Future
Annual Report 2021

Plain-text annual report

F u t u r e p c l F Y 2 0 2 1 A N N UA L R EP O R T Contents Strategic Report Financial Review 6 GROUP OVERVIEW 22 CHIEF EXECUTIVE’S Q&A 56 FINANCIAL REVIEW 8 CHAIR’S STATEMENT 24 OPERATIONAL REVIEW 60 RISKS AND UNCERTAINTIES 12 OUR PURPOSE AND STRATEGY 14 OURBUSINESSMODEL 16 HOW WE EXECUTE ON OUR STRATEGY 20 KEY PERFORMANCE INDICATORS(KPIS) 34 OUR FUTURE, OURRESPONSIBILITY 62 SUMMARY OF PRINCIPAL RISKS 50 HOW WE ENGAGE WITH OUR STAKEHOLDERS 65 LONG-TERMVIABILITY STATEMENT 53 S172 STATEMENT 2 / FUTURE PLC A N N U A L R E P O R T F Y 2 0 2 1 Corporate Governance Financial Statements Annual General Meeting 68 CHAIR’S INTRODUCTION 116 INDEPENDENT 174 NOTICE OF MEETING 70 GOVERNANCE FRAMEWORK 72 BOARDOFDIRECTORS 78 NOMINATION COMMITTEE 82 AUDIT AND RISK COMMITTEE 88 DIRECTORS’ REMUNERATION REPORT 92 DIRECTORS’ REMUNERATION POLICY 100 ANNUAL REPORT ON REMUNERATION 110 DIRECTORS' REPORT 113 DIRECTORS' RESPONSIBILITY STATEMENT AUDITORS’ REPORT 128 CONSOLIDATED INCOME STATEMENT 128 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 129 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 129 COMPANY STATEMENT OF CHANGES IN EQUITY 130 CONSOLIDATED BALANCESHEET 131 COMPANYBALANCESHEET 132 CONSOLIDATED CASH FLOW STATEMENT 133 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT 135 ACCOUNTING POLICIES 142 NOTES TO THE FINANCIAL STATEMENTS ANNUAL REPORT AND ACCOUNTS FY 2021 / 3 Strategic Report 6 GROUP OVERVIEW 8 CHAIR’S STATEMENT 12 OUR PURPOSE AND STRATEGY 14 OUR BUSINESSMODEL 16 HOW WE EXECUTE ON OUR STRATEGY 20 KEY PERFORMANCE INDICATORS(KPIS) 22 CHIEF EXECUTIVE’S Q&A 24 OPERATIONAL REVIEW 34 OUR FUTURE, OUR RESPONSIBILITY HOW WE ENGAGE 50 WITH OUR STAKEHOLDERS 53 S172 STATEMENT 4 / FUTURE PLC ANNUAL REPORT AND ACCOUNTS FY 2021 / 5 Strategic ReportC D H G M I P V T R W Y Group Overview Future is a global platform for intent-led specialist media underpinned by technology, enabled by data; with diversified revenue streams. We operate c.250 brands in 11 content verticals (“wheels”) and have 3 core monetisation frameworks (described below), within which there are 9 main product types (“spokes" on the wheel). Our content reaches 1 in 2 adults online in the UK and 1 in 3 in the US.* The successful execution of the strategy is based on a value-led organisation with a clear 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”. For more information, please visit our website: www.futureplc.com/investor-relations/ Our brands # A B E F K N L O North America (USA and Canada) We reach 1 in 3 £m % Group Revenue 210.2 35% Employees 504 21% UK & ROW We reach 1 in 2 £m % Group S Revenue 396.6 65% Employees 1,935 79% *Source:comScoreMediaMetrixDemographicProfile,October2021- Desktop Age 2+andTotalMobile18+ 1. Advertising (40% of Group’s revenue) is the revenue we earn from ads displayed 2 Our wheel of monetisation 6 / FUTURE PLC alongside our content on various platforms (our own websites, social platforms, videos, email newsletters, magazines (physical or digital), and events (physical or digital)). 2. Premium content (22% of Group’s revenue) is made through the direct purchase of content or services by consumers - e.g. the sale of magazines either directly from the newsstand or through subscriptions, or the purchase of an online membership. 3. Affiliate (36% of Group’s revenue) is the commission we earn when an online user clicks through to a retailer or service providers website to make a purchase (products or services), we offer this across our content and comparison websites. In addition, we have a small revenue line in Platform as a service (2% of Group’s revenue) is where we monetise our products via 3rd parties, i.e. we licence our content, franchise our business model and we have a distribution service that distributes magazines for Future and 3rd parties. Group overview Our brands # Our Brands We own and operate c.250 brands: A B E F L O K N S 2 I P V T C D H G M R W Y Our top 10 brands: Financial highlights FY 2021: TechRadar Tom's Guide GamesRadar CinemaBlend Live Science PC Gamer Space.com MarieClaire.com iMore Windows Central Other 42.4 27.2 25.0 23.3 22.8 21.9 13.9 15.0 9.5 8.8 95.3 TOTAL ONLINE USERS (M) 305.1 Online users are taken from Google Analytics. Unless otherwise stated, online users are monthly and the monthly average across the year Adjusted1 results Revenue (£m) Adjusted operating profit (£m) Adjusted operating profit margin (%) Adjusted diluted EPS (p) Adjusted Free Cash Flow2 (£m) Statutory results Revenue (£m) Operating profit (£m) Operating profit margin (%) Profit before tax (£m) Cash generated from operations (£m) Diluted EPS (p) FY 2021 FY 2020 606.8 195.8 32% 131.9p 199.3 339.6 93.4 28% 74.7p 96.0 FY 2021 FY 2020 606.8 339.6 115.3 19% 107.8 197.2 58.1p 50.7 15% 52.0 91.9 45.4p Var +79% +110% +4ppt +77% +108% Var +79% +127% +4ppt +107% +115% +28% The Directors believe that adjusted results and adjusted earnings per share provide additional useful information on the core operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally. The term ‘adjusted’ is not a defined term under IFRS and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to, IFRS measurements of profit. 1 Adjusted results are adjusted to exclude share-based payments (relating to equity settled share awards with vesting periods longer than 12 months) and associated social security costs, exceptional items, amortisation of intangible assets arising on acquisitions and any related tax effects as well as the impact of the UK tax rate change. The prior year results are also adjusted for fair value movements on contingent consideration (and unwinding of associated discount) and on the currency option (including any related tax effects). 2 Adjusted free cash flow is defined as adjusted operating cash inflow less capital expenditure. Adjusted operating cash inflow represents cash generated from operations adjusted to exclude cash flows relating to exceptional items and movement on accrual for employer’s taxes on share based payments relating to equity settled share awards with vesting periods longer than 12 months, and to include lease repayments following adoption of IFRS 16 Leases in the prior year. ANNUAL REPORT AND ACCOUNTS FY 2021 / 7 Strategic ReportChair’s Statement Richard Huntingford Chair D ear Shareholders, I want to start by thanking all of my colleagues at Future who have worked so hard, throughout a very challenging year, to deliver another strong and consistent performance profit margin of 32% was up 4ppt year-on-year (FY 2020: 28%) with adjusted operating profit up 110% to £195.8m (FY 2020: £93.4m) and statutory operating profit up 127% to £115.3m (FY 2020: £50.7m). The Group remains highly cash generative with across the business, adding to the Group’s track record strong adjusted free cash flow of £199.3m (FY 2020: of success. £96.0m), representing 102% of adjusted operating FY 2021 has been another year in which the profit (FY 2020: 103%). The leverage of 0.8x (FY 2020: successful execution of our strategy has delivered 0.6x) reflected rapid de-levering of the Group following strong results despite the impact of the pandemic. It the acquisition of GoCo, resulting in net debt at the end has also been an exciting period as we welcomed into of the year of £176.3m (FY 2020: £62.1m). Leverage on 1 the Group, CinemaBlend, Mozo, GoCo, Marie Claire US October, following the completion of the Dennis and, after the year end, a portfolio of brands from acquisition would have been 1.9x. Dennis, all of which have added capabilities and Finally, the proposed dividend for the year is 2.8p per content to accelerate the execution of our strategy. share, up 75% year-on-year, reflecting the growth of the The year in review FY 2021 was a record year on all metrics: growth, profitability and cash. Group and the confidence in the future. Continued execution of the strategy As this year’s results testify, the Group has continued to The Group now reaches 432m people monthly execute successfully on its strategy of being a global through our websites, magazines, newsletters or social platform for intent-led specialist media, with scalable, media (FY 2020: 394m). diversified brands and products, underpinned by The momentum seen in H1 continued with revenue proprietary technology and enabled by data, delivering up 79% for the year overall to £606.8m (FY 2020: diversified revenue streams. High quality engaging and £339.6m). Revenue was ahead of last year by 23% on compelling content lies at the heart of everything we an organic basis, with organic growth of 21% in H1 and do, delivering valuable audiences that can be 26% in H2. monetised in multiple ways. Diversification – whether Quality of earnings has improved as a result of favourable revenue mix, scalability of the model and through our breadth of verticals or our different routes to monetisation - helps the Group to manage business the platform effect. As a result, adjusted operating risk, particularly in uncertain times, and to deliver “Our scalable technology platform and proven operating model will ensure that this growth delivers high margin profitability. I am therefore very confident that the Group will continue its strong track record of success over the coming years. ” 8 / FUTURE PLC Chair’s Statementrobust performance year in, year out. Technology is a strong strategic enabler for us with one common, highly scalable technology platform behind which there is continued investment. This, combined with the centres of excellence and our low cost location approach, drives continued operating margin progression. The Group is also very agile, which is a key success factor in the constantly evolving and disrupted media landscape. A values-led responsible organisation The Group has always been driven by its purpose and its values. These are embedded in everything the Group does and define the way the organisation behaves, in both good and challenging times. Our core purpose is that “we change people’s lives through sharing our knowledge and expertise with others, making it easy and fun for them to do what they including environmental impact). Against these four want.” pillars, the Group has set out a clear road-map of During the year, the Board has spent time focusing deliverables and related targets. The Board has created on how the Group can build on its purpose and culture a Responsibility Committee, chaired by Senior to become, in time, the leading responsible and Independent Director Hugo Drayton, to provide Board sustainable business in our sector. To achieve this, we oversight of the execution of the Responsibility recently launched our Responsibility strategy - Our strategy and to monitor progress. Zillah Byng-Thorne Future, Our Responsibility. This is articulated around will talk more about how this strategy was developed four pillars: Expanding Horizons (redefining learning on page 23 and you can find out more about the through our content); Shaping The Future (leading strategy on pages 34 to 53. conversations on the future of the internet and In addition to creating a more sustainable and publishing); The Culture Behind The Company (building responsible business, I believe that our Responsibility a diverse and inclusive culture that creates exceptional strategy will help enhance Future’s strong corporate content); and Taking Responsibility (delivering a culture which is so important in attracting, inspiring sustainable, transparent and well governed business, and motivating the best people to work for an ANNUAL REPORT AND ACCOUNTS FY 2021 / 9 Strategic Reportorganisation. Our people are vital to the success of the Group, playing a huge part in the successful execution of our strategy which, in turn, drives significant value for our shareholders. Reflecting the entrepreneurial and ambitious culture on which Future’s success has been based, I was therefore very pleased the Group introduced a new Value Creation Plan during the year which allows all employees to participate and share in the value created for shareholders (above a 10% per and the acquired business. The Group does this by adding content, like with CinemaBlend (acquired in October 2020) and Marie Claire US (acquired in May 2021), or by adding capabilities, for example Mozo (acquired in February 2021) and GoCo (acquired in February 2021) which both brought comparison technology for services in their respective geographies (Australia and the UK). The recent acquisition of Dennis in October 2021 has brought both additional content as well as expertise in subscriptions and lead generation. annum hurdle rate) over a five-year period. I would like The Group has a strong track record of successfully to thank shareholders very much for supporting this integrating acquisitions by deploying a proven important initiative. Continued investment The Group’s strategy is enabled by both organic and inorganic investment. The Group continues to deploy capital to create further revenue growth opportunities, a greater audience or increased monetisation by adding a platform capability which can be leveraged across all audiences. In some instances, acquisitions provide both opportunities. Organically the Group continued to invest in editorial with over 100 roles created this year, which supported organic brand launches like The Money Edit in July 2021, and in technology with a number of new heads during the year to support new products such as Aperture, our new data platform, and Kiosq, the paywall proprietary technology. In parallel, the Group invests inorganically (through M&A) to accelerate the strategy, where incremental value can be created through the combination of Future 10 / FUTURE PLC Chair’s Statementintegration playbook. In addition, the Board carefully and previously served as CFO from 2015, was reviews all acquisitions twelve months after appointed as the new CFO from 1 November 2021. I integration to assess whether the strategic rationale would like to thank Rachel for her valuable contribution and financial objectives for the acquisition have to the development of the Group during her time with been met. us and wish her well for the future. The most significant acquisition in the year was that The biographies of the current Directors can be of GoCo given its transformative nature. I am pleased found on page 72 to 73 and you can read more about to report that the combination of GoCo and Future is the work of the Nomination Committee, which oversaw already creating multiple routes for revenue synergies, the appointments, on page 78. in addition to delivering an increased level of cost synergies of £15m. Further benefits will flow from the acquisition of Dennis which has added additional Looking forwards The Group’s strategy works and has delivered very brands to bolster the newly-created Wealth & Savings significant value for shareholders over the past few vertical. Board composition We continue to ensure that we have a strong Board years. We see no reason to change this going forward and will maintain a clear focus on both maximising the growth potential within our existing brands and audiences, whilst also looking to leverage our expertise and one that brings together complementary skills from new product and vertical opportunities – both and diversity in terms of experience, background and organic and inorganic. Our scalable technology gender. During the year, we were pleased to welcome platform and proven operating model will ensure that Mark Brooker and Angela Seymour-Jackson to the this growth delivers high margin profitability. I am Board. Our Board brings together expertise across key therefore very confident that the Group will continue its industries such as media, eCommerce, financial strong track record of success over the coming years. services and retail, as well as extensive corporate finance, M&A and public company experience. We exceed the Hampton Alexander gender target with 44% of the Board being female. Subsequent to the year-end, Rachel Addison stood down from her position as Chief Financial Officer with Richard Huntingford Chair effect from 31 October 2021. Penny Ladkin-Brand, who 29 November 2021 served as the Chief Strategy Officer from June 2020, ANNUAL REPORT AND ACCOUNTS FY 2021 / 11 Strategic Report Our Purpose and Strategy Future is a global platform for intent-led specialist media underpinned by technology, enabled by data; with diversified revenue streams. We aspire to be a global leader in helping people achieve their goals, utilising our expert content and advice which resonates with 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.” Our purpose is central to the way our strategy is deployed and our organisation behaves, this is the Future Playbook. Our strategy is clear, simple and unchanged, we focus on the consistency of its execution. We help people do the things that matter in their life, our content and brands give them a place they want to spend their time while meeting their needs We successfully deliver expert We diversify our monetisation models to create significant revenue streams. We are focused on three material revenue types, Advertising, Consumer Direct and eCommerce affiliate We leverage our data and analytics to predict our audiences’ needs, this drives innovation and execution of our strategy Data is an inherent part of our business and we have a wealth of content that our audiences want We aim to create things once rich first-party data, captured in Aperture to read about the things that matter to and monetise them many - our audience data platform. The them. Our audiences are largely endemic and intent-led, so it is crucial for us to be a times which creates strong profitable growth, organically or intelligent platform allows advertisers to access Future’s rich first-party audience trusted partner to help them meet their through acquisitions. The strong data captured across our vast portfolio of needs. profit conversion also translates brands, helping them reach high-intent As our global reach expands, we into a high cash conversion rate. target audiences. continue to monetise our highly-engaged We diversify our revenues by This understanding enables us to audiences through websites (digital adding content verticals (“wheels”) launch new monetisation routes through advertising and eCommerce), events, or source of monetisation content with the launch of The Money social media, email newletters and (“spokes”). magazines. Edit brand in our newly created Wealth & Savings vertical which was enhanced and scaled with the Dennis acquisition. 12 / FUTURE PLC We have unique differentiators and enablers that enable us to consistently execute on the strategy: Winning Differentiators > Offering the easiest-to-access "how to" advice wherever our audiences are > Having the most relevant review content in the world > Demonstrating the value of original content > Disrupting publishing through platforms > Predicting our customers' needs Competitive Essentials > Creating meaningful strategic relationships > Use of machine learning and automation to drive scale > Simple but brilliant proprietary software We expand our global reach through organic growth, acquisitions and strategic partnerships To drive sustainable growth, we ensure that we continue to invest organically and We operate as a responsible business driven by strong purpose, value and culture. Our strategy drives returns and sustainability for the long term We are a value-led business and this is ingrained within the inorganically in our business, in organisation but the horizon goes beyond > Using data to meet our content through editorial the Future borders and we look to have a customers' needs investment, in data through our audience development and insight positive impact for our audiences through our expert content (we have electric and team and in product via our hybrid vehicles on TechRadar, green bonds technology and engineering teams. on The Money Edit), for our employees with In February 2021, we completed the example of the kickstarter scheme the acquisition of GoCo. The which gives the opportunity to start a acquisition added a new content career in digital media and for our “wheel” in Wealth & Savings and communities with for example the donation the ability to monetise eCommerce of laptops to schools in the Bath for services, whilst enriching our community. Working according to our > Knowing our customers > Having world-class Search Engine Optimisation (SEO) Enablers > A disciplined approach to investment through test first-party data, creating additional values, helping our audiences meet their > Having a culture representative product "spokes". The Future needs has always been part of the Group. In of our values operating model is also deployed FY 2021, we formalised our approach to on the GoCo business leveraging sustainability by launching Our Future, Our our SEO (Search Engine Responsibility. For more information about > Beingbrilliantatthebasics > Cash generation Optimisation) expertise and our our Responsibility strategy please go to > Beingleaner,simpler centres of excellence. page 34. ANNUAL REPORT AND ACCOUNTS FY 2021 / 13 Strategic ReportOur Business Model The Future Wheel is central to our business model, driving diversified revenue streams to ensure we meet our audience’s needs in whichever way required. the tech is benefiting the entire organisation. Our approach to content. Our global-first approach ensures that our content reaches many. We focus on providing The Wheel is all about reaching and monetising our expert content to ensure we meet the needs of our audiences. audiences, which we group into verticals, from Homes to We also focus on making our content as monetisable as Games to Technology and Wealth & Savings. Content is in the possible by focusing on reusability, such as from magazine to centre of the Wheel as it is at the heart of how we reach our online content and content that can be easily translated to audiences. Alongside content we use data to enable our other geographic territories. This means we maximise our decisions on the best way to reach our audience. Using the editorial teams’ efficiency as well as increasing the evergreen Wheel as our business model ensures that we monetise our nature of our content for which revenue compounds over time. content fully and effectively. The Wheel is supported by a firm foundation of ways of working and centres of excellence: Finally, the organisation is supported by centres of excellence. They provide a cost advantage by being country agnostic and focusing on low cost locations they also ensure Our scalable and proprietary tech stack means that it is scalability of our operations as we don’t need to grow our fixed easy for us to grow verticals and brands thus adding new costs at the same cadence as our revenue and most revenue streams. Our technology is common for the Group importantly, they create teams of experts to increase group which drives scalability and ensures that any improvement to learning and provide career progression. 14 / FUTURE PLC How we execute our strategyOur business model is underpinned by a set of principles that ensure we all work towards the same goal: flawless execution of the strategy. These principles are also a reflection of our values that guide everything we do: Principles Future is our first team and content is our first thought We are aligned on our strategy and purpose, we call that the "Future Playbook" We have a common goal, we call that "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 sometimes we go slower to go faster, we use RACIs to help We stay close to our core competencies i.e. we have a reason to believe in our ambition We are a lean and simple operation, it takes time to make things simple We are risk averse and 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 We have conversations, making time to hear feedback and act on insight The execution of the strategy and our robust business model ensures that we maximise value for stakeholders: 01 02 03 04 05 Audience Our audiences value our expert content We reach 1 in 3 in the US and 1 in 2 in the UK Customers Employees Our value proposition satisfies our customers thanks to our rich first-party data, our scale and our expertise Digital advertising grew organically by 27% "It's the people in the boat that matter" and "suc- cess feels good" are part of our values In FY 2021, we launched the Value Creation Plan to reward employees in the long term Shareholders Successful execution of the strategy drives strong earnings performance 5-year CAGR adjusted EPS growth +72% Communities We are part of the communities and we are keen to make the difference Launch Our Future, Our Responsibility ANNUAL REPORT AND ACCOUNTS FY 2021 / 15 Strategic ReportHow we Execute on our Strategy We believe that strategy is easy and execution is what makes the difference. This is why we focus on flawless execution. This is supported by our matrix operating model and, combined with the agility of our organisation, we believe are key drivers of success. Three Horizons planning We use McKinsey’s Three Horizons of Growth planning approach across the organisation to ensure that the strategy is translated into steps to ensure we are successful today and tomorrow. This approach enables the organisation to engage on the strategy and ensures that we deliver performance today but also invest for the long term growth as well as ensuring that we are thoughtful about our prioritisation. Horizon 1 Next 12 months Horizon 2 12-36 months Horizon 3 36 months+ Also known as What's Important Right Now? Is the key areas of focus we have set out annually and what we want to do in order to achieve our strategic ambitions Focuses on developing today the revenue of tomorrow, such as lead-generation Focuses on the most disruptive revenue streams By breaking down the strategy into intentional steps, creates an agile organisation that can manage risks and adapt quickly to the constantly changing media landscape and is able to prioritise accordingly. Three execution pillars Our execution is focused on three pillars: Organic growth, Platform effect and Acquisitions. Our legacy media brands are the fuel that drives our engine, realising the platform effect from historic acquisitions, and identifying new targets to add value to accelerate our growth. We create our own momentum. 1. Organic growth Our evergreen content means that we write it once and we monetise it many times, creating strong operating leverage. organic growth for audience which translated into an average organic Media revenue growth of 31%. Some brands which have been in the For example the “how to play the guitar” article on Guitar World is an market for decades continue to grow audiences steadily; which gives article that will largely be unchanged and still be relevant for many us great confidence for the future. For example, GamesRadar which years and continue to earn revenue. Another aspect is our ability to was launched in 1999 has grown online users from 6m in 2017 to 25m increase the penetration of products and one same article can be in 2021, a CAGR growth of 40%. monetised through magazine sales to digital advertising to eCommerce affiliate commissions. For example, an article on best We continue to invest in our proprietary technology, which is a key enabler of the execution of the strategy. We have a one platform mattresses on Ideal Home would be monetised through digital approach which drives scalability and high return on continued advertising on the website and eCommerce affiliates commission if investment but also ensures that our organisation remains agile and the reader’s intent is converted into a purchase with one of the proactive against industry changes. As a result, when we enhance our proposed retailers. technology this is leveraged across the Group. We prolong the life of magazines via pricing and distribution. Magazines is a valuable segment which brings expert content and can During the year we launched Kiosq, new proprietary reusable paywall service for monetising gated editorial content. Kiosq is in use be expanded into premium editions and bookazines. In addition, on our Horse & Hound and Cycling News websites. We also launched magazines are very strong cash-generators that can be re-invested for Eagle, our voucher proprietary technology which is live on Real growth. Homes and will be deployed further in FY 2022. We grow newsstand revenues via bookazines. Bookazines are luxury editions of magazines with greater content and less frequent We continue to invest in editorial content to continuously enrich our wealth of expert content, including evergreen content. During the editions. The benefit of bookazines is that it encompasses a wealth of year, we hired over 100 new editorial heads. Editorial remains the evergreen content and is sold at a premium. greatest cost of the Group. The model works, since 2017, we recorded an average of 23% 16 / FUTURE PLC How we execute our strategyASSETS Freelance Content Commissioning Portal Source Content Reuse Asset Storage System WEBSITES MONETISATION Staff Web Platform Vanilla Vanilla 41 SITES NOW ON VANILLA Tech Services Ecom Tech: Hawk Ad Tech: Hybrid Comparison Tech: GoDemand New Asset New Asset New Asset DataTech: Aperture Voucher Tech: Eagle Email Tech: SmartBrief Lead Gen Tech: Falcon Paywall Tech: Kiosq New Asset Vanilla is our single modular web platform, it has a single content management system Hawk is our eCommerce service that enables the monetisation of our contentthroughproductaffiliates Hybrid is our advertising system and is a server side open auction marketplace dealing with yield management GoDemand is our eCommerce service that enables the monetisation of our content through serviceaffiliates SmartBrief is our email curation and delivery platform for email products. Offering hyper audience cohort targeting and advertising capabilities Aperture is our customer audience data platform Eagle is our proprietary voucher technology Falcon is our lead gen tech for content, funnelling leads through surveys and whitepapers Kiosq is our new proprietary reusable paywall service for monetising gated editorial content Evergreen content Content generated in prior years continue to generate revenue years after being published unknown year 2021 2020 2019 2018 2017 2016 2015 <2015 Sep-19 Sep-19 Sep-20 Sep-20 Month Sep-21 Sep-21 unknown year < 2015 2021 2020 2015 ANNUAL REPORT AND ACCOUNTS FY 2021 / 17 2019 2018 2017 2016 Strategic Report 2. Platform effect - the way we do things We constantly look for innovative ways to increase our We constantly look for innovative ways to increase our audience reach and monetise it further, either through the audience reach and monetise it further, either through the Multiple monetisation routes - a core part of our strategy is the Multiple monetisation routes - a core part of our strategy is the diversification of our routes to monetisation. We ensure that the diversification of our routes to monetisation. We ensure that the content verticals or through the expansion or enhancement of the content verticals or through the expansion or enhancement of the same content is monetised multiple times through the Future Wheel. same content is monetised multiple times through the Future Wheel. Future Wheel. The platform effect is broken down into four key Future Wheel. The platform effect is broken down into four key For example, in our photography verticals, we hold the Photography For example, in our photography verticals, we hold the Photography elements: elements: Vertical leadership - Our approach to content is a key success Vertical leadership - Our approach to content is a key success factor. We ensure that we write the content that our audiences want factor. We ensure that we write the content that our audiences want Show, we publish magazines such as Digital Camera, Digital Show, we publish magazines such as Digital Camera, Digital Photographer, PhotoPlus, we own and operate the website Digital Photographer, PhotoPlus, we own and operate the website Digital Camera World that is monetised through digital advertising and Camera World that is monetised through digital advertising and eCommerce. eCommerce. to read, what is useful for them, not what we want to write. We to read, what is useful for them, not what we want to write. We For monetisation (‘spokes’), we have added eCommerce for For monetisation (‘spokes’), we have added eCommerce for ensure that the content is also refreshed on a regular basis to ensure ensure that the content is also refreshed on a regular basis to ensure services with the GoCo and Mozo acquisitions and we are looking to services with the GoCo and Mozo acquisitions and we are looking to relevance and demonstrate expertise and is able to rank highly on relevance and demonstrate expertise and is able to rank highly on deploy this capability on our websites. This has been deployed for deploy this capability on our websites. This has been deployed for Search Engine Optimisation (SEO). With our evergreen content we Search Engine Optimisation (SEO). With our evergreen content we energy on Real Homes for example. We have developed Eagle, our energy on Real Homes for example. We have developed Eagle, our ensure that we write it once and monetise it many times and this ensure that we write it once and monetise it many times and this proprietary voucher technology, leveraging the capability from the proprietary voucher technology, leveraging the capability from the approach contributes to our podium approach, where we want to be approach contributes to our podium approach, where we want to be GoCo acquiistion. We have developed a lead generation technology GoCo acquiistion. We have developed a lead generation technology our own competition and maximise our audience reach. We have 30 our own competition and maximise our audience reach. We have 30 - Falcon - which is in its infancy and through the Dennis acquisition - Falcon - which is in its infancy and through the Dennis acquisition leadership positions. leadership positions. we are adding a proven operating model to lead generation through we are adding a proven operating model to lead generation through For verticals (‘wheels’), we either look to reach leadership and For verticals (‘wheels’), we either look to reach leadership and the ITPro brand. the ITPro brand. podium positions or we look to enter new ones. With the TI podium positions or we look to enter new ones. With the TI acquisition in April 2020, we have bolstered our Women’s Lifestyle acquisition in April 2020, we have bolstered our Women’s Lifestyle vertical notably with Marie Claire UK and Woman & Home titles, and vertical notably with Marie Claire UK and Woman & Home titles, and Global first mindset - In terms of content, we focus on English- Global first mindset - I n terms of content, we focus on English- speaking countries to create greater operating leverage. speaking countries to create greater operating leverage. this was further enhanced in May 2021 with the acquisition of Marie this was further enhanced in May 2021 with the acquisition of Marie Operationally, our teams are global and operate from low cost Operationally, our teams are global and operate from low cost Claire US. These acquisitions combined with the Future operating Claire US. These acquisitions combined with the Future operating regions. For example, all the editorial at Louder, one of our music regions. For example, all the editorial at Louder, one of our music model and centres of excellence are already bearing fruit with digital model and centres of excellence are already bearing fruit with digital titles is based in the UK despite c70% of the revenue being titles is based in the UK despite c70% of the revenue being advertising and eCommerce revenues up 38% on a proforma basis advertising and eCommerce revenues up 38% on a proforma basis generated in the US. generated in the US. for the year for TI Media and accelerating to 60% in the second half. for the year for TI Media and accelerating to 60% in the second half. Attractive verticals to us, are verticals that demonstrate audiences Attractive verticals to us, are verticals that demonstrate audiences with intent (likely to make a purchase of a product or a service) and with intent (likely to make a purchase of a product or a service) and Centres of excellence have the same philosophy as the other Centres of excellence have the same philosophy as the other pillars we have mentioned: “do it once, apply it across”. They enable pillars we have mentioned: “do it once, apply it across”. They enable that ask a lot of questions that our expert content can answer. In line that ask a lot of questions that our expert content can answer. In line us to have one common approach but also gives us the capability to us to have one common approach but also gives us the capability to with this, earlier in the year, we entered the Wealth & Savings with this, earlier in the year, we entered the Wealth & Savings invest in these areas that benefit the whole of the Group. For invest in these areas that benefit the whole of the Group. For vertical with the organic launch of The Money Edit in July 2021 and vertical with the organic launch of The Money Edit in July 2021 and example we have an SEO centre of excellence which shares its example we have an SEO centre of excellence which shares its powered by the acquisition of Mozo and GoCo in February 2021 and powered by the acquisition of Mozo and GoCo in February 2021 and expertise across the Group. In addition, we have a low cost location expertise across the Group. In addition, we have a low cost location Dennis in October 2021. Dennis in October 2021. approach to these centres of excellence which enhance the approach to these centres of excellence which enhance the operating leverage. We have recently announced a new US hub in operating leverage. We have recently announced a new US hub in Atlanta to ensure we can attract and retain talent through proximity Atlanta to ensure we can attract and retain talent through proximity to universities whilst being located in an affordable location. to universities whilst being located in an affordable location. 18 / FUTURE PLC How we execute our strategy3. Acquisitions Whilst organic growth is our priority, we look to accelerate acquired SmartBrief which enhanced our wheel by adding email the strategy through M&A. At its core, this pillar aims to marketing as a route of monetisation and increased our B2B increase our market leadership, or enter new markets. portfolio. There are three types of acquisitions: tactical, strategic or transformative and they each fall into two categories: content and/ or capabilities. A transformational acquisition is an acquisition that further propels the Group strategy in terms of size but also adds content and/or capabilities in adjacencies. For example, in February 2021 we A content acquisition is an acquisition where we look to either bolster an existing content vertical or enter a new one. For example, acquired GoCo Group plc which added eCommerce affiliate technology for services but also entered a new vertical with Wealth in May 2021, we acquired the right to operate the Marie Claire US & Savings. brand. This acquisition was to reinforce our Women’s Lifestyle We are very disciplined regarding acquisitions, both on valuation vertical whilst also accelerating the globalisation of the vertical, but also on the unique value creation opportunities. This is why our notably in North America. ratio of reviewed vs executed transactions is 28 to 1 in FY 2021. A capability acquisition is an acquisition that adds a technology The full integration of acquisitions is an important part of our or a route of monetisation. For example, in November 2019, we M&A playbook which has proven its efficacy over our multiple acquired Barcroft Studios which brought us video production and transactions. We focus the first four to six months of an acquisition AVOD (Advertising-Based Video on Demand) expertise. on fully integrating all the systems and technologies and people. A tactical acquisition is a small acquisition, funded out of cash and is usually a content-based acquisition to deliver on our podium This “industrial” phase of the integration enables us not only to remove duplicative costs and technical debt but also to deploy the strategy. For example, In October 2020, we bought CinemaBlend to Future platform on the acquired business. This phase is also bolster our TV and entertainment vertical as well as focusing on our important to reduce the risk and increase the controls within the geographic diversification in North America. Group (for more on this, please the risk section on page 60). A strategic acquisition is an acquisition that either adds The strategy is executed in line with our values which are fully capability and or enters a new vertical. For example, In July 2019, we embedded within the organisation. TACTICAL STRATEGIC TRANSFORMATIONAL AREAS OF INTEREST CONTENT Existing New/Existing New CAPABILITY Existing New/Existing New Audience characteristics for areas of interest for future M&A • Ask a lot of questions • Likely to make a purchase S FUNDING Free cash flow Debt Debt & Equity RECENT TRANSACTIONS ANNUAL REPORT AND ACCOUNTS FY 2021 / 19 Strategic ReportKey Performance Indicators (KPIs) Our strategy is measured by a set of KPIs Global audience (million) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Includes magazines and bookazines circulation, online users (see definition below), event attendees, social media followers (Twitter, Facebook and YouTube) and newsletter subscribers. Online users1 (million) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 432 394 269 193 86 305 282 181 118 49 Total global monthly online users to Future websites. Source: Google Analytics All figures are excluding forums as they are non-commercial websites for which Future does not write content or actively manage or monetise. Revenue (£m) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 Organic Revenue Growth (%) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 606.8 339.6 221.5 130.1 84.4 +23% +6% +11% +11% +8% Organic growth defined as the like for like portfolio excluding acquisitions and disposals made during FY 2020 and FY 2021 and including the impact of closures and new launches at constant FX rates. Constant FX rates is defined as the average rate for FY 2021. Global audience was up 10% year-on-year driven by online users, email newsletter subscribers and social media followers. Reported users growth of 8% benefited from the acquisition of CinemaBlend, GoCo, Marie Claire US. On a CAGR basis, online users have grown by 58% since FY 2017. Revenue grew 79% in FY 2021, a combination of organic growth of 23% and the benefits of acquisition. On a CAGR basis, revenue has grown by 64% since FY 2017. Organic revenue growth of 23% in FY 2021 was mainly driven by Media organic revenue growth of 27% (mainly digital advertising and eCommerce affiliates) as well as Magazines organic revenue growth of 4%. Average organic growth between FY 2017 and FY 2021 was 12%. Operating profit (£m) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 20 / FUTURE PLC Operating profit of £115.3m was up 127% in the year. On a CAGR basis, operating profit has grown by 246%, outpacing revenue growth since FY 2017. 115.3 50.7 26.7 5.3 0.8 How we execute our strategyAdjusted operating profit (AOP) (£m) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 195.8 93.4 52.2 18.5 8.9 Adjusted operating profit growth of 110%, outpaced revenue growth due to favourable mix and operating leverage. Adjusted results are adjusted to exclude share-based payments (relating to equity settled share awards with vesting periods longer than 12 months) and associated social security costs, exceptional items, amortisation of intangible assets arising on acquisitions and any related tax effects as well as the impact of the UK tax rate change. The prior year results are also adjusted for fair value movements on contingent consideration (and unwinding of associated discount) and on the currency option (including any related tax effects). On a CAGR basis, adjusted operating profit has grown by 117%, outpacing revenue growth since FY 2017. Adjusted operating profit (AOP) margin (%) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 32% 28% 24% 14% 11% Improved quality of earnings, resulting from favourable revenue mix, scalability of the model and platform effect, drove adjusted operating profit margin of 32%, up 4ppt. Adjusted operating profit margin is defined as adjusted operating profit as a percentage of revenue. Adjusted diluted Earnings Per Share (EPS) (p) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 131.9 74.7 47.5 24.3 18.4 Adjusted diluted EPS represents adjusted profit after tax divided by the weighted average dilutive number of shares at the year end date. Adjusted Free Cash Flow (FCF) (£m) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 199.3 96.0 53.7 17.4 15.3 Adjusted free cash flow is defined as adjusted operating cash inflow less capital expenditure. Adjusted operating cash inflow represents cash generated from operations adjusted to exclude cash flows relating to exceptional items and movement on accrual for employer’s taxes on share based payments relating to equity settled share awards with vesting periods longer than 12 months, and to include lease repayments following adoption of IFRS 16 Leases in the prior year. Leverage (x) FY 2021 FY 2020 FY 2019 FY 2018 FY 2017 0.8 0.6 0.7 0.9 0.9 Leverage is defined as Net Debt (excluding capitalised bank arrangement fees and including any non-cash ancillaries), as a proportion of adjusted EBITDA adjusted for the impact of IFRS 16 and including the 12 month trailing impact of acquired businesses (in line with the Group’s bank covenants definition). Adjusted diluted EPS grew by 77% in the year driven by adjusted operating profit growth. On a CAGR basis, adjusted diluted EPS has grown by 64% since FY 2017. Strong cash generation is a feature of the Group, Adjusted FCF grew by 108% year-on-year and represented 102% of AOP (FY 2020: 103%). On a CAGR basis, adjusted FCF has grown by 90% since FY 2017. Our strong cash generation enables rapid de-leveraging. Leverage at September 2021 was 0.8 with net debt of £176.3m. Including the Dennis acquisition, which completed on 1 October 2021, leverage would have been 1.9x (ignoring other cash movements on 1 October 2021). ANNUAL REPORT AND ACCOUNTS FY 2021 / 21 Strategic ReportChief Executive’s Q&A ZillahByng-Thorne Chief Executive FY 2021 was an extraordinary year, yet the the bench strength. For example, with the GoCo Group delivered another very strong set acquisition, Lee Griffin, one of the founders of of results, how would you describe the year? GoCompare, now looks after our Wealth & Savings I am delighted with the performance we delivered in FY vertical. 