
to shareholders in accordance with our
December 2020 (being the last business day
Reappointment of Directors
The New Articles also contain updated
Articles of Association and by Stock Exchange
prior to the publication of this notice) the
Announcement.
Company's issued share capital consisted of
provisions relating to the appointment of
Appointment of a proxy does not preclude a
98,015,038 Ordinary shares of 15 pence each.
Directors so that these are in line with the
member from attending the meeting and
Each Ordinary share carries one vote. There
requirements of the UK Corporate Governance
voting in person. If a member has appointed a
are no shares held in treasury. The total
Code, which recommends that all Directors
proxy and attends the meeting in person, the
number of voting rights in the Company is
retire (and should they wish to remain in office,
proxy appointment will automatically be
therefore 98,015,100.
seek re-election) at each annual general
terminated.
meeting.
Vacation of office of directors
The New Articles include further circumstances
APPOINTMENT OF PROXIES
3. Any member entitled to attend and vote at
DOCUMENTS AVAILABLE
FOR INSPECTION
6. Printed copies of the service contracts of
the meeting may appoint one or more proxies
the Company's Directors, the letters of
in which a Director's office may be vacated so
to attend, speak and vote in their place. A
appointment for the Non-Executive
that these are in line with market practice.
member may appoint more than one proxy
Directors, and the proposed Articles, will be
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
provided that each proxy is appointed to
available for inspection during usual business
exercise the rights attached to a different
hours on any weekday (Saturdays, Sundays
share or shares held by that shareholder. If you
and public holidays excluded) at the
appoint multiple proxies for a number of
Company's London office at 1-10 Praed Mews,
shares in excess of your holding, the proxy
London, W2 1QY and at the Company's
appointments may be treated as invalid. A
registered office at Quay House, The Ambury,
proxy need not be a member of the Company.
Bath, BA1 lUA including on the day of the
A proxy card is enclosed. To be effective, proxy
meeting from 10:15am until its completion.
cards should be completed in accordance with
ANNUAL REPORT AND ACCOUNTS FY 2020 / 171
ELIGIBLE SHAREHOLDERS
7. The Company, pursuant to Regulation 41
CREST sponsored members, and those
in Regulation 35(5)(a) of the Uncertificated
CREST members who have appointed a voting
Securities Regulations 2001.
of The Uncertificated Securities Regulations
service provider(s), should refer to their
2001, specifies that only those members on
CREST sponsor or voting service provider(s),
the register of the Company as at 6pm on 8
who will be able to take the appropriate action
February 2021 or, if this meeting is adjourned,
on their behalf.
AMENDING A PROXY
10. To change a proxy instruction, a member
needs to submit a new proxy appointment
in the register of members 48 hours before
For a proxy appointment or instruction
using the methods set out above. Note that
the time of any adjourned meeting, are
made using the CREST service to be valid, the
the deadlines for receipt of proxy
entitled to attend and vote at the meeting in
appropriate CREST message (a 'CREST Proxy
appointments (see above) also apply in
respect of the number of shares registered in
Instruction') must be properly authenticated
relation to amended instructions; any
their name at that time. Changes to entries on
in accordance with Euroclear UK & Ireland
amended proxy appointment received after
the Register after 6pm on 8 February 2021 or,
Limited's specifications and must contain the
the relevant deadline will be disregarded.
if this meeting is adjourned, in the register of
information required for such instructions, as
Where a member has appointed a proxy using
members 48 hours before the time of any
described in the CREST Manual. The message,
the paper proxy form and would like to change
adjourned meeting, will be disregarded in
regardless of whether it constitutes the
the instructions using another such form, that
determining the rights of any person to attend
appointment of a proxy or an amendment to
member should contact the Registrars on +44
or vote at the meeting.
the instruction given to a previously appointed
(0)370 7071443.
proxy must, in order to be valid, be transmitted
If more than one valid proxy appointment is
INDIRECT INVESTORS
8. Any person to whom this notice is sent
so as to be received by the issuer's agent (ID
submitted, the appointment received last
3RA50) by 3:30pm on 8 February 2021 or, if
before the deadline for the receipt of proxies
who is a person that has been nominated
the meeting is adjourned, not less than 48
will take precedence.
under section 146 of the Companies Act 2006
hours before the time fixed for the adjourned
(‘Act’) to enjoy information rights (a
meeting. For this purpose, the time of receipt
'Nominated Person') does not have a right to
will be taken to be the time (as determined by
REVOKING A PROXY
11. In order to revoke a proxy instruction, a
appoint a proxy. However, a Nominated
the timestamp applied to the message by the
signed letter clearly stating a member's
Person may, under an agreement with the
CREST Applications Host) from which the
intention to revoke a proxy appointment must
registered shareholder by whom they were
issuer's agent is able to retrieve the message
be sent by post or by hand to the Company's
nominated (a 'Relevant Member'), have a right
by enquiry to CREST in the manner prescribed
Registrars:
to be appointed (or to have someone else
by CREST. After this time any change of
Computershare Investor Services PLC, The
appointed) as a proxy for the meeting.
instructions to proxies appointed through
Pavilions, Bridgwater Road,
Alternatively, if a Nominated Person does not
CREST should be communicated to the
Bristol BS99 6ZY.
have such a right, or does not wish to exercise
appointee through other means.