2021 - it’s evidence that the strategy of diversification We are very pleased with the progress on each of our with our business model is continuing to deliver growth acquisitions. We look at integration in two stages: first, in ever changing markets. I believe our focus as a team the industrial phase, which is about merging the back on execution and content is what underpins it. I am very office functions and ensuring that not only are all the proud of all of our colleagues, and that we have controls in place, but also that we are all on one system. managed to deliver record results despite the pandemic This phase is now complete for all acquisitions except and numerous lockdowns, enabling us to continue Dennis, given the recent completion. This phase typically adding to our strong track record. takes between four to six months. Secondly, we focus in parallel on the revenue synergies realisation, which is Media is a constantly evolving industry: how do about delivering against the strategic rationale. All of this you thrive in this environment? What drives the is underpinned by our robust and efficient technology success of the Group? which allows for these acquisitions to be quickly That is the nature of our industry, it is fast-moving and incorporated onto our integrated media platform. disruptive. Our organisation is set up to be agile and able I would like to thank all the colleagues we have to proactively manage these shifts. acquired throughout the year. Change is always hard, and I think one of our key success factors is how we are set the lead up to and afterwards bring a lot of uncertainty up: our matrix organisation enables us to flow through and change to our new colleagues - most of whom have improvements across the organisation effectively. For had no say in the decision to be sold. While the process example, every improvement we make to our Vanilla of integration is inevitable, we could not have the success template benefits all of our websites on the web we enjoy if it was not for the ongoing support and platform. The mantra “do it once, monetise it many times” doesn’t just apply to content! resilience of these teams. What do you think makes Future a great place to In FY 2021, Future made four acquisitions - five if work? you include Dennis that has completed post I think there are a few reasons why Future is a great place year-end - can you give an update on the to work. integrations? Do you have the bandwidth to Our values are core to how we do things at Future and focus on organic growth as well as these importantly, they translate into real outcomes. For integrations? example, “Results matter, success feels good” means The more you do something, the more you perfect it. We that as a result of the strong performance in FY 2021, the have a strong track record of successfully integrating the all employee profit pool is paying out in full and we also businesses we acquire, and after each one we perform a recognise outstanding performance with our Star of the “lessons learned” process to ensure that we continue to Month programme. get better at it. We invest in people in two ways. Firstly, we continue When we acquire businesses, we also acquire talent, to add to our talent pool, adding c.130 new heads over FY and therefore as we have grown, we have also added to 2021 excluding acquisitions in Technology and Editorial. 22 / FUTURE PLC Chief Executive’s ReviewSecondly, we invest a lot in training and development, to give people all the tools they need to thrive. In the UK we are leveraging the apprentice levy to offer management training throughout the organisation. because it is the right thing to do, but also because it is at the heart of our purpose - helping people, through sharing our knowledge. This has been about formalising a lot of the initiatives that were already in Communication is also paramount, and we believe place and that we have been working on. that by being open and transparent and communicating on a regular basis we foster a sense of belonging, which is crucial in ensuring people are motivated. Since the start of the pandemic, I have been writing a weekly email to all staff sharing my thoughts and showcasing achievements across the Group. We also have a weekly snapshot that is curated by our colleagues which showcases everything that has happened in the our business that week. We also believe that people being able to switch off is just as important, as it gives them the opportunity to step back and reflect. This is why we offer unlimited leave. Finally, our local communities and the wellbeing of our staff is a key area of attention. You can find more about how important our inclusive culture is to us in our Responsibility section on page 34. The Group has published its Responsibility strategy, can you explain why you are doing this now? Is the organisation engaged on it? We launched Our Future, Our Responsibility not only “The more you do something, the more you perfect it. We have a strong track record of successfully integrating the businesses we acquire, and after each one we perform a “lessons learned” process to ensure that we continue to get better at it.” What has been front of mind whilst developing it is that we are focused on our areas of expertise and where we can make a difference. Therefore we are putting the emphasis on areas that resonate with our industry and where we can have the biggest impact. For example, we are not a carbon intensive business and therefore, whilst we minimise our impact on the environment as much as possible, it did not sound genuine to make this an area of focus. However, given we produce online content, we have a role to play in ensuring the internet is a safe place and reducing the impact of misinformation, for example. What is the outlook for FY 2022? We expect the diversified strategy to continue to deliver and are well-positioned to continue to grow strongly. As we transition from the COVID-19 boosted comparators, we expect the growth to accelerate in H2 FY 2022 and the platform effect to drive further margin expansion in FY 2022. Future is an ambitious organisation: what is next? Indeed - one of our values is that whilst we are proud of our past, we are more excited about our future. Today we reach 1 in 3 people online in the US, so we want to expand our presence and reach 1 in 2. We have so far been very focused on the US, but there are untapped opportunities in Canada as well, so this year we set up a sales office there to enable us to deliver further growth in this region. We will continue to focus on flawlessly executing our strategy, and further diversifying our revenue streams, both in terms of products and content, and I am confident that we can continue to build on our strong track record of delivering for all stakeholders. I am very excited about our Future! ANNUAL REPORT AND ACCOUNTS FY 2021 / 23 Strategic ReportOperational review GEOGRAPHIC SEGMENTAL REVIEW Our global-first approach translates into our ability to be country or region agnostic, which gives us flexibility and ability to manage costs efficiently. We operate two geographic segments: US and UK. US The US encompasses both the USA and Canada. UK The UK monetises all our online content outside the Our reach is significant as we reach 1 in 3 adults online US and Canada and also includes our satellite operations in every month and we have ambitions to pursue our strong Australia. growth in the region. In FY 2021, online users grew from Our UK operations consist of editorial, video production, 136m to 158m, driven by the acquisitions of CinemaBlend advertising sales and events across websites, video, and Marie Claire US. newsletters, the production of the large majority of print Our US operations consist of editorial, video production, magazines and licencing operations which distribute online marketing, advertising sales and events across websites, and print magazines. In addition, the UK hosts our centres of video, newsletters and magazines. excellence for back office functions such as finance, human US represents 35% of the Group’s total revenue and 96% of resources and technology. The technology team is split its revenue is in Media. between Bath (UK) and Grenoble (France). UK represents 65% of the Group’s total revenue and 56% of its revenue is in Media. FY 2021 FY 2020 Reported growth Organic growth FY 2021 FY 2020 Reported growth Organic growth Online users (m) 158 136 +16% (5%) Online users (m) 147 146 +1% (12%) Revenue (£m) 210.2 167.7 +25% +27% Revenue (£m) 396.6 171.9 +131% +17% - Media (£m) 202.4 157.5 +29% +30% - Media (£m) 220.4 79.8 +176% +20% - Magazines (£m) 7.8 10.2 (24)% (24%) - Magazines (£m) 176.2 Adjusted operating profit (£m) 62.2 34.3 +81% N/A Adjusted operating profit (£m) 133.6 92.1 59.1 +91% +11% +126% N/A London Paddington Reading Newport HQ BATH Grenoble Atlanta New York Washington DC OUR OFFICE LOCATIONS 24 / FUTURE PLC Sydney Lens one - globallyANNUAL REPORT AND ACCOUNTS FY 2021 / 25 Strategic ReportDIVISIONAL REVIEW Media Media is the largest division with representing 68% of the total advertising eMarketer, global eCommerce sales are 70% of the Group’s total revenue market (eMarketer March 2021) compared projected to reach 24.5% share vs 19.6% with the fastest growth - 27% organic to c60% today. Within this it is expected currently, growing at 10% CAGR. growth in FY 2021. The Media division that the fastest growth will be coming In the medium term, we would expect encompasses all revenue which is not from video format, which is of higher recovery in the physical events segment - magazines and includes sub-segments yields (up to 5x higher) than other types of which is a small portion of the overall like digital advertising (revenue from advertising on our websites or on social advertising. Secondly, online purchase continues to Group revenue. Long term, we expect this division to grow around 10% per annum platform and email marketing), gain share, with an accelerated conversion organically. eCommerce affiliates for both products during the pandemic. According to and services and events. Media revenues are now generated from 110 websites and 78 events held this year in the UK, US and Australia. Long term growth drivers The media division growth is powered by Online users Social media followers strong, attractive long term growth Events attendees (virtual and physical) fundamentals. First, digital advertising is expected to continue to take share in the advertising market to reach $646bn by 2024, Email newsletter subscribers eCommerce transactions 26 / FUTURE PLC FY2021 305m 123m 93k 11m 15.9m FY2020 282m 99m 100k 9m 13.6m Lens two - divisionallyMagazines Magazines represent 30% of the Group’s total revenue. Revenue drivers Magazines are experiencing secular decline, The Magazine division encompasses all which has been accelerated by the pandemic revenue associated with digital or printed but as we face easier comparators the next 6 magazines or bookazines from advertising, months will continue to display abnormal to subscriptions, to newstrade. trends. Over time, we continue to expect We published 131 magazines and 735 bookazines in FY 2021. magazines to decline in the region of 10-15% as previously experienced. 96% of magazine revenues are generated However, subscriptions are more resilient from the UK. and with the newly acquired capabilities and brands from Dennis we see an opportunity to drive this further. Total circulation Subscribers Magazines published Bookazines published FY2021 3.4m 1.8m 131 735 FY2020 3.8m 1.5m 115 410 ANNUAL REPORT AND ACCOUNTS FY 2021 / 27 Strategic ReportVertical review 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. B 2 B B 2 B B 2 B T H T H T H L L L V I N G S V I N G S V I N G S A A A A A A W E W E W E & S & S & S M E N’S M E N’S M E N’S LIFESTY L E LIFESTY L E LIFESTY L E O O O W W W & & & E E E L L L Y Y Y T T T S S S E E E F F F I I I L L L T T T N N N E E E M M M N N N I I I A A A T T T R R R E E E T T T N N N E E E E E E L L L Y Y Y R R R Y Y Y T T T T T T N N N S S S U U U E E E O O O F F F I I I C C C L L L N N N G G G I I I E E E S S S G G G E E E D D D D D D E E E , , , Y Y Y L L L H H H W W W P P P O O O A A A N N N R R R & K & K & K G G G O O O T T T O O O H H H P P P SPORTS SPORTS SPORTS 28 / FUTURE PLC TEC TEC TEC H H H N N N O O O L L L O O O G G G Y Y Y G G G A A A M M M I I I N N N G G G H H H O O O M M M E E E S S S M M M U U U SIC SIC SIC Vertical Review ANNUAL REPORT AND ACCOUNTS FY 2021 / 29 Strategic ReportTech, Games & Entertainment CASE STUDY: GAMES RADAR REVENUE DIVERSFICATION Brands include: Future’s Games vertical continued its impressive growth story to Future’s Games vertical continued its impressive growth story to deliver double digit organic gains in FY 2021. Flagship digital deliver double digit organic gains in FY 2021. Flagship digital brands GamesRadar.com and PCGamer.com drove the vertical’s global brands GamesRadar.com and PCGamer.com drove the vertical’s global users and sessions by +16% YoY, with strong consumer appetite around users and sessions by +16% YoY, with strong consumer appetite around both the new generation of gaming consoles and PC gaming. both the new generation of gaming consoles and PC gaming. In FY 2021, the vertical further diversified its revenue - a core element In FY 2021, the vertical further diversified its revenue - a core element of our strategy - by developing video revenues through both short-form of our strategy - by developing video revenues through both short-form and long-form digital broadcast content. and long-form digital broadcast content. The Future Games Show was conceived and launched in lockdown. A The Future Games Show was conceived and launched in lockdown. A 90-minute video show distributed on YouTube, Facebook and our 90-minute video show distributed on YouTube, Facebook and our network of Games and Tech sites every quarter, giving audiences the network of Games and Tech sites every quarter, giving audiences the KPIs: chance to see some of the biggest new games in action. The event was a chance to see some of the biggest new games in action. The event was a huge success over 70m viewers in FY 2021. huge success over 70m viewers in FY 2021. Working closely with Future Studios, the bespoke multi-episode series Working closely with Future Studios, the bespoke multi-episode series Totally Game was developed with social distribution in mind, and as well Totally Game was developed with social distribution in mind, and as well as featuring across our owned and operated websites. Totally Game as featuring across our owned and operated websites. Totally Game found a passionate audience on both Snapchat and Facebook, reaching found a passionate audience on both Snapchat and Facebook, reaching 20m global viewers, and securing a commercial partnership with Acer. 20m global viewers, and securing a commercial partnership with Acer. Proving that Future’s retro gaming brands are also still relevant and Proving that Future’s retro gaming brands are also still relevant and valuable, in September 2021 we partnered with Channel 4 to resurrect valuable, in September 2021 we partnered with Channel 4 to resurrect the classic GamesMaster TV show - first broadcast in the early ‘90s. The the classic GamesMaster TV show - first broadcast in the early ‘90s. The new-look show, featuring Sir Trevor McDonald as the titular game sage, new-look show, featuring Sir Trevor McDonald as the titular game sage, debuted in late November on E4’s YouTube channel, before being debuted in late November on E4’s YouTube channel, before being broadcast on the E4 channel itself. broadcast on the E4 channel itself. 30 / FUTURE PLC Online users: 213m Social Media Followers: 62m Market-leading positions: 17 * From 1 October 2021, with the completion of the Dennis acquisition, the following brands are included in this content vertical: Computer Active, Minecraft World Vertical ReviewWomen’s Lifestyle, Homes and Gardens CASE STUDY: MARIE CLAIRE ANDSUSTAINABILITY Brands include: With over 30 years of championing sustainability through the lens of people, planet and regeneration, Marie Claire is in the vanguard of women’s brands championing environmental issues ranging from global warming to ethical fashion. Marie Claire has been recognised externally for its commitment by winning the Ocean Champion badge, the first UK brand to win this award for bringing Marie Claire Commitment sustainability to the forefront of the conversation in the fashion and beauty industry. During the year, Marie Claire has made further progress on this agenda. 1. For example, the Sustainability Awards, its first carbon neutral KPIs: meet the 2030 Global goals. event. As part of the awards, the team produced their first fully sustainable fashion and beauty shoot, encouraging audiences to buy more consciously by reducing, reusing, and recycling to help Our new digital channel hosts our editorial content commitment to Sustainability to date, and build a far-reaching community of followers. From our editorial strategy to 2 . The brand also launched the Vintage Edit, a new resale platform deliver content with depth and meaning, for pre-loved fashion. This initiative is fully aligned to Marie through to recognising industry Sustainability editor, Ally Head said: “The vintage resale platform game-changers, Marie Claire is already in the vanguard of the Sustainability movement. we’re so delighted to be offering more planet-friendly shopping highlights our dedication to building a better tomorrow. Ethical fashion is no longer just a trend, but an essential, which is why Claire's commitment to sustainability. Marie Claire Health & solutions to our readers. Now more than ever, we need to be Online users: 36m Social Media Followers: 46m Market-leading positions: 4 Cover star ‘purpose’ led strategy opting for pre-loved fashion – for both people and planet.” Our audience is aware not only of the current fashion and beauty trends, but also of the shopping trends including many of the key Consistent editorial commitment with dedicated channel environment aspects. In addition, search across all major related terms Recognising industry-leading best practice through Prix such as sustainability, clean beauty, plastic free, etc. has increased D’Excellence Awards. significantly year on year. Therefore the content is attractive to our Editorial Channels & Pillars online audience and to advertisers who are keen to reach them. Award winning: Marie Claire UK awarded the Ocean Champion badge by the Oceanic Global Foundation, the highest level of The Oceanic Standard (TOS). A first brand in the UK to be awarded, the badge honours efforts by Marie Claire to bring sustainability to the forefront of the conversation in the fashion and beauty industry. 4 Alan Jope, CEO of Unilever thanking Marie Claire for his Prix D’Excellence Beauty Award for Sustainability in June 20 Sustainability Mental Health 2 Education Empowerment ANNUAL REPORT AND ACCOUNTS FY 2021 / 31 Strategic ReportBrands include: Wealth & Savings, Knowledge, Health & Fitness CASE STUDY: ADVERTISING IN OUR CYCLING VERTICAL KPIs: With the TI Media acquisition in April 2020, we acquired Cycling Weekly which complemented our existing brand Cycling News. Using our SEO centre of excellence, we have the ability to rank on search. As a result, we are #1 in the UK and #2 in the US according to Comscore. Combined with our quality expert content, we are therefore a preferred partner for advertisers who can reach high-intent audiences. As a result, we have increased our advertisers for this vertical both in the UK and in the US and our average order value from advertisers is up 100%. In addition, thanks to our diversified content verticals, we have scale that is attractive for advertisers. For example, on T3 there are articles on indoor cycling and we have cycling brands that are keen to reach other cycling enthusiasts. 32 / FUTURE PLC Online users: 54m Social Media Followers: 15m Market-leading positions: 9 *From 1 October 2021, with the completion of the Dennis acquisition, the following brands are included in this content vertical: MoneyWeek, Kiplinger, The Week, The Week Junior, Coach Vertical ReviewStrategic Report Future B2B Main Brands: CASE STUDY: SMARTBRIEF AND THE VALUE OF AUDIENCE IN A SPECIALIST PLATFORM KPIs: SmartBrief seamlessly creates and distributes 250+ digital SmartBrief seamlessly creates and distributes 250+ digital newsletters, curating the most relevant content for virtually newsletters, curating the most relevant content for virtually every industry and profession, and we are able to do that at scale every industry and profession, and we are able to do that at scale without sacrificing the quality of the content or product. This allows without sacrificing the quality of the content or product. This allows us to create an unparalleled combination of breadth and depth of us to create an unparalleled combination of breadth and depth of B2B audience engagement. B2B audience engagement. Working closely with our association partners, who connect us Working closely with our association partners, who connect us with the majority of our qualified, valuable audience, we acquire with the majority of our qualified, valuable audience, we acquire more than 1 million new subscribers annually through a variety of more than 1 million new subscribers annually through a variety of opt-in tactics. This type of audience growth is not only incredibly opt-in tactics. This type of audience growth is not only incredibly effective and efficient, but provides a deep contextual understanding effective and efficient, but provides a deep contextual understanding of who our audience is. of who our audience is. Having a deep understanding and trust with your audience, means Having a deep understanding and trust with your audience, means the ability to effectively expand your relationship with them through the ability to effectively expand your relationship with them through new products, and new content, that allow us to engage with them in new products, and new content, that allow us to engage with them in even deeper and more meaningful ways. As a part of the larger even deeper and more meaningful ways. As a part of the larger Future ecosystem, and even prior to the acquisition, we’ve been able Future ecosystem, and even prior to the acquisition, we’ve been able to expand our capabilities beyond our core newsletter product, and to expand our capabilities beyond our core newsletter product, and are seeing early success with events, awards programs and podcasts. are seeing early success with events, awards programs and podcasts. This mix of products deepens and reinforces our relationships with This mix of products deepens and reinforces our relationships with key advertisers. Being part of the Future group has helped grow the key advertisers. Being part of the Future group has helped grow the business - it's certainly the products we are selling - the awards - the business - it's certainly the products we are selling - the awards - the video products - and the opportunity to build audience through video products - and the opportunity to build audience through 305m monthly visitors to websites. 305m monthly visitors to websites. I E C N E D U A E R U T U F E L A C S Online users: 2m Social Media Followers: 8m *From 1 October 2021, with the completion of the Dennis acquisition, the following brands are included in this content vertical: IT Pro, PC Pro 1P data moving from 'Unknown' to 'known' Y E I L D ONLINE USERS moving from non-intent to intent ANNUAL REPORT AND ACCOUNTS FY 2021 / 33 Our Future, Our Responsibility At Future we operate as a responsible While we are driven by the desire to do things that business driven by our clear purpose, value make a difference, we are mindful of the importance of and culture. Our corporate strategy was formulated ensuring that we are accountable and transparent, and to drive returns and sustainability for the long term, as a result we are, where possible, aligned with a and as a consequence Environment, Social and framework. We have adopted the UN’s Sustainable Governance (ESG) has been at the heart of what we Development Goals (SDGs) as a guide for our objectives do. We’re committed to using our scale and reach to and our performance. Next year we will also report make a positive societal impact and inspire change against the Task Force for Climate-related Financial - playing our part in building a sustainable future for disclosures (TCFD), to disclose our climate-related all our communities and our planet. While operating governance, strategy, risks and targets. As the responsibly has been something we have continued formulation of our Responsibility strategy is a new to do (see pages 40-49 for details on what we have initiative for Future this year, we have set formal delivered this year) we also realised that we could targets for some but not all areas, and over the next do more. At Future we strive to truly make a few months one of our key objectives is to understand difference, and so this year we have revisited our how best to measure our effectiveness. approach to this important topic and are delighted to We are driven and excited about responding to the be able to share our new responsibility strategy, array of ESG issues affecting our communities today. called Our Future, Our Responsibility, in this report, While there are many topics we could consider, in (see pages 36-49). Our journey in 2021 As we thought about how we could make more of a staying true to Future’s principles we have been disciplined about focusing on the issues where we believe we can truly make a difference. Our strategy is centred around four pillars that we difference we naturally looked to our employees and know are important to our colleagues and our external stakeholders to understand what mattered audiences, and we have separated these into: most to those who engage with Future. Over the last • Future Differentiators - Where we have a unique six months we undertook a materiality assessment, opportunity to make a difference to identify the issues which are important to us and • Future Foundation - The things that we do which we align with our values. believe are critical to all businesses who operate To achieve this we formed a Responsibility steering responsibly. team and collaborated with global stakeholders to map the materiality issues for our sector and to Our Future differentiators are new to us this year, and identify any gaps. We consulted widely with our although we have acted responsibly in these areas, we stakeholders, including inputs from shareholder have not coalesced our approach explicitly until the reviews, the gap analysis versus peer benchmarking, launch of the new strategy, therefore you will not find ESG policy review benchmarking, and engagement any specific reporting against these. In contrast the two with our leadership team around key themes. pillars under the Future Foundation are things we have From the outset we focused on key topics that: been working on for many years, and so in each pillar resonate with our organisation; are actionable; are section you will find an update on our progress in 2021. in line with all our stakeholder expectations; and You will also find in this section our update on S172, our are where we feel we, as Future, can make a carbon efficiency reporting and our non-financial unique difference. information statement. 34 / FUTURE PLC “Being a responsible business is at the heart of everything we do and the ‘Our Future, Our Responsibility’ strategy reflects our commitment to drive further change within our own company and through the content we produce. It is paramount that we focus on what is important to us at Future and where we can make a unique difference, building on what we do already, with clear ambition to do more across the business. Our portfolio of brands gives us the platform and opportunity to influence and inspire people, and to encourage positive change for a more sustainable environment through trusted information and advice.” ZILLAH BYNG-THORNE, CEO ANNUAL REPORT AND ACCOUNTS FY 2021 / 35 ResponsibilityFuture differentiation Future differentiation Future Foundation Pillar 1: EXPANDING HORIZONS Pillar 2: SHAPING THE FUTURE Connecting people with their passions and lifelong learning. Leading conversations on the future of the internet and publishing. Our depth of expert content enables us to take positive action to fuel passions and provide compelling learning opportunities for colleagues, audiences and future talent. We will leverage our brands’ influence and content to create positive societal change; facilitating lifelong learning for all. We will not tolerate misinformation or fake news. We will further strengthen the responsible content framework for our brands and will use our data responsibly. We will adopt a leadership position in championing a safer internet and we will make it integral to our day-to-day business. Pillar 3: THE CULTURE BEHIND THE COMPANY Great content emerges from a great culture. Great content is created by great people and we will build an environment where all our people can do their best work. We will continue to invest in our employee experience in order to attract, retain and grow the best talent, championing inclusive growth and development opportunities for all. At Future everyone has something to contribute. To create content that our customers love we value diversity in our business, people and thoughts. We enrich lives by embracing difference, driving diversity in content, discussion and views. 36 / FUTURE PLC Responsibility reviewFuture Foundation Non-financial information statement Pillar 4: TAKING RESPONSIBILITY Going further to deliver a sustainable, transparent and well-governed business. We are committed to making a positive impact and inspiring change — playing our part in building a sustainable future for our planet and our communities. The Company is required to comply with the 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 Relevant Group principal and emerging risks, pages 60 to 64 Policies which govern our approach Policy embedding, due diligence, outcomes and key performance indicators ENVIRONMENTAL MATTERS Climate change Responsibility Policy Risk section, page 60 • Carbon performance, metrics and targets COLLEAGUES Key person risk • Health and safety • Culture and ethics Pandemic impact • Inclusion and diversity • Wellbeing and support during COVID-19 Health and Safety Policy Diversity Policy Whistleblowing Policy SOCIAL MATTERS Personal data Charity Policy • Contributing to the economy Cyber security and IT Health and Safety Policy • Support during COVID-19 Pandemic impact Responsibility Report, pages 44 to 47 Responsibility Report, pages 40 to 43 Risk section, page 60 Governance Report, page 80 Directors’ Report, page 111 Responsibility Report, pages 38 to 39 Risk section, page 60 Financial Review, page 58 Digital advertising market changes Personal data Cyber security and IT Economic & geo-political uncertainty HUMAN RIGHTS AND ANTI-CORRUPTION AND ANTI-BRIBERY • Reinforcing an ethical business culture • Speaking up against wrongdoing • Prevention of bribery and corruption • Approach to human rights and modern slavery Anti-corruption and Bribery Policy Responsibility Report, pages 38 to 39 Whistleblowing Policy Risk section, page 60 Slavery and Human Trafficking Policy Directors’ Report, page 111 ANNUAL REPORT AND ACCOUNTS FY 2021 / 37 ResponsibilityPillar 1: Expanding Horizons Connecting people with their passions and lifelong learning We have an opportunity to take positive action to fuel passions and provide compelling learning opportunities for our colleagues, our audiences and our future talent. We will leverage our brands’ influence to create positive societal change through our expert content, facilitating lifelong learning for all. WHY IS THIS IMPORTANT TO FUTURE? We’re one of the biggest digital publishers in the UK and US and we’re all about expanding mindsets and prospects. Our brands connect people with their current passions and help them to find new ones. We help people learn in a way that is: • Varied and diverse in content • Informal and fun • Lifelong and out of the classroom • Facilitated by enthusiasts and peers • Open and accessible • Accurate and responsible Our content will be accessible, engaging, authoritative and expert so that everyone from diverse and global backgrounds will be able to fuel their passion or gain valuable learning. Our Future Plans - Beyond 2021 Topic Ambition Facilitating Lifelong Learning for our Audiences We will connect our audiences’ passions to social and environmental content, inspiring them to effect positive change. We will diversify our output across our brands to widen learning opportunities for our audiences. We will develop content that is fully accessible for lifelong learning. We will use the ‘Responsible Content Framework’ to package content as a learning opportunity for readers. We will create an editorial steering group that embeds and advocates responsible content. We will conduct an audit of brands readership and set targets for brand staff to better reflect readership by 2030. 38 / FUTURE PLC Responsibility reviewPillar 2: Shaping The Future Leading conversations on the future of the internet and publishing We will not tolerate misinformation or fake news. We will develop a responsible content framework for our brands and will use our data responsibly. We will adopt a leadership position in championing a safer internet and embed it in our day-to-day business. WHY IS THIS IMPORTANT TO FUTURE? Our core purpose is that “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.” At Future we only have experts creating content to ensure we meet our audiences’ needs, promote a safer internet and produce truly responsible content. As a leading digital publisher we have a responsibility to create a safe internet. Future has an audience reach of over 400 million, and with this comes a responsibility to ensure we work hard to secure the internet we want, the environment we need, and to keep our audiences safe. Online content is a vital part of our business and we are committed to championing an internet that is safe for all ages, and is free of misinformation or fake news. We will take a lead in conversations on this issue and embed it in our day-to-day business. The internet enables us to share our expert content with our audiences and to engage with them. We hold ourselves to high standards, ensuring our content is ethical and in line with our values. We are working on a Responsible Content Framework that sets common principles across the Group, to guide our editorial colleagues. Our Future Plans - Beyond 2021 Topic Ambition Fake News and Misinformation We will take an active role in the ‘future of the internet’ debate. We will commission thought- leadership and research. Responsible Content We are developing a “Responsible Content Framework” that will be implemented across all verticals. Our annual stakeholder survey will determine committee themes i.e. online safety, editorial safeguarding guidelines. We are introducing editorial guidelines on equal access, accuracy, independence, freedom of expression & rights. Our ethics committee will meet quarterly. We will use our content to positively influence consumer behaviour. We will collaborate with editors to establish how we use our expertise to amplify and promote issues. This will differ across brands to be truly authentic for our audiences. Encourage Positive Impact ANNUAL REPORT AND ACCOUNTS FY 2021 / 39 ResponsibilityPillar 3: The Culture Behind The Company Great content emerges from a great culture We are a people business first and foremost. We believe in nurturing a smart, diverse and inclusive culture which brings people together from all backgrounds and lets them shine. WHY IS THIS IMPORTANT TO FUTURE? Everyone’s welcome (inclusion and diversity) We are working hard to ensure that our workforce reflects the diverse communities we serve, and that we create an inclusive culture where every employee can truly be themselves at work. Through 2021 we have continued to build momentum towards this goal of inclusion. The Inclusion and Diversity Forum, continues to meet to discuss and implement initiatives and ensure a focus on inclusivity. We now have 30 ambassadors from across the global business involved in the forum, empowered to champion inclusion at Future and drive the agenda for change. Throughout 2021 we have celebrated diversity in our organisation through a hugely varied programme of internal events, communications and training. In order to attract, retain and grow top talent we continue to invest in our people strategy, to ensure that we are an employer of choice for all. Board Male 5 To create content that our customers love we value Senior management 5 diversity in our business, people and thoughts. That is what drives diversity in content, discussion and views, Direct reports All Colleagues 53 1,156 Female 4 6 32 1,110 44% 55% 38% 49% 56% 45% 62% 51% enriching lives. In Future: • Everyone’s welcome (inclusion, mobility) • Everyone can shine (inclusion & diversity) • Everyone contributes (deliver social impact) • Everyone’s engaged (community, opinions) • Everyone is supported (wellbeing & safety) All staff split Senior management Board 51% 49% 45% 55% 56% 44% Male Female 40 / FUTURE PLC Responsibility reviewBlack Lives Matter Our passion for justice and for 3. An independent diversity audit is making a difference meant that we conducted six-monthly, by Creative did not stay silent on this issue. In Equals, a global inclusion 2020, we committed to making a consultancy. lasting difference and to effect real change, so we pledged to take action. In 2021 we have: 4. Every brand has been given diversity targets for contributor spend, ensuring black writers and 1. Donated $1m of advertising space creatives have a voice across our across our brands, in collaboration portfolio. with The Movement for Black Lives. 5. We encourage brands to take a lead 2. We have mandated that all original in demonstrating solidarity with the and stock photography used in our Black Lives Matters campaign, and brands will have equal to share with our audiences positive representation of black people. ways that they can help. In 2021 we identified a number of recruitment sites in the UK and US where we can advertise roles with a focus on inclusivity, such as Diversity for Social Impact - a jobs board that focuses on promoting and empowering Social Impact around the world. We continue to review new platforms, to build Future’s presence in this area. Embracing diversity underpins our commitment to providing equal opportunities to our current and future colleagues, and to applying fair and equitable employment practices. We codify this through our Equality and Diversity Policy, our I&D Strategy, and our Values. Disability policy When considering recruitment, training, career development, promotion or any other aspect of employment, we strive to ensure that no employee or job applicant is discriminated against, either directly or indirectly, on the grounds of disability. If an employee becomes disabled while in employment - and as a result is unable to perform their duties - we would make every effort to offer suitable alternative employment and assistance with retraining. Everyone can shine (learning and development) 2021 has seen Future welcome over 932 new colleagues into the business, through acquisition and hiring. We have introduced an on-boarding tool to further enhance the employee journey (see page 51). We continue to build content into our flexible online learning portal, “Future University”, which gives colleagues access to bitesize learning opportunities at a time that is convenient for them. Our Leadership Programme (Apprenticeship) launched in partnership with Multiverse in the UK. We review our top 150 colleagues annually, calibrating with the Executive Team to identify potential and ensure we are all aware of the talent in our business, that we have succession plans and individual learning plans. All the Future Leadership team has access to ClickNCoach, which is a virtual coaching tool, offering flexible, real-time support. Our Values We are part of the audience and their community > Our passion for our products and brands makes us part of the community in which we engage – an incredible privilege which we treat with total respect. We are proud of our past and excited about our future > Founded in 1985 with one magazine, today Future boasts a portfolio of over 240 brands: we celebrate our heritage, and we remain excited about our future. We all row the boat > Everyone at Future has a part to play and a contribution to make, because together we are stronger. Let’s do this > We have a bias for action, taking the best decisions we can in the face of uncertainty; we won’t always get it right, and that’s ok. It’s the people in the boat that matter > We make sure we have the right team, with the right skills, to deliver our strategy, supporting each other, challenging each other and having fun along the way. Results matter, success feels good > We restlessly seek to improve, be ever creative and unashamedly commercial in our ventures. Positive momentum helps us achieve extraordinary results, and celebrating our successes is a great way to support this. ANNUAL REPORT AND ACCOUNTS FY 2021 / 41 ResponsibilityJournalist training programme In 2021 we launched bespoke Journalist training in the UK, the opportunity for disadvantaged children to reach their full potential. encompassing the National Council for the Training of Journalists This year, under the Foundation umbrella, we launched a (NCTJ) qualification and in-house training on audience development programme to provide mentoring, coaching and internships to and SEO, to bring together the best of external accreditation and disadvantaged students, inspiring them with the confidence and skills Future’s own expertise. Through this programme we are developing to pursue a career in media. Future Frontiers is an award-winning the next generation of editorial talent. education charity that ensures young people from disadvantaged SEO training programme This year we developed an internal SEO training programme for new and current editorial staff, to learn or improve audience development techniques. Government Kickstart Scheme, UK In 2021 we partnered with charities, Media Trust and A New Direction, that run unique programmes In 2021, Future committed to ensure our UK Pay is above living wage levels; and we introduced the US tiered living wage - around 100 colleagues saw an increase in 2021. backgrounds fulfil their potential at school, and when transitioning to education, employment or training at ages 16 and 18. Double the number of UK colleagues participated in a 1-1 coaching programme this year compared to last year to help prepare young people from disadvantaged backgrounds to make informed decisions about their next steps. Everyone’s engaged (employee engagement, community, opinions) At Future, engagement is more than a governance to encourage young, diverse talent to develop their confidence, requirement. Having an engaged workforce is critical to business passions and talents to work in the media sector. Kickstart roles at growth and success. Future span advertising operation executives, eCommerce marketing We have a consistent rhythm of internal communications that assistants, supply chain administrators, researchers, circulation engage all our colleagues in regular updates, formal and informal, in executives, website administrators and content writers, across person and online. All staff are given frequent opportunities to ask brands. questions directly of the senior management and receive direct feedback. We encourage all managers to have regular check-ins, both individual and team meetings. We run Star of the Month activities and Dreamyard, US We work with Dreamyard in the US, a not-for-profit organisation that annual awards aligned to our values. Colleagues' involvement in the company's performance is collaborates with Bronx youth, families and schools to build encouraged through employee share schemes and other initiatives. In pathways to equity and opportunity through the arts. The young 2021, our profit pool bonus increased to reward exceptional interns shadow, work with, and learn from a Future colleague, performance, and all colleagues received an additional working-from- rotating across departments. home stipend in January. We launched our Value Creation Plan in 2021, giving all colleagues the opportunity to share in the success of the business. All new colleagues, whether organic or through acquisition, Everyone contributes (delivers social impact) At Future we are proud of our charity-matching scheme that supports enjoy these benefits. We strongly believe that colleagues who can benefit from the success of the company are engaged, ensuring our people with their fundraising endeavours. In support of the everything we do is for the benefit of all. incredible efforts of our colleagues, a donation is made to match their In September our live events returned, and we held Leadercon’21, a fundraising efforts. The holiday season is a time when colleagues conference for around 125 senior managers, to empower them to come together to support those in need; in the UK our chosen charity deliver on our strategic objectives, which we call “What's Important is Centrepoint, and in the US we support the Secret Snowflake Gift Drive in New York. Right Now”, for 2022. Additionally the Future Leadership Team has a monthly video call to discuss the strategic narrative, which ensures Our approach to development also extends to supporting alignment and prompts leaders to cascade these messages to their employability and career development outside Future. In 2021 we teams. continued with the Future Foundation which seeks, through At Future, colleagues are invited to contribute their experience, investment of our time, expertise, resources and passion, to provide expertise and ideas. Colleagues are encouraged to partake in ADDITIONAL SUPPORT FOR OUR COLLEAGUES We gave everyone a stipend at the start of the pandemic to allow them to kit out their home workspaces and gave a second stipend in January 2021. We have supported those that have been further challenged by lockdown by implementing a hardship fund, still available to colleagues if they or their families are affected. 42 / FUTURE PLC Responsibility reviewcross-functional working, with team members collaborating on projects throughout the business, sharing their knowledge and expertise and learning from other departments. All colleagues transferring through acquisition are given a ‘buddy’, an opportunity to meet with someone from the existing Future workforce, informally, to support them through the transition; this is in addition to meeting their own manager and team. Our speed networking events link existing and new colleagues and are a fun and informal way for colleagues to meet while we are onboarding online. We invite all new colleagues to tailored ‘Welcome’ sessions and Town Halls with the senior management team. Throughout the process, we invite feedback to understand how we can continue to improve our employee engagement and onboarding activities. Everyone is supported (wellbeing and safety) At Future, prioritising health and colleague wellbeing is a critical part of our company culture. By supporting our colleagues physically, mentally and emotionally they can be fulfilled in their career and give their best performance. We remain proud of our unlimited holidays - an extraordinary benefit that allows colleagues time to reset. The well-being and safety of colleagues is a key priority for the Group. Future is largely an office-based environment; all locations across the Group comply with relevant legislation and we communicate our health and safety policy to all colleagues. In the UK, during the year to 30 September 2021, there were no fatalities and four minor injuries across all sites. Our continued response to COVID-19, supported by our strong technology infrastructures, allowed us to adapt to changing environmental pressures. Future was able to maintain remote working, phased returns and ensure COVID-safe practices in our office spaces. We continue to monitor our office spaces to be COVID-secure, based on Government and State guidance. Well-being at Future does not end with physical safety. In 2021 we have taken a number of steps to ensure the mental and emotional well-being of our colleagues is supported. We maintained over 50 Mental Health First Aiders across our sites, to provide our colleagues with resources and confidential support, focusing on mental health. 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 with access to free and confidential support services, such as a qualified counsellor. We are committed to being a great place to work and an employer of choice, ensuring that we have the best people. In January 2021, we invested in our employment contracts, enhancing benefits beyond just pay, by launching Future 3.0. This harmonisation of contracts of employment provided more favourable terms for the majority of colleagues. This simplification from over 20 different contracts in the UK was carried out to ensure we offer attractive terms. The benefit enhancements included an increase in pension matching from a range of 3-4% to 5% for around 490 employees and a life assurance increase from 3x salary to 4x salary. Other enhancements included an increase in paid parental leave to 13 weeks for maternity and adoption and 2 weeks paid paternity, as well as enhanced sick pay to 6 weeks full pay and 6 weeks half pay for around 660 employees. Our Future Plans - Beyond 2021 Topic Ambition Inclusion, Diversity and Representation We will set our E,D&I objectives and publish our diversity policy. We will publicly report on the diversity of the Executive Leadership Team. We have an opportunity to build new and existing partnerships, in order to diversify our workforce and our content. Race and inclusion training will be mandatory, and all managers will have inclusive leadership training. Our content will become more representative and we will be proud of our diversity of thought. Talent Attraction, Retention and Development We will increase internal mobility. We will continue to offer coaching, training and mentoring for colleagues. We will have a digital skills programme for junior staff. Colleague Wellbeing We will continue to train mental health first aiders, operating a ratio of around 1 per 50 employees, and support the individuals who provide this service across the group. Our annual employee engagement survey will include a section on wellbeing and knowledge of current activities and available solutions. We will ensure colleagues are taking a minimum of 15 days leave a year and within any rolling 12 weeks at least 2 days off. Employment Offer and Culture We will incorporate Future values as part of the recruitment process, employee reviews and all existing HR processes. Our Executive Leadership Team will hold Values workshops with each department, to ensure we embed them in our day to day work. Annually, we will hold a Town Hall to review the Values and reflect on the annual engagement survey results. We will invest in the Future Foundation and increase its impact. We will create partnerships with charities that align with our values. We will support our office communities with their charitable endeavours. Community and Charitable Partnerships Employee Volunteering and Engagement All colleagues will have the opportunity to volunteer up to two days per year. We will increase the number of colleagues coaching young people from disadvantaged backgrounds, via Future Frontiers. ANNUAL REPORT AND ACCOUNTS FY 2021 / 43 ResponsibilityPillar 4: Taking Responsibility Great content emerges from a great culture. We are committed to making a positive impact and inspiring change — playing our part in building a sustainable future for our planet and our communities. WHY IS THIS IMPORTANT TO FUTURE? At Future, we acknowledge our responsibility to build a sustainable future for our planet and our communities. We are committed to delivering a sustainable, transparent and well-governed business. We will be principled and transparent in reducing our own impacts, and behaving ethically. We already do much work to ensure our business is sustainable - from Responsibility Committee Ensuring governance of our responsibility strategy is critical, and consequently we have constituted a new Board Committee for 2022 and onwards, with the mandate to ensure board level oversight of our responsibility strategy, monitoring and approving the output Members Hugo Drayton - Chair Meredith Amdur Angela Seymour-Jackson Key responsibilities The Responsibility Committee supports the Board in the oversight of our responsibility sourcing paper responsibly to our travel policies - and we have brands at strategy: the forefront of these conversations, such as: Marie Claire, which is at the vanguard of women’s brands championing environmental issues, • Oversee and assess Future’s overall contribution to, impact on, and role in society ranging from global warming to ethical fashion; Home and Gardens, • Oversee Future’s plans to deliver the Our Future, showcasing eco home improvement solutions, such as ‘the greenest Our Responsibility strategy, including the way to heat your home’, and ‘eco benefits of sedum roofs’; Tom’s Guide, setting, disclosing and achievement of targets leading the charge on a breadth of sustainable content, from the • Review progress against priorities and benefits of transitioning to electric vehicles, to grow and replant your objectives, across Future’s sustainability own Christmas tree year on year; and Decanter, highlighting those strategy wineries that are decreasing their environmental impact and hosting carbon neutral events. • Consider Future’s position on relevant, emerging sustainability issues Hugo Drayton, Chair of the Future plc Responsibility Committee, commented: “As a public media company, Future is clear about our privilege and duty to all our stakeholders - including consumers, shareholders and colleagues - to support and defend our people and our planet. I am delighted to chair Future's Responsibility Committee, which anticipates and reflects our stakeholders' expectation that the company proactively seek to improve continuously in all areas of responsibility, transparency and education; to ensure the best possible, sustainable environment, to minimise negative impact, and deliver opportunities for all.” Key priorities in FY 2022 • Review and agree the 3 year plan ambitions for Our Future, Our Responsibility • Determine suitable measures to report against for each pillar, ensuring that we stay focussed on what matters, not just what can be measured • Engage with the wider Future organisation to ensure the strategy is being embedded and the key milestones are achievable • Report against the TCFD framework, and begin work on our carbon reduction programme 44 / FUTURE PLC Responsibility review Taking Responsibility Earlier this year, Country Life launched an ambitious campaign in partnership with Forestry England and Charles Stanley Wealth Managers, to plant thousands of trees in a new Country Life wood. From reader and supplier donations, over 2300 trees will be planted in January. A mixture of species will be planted in Hampshire, carefully selected to support the biodiversity of the site and to be resilient to pests, diseases, and a warming climate. volumes and offset our waste by purchase of Packaging Waste Recovery Notes. Our UK subscription copies are now all mailed in paper-wrap, along with the majority of promotional packs to the retail newsstand. In 2022 we will Reducing waste Sourcing paper Paper is the largest raw material we use as a Group. We work hard to make sure that whatever we consume, we do it in a way that is ethically responsible and environmentally sustainable. Our paper is sourced and explore moving our export subscriptions to paper wrap, from their produced from sustainable, managed forests, conforming to strict current LDPE4 (number 4-coded low-density polyethylene) fully environmental and socio-economic standards. Our paper mills and recyclable wrap. We remain committed to ensuring recycling logos paper merchants all hold full FSC (Forest Stewardship Council) show the latest information available on recyclability of the certification and accreditation, showing our commitment to wrappers, directing customers to recycle the bags at local sourcing paper supplies from sustainable sources. supermarkets. Recycling of unsold magazines and gifts The Group is strongly incentivised to minimise the number of unsold magazines and we employ sophisticated techniques to help achieve Recycling and waste management in the office All of our offices have clearly defined communal waste and recycling areas. In 2021, as we have opened new offices, waste this. In the UK, Future’s unsold magazines are either used in recycled management has been a critical part of that process. Through our paper manufacture or in other recycling operations, or they are GoCo acquisition we acquired a new Newport office location, which handed to local schools and hospitals. We also support the reports zero waste to landfill. Professional Publishers Association’s initiative, encouraging readers Our in-office signage for colleagues ensures we all play an active to recycle their magazines after use, and we are now full members part in recycling. We have separate general waste, mixed recycling of the OPRL (On-Pack-Recycling-Label) Scheme which provides full and food waste in all offices, and we operate a zero single-use access to and use of correct recycling labelling, instructing plastic policy, which has significantly reduced our impact already. consumers how to responsibly recycle or dispose of our magazines We work with our waste provider to complete quarterly reporting and packaging. to trace waste usage more efficiently and monitor progress on reducing waste that is sent to landfill. Packaging We comply with our obligations under the Producer Responsibility 2021: Obligations (Packaging Waste) Regulations, and carry out an annual Total waste: 15.129 tonnes across four locations packaging waste audit where we declare our packaging waste Total recycled: 5.354 tonnes across four locations ANNUAL REPORT AND ACCOUNTS FY 2021 / 45 Responsibility Scope 1 and 2 emission reporting Climate change is not currently considered a principal risk. You can read more about our approach to risk on page 60. Streamlined Energy & Carbon Report (SECR) Summary In accordance with the Companies Act 2006 (Strategic Report and Directors’ 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 and Carbon Report disclosure for 2021, covering the period 1 October 2020 to 30 September 2021. 2018 2019 2020 2021 Total (tCO2e) Total (tCO2e) Total (tCO2e) Total (tCO2e) Global tonnes CO2e emissions 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) Location Based UK US Australia TOTAL UK US Australia TOTAL The purchase of electricity: heat, steam or cooling by the Group for its own use (Scope 2) Market Based UK US Australia TOTAL Total Emissions (tCO2e) - Location Based Total Revenue (£m) Intensity Ratio (tCO2e per £1m) – Location Based Underlying global kWh energy use from 97 - - 97 331 3 - 334 - - - - 431 130.1 3.3 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) 96 - - 96 298 205 - 503 - - - - 599 221.5 2.7 UK US Australia TOTAL UK US Australia TOTAL 106 2 1 109 235 34 - 269 337 34 - 371 378 232 2 0 234 230 8 3 241 - - - - 475 339.6 606.8 1.1 0.8 2020 comparator 2021 Total (kWh) Total (kWh) Total (kWh) 549,946 8,854 5,144 563,944 1,008,372 83,247 - 1,091,619 1,152,393 7,318 - 1,159,711 1,084,041 41,433 3,776 1,129,250 1,655,563 2,288,961 339.6 606.8 4,875.04 3,772.18 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/) 46 / FUTURE PLC Responsibility reviewMethodology We have used the Environmental Reporting Guidelines: including Our Future Plans - Beyond 2021 streamlined energy and carbon reporting guidance 1 and Topic Ambition Greenhouse Gas Protocol 2 methodology for compiling this GHG data, and have included all required emissions sources. GHG emissions factors have been sourced and applied from BEIS conversion factors for Greenhouse Gas emissions 3; the equivalent reports on non-UK (Australia) properties used the CO 2e factors provided by the International Energy Agency (“IEA” 4 ), and for USA regional factor for New York, provided by United States Environmental Protection Agency, sourced from carbon footprint 5 for emissions associated with grid electricity consumption. As a Group with only office-based activities and no manufacturing activities, under the GHG Protocol Corporate Standard, emissions fall under Scope 1 (combustion of fuel) and Scope 2 (purchase of electricity). Energy Efficiency Action Taken In the period covered by the report the Company has completed installation of EV charging points in its Bath office and LED lighting installations at all legacy Future offices. Two new office locations will have LED lighting completed in 2022. We have a Building Management System running our Bath office to minimise our usage. During the next financial year the company will be completing TM44 surveys at all sites and will act on the results accordingly. Intensity Ratio We are using ‘Tonnes per £1 million revenue’. Our GHG emissions CO 2e intensity has decreased from 1.1 tonnes CO 2e per £m in 2020 to 0.8 tonnes CO 2e per £m 2021, which is a decrease of 27%. Office closures due to COVID-19 COVID-19 has had a large impact on our kWh usage as offices have been shut for periods of time due to government lockdowns. Climate Change - Direct We will target net zero GHG emissions from Scope 1 and 2. We will demonstrate reductions via energy saving and renewable energy. We will conduct a Scope 3 footprint. Value Chain Impacts Our commitment to producing hard copy issues from certified or responsibly-sourced paper, with a preference for FSC, will continue. We will set targets to measure emissions from our digital value chain. We have am ambition to join the DIMPACT collaboration. We will remain committed to responsible sourcing of paper and other materials. We will set a plastic-free policy, and report on compliance. We will disclose our operational waste tonnage and introduce programmes to increase our recycling rate. Corporate Governance and Compliance A sub-committee of the board will govern the Responsibility strategy. We will increase the diversity of our Board. We have introduced new Board policies. Our policy committee will take responsibility for reviewing, updating and circulating our policies. Training will support the Group’s key policies. We will publish our tax strategy in our 2022 annual report. Lobbying and Public Affairs Using the responsible lobbying framework we will interact with regulators and policy makers. Stakeholder Engagement We will continue to disclose our section 172 statement, annually. We will engage in Ratings providers’ research, and ensure transparency of our data. ANNUAL REPORT AND ACCOUNTS FY 2021 / 47 ResponsibilityRoadmap to TCFD In 2022, the Task Force on Climate-related Financial Disclosures transparency and disclosure. In 2022, we will undertake a fully assessed gap analysis. From this, we are committed to collecting (TCFD) aligned reporting will become mandatory for Future. Below, data, calculating our emissions and setting targets (see page 62 for we outline our 2022 roadmap; our approach to implementing the our approach to principal risks). recommendations of TCFD. Our targets for Scope 3 emissions will be defined over the next While we continue to focus on social issues, tackling climate three years; we anticipate our digital footprint to be our biggest change remains a priority for the Group and we are committed to contribution to our Scope 3 emissions. our climate ambition; understanding our impact and increasing our GOVERNANCE STRATEGY RISK MANAGEMENT METRICS AND TARGETS We will report our governance around climate-related risks and opportunities. We will conduct climate- related scenario analysis and will report the actual and potential impacts of climate-related risks and opportunities on our business, strategy and financial planning. Our scenario analysis will be shared but will not include confidential business information. Our aim is to integrate climate into our risk management processes. We will disclose the processes we use to identify, assess and manage climate-related risks. We will identify the top issues and report the metrics and targets we use to assess and manage relevant climate-related risks and opportunities. RECOMMENDED DISCLOSURES Describe the board’s oversight of climate-related risks and opportunities. Describe management’s role in assessing and managing climate-related risks and opportunities. Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term. Describe the organization’s processes for identifying and assessing climate- related risks. Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning. Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. Describe the organization’s processes for managing climate- related risks. Describe how processes for identifying, assessing, and managing climate- related risks are integrated into the organization’s overall risk management. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process. Disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions, and the related risks. Disclose Scope 3 greenhouse gas (GHG) emissions, and the related risks. Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets. Will be undertaken in 2022 Undertaken in 2021 48 / FUTURE PLC Responsibility reviewIn 2021, Marie Claire UK held its first ever Sustainability Awards - also its first ever carbon neutral event. It follows the Marie Claire Sustainability festival earlier this year and the launch of the brand’s dedicated Sustainability Channel in 2019. The awards covered over 60 categories and multiple industries, including beauty, fashion, health & wellness, homes, motors, food & drink and travel & leisure. Entries were judged by a trailblazing panel of over 40 of the world's leading experts in sustainability; the awards were delivered in partnership with Nula Carbon, so for every attendee to the virtual event, a mango tree was planted. ANNUAL REPORT AND ACCOUNTS FY 2021 / 49 Responsibility How we engage with our stakeholders Our key stakeholders are those who influence or are affected by our day-to- day activities. These stakeholder groups have varying needs and expectations and our aim at Future is to engage effectively with all of them to develop and maintain positive and productive relationships. Details on how information from our stakeholder groups flows up to the Board can be found in the Corporate Governance Report, on page 68. Our Audience We create fans of our brands by giving them a place where they want to spend their time and 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 24 to 33. How the Board engaged in FY 2021 The board receives regular audience insight reports through the year, and regularly reviews our audience needs. Last year, as the pandemic continued to unfold, our brands were able to meet the needs of our audiences across an increasingly diverse range of consumer verticals. We evolved our platforms to take advantage of the evolving landscape in search, and to ensure that our content was able to reach and meet the needs of our audiences. What we learnt As the pandemic unfolded and drove changes in consumer behaviour, particularly around the adoption of ecommerce, our content continued to be a source of help and advice for hundreds of millions of consumers. As consumers returned to some semblance of normality, it’s clear that many of those new habits stuck, giving our brands new and enlarged audiences across our diverse verticals. What are we going to do in FY 2022 Looking ahead, the challenge is to ensure that our platforms continue to evolve to meet the needs of our new audiences, and that we take advantage of our platform capabilities across the new verticals in which we now operate as well as our core business. 50 / FUTURE PLC Stakeholder engagement Our people Our talented and engaged workforce are committed to upholding our values, enabling us to deliver on our promises. We recognise that listening to our people and keeping them engaged is essential to our continued success. You can read more about how we engage colleagues on pages 40 to 43, including how we continued to support them during lockdowns and when workspaces opened as restrictions eased. The way we invest in and reward our people is on page 43. How the Board engaged in FY 2021 Listening, learning and responding to our for the Board. Our Chief People Officer, of which are attended by our Board, people continued to be a key priority this who is responsible for global HR, attends including the annual Future recognition year (as identified in our forward looking Board meetings at least once a year to give awards which was conducted globally statement). We have addressed this in a updates and a HR dashboard, showing key online last December. number of ways, including increased statistics in relation to our people, is Feedback, suggestions and concerns in-person engagement, increased online reviewed at each Board meeting. As we from employees across the business are communication and the formalisation of reopened our offices in the UK, the Board also considered through channels such as our internal communications calendar to took the opportunity to visit both the Bath town hall meetings, ELT listening sessions, ensure we maximise the opportunities to and Newport offices during July, and most direct correspondence with the executive, have quality interactions whilst the of the Board attended the leadership weekly all staff emails from the CEO and company was working remotely, and then conference in September. Throughout the the weekly Future snapshot. Most of the ensure this remained appropriate as we year we have had numerous live online Board participate in the communication returned to the office . events via Google Hangouts and Zoom, led updates and have invitations to the town Workforce engagement is a key priority by the Executive Leadership Team, many of hall events. What we learnt Our people enjoy working at Future, and are this area are very much in demand as is a focus during the summer of 2021 has been proud of our success and growth. They desire to understand how we benchmark in on re-opening our offices and identifying identify with our purpose and values and against our peers. Another key area our new ways of working post lockdown. As have a strong understanding of the culture people care about is mental wellbeing, and restrictions were lifted, we offered a phased and what is important at Future. They were this has been a key focus area during the return to the offices for our colleagues to very pleased to share in our ongoing year, our Mental Health First Aiders (MHFA) help them adjust and we also provided financial success as a result of the creation of have been providing invaluable support for weekly lunches, breakfasts and advice and the Value Creation Plan. colleagues. Further training and support for guidance on transitioning back to the Managing the integration of new the MHFAs will be provided in 2022. As commute and working in the office. businesses into Future’s culture is something mentioned last year we implemented a Following extensive consultation with our that we do well and we will continue to hardship fund for colleagues who had colleagues we determined that the evolve and improve our onboarding suffered financial difficulties as a result of go-forward working model for Future would activities. the pandemic and during 2021 27 colleagues be one with increased flexibility, where Our people care about being a made a request to this fund, with the employees that want to can work for up to responsible business, and of particular average award being £949. two days a week from home, and the vast importance is ensuring that we treat all colleagues fairly, be inclusive, and diverse. From our colleagues feedback we identified that the loss of physical office majority of our colleagues will adopt this model allowing greater flexibility and Education and awareness programmes in space was isolating for many, and so the balance than pre-pandemic. What are we going to do in FY 2022 We will continue to enhance our initiatives. We intend during this year to performance of the business and create a onboarding experience, piloting a new tool launch a new employee engagement regular cadence both with the relevant to engage new employees post offer but survey, and our new CPO - Hazel Boyle body and all colleague population. This prior to commencement, giving them a - who joined in November 2021, will lead the year there were various communications feeling of belonging and insight into their scoping and delivery of this work during provided by the CEO about the profit pool, new working environment. We will 2022. 2021 has been a year of transition for annual salary review and the roll out of the continuously improve our integration the senior leadership team at Future, our VCP all in connection with our overall practices, creating playbooks and lessons intention is to ensure we evolve strategy and business performance, and we learned, holding town halls, encouraging communication to all colleagues about the will continue our commitment to fairness buddying, meet and greets and training link to remuneration and overall and transparency of information in 2022. ANNUAL REPORT AND ACCOUNTS FY 2021 / 51 ResponsibilityOur Investors The Board places great importance on having constructive relationships with all shareholders and seeks to ensure there is an appropriate level of dialogue with them. How the Board engaged in FY 2021 Like many other companies, due to the public health guidance and measures regarding the conduct of general meetings brought in by legislation we were not able to hold an in person AGM. Instead we encouraged shareholders to email in their questions in advance of our AGM, which was held virtually on 10 February 2021 and was webcast live to our shareholders. Shareholders were also given the Our Commercial Partners and Suppliers 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. 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. How the Board engaged in FY 2021 Through FY 2021 Future has continued to identify and engage with our opportunity to submit questions during the meeting. core commercial partners to drive further business success through Annually, the Chair offers a meeting with our top shareholders to collaboration and alignment. maintain the interaction but also to obtain feedback and during the In FY 2021 new trading agreements were signed with the largest year he held a number of meetings with our investors. advertising agencies GroupM, Publicis and Opera. These agencies are As part of the FY 2020 annual report, we updated our the largest trading partners for Future and represent many advertisers remuneration policy. The Chair and the Chair of the Remuneration who feature on the sites, in magazines and at events. The trading Committee proactively engaged with shareholders to obtain agreements ensure that Future’s commercial teams gain access to ad feedback on this policy. A total of 12 meetings were held with agency decision makers at the highest level, ensure our businesses are investors on the subject. aligned and that we have forward visibility of issues and trends that We organised two webinars during the year to inform our agencies believe are important to themselves and the advertising shareholders about market development on privacy, regulation in industry as a whole. the PCW (Price Comparator Website), and post year-end we ran an Whilst many brands purchase media through advertising agencies, additional webinar focussed on the quality of our audiences, with a Future maintains relationships with brands directly. By maintaining spotlight on our B2B business. A number of members of the Board these connections the commercial teams are able to ensure the true attended these events and provided feedback. value of Future and it’s audiences are shared with the marketing and During the year we launched a quarterly investor newsletter, product teams of the largest brands partners. This includes Future which gives an update on the business to demonstrate progress on hosted Industry events, such as the Cycling Summit, where teams from the strategy including sustainability, previous communications with across Future present our unique insights on the cycling market to the financial markets, thought leadership as well as upcoming representatives from key partners across the industry, developing a events. Engagement with this has been high, with open rates of 50%. common learning and collaboration that supports the markets we The Board receives regular updates on investor communication operate in. activity, changes to the shareholder register, analysis of share price Where Future has completed acquisitions in FY 2021 we engaged with performance and particular investment themes. In addition, the commercial partners to ensure that those who had operated on feedback from shareholder / analyst interactions is shared with the acquired brands were migrated over to Future terms and that our Board on a regular basis, via our corporate brokers. expanded portfolio was included in the deals we have, this is pertinent What we learnt Investors are highly engaged with Future and understand the strategy that underpins our future growth plans. They are keen to see the traction from these and they are supportive of the strategy and with Ad Tech partners and Supply Side Partners to ensure optimum monetization of the acquired assets. What we learnt Future held regular meetings with the large platform businesses such as its implementation. In addition they have a focus on ensuring key Facebook, Google and Snap throughout the year. These sessions helped management is retained, good succession planning is in place across to ensure that feedback was shared and that Future teams learnt about the leadership teams and were very pleased to see that the new VCP upcoming developments, such as new product development that the was focused on ensuring all members of staff shared in the economic platforms are introducing. benefits of our success. What are we going to do in FY 2022 We will continue to engage with our shareholders throughout FY What are we going to do in FY 2022 In FY 2022 Future will continue to utilise the existing trading agreements with key agencies whilst expanding their scope to cover any new brands 2022. We look forward to welcoming shareholders, subject to there that we own and operate. The acquisition of Dennis is an area where being no COVID-19 restrictions in place, at our AGM in February new vendors will be migrated to Future terms and integrated to our where they will have an opportunity to meet our new Board platform. In areas such as privacy we continue to engage with our key members, Angela Seymour-Jackson and Penny Ladkin-Brand, and vendors and the broader media industry to agree on frameworks and vote on resolutions. systems that allow us to manage new and existing trends. 52 / FUTURE PLC Stakeholder engagement and Section 172Regulators Our price comparison services are subject to regulations and authorisations in the markets we operate in such as financial services. Regulators recognise that comparison encourages switching and enables competition and PCWs have a positive impact, especially in areas where regular switching remains a challenge. You can read more about this part of our business on page 32. How the Board engaged in FY 2021 Following the acquisition of the GoCompare business during the year we have started to develop and maintain a constructive and open relationship with our regulators. with the Department for Business, Energy, and Industrial Strategy, Ofgem, the Business, Energy, and Industrial Strategy Select Committee, and MP groups including the APPG for Consumer Protection and APPG for Fuel Poverty and Energy Efficiency. Regular updates were provided to the Board including updates on major interactions with regulators and we responded to any correspondence in a timely and open manner. What we learnt Proactive and open communications with regulators this year has enabled us to understand and respond to their views and concerns and to discuss our approach and opinions around important issues. An ongoing dialogue helps us to maintain our high standards of regulatory compliance. What are we going to do in FY 2022 We intend to continue to engage with government and other After the acquisition of GoCompare we proactively engaged with stakeholders to feed areas of business expertise into policymaking. the FCA to provide an understanding of our strategy, business plans Areas for engagement include ethical content and protection for and culture. journalists online, development of technology skills, and the Future has also engaged with UK policymakers sharing expertise regulation of price comparisons websites operating in the energy on auto-switching in the energy sector. This has included meetings market. Section 172(1) statement This statement intends to set out how our Board of Directors, both individually and collectively, has had regard to matters set out in section 172(1) of the Companies Act 2006 when undertaking their duties during FY 2021. We have a broad range of stakeholders who 12 and our core values (which you can find on stakeholder. Where the Board does not influence or are affected by our day-to-day page 41) reaffirm the central importance of engage directly with our stakeholders, it is activities, and have varying needs and our stakeholders (our people, customers, kept updated so Directors maintain an expectations. Our aim is to try to ensure that audience, commercial partners and effective understanding of what matters to the perspectives, insights and opinions of suppliers, investors and regulators) to our our stakeholders and can draw on these stakeholders are understood and taken business. Relationship with key stakeholders perspectives in Board decision-making and account of when key operational, investment is two-way, with Future receiving a range of strategy development. or business decisions are being taken, so contributions from stakeholders, from which For details of how our Board operates and that those decisions: Future generates value. Day-to-day the way in which it reaches decisions, • are more robust and sustainable in engagement with our key stakeholders, and including the matters discussed and debated themselves; and other local stakeholder groups, is conducted during the year, please refer to the Corporate • support Future’s strategic approach of creating value for shareholders and society. at the level and in a format best suited to the Governance Report on pages 66 to 76. context. This may be locally, regionally or functionally, by the Board or senior Future’s approach to stakeholder engagement runs throughout this Annual Our purpose (which you can find on page management, depending on the Report. Engagement in action Strategy in action Board principal decision Future works directly with its key stakeholders to understand and respond to material issues. • Development of our Responsibility strategy - pages 34 to 49 • In-depth content analysis of our sites to ensure overall balance and representation balance - page 39 • Impairment of the Look After My Bills assets - pages 84 and 141 Stakeholder engagement influences the direction of Future’s strategy and the choices it makes to create value for shareholders and society. • Investment in technology - page 16 • Development and launch of our VCP - pages 42 and 103 Responsible leadership and considered decision-making require the integration of stakeholder views and an understanding of stakeholder outcomes. • Acquisitions of GoCo, Dennis Publishing - pages 19 and 22 • Creation of centres of excellence in low cost locations - pages 14 and 18 ANNUAL REPORT AND ACCOUNTS FY 2021 / 53 ResponsibilityFinancial Review 56 FINANCIAL REVIEW 60 RISKS AND UNCERTAINTIES 62 SUMMARY OF PRINCIPAL RISKS 65 LONGER TERM VIABILITY STATEMENT 54 / FUTURE PLC ANNUAL REPORT AND ACCOUNTS FY 2021 / 55 Financial ReviewFinancial Review Penny Ladkin-Brand Chief Financial Officer Financial summary The financial review is based primarily on a comparison of results review the results of the Group on an adjusted basis internally. See page 59 for a reconciliation between adjusted and statutory results. for the year ended 30 September 2021 with those for the year ended 30 Group revenue increased 79% or £267.2m to £606.8m (FY 2020: September 2020. Unless otherwise stated, change percentages relate £339.6m), achieved organically (increase of 23% at constant currency to a comparison of these two periods. Organic growth is defined as the and 18% at actual currency) and through acquisition, with FY 2020 and like for like portfolio excluding acquisitions and disposals made during FY 2021 acquisitions net of disposals contributing £294.7m to revenue in FY 2020 and FY 2021 at constant FX rates (defined as the average rate for the year. FY 2021). 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 FY2021 £m FY2020 £m 606.8 339.6 195.8 188.3 115.3 107.8 59.3 58.1 134.6 131.9 93.4 90.9 50.7 52.0 46.4 45.4 76.3 74.7 1 Adjusted items are a non-GAAP measure. For further details refer to the section on Alternative Performance Measures on page 59. UK revenue growth of 131% or £224.7m to £396.6m (FY 2020: £171.9m) included £109.1m of revenue from the GoCo acquisition in February 2021. Total UK organic revenues increased by 17% driven by digital revenues (which include digital display advertising and eCommerce) which grew strongly by 25% on an organic basis. UK magazine revenue grew organically by 11%, reflecting an increase in newstrade over the comparative period when retail sales were impacted by store closures. UK events continued to be impacted by the pandemic but recovered strongly in H2. Performance was also strong in the US where growth of 25% or £42.5m to £210.2m (FY 2020: £167.7m) was supported by underlying organic growth of 27% reflecting strong eCommerce performance and increased further by the inclusion of £8.4m incremental year-on-year revenue from the CinemaBlend and Marie Claire US acquisitions. Media revenue increased by £185.5m or 78% and by 27% organically. Organic digital advertising revenue grew 27% driven by an increase in yield and organic eCommerce revenue was 36% ahead of the prior year. The Directors believe that adjusted results provide additional useful Other Media organic revenue declined by 17% due to the impact of the information on the core operational performance of the Group, and pandemic on Events. Revenue Digital display advertising on platform Digital display advertising off platform eCommerce Events, digital licensing other online Platform Services Total Media Print & digital content Print advertising, licensing, and other print Platform publisher services Total Magazines Total revenue 56 / FUTURE PLC Segment UK £m 47.6 13.9 142.4 15.0 1.5 220.4 129.5 39.0 7.7 176.2 396.6 US £m 89.9 35.2 73.8 3.5 - 202.4 2.9 4.9 - 7.8 210.2 FY2021 £m Total £m 137.5 49.1 216.2 18.5 1.5 422.8 132.4 43.9 7.7 184.0 606.8 Segment FY2020 £m UK £m 31.6 11.2 24.5 12.5 - 79.8 70.2 19.8 2.1 92.1 171.9 US £m 68.0 29.4 54.8 5.3 - 157.5 3.5 6.7 - 10.2 167.7 Total £m 99.6 40.6 79.3 17.8 - 237.3 73.7 26.5 2.1 102.3 339.6 YoY Var Organic YoY Var 38% 21% 173% 4% - 78% 80% 65% 269% 80% 79% 26% 28% 36% (17)% - 27% 16% (17)% - 4% 23% Financial ReviewMagazine division revenue increased by 80% to £184.0m (FY 2020: Adjusted earnings per share is based on profit after taxation which is £102.3m), including the full-year impact of the 2020 acquisition of then adjusted to exclude share-based payments (relating to equity settled TI Media. Magazine organic revenue performance increased by 4%, share awards with vesting periods longer than 12 months) and associated following the prior year revenue being materially impacted by travel social security costs, exceptional items, amortisation of intangible assets outlets and store closures as a consequence of COVID-19. arising on acquisitions and any related tax effects as well as the impact Included below is a reconciliation between statutory revenue and of the UK tax rate change. The prior year results are also adjusted for organic revenue: Total revenue FY2021 £m 606.8 Revenue from FY 2021 and FY 2020 acquisitions (294.7) Organic revenue Impact of FX at constant FX rates Organic revenue at constant currency 312.1 (0.3) 311.8 FY2020 £m 339.6 (75.5) 264.1 (10.4) 253.7 fair value movements on contingent consideration (and unwinding of associated discount) and on the currency option (including any related tax effects). Adjusted profit after tax was £150.0m (FY 2020: £72.9m). Exceptional items Exceptional costs amounted to £27.4m (FY 2020: £17.1m) and relate largely to acquisition related costs in respect of the GoCo and Dennis acquisitions (£10.2m and £4.5m respectively), integration and restructuring costs of £3.9m consisting of £2.9m relating to GoCo and £1m net expense in respect of onerous properties, plus an impairment As stated at the half-year, it is our view that the impact of the prolonged charge of £8.8m relating to a write down of the brand and customer UK lockdown in January-March, coupled with the US Government stimulus relationship intangible assets relating to Look After My Bills (‘LAMB’), checks in the US resulted in an estimated £5m of one-off COVID-19 which was acquired as part of the GoCo acquisition. The impairment, by, related benefit to eCommerce revenues. Consequently H1 organic growth £4.4m of both the brand and customer relationship intangible assets in eCommerce would have been 49% vs the 56% reported. was recognised as a result of turbulence in the UK energy market which directly impacted the auto-switch service offering. Operating profit Statutory operating profit increased by £64.6m to £115.3m (FY 2020: The GoCo restructuring costs charged in the year are associated with £15m expected cost synergies by FY 2023, a 19% cost-to-achieve ratio. £50.7m) and statutory operating margin increased to 19% (FY 2020: 15%). Adjusted operating profit increased by £102.4m to £195.8m (FY 2020: £93.4m) with adjusted operating margin increasing to 32% (FY 2020: Other adjusting items Acquired amortisation increased by £16.7m to £38.3m (FY 2020: £21.6m) 28%), reflecting favourable mix from the strong growth of the Media reflecting a full year of amortisation for the TI Media and Barcroft division and the operating leverage provided by the increased scale of acquisitions which were completed in FY 2020 and CinemaBlend which the Group. completed on 2 October 2020 as well as amortisation arising from the Basic earnings per share are calculated using the weighted average other in-year acquisitions of GoCo, Mozo and Marie Claire US. number of ordinary shares in issue during the year of 111.5m (FY 2020: Share-based payment expenses (relating to equity-settled share 95.6m), the increase reflecting the weighted impact of the issue of 22.6m awards with vesting periods longer than 12 months), together with shares to fund the acquisition of GoCo. Adjusted operating profit and margin 32% 28% 24% £250.0 £200.0 m £ £150.0 £100.0 £50.0 5% £0.0 14% 11% FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 35% 30% 25% 20% 15% 10% 5% 0% associated social security costs increased by £9.3m to £14.8m (FY 2020 £5.5m) reflecting the charge relating to the new all employee share scheme and a higher charge in respect of employers social security costs as a result of the increase in the Future plc share price at 30 September 2021 from FY 2020. Net finance costs and refinancing In November 2020, the Group increased its debt facilities to fund the acquisition of GoCo through a £215m two-year term loan. The Group's £30m short dated COVID-19 facility was cancelled at this date as it was no longer required. In July 2021, the Group undertook a further Amend & Extend of its existing £350m debt facilities. The amended facilities comprise a three- year £400m RCF (repayable in July 2024 but with the ability to request two one-year extensions at lender consent), and a £200m term loan which amortises at £10m in March and June 2022 and £20m per quarter thereafter with a final bullet payment on expiry in June 2023, (with one Earnings per share Basic earnings per share (p) Adjusted basic earnings per share (p) Diluted earnings per share (p) Adjusted diluted earnings per share (p) FY 2021 FY 2020 six-month extension option at lender consent). The amended facility was 59.3 134.6 58.1 131.9 46.4 76.3 45.4 74.7 secured at competitive market rates, on substantially similar terms as the previous facility, giving the Group significant headroom and flexibility to pursue the Group’s growth strategy. At 30 September 2021, the £300m consideration required to complete the Dennis acquisition had been drawn and held in cash in readiness for completion on 1 October 2021. ANNUAL REPORT AND ACCOUNTS FY 2021 / 57 Financial ReviewNet adjusted finance costs increased to £7.5m (FY 2020: £2.5m) which includes external interest payable of £5.1m reflecting the drawdown Cash flow and net debt Net debt at 30 September 2021 was £176.3m (FY 2020: £62.1m) of the RCF to fund the GoCo acquisition and £1.7m in respect of the reflecting additional debt drawn to fund the acquisition of GoCo, offset amortisation of bank loan arrangement fees relating to the Group’s bank by strong cash generation. Net debt on 1 October 2021 was around facilities. £476m, following completion of the Dennis acquisition. Leverage at 30 September 2021 was 0.8 times (FY 2020: 0.6 times). During the year, there was a cash inflow from operations of £197.2m Following completion of the Dennis acquisition on 1 October 2021 (and (FY 2020: £91.9m) reflecting the Group’s strong trading performance. excluding other cash movements on 1 October), leverage was 1.9 times. Adjusted operating cash inflow was £210.4m (FY 2020: £100.0m). A reconciliation of cash generated from operations to adjusted free cash flow is included below: Taxation The tax charge for the year amounted to £41.7m (FY 2020: £7.7m), comprising a current tax charge of £30.2m (FY 2020: £9.8m) and a deferred tax charge of £11.5m (FY 2020: £2.1m credit). The current tax charge arises in the UK where the standard rate of corporation tax is 19% Cash generated from operations and in the US where the Group pays a blended Federal and State tax rate Cash flows related to exceptional items FY2021 £m FY2020 £m 197.2 22.7 91.9 8.0 (3.4) 4.0 of £28%. The Group's adjusted effective tax rate is 20.3% (FY 2020: 19.8%), which includes a credit of £1.1m 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. The Group's statutory effective tax rate is 39% (FY 2020: 15%) with the difference between the statutory rate and adjusted effective rates attributable primarily to the impact of the UK tax rate increase (from 19% to 25%) impacting deferred taxes and certain exceptional items not being (Increase)/decrease in accrual for employer's taxes on share-based payments Lease payments following adoption of IFRS 16 Leases (6.1) (3.9) Adjusted operating cash inflow Cash flows related to capital expenditure Adjusted free cash flow 210.4 100.0 (11.1) (4.0) 199.3 96.0 deductible for tax purposes. Adjusted free cash flow In the UK Budget of 3 March 2021, it was announced that the main corporation tax rate will increase from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on 24 May 2021 and as a result the relevant deferred tax balances have been re-measured. The overall impact of the re-measurement has been an increase in the Group’s deferred tax liabilities of £15.6m. The Group’s deferred tax liability increased £67.8m to £70.3m (FY 2020: £2.5m) mainly as a result of the deferred tax liabilities recognised in respect of the acquisition of GoCo (£60.7m) and as a result of the UK tax rate change detailed above. £200.0 £180.0 £160.0 £140.0 m £ £120.0 £100.0 £80.0 £60.0 £40.0 £20.0 £0.0 £199.3m £96.0m £53.7m £15.3m £17.4 £4.6m FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Dividend The Board is recommending a final dividend of 2.8p per share for the Other significant movements in cash flows include £11.1m (FY year ended 30 September 2021, payable on 9 February 2022 to all 2020: £4.0m) of capital expenditure, net drawdown of bank loans shareholders on the register at close of business on 14 January 2022. and overdraft (net of repayments and arrangement fees) of £334.8m Balance sheet Property, plant and equipment increased by £26.5m to £47.4m in the partly to fund the acquisition of Dennis on 1 October 2021 (FY 2020: net repayment of £75.7m), payments of £169.3m (FY 2020: £75.7m inclusive of payments for disposals) for acquisitions, lease payments of £6.1m (FY year (FY 2020: £20.9m) reflecting the acquisition of GoCo (£4.7m) and in 2020: £3.9m), the cost of share issue as part consideration for the GoCo year right of use asset acquisitions (£33.9m) offset by depreciation and acquisition of £0.7m (FY 2020: proceeds from the issue of shares (net of impairment of £16.7m. costs of share issue) of £101.0m), and the acquisition of own shares of Intangible assets increased by £661.1m to £1,154.7m (FY 2020: £493.6m) £4.9m (FY 2020: £8.5m) to satisfy share awards vesting both in the year mainly reflecting the in-year acquisitions of GoCo, Marie Claire US, Mozo and in future years. The Group paid a dividend in the year of £1.6m (FY and CinemaBlend (£721.4m) and capitalisation of website development 2020: £1.0m). Foreign exchange and other movements accounted for costs (£7.4m) offset by amortisation (£48.7m) and the impairment of the balance of cash flows. LAMB intangibles (£8.8m) and the impact of FX (£10.2m). Adjusted free cash flow increased to £199.3m (FY 2020: £96.0m), Trade and other receivables increased by £25.6m to £98.0m (FY representing 102% of adjusted operating profit (FY 2020: 103%), 2020; £72.4m) primarily driven by the acquisition of GoCo (£32.6m on reflecting the ongoing efficient cash management by the Group. acquisition) offset by reduction in aged debt. Trade and other payables increased by £24.6m to £140.8m (FY 2020; £116.2m) primarily driven by the acquisition of GoCo (£27.3m on acquisition). Going concern As part of the year-end process and as required by the Companies Act, Listing Rules and IAS 1 Presentation of Financial Statements, the 58 / FUTURE PLC Financial ReviewDirectors have undertaken a going concern review. This included reviewing the Group’s forecasts and projections, and assessing the Alternative performance measures Alternative performance measures (APMs) are used by the Board headroom on the Group’s combined multicurrency Revolving Credit to assess the Group’s performance, providing additional useful Facility (“RCF”) of £400m and term loan of £200m (which following information for shareholders on the underlying performance of the the Dennis acquisition on 1 October 2021 was over £120m) and banking Group. These measures are not defined by IFRS and are not intended to covenants after applying several severe but plausible downside be a substitute for IFRS measures. scenarios to those projections as part of the assessment made for the The Group presents adjusted operating profit and EPS, which are Viability Statement, provided on page 65. calculated as the statutory reported measures stated before charges This assessment included various individual and combined scenarios relating to share-based payments (relating to equity-settled share none of which individually (or in combination) threaten the viability of awards with vesting periods longer than 12 months), and associated the Group. Even in the most extreme downside scenario modelled social security costs, exceptional items, amortisation of intangible the Group would be able to operate well within the level of its current assets arising on acquisitions, and any related tax effects, including the available debt facilities and covenants. UK tax rate change. The prior year results are also adjusted for fair value The Directors also note that at the year end the Group had net movements on contingent consideration (and unwinding of associated current assets of £234.9m (FY 2020: net current liabilities of £34.3m) discount) and on currency option (including any related tax effects). following the drawdown of the RCF prior to the completion of the EPS is used as a key performance indicator for the Performance Share Dennis acquisition on 1 October 2021. If the cash related to the Dennis Plan. The table below reconciles the APMs to the statutory reported acquisition is excluded then the Group would have net current liabilities measures. of £65.1m, primarily driven by the current portion of the new term loan relating to the Dennis acquisition, deferred income of £7.1m and the nature of the TI Media business acquired in the prior year where the Conclusion The Group has delivered another year of strong growth (both organic profile of cash receipts from wholesalers is often ahead of payment of and complemented by acquisitions), record profit and cash flow, certain magazine related costs. The Group has consistently delivered adding to our track record. The Group is well positioned to continue to adjusted free cash flow conversion in excess of 100% and is forecast to deliver it's strategy. The Strategic Report and the Financial Review are generate sufficient cash flows to meet its liabilities as they fall due. approved by the 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 Penny Ladkin-Brand concern basis in preparing the consolidated financial statements for the Chief Financial Officer year ended 30 September 2021. 