Note that the deadlines for receipt of proxy
it, they may have a right under any such
CREST members and, where applicable,
appointments (see above) also apply in
agreement to give instructions to the Relevant
their CREST sponsors or voting service
relation to revocations; any revocation
Member as to the exercise of voting rights.
providers should note that Euroclear UK &
received after the relevant deadline will be
A Nominated Person's main point of
Ireland Limited does not make available
disregarded.
contact in terms of their investment in the
special procedures in CREST for any particular
Company remains the Relevant Member (or,
messages. Normal system timings and
perhaps, the Nominated Person's custodian
limitations will therefore apply in relation to the
CORPORATE MEMBERS
12. In the case of a member which is a
or broker) and the Nominated Person should
input of CREST Proxy Instructions. It is the
company, any proxy form, amendment or
continue to contact them (and not the
responsibility of the CREST member
revocation must be executed under its
Company) regarding any changes or queries
concerned to take (or, if the CREST member is
common seal or signed on its behalf by an
relating to the Nominated Person's personal
a CREST personal member or sponsored
officer of the company or an attorney for the
details and their interest in the Company
member or has appointed a voting service
company. Any power of attorney or any other
(including any administrative matters). The
provider(s), to procure that his/her CREST
authority under which the documents are
only exception to this is where the Company
sponsor or voting service provider(s) take(s))
signed (or a duly certified copy of such power
expressly requests a response from the
such action as is necessary to ensure that a
of authority) must be included. A corporate
Nominated Person.
message is transmitted by means of the
member can appoint one or more corporate
APPOINTMENT OF PROXIES
THROUGH CREST
9. CREST members who wish to appoint a
CREST system by any particular time. In this
representatives who may exercise, on its
connection, CREST members and, where
behalf, all its powers as a member provided
applicable, their CREST sponsors or voting
that no more than one corporate
service providers are referred, in particular, to
representative exercises powers over the
proxy or proxies through the CREST electronic
those sections of the CREST Manual
same share. Members considering the
proxy appointment service may do so for the
concerning practical limitations of the CREST
appointment of a corporate representative
meeting and any adjournment(s) thereof by
system and timings.
should check their own legal position, the
using the procedures described in the CREST
The Company may treat as invalid a CREST
company's articles of association and the
Manual. CREST personal members or other
Proxy Instruction in the circumstances set out
relevant provision of the Companies Act 2006.
172 / FUTURE PLC
Notice of Annual General Meeting Notice of Annual General Meeting
JOINT HOLDERS
13. Where more than one of the joint holders
raise at the AGM relating to the audit of the
(ii) must identify the resolution or the
Company's accounts (including the auditors'
matter of business of which notice is
purports to vote or appoint a proxy, only the
report and the conduct of the audit) that are to
to be given by either setting it out in
vote or appointment submitted by the
be laid before the AGM.
full or, if supporting a resolution/
member whose name appears first on the
Where the Company is required to publish
matter of business sent by another
register will be accepted.
such a statement on its website:
member, clearly identifying the
QUESTIONS AT THE AGM
14. Under section 319A of the Act, the
(a) it may not require the members
resolution/matter of business which
making the request to pay any
is being supported;
expenses incurred by the Company in
(iii)
in the case of a resolution, must be
Company must answer any question you ask
complying with the request;
accompanied by a statement setting
relating to the business being dealt with at the
(b) it must forward the statement to the
out the grounds for the request;
meeting unless:
Company's auditors no later than the
(iv)
must be authenticated by the person
(a)
answering the question would
time the statement is made available
or persons making it; and
interfere unduly with the preparation
on the Company's website; and
(v)
must be received by the Company not
for the meeting or involve the
(c) the statement may be dealt with as
later than six weeks before the date of
disclosure of confidential information;
part of the business of the AGM.
the AGM; and
(b)
the answer has already been given on
The request:
(d)
in the case of a request made in hard
a website in the form of an answer to a
(d) may be in hard copy form or in
copy form, such request must be:
question; or
electronic form and must be
(i)
signed by you and state your full name
(c)
it is undesirable in the interests of the
authenticated by the person or
and address; and
Company or the good order of the
persons making it (see note 19(d) and
(ii)
sent either: by post to
meeting that the question be
(e) below);
Company Secretary,
answered.