29 November 2021 Revenue (£m) Operating profit (£m) Net finance income/(costs) (£m) Profit before tax (£m) Tax (£m) Profit after tax (£m) Basic earnings per share (pence) Diluted earnings per share (pence) 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 Share-based payments Exceptional items Amortisation of acquired intangibles Effect of tax rate change 606.8 115.3 (7.5) 107.8 (41.7) 66.1 59.3p 58.1p - 14.8 - 14.8 1.5 16.3 14.6p 14.4p - 27.4 - 27.4 (1.3) 26.1 23.5p 22.9p - 38.3 - 38.3 (12.4) 25.9 23.2p 22.8p - - - - 15.6 15.6 14.0p 13.7p 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 - 5.5 - - 5.5 (1.0) 4.5 4.7p 4.6p - 15.6 - 1.5 17.1 (2.3) 14.8 15.5p 15.2p - 21.6 - - 21.6 (6.7) 14.9 15.6p 15.3p - - (7.6) - (7.6) - (7.6) (7.9)p (7.8)p - - 1.1 - 1.1 (0.1) 1.0 1.0p 1.0p - - 1.2 - 1.2 (0.2) 1.0 1.0p 1.0p Statutory 339.6 50.7 2.8 (1.5) 52.0 (7.7) 44.3 46.4p 45.4p FY2021 Adjusted 606.8 195.8 (7.5) 188.3 (38.3) 150.0 134.6p 131.9p FY2020 Adjusted 339.6 93.4 (2.5) - 90.9 (18.0) 72.9 76.3p 74.7p ANNUAL REPORT AND ACCOUNTS FY 2021 / 59 Financial ReviewRisks and uncertainties The Board has overall responsibility for risk management. Our robust approach to the identification and evaluation of key risks enables us to support the achievement of strategic and operational objectives and to address the challenges, uncertainties and opportunities Future faces. Emerging risks The Group operates in a number of dynamic markets and environments and takes a forward-looking and proactive approach to the identification and evaluation of new and emerging risks, which are identified from current business activities, acquisitions, integration workstreams and through developments in the wider environment. Climate change is not currently considered to be a principal risk, but will be kept under review. The Group's responsibility commitment is included in Our Future, Our Responsibility strategy - more can be found on page 44. Developments in 2021 • The overarching risk management framework was reviewed and refreshed by the Executive Leadership Team (ELT), Audit and Risk Committee and Board, which includes: • Updates to risk policy, risk appetite statements and associated governance processes. Identification of risks, uncertainties and opportunities is a • Dedicated Risk function put in place to provide specialist risk fundamental part of strategic decision making and part of management advice, reporting and support. day-to-day management of our operations across the Group. • Formal review of principal risks to ensure commentary, controls The Board recognises that risks, uncertainties and opportunities and impacts are documented and understood. are a natural consequence of operating in fast-paced and dynamic • Risk Governance arrangements have been updated to reflect the sectors and markets and the aim is to ensure that risk-aware needs of the wider group. decision making is a fundamental part of strategy - in day-to-day • Specific FCA risk management requirements for a distinct operations and management of the Group’s business divisions, key approach to risk management and risk governance within operational functions and acquisitions and integration activities. GoCompare have been introduced, this includes: Risk appetite The Group’s risk appetite statements set out the nature and extent • Risk mapping and calibration exercise to ensure the different risk exposures within the FCA regulated entity are understood and reflected in the Group’s principal risks and uncertainties (where relevant). of the risks the Group is prepared to take, retain and accept in • Dedicated integration cross-functional workstreams in place to pursuit of strategic objectives. Risk appetite statements may change identify any new or emerging risks arising from acquisitions. to reflect the Group’s strategy, business performance and to reflect developments in both the internal and external environments. Risk appetite statements are matters reserved for the Board and are reviewed at least annually. Y G E T A R T S N O T C A P M I H G I H M U I D E M W O L Risk Matrix Personal Data Media Market Disruption and Changing Consumer Habit Key Personnel Cyber Security Reliance on Third Party Distribution Platforms Digital Advertising Market Changes Economic & Geo-political Reliance on Third Party Service Partners Continuing Pandemic Impact 60 / FUTURE PLC L O W M E D I U M H I G H L I K E L I H O O D Financial Review Three Lines of Defence Future has adopted the three lines of defence model for the effective oversight and support of risk management. OVERALL ACCOUNTABILITY THE BOARD Renumeration Committee THE AUDIT AND RISK COMMITTEE Nomination Committee EXECUTIVE LEADERSHIP TEAM FIRST LINE OF DEFENCE SECOND LINE OF DEFENCE THIRD LINE OF DEFENCE Executive Management Responsibility Compliance & Risk Operational Performance and Monitoring Monthly Business Perfomance Reviews Legal DPO Weekly and Monthly ELT Meetings Information Security Financial Forecasting and Management Key Policies t i d u A l a n r e t n I E G N E L L A H C D N A T H G I S R E V O R E P O R T I N G A N D I N F O R M A T I O N First Line Operational areas are responsible for Second Line Specialist functions provide support and Third Line Independent Internal Audit delivers a risk day-to-day identification, management and advice to operational areas in areas of risk based programme to provide assurance on reporting of risks. Risks, opportunities and emerging risk are reviewed at Monthly management and control design. Second line functions include: the management of key risks and the effectiveness of the control environment. Business Performance Reviews, Weekly and • Compliance monthly ELT meetings, financial budget • Data Protection Officer Internal Audit activities are provided by both an in-house and an outsourced team setting, forecasting and ongoing reviews. • Legal (currently Mazars). In addition, M&A risks are identified and • Information Security Internal Audit reports directly to the Audit managed through pre-acquisition Due • Risk and Risk Committee, which is a formal Diligence activities, Integration planning and This assists management in ensuring that sub-committee of the Future plc Board. weekly project meetings. risks, issues and incidents are escalated and reported throughout the organisation, including (where appropriate) the Audit and Risk Committee and the Board. Second Line activities may also include specialist technical support provided by third parties (e.g. external legal counsel advice, professional advisory and consulting firms). ANNUAL REPORT AND ACCOUNTS FY 2021 / 61 Financial Review Summary of Principal Risks 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 Media market disruption and changing consumer habits V Business Model link: i, ii, viii Strategy link: 1-5 Risk Key person risk V Business Model link: i-viii Strategy link: 1-5 The Group’s strategic 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 investment in its editorial content. Impact Failure to anticipate and respond to market disruption and changing content consumer habits may affect demand for our products and services and our ability to drive long-term growth. Mitigation The Group distributes content across all relevant media channels with 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 page 14. Risk movement Stable 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. Impact Lack of skilled, experienced and motivated people at executive board level and throughout the wider group may lead to an inability to deliver on strategy and business and financial performance targets. Mitigation The Group has recruited several new senior roles recently to provide additional strength and depth to the leadership team. We have created a number of new executive leadership roles whilst investing in leadership across our growth portfolio of content verticals. Operational leadership and FCA expertise has been expanded with the recent GoCo acquisition. In order to attract and retain top talent and ensure that the Group remains an attractive place to work, appropriate reward packages including newly launched all employee Value Creation Plan 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 78. Risk movement Stable The Group derives its revenue principally through the marketing activities and the interaction of customers with websites and online publications. This includes using digital advertising, subscription services and comparison journeys. The Group (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), relating to the collection and use of personal information and places significant transparency and accountability on the Group. Acquisitions increase the level of personal data risk through the increased volume and nature of personal data processed and through legacy systems and partners that may not operate to the same standard as the Group and its partners. Impact The collection, storage and use of personal data presents a risk of misuse, loss, compromise or unauthorised access, which could result in reputational damage, regulatory intervention, financial penalties in the event of a serious breach along with a loss of trust amongst customers and partners. Mitigation Group Data Protection function in place provides continuous monitoring of data and privacy developments and adoption of best practice and advice across the Group. Content Management Platform in place for websites. Contractual provisions to ensure compliance with data protection legislation with third parties involved in providing or processing data. Data protection training and awareness programmes are in place to ensure that colleagues across the Group are aware of regulatory requirements in relation to data processing and marketing activities. Data Protection workstream included in acquisition and integration activities. Data Steering Committee meets regularly to review developments. Data Protection Roadmap in place to drive priorities and activity within the Group. Governance oversight The Audit and Risk 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 70. Risk movement Stable 62 / FUTURE PLC Financial Review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 Risk Cyber security and IT Business Model link: i, ii, vi, vii, viii, Strategy link: 1, 4 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 Reliance on third party distribution platforms V Business Model Link: i, ii, viii Strategy link: 1-5 Risk Digital advertising market changes V Business Model Link: i, ii, viii Strategy link: 1-5 The Group relies on resilient websites, customer journeys and systems to provide high-quality and relevant content and services to customers. The Group is exposed to a variety of cyber threats including DDoS attacks, malware and hacking that may result in the compromise of commercial and customer data. The Group depends on its ability to market, distribute and monetise 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. Impact A failure to manage and mitigate cyber-related incidents affecting datastores, tech infrastructure and websites may lead to unavailability of services, access to or compromise of data, which could have reputational, financial and regulatory consequences. Mitigation Continuous and proactive monitoring of the cyber threat landscape. In-house Information Security team. Business continuity arrangements in place for websites, office systems in place. Cyber threat monitoring, detection, prevention and response capabilities. Best practice approach through investment and upgrading of IT systems and processes. Antivirus protection for all company-owned devices. Ongoing vulnerability assessment programme in place. Multiple back-up facilities in different locations that minimises any single point of failure. Servers are distributed in diverse data centre locations across geographic locations. Information Security integration workstream to ensure acquisitions are incorporated into the Group's cyber control framework. Bring Your Own Device and USB access controls in place. Staff awareness programme in place with annual training with FAQs. 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 page 14. Risk movement Stable Impact Although the Group has not been materially impacted by any algorithm changes to date, the Group is not complacent. 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 Dedicated audience development team to embed best practice within its editorial and technical teams. Continuous approach to create expert quality content to meet the needs of audiences to deliver information and advice users are searching for. Investment 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 (IAB) and upcoming Google Web Vitals (standards) introduction. Considerable expertise in distributing and monetising content across a broader group of digital platforms with which the Group has strong partnerships. 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 page 14. Risk movement Stable The Group depends on digital advertising as a key channel to drive volume from and interaction with its audiences. Ad propositions must be relevant to drive engagement and optimal performance as users shift to mobile devices and increasingly to video consumption. The Group’s ability to compete for a share of available advertising expenditures will be challenged as more traditional offline and emerging media companies continue to enter the online advertising market. Impact Failure to anticipate changing customer behaviour, developments in technology, privacy standards, changes on targeted personalised ads and the approach to customer acquisition by third parties advertisers may have a negative impact on market share, revenue and profit. Mitigation The Group is a premium publisher with large market shares of highly endemic audiences, as a consequence advertising partners are typically endemic and work with the Group because of the brands and audiences it has. The Group’s sales teams are trained to sell the benefits associated with working with the wider Group (rather than acquiring advertising programmatically). Continued investment in the direct sales team to maintain and develop deep direct client contact. The proportion of advertising directly sold to advertisers has increased year-on-year. Enhanced first party audience capabilities to target Advertiser's campaigns with rich first party audience data (a data set which continues to grow) and is facilitated by our Aperture data platform. This allows Advertisers to hyper target the Group’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 the Group’s Hybrid technology ensures that Future delivers quality, optimised audiences for advertisers. Expansion of video offering including specialist digital video production and social media distribution enables the Group to capitalise on growing social media and video advertising demand. 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 page 14. Risk movement Stable continued overleaf: ANNUAL REPORT AND ACCOUNTS FY 2021 / 63 Financial Review Summary of Principal Risks continued Risk Economic & Geo-political uncertainty V Business Model link: i-viii Strategy link: 3, 5 Risk Reliance on key third party service providers V Business Model Link: ii, v, viii Strategy link: 1, 3 Risk Pandemic impact continues V Business Model link: i-viii Strategy link: 3, 5 Group performance could be adversely impacted by factors beyond our control such as the economic conditions in key markets and political uncertainty. The macroeconomic climate and continued uncertainty surrounding the impact of Brexit and energy costs on the UK economy and the US political landscape could lead to reduced consumer spending and a related downturn in advertising. Certain third parties are critical to the operations of our businesses. Key third parties include: • Printers and paper suppliers • Magazine wholesalers and hauliers • Data centre and cloud service providers • High performing technology and data science solutions Whilst the Group trading results overall have proven resilient during the pandemic period to date, there is a risk of longer term impacts on other stakeholders such as employees, customers, suppliers, the wider economy and consequently the success of the Group. The safety and wellbeing of the Group's employees remains a high priority. Impact An economic downturn, fiscal policy changes or unexpected developments linked to worsening economic conditions may have a negative impact on revenue and profit. Mitigation We continue to monitor macroeconomic developments to ensure that the Group responds swiftly 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's diversifed revenue streams across different sectors provides resilience to economic shocks. In addition, the Group has focused on being the market leader wherever possible, which should make it more resilient 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 starting on page 24. Risk movement Stable Impact A failure of one of our critical third parties may cause disruption to business operations, impact our ability to deliver products and services, meet the needs of our customers and result in financial loss. The reputation of our businesses may be damaged by poor performance or a regulatory breach by critical third parties. 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. The Group 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 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 page 14. Risk movement Stable Impact Further lockdowns or restrictions imposed by governments as a consequence of increasing COVID-19 infection rates, may have a negative effect on revenue and profit and on the wellbeing of colleagues across the Group. Mitigation Work from home strategies are in place. Robust measures in place at office locations to ensure they are ‘Covid safe’ and comply with local legislation and government guidance. Offices in the US will remain closed until it is appropriate. Financial support offered to employees to support increased costs of working from home and hardship. Circa 100 of colleagues decided not to take this payment and their payments were diverted to the company hardship fund. Communication continues with virtual monthly town hall meetings, chat Q&As, listening sessions hosted by senior business leaders along with regular email updates. Physical & mental wellbeing is a key priority and we have trained over 50 Mental Health First Aiders. Credit extended when necessary to assist and ease pressure on partner 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 in the Responsibility Report on pages 34 to 49. Risk movement Stable 64 / FUTURE PLC Financial Review Longer term Viability Statement Assessing the Group’s longer term prospects and viability £10m in March and June 2022 and £20m per quarter thereafter with a final bullet payment on expiry in June 2023. The Company has the ability The Directors have based their assessment of viability on the Group’s to request an extension to both facilities subject to lender consent. The current strategy, which is outlined in pages 12 to 19. The Group’s prospects RCF has two one year extension options which, if exercised, would are assessed primarily through its annual long-term detailed planning extend the life of the facility to July 2026. Whilst the term loan has a six process which considers profitability, the Group’s cash flows, committed month extension option which, if exercised, would extend the life of the banking facilities, liquidity and forecast funding requirements over the facility out to 30 December 2023. We have assumed for the purposes of next three years. This exercise is completed annually and was signed off this viability assessment that the Group will take advantage of the by the Board in Q4 FY 2021. As part of this the Board considers the extension option in respect of the RCF to maximise the availability of the appropriateness of key assumptions, taking into account the external facilities. environment and the Group’s strategy. The assessment period A three-year period is used for the Group’s Viability Statement as this The scenarios are hypothetical and purposefully severe with the aim of creating outcomes that have the ability to threaten the viability of the Group. The Group has multiple control measures in place to prevent and mitigate the scenarios from taking place. aligns with the length of the Group’s detailed plan, and this horizon most Although each of the downside (and the combined) scenarios result in appropriately reflects the dynamic and fast changing media environment increased leverage they all result in headroom over the existing bank in which the Group operates. Assessing the Group’s viability The viability of the Group has been assessed, taking into account the facilities and covenants at all testing points (even where none of the various options available to the Group in order to maintain liquidity such as reducing any non-essential capital and operating expenditure as well as not paying dividends are utilised). Group’s current financial position, including external funding in place over The results of this stress testing showed that the Group would be able to the assessment period, and after modelling the impact of certain withstand the impact of these scenarios occurring over the assessment scenarios arising from the principal risks, which have the greatest period. potential impact on viability in that period. The exercise undertaken indicates that the Group is extremely A number of scenarios have been modelled, considered severe but diversified and very resilient to a number of extreme but plausible plausible, that encompass these identified risks. Whilst each of the risks on downside scenarios however in order to illustrate the level of headroom, pages 62 to 64 has a potential impact and has been considered as part of we have separately quantified that it would require adjusted operating the assessment, only those that represent severe but plausible scenarios cashflow to reduce by 60% in total across FY 2022 and FY 2023 for the were selected for modelling. None of these scenarios individually threaten Group to breach its facility limits in June 2023 when the outstanding term the viability of the Group. The assessment undertaken includes the impact loan facility has to be repaid (although noting that an extension could be of the acquisition of Dennis on 1 October 2021. sought from the Group’s banking partners). The Directors consider such a The scenarios have been run both individually and with 2) and 3) large reduction to be extremely unlikely and would contradict the combined (as the combination of all downside scenarios occurring at Group’s underlying track record and success of the business model. once is considered to be remote) as well as running the scenario where the Dennis acquisition does not deliver the results that are expected individually as well as within the downside combination scenario. Viability Statement Based on these severe but plausible scenarios, the Directors have a The scenarios have been modelled using the Group’s existing £400m reasonable expectation that the Group will continue in operation and RCF which runs to July 2024 and the £200m term loan which amortises at meet its liabilities as they fall due over the three-year period considered. Scenario Associated Principal Risk(s) Description 1) Data security breach Personal data 2) Significant Media revenue reduction Key person risk Digital Advertising Third party distribution platforms Media market disruption and changing consumer habits Cyber security and IT 3) Significant change in external environment Economic and geo-political uncertainty Third party service providers Pandemic impact continues A serious data security or regulatory breach would significantly change the Group's reputation amongst its customers and result in a material reduction in Media revenues and additional IT costs whilst the breach is rectified. We have also assumed that the largest monetary penalty being the higher of £17.5 million or 4% of the total annual worldwide turnover in the preceding financial year is incured. Given the inherent uncertainty of total quantum, this test is purposely severe as a stress test for the Group. This scenario assumes a material reduction in eCommerce and advertising revenues (net of direct cost reductions) compared to the three year plan of 10% per annum. 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. ANNUAL REPORT AND ACCOUNTS FY 2021 / 65 Financial ReviewCorporate Governance 68 CHAIR’S INTRODUCTION 70 GOVERNANCE FRAMEWORK 72 BOARD OF DIRECTORS 78 NOMINATION COMMITTEE 82 AUDIT AND RISK COMMITTEE 88 DIRECTORS’ REMUNERATION REPORT 92 DIRECTORS’ REMUNERATION POLICY 100 ANNUAL REPORT ON REMUNERATION 110 DIRECTORS' REPORT 113 DIRECTORS' RESPONSIBILITY STATEMENT 66 / FUTURE PLC ANNUAL REPORT AND ACCOUNTS FY 2020 / 67 Corporate GovernanceChair’s Introduction Richard Huntingford Chair Dear fellow shareholders, The challenges raised by the ongoing global pandemic This Corporate Governance Report for the year ended 30 continued to be a focus as the Board considered the September 2021 outlines how the Board has ensured that necessary steps needed to protect the businesses and robust and appropriate governance procedures are in place stakeholders, particularly our employees, in all our to ensure effective, entrepreneurial and prudent jurisdictions and you can read more about this on page 43. management of the Company that will deliver long-term The Code provides that a board should establish a sustainable success for the benefit of our shareholders and company’s purpose and values as well as its strategy and broader stakeholders. In this report, we set out our that its directors should lead by example and promote the approach to corporate governance and provide detail on desired culture. the role of the Board of Directors, followed by a more Our values have been in place for many years and are detailed focus on the work of each of the three key Board firmly embedded in the DNA of our business and all that we committees: the Audit and Risk Committee, the do, fostering a strong culture which, combined with our Nomination Committee and the Remuneration Committee. effective governance, ensures that everyone stays focused As explained on page 34 a Responsibility Committee has on delivering our strategy, whilst staying true to who we are. just been formed and next year we will also be reporting on The Board has a key focus on monitoring the culture the work of this Committee. Together, these Committee throughout the Group, and ensuring that the necessary reports give a clear insight into how we manage corporate resources are in place to allow our people to shine. governance principles and processes within the Group. Following the acquisition of GoCo Group plc (GoCo), the Strategy, culture and people The Board’s annual work programme allows the Directors Board and Board Committees have also focused on ensuring that regulatory compliance is embedded into our culture. to maintain oversight and governance of all aspects of the The Board is kept up-to-date on key issues regarding Group’s business and to play an active role in debating and employees by the inclusion in Board packs of an HR examining forward-looking strategy and overseeing the Dashboard, with the Chief People Officer attending Board management of the business. Directors work closely with meetings to discuss matters relating to people and culture. the executive management team, offering support and The main focus of the people and culture team this year has robust challenge as appropriate. been ensuring that those who have joined the Future family “Robust and appropriate governance procedures are in place to ensure effective, entrepreneurial and prudent management of the Company that will deliver the long-term sustainable success for the benefit of our shareholders and broader stakeholders.” 68 / FUTURE PLC Chair’s Introductionas a result of recent acquisitions are fully aligned with the culture of the Company whilst also the ensuring the overall welfare of our employees throughout the global pandemic, particularly focusing on mental wellbeing and you can read more about this work on page 43. Whilst the pandemic-related restrictions prevented the Board from visiting our overseas operations during the year, Directors were delighted to be able to spend time in our Bath and Newport sites meeting our colleagues, as well as those in our London offices, both informally and as part of formal Board business. The Board is satisfied that the approach towards engagement with the workforce described in the Responsibility Report on pages 34 to 49 is robust. Board changes during the year The Board was strengthened during the year by two new appointments. Firstly, Mark Brooker was appointed as an independent Non-Executive Director on 1 October 2020 to bring further board level public listed company experience, together with platform-based expertise and a successful track record across a variety of operational, strategic and financial roles. Secondly, following completion of the GoCo acquisition, Angela Seymour-Jackson was appointed as an independent Non-Executive Director on 22 February 2021 having previously served as an independent Non-Executive Director on the GoCo board. Angela has extensive AGM The pandemic restrictions unfortunately prevented us holding our usual AGM gathering this year so I very much hope that we will be able to meet shareholders again in person at our 2022 AGM in February. You can read more about our plans for the AGM later in this report and in the notice of meeting on page 174, and I look forward to seeing as many of you there as possible. Richard Huntingford Chair of the Board Compliance with the 2018 Code An explanation of how the Company has complied with the 2018 UK Corporate Governance Code (the Code is available at www.frc.org.uk), including how it has applied the principles contained therein, is set out within this Corporate Governance Report, the Strategic Report and the Directors’ experience gained from a multitude of industries and Report. In particular, the following pages will be most relevant sectors, including the insurance market. in enabling shareholders to evaluate how these principles have Rachel Addison stood down from her position as Chief been applied:: Financial Officer (CFO) with effect from 31 October 2021. As a result of the ongoing succession planning work undertaken by the Board, the natural succession candidate to Rachel Addison was the internal appointment of Penny Ladkin- Brand as the new CFO. Penny served as the Chief Strategy Officer from June 2020, having previously served as CFO from 2015. A detailed and thorough interview process was undertaken before Penny Ladkin-Brand was appointed. Further details on the process and Penny’s background are BOARD LEADERSHIP AND COMPANY PURPOSE.........................................................Pages 12, 35 DIVISION OF RESPONSIBILITIES ................................................ Page 70 COMPOSITION, SUCCESSION AND EVALUATION ................................................................................Pages 75, 78 set out in the Nomination Committee Report on page 78. AUDIT, RISK AND INTERNAL CONTROL ...........................Page 82 Succession planning remains an ongoing focus for the Board and Nomination Committee. Our goal is the development of a diverse pipeline of talented and experienced people supporting the Board and our Executive Leadership Team ( ELT) and you can read more about this on page 80. Stakeholders Consideration of the Group’s full range of stakeholders, including our people, investors, audience, strategic partners, and suppliers, continued to be an integral part of the Board’s discussions and decision-making. The section 172 statement on pages 50 to 53 describes how the Board took its wider responsibilities into account, including an overview of the Board’s engagement activities with each of our key stakeholder groups. REMUNERATION ..............................................................................................Page 88 The Company confirms that it has complied with the provisions of the Code throughout the financial year, or where it has not complied an explanation has been provided as shown below: Provision 5 .........................................................................................................................Page 69 Provision 15 .......................................................................................................................Page 78 Provision 20 .....................................................................................................................Page 78 Provision 36 ....................................................................................................................Page 94 Provision 38 ..................................................................................................................Page 109 Provision 41 .......................................................................................................................Page 51 ANNUAL REPORT AND ACCOUNTS FY 2021 / 69 Corporate Governance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 www.futureplc.com/governance/ Chair Chief Executive • Primarily responsible for overall • Responsible for executive Senior Independent Director operation, leadership and governance of the Board. management of the Group as a • Provides a sounding board to the whole. Chair. • Leads the Board, sets the agenda and promotes a culture of open • Delivers strategic and commercial • Leads the appraisal of the Chair’s objectives within the Board’s performance with the other debate between Executive and stated risk appetite. non-Executive Directors annually. • Builds positive relationships with • Acts as intermediary for other all the Group’s stakeholders. 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. 70 / FUTURE PLC Governance FrameworkBoard and Board Committees meeting and attendance Richard Huntingford Zillah Byng-Thorne Rachel Addison Meredith Amdur Mark Brooker Hugo Drayton Rob Hattrell Alan Newman Angela Seymour-Jackson3 Board1 Nomination Committee Audit and Risk Committee Remuneration Committee General meetings2 13 13 13 13 13 13 13 13 7 4 4 - 4 4 4 4 4 2 - - - 5 - 5 - 5 4 - - - - 5 5 5 - 2 2 2 - - - - - - - 1. 2. In addition to the six Board meetings and two strategy meetings, five Board calls were held to discuss business matters that the Chair and Chief Executive decided should be considered by the Board. 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 The General Meeting held in January 2021 and the Annual General Meeting held in February 2021 were closed meetings with restricted attendance in line with the Government’s COVID-19 guidance. 3. Angela Seymour-Jackson was appointed to the Board on 22 February 2021. 4. In addition to the scheduled meetings, the Chair and the Non-Executive Directors meet once a year to allow discussion without executive management present. The Senior Independent Director and the Non-Executive Directors meet once a year without the Chair present in order to appraise his performance. Principal Board Committees Audit and Risk Committee Remuneration Committee Nomination Committee Responsibility Committee • Oversees and monitors the Company’s financial • Reviews and recommends the framework and policy for the • Reviews the structure, size and composition of the • Develops and oversees Future’s responsibility statements, accounting remuneration of the Chair, the Board and its strategy. processes and audits Executive Directors, the Committees. (internal and external). Company Secretary and senior • Ensures that risks are carefully identified and executives in alignment with the Group’s reward principles. • Identifies and nominates suitable executive candidates to be assessed, and that sound • Considers the business appointed to the Board systems of risk strategy of the Group and how and reviews the talent management and internal the remuneration policy pool. control are in place. reflects and supports that. • Review progress against priorities and objectives, across the responsibility strategy. • Considers Future’s position on relevant, emerging sustainability • Considers wider elements issues . • Reviews matters relating • Reviews workforce of succession planning to fraud and remuneration and related whistleblowing reports policies and alignment of below Board level, including diversity. received. incentives and rewards with culture, to help inform setting of Directors’ remuneration policy. • Consults with shareholders on the remuneration policy. SEE PAGE 82 FOR MORE INFORMATION SEE PAGE 88 FOR MORE INFORMATION SEE PAGE 78 FOR MORE INFORMATION SEE PAGE 44 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. ANNUAL REPORT AND ACCOUNTS FY 2021 / 71 Corporate GovernanceBoard of Directors Nomination Committee Remuneration Committee Audit and Risk Committee Responsibility Committee Committee chair Richard Huntingford POSITION: Independent Non-Executive Chair NATIONALITY: British APPOINTED: December 2017 and as Chair in February 2018 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 Chair of Unite Group plc and Non-Executive Director of JPMorgan Mid Cap Investment Trust plc. Richard had a 20-year career at Chrysalis plc and was CEO from 2000 to 2007, following which he was Chair of Virgin Radio until its sale in 2008. More recently, he has been Non-Executive Chair of Wireless Group plc (formerly UTV Media plc) from 2012 to 2016, Non- Executive Director and Chair of Creston plc from 2011 to 2016 and Non-Executive Director of The Bankers Investment Trust plc from 2018 to 2021. Education: Richard is a chartered accountant (FCA), having qualified with KPMG. Zillah Byng-Thorne POSITION: Chief Executive NATIONALITY: British APPOINTED: November 2013 and as Chief Executive in April 2014 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 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. Penny Ladkin-Brand POSITION: Chief Financial Officer NATIONALITY: British APPOINTED: October 2021 Key skills and experience: • Strong financial and commercial expertise • Considerable experience of digital disruption and transformation External appointments: Penny is Non-Executive Chair of Next Fifteen Communications plc, a Non-Executive Director of Auction Technology Group plc and a Trustee of The Media Trust. As noted in the Nomination Committee report on page 78, Penny will be reducing the number of her external directorships within one year of her appointment as CFO. Prior to joining Future, Penny was previously Commercial Director at AutoTrader Group plc. Education: Penny is a chartered accountant and holds a BA in Classics from Oxford University. Meredith Amdur POSITION: Independent Non-Executive Director NATIONALITY: American APPOINTED: February 2020 Key skills and experience: • Editorial and publishing content • Digital • Technology platforms • Advertising and brands External appointments: Currently Chief Executive Officer of Rhetorik, a leading data supplier to technology vendors. 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. 72 / FUTURE PLC Board of Directors Mark Brooker POSITION: Independent Non-Executive Director NATIONALITY: British APPOINTED: October 2020 Key skills and experience: • Board roles in public companies • UK and International consumer and B2B businesses • Digital platforms External appointments: Non-Executive Director at Paysafe Ltd (NYSE listed) and Equiniti Group plc (until December 2021). Previously Chief Operating Officer of Trainline (formerly thetrainline.com) with responsibility for the UK and International consumer and B2B businesses. Prior to this he was COO at Betfair having previously 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. Hugo Drayton POSITION: Senior Independent Non-Executive Director NATIONALITY: British APPOINTED: December 2014 Key skills and experience: • Advertising and marketing, technology, customer behaviour, media, executive leadership, business development. External appointments: Currently Non-Executive Director of GFinity plc and a trustee of the British Skin Foundation. Regular contributor to trade press and publishing conferences. CEO of the advertising technology business Inskin Media (2009-19). Previously CEO of Phorm, European MD of Advertising.com and Marketing & New Media Director and then Group MD at The Telegraph Group,. Chaired the British Internet Publishers’ Alliance. Education: BA in Latin American Studies & French from University College of London. Rob Hattrell POSITION: Independent Non-Executive Director NATIONALITY: British APPOINTED: October 2018 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. Alan Newman POSITION: Independent Non-Executive Director NATIONALITY: British APPOINTED: February 2018 Key skills and experience: • Corporate finance, accounting 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. Angela Seymour-Jackson POSITION: Independent Non-Executive Director NATIONALITY: British APPOINTED: February 2021 Key skills and experience: • Strong strategic understanding. • Extensive experience gained from a multitude of industries and sectors, including the insurance market. • Relevant experience with audit and remuneration committees. External appointments: Non-Executive Director of Janus Henderson Group plc, PageGroup plc and Trustpilot Group plc. Held executive roles with Aegon UK, RAC Motoring Services Limited and Aviva UK Limited, and was Senior Advisor to Lloyds Banking Group (insurance). Previous Non-Executive Director roles include esure Group plc, Rentokil Initial plc and GoCo Group plc. Education: Angela is a qualified marketing professional and a member of the Chartered Institute of Marketing. She holds an MSc in Marketing. ANNUAL REPORT AND ACCOUNTS FY 2021 / 73 Corporate Governance Board activities Focus area Key stakeholders Activities Example of some principal decisions Link to strategic priorities Strategy and operations (see Strategic Report starting on page 6) Leadership, people and culture (see page 40) Finance (see Strategic Report on page 6 and Financial Review on page 56) 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 synergies. Our audience Our commercial partners and suppliers Our investors Regulators Our people • Receiving an update on employee views and Our investors engagement. • Ensuring the Company remains at the forefront of developing and embedding best practice in responsible business behaviour. • Maintaining and enhancing Future’s culture and values and key policies and procedures and ensuring these are rolled out to existing and acquired businesses. • Reviewing whistleblowing statistics, details of cases raised through the whistleblowing hotline and related independent investigations. • Continuing to monitor senior executive talent management and development plans to provide succession for all key positions. Acquisition of GoCo Group plc: The Board gave extensive consideration to what the impact of the proposed acquisition would be on the various stakeholder groups. This involved an appraisal of the financial effects of the acquisition, the operational risks involved in its integration, optimal financing arrangements and enhanced regulatory compliance. In addition, the Board considered the impact of the acquisition on the employees of both Future and GoCompare, particularly during the consultation process with employees, the audience and suppliers, as well as the potential consequences for existing shareholders. Development and launch of the VCP: We continue to be a responsible employer in our approach to our people. The Board looked at development of the VCP, to ensure that it reflected Future's culture, with participation extending throughout the company and engaged with investors as part of this development. Once the VCP received shareholder approval and had been rolled out across the Group, the Board reviewed how it had been received. Our audience • Reviewing and approving the Group budget. Our commercial partners and suppliers Our investors Regulators • Reviewing financial Key Performance Indicators (KPIs). • Approving full year results, half year results, trading update, and the Annual Report. • Reviewing the Group’s dividend policy. • Reviewing the key risks to the Group and the controls in place for their mitigation. • 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. Financial strategy and resilience: As part of its role in keeping funding requirements and planned project expenditure together with financial headroom and cash flow under review, the Board considered and approved the financing arrangements in November 2020, when it reviewed the debt facilities as part of the GoCo acquisition, and again July 2021 when it undertook a further Amend and Extend of the debt facilities (for more information see page 57). Governance (see page 68 of the Governance Report) Our people Our commercial partners and suppliers • Monitoring and reviewing the Company’s approach to corporate governance, its key practices and its ongoing compliance with the 2018 Code. • Reviewing the results from the external Board effectiveness evaluation. • Approving updated Committees’ terms of Our investors reference. Regulators • Continuing to keep key policies updated and monitor ongoing compliance. • Receiving and considering feedback from shareholder engagement. • Reviewing and approving the Modern Slavery statement. Regular dialogue with investors: The Chair, Senior Independent Director and Chair of the Remuneration Committee have a number of scheduled meetings with investors over the year and have provided feedback on that engagement to the Board (for example on the development of the VCP). Following the announcement that Penny Ladkin-Brand would be taking over as CFO, the Chair made himself available to speak with a number of investors. 74 / FUTURE PLC • Diversifying our audience • Scalable platform • Continued diversification of content monetisation • Ongoing investment • Ongoing investment • Scalable platform • Continued diversification of content monetisation • Ongoing investment • Ongoing investment Governance Framework Focus area Key stakeholders Activities Example of some principal decisions Link to strategic priorities Strategy and operations (see Strategic Report starting on page 6) Our people • Applying the Board’s strategic understanding Acquisition of GoCo Group plc: of geopolitical and economic risks in The Board gave extensive consideration to international markets to the Company’s what the impact of the proposed acquisition Our audience 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 synergies. Our commercial partners and suppliers Our investors Regulators • Diversifying our audience • Scalable platform • Continued diversification of content monetisation • Ongoing investment Our people • Receiving an update on employee views and Development and launch of the VCP: • Ongoing investment Leadership, people and culture (see page 40) Our investors would be on the various stakeholder groups. This involved an appraisal of the financial effects of the acquisition, the operational risks involved in its integration, optimal financing arrangements and enhanced regulatory compliance. In addition, the Board considered the impact of the acquisition on the employees of both Future and GoCompare, particularly during the consultation process with employees, the audience and suppliers, as well as the potential consequences for existing shareholders. We continue to be a responsible employer in our approach to our people. The Board looked at development of the VCP, to ensure that it reflected Future's culture, with participation extending throughout the company and engaged with investors as part of this development. Once the VCP received shareholder approval and had been rolled out across the Group, the Board reviewed how it had been received. engagement. • Ensuring the Company remains at the forefront of developing and embedding best practice in responsible business behaviour. • Maintaining and enhancing Future’s culture and values and key policies and procedures and ensuring these are rolled out to existing and acquired businesses. • Reviewing whistleblowing statistics, details of cases raised through the whistleblowing hotline and related independent investigations. • Continuing to monitor senior executive talent management and development plans to provide succession for all key positions. Our audience • Reviewing and approving the Group budget. Financial strategy and resilience: • Scalable platform Board evaluation Formal evaluation is a valuable tool for improvement of Board performance. Following two years of internal evaluations, the 2021 evaluation exercise was undertaken by external consultants, Independent Audit Ltd, in accordance with the guidance provided under the UK Corporate Governance Code. Following the internal performance evaluation carried out in 2020, the following main objectives were identified for 2021, together with steps taken to address them. Objectives for 2021 Steps taken during 2021 Utilising our skills matrix as part of our Board succession planning. • A Board skills matrix is reviewed at least annually. This track s factors relating to Board and Committee composition (including diversity) and succession planning, such as retirement by rotation and the lapse of ‘independent’ status. Reorganisation of our Board Committees and their remits. • The membership of the Board Committees was reviewed during the year with various changes made to make the best use of respective Board talent. • Following the acquisition of GoCo, the Audit Committee's terms of reference was updated to reflect its broader responsibilities, with the Committee renamed the Audit and Risk Committee. • A new Responsibility Committee has been created (and you can read more about this on page 44). • Continued diversification of content monetisation • Ongoing investment Reviewing our stakeholder engagement mechanisms in relation to the 2018 Code. • The Board reviewed stakeholder engagement and progress against the commitments made in the FY 2020 Annual Report at the half year. You can read more about this on page 50. Our people • Monitoring and reviewing the Company’s Regular dialogue with investors: • Ongoing investment Continuing to set and monitor our corporate culture. • The Board reviewed employee engagement. Following a tender process run by the Chair in consultation with the Company Secretary, Independent Audit Ltd, a specialist consultancy which undertakes no other business for the Company and has no links with any individual Director, was appointed to undertake the 2021 Board evaluation. ANNUAL REPORT AND ACCOUNTS FY 2021 / 75 Finance (see Strategic Report on page 6 and Financial Review on page 56) Governance (see page 68 of the Governance Report) Our commercial Indicators (KPIs). • Reviewing financial Key Performance partners and suppliers Our investors Regulators • Approving full year results, half year results, trading update, and the Annual Report. • Reviewing the Group’s dividend policy. • Reviewing the key risks to the Group and the controls in place for their mitigation. • 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. As part of its role in keeping funding requirements and planned project expenditure together with financial headroom and cash flow under review, the Board considered and approved the financing arrangements in November 2020, when it reviewed the debt facilities as part of the GoCo acquisition, and again July 2021 when it undertook a further Amend and Extend of the debt facilities (for more information see page 57). approach to corporate governance, its key The Chair, Senior Independent Director practices and its ongoing compliance with the and Chair of the Remuneration Committee Our commercial partners and suppliers 2018 Code. Our investors reference. • Reviewing the results from the external Board effectiveness evaluation. • Approving updated Committees’ terms of Regulators • Continuing to keep key policies updated and monitor ongoing compliance. • Receiving and considering feedback from shareholder engagement. • Reviewing and approving the Modern Slavery statement. have a number of scheduled meetings with investors over the year and have provided feedback on that engagement to the Board (for example on the development of the VCP). Following the announcement that Penny Ladkin-Brand would be taking over as CFO, the Chair made himself available to speak with a number of investors. Corporate Governance The Board evaluation process The review was conducted from July to September 2021. As part of the Outcomes The review noted many areas of strength of the Board and process Independent Audit Ltd attended and observed a Board Committees, including: meeting, the Audit and Risk and Nomination Committee meetings and • relationships between Non-Executive Directors and Executive part of the Board strategy meeting, and were given access to Board Directors were good, and interactions in the boardroom were papers to enhance their understanding of how the Board and its grounded in openness and trust. Committees operate. • A very positive boardroom atmosphere with the Chief Executive Views were gathered using Independent Audit’s online governance giving good insight into all aspects of the business was observed. platform, Thinking Board. A questionnaire was tailored to Future’s • Non-Executive Directors contributed well with their insights and needs and covered the Board’s role, composition, dynamics, observations, and the Chair managed the discussion well. chairmanship and access to information. Separate Committee A number of recommendations were made in the evaluation report which questionnaires were used which looked in detail at all the major were discussed by the Board for future actioning. The key aspects of the Committees’ responsibilities. recommendations are set out below. The agreed actions will be The questionnaires were completed by all Board members and implemented throughout 2022 and their impact and effectiveness will be executives and advisors who attended the Board and/or Committees considered as part of next year's Board evaluation exercise. on a regular basis. Independent Audit analysed the results and prepared a report, combining their observations with the views of questionnaire respondents. The report was discussed with the Chair Objectives for 2022 Steps to be taken during 2022 and the Company Secretary and no material revisions were made. It was then distributed to the Board and Board Committees and was discussed at the September Board and Board Committee meetings. Independent Audit attended the September Board meeting to give an overview of the results and answer Directors’ questions. Continue the focus on succession planning and talent development at ELT level, together with increased diversity and inclusion across the organisation, including the Board. The Chair will ensure that there are regular opportunities throughout the year, formally and informally, for Board members to increase their interaction with ELT members and the broader Future leadership team. This will allow the Board to monitor individual talent development and the executive talent pipeline generally as part of its internal succession planning. Continue to monitor our corporate culture and behaviours, including integration and cultural alignment of new acquisitions. Oversee the introduction of the Company’s Responsibility strategy and agree how progress with its execution should be measured and monitored. Ensure the Board maintains a deep understanding of the competitive landscape, including key stakeholders. Individual Non-Executive Directors will, restrictions permitting, make more site visits, in addition to the planned Board meetings at operational sites, in order to hear from a wide range of voices. The Board will monitor integration of any new acquisitions for alignment with our culture and will continue to ensure that the policy, practices and behaviours throughout the business are aligned with the purpose, values and strategy of the Company. The newly formed Responsibility Committee will monitor the setting of Responsibility objectives and progress against these mechanisms in relation to the 2018 Code. The Board will broaden the range of deep dive discussions at Board meetings, to include inviting subject matter experts to brief the Board on broader landscape topics. 76 / FUTURE PLC Governance FrameworkANNUAL REPORT AND ACCOUNTS FY 2021 / 77 Corporate GovernanceNomination Committee Members Since Richard Huntingford .....................2017 (Chair) Meredith Amdur ...............................2020 Mark Brooker .......................................2020 Zillah Byng-Thorne .........................2014 Hugo Drayton .....................................2015 Rob Hattrell ...........................................2018 Alan Newman .....................................2018 Introduction from Nomination Committee Chair: There were three changes to the Board during FY 2021, with the Nomination Committee playing an appropriately central role in the process. In October 2020, Mark Brooker was appointed as a Non-Executive Angela Seymour-Jackson .......February 2021 Director of the Company. Mark’s appointment followed a review The Company Secretary, or nominee, acts as secretary which had identified the need for an additional Non-Executive to the Committee. Director with public company board experience and knowledge Details of individual Directors’ attendance can be and understanding of digital platform-based businesses. An of the Board’s skills matrix that had taken place during FY 2020 found on page 71. Key objective of the Nomination Committee The Nomination Committee supports the Board in external search process took place, led by Heidrick & Struggles, and resulted in Mark being appointed. In February 2021, following the completion of the GoCo Group plc acquisition, Angela Seymour-Jackson was appointed to the Board as a Non-Executive Director, having previously served as Executive and Non-Executive succession planning. an independent Non-Executive Director on the GoCo Board. In Our key objectives as a Nomination Committee are: addition to her price comparison website knowledge and FCA • 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 regulatory experience, Angela has extensive experience gained from a multitude of industries and sectors, including the insurance market. Angela was appointed as independent Chair of the Group’s regulated subsidiary, GoCompare.Com Limited, in June 2021. responsibilities and overseeing appropriately all In October 2021, it was announced that Rachel Addison was matters relating to corporate governance. stepping down as Chief Financial Officer (CFO) with effect from 31 Key responsibilities • Ensure succession plans are reviewed. • Improve diversity on the Board and in the pipeline for senior management roles. • Further strengthen the senior management team. • Ensuring that appointments to Gocompare.com Limited are assessed in accordance with the regulatory requirements and that appropriate regulatory approval is obtained. Key actions from FY2021 • Board and Committee composition • Board succession planning Priorities for 2022 • Monitor Board composition for alignment of relevant skills, experience and diversity to Company strategy. • Monitor progress on the Board Diversity Policy. • Oversight of the ELT's development and succession planning. 78 / FUTURE PLC October 2021. Following a thorough succession process, the Board selected Penny Ladkin-Brand as the new CFO. Penny served as CFO from 2015 and was then the Chief Strategy Officer from June 2020, overseeing the completion of various acquisitions including GoCo. As part of the appointment process, Penny was interviewed by all Nomination Committee members who unanimously concluded that her extensive knowledge of the Group’s strategy and business, together with her finance expertise, made her a natural choice for the CFO role. In accepting the appointment, Penny has agreed to reduce the number of her Non-Executive board appointments, in line with Company policy. Committee composition As reported last year, in October 2020 we revised the structure of our Board Committees to make the best use of our Board talent. Following the development of the Group’s Responsibility strategy during the year, the Nomination Committee recommended that a new Board Committee be formed to oversee the execution of the Responsibility strategy and to measure its progress. As a consequence, the Responsibility Committee was set up with effect from 1 October 2021 with Hugo Drayton appointed as the Committee’s Chair. At the same time, Hugo retired from his role as Chair of the Remuneration Nomination Committee Director induction programme example We have a detailed Director induction programme which all new Board members participate in. • Governance training • Briefed on outcomes of most recent effectiveness review • Information on the Group budget and strategy • Last Annual Report Effe ctiv e n e ss A c c o u n t a b ili t y • Meeting senior executives • Meeting with colleagues during site visits L e a d e r s h i p R elatio n s w ith sta k e h old ers • • Meeting with investors and other key stakeholders • Meeting with external and internal auditors CASE STUDY Mark Brooker and Angela Seymour-Jackson both joined the Board during the year, but due to COVID-19 restrictions were not immediately able to meet all their Board colleagues in person. We asked them about their induction programme, in the context of the COVID-19 restrictions. a success story over the past locations, the ability to have 5+ years continue as the company meaningful conversations which What have been your impressions of Future? (MB) Future has a strong team of passionate experts. (ASJ) This is an incredibly fast paced business with an unrelenting focus on driving scales. What is the biggest opportunity? (MB) Growing audience in North improvements in results but America continues to be an area everyone is so collegiate and for significant value creation. welcoming. What do you think is the biggest challenge? (ASJ) I think the biggest challenge is ensuring that the business organisation and all our colleagues (ASJ) The standout for me is the opportunity to take a true podium position in the US. How did you find being inducted remotely? (ASJ) It's been remarkably efficient allowed me to learn about the business quickly is what really mattered. What have been the challenges of not being able to attend Board or Committee meetings in person? (MB) I missed the ad hoc conversations with colleagues that sparks a fresh idea or explains the subtlety of an issue that may have otherwise been missed. can keep up with the pace of and I’ve honestly felt that I have (ASJ) The biggest challenge is growth. got to know people quite well. trying to ‘read the room’ and get a (MB) For me, it's ensuring that the (MB) As Future is much more feel of the informal workings of the disciplines that have made Future about people than physical Board, alongside the formal. ANNUAL REPORT AND ACCOUNTS FY 2021 / 79 Corporate GovernanceCommittee with Mark Brooker, who had been a member of the Remuneration Committee for 12 months, taking over as Chair of Committee performance and effectiveness The Committee’s performance was evaluated as part of the that committee. external effectiveness survey, as described on page 75. The review was completed by all Committee members and no issues Succession planning The Committee, on behalf of the Board, regularly assesses the arose. balance of Executive and Non-Executive Directors, and the composition of the Board in terms of skills, experience, diversity and capacity. Independence During FY 2021, the Committee reviewed the balance of skills, experience and independence of the Board. For Non-Executive The Chief Executive and Executive Leadership Team (ELT) Directors independence in thought and judgement is vital to succession planning is a particular focus of the Committee. The facilitating constructive and challenging debate in the boardroom Committee will continue to monitor the ELT and senior and is essential to the operational effectiveness of the Future management talent pool to ensure that succession planning for Board and its committees. business-critical roles is proactively reviewed and to ensure the The Committee is satisfied that the external commitments of development of a diverse pipeline for succession for the Board the Board’s Chair and members do not conflict with their duties as and the ELT, as required by the 2018 Code. Directors of the Company. Following the exploratory work we undertook with Russell After the year-end, the Committee also considered the Reynolds in 2020, we updated the report as a small, internal Directors proposed for election or re-election by shareholders at NED project in 2021, covering a selection of potential outside the AGM. Following discussion of the skills, contribution and CEO candidates. The Committee will continue to keep a external commitments of each Director, and in conjunction with watching brief on the market and potential talent. the Board performance evaluation conducted in September 2021, Board diversity policy Our objective of driving the benefits of a diverse Board, senior standing for re-election (or election) at the AGM in 2022. In line with best practice, each Committee member was excluded from management team and wider workforce is underpinned by our approving the proposal for their re-election (or election). the Committee supports the proposed re-election of all Directors strong culture of diversity and inclusion. You can read more about the Group’s approach to diversity and inclusion on page 40. During the year under review the Board approved a Diversity Policy which is available on our website. The Policy ensures that it remains an effective driver of diversity in its Richard Huntingford broadest sense, having due regard to gender, ethnicity, social Chair background, skillset and breadth of experience. Set out below are the objectives of our Board Diversity Policy and our assessment of performance against them. These objectives ensure that both appointments and succession planning support developing a diverse pipeline. Maintain at least 33% female Directors on the Board (in accordance with the recommendations of the FTSE Women Leaders Review (formerly the Hampton-Alexander Review). As at the date of this report, the Board has 44% female representation, including two Executive Directors; we have therefore exceeded this target. Whilst the Board recognises that an effective board with broad strategic perspective requires diversity, ultimately the Board appoints candidates based on merit and assesses potential Directors against measurable, objective criteria. Our principles for Board diversity also apply to the ELT and senior management below this level with female representation of 35.9%. To have at least one Director of colour by no later than 2024 (in accordance with the recommendations of the Parker Review). The Committee will work closely with executive search agencies in compiling long and shortlists of candidates from various backgrounds and industries, including BAME (black, Asian and minority ethnic) backgrounds when the time comes to refresh the Board composition. 80 / FUTURE PLC Nomination CommitteeANNUAL REPORT AND ACCOUNTS FY 2021 / 81 Corporate GovernanceAudit and Risk Committee Dear Shareholder, On behalf of the Audit and Risk Committee, I am pleased to present its report for the year ended 30 September 2021. This report sets out how the Committee has discharged its duties in accordance with the UK Corporate Members Since Alan Newman (Chair) ...............2018 Meredith Amdur ...........................2020 Hugo Drayton .................................2015 Angela Seymour-Jackson ....February 2021 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 sound systems of risk management and internal control are in place. Governance Code 2018 (the 2018 Code) and its key 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 oversee the internal controls, including oversight of the external and internal audit processes. Key responsibilities • Overseeing the accounting principles, policies and practices adopted by the Group. • Overseeing the external financial reporting and associated announcements. • Overseeing the appointment, independence, effectiveness and remuneration of the Group’s External Auditor, including the policy on the supply of non-audit services. The Committee updated its Terms of Reference to • Conducting a competitive tender process for the external audit when reflect the enhanced governance requirements required. following the acquisition during the year under review of GoCompare.Com Limited, an FCA regulated entity. The Committee has an annual work plan linked to the Group’s financial reporting cycle, which ensures that it considers all matters delegated to it by the Board. In addition to its annual work plan, it reviewed the specific risk associated with the GoCo acquisition and agreed the approach to how the internal audit should be resourced. This year the Board undertook an externally- facilitated review of the effectiveness of the Board and • Reviewing the resourcing, plans and effectiveness of internal audit, which is independent from the Group’s External Auditor. • Ensuring the adequacy and effectiveness of the internal control environment. • Monitoring the Group’s risk management processes and performance. • Ensuring that the regulatory requirements for the GoCo business are assessed and properly managed and that appropriate regulatory approval is obtained as appropriate. • Ensuring the establishment and oversight of fraud prevention arrangements and reports under the whistleblowing policy. • Monitoring the Group’s compliance with the 2018 UK Corporate Board Committees, including this Committee, in Governance Code. accordance with the requirements under the 2018 Code • Providing advice to the Board on whether the Annual Report and and you can read more about this on page 75. Alan Newman Chair of the Audit and Risk Committee 29 November 2021 “The Audit and Risk Committee’s primary objective is to provide effective financial governance” 82 / FUTURE PLC 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 for FY 2021 • 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 ensure a smooth transition of External Auditor. • Responded to FRC request for information on the FY 2020 Annual Report. • Reviewed the effectiveness of internal audit and the Group’s underlying control environment. • Terms of reference of Committee revised to take account of the additional responsibilities for GoCo as an FCA regulated subsidiary. Priorities for FY 2022 • Continue to monitor legislative and regulatory changes that may impact the work of the Committee. • Consider the impact of proposed audit industry changes. • Review the work of the new internal audit model that has been deployed. • Consider a wider range of topics for Committee training. Audit and Risk CommitteeMembership and meetings During the year, the Committee met five times and met privately with the External Auditor. Details of individual Directors’ attendance can be found on page 71. In addition to • a review by the Committee of all material matters, as reported elsewhere in this Annual Report and Accounts; • a risk-comparison review, which assesses the consistency of the presentation of risks, and significant judgements the Committee members, the Chief Financial Officer (CFO), throughout the main areas of risk disclosure in this Annual the Group Finance Director, Group Financial Controller, the Report and Accounts; Risk and Compliance Director, the Internal Auditor (Mazars LLP) and the External Auditor (Deloitte) attended parts of these meetings by invitation. The Chair of the Board and Chief • a review of the balance of good and bad news; and • ensuring it correctly reflects: • the Group’s position and performance as described on Executive may also attend meetings. The Company Secretary pages 56 to 59; acts as Secretary to the Committee. The Chair of the Committee holds regular meetings with the External and • the Group’s business model, as described on page 14; • the Group’s strategy, as described on pages 16 to 33. Internal Auditors who have an opportunity to discuss matters without management being present and also the CFO (who On the basis of this work together with the views expressed by has responsibility and custody of the internal audit function). the External Auditor, the Committee recommended, and in turn The Committee received sufficient, reliable and timely the Board confirmed, that it could make the required statement information from management to enable it to fulfil its that the Annual Report is ‘fair, balanced and understandable’. responsibilities. The Committee also received regular updates from the Chief The Board has confirmed that it is satisfied that Committee Financial Officer on provisions made for litigation and the members possess an appropriate level of independence and Committee considered the appropriateness of the methodology depth of financial and commercial, including sectoral, applied. expertise. For the financial year ended 30 September 2021, Alan Newman was the member of the Committee determined by the Board as having recent and relevant financial experience. Going concern and viability statements The Committee reviewed the updated wording of the Group’s Risk management The Board has overall responsibility for determining the nature and extent of its principal and emerging risks and the extent of the Group’s risk appetite, and for monitoring and reviewing the effectiveness of the Group’s systems of risk management and internal control. Further details of the risk management longer-term viability statement, set out on page 65. To do this, objectives and process are on pages 60 to 61. the Committee ensured that the model used was consistent The principal risks and uncertainties facing the Company are with the approved three-year plan and that scenario and addressed in the Strategic Report and in the table on pages 62 sensitivity testing aligned clearly with the principal risks of the to 64. The Board has delegated to the Committee the Group. Committee members challenged the underlying responsibility for monitoring the effectiveness of the systems of assumptions used and reviewed the results of the detailed risk management. work performed. The Committee was satisfied that the analysis supporting the viability statement had been prepared on an appropriate basis. The Committee also reviewed the Internal control The Board determines the objectives and broad policies of the going concern statement, set out on page 58 and confirmed Group and meets regularly, when a set schedule of matters its satisfaction with the methodology, including appropriateness of sensitivity testing. which are required to be brought to it for decision is discussed. Overall management of the Group’s risk appetite, its tolerance to risk and discussion of key aspects of execution of the Group’s Fair, balanced and understandable The Committee considered whether the Annual Report is ‘fair, strategy remain the responsibility of the Board. The Board has delegated to the Audit and Risk Committee the responsibility balanced and understandable’, in line with the requirements for establishing a system of internal controls appropriate to the of the 2018 Code. The Committee members were consulted at business environments in which the Group operates. various stages during the drafting process and gave input to the planning process, as well as having the opportunity to Key elements of this system include: review the Annual Report as a whole and discuss, prior to the - A clearly defined organisation structure for monitoring the November 2021 Committee meeting, any areas requiring conduct and operations of the business. additional clarity or better balance in the messaging. - Clear delegation of authority throughout the Group, starting In this respect the Committee focused on: with the matters reserved for the Board. • a qualitative review of disclosures and a review of - A formal process for ensuring that key risks affecting internal consistency throughout the Annual Report and operations across the Group are identified and assessed on Accounts; a regular basis, together with the controls in place to ANNUAL REPORT AND ACCOUNTS FY 2021 / 83 Corporate Governance 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 At the request of the Committee the Group engaged third party valuations experts to assist in the preparation of the purchase price allocation exercises for the acquisitions in the year. The Committee has reviewed detailed papers setting out the acquisition accounting undertaken, including purchase price allocations and opening balance sheet fair value assessments. The Committee agreed with the judgements made by management in respect of the acquisition accounting undertaken during the year and the presentation in the Group’s results for the year ended 30 September 2021. Refer to note 28 on page 168 for further information in respect of the acquisition accounting undertaken in the year. The Committee reviewed and challenged information provided by management explaining the nature and rationale for the inclusion of these items as exceptional and discussed them with the auditors. Refer to note 5 on page 145 for further information in respect of exceptional items. The Committee agreed with the conclusion that these items should be separately presented within exceptional items, given their nature and magnitude, and that excluding them assists the users of the financial statements to understand better the results of the core operations of the Group. The Committee agreed with management’s conclusion that an impairment was required and noted the sensitivity analysis performed that demonstrated that a reasonably possible change in assumptions would not have a material impact on the level of impairment charge recognised. The Committee agreed with the level of returns provision recognised by management, noting that a balanced and prudent approach had been taken in calculating the level of the provision. Management prepared a detailed impairment assessment, which concluded that an impairment of £8.8m was required in respect of the LAMB acquired intangible assets at 30 September 2021. The Committee challenged the assessment performed and the detailed assumptions made, which included: * Useful life of the LAMB business of 10 years * EBITDA margins assumed of 59% to 65% * Discount rates applied (post-tax) of 9.5% and (pre-tax) 12.7% Refer to note 12 on page 151 for further information in respect of this matter. The Committee challenged the provision calculations prepared by management based on the review of relevant historic and recent returns experience and data. This demonstrated that the level of provision recognised was appropriate. Refer to note (b) of the section Critical judgements in applying the Group's accounting policies on page 141. Acquisition accounting As outlined on page 19 in the Strategic Report, the Group has completed a number of significant acquisitions during the year. The classification of exceptional items Due to the significant acquisition-related activity in the year a number of items (such as acquisition or related integration and restructuring costs and impairment) totalling £27.4m are considered exceptional in nature. Impairment of the intangible assets relating to the Look After My Bills (‘LAMB’) business An impairment charge of £8.8m has been recognised in the year, relating to a write down of the brand and customer relationship intangible assets relating to LAMB which was acquired as part of the GoCo acquisition, by £4.4m each respectively, as a result of turbulence in the UK gas and electricity market which directly impacted the auto-switch service offering. Provision for magazine returns Marketforce is a print distribution business. Contracts with the newsstand wholesalers and international distributors are on a sale or return basis. The claims window for which returns are permitted can extend to as long as 12 months in respect 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. At 30 September 2021 the Group’s total provision for returns was £51.2m 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. 84 / FUTURE PLC Audit and Risk Committee mitigate those risks. Risk consideration is embedded in significant issues identified within internal control review decision-making processes at all levels and the most reports are considered in detail by the Committee along with significant risks are periodically reviewed by the Board. The the remediation plans to resolve those issues. Progress risk process is reviewed by the Audit and Risk Committee. against the plan and actions from previous internal control - The preparation and review of comprehensive annual review reviews are monitored by the Committee throughout budgets. the year. Throughout FY 2021 reviews were completed on - The monthly reporting of actual results and their review Accounts Receivable, Payments and Payroll as well as a against budget, forecasts and the previous year, with review of Events Revenue which was completed upon explanations obtained for all significant variances. request of the Committee. - The Finance Manual which outlines key control procedures Looking forward to FY 2022, in reflection of the continued and policies to apply throughout the Group. This includes growth and complexity of the business, the Committee has clearly defined policies and escalating authorisation levels recently appointed an in-house Group Head of Internal Audit for all procurement activity including capital expenditure for Q1 FY 2022, who will assess how the function can best and investment, with larger capital projects, acquisitions deliver the assurance needs of the business throughout FY and disposals requiring Board approval. This framework is 2022 and beyond. kept under periodic review. - A formal controls framework that defines the key controls and the specific risk that each of these key controls is External audit independence The Committee is responsible for reviewing the designed to mitigate. independence of the Company’s External Auditor, Deloitte - Appropriately qualified staff in our finance, legal and LLP (Deloitte), agreeing the terms of engagement with them human resource functions with business continuity plans to and the scope of their audit. Deloitte has a policy of partner ensure that all key roles have adequate cover. rotation, which complies with regulatory standards, and, in - A regular timetable of internal controls reviews that addition, Deloitte has a structure of peer reviews for its include the testing of key controls and walk-throughs of engagements, which are aimed at ensuring that its processes, reported to the Audit and Risk Committee. independence is maintained. - Regular formal meetings between the Chief Executive, the Maintaining an independent relationship with the CFO and senior management to discuss strategic, Company’s External Auditor is a critical part of assessing the operational and financial issues. effectiveness of the audit process. European Union The framework of internal control has continued to operate legislation on permitted non-audit services which came into throughout the COVID-19 pandemic. effect from 17 June 2016, introduced a permitted non-audit services fee cap for certain services of 70% of the average Internal audit The Audit & Risk Committee assesses the effectiveness of the audit fee over a consecutive three-year period. This cap was applicable to the Group from the financial year ended 30 Internal Audit function annually, and considers whether the September 2020. The Committee has agreed the Group’s level of internal audit resources is appropriate to provide the policy on non-audit fees, and this was reviewed by the right level of assurance over its principal risks and controls. Committee during the year ended 30 September 2021. The Following acquisitions in FY 2020 and 2021, revenue streams Committee also regularly reviews the level of audit and have further diversified and added considerable complexity non-audit fees paid to Deloitte. The key principles of the and scale to the business. The Committee therefore decided that the Group had reached a scale where a dedicated Internal policy on non-audit services are: • The Committee has approved a list of all permitted Audit function was appropriate and appointed Mazars LLP as non-audit services which are allowed under UK statutory Internal Auditor in April 2021 (who were existing internal auditors for GoCo Group). legislation and complies with the European Union Directive on audit and non-audit services. These services include The Internal Audit plan is approved by the Committee, and audit-related services such as reviews of interim financial Internal Audit is an agenda item at each Committee meeting. information or any other review of financial statements Mazars LLP presents an update on audit activities, progress of required by law to be audited. the audit plans and the outcomes of all audits with action plans to address any issues. Reviews have been completed in • The Audit and Risk Committee updated its policy to ensure that non-audit services listed in appendix B of the FRC's FY 2021 on areas including Fraud, Management Information revised Ethical Standard 2019 are not offered to the and GoCompare Revenue Completeness. The Committee has External Auditor. overseen that the control improvements stated within these • Any service that is on the list, if in excess of £100,000, reviews are being addressed by the business. requires the approval of the Committee. In addition to the formal Internal Audit reviews that have During FY 2021, the External Auditor provided services in taken place, Internal Control reviews conducted by the Group’s relation to the Group’s interim and year end results and bank central Finance function have continued throughout FY 2021. covenant compliance reporting. The External Auditor has The annual internal control review plan is approved by the also confirmed to the Committee that they did not provide Committee at the beginning of the financial year and any any other non-audit and additional services and that they ANNUAL REPORT AND ACCOUNTS FY 2021 / 85 Corporate Governancehave not undertaken any work that could lead to their objectivity and independence being compromised. Looking forward As well as the regular cycle of matters that the Committee The non-audit services supplied by the External Auditor can schedules for consideration each year, we are planning over the be found in note 4 of the financial statements. The 70% cap is calculated separately for each firm, meaning there is no next 12 months to: • Continue to monitor legislative and regulatory changes that requirement under the FRC’s Revised Ethical Standard 2019 to may impact the work of the Committee. formally calculate the cap in the first three years of Deloitte’s tenure (it will be applicable from their fourth year as auditors). • Consider the impact of proposed audit industry changes. • Consider a wider range of topics for Committee training. However, as the calculation is based on Deloitte's first three years of fees these will be closely monitored by the Committee. The Committee’s report was approved by a Committee of the The fees incurred for services which would have fallen within the Board of Directors on 29 November 2021 and signed on its 70% cap had it applied totalled £42,000, representing around behalf by: 7% of Deloitte’s audit fee for FY 2021. The lead partner is rotated every five years. Mark Tolley was appointed as the lead audit engagement partner in FY 2021. Assessment of audit process The scope of the external audit is formally documented by the auditor. They discuss the draft audit plan with management Alan Newman before it is referred to the Committee which reviews its Chair of the Audit Committee adequacy and discusses it with management and the auditor 29 November 2021 before final approval. In respect of the financial year ended 30 September 2021, the Committee assessed the performance and effectiveness of the External Auditor, as well as their independence and objectivity, on the basis of meetings and a questionnaire-based internal review which was completed by the Committee members and regular attendees to the Committee. The summary of the results of the questionnaire has been reviewed by the Committee. Audit tender and appointment Deloitte LLP were appointed in 2019 to succeed PwC as the Company's auditors with effect from the start of FY 2021. As reported in the FY 2020 Annual Report, this appointment was made following a tender process undertaken in accordance with the provisions of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Process and Audit Committee Responsibilities) Order 2014 (Competition & Markets Authority Order), which is now in force. A resolution to reappoint Deloitte LLP as auditors for the year ending 30 September 2022 is being proposed to shareholders at the Company's AGM to be held on Thursday 3 February 2022. You can read more about this in the Notice of AGM on page 174. The Company has complied with the provisions of the Competition and Markets Authority’s Order for FY 2021 in respect to audit tendering and the provision of non-audit services. Assessment of the effectiveness of the Committee The Committee's effectiveness in respect of the year ended 30 September 2021 was evaluated as part of the external review described on page 75. The key issues that were identified in the previous year’s assessment were discussed by the Committee to ensure these were adequately addressed and the Chair provided an update where appropriate. 86 / FUTURE PLC Audit and Risk CommitteeANNUAL REPORT AND ACCOUNTS FY 2021 / 87 Corporate GovernanceDirectors' Remuneration Report Mark Brooker Chair of the Remuneration Committee Members Mark Brooker (Chair since 1 October 2021) .....2020 Hugo Drayton (Chair until 1 October 2021) ....2015 (until 1 October 2021) Rob Hattrell ................................................................... 