(e) should either set out the statement in
MEMBERS’ RIGHT TO
REQUIRE CIRCULATION
OF A RESOLUTION TO BE
PROPOSED AT THE AGM
15. Under section 338 of the Act, a member
or members meeting the qualification criteria
set out at note 18 opposite, may, subject to
conditions set out at note 19, require the
Company to give to members notice of a
full or, if supporting a statement sent
by another member, clearly identify
the statement which is being
supported; and
Future plc,
Quay House,
The Ambury,
Bath BA1 lUA; or by fax to
+44(0)1225 732266
(f) must be received by the Company at
marked for the attention of the
least one week before the AGM.
Company Secretary; and
MEMBERS’ QUALIFICATION
CRITERIA
18. In order to be able to exercise the
(e) in the case of a request made in
electronic form, such request must:
(i) state your full name and address;
and
resolution which may properly be moved and
members' rights set out in notes 15 to 17 above
(ii) be sent to
is intended to be moved at that meeting.
the relevant request must be made by:
cosec@futurenet.com.
MEMBERS’ RIGHT TO
HAVE A MATTER OF BUSINESS
DEALT WITH AT THE AGM
16. Under section 338A of the Act, a member
(a) a member or members having a right
Please state 'AGM' in the subject
to vote at the AGM and holding at least
line of the email. You may not use
5% of total voting rights of all the
this electronic address to
members having a right to vote on the
communicate with the Company
resolution to which the request
for any other purpose.
or members meeting the qualification criteria
relates; or
set out at note 18 opposite, may, subject to the
(b) at least 100 members having a right to
conditions set out at note 19, require the
vote at the AGM and holding, on
Company to include in the business to be dealt
average, at least £100 of paid up share
with at the AGM a matter (other than a
capital.
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
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
Act, where requested by a member or
must not be defamatory of any
members meeting the qualification criteria set
person, frivolous or vexatious;
out at note 18 below, the Company must
(c) the request:
publish on its website a statement setting out
(i) may be in hard copy form or in
any matter that such members propose to
electronic form;
ANNUAL REPORT AND ACCOUNTS FY 2020 / 173
Shareholder information
Financial calendar
Annual General
Meeting
10 February 2021
Announcement of
half year results to
the six months
ending 31 March 2021
Announcement of
preliminary results
for the year ended
30 September 2021
May 2021
December 2021
Company website
The Company’s website at www.futureplc.com contains the latest
information for shareholders, including press releases. Email alerts
The account information you provide will not be shared with third
parties. It will be held by Computershare as part of your
shareholder account details. Those selecting this method will
receive a tax voucher at their registered address when the
corresponding dividend is paid.
of the latest news, press releases and financial reports about Future
Shareholders wishing to benefit from this service should register
plc may be obtained by registering for the email news alert service
at www.investorcentre.co.uk or call our registrar, Computershare
on the website.
Investor Services PLC, for a form by phone on 0870 707 1443 (a
text phone facility for those with hearing difficulties is available on
0870 702 0005) or by post at Computershare Investor Services
Share price information
PLC at the address below.
The latest price of the Company’s ordinary shares is available on
www.londonstockexchange.com. Future’s ticker symbol is FUTR. It
Registered office
Quay House
is recommended that you consult your financial adviser and verify
The Ambury
information obtained before making any investment decision.
Bath
BA1 1UA
Principal
clearing bank
HSBC Bank plc
8 Canada Square
London
E14 5HQ
Stockbroker
Numis Securities Ltd
10 Paternoster Square
London
EC4M 7LT
Goldman Sachs
Plumtree Court
25 Shoe Lane
Auditor
PricewaterhouseCoopers
LLP
2 Glass Wharf
Temple Quay
Avon Street
Bristol
BS2 0FR
Solicitor
Simmons & Simmons LLP
London
EC4A 4AU2
Aurora
Floors 5 and 6
Finzels Reach
Counterslip
Bristol
BS1 6BX
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Registrar
The Company’s share register is maintained by Computershare.
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.
Computershare also has a service to provide shareholders with
online access to details of their shareholdings. The service is free,
secure and easy to use.
To register, please visit www.investorcentre.co.uk
Dividends
The quickest, most efficient and secure way to receive your
dividends is to have them paid direct to your bank or building
society account. It saves waiting for the funds to clear and reduces
the paper and postage we use. Using BACS (Bank Automated
Clearing System) we are able to pay your dividend straight to your
account on the payment date.
174 / 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 FY 2020 / 175