2018 Angela Seymour-Jackson .............................2021 (from February 2021) Since Details of individual Directors’ attendance can be found on page 71. Other Directors and executives, including the Board Chair, the Chief Executive (CEO) and the Chief People Officer may be invited to attend Committee meetings. The Company Secretary, or nominee, acts as secretary to the Committee. No individuals are involved in decisions relating to their own remuneration. Key objective of the Remuneration Committee Our objective is to have a fair, equitable and competitive total reward package that supports our vision; and to ensure rewards are performance-based and reinforce long-term shareholder value creation. Key responsibilities • Designing & implementing the remuneration policy. • Ensuring the competitiveness of reward. • Designing the incentive plans, including the setting of incentive targets and overseeing all share awards. • Setting remuneration for the Executive Directors and Board Chair and overseeing senior executive and all employee remuneration policies across the Group in alignment with the Group’s reward principles. Key actions from FY 2021 • Engaging with shareholders around proposed Remuneration policy changes. • Finalising the proposed remuneration policy for 2021-2024 (approved at the 2021 AGM). • Approving awards under the VCP. • Keeping under review the remuneration arrangements across the Group. • Revising our Terms of Reference. Priorities for FY 2022 • Ensuring the policy continues to be implemented in line with our business strategy and culture. • Continuing to monitor remuneration practice across Future, keeping abreast of market practice. • Considering the potential role for responsibility targets in our executive incentives. Dear Shareholders, On behalf of the Board, I am delighted to present my first Directors’ Remuneration Report as Chair of the Remuneration Committee, for the financial year ended 30 September 2021. I would like to start by thanking Hugo on behalf of the Committee, for his contribution and hard work chairing the Committee both during the year under review and in each of the last four years. We also welcomed Angela Seymour-Jackson to the Committee during the year (in February 2021), following the GoCo acquisition. Angela previously served as a Non-Executive Director with GoCo Group plc, and I look forward to continuing to work closely with her and Rob Hattrell going forward into FY 2022. As in previous years, this report is split into three sections: (a) this Annual Statement; (b) the Policy Report, setting out the Group’s Remuneration Policy (“Policy”) for Executive and Non-Executive Directors, as approved by shareholders at the 2021 AGM; and (c) the Implementation Report, setting out details of Directors’ remuneration for the financial years ended 30 September 2021 and ending 30 September 2022. Although no changes are proposed to the Policy this year, the Policy report is included on pages 92 to 93 for ease of reference and to provide context to the key decisions taken by the Committee during the year under review. The context for remuneration in FY 2021 Our performance Despite the challenging market conditions, in part due to the extended pandemic, Future plc delivered a strong year of growth and significantly outperformed its targets, leading the Board to upgrade its forecasts to shareholders during the year. The Company’s share price responded positively, continuing the trend of the last five years in materially outperforming the market. We also completed the integration of TI Media as well as the acquisition and integration of GoCo, a FCA regulated business. With the Group now having a FCA regulated subsidiary for the first time, we continue to hold collaborative and transparent dialogue with our regulators, working together to ensure we meet all prudential and conduct based regulatory standards. Our people The COVID-19 pandemic continued to impact our people during FY 2021, but the Group’s performance meant we were in a 88 / FUTURE PLC Directors' Remuneration Reportstrong financial position and have not needed to lean on any the proposed Policy amendments and welcomed the majority available Government support schemes. We continued to votes for the Remuneration Policy, Remuneration Report and operate the hardship fund detailed in last year’s Remuneration VCP. We do, however, recognise that there was a significant Report. This is offered to all of our people to provide assistance number of votes opposing these resolutions. in the face of financial difficulty or unexpected bills due to the We value stakeholder engagement when considering our pandemic. We have introduced hybrid working, a mix of home Remuneration Policy and its future implementation; and we and office locations to provide added flexibility for our consulted extensively pre- and post- the publication of the FY colleagues' experience, reflecting the changes to the wider 2020 Annual Report. The Committee was grateful for the time working environment as we exited from the prolonged periods and contribution of all those shareholders who participated in of lockdown. We continue to ensure that we meet relevant local the consultation process, and for the broad indications of living wage requirements as opposed to minimum wages, and support for Future’s management team and the principles during the year we revised and increased our threshold pay underlying our proposals. levels in the US. We also ensure we are compliant with our US We also reviewed the key areas on which we received collective bargaining agreement. feedback (notably the above-average salary increase awarded More generally, the Committee maintains an active role in to the Chief Executive for FY 2021, and the maximum monitoring pay and practices across the wider workforce. This opportunity under the VCP), and responded to this by increasing provides valuable input into the Committee’s decision-making the level of in-post shareholding guidelines, introducing a around Executive Director remuneration and, in FY 2021, post-employment shareholding requirement, and accelerating included: the timeframe for reducing the CEO’s pension contribution to align with that offered to the wider workforce. We also • Launching the Value Creation Plan (VCP) to all employees, re-affirmed publicly our commitment that the CEO's salary level with awards being made in April and June, and the Future will remain at its current level for at least two years. plc Employee Stock Purchase Plan programme in January We recognise that these revisions to our original proposals, 2021 to US employees. The roll-out of the VCP has been very while generally well-received, were not considered sufficient to well received by employees, and the Group’s outstanding secure support from all shareholders. performance this year helped to create real excitement Since the AGM, both the Board Chair and the Chairs of the about the scheme. As a result, one of the priorities identified Remuneration Committee have held follow up meetings with by the Committee for FY 2022 is to build on this success to key shareholders. ensure the VCP is recognised as a unique and valued part of We are very mindful of the views of our shareholders and do a total reward package; and supports talent acquisition and not take a c.35% vote against our Remuneration Policy lightly. retention going forward. However, the Remuneration Committee continues to believe • Receiving regular updates from the Group’s Chief People that the VCP: Officer on workforce initiatives and employees’ perspectives • incentivises and rewards the whole Future workforce; on the Committee’s decision-making process. • is both fair and competitive; • Monitoring headline ratios, such as the CEO pay ratio • is clear and simple, maximising transparency and avoiding (shown on page 106) and our gender pay gap (available on unnecessary complexity; our website). The Committee uses this data to support its • aligns with Future’s strategy and culture; deliberations on Future executive remuneration, but also to • supports the long-term success of the business and the inform its assessment of whether the Group’s reward continued creation of sustainable long-term shareholder principles are met. The Committee also shares this data with value; and the wider Board, as an input to assess progress against the • remains the right vehicle to remunerate and retain our Group’s long-term commitment to building a diverse, inclusive and gender-balanced workforce; alongside other Executives. The Company continues to be committed to governance best initiatives such as: the formation of a colleague Inclusion & practice and will continue its policy of keeping all elements of Diversity forum; development of internship programmes for executive remuneration under review and proactively engaging under-represented groups; and a partnership with Inclusive with shareholders and advisory bodies to ensure it is aligned Employers to support the delivery of a programme of with the shareholder and employee experience. We welcome training and education across the Group. further input from shareholders and look forward to ongoing engagement. We are pleased with the continued progress made during the year in these important areas, and look forward to further development in the future. Our remuneration policy Following a detailed consultation with major investors, we FY 2021 incentive outcomes As a result of Future’s continued strong performance, the Committee approved maximum annual bonus payments for Zillah Byng-Thorne and Rachel Addison in respect of FY 2021. This outcome is echoed by the full pay-out of the Group-wide submitted our Policy to shareholders at the last AGM, receiving profit pool to all other employees in December 2021. In reaching 64.24% of votes in favour. We were pleased to gain support for this decision, the Committee considered the formulaic outcome ANNUAL REPORT AND ACCOUNTS FY 2021 / 89 Corporate Governanceagainst the targets set at the start of the year, the impact of with performance assessed against Adjusted Operating Profit acquisitions during FY 2021 and the broader underlying targets set at the start of the year. performance of the Group. For Zillah Byng-Thorne 50% of the No further awards will be granted to Executive Directors bonus earned will be paid in cash, and 50% will be deferred in under the VCP (other than the pro-rated adjustment to Penny Future plc shares for two years. In line with the leaver treatment Ladkin-Brand’s VCP award mentioned above and detailed on agreed on her stepping off the Board and leaving Future, Rachel page 109). This plan will form the Group’s sole long-term Addison will receive 100% of her bonus in cash. Further details incentive for the next two years. are included on page 106. Rachel Addison stepped down as CFO on 31 October 2021 and With regard to the Group’s longer-term incentives, was treated as a good leaver for the purposes of the PSP and performance conditions attached to Performance Share Plan VCP. Full details of her leaver treatment are set on page 106. (PSP) awards made on 23 November 2018 were tested to 30 Full details of our approach to executive remuneration in FY September 2021. Over the three-year performance period, the 2022 are included on page 109. Company’s EPS growth and share price performance (each representing 50% of the award) significantly exceeded the targets set at grant. Accordingly, these awards will vest in full on Other Board changes On 17 June 2021, Angela Seymour-Jackson was appointed as 30 November 2021, and will be subject to a mandatory two-year Non-Executive Chair of GoCompare.Com Limited, the Group’s holding period. Further details, including the value of these FCA regulated subsidiary. Angela’s fee as a Non-Executive awards, are included on page 103. Director of Future plc is in line with the fees paid to the other The Committee is satisfied that overall pay outcomes in Non-Executive Directors, as disclosed on page 109, and in respect of the year ended 30 September 2021 are appropriate accordance with our Policy. She also earns additional annual and reflect Future’s continued exceptional financial and board fees of £25,000 for serving as the Non-Executive Chair of operational performance, and the experience of all key the GoCompare.Com Limited board. stakeholder groups. The annual bonus outcome for the year A new Responsibility Committee was created during the year. reflects another strong year of profit growth, while vesting of You can read more about the work of this committee on page the awards granted under the PSP in November 2018 reflects 44. The Chair of this committee will receive a fee of £10,000 in strong, longer-term over-performance and value creation for line with the fees for our other committee chairs. shareholders during the period. The Committee has therefore not exercised any discretion in relation to its assessment of the outcome of the variable pay schemes, or to overall remuneration levels this year. Conclusion We are strongly committed to the principle of pay-for- performance at Future. The introduction and roll-out of the VCP in FY 2021 and the continued exceptional growth of the Group Looking ahead: executive remuneration in FY 2022 have demonstrated the power of incentivising and rewarding all No changes are proposed to the Policy this year and accordingly, employees on the performance to which they contribute. We are our approach to remuneration in FY 2022 will be similar to FY grateful for shareholders’ support for this arrangement, and 2021. look forward to the exciting prospects for growth and As reported last year the CEO's salary will remain unchanged diversification that each of this year’s acquisitions will deliver on in FY 2022 and her pension benefit is being reduced to match behalf of Future’s shareholders and other stakeholders. the benefit of the wider workforce in two stages from 15% to 6% The Committee will continue to monitor market by 2022. The first reduction to 10.5% of salary took effect from developments throughout FY 2022 and will consider how any January 2021 with the second and final reduction to 6% of salary emerging trends may impact Future. This will include working taking effect from January 2022. The CEO's maximum annual closely with the new Responsibility Committee to understand bonus opportunity remains 200% of salary. As described in the Governance Report on page 78, after the any potential role for sustainability targets in our executive incentives to drive our priorities in this area. I hope that you find year-end Penny Ladkin-Brand took on the role of Chief Financial this report a clear account of our decision-making process Officer (CFO) following Rachel Addison’s decision to step down during the year. I will be happy to answer any questions you may from that role. Penny’s remuneration arrangements will be in have at the upcoming AGM. line with the prevailing Remuneration Policy and consistent with those of her predecessor, namely a salary of £355,250; a pension contribution aligned with that offered to Future’s UK employees, at 6% of salary; a maximum annual bonus opportunity of 150% of salary; and a pro-rated adjustment to Mark Brooker her VCP award such that Penny’s VCP award is the same as her Chair of the Remuneration Committee predecessor adjusted for the time period in which she is in the 29 November 2021 CFO role. Further details of Penny’s remuneration arrangements can be found in the section regarding implementation of remuneration policy in FY 2022 on page 109. The annual bonus will operate on the same basis as last year, 90 / FUTURE PLC Directors' Remuneration ReportRemuneration at a glance This table sets out a summary of how the remuneration policy will apply during FY 2022: Remuneration element Application of the remuneration policy Base salary See page 109 for more details FY 2022 Executive Director salaries: • CEO £575,000 (no change, fixed until 1 October 2022). • CFO £355,250 from 1 October 2021, increasing to £362,355 (+2%) from 1 January 2022, in line with the wider workforce. • CEO 10.5% of salary, reducing to 6% in January 2022 • CFO 6% of salary (in line with the wider workforce) Pensions and benefits See page 109 for more details In line with our commitment in the Remuneration Policy approved by shareholders at the AGM in 2021, the CEO's pension benefit will be reduced to match the benefit of the wider workforce. This was reduced from 15% of salary to 10.5% with effect from 1 January 2021 and will be further reduced to 6% of salary with effect from 1 January 2022 (a total reduction of 9% over the 2 year period). There is no change to the CFO's pension (6% of salary, in line with the wider workforce). No changes to other benefits for FY 2022. No changes to maximum award levels of: • CEO 200% of salary • CFO 150% of salary Annual bonus See page 109 for more details To the extent earned, bonuses shall be paid: 50% in cash in November 2022; and 50% in Future shares, deferred for a further two years. As in previous years, the performance measures for FY 2022 are based solely on Adjusted Operating Profit, adjusting for any material acquisitions, as required. Value Creation Plan See page 109 for more details This Plan replaced the PSP, following shareholder approval: One-off award of units rewarding employees with a percentage of any shareholder value created over the three to five year periods commencing on 1 October 2020, 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 109 for more details Following approval of the VCP, no further awards will be made to existing Executive Directors under the PSP over the life of this Policy. 2021 outcomes Performance measure and % payout Threshold3 25% Target3 50% Maximum3 100% Actual % weighting % of maximum achieved Annual Bonus Adjusted Operating Profit £114.3m £117.2m £131.9m £195.8m 100% Overall Performance measure PSP1 Adjusted EPS Share price Overall Threshold (19%) Stretch (75%) Exceptional (100%) 28.2p 555p 32.5p 638p 41.0p 831p 131.9p 3,574p² 50% 50% 100% 100% 100% 100% 100% 1. Representing 100% of LTIP awards granted in November 2018, vesting of which was dependent on adjusted EPS and share price performance to 30 September 2021. See page 108 for further details. 2. Based on the average share price for the 90 day period ending on the last day of FY 2021. 3. 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, the Committee reviewed the impact of all acquisitions on the outcome and concluded that, even if an adjustment had been made performance in the year would still have warranted a full bonus payout. This report has been prepared in accordance with the provisions of Remuneration Report are subject to audit: the single total figure of the Companies Act 2006, and Schedule 8 of the Large and Medium- remuneration for Directors and accompanying notes (page 101); Scheme sized Companies and Groups (Accounts and Reports) Regulations 2008 interests awarded during the financial year (page 103); Payments to past (as amended). It also meets the requirements of the UK Listing directors (page 106); Payments for loss of office (page 106); and the Authority’s Listing Rules and the Disclosure and Transparency Rules. statement of directors’ shareholdings and share interests (page 107). In accordance with the Regulations, the following sections of the The remaining sections of the report are not subject to audit. ANNUAL REPORT AND ACCOUNTS FY 2021 / 91 Corporate GovernanceDirectors’ Remuneration Policy (approved in 2021) Set out below are the key elements of our Directors’ remuneration policy applicable from 10 February 2021 when the policy was approved by our shareholders. The full policy can be found in the Annual Report 2020 on our website. Element Operation Objective & link to strategy Max. potential value Performance measures 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. 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. 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 is 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. 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. Performance- related bonus Value Creation Plan (VCP) Long-term share-based incentive (PSP) 92 / FUTURE PLC 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. Designed to align the interests of Future employees and shareholders, by incentivising the delivery of exceptional shareholder returns over the long-term. Awards under the VCP are subject to malus and clawback provisions, further details of which are included as a note to the policy table. 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 Following shareholder approval of the VCP, no further awards will be granted under the long-term share-based incentive (PSP) to 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 current Executive Directors during the life of this Policy. Details of the PSP, under which there are a number of awards outstanding, are the Policy table, instead of under the VCP – see approach to recruitment remuneration section on page 91. included below, for the purpose of transparency. In the event that a new Executive Director is appointed 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 97. 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. For both the Chief Executive and Chief Financial Officer the Committee retains discretion to vary the potential total maximum bonus, the weighting of the variable elements and the stretch of the targets in order to incentivise or recruit Executive Directors, provided that the total maximum potential bonus for any one year shall not exceed 200% of basic annual salary and that the maximum bonus shall only be payable for outperformance of stretching targets. Target performance will typically deliver up to 50% of maximum bonus, with threshold performance typically paying up to 25% of maximum bonus. The performance measures' relative weightings and targets are set annually by the Committee. Details of the measures and their relative weightings are disclosed annually in the Directors’ remuneration report with the targets disclosed, provided they are not deemed to be commercially sensitive. The Committee retains discretion to adjust the targets if events occur which lead it to conclude that they are no longer appropriate. The Committee also retains discretion to adjust the outcome of the performance- related bonus for any performance measure if it considers that to be appropriate. 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 are 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 are allocated to Future’s employees, with a small pool reserved for future hires and promotions. Units vest based on value created in terms of £ TSR, being the growth in Future’s market capitalisation plus net equity cash flows 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. 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. Directors' Remuneration Policy Element Operation Objective & link to strategy Max. potential value Performance measures 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 terms 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 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. 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. Value Creation Plan (VCP) Future shares. 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 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. Following 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 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 97. 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. 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 is 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. 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. 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 are 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 are allocated to Future’s employees, with a small pool reserved for future hires and promotions. Units vest based on value created in terms of £ TSR, being the growth in Future’s market capitalisation plus net equity cash flows 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. 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. ANNUAL REPORT AND ACCOUNTS FY 2021 / 93 Corporate Governance 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, formalised in annually to reflect the Group’s main short-term objectives and can 2018 and increased in 2021, require Executive Directors to acquire and reflect both financial and non-financial priorities, as appropriate. maintain a holding of Future shares (excluding shares that remain The Committee considers that Adjusted Operating Profit is an subject to performance conditions), within five years of appointment of important and recognised measure of the Company’s performance 400% of salary in respect of the CEO and to 300% of salary in respect that reinforces the strategic objective of profitable growth. The use of £ of the CFO. Details of the Executive Directors’ current shareholdings TSR in the VCP is directly aligned with the interests of shareholders, are provided in the Implementation Report on page 107. and ensures that Executive Directors are rewarded only if they deliver Building on feedback received as part of the shareholder material shareholder returns over the longer-term. More generally, the consultation programme last year, the Committee has now introduced focus on absolute performance measures reflects the Company’s post-employment guidelines. Executive Directors will normally be unique business structure and lack of direct competitors, which would expected to maintain a holding of Future shares for a period after their make comparisons (and therefore target setting) difficult. employment with the Company. This shareholding guideline will be Targets applying to the performance-related bonus are reviewed equal to the lower of an Executive Directors’ actual shareholding at the annually, based on a number of internal and external reference points. time of their departure and the shareholding requirement in effect at Performance targets are set to be stretching but achievable, with the date of their departure, with such shares to be held for a period of regard to the particular strategic priorities and the economic at least two years from the date of ceasing to be an Executive Director. environment in a given year. Targets are typically not disclosed in The specific application of this shareholding guideline will be at the advance due to commercial sensitivity but will typically be Committee’s discretion. retrospectively disclosed in full, following the year-end, to the extent that such commercial sensitivity concerns no longer apply. Targets applying to the VCP are disclosed prospectively in the table above. The hurdle rate of 10% per annum is considered to be between Malus and clawback Payments and awards under the performance-related bonus, PSP and median and upper quartile, compared to the historical returns of VCP are subject to malus and clawback provisions, which can be FTSE250 constituents, with capping of the scheme requiring applied to both vested and unvested awards. Malus and clawback performance significantly above upper decile performance. provisions will apply for a period of at least two years after payment or Remuneration for other employees All employees of the Group receive a basic annual salary, benefits, vesting. Circumstances in which malus and clawback may be applied include a material misstatement of the Company’s financial accounts, fraud or gross misconduct on the part of the award-holder or an error in calculating the award vesting outcome. pension and annual bonus (subject to financial performance). The Participants in the performance-related bonus, PSP and VCP are maximum value of remuneration packages is based on the seniority required to acknowledge their understanding and acceptance of the and responsibilities of the relevant role. A key feature of the VCP is that malus and clawback provisions as a pre-condition to participating in a much broader group of employees (in comparison to the PSP) have these plans. The Committee is satisfied that the malus and clawback been awarded units under the plan to enable them to share in the provisions are appropriate and enforceable. value created for shareholders above a stretching hurdle, supporting alignment not only with the interests of shareholders, but also alignment of interests across the employee population. 94 / FUTURE PLC Directors' Remuneration PolicyPay for performance scenarios The charts below provide an illustration of the potential future reward performance-related bonus payout of 50% of maximum. No VCP value is shown for this scenario, reflecting the stretching £ TSR hurdle rate of opportunities for the CEO and CFO, and the potential split between 10% per annum - which is higher than the threshold absolute TSR the different elements of remuneration under three different target applying to previous PSP awards (and achievement of which performance scenarios: ‘Minimum’, ‘Target’, ‘Maximum’. 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 2021. The of the performance-related bonus. The value of the VCP shown is performance-related bonus is based on the maximum opportunities consistent with that reported last year and is based on an accounting set out under the remuneration policy for normal circumstances. Note fair value assessment as at 1 October 2020, with the resulting value that VCP awards will vest in tranches after three, four and five years amortised over three years. (and are thereafter subject to a holding period, bringing the total time The Companies (Miscellaneous Reporting) Regulations 2018 require to release to five years from grant). As the VCP is intended to replace a fourth scenario, showing the value at maximum assuming share price the PSP for at least three years, the values shown reflect the aggregate growth of 50% for the purpose of long-term incentive awards. We value of the VCP amortised over three years. have chosen not to illustrate this scenario above since the value of the The ‘Minimum’ scenario reflects base salary, pension and benefits VCP is dependent on share price growth above a hurdle of 10% per (i.e. fixed remuneration) which are the only elements of the Executive’s annum. 50% share price growth over the maximum five-year remuneration packages not linked to performance. performance period equates to c.8.4% per annum growth and would The ‘Target’ scenario reflects fixed remuneration as above, plus generate no value to participants under this scheme. Zillah Byng-Thorne Penny Ladkin-Brand ) 0 0 0 £ ( n o i t a r e n u m e R 4000 3000 2000 1000 0 £3,271 45.4% 35.2% 2000 1500 1000 ) 0 0 0 £ ( n o i t a r e n u m e R 500 £390 £1,592 42.0% 33.5% £656 40.6% £1,208 47.6% £633 100.0% 52.4% 19.4% 100.0% 59.4% 24.5% Minimum On-target Maximum Minimum On-target Maximum 0 Fixed remuneration Performance-related bonus VCP Fixed remuneration Performance-related bonus VCP FY 2022 remuneration assumptions Executive Director Salary Pension Benefits Maximum performance- related bonus Amortised fair value VCP valuation Zillah Byng-Thorne £575,000 10.5%, reducing to 6% from 1 January 2022 £17,000 200% £1,487,971 Penny Ladkin-Brand £355,250 6.0% £13,000 150% £669,587 ANNUAL REPORT AND ACCOUNTS FY 2021 / 95 Corporate Governance 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 Not applicable. 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 Chair are determined by the Committee, whilst the fees of the Non-Executive Directors are determined by the Board. Expenses incurred by the Chair 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 109. Aggregate fees paid to Non-Executive Directors are subject to the limits set out in the Articles of Association. 96 / FUTURE PLC Directors' Remuneration PolicyApproach to recruitment remuneration External Executive Director appointment In line with our principles on remuneration, the Committee’s objective at the time of an appointment to a new role is to weight Executive Directors’ remuneration packages towards performance-related pay that is linked to targets set for the financial performance of the Group against budget, and the Group’s performance against its business objectives and stated strategy. Any new Executive Director’s remuneration package would include the same elements as those of the existing Executive Directors, as shown below: Element of remuneration Approach Maximum % of salary Salary 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. 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 these jurisdiction from which the candidate was recruited) to ensure that awards and the likelihood of such conditions being met. Any such arrangements are in the best interests of both the Company and its buy-out awards would typically be made under the existing shareholders. performance-related bonus, VCP or 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 2021 / 97 Corporate Governance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, for good leavers, awards will normally be reduced pro-rata to reflect the proportion of the vesting period actually served and tested for performance at the Committee will use the policy as set out in the table on page 97. end of the original performance period. Under the VCP, for good Service contracts and loss of office payments Copies of Directors’ service agreements and letters of appointment are leavers, awards in the current tranche will be prorated to the termination date, the residual units in the current tranche together with units in future tranches will lapse. PSP and VCP awards which are subject to an additional holding period will typically be available for inspection on request at the Company’s registered office. retained and released at the end of the holding period, with Executive Directors Committee discretion to accelerate the release of such awards in certain good leaver or change of control circumstances. Deferred In summary, the contractual provisions for current Executive Directors bonus shares will normally be retained by the Executive Director are as follows: Contract provision Notice periods Change of control Policy Details A Director may be required to work during their notice period or be put on garden leave. In the event of termination by either the Director or the Company, the Director will be entitled to receive six months’ salary. Director or Company shall be entitled to serve six months’ notice (in Penny Ladkin-Brand's case) or 12 months’ notice (in Zillah Byng-Thorne’s case). 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). 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 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 the Company or Director. Appointed for a three year term, subject to annual re-election by shareholders at the Company’s AGM. 98 / FUTURE PLC Directors' Remuneration Policy 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 reported in last year’s Remuneration Report, the Committee not represent a conflict to their current role. In the case of Zillah consulted with Future’s 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, ahead of submitting its Chief Executive. In the case of Penny Ladkin-Brand, the Committee proposals for approval at the 2021 AGM. Following that meeting (and has agreed that she may hold two Non-Executive roles on in keeping with the provisions of the UK Corporate Governance appointment, reducing to one within 12 months of appointment. Code), the Remuneration Committee held further follow up meetings In respect of positions at listed companies, during the financial with Future’s 20 largest shareholders, to understand more fully their year ended 30 September 2021, Zillah Byng-Thorne served as a perspectives on executive remuneration at Future. The Committee is Non-Executive Director at Flutter Entertainment plc, GoCo Group plc grateful for the feedback it received from those investors, which (until its acquisition by Future in February 2021) and THG Holdings plc continues to inform the Committee’s decision-making, alongside for which she retained total fees of £229,077 (compared to £206,830 trends and developments in corporate governance and market in 2020). Rachel Addison did not hold any outside directorships. practice. 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, an entitlement to receive a bonus (subject to financial performance) under the Group’s profit pool bonus scheme, and entitlement to participate in the Value Creation Plan and retirement plans. The Group operates a Share Incentive Plan and an Employee Stock Purchase Plan in order to encourage active employee share ownership. The VCP offers 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 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 2021 / 99 Corporate GovernanceAnnual Report On Remuneration The following section provides details of how the Directors’ Remuneration Policy was applied for the year ended 30 September 2021 and how the Committee intends to apply the Policy in the year ending 30 September 2022. Governance The Committee is responsible for determining the overall remuneration policy of the Group, and in particular: • Determining the appropriate basic annual salaries, incentive arrangements and terms of employment of Executive Directors • Monitoring and reviewing the level and make-up of the Remuneration Report FY 2020 Remuneration Policy FY 2020 For (including discretionary) 59,841,021 72.53% Against 22,663,448 27.47% 53,001,306 64.24% 29,503,129 35.76% remuneration packages of senior managers, including bonus schemes and share-based incentives, and ensuring that Total votes cast (excluding withheld votes) 82,504,469 82,504,435 remuneration policies and practices do not encourage excessive risk-taking • Setting the Board Chair’s remuneration • Approving the terms of any new share-based incentive scheme for Votes withheld 4,511,573 4,511,607 The Company published a statement on its website on 9 August 2021 any employees of the Group, subject, where appropriate, to noting its understanding that the main reasons for the voting outcome in shareholder approval relation to the FY 2020 Remuneration Report were related to the CEO’s The terms of reference of the Remuneration Committee, reviewed salary increase, while the main concerns with the Remuneration Policy annually, are available on the Company’s website (www.futureplc.com). were to do with the introduction of the VCP. The Committee’s response Advisers to this feedback is covered in more detail in the Chair’s Statement on page 89. As set out in the Chair’s Statement, the Committee continues to The Committee is informed of key developments and best practice monitor evolving best practice on remuneration matters, and welcomes in the field of remuneration and obtains advice from independent dialogue with shareholders on an ongoing basis. external consultants, when required, on individual remuneration packages and executive remuneration practices in general. Mercer, who were appointed as the Committee’s independent advisor following a competitive tender process in 2018, supported the Context for remuneration decisions The Committee’s decision-making this year has taken into account a range Committee until December 2020. Following the lead adviser moving of internal and external factors, including the Group’s ongoing response to Ellason LLP, Ellason was appointed as the independent to COVID-19 and the experience of our stakeholders during this period. remuneration advisor to the Committee effective 1 January 2021. The purpose of our remuneration policy is to deliver a remuneration Fees paid to Mercer and Ellason for services provided to the package that: Committee during the financial year were £33,400 and £7,263 • Attracts and retains high calibre Executive Directors and senior respectively (2020: £27,900 to Mercer) on the basis of time and managers in a challenging and competitive business environment materials. • Reduces complexity, delivering an appropriate balance between fixed Following their appointment as remuneration consultants during FY 2021, services provided to the Committee by Ellason have included and variable pay for each Executive Director and the senior management team regulatory guidance, advice on remuneration trends and consultation • Encourages long-term performance by setting challenging targets support. linked to sustainable growth Ellason does not provide any other services to the Group or any of • Is strongly aligned to the achievement of the Group’s objectives and the Directors and the Committee is satisfied that Ellason remains shareholder interests and to the delivery of sustainable value to independent. Both Mercer and Ellason are members and signatories shareholders to the Remuneration Consultants’ Code of Conduct (www. • Seeks to avoid creating excessive risks in the achievement of remunerationconsultantsgroup.com) which requires that their advice performance targets be objective and impartial. Shareholder voting The following table shows the results of the binding vote on the FY • Is consistent with the Company’s purpose and values • Is commensurate with pay conditions across the Group • Is aligned to the Future reward principles (as set out on page 88) • Takes into account overall corporate performance as well as business performance 2020 Policy Report and the advisory vote on the FY 2020 All our decisions as a Remuneration Committee are taken in this Implementation Report at the 2021 Annual General Meeting: context. 100 / FUTURE PLC Annual Report On Remuneration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 2021. Note that the 2021 figure for the CEO includes an assumed value for the PSP awards vesting on 30 November 2021 which has been calculated using the three-month average share price to 30 September 2021 of 3,574p. Further details relating to the PSP are set out on page 108. £'000 Executive Directors Zillah Byng-Thorne Rachel Addison5 Non-Executive Directors Richard Huntingford Meredith Amdur6 Mark Brooker8 Hugo Drayton Rob Hattrell Alan Newman Angela Seymour-Jackson9 Total Notes: Year end 30 September (A) Basic salary or fees7 (B) Taxable benefits1 (C) Annual bonus3 (D) PSP4 (E) Pension benefit2 TOTAL SINGLE FIGURE (A+B+E) Total fixed (C+D) Total variable 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 575 455 354 117 202 142 55 36 55 - 75 63 55 46 65 53 33 - 17 17 13 4 - - - - - - - - - - - - - - 1,150 7,030 950 533 175 - - - - - - - - - - - - - - 2,195 - - - - - - - - - - - - - - - - 67 68 21 9 - - - - - - - - - - - - - - 8,839 3,685 921 305 202 142 55 36 55 - 75 63 55 46 65 53 33 - 659 540 388 130 202 142 55 36 55 - 75 63 55 46 65 53 33 - 8,180 3,145 533 175 - - - - - - - - - - - - - - 1,469 912 30 21 1,683 7,030 1,125 2,195 88 77 10,300 4,330 1,587 1,010 8,713 3,320 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 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 102. 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 103 for further details). 2021 figure: relates to 100% of the PSP awards granted on 23 November 2018 which will vest on 30 November 2021 following the achievement of the share price target and adjusted EPS target for the three-year period ended 30 September 2021. The value of these awards has been calculated using the three-month average share price to 30 September 2021 of 3,574p. Further details relating to the PSP are set out on page 108. 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 was calculated using the spot closing price on vest date of 1,634p. 5. Rachel Addison was appointed to the Board as Chief Financial Officer on 1 June 2020. Her remuneration arrangements for 2020 were in line with the prevailing Remuneration Policy and consistent with those of her predecessor, namely; a salary of £350,000 per annum; a pension contribution aligned with the majority of UK employees at 6% of salary; a maximum annual bonus opportunity of 150% of salary; and eligibility for an annual award under the PSP. Rachel stepped down from the Board on 31 October 2021. 6. Meredith Amdur was appointed to the Board on 6 February 2020 and is US-based. During FY 2021 Meredith received US$72,000 (FY 2020: US$48,000) as remuneration (Sterling equivalent shown in the table above). 7. In FY 2020, 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; Richard Huntingford £5,108; Meredith Amdur $2,000; Hugo Drayton £1,915; Rob Hattrell £1,915; and Alan Newman £1,915. 8. Mark Brooker was appointed to the Board on 1 October 2020. 9. Angela Seymour-Jackson was appointed to the Board on 22 February 2021 following the acquisition of GoCo Group. ANNUAL REPORT AND ACCOUNTS FY 2021 / 101 Corporate GovernanceIncentive outcomes for the year ended 30 September 2021 Performance-related bonus (Annual Bonus Scheme) During FY 2021, the Company operated a profit pool bonus for all Actual AOP performance for the year of £195.8 million significantly exceeded the stretch target of £131.9 million (which was 41% growth on the prior year), resulting in a formulaic outcome of 148% of maximum employees across the Group, including the Executive Directors. This for this element. profit pool comprised 100% of the Executive Director bonus Under the current scheme design, adjustments can be made to opportunity for FY 2021, and was subject to Adjusted Operating Profit targets for material acquisitions, defined as those that contribute more (AOP) outperformance (defined as adjusted earnings before interest than 15% of the total Group’s AOP for the relevant financial year. Of the and tax). reported AOP outcome, GoCo contributed c.£16 million or c.8% of Maximum opportunities were 200% of salary for the CEO and 150% Group total. This is less than the stated 15% threshold and therefore no of salary for the CFO. The profit pool pays out a fixed amount of cash adjustment is automatically made. However, the Committee for the majority of employees based on delivering AOP performance nevertheless reviewed the impact of the GoCo acquisition on the above Budget. In addition to the profit pool component, which formulaic outcome noting that, if an adjustment had been made for it, accounts for 25% of the CEO's bonus opportunity (worth 50% of then the bonus would still have paid out in full due to the level of salary), a further opportunity to earn an additional 150% of salary as a over-performance in the year. Other, smaller, in-year acquisitions (of bonus is possible. The same profit pool scheme applies to the CFO, CinemaBlend, Mozo and Marie Claire US also did not meet the with an additional 100% of salary payable as a bonus for materiality threshold, but were reviewed in a similar context. outperformance above this level. Performance measure Annual bonus Adjusted Operating profit Overall Threshold £m Target £m Maximum £m Actual £m % weighting % of maximum achieved 114.3 117.2 131.9 195.8 100% 100% 100% Accordingly, all Executive Directors earned 100% of their respective Executive Directors. opportunities under the annual bonus for the year. In confirming this In accordance with the Remuneration Policy, for Zillah Byng-Thorne outcome, the Committee took into account the broader financial and 50% of these bonus amounts has been paid in cash, with the operational performance of the Group during the year, the exceptional remaining 50% to be converted to Future shares and deferred for 2 shareholder returns generated, the experience of our key stakeholder years. For Rachel Addison 100% of the bonus amount has been paid in groups, and the strong and effective leadership demonstrated by the cash. See page 106 for more details. Executive Base Salary Maximum opportunity (% salary) Performance outcome (% of maximum) Bonus outcome £ …of which cash £ …of which shares Zillah Byng-Thorne £575,000 200% 100% £1,150,000 £575,000 £575,000 Rachel Addison £355,250 150% 100% £532,875 £532,875 - 102 / FUTURE PLC Annual Report On RemunerationPerformance Share Plan (PSP) Awards vesting for performance to 30 September 2021 Vesting of awards made on 23 November 2018 was dependent on two equally-weighted performance conditions – adjusted diluted EPS and Awards granted during the year to 30 September 2021 No awards were made to Executive Directors under the PSP during the year under review. share price – assessed over the performance period, as follows: Value Creation Plan (VCP) Measure Targets Outcome Vesting EPS for year ended 30 September 2021 Share Price (90-day average to 30 September 2021) 0% vesting below 5% CAGR (28.2p) 19% vesting for 5% CAGR (28.2p) 75% vesting for 10% CAGR (32.5p) 100% vesting for 20% CAGR (41p) Straight-line vesting between these points 0% vesting below 5% CAGR (555p) 19% vesting for 5% CAGR (555p) 75% vesting for 10% CAGR (638p) 100% vesting for 20% CAGR (831p) Straight-line vesting between these points 71% CAGR 131.9p 100% 95% CAGR 3,574p 100% Awards granted during the year to 30 September 2021 During FY 2021, the following awards under the VCP were granted to the Executive Directors: Executive Director Date of award Face value (% of salary) Number of units Vesting date Zillah Byng- Thorne 14 April 2021 N/A 140,000 units per tranche Rachel Addison 14 April 2021 N/A 63,000 units per tranche Tranche 1: November 2023 Tranche 2: November 2024 Tranche 3: November 2025 Tranche 1: November 2023 Tranche 2: November 2024 Tranche 3: November 2025 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 As with the annual bonus, in confirming this outcome the Committee anniversary of grant at the earliest. Awards under the VCP are subject took into account the broader financial and operational performance of to malus and clawback provisions. See page 106 for details of Rachel the Group over the three-year performance period, the exceptional Addison's leaver treatment. returns generated for shareholders and the strong and effective Units vest based on value created in terms of £ TSR, being the leadership demonstrated by the Executive Directors. Notwithstanding growth in Future’s market capitalisation plus net equity cash flows to that Future’s actual performance significantly exceeded the level shareholders (i.e. dividends plus share buybacks, less share issues), required for maximum vesting, the Committee is satisfied that the over and above a hurdle rate of return of 10% per annum. targets originally set were appropriately stretching, with 20% per Future’s starting market capitalisation is based on the spot closing annum growth significantly higher than the maximum performance price of a share on 30 September 2020. Value created at each targets applying to similar measures across the FTSE. measurement date will be calculated with reference to the average Shares subject to award Performance outcome (% of maximum) Share price on vesting (3-month average share price to 30 September 2021) PSP outcome 196,687 100% 3,574p £7,029,593 Executive Zillah Byng-Thorne The value attributable to share price appreciation above the share price at the date of grant (483p) was c.£6.1m for Zillah Byng-Thorne (c.87% of the total value reported). The Committee has not exercised any discretion in respect of this share price appreciation. Rachel Addison did not hold any awards under the 23 November 2018 PSP; and a summary of those vesting to Penny Ladkin-Brand (who retained an interest in this award, which was granted in relation to her previous tenure as CFO) is set out in the Payments to past directors section of this Report. 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. Deferred Annual Bonus Scheme (DABS) Awards granted during the year to 30 September 2021 Awards granted under the DABS during the year are as set out below. Executive Director Date of award Face value (% of bonus deferred)1 Number of shares Vesting date Zillah Byng-Thorne 17 Dec 2020 Rachel Addison2 17 Dec 2020 50% of bonus 27,111 50% of bonus 4,994 26 Nov 2022 31 Dec 2021 1 The share price used to calculate the number of shares was £17.52 (the MMQ on 16 December 2020). 2 See page 106 for details of Rachel's leaver provisions. ANNUAL REPORT AND ACCOUNTS FY 2021 / 103 Corporate Governance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 salary. During the year ended 30 September 2021, employer’s pension to Future plc as of 1 October 2011 contributions were payable to the Executive Directors as a salary supplement, at a rate of 15% of salary for the CEO (from 1 October This graph shows a comparison of Future’s total shareholder return 2020) reducing to 10.5% from 1 January 2021 and 6% of salary for (share price growth plus dividends) with that of the FTSE All-Share Rachel Addison (aligned with the majority of UK employees, as set out Media Index and the FTSE Mid 250 Index (excluding investment in the FY 2020 Remuneration Policy). This additional cash payment is trusts). The FTSE All-Share Media Index was selected as it provides a not included in determining their entitlement to any performance- comparison of Future’s performance relative to the other companies in related bonus, share-based incentive or pension. The Company had no its sector, whilst the FTSE Mid 250 Index is shown to reflect the Group liability in respect of the Executive Directors’ pensions as at 30 having moved up to a Premium Listing and its inclusion in the FTSE250 September 2021. Normal retirement age under the scheme rules is 75. index during 2019. Historical TSR performance Growth in the value of a hypothetical £100 holding over the 10 years to 30 September 2021 1 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 £3,000 £2,500 £2,000 £1,500 £1,000 £500 £0 Sep 11 Sep 12 Sep 13 Sep 14 Sep 15 Sep 16 Sep 17 Sep 18 Sep 19 Sep 20 Sep 21 Future plc FTSE Mid 250 Excluding Investment Trust Index FTSE All-Share Media Index GBP The table below shows the CEO's single figure of remuneration and variable pay outcomes over the same period as the graph above. Mark Wood Zillah Byng-Thorne Year FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 CEO single figure of remuneration £’000 Annual Bonus as % of Maximum PSP Vesting (% of maximum) Notes: £430 £331 £3063 £471 £347 £5,4256 £10,8816 £5,678 £3,685 £8,839 50% 0% 20% 36% 0%4 88%5 100% 100% 100% 100% 0%1 0%1 0%2 0%2 0%2 100% 100% 100% 100% 100% 1. 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. 2. 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. 3. The single figure for Zillah Byng-Thorne for 2014 includes five months of her CFO's salary and six months of her salary as CEO. 4. Zillah Byng-Thorne waived her performance-related bonus for 2016. 5. 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. 6. Figures restated to reflect the share price at date of vest for PSP awards granted in November 2017. 104 / FUTURE PLC Annual Report On Remuneration Percentage change in remuneration of Directors and employees As required under the revised reporting regulations, the Committee 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 reviews the year-on-year change in the level of Board Director salaries/ movements in the number of employees. The comparator group used is fees, taxable benefits and bonus payments, compared with the wider all Future employees. For FY 2021 the percentage increases reported for workforce. This analysis will be built up over time to display a five-year certain Directors reflect voluntary reductions taken in FY 2020. Director1 Basic salary/fee2 Taxable benefits Bonus3 Executive Directors FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 Zillah Byng-Thorne Rachel Addison5 Non-Executive Directors Richard Huntingford Meredith Amdur Mark Brooker Hugo Drayton Rob Hattrell Alan Newman Angela Seymour-Jackson All employees4 Notes: 26% 1% 41% 2% N/A N/A 20% 23% N/A (6)% (4)% N/A 18% N/A N/A 21% 3% 6% N/A (1)% 0% 0% N/A N/A N/A N/A N/A N/A N/A (6)% 0% N/A N/A N/A N/A N/A N/A N/A N/A 3% 21% 2% N/A N/A N/A N/A N/A N/A N/A (28)% 33% N/A N/A N/A N/A N/A N/A N/A N/A 0% 3 The figures shown are reflective of any bonus earned during the respective financial year. 1 Changes in Directors and roles during the FY 2021 financial year were as follows: Non-Executive Directors are not eligible to participate in the bonus scheme. • Mark Brooker was appointed to the Board as a Non-Executive Director on 1 October 2020 4 As a result of acquisitions during the year under review a higher proportion of employees are • Angela Seymour-Jackson was appointed to the Board as a Non-Executive Director on 22 now based in the UK rather than the US and in lower cost locations outside of London. This February 2021 and as Chair of GoCompare.Com Limited on 1 June 2021. change in geographic mix of the employee population has resulted in an overall decrease in Relevant changes in Directors and roles during the FY 2020 financial year were as follows: all-employee remuneration including bonus. All colleagues have been harmonised into • Rachel Addison was appointed to the Board as CFO on 1 June 2020. Future's Defined Contribution scheme and are now offered a standard contribution rate • Meredith Amdur was appointed to the Board on 6 February 2020. which has resulted in a flattening of Futures overall pensions provision. 2 Salary/fees for FY 2020 reflect the voluntary temporary reductions of 20% in March (half of 5 Rachel Addison's FY 2020 remuneration has been annualised for comparison purposes. month), April and May 2020. Relative importance of spend on pay The relative importance of spend on pay for the business is shown in the table below. 2021 Group pay: £156.6m (+51%) Group operating costs excluding Group pay & exceptional costs: £307.5m (+82%) Capital expenditure: £11.1m (+178%) Acquisition of own shares:£4.9m (-42%) Distributions to shareholders: £3.4m (+113%) 2020 Group pay: £104.0m Group operating costs excluding Group pay & exceptional costs: £169.3m Capital expenditure: £4.0m Acquisition of own shares: £8.5m Distributions to shareholders: £1.6m 0 300 600 900 The chart 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 GoCo of £15m per annum (see page 170 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 2020 and FY 2021 financial years being, respectively, (i) the 1.6p final dividend for the FY 2020 financial year paid in February 2021; and (ii) the 2.8p final dividend proposed for the FY 2021 financial year, payable in February 2022. The dividend figure of £3.4m in the chart above is based on the issued share capital of 120.6m at 30 September 2021. ANNUAL REPORT AND ACCOUNTS FY 2021 / 105 Corporate Governance CEO pay ratio UK reporting regulations require companies with 250 employees or During 2021 the CEO had a large number of shares vest which, as a result of Future's strong share price performance, increased the single more to publish information on the pay ratio of the CEO to UK figure remuneration. employees, and to build this up over time until it covers a rolling 10-year period. In line with this requirement, the table below adds to Payments to past Directors (audited) the FY 2020 analysis the ratio of CEO total pay to that of three Chief Financial Officer employees indicative of lower quartile (P25), median (P50) and upper Penny Ladkin-Brand stepped down as CFO and from the Board of quartile (P75) pay received during the financial year ended 30 Directors on 1 June 2020. As Penny remained an employee of Future, in September 2021 and includes basic salary, benefits, pension her new role as Chief Strategy Officer (CSO) Penny’s remuneration was contributions (for CEO figure), and the value received from incentive determined in line with the policy that applies to other Executive plans. On average the Future plc Group employed 1,920 UK employees Committee members. Penny retained an interest in the PSP awards during the financial year ended 30 September 2021. granted to her in connection with her former role as CFO (albeit the Financial year Calculation methodology Lower quartile (P25) Median (P50) Upper quartile (P75) 2021 2020 Option B Option B 311:1 107:1 240:1 84:1 184:1 66:1 award levels were reduced with her agreement to reflect her new role). Penny has DABS awards over 12,155 shares, granted on 25 November 2019 and 9,988, granted on 17 December 2020, which will vest on the first dealing day after the announcement of the full year results two years after grant. Penny's adjusted PSP award over 76,344 shares granted on 23 November 2018 and 27,654 granted on 25 The Committee has opted to use data already available from the November 2019 will vest on first dealing day after the announcement gender pay reporting as the basis for identifying employees at P25, of the full year results three years after grant. P50 and P75 (‘Option B’ ). This excludes pension. We believe this provides a reasonable estimate for employees' pay at these levels Payments for loss of office (audited) within the organisation. Rachel Addison stepped down as CFO and from the Board of Directors Individuals positioned at each quartile were identified using the on 31 October 2021. She was treated as a good leaver in respect of her most recent gender pay gap report in 2021 (which uses data from 5 share plan awards. She transitioned the role over to Penny Ladkin- April 2020). Total full-time equivalent remuneration for each of these Brand during October 2021, when Penny held the role of CFO individuals was then calculated on the same basis as used in the single designate, officially relinquishing responsibility on 31 October 2021. figure table for the CEO. All figures are total amounts paid to full-time She remains an employee on Garden Leave until 31 December 2021, employees. Total compensation figures have been checked to ensure during which time she continues to receive all contractual benefits the employees identified are representative of pay at these levels in including pension and car allowance. She subsequently receives the the organisation. The data points are reflective of our Company structure and types of roles across the organisation and accordingly the Committee believes the median pay ratio for FY 2021 is consistent with the pay, reward and progression policies for the Company’s UK employees taken as a whole. following exit package: • Four months notice not worked (two months worked), totalling £118,417. Paid monthly in four installments (January - April 2022). • Payment for 2021 bonus of £532,875 (in cash). • No payment for accrued but untaken holiday entitlement during A summary of the salaries and total single figures of remuneration FY 2021. for the relevant individuals in FY 2021 is included in the table below: Pay level CEO Lower quartile (P25) Median (P50) Upper quartile (P75) Salary £575,000 £26,138 £35,000 £44,898 Single figure of remuneration £8,839,000 £28,388 £36,775 £47,941 • PSP (FY 2020) will vest in full on termination date. • DABS (FY 2020) is accelerated and vests in full on termination date. • Of the 63,000 VCP units per tranche awarded, 25,830 units from tranche 1 will not lapse, whilst the remainder of tranche 1 units together with all tranche 2 and 3 units will lapse on termination. This pro-rating balances out the accelerated vest of the PSP and DABS awards. All outstanding share awards remain subject to malus and clawback. Statement of Directors’ shareholding and share interests (audited) The Company has a policy on share ownership by Executive Directors shares which, at the share price on the same date, were worth (as amended with effect from the 2021 AGM) which requires that the £9,690,014 (1,685% of salary). CEO is required to build up a holding of shares of 400% of salary and In respect of Rachel Addison, the period commenced on 1 June the CFO is required to build up a holding of shares of 300% of salary 2020, the date upon which she joined the Board. As at 30 September over a five-year period from appointment. Zillah Byng-Thorne 2021, Rachel Addison had a holding of 2,798 shares which, at the share currently meets this requirement. price on the same date, were worth £103,246 (29% of salary). In respect of Zillah Byng-Thorne, the relevant five-year period In respect of Penny Ladkin-Brand, the period commenced from the commenced on 1 November 2013 and ended on 31 October 2018. As at date of her new appointment to the Board on 31 October 2021. At the 30 September 2021, Zillah Byng-Thorne had a holding of 262,602 date of her appointment she held 150,915 shares (1,518% of salary). 106 / FUTURE PLC Annual Report On Remuneration Directors’ shareholdings (audited) Directors in office at 30 September 20211 Executive3 Zillah Byng-Thorne4 Rachel Addison5 Non-Executive Richard Huntingford Meredith Amdur Mark Brooker Hugo Drayton Rob Hattrell Alan Newman Angela Seymour-Jackson6 Total Notes: 1. All holdings are beneficial. 2. Or on appointment Balance as at 30 September 20202 Purchases during the year Share scheme exercises during the year Sales during the year Balance as at 30 September 20211 269,569 - 24,500 - - - - 8,750 3,145 10,709 2,798 - 385 1,500 2,376 - - - 200,000 (212,532) - - - - - - - - - - - - - - - - 267,746 2,798 24,500 385 1,500 2,376 - 8,750 3,145 305,964 12,624 200,000 (212,532) 311,200 2021 Zillah Byng-Thorne sold 7,444 shares at a price of £29.24 and 2,658 shares at a price of £29.23. On 3 June 2021, Zillah Byng-Thorne exercised her award over the balance of 200,000 Ordinary shares from the award which had vested on 2 February 2020 and subsequently sold 3. Details of the share options and awards for Executive Directors are set out on page 108. No such these on the same day at a price of £28.75 per Ordinary share. Max Thorne (husband of Zillah options or awards are granted to Non-Executive Directors. Byng-Thorne) purchased 1,180 shares at a price of £16.84 on 1 December 2020 and sold 2,430 4. On 1 December 2020 Zillah Byng-Thorne purchased 4,835 shares at a price of £16.80; Zillah Ordinary shares at a price of £29.36 per Ordinary share on 28 May 2021. acquired 4,694 shares when her holding of 89,415 GoCo Group Plc shares were converted to 5. On 3 December 2020 Rachel Addison purchased 2,798 shares at a price of £17.7392. Future shares following the acquisition of GoCo Group Plc by Future in February 2021. On 28 May 6. Angela Seymour-Jackson was appointed to the Board on 22 February 2021. Executive Director shareholdings 0 400% 800% 1200% 1600% Zillah Byng-Thorne Rachel Addison Required holding Required holding Actual holding (29% of salary) Actual holding (1,685% of salary) Directors’ interests in share schemes (audited) Details of units, options and other share incentives held by Executive Directors and movements during the year are set out in the tables below. VCP Director Date of grant Vesting date Balance as at 1 Oct 2020 Granted during the year Released during the year Balance as at 30 Sept 2021 Holding period Zillah Byng-Thorne 14 Apr 2021 The first Dealing Day after the announcement of the FY23 results 14 Apr 2021 The first Dealing Day after the announcement of the FY24 results 14 Apr 2021 The first Dealing Day after the announcement of the FY25 results Rachel Addison1 14 Apr 2021 The first Dealing Day after the announcement of the FY23 results 14 Apr 2021 The first Dealing Day after the announcement of the FY24 results 14 Apr 2021 The first Dealing Day after the announcement of the FY25 results - - - - - - 140,000 140,000 140,000 63,000 63,000 63,000 - - - - - - 140,000 140,000 140,000 63,000 63,000 63,000 Any shares awarded in respect of tranche 1 will be subject to a mandatory two-year holding period Any shares awarded in respect of tranche 2 will be subject to a mandatory one-year holding period Any shares awareded in respect of the final tranche will vest on the fifth anniversary of grant Any shares awarded in respect of tranche 1 will be subject to a mandatory two-year holding period Any shares awarded in respect of tranche 2 will be subject to a mandatory one-year holding period Any shares awareded in respect of the final tranche will vest on the fifth anniversary of grant Notes: 1. On 31 October 2021 Rachel Addison stepped down as an Executive Director. Details of her leaver treatment can be found on page 106. The key features of the VCP are as set out on page 103. ANNUAL REPORT AND ACCOUNTS FY 2021 / 107 Corporate Governance Directors’ interests in share schemes (audited) Details of units, options and other share incentives held by Executive Directors and movements during the year are set out in the tables below. PSP Director Date of grant1 Earliest exercise date Expiry date Exercise price per share (p) Balance at 1 Oct 2020 Granted during the year Lapsed during the year Zillah Byng-Thorne 2 Feb 2017 23 Nov 19 2 Feb 27 Nil 200,000 24 Nov 2017 23 Nov 2018 25 Nov 2019 1 Jun 2020 First dealing day after the announcement of the FY 2020 results First dealing day after the announcement of the FY 2021 results First dealing day after the announcement of the FY 2022 results² 24 Nov 27 Nil 134,345 23 Nov 28 Nil 196,687 25 Nov 29 Nil 67,185 598,217 31 May 23²,5 1 Jun 30 Nil 17,222 17,222 - - - - - - - - - - - - - - Total Rachel Addison Total Notes: Vested and exercised during the year2 Balance at 30 Sept 20215 (200,000)4 - - - - 134,345 196,687 67,185 (200,000) 398,217 - - 17,222 17,222 4. On 31 October 2021 Rachel Addison stepped down as an Executive Director. See page 106 for 1. Awards granted since November 2018 are subject to a mandatory 2-year holding period details of her leaver treatment. following vesting. 5. All outstanding awards were converted to nil-cost options as at 20 November 2020. 2. Details of awards vesting during the year were set out in last year’s report. 3. Awards were converted to nil-cost options as at 3 July 2019. The award granted on 24 November 2017 is fully vested. DABS Director Date of grant End of deferral period Balance at 1 Oct 2020 Granted during the year Released during the year Balance at 30 Sept 2021 Zillah Byng-Thorne 25 Nov 2019 17 Dec 2020 First dealing day after the announcement of the FY 2021 results 25,194 - First dealing day after the announcement of the FY 2022 results - 27,111 Total 25,194 27,111 Rachel Addison1 17 Dec 2020 Total First dealing day after the announcement of the FY 2022 results - - 4,994 4,994 1. On 31 October 2021 Rachel Addison stepped down as an Executive Director. See page 106 for details of her leaver treatment. - - - - - 25,194 27,111 52,305 4,994 4,994 Dilution Awards under Future plc incentive plans may be satisfied by treasury cancellation) in any rolling ten-year period. As at 30 September 2021 this limit had not been exceeded (9.9%). The Committee has now reinstated shares or the issue of new shares or the purchase of shares in the market. a secondary, ‘5% in 10’ dilution limit, to apply prospectively for any future Under Investment Association guidelines, the issue of new shares or discretionary awards. Shareholders had previously approved the reissue of treasury shares under a plan, when aggregated with awards waiving of this limit, which the Committee recognises is in line with under all of a company’s other schemes, must not exceed 10% of the generally-accepted principles of good governance, when Future moved issued ordinary share capital (adjusted for share issuance and to a Standard listing in 2015. 108 / FUTURE PLC Annual Report On Remuneration Implementation of remuneration policy in the year to 30 September 2022 Rachel Addison stepped down as CFO with effect from 31 October award under the PSP on the terms set out in the Policy table, instead 2021, and was succeeded on 1 November 2021 by Penny Ladkin-Brand, of the VCP. (who was Chief Strategy Officer prior to this appointment and was Penny Ladkin-Brand will have her VCP units increased to the previously former Group CFO). Penny’s remuneration arrangements equivalent of Rachel Addison's award (63,000 units per tranche). as CFO are in line with the prevailing Remuneration Policy and Tranche 1 will be prorated from 1 November 2021 (47,472 units) consistent with those of her predecessor. Further details are set out in reflecting 13 months as CSO and 23 months as CFO reflecting the the relevant sections below: leaver treatment agreed for Rachel Addison. Basic salary When reviewing salary levels, the Committee takes into account a number of internal and external factors, including the performance of Fees for Non-Executive Directors and the Chair Non-Executive Directors do not participate in any of the Company’s Future during the year, external market data, historic increases made share incentive arrangements, nor do they receive any benefits. Fees to the individual and, to ensure a consistent approach, the salary are reviewed annually, in line with the wider workforce, with the Board review principles applied to the rest of the organisation. Chair’s fees set by the Committee, and those for the Non-Executive The CEO's salary is fixed for a period of two years and accordingly Directors set by the Board as a whole. will remain at £575,000 in FY 2022. Rachel Addison will continue to The rates for the Chair’s and Non-Executive Directors’ fees are: receive an unchanged salary of £355,250 until her termination date of 31 December 2021. Penny Ladkin-Brand will receive a salary of £355,250 per annum and will be eligible for an annual inflationary pay rise in line with the wider workforce, of 2%, with effect from 1 January 2022. Pension and benefits Zillah Byng-Thorne’s pension benefit is being reduced to match the benefit of the wider workforce in FY 2021 and FY 2022. The original 15% of salary rate was reduced to 10.5% of salary in January 2021, and will be further reduced to 6% of salary from 1 January 2022. Rachel Addison will continue to receive a pension contribution of Fees effective from 1 October 2020 Fees effective from 1 March 2021 Fees effective from 1 January 2022 Base fees Board Chair £200,000 £203,000 £207,060 Non-Executive Director1 £55,000 £55,825 £56,940 6% of salary until her termination date of 31 December 2021. Penny Additional fees Ladkin-Brand will receive a cash supplement in lieu of pension contribution of 6% of salary. No changes are proposed to the benefits provided to any Executive Director. Annual bonus For FY 2022, the Company will continue to operate a profit pool bonus for all employees across the Group, including the Executive Directors on a similar basis to that operated for FY 2021. The maximum opportunity will remain at 200% of salary for the CEO and 150% of salary for the CFO, with payouts linked to delivering AOP performance above Budget. Specific performance targets for the Annual Bonus are not disclosed due to their commercial sensitivity, however it is the Committee’s intention that these will be disclosed retrospectively in next year’s report. In accordance with the Policy, Senior Independent Director £10,000 £10,000 £10,000 Audit and Risk Committee Chair Remuneration Committee Chair Responsibility Committee Chair GoCompare.Com Limited Chair £10,000 £10,000 £10,000 £10,000 £10,000 £10,000 N/A N/A £10,000 £10,000 £25,000 £25,000 1. Meredith Amdur is paid in US$ and for FY 2022 this will be subject to a fixed exchange rate of £1 = US$1.3. 50% of any bonus earned will be deferred in Future shares for 2 years Approved by the Board and signed on its behalf by under the DABS. Long-term incentive No further VCP units will be granted to the CEO. New employees may be granted units under the VCP, replacing Mark Brooker participation in the PSP until 2023. Operation of the VCP is outlined in Chair of the Remuneration Committee the Policy Table on page 92. In the event that a new Executive Director 29 November 2021 is appointed and joins when the performance period(s) of the VCP is materially completed, the Committee reserves the right to make an ANNUAL REPORT AND ACCOUNTS FY 2021 / 109 Corporate Governance Directors' Report Future plc is the holding company of the Future group of companies (the Group). Annual General Meeting The Company’s twenty third Annual General Meeting will be held Directors’ conflicts of interests The Company has procedures in place for managing conflicts of at 11.30am on Thursday 3 February 2022 at Future’s London office interest. Should a Director become aware that they, or any of their at, 121-141 Westbourne Terrace, Paddington, W2 6JR. The resolutions connected parties, have an interest in an existing or proposed and explanatory notes are set out in the Notice of Annual General transaction with the Company, they should notify the Board in Meeting on pages 174 to 180. writing or at the next Board meeting. Corporate Governance statement The Corporate Governance statement, prepared in accordance with rule 7.2 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, comprises of the following sections of the Internal controls are in place to ensure that any related party transactions involving Directors, or their connected parties, are conducted on an arm’s length basis. Directors have a continuing duty to update any changes to these conflicts. Annual Report: the Strategic Report; the Corporate Governance Report; the Audit and Risk Committee Report; the Nomination Directors’ indemnities The Company had Directors’ and Officers’ liability insurance cover Committee Report; the Remuneration Committee Report; together in place throughout the year. 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 cross reference including details of the Group’s financial risk management objectives and policies, Share capital Details of the Company’s issued share capital, together with business review, future prospects and environmental policy. details of the movements in the Company’s issued share capital Directors The names and biographical details of the current Directors are 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 receive a fixed income. Each share carries the right to one shown on pages 72 to 73 of this Annual Report. Particulars of their vote at general meetings of the Company. There are no restrictions emoluments and beneficial and non-beneficial interests in shares or agreements known to the Company that may result in are given in the Directors’ Remuneration Report on page 100 and restrictions on share transfers or voting rights in the Company. 109. There are no specific restrictions on the size of a holding, on the The appointment and removal of Directors is governed by the transfer of shares, or on voting rights, all of which are governed by Company’s Articles of Association, the 2018 Code and the the provisions of the Articles of Association and prevailing Companies Act 2006. The Directors may, from time to time, appoint legislation. one or more Directors. In the interests of good governance and in Shareholder authority for the Company to allot Ordinary Shares accordance with the provisions of the 2018 Code, all Directors will retire and submit themselves for election or re-election at the up to an aggregate nominal amount of £735,113.25 was granted at the 2020 AGM. The issued share capital of the Company at 30 forthcoming AGM. September 2021 was approximately £18,093,695.10 divided into Directors' Powers The Board manages the business of the Company under the powers result of the exercise of share options by the Company’s share option scheme participants and the total issued share capital at 29 set out in the Company’s Articles of Association. The Company’s November 2021 is 120,624,884 Ordinary Shares. The Company’s Articles of Association can only be amended, or new Articles Ordinary Shares are listed on the London Stock Exchange. The adopted, by a resolution passed by shareholders in a general register of shareholders is held in the UK. 120,624,634 Ordinary Shares. Since 30 September 2021, 250 new shares have been issued as a meeting by at least three quarters of the votes cast. Further discussion of the Board’s activities, powers and responsibilities appears within the Corporate Governance Report on page 74 of this Annual Report. Information on compensation for Political donations No contributions were made to political parties during the year loss of office is contained in the Directors’ Remuneration Report on (2020: £Nil). page 106 of this Annual Report. 110 / FUTURE PLC Directors' Report 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 Standard Life Aberdeen plc JPMorgan Asset Management Holdings Inc. Sir Peter Wood Old Mutual Global Investors (UK) Ltd Jupiter Fund Management Plc BlackRock Ameriprise Financial, Inc. and its group Invesco Ltd AXA Investment Managers Oberweis Asset Management, Inc. As at 30 September 2021 As at 29 November 2021 Nature of holding 9.9% 6.0% 5.9% 5.7% 5.5% 5.0% 4.9% 4.9% 3.8% 3.7% 9.9% 6.0% 5.9% 5.7% 5.5% 5.0% 4.9% 4.9% 3.8% 3.7% Indirect Indirect Direct Indirect Indirect Indirect Direct and indirect 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. Whistleblowing procedure Whistleblowing and anti-bribery policies It is Future’s policy to conduct all of our business in an honest and In addition, to ensure Future is adopting best practice with anti-corruption legislation, and to promote transparency, a Review Kit, Trips and Gifts Log is in place to track the whereabouts of ethical manner, and we take a zero-tolerance approach to bribery products sent to us for review and the acceptance of gifts and trips and corruption. We are committed to acting professionally, fairly by our employees. We also have in place an Editorial Ethics and with integrity in all our business dealings and relationships wherever we operate, and we are implementing and enforcing Committee which monitors the approach to gifts and reviews trips to ensure not only are we legally compliant, but that we also effective systems to counter bribery and corruption. comply with our own ethical and editorial standards. We have whistleblowing, anti-bribery and corruption policies which are updated regularly and published on our intranet. The whistleblowing policy is designed to encourage employees to report, in good faith, any genuine suspicions of fraud, bribery, Results and dividends The results of the Group are shown on page 128 and movements in malpractice, modern slavery and human trafficking. Concerns may reserves are set out in note 24 to the financial statements. be raised according to a stated escalation process from an The Board’s policy is that dividends should be covered at least individual’s line manager, via their head of department, Chief four times by adjusted earnings per share and free cashflow. The People Officer, to the Head of Legal and then to the Board of Company’s Employee Benefit Trust (EBT) waives its entitlement to Directors, including the Senior Independent Director. Concerns may any dividends. The Board is recommending a final dividend for the also be raised completely anonymously by post. The whistle- year of 2.8p per share (2020: 1.6p per share) payable on 9 February blowing policy is also designed to ensure that any employee who 2022 to shareholders recorded on the register at the close of raises a genuine concern is protected. During the year, no issues of business on 14 January 2022. The Ordinary Shares will become concern were raised via any of the whistleblowing channels. ex-dividend on 13 January 2022. ANNUAL REPORT AND ACCOUNTS FY 2021 / 111 Corporate Governance Significant agreements The provisions of the European Directive on Takeover Bids (as Other information Other information relevant to this Directors’ Report, and which is implemented in the UK in the Companies Act 2006) require the incorporated by reference, including information required in Company to disclose any significant agreements which take effect, accordance with the UK Companies Act 2006 and Listing Rule alter or terminate upon a change of control of the Company. In 9.8.4R, can be located as follows: common with many other companies, the Group’s bank facility is terminable upon change of control of the Company. In common with market practice, awards under certain of the Group’s long-term incentive plans (details of which are set out in the Directors’ Remuneration Report on pages 100 to 108) will vest or potentially be exchangeable into awards over a purchaser’s share capital upon change of control of the Company. There is also a change of control provision in the service agreements of the two Executive Directors, exercisable within three months of a change Subject matter Important events since the financial year-end Likely future developments in the business of control by the Company or on one month’s notice by the Research and development 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 approval of this Directors’ Report confirm that, so far as they are aware, there is no relevant audit information of which the Company’s auditor is unaware, and each 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. 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 This Directors’ Report was approved by order of the Board. On behalf of the Board Anne Steele Company Secretary 29 November 2021 Page 173 11 17 57 83 41 42 50 172 80 112 / FUTURE PLC Directors' Report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 accounting standards in conformity Each of the Directors, whose names and functions are listed in the with the requirements of the Companies Act 2006 and International Corporate Governance report confirm that, to the best of their Financial Reporting Standards (IFRSs) adopted pursuant to knowledge: Regulation (EC) No 1606/2002 as it applies in the European Union. In preparing the Group financial statements, the Directors have also • the Group and Company financial statements, which have been prepared in accordance with IFRSs as adopted by the European elected to comply with IFRSs, issued by the International Accounting Union and IFRSs issued by IASB, give a true and fair view of the Standards Board (IASB). assets, liabilities, financial position and profit of the Group and Under company law, Directors must not approve the financial loss of the Company; and statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the • the Strategic Report includes a fair review of the development and performance of the business and the position of the Group profit or loss of the Group for that period. In preparing the financial and Company, together with a description of the principal risks statements, the Directors are required to: and uncertainties that it faces. • select suitable accounting policies and then apply them In the case of each Director in office at the date the Directors’ Report consistently; is approved: • state whether applicable IFRSs as adopted by the European • so far as the Director is aware, there is no relevant audit Union and IFRSs issued by IASB have been followed, subject to information of which the Group’s and Company’s auditors are any material departures disclosed and explained in the financial unaware; and statements; • they have taken all the steps that they ought to have taken as a • make judgements and accounting estimates that are reasonable Director in order to make themselves aware of any relevant audit and prudent; and information and to establish that the Group’s and Company’s • prepare the financial statements on the going concern basis auditors are aware of that information. unless it is inappropriate to presume that the Group and Company will continue in business. This responsibility statement was approved by the Board of Directors on 29 November 2021 and is signed on its behalf by: The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’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’ Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Zillah Byng-Thorne Chief Executive 29 November 2021 ANNUAL REPORT AND ACCOUNTS FY 2021 / 113 Corporate GovernanceFinancial Statements 116 INDEPENDENT AUDITORS' REPORT 128 CONSOLIDATED INCOME STATEMENT 128 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 129 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 129 COMPANY STATEMENT OF CHANGES IN EQUITY 130 CONSOLIDATED BALANCE SHEET COMPANY 131 BALANCE SHEET 132 CONSOLIDATED CASH FLOW STATEMENT 133 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT 135 ACCOUNTING POLICIES 142 NOTES TO THE FINANCIAL STATEMENTS 114 / FUTURE PLC 114 / FUTURE PLC Financial Statements ANNUAL REPORT AND ACCOUNTS FY 2021 / 115 ANNUAL REPORT AND ACCOUNTS FY 2021 / 115 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC Report on the audit of the financial statements 1. Opinion In our opinion: • • • • the financial statements of Future plc (the ‘parent company’) and its subsidiaries (together the ‘group’) give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2021 and of the group’s profit for the year then ended; the group financial statements have been properly prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRSs) as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements which comprise: • • • • • • • the consolidated income statement; the consolidated statement of comprehensive income; the consolidated and parent company balance sheets; the consolidated and parent company statements of changes in equity; the consolidated cash flow statement; the accounting policies compliance statement and basis of preparation; and the related notes 1 to 30. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Accounting Standards in conformity with the requirements of the Companies Act 2006 and IFRSs as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice). 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the group and 116 / FUTURE PLC Independent Auditors' report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) parent company for the year are disclosed in note 4 to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the group or the parent company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3. Summary of our audit approach KKeeyy aauuddiitt mmaatttteerrss The key audit matters that we identified in the current year were: • The valuation of acquired intangible assets relating to GoCo Group plc • The valuation of Newstrade returns provisions Within this report, key audit matters are identified as follows: Newly identified Similar level of risk MMaatteerriiaalliittyy SSccooppiinngg The materiality that we used for the group financial statements was £6.6m which was determined on the basis of 5% of profit before tax adjusted for exceptional items, defined in note 5. Our scoping covered 94% of the Group’s revenue; 90% of the Group’s profit before tax; and 82% of the Group’s total assets. 4. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of accounting included the following: • • • • • Understood the processes and controls underpinning management’s forecasting of financial performance and cashflow and determination of downside scenarios including those to support accuracy of the models and the underlying data; Challenged the adequacy of downside scenarios and the reverse stress tests and perform sensitivity testing, considering the plausibility of a break even scenario; Assessed the impact of refinancing on the Group’s borrowing facilities and performing procedures to evaluate actual and forecast covenant positions as set out in note 18 to the financial statements; Considered whether there is a material inconsistency between the viability statement and the knowledge we obtained in the audit; and Assessed the going concern disclosures in the annual report. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. ANNUAL REPORT AND ACCOUNTS FY 2021 / 117 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) In relation to the reporting on how the group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 5. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our 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) that we identified. These matters included 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 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. Key audit matters were identified as part of the prior year that have not been identified in the current year include accounting for the acquisition of Barcroft Studios and TI Media, classification of exceptional items, valuation of goodwill and other intangible assets, accounting for uncertain tax provisions and the impact of COVID-19. These matters are not considered to be key audit matters in the current year as these relate to events that specifically related to the prior year or are no longer considered material due to the increased size of the group. 55..11.. TThhee vvaalluuaattiioonn ooff aaccqquuiirreedd bbrraanndd iinnttaannggiibbllee aasssseettss rreellaattiinngg ttoo GGooCCoo GGrroouupp ppllcc KKeeyy aauuddiitt mmaatttteerr ddeessccrriippttiioonn HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee kkeeyy aauuddiitt mmaatttteerr Following the acquisition of GoCo Group plc in the period, management has completed the valuation of the acquisition balance sheet of the business, which includes £319.5m of acquired intangible assets including £279.8m of brand intangible assets. Management engaged valuation specialists to support in the valuation of intangibles and the overall preparation of the acquisition balance sheet position including goodwill. The acquisition of GoCo Group plc is material to the group and there is significant judgement in determining the revenue growth assumptions that underpin the valuation of the GoCompare brand intangibles. Further details are included within the Audit Committee report on page 84, in the accounting policies section and note 28 to the financial statements. In response to the identified key audit matter we have performed the following procedures: - Assessed the processes and relevant controls around management estimates including those around data used in forming those estimates. Assessed relevant controls over management review of revenue projections and input data used in that review; - Evaluated the appropriateness of the methodology used to value intangible assets and the reasonableness of key valuation assumptions, supported by our own valuation specialists; 118 / FUTURE PLC Independent Auditors' report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) - Challenged the revenue growth and margin assumptions driving value in the model through benchmarking against analyst and industry consensus, considering both confirmatory and contradictory evidence; - Challenged the basis for customer attrition assumptions and margin through benchmarking to comparator acquisitions and tested the accuracy of the underlying data used; - Checked the mechanical accuracy of the valuation models; - Considered the reasonableness of useful economic lives through benchmarking to comparator acquisitions and other qualitative factors; and - Assessed the competence, capabilities and objectivity of management’s valuation specialists; and - Assessed the adequacy of disclosures relating to the acquired intangibles, taking into account the requirements of relevant financial reporting standards. KKeeyy oobbsseerrvvaattiioonnss Based on the work performed, we determined that the valuation of acquired brand intangible assets in relation to GoCo Group plc was appropriate. 55..22.. TThhee vvaalluuaattiioonn ooff IInntteerrnnaattiioonnaall NNeewwssttrraaddee rreettuurrnnss pprroovviissiioonnss KKeeyy aauuddiitt mmaatttteerr ddeessccrriippttiioonn Magazine newsstand and distribution revenue, where the group is the publisher, is recognised at the date the publication is available for sale. The amount of revenue recognised is dependent on an estimate of the number of returns. There is a lag period over which returns can occur resulting in inherent judgement in estimating the number of returns, particularly international sales, and changes to the estimated number could have a material impact on magazine revenue therefore we consider this a key audit matter and a potential fraud risk in respect of revenue recognition. The value of the returns provision at 30 September 2021 is £51.2m (2020: £39.2m), of which £15.3m (2020: £2.6m) relates to international sale returns by the core Future business. Further details are included within the Audit Committee report on page 84 and in the accounting policies section and note 2 to the financial statements. In response to the identified key audit matter we have performed the following procedures: - Assessed the processes and relevant controls around management estimates including those around data used in forming those estimates. - Assessed relevant controls around management reviews and controls related to the accuracy of information used; HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee kkeeyy aauuddiitt mmaatttteerr ANNUAL REPORT AND ACCOUNTS FY 2021 / 119 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) - We have understood and assessed the basis for management’s provisions including the consistency in policy and application in each period; - We have compared management’s estimated returns levels to historical trends and tested post year end returns against provisions; - We have assessed the forecasting accuracy of past estimates made by reviewing post period actual returns and considered any contradictory evidence; and - We have assessed the level of uncertainty and sensitivity in the estimate and evaluated the appropriateness of management’s disclosure under the requirements of IAS 1. KKeeyy oobbsseerrvvaattiioonnss Based on the work performed, we determined that the valuation of Newstrade returns provision was appropriate. 6. Our application of materiality 66..11.. MMaatteerriiaalliittyy We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: GGrroouupp ffiinnaanncciiaall ssttaatteemmeennttss PPaarreenntt ccoommppaannyy ffiinnaanncciiaall ssttaatteemmeennttss MMaatteerriiaalliittyy £6.6m (2020: £2.6m) £4.0m (2020: £4.3m) BBaassiiss ffoorr ddeetteerrmmiinniinngg mmaatteerriiaalliittyy 5% of profit before tax adjusted for exceptional items, as defined in note 5. (In 2020 the previous auditor set group materiality based on 5% of profit before tax). RRaattiioonnaallee ffoorr tthhee bbeenncchhmmaarrkk aapppplliieedd Profit before tax adjusted for exceptional items is a key metric for the principal users of the financial statements as it derives the prediction of future share price, the ability to pay dividends, and is therefore of particular importance to both shareholders and potential investors. Parent company materiality is based on 2% of net assets, which is capped at 60% of group materiality. (In 2020 the previous auditor set parent company materiality based on 1% of total assets). The company is non-trading and operates primarily as a holding company. As such, we believe the net asset position is the most appropriate benchmark to use. 120 / FUTURE PLC Independent Auditors' report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) Profit before tax adjusted for exceptional items better reflect earnings, growth and performance of the business, given that the adjustments to operating profit are deemed to be one-off in both quantum and nature. £131.6m Profit before tax adjusted for exceptional items Group materiality £6.6m Component materaility range £1.8m to £2.8m Audit Committee reporting threshold £0.3m 66..22.. PPeerrffoorrmmaannccee mmaatteerriiaalliittyy We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. PPeerrffoorrmmaannccee mmaatteerriiaalliittyy BBaassiiss aanndd rraattiioonnaallee ffoorr ddeetteerrmmiinniinngg ppeerrffoorrmmaannccee mmaatteerriiaalliittyy GGrroouupp ffiinnaanncciiaall ssttaatteemmeennttss PPaarreenntt ccoommppaannyy ffiinnaanncciiaall ssttaatteemmeennttss 70% of group materiality 70% of parent company materiality In setting performance materiality, we considered: - - - The quality of the control environment in the group and whether we were able to rely on controls; The low number of corrected and uncorrected misstatements identified in the previous audit; and The level of consistency in key management personnel. 66..33.. EErrrroorr rreeppoorrttiinngg tthhrreesshhoolldd We agreed with the Audit Committee that we would report all audit differences in excess of £0.3m (2020: £0.1m) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. ANNUAL REPORT AND ACCOUNTS FY 2021 / 121 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) 7. An overview of the scope of our audit 77..11.. IIddeennttiiffiiccaattiioonn aanndd ssccooppiinngg ooff ccoommppoonneennttss Our group audit was scoped by obtaining an understanding of the Group and its environment, including group- wide controls, and assessing the risks of misstatement at the group level. Based on that assessment we focused our group audit scope primarily on the audit work at four components, which were subject to a full scope audit. This has increased from three in the previous year due to the acquisition of GoCo group plc in the period. The four components represent the principal business units with the Group’s reportable segments and account for 94% of the Group’s revenue and 90% of the profit before tax and 82% of total assets. They were also selected to provide an appropriate basis for undertaking audit work to address the risks of material misstatement identified above. Our audit work at these components, excluding the parent company, were executed at levels of materiality applicable to each individual entity, which were lower than group materiality ranging from £1.8m to £2.8m (2020: £1.1m to £2.6m). At the group level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to full scope audit. None of these components represented more than 5% of revenue or 9% profit before tax individually. The group is audited by one audit team, led by the Senior Statutory Auditor. The audit has been performed at the Group’s Bath and Newport head offices and London offices, as the books and records for each entity within the group are maintained at these locations. 66%% RReevveennuuee 9944%% Full audit scope 1100%% PPrrooffiitt bbeeffoorree ttaaxx 9900%% Full audit scope Review at group level Review at group level 77..22.. OOuurr ccoonnssiiddeerraattiioonn ooff tthhee ccoonnttrrooll eennvviirroonnmmeenntt 1188%% TToottaall aasssseettss 8822%% Full audit scope Review at group level The group operates a diverse IT infrastructure. With the involvement of our IT specialists, we obtained an understanding of the relevant IT environment, including performance of general IT control (“GITC”) testing. For all components we obtained an understanding of the relevant controls associated with the financial reporting process, key audit matters, and in relation to significant accounting estimates. We did not rely on controls in any areas of the audit and instead adopted a fully substantive approach. 122 / FUTURE PLC Independent Auditors' report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) 8. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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 in this regard. 9. Responsibilities of directors As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors 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 parent company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. 10. Auditor’s 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 auditor’s 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 auditor’s report. ANNUAL REPORT AND ACCOUNTS FY 2021 / 123 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) 11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. 1111..11.. IIddeennttiiffyyiinngg aanndd aasssseessssiinngg ppootteennttiiaall rriisskkss rreellaatteedd ttoo iirrrreegguullaarriittiieess In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations, we considered the following: • • • • • the nature of the industry and sector, control environment and business performance including the design of the group’s remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets; the group’s own assessment of the risks that irregularities may occur either as a result of fraud or error; results of our enquiries of management internal audit, and the audit committee about their own identification and assessment of the risks of irregularities; any matters we identified having obtained and reviewed the group’s documentation of their policies and procedures relating to: o identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance o detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud o the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations. the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuation, IT, and industry specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the estimate of the international sales related Newstrade returns provision at year-end. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory framework that the group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, Listing Rules, pensions legislation and tax legislation. In addition, we considered provisions of other laws and regulations including FCA related legislation that do not have a direct effect on the financial statements but compliance with which may be fundamental to the group’s ability to operate or to avoid a material penalty. 124 / FUTURE PLC Independent Auditors' reportINDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) 1111..22.. AAuuddiitt rreessppoonnssee ttoo rriisskkss iiddeennttiiffiieedd As a result of performing the above, we identified the valuation of Newstrade returns provision as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter. In addition to the above our procedures to respond to risks identified included the following: • reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements; • enquiring of management, the audit committee and external legal counsel concerning actual and potential litigation and claims; • performing analytical procedures to identify any unusual or unexpected relationships that may • • indicate risks of material misstatement due to fraud; reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC; and in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Report on other legal and regulatory requirements 12. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report. 13. Corporate Governance Statement The Listing Rules require us to review the directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance Code specified for our review. ANNUAL REPORT AND ACCOUNTS FY 2021 / 125 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: • • • • • • the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 59; the directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is appropriate set out on page 65; the directors' statement on fair, balanced and understandable set out on page 113; the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 60; the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 83 and 85, and the section describing the work of the audit committee set out on page 82. 14. Matters on which we are required to report by exception 1144..11.. AAddeeqquuaaccyy ooff eexxppllaannaattiioonnss rreecceeiivveedd aanndd aaccccoouunnttiinngg rreeccoorrddss 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 parent company, or returns adequate for our • audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 1144..22.. DDiirreeccttoorrss’’ rreemmuunneerraattiioonn Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 15. Other matters which we are required to address 1155..11.. AAuuddiittoorr tteennuurree Following the recommendation of the Audit Committee, we were appointed by the shareholders at the Annual General Meeting on 21 February 2021 to audit the financial statements for the year ended 30 September 2021 and subsequent financial periods. The period of total uninterrupted engagement of the firm is therefore one year. 1155..22.. CCoonnssiisstteennccyy ooff tthhee aauuddiitt rreeppoorrtt wwiitthh tthhee aaddddiittiioonnaall rreeppoorrtt ttoo tthhee aauuddiitt ccoommmmiitttteeee Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK). 126 / FUTURE PLC Independent Auditors' report INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FUTURE PLC (CONTINUED) 16. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Mark Tolley, FCA (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor Reading, United Kingdom 29 November 2021 ANNUAL REPORT AND ACCOUNTS FY 2021 / 127 2021 Non -GAAP Adjusted results £m Adjusting items £m Statutory results £m Non -GAAP Adjusted results £m 2020 Adjusting items £m 606.8 (411.0) 195.8 0.3 (7.8) (7.5) - 188.3 (38.3) 150.0 - 606.8 339.6 (80.5) (80.5) - - - - (80.5) (3.4) (83.9) (491.5) (246.2) 115.3 0.3 (7.8) (7.5) - 107.8 (41.7) 66.1 93.4 0.5 (3.0) (2.5) - 90.9 (18.0) 72.9 - (42.7) (42.7) 7.6 (2.3) 5.3 (1.5) (38.9) 10.3 (28.6) Note 1, 2 3 7 7 1 8 Statutory results £m 339.6 (288.9) 50.7 8.1 (5.3) 2.8 (1.5) 52.0 (7.7) 44.3 Note 10 10 2021 pence 59.3 58.1 2020 pence 46.4 45.4 2021 £m 66.1 (12.3) (12.3) 53.8 2020 £m 44.3 (8.3) (8.3) 36.0 Consolidated income statement for the year ended 30 September 2021 Revenue Net operating expenses Operating profit Finance income Finance costs Net finance (costs)/income Other expense Profit before tax Tax (charge)/credit Profit for the year attributable to owners of the parent See page 137 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 2021 Profit for the year Items that may be reclassified to the consolidated income statement Currency translation differences Other comprehensive expense 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. 128 / FUTURE PLC Financial Statements Financial Statements Consolidated statement of changes in equity for the year ended 30 September 2021 Group 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 (net of tax) Other comprehensive expense for the year Total comprehensive income for the year Share capital issued during the year Acquisition of own shares Share schemes - Issue of treasury shares to employees - Value of employees’ services - Current tax on options - Deferred tax on options Dividends paid to shareholders Balance at 30 September 2020 Profit for the year Currency translation differences (net of tax) Other comprehensive expense for the year Total comprehensive income for the year Share capital issued during the year Acquisition of own shares Share schemes - Issue of treasury shares to employees - Value of employees’ services - Current tax on options - Deferred tax on options Dividends paid to shareholders Balance at 30 September 2021 Issued share capital £m Note 12.5 - 12.5 - - - - Share premium account £m 97.2 - 97.2 - - - - Merger reserve £m 140.4 - 140.4 - - - - 22, 24 2.2 99.8 30.5 24 24 6 14 9 - - - - - - - - - - - - - - - - - - - - - - 22, 24 3.4 24 24 6 14 9 - - - - - - - - - - - - - - - - - - - 411.0 - - - - - - 18.1 - 197.0 - 581.9 Treasury reserve £m Accumulated exchange differences £m (0.3) - (0.3) - - - - - (9.1) 0.6 - - - - - - - - - (4.9) 6.1 - - - - (7.6) 10.5 - 10.5 - (8.3) (8.3) (8.3) - - - - - - - 2.2 - (12.3) (12.3) (12.3) - - - - - - - (10.1) 14.7 197.0 170.9 (8.8) Company statement of changes in equity for the year ended 30 September 2021 Company Balance at 30 September 2019 Loss for the year Total comprehensive loss for the year Share capital issued during the year Share schemes - Issue of treasury shares to employees - Value of employees’ services - Deferred tax on options Dividends paid to shareholders Balance at 30 September 2020 Loss for the year Total comprehensive loss for the year Share capital issued during the year Share schemes - Issue of treasury shares to employees - Value of employees’ services - Deferred tax on options Dividends paid to shareholders Balance at 30 September 2021 Issued share capital £m Note Share premium account £m Merger reserve £m Retained earnings £m 12.5 - - 2.2 - - - - 14.7 - - 3.4 - - - - 18.1 97.2 - - 99.8 - - - - 197.0 - - - - - - 31.4 - - 30.5 - - - - 61.9 - - 411.0 - - - - 197.0 - 472.9 22, 24 24 6 9 22, 24 24 6 9 ANNUAL REPORT AND ACCOUNTS FY 2021 / 129 Retained (losses)/ earnings £m (46.9) (0.8) (47.7) 44.3 - - 44.3 - - (0.6) 5.6 8.4 (3.7) (1.0) 5.3 66.1 - - 66.1 - - (6.1) 10.0 (2.4) 11.7 (1.6) 83.0 58.9 (6.5) (6.5) - (0.6) 5.6 (3.9) (1.0) 52.5 (8.7) (8.7) Total equity £m 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 66.1 (12.3) (12.3) 53.8 414.4 (4.9) - 10.0 (2.4) 11.7 (1.6) 862.3 Total equity £m 200.0 (6.5) (6.5) 132.5 (0.6) 5.6 (3.9) (1.0) 326.1 (8.7) (8.7) - 414.4 (6.1) 10.0 1.4 (1.6) 47.5 (6.1) 10.0 1.4 (1.6) 735.5 Financial Statements Consolidated balance sheet as at 30 September 2021 Assets Non-current assets Property, plant and equipment Intangible assets - goodwill Intangible assets - other Deferred tax Total non-current assets Current assets Inventories Corporation tax recoverable Trade and other receivables Cash and cash equivalents Finance lease receivable Total current assets Total assets Equity and liabilities Equity Issued share capital Share premium account Merger reserve Treasury reserve Accumulated exchange differences Retained earnings Total equity Non-current liabilities Financial liabilities - interest-bearing loans and borrowings Lease liability due in more than one year Deferred tax Provisions 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 Total current liabilities Total liabilities Total equity and liabilities Note 2021 £m 2020 £m 11 12 12 14 15 16 21 22 24 24 24 18 20 14 19 18 17 47.4 688.2 466.5 3.8 1,205.9 1.0 - 98.0 324.3 1.9 425.2 1,631.1 18.1 197.0 581.9 (7.6) (10.1) 83.0 862.3 458.1 44.0 70.3 6.1 578.5 42.5 140.8 2.1 4.9 190.3 768.8 1,631.1 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) 2.2 5.3 381.3 73.6 18.7 2.5 5.1 99.9 7.8 116.2 - 6.0 130.0 229.9 611.2 The financial statements on pages 128 to 173 were approved by the Board of Directors on 29 November 2021 and signed on its behalf by: Richard Huntingford Chair Penny Ladkin-Brand Chief Financial Officer 130 / FUTURE PLC Financial Statements Company balance sheet as at 30 September 2021 Assets Non-current assets Investments in Group undertakings Deferred tax Total non-current assets Current assets Trade and other receivables Cash and cash equivalents Total current assets Total assets Equity and liabilities Equity Issued share capital Share premium account Merger reserve Retained earnings Total equity Non-current liabilities Financial liabilities - interest-bearing loans and borrowings Total non-current liabilities Current liabilities Financial liabilities - interest-bearing loans and borrowings Trade and other payables Total current liabilities Total liabilities Total equity and liabilities Note 2021 £m 2020 £m 13 14 15 16 22 24 24 18 18 17 1,006.7 1.9 1,008.6 73.9 266.4 340.3 1,348.9 18.1 197.0 472.9 47.5 735.5 442.8 442.8 39.4 131.2 170.6 613.4 1,348.9 356.3 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 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 £8.7m (2020: £6.5m). The financial statements on pages 128 to 173 were approved by the Board of Directors on 29 November 2021 and signed on its behalf by: Richard Huntingford Chair Penny Ladkin-Brand Chief Financial Officer Future plc 03757874 ANNUAL REPORT AND ACCOUNTS FY 2021 / 131 Financial Statements 2021 £m 197.2 (4.9) (0.9) (25.7) 165.7 (3.7) (7.4) - (169.3) - (180.4) - (0.7) (4.9) 559.4 (213.6) (4.6) (6.4) (6.1) - (1.6) 321.5 306.8 19.3 (1.8) 324.3 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 Consolidated cash flow statement for the year ended 30 September 2021 Cash flows from operating activities Cash generated from operations Net interest paid on bank facilities Interest paid on lease liabilities Tax paid Net cash generated from 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 cash acquired Disposal of subsidiaries, magazine titles and websites 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 (Repayment)/drawdown of overdraft Bank arrangement fees Repayment of principal element of lease liabilities Settlement of derivative Dividends paid Net cash generated from financing activities Net increase 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 132 / FUTURE PLC Financial StatementsNotes to the consolidated cash flow statement for the year ended 30 September 2021 A. Cash generated from operations The reconciliation of profit for the year to cash generated from operations is set out below: Profit for the year Adjustments for: Depreciation and impairment charge Amortisation of intangible assets and impairment charge Share schemes - Value of employees’ services Net finance costs/(income) Tax charge Loss on the sale of operations Cash generated from operations before changes in working capital and provisions Movement in provisions (Increase)/decrease in inventories Decrease in trade and other receivables (Decrease)/increase in trade and other payables Cash generated from operations B. Analysis of net debt Group 2021 £m 66.1 9.7 57.5 10.0 7.5 41.7 - 192.5 0.2 (0.2) 8.9 (4.2) 197.2 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 The definition of net debt is provided in the 'Presentation of non-statutory measures' section of the Accounting policies, on page 135. Group Cash and cash equivalents Debt due within one year Debt due after more than one year Net debt Group Cash and cash equivalents Debt due within one year Debt due after more than one year Net debt 1 October 2020 £m 19.3 (7.8) (73.6) (62.1) 1 October 2019 £m 6.6 (4.3) (42.6) (40.3) Cash flows £m On acquisition £m Other non-cash changes £m Exchange movements £m 30 September 2021 £m 293.5 (31.4) (303.2) (41.1) 13.3 (3.2) (80.0) (69.9) - (0.1) (1.6) (1.7) (1.8) - 0.3 (1.5) 324.3 (42.5) (458.1) (176.3) 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 29.2 - (111.0) (81.8) - - 0.2 0.2 (1.0) - 1.1 0.1 19.3 (7.8) (73.6) (62.1) ANNUAL REPORT AND ACCOUNTS FY 2021 / 133 Financial Statements     C. Reconciliation of movement in net debt Net debt at start of year Increase in cash and cash equivalents Increase in borrowings Other non-cash changes Exchange movements Net debt at end of year D. Changes in financial assets and financial liabilities Group Financial assets Trade and other receivables (net) Cash and cash equivalents Finance lease receivable Total financial assets Financial liabilities Lease liabilities Current borrowings Non-current borrowings Total financial liabilities Net financial assets and liabilities Group Financial assets Trade and other payables [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] (104.8) [ ] [ ] [ ] Group 2021 £m (62.1) 306.8 (417.8) (1.7) (1.5) (176.3) Group 2020 £m (40.3) 13.7 (35.8) 0.2 0.1 (62.1) 1 October 2020 £m Cash flows £m Acquisitions £m Exchange movements £m Other non cash movements £m 30 September 2021 £m 58.7 19.3 1.6 79.6 (24.7) (7.8) (2.2) 293.5 (0.4) 290.9 [ ] 7.7 [ ] [ ] 6.5 (32.1) (74.5) (308.3) (211.8) (132.2) (326.2) (35.3) 18.5 13.3 - 31.8 [ ] (28.6) [ ] (3.5) (3.2) (80.0) (115.3) (83.5) (1.5) (1.8) - (3.3) [ ] 0.5 0.4 - (0.3) 0.6 (2.7) - - 0.7 0.7 - (27.6) - - (27.6) (26.9) 73.5 324.3 1.9 399.7 (125.2) (48.9) (43.1) (463.1) (680.3) (280.6) 1 October 2019 £m Cash flows £m Share issues £m Acquisitions £m Changes in fair values and unwinding of discount £m Adopion of IFRS 16 Leases £m Exchange movements £m Other non cash move- ments £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 Lease liabilities Current borrowings Non-current borrowings Deferred consideration Contingent consideration Total financial liabilities Net financial assets and liabilities (53.8) - (4.3) (43.3) (43.9) (10.9) (156.2) (112.2) (0.5) 4.0 (3.5) 78.7 21.4 3.6 103.7 81.7 - - - - - - - - - 21.8 - 21.8 21.8 29.2 29.2 - - 58.4 (49.8) (11.9) - (111.0) - - (172.7) (114.3) - - - (1.2) (1.2) - - - - (0.3) 6.8 6.5 5.3 - - 1.8 - 1.8 0.4 (16.8) - - - - (16.4) (14.6) (0.3) (1.0) - - (1.3) (1.1) - - 1.1 1.0 0.5 1.5 0.2 - - (0.1) - (0.1) - - - - - - - (0.1) 58.7 19.3 1.6 - 79.6 (104.8) (24.7) (7.8) (74.5) - - (211.8) (132.2) 134 / FUTURE PLC 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 131 and 182. The financial statements consolidate those of Future plc and its subsidiaries (the Group). The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee’s (IFRS IC) interpretations adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, applicable as at 30 September 2021, 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 2021 Annual Report are set out on pages 135 to 141. 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 113. The Company has applied Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (FRS 101) issued by the Financial Reporting New or revised accounting standards and interpretations adopted in the year Amendments regarding the disclosure of accounting policies; - IAS 8 Amendments regarding the definition Council (FRC) incorporating the Amendments The following standards and amendments of accounting estimates; to FRS 101 issued by the FRC in July 2015, and became effective in the year: - IAS 12 Amendments regarding deferred tax the amendments to Company law made by The - amendment to IFRS 3 Clarifying the definition on leases and decommissioning Companies, Partnerships and Groups (Accounts of a business; obligations; and Reports) Regulations 2015. In these - amendment to IAS 1 and IAS 8 Definition of - IAS 16 Amendments prohibiting a company financial statements, the Company has applied material; and from deducting from the cost of property, the exemptions available under FRS 101 in - amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 plant and equipment amounts received respect of the following disclosures: and IFRS 16: Interest Rate Benchmark Reform from selling items produced while the - A Cash Flow Statement and related notes; Phase 2. company is preparing the asset for its - Comparative period reconciliations for There has been no material impact from the intended use; share capital and tangible fixed assets; adoption of new standards, amendments to - IAS 37 Amendments regarding the costs to - Disclosures in respect of transactions with standards or interpretations which are relevant include when assessing whether a contract wholly owned subsidiaries; to the Group. is onerous; and - Disclosures in respect of capital During April 2021 the IFRS Interpretations - Annual Improvements to IFRS Standards management; Committee finalised an agenda decision 2018-2020 Cycle. - The effects of new but not yet effective regarding configuration and customisation The Group does not expect that the IFRSs; and costs in Cloud Computing arrangements standards and amendments issued but not yet - Disclosures in respect of the compensation (Software as a Service) under IAS 38. The Group effective will have a material impact on results of Key Management Personnel. has changed its accounting policy relating to or net assets. The Company produces consolidated the capitalisation of software costs to align with financial statements which are prepared in the interpretation, however there is no impact accordance with International Financial Reporting Standards. As the consolidated on amounts capitalised on the balance sheet as a result of this alignment. Presentation of non-statutory measures financial statements of the Company include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures: - IFRS 2 Share Based Payments in respect of group settled share based payments; and New accounting standards, amendments and interpretations that are issued but not yet applied by the Group The Directors believe that adjusted results and adjusted earnings per share provide additional useful information on the core operational performance of the Group to shareholders, and review the results of the Group on an adjusted basis internally. The term ‘adjusted’ is not a - The disclosures required by IFRS 7 and IFRS Certain new standards, amendments and defined term under IFRS and may not therefore 13 regarding financial instrument disclosures interpretations to existing standards have been be comparable with similarly titled profit have not been provided. published that are mandatory for accounting measurements reported by other companies. It As permitted by s408 of the Companies Act periods beginning on or after 1 October 2021 is not intended to be a substitute for, or superior 2006 the Company has elected not to present and which the Group has chosen not to adopt to, IFRS measurements of profit. its own profit and loss account or statement of early. These include the following standards Adjustments are made in respect of: comprehensive income for the year. The profit which are relevant to the Group: - Share-based payments – share-based attributable to the Company is disclosed in the - amendment to IAS 1 Amendments payment expenses (relating to equity- footnote to the Company’s balance sheet. regarding the classification of liabilities and settled share awards with vesting periods ANNUAL REPORT AND ACCOUNTS FY 2021 / 135 Financial Statementslonger than 12 months), together with the balance is driven by the Group’s trading results of the Group without the impact associated social security costs, are assessment of the relevant discount rate to of one-off items, amortisation of acquired excluded from the adjusted results of the apply. Excluding these items ensures intangible assets, exceptional items, share- Group as the Directors believe they result in comparability between years. based payment expenses (relating to a level of charge that would distort the - Changes in the fair value of currency option equity-settled share awards with vesting user’s view of the core trading performance - the Group has excluded this from its periods longer than 12 months), together with of the Group. Details of share-based adjusted results as the option was acquired associated social security costs and any tax payments are shown in note 23. in order to hedge USD exposure to related effects (including the impact of the UK - Exceptional items – the Group considers acquisition-related contingent tax rate change) that would otherwise distort items of income and expense as consideration and does not relate to the the users understanding of the Group's exceptional and excludes them from the core underlying trading performance of the performance. In the prior year this also adjusted results where the nature of the Group. excludes changes in the fair value of contingent item, or its size, is material and/or is not The tax related to adjusting items is the tax consideration (and unwinding of associated related to the core underlying trading of the effect of the items above, calculated using the discount) and on the currency option (including Group so as to assist the user of the standard rate of corporation tax in the relevant any related tax effects). financial statements to better understand jurisdiction. A summary table of all measures is included the results of the Group. The impairment Reference to 'core or underlying' reflects the below: charge recognised in the year in respect of acquired intangible assets has been excluded from the adjusted results of the Group as it is non-cash and relates to acquired intangible assets for which amortisation is already considered to be an adjusting item. As such it is not considered to be reflective of the core trading performance of the Group. Details of exceptional items are shown in note 5. - Amortisation of acquired intangible assets – the amortisation charge for those intangible assets recognised on business combinations is excluded from the adjusted results of the Group since they are non-cash charges arising from non-trading investment activities. As such, they are not considered to be reflective of the core trading performance of the Group. - Impact of the UK tax rate change – this was substantively enacted in the UK in May 2021 and results in tax rates increasing from 19% to 25% in 2023. This has been excluded from the adjusted results of the Group as it results in a one-off non-cash impact on the Group’s deferred tax balances and would otherwise significantly distort the Group’s core underlying tax charge. The following adjustments are only relevant in the context of the prior year results: - Change in the fair value of contingent consideration - the Group excludes the remeasurement of these acquisition-related liabilities from its adjusted results as the impact of remeasurement can vary significantly depending on the underlying Adjusted free cash flow acquisition’s performance. The unwinding Net debt of the discount on contingent consideration is also excluded from the Group’s adjusted results on the basis that it is non-cash and 136 / FUTURE PLC Closest equivalent statutory measure Operating profit APM Adjusted operating profit Adjusted profit before tax Profit before tax Definition 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, amortisation of acquired intangible assets, exceptional items and the prior year fair value movements on contingent consideration. This is a key management incentive metric, used within the Group’s Deferred Annual Bonus Plan. Adjusted operating profit margin is adjusted operating profit as a percentage of revenue. Adjusting items are shown in the table below and defined in the table commentary. Adjusted profit before tax 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, excep- tional items, and any related tax effects as well as the impact of the UK tax rate change. The prior year results are also adjusted for fair value movements on contingent consideration (and unwinding of associated discount) and on the currency option (including any related tax effects). Adjusting items are shown in the table below and defined in the table commentary. Adjusted diluted earnings per share Diluted earnings per share Adjusted diluted earnings per share (EPS) represents adjusted profit after tax divided by the weighted average dilutive number of shares at the year end date. This is a key management incentive metric, used within the Group’s Performance Share Plan. A reconciliation is provided in note 10. Adjusted effective tax rate Adjusted operating cash flow Effective tax rate Adjusted effective tax rate is defined as the effective tax rate adjusted for the tax impact of adjusting items. The tax impact of adjusting items is provided in note 8. Operating cash flow Adjusted operating cash flow represents cash generated from operations adjusted to exclude cash flows relating to exceptional items and movement on accrual for employer's taxes on share- based payments relating to equity settled share awards with vesting periods longer than 12 months, and to include lease re- payments following adoption of IFRS 16 Leases in the prior year. Free cash flow Adjusted free cash flow is defined as adjusted operating cash flow less capital expenditure. Statutory net debt Net debt is defined as the aggregate of the Group's cash and cash equivalents and its external bank borrowings net of capital- ised bank arrangement fees. It does not include lease liabilities recognised following the adoption of IFRS 16 Leases in the prior year. Financial StatementsA reconciliation of adjusted operating profit net assets acquired is recorded as goodwill. - Magazine newsstand circulation, print to profit before tax is shown below: Inter-company transactions, balances and subscription and advertising revenue is 2021 £m 2020 £m Adjusted operating profit 195.8 93.4 Adjusted net finance costs (7.5) (2.5) Adjusted profit before tax 188.3 90.9 Adjusting items: Share-based payments (including social security costs) (14.8) (5.5) unrealised gains on transactions between recognised according to the date that the Group companies are eliminated. related publication goes on sale. Unrealised losses are also eliminated but - Online advertising revenue is recognised are considered an impairment indicator of the over the period during which the adverts asset transferred. Accounting policies of are served. subsidiaries have been changed where - Revenue from the sale of digital magazine necessary to ensure consistency with the subscriptions is recognised uniformly over policies adopted by the Group. the term of the subscription. - Event income is recognised when the event has taken place. - Licensing revenue is recognised on the Exceptional items (note 5) (27.4) (17.1) Segment reporting Amortisation of acquired intangibles (note 12) Fair value gain on contingent consideration Unwinding of discount on contingent consideration Fair value loss on currency option (38.3) (21.6) by geographical segment. The Group also uses - Publisher services revenue is recognised The Group is organised and arranged primarily supply of the licensed content. - - - 7.6 (1.1) (1.2) a sub-segment split of Media and Magazines when the issues are distributed to for further analysis. Operating segments are wholesalers. reported in a manner consistent with the - Revenue from broadcaster productions is internal reporting provided to the Chief recognised over the period of Operating Decision Makers who are development in line with expenditure considered to be the Executive Directors of incurred. Profit before tax 107.8 52.0 Future plc. A reconciliation between adjusted and - Other revenue is recognised at the time of sale or provision of service. - Price comparison revenue is recognised statutory earnings per share measures is Revenue recognition upon completion of the sale. shown in note 10. Revenue from contracts with customers is - Rewards revenue is recognised upon recognised in the income statement in line usage of a voucher net of an estimate for with the five-step model in IFRS 15, to reflect cancellations. Basis of consolidation the pattern of transfer of goods and services The right of return is considered to be The consolidated financial statements to the customer. Revenue is recognised in the variable consideration. The probable amount incorporate the financial statements of Future income statement when control passes to the of expected returns is estimated using the plc (the Company) and its subsidiary customer. If the customer simultaneously most-likely amount method and accounted for undertakings. Subsidiaries are all entities receives and consumes the benefits of the as a reduction in revenue. controlled by the Group. Control exists when contract, revenue is recognised over time. the Group is either exposed to or has the rights Otherwise, revenue is recognised at a point in to variable returns from its involvement with time. Foreign currency translation the entity and has the ability to affect those Revenue comprises the transaction price of returns through its power over the entity. the contract, being consideration received or (a) Functional and presentation Subsidiaries are fully consolidated from the receivable for the sale of goods and services in currency date on which control is transferred to the the ordinary course of the Group’s activities. Items included in the financial statements of Group. They are deconsolidated from the date Revenue is shown net of value-added tax, each of the Group’s entities are measured that control ceases. The purchase method of accounting is used to account for the estimated returns, rebates and discounts, which includes retail promotion costs and using the currency of the primary economic environment in which the entity operates (‘the acquisition of subsidiaries by the Group. advertising rebates, and after eliminating functional currency’). The consolidated The cost of an acquisition is measured as the sales within the Group. financial statements are presented in sterling, fair value of the assets given, equity For print and digital magazine newstrade which is the Group’s presentation currency. instruments issued and liabilities incurred or and subscription revenue, and digital assumed at the date of exchange, and includes advertising revenues and expenses, revenue is (b) Transactions and balances the fair value of any asset or liability resulting recognised as the amount paid by the end Foreign currency transactions are translated from a contingent consideration arrangement. consumer, rather than the amount remitted by into the functional currency using the Acquisition-related costs are expensed as the agent. exchange rate prevailing at the date of the incurred. Identifiable assets acquired and Related commissions paid to agents are transaction. Foreign exchange gains and liabilities and contingent liabilities assumed in recognised as an expense within cost of sales. losses resulting from the settlement of such a business combination are measured initially The following recognition criteria also transactions and from the translation at at their fair values at the acquisition date. The apply: balance sheet exchange rates of monetary excess of the cost of acquisition over the fair - eCommerce revenue is recognised at the assets and liabilities denominated in foreign value of the Group’s share of the identifiable time of the related product sale. currencies are recognised in the income ANNUAL REPORT AND ACCOUNTS FY 2021 / 137 Financial Statementsstatement, with exchange differences arising amount to be expensed over the appropriate Lease payments are discounted using the on trading transactions being reported in service period is determined by reference to interest rate implicit in the lease, or where not operating profit and with those arising on the fair value of the awards. The calculation of available, the incremental borrowing rate (for financing transactions reported in net finance fair value includes assumptions regarding the leases existing on transition the incremental costs unless, as a result of cash flow hedging, number of cancellations and excludes the borrowing rate). they are reported in other comprehensive impact of any non-market vesting conditions Short-term and low-value leases (as income. (for example, earnings per share). Non- defined by IFRS 16) are recognised on a market vesting conditions are included in straight-line basis as an expense in the (c) Group companies assumptions about the number of awards income statement. The results and financial position of all the that are expected to vest. At each balance Finance costs are charged to the income Group entities that have a functional currency sheet date, the Group revises its estimates of statement over the lease term, at a constant different from the presentation currency are the number of awards that are expected to periodic rate of interest. Right-of-use assets translated into the presentation currency as vest. It recognises the impact of the revision are depreciated over the lease term on a follows: of original estimates, if any, in the income straight-line basis. Each lease payment is (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 statement, with a corresponding adjustment allocated between the liability and finance to equity for equity-settled awards and cost. liabilities for cash-settled awards. Where the Group is a lessor, where the The grant by the Company of share awards lease transfers substantially all the risks and to the employees of subsidiary undertakings rewards of ownership to the lessee it is is treated as a capital contribution. The fair classified as a finance lease. All others are value of employee services received, accounted for as operating leases. Where the measured by reference to the grant date fair Group is an intermediate lessor, the sublease equity and presented separately in the value, is recognised over the vesting period as is classified as a finance or operating lease by Consolidated statement of changes in an increase to investment in subsidiary reference to the right-of-use asset arising equity. undertakings, with a corresponding credit to from the head lease. Amounts due from equity in the Company’s financial statements. lessees under finance leases are recognised On consolidation, exchange differences Shares in the Company are held in trust to as receivables at the amount of the net arising from the translation of the net satisfy the exercise of awards under certain of investment in the leases. Finance lease investment in foreign operations, and of the Group’s share-based compensation plans income reflects a constant periodic rate of borrowings and other currency instruments and exceptional awards. The trust is return on the Group’s net investment designated as hedges of such investments, consolidated within the Group financial outstanding. Rental income from operating are taken to shareholders’ equity. When a statements. These shares are presented in the leases is recognised on a straight-line basis foreign operation is sold, exchange consolidated balance sheet as a deduction over the term of the relevant lease. differences that were recorded in equity are from equity at the market value on the date of recognised in the income statement as part of acquisition. the gain or loss on sale. Tax (c) Bonus plans Tax on the profit or loss for the year comprises The Group recognises a liability and an current tax and deferred tax. Tax is recognised Employee benefits expense for bonuses taking into in the income statement except to the extent consideration the profit attributable to the that it relates to items recognised directly in (a) Pension obligations Company’s shareholders after certain equity in which case it is recognised in equity. The Group has a number of defined contribution plans. For defined contribution adjustments. The Group recognises a provision where contractually obliged or Current tax is payable based on taxable profits for the year, using tax rates that have plans the Group pays contributions into a where there is a past practice that has created been enacted or substantively enacted at the privately administered pension plan on a a constructive obligation. balance sheet date, along with any contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. Contributions Leases adjustment relating to tax payable in previous years. Management periodically evaluates items detailed in tax returns where the tax are charged to the income statement as they Property leases are recognised on the treatment is subject to interpretation. Taxable are incurred. balance sheet as a right-of-use asset and profit differs from net profit in the income corresponding lease liability at the date the statement in that income or expense items (b) Share-based compensation leased asset is available for use. Lease that are taxable or deductible in other years The Group operates a number of share-based liabilities are measured at the present value of are excluded – as are items that are never compensation plans. payments less lease incentives receivable. taxable or deductible. Current tax assets The fair value of the employee services Right-of-use assets are measured equal to the relate to payments on account not offset received in exchange for the grant of the value of the lease liability plus restoration against current tax liabilities. awards is recognised as an expense. The total costs. Deferred tax is provided for in full, using 138 / FUTURE PLC Financial Statementsthe liability method, on temporary differences applicable jurisdiction over the life of the (b) Acquired intangible assets arising between the tax bases of assets and asset. liabilities and their carrying amounts in the consolidated financial statements. However, Dividends These intangible assets have a finite useful life and are stated at cost less accumulated amortisation. Assets acquired as part of a deferred tax is not accounted for if it arises All dividend distributions to the Company’s business combination are initially stated at from initial recognition of an asset or liability shareholders are recognised as a liability in fair value. Amortisation is calculated using the in a transaction other than a business the financial statements in the period in which straight-line method to allocate the cost of combination that at the time of the they are approved. transaction affects neither accounting nor taxable profit or loss. Deferred tax is these intangibles over their estimated useful lives (typically between one and fifteen years). determined using tax rates (and laws) that Property, plant and equipment Expenditure incurred on the launch of new have been enacted or substantively enacted Property, plant and equipment is stated at magazine titles is recognised as an expense in by the balance sheet date and are expected to cost (or deemed cost) less accumulated the income statement as incurred. apply when the related deferred tax asset is depreciation and impairment losses. Cost realised or the deferred tax liability is settled includes expenditure that is directly (c) Computer software and website in the appropriate territory. attributable to the acquisition of the items. development Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the Depreciation Non-integral computer software purchases are stated at cost less accumulated amortisation. Costs incurred in the temporary differences can be utilised. Depreciation is calculated using the straight- development of new websites are capitalised Deferred tax is provided on temporary line method to allocate the cost of property, only where the cost can be directly attributed differences arising on investments in plant and equipment less residual value over to developing the website to operate in the subsidiaries, except where the timing of the estimated useful lives, as follows: manner intended by management and only to reversal of the temporary difference is • Land and buildings – 50 years or period the extent of the future economic benefits controlled by the Group and it is probable of the lease if shorter. expected from its use. These costs are that the temporary difference will not reverse • Plant and machinery – between one and amortised on a straight-line basis over their in the foreseeable future. five years. estimated useful lives (between one and Certain deferred tax assets and liabilities • Equipment, fixtures and fittings – three years). Costs associated with are offset against each other where they between one and five years. maintaining computer software or websites relate to the same jurisdiction and there is a • Right-of-use assets – lease term. are recognised as an expense as incurred. legally enforceable right to offset. The assets’ residual values and useful lives Uncertain tax positions are provided for are reviewed, and adjusted if appropriate, at under IAS 12, with due consideration for the each balance sheet date. An asset’s carrying interpretive guidance in IFRIC 23. Each amount is written down immediately to its Impairment tests and Cash-Generating Units (CGUs) uncertain tax treatment is considered either recoverable amount if the asset’s carrying A CGU is defined as the smallest identifiable separately or together with other uncertain amount is greater than its estimated group of assets that generates cash inflows positions in the same jurisdiction, depending recoverable amount. that are largely independent of the cash on which approach better predicts the Gains and losses on disposals are inflows from other assets or groups of assets. resolution of the uncertainty. The effect of determined by comparing proceeds with Goodwill is not amortised but tested for the uncertainty is measured with reference to carrying amounts. These are included in the impairment at least once a year or more the expected value, i.e. the sum of the income statement. probability-weighted amounts in a range of possible outcomes. The expected value better predicts the resolution of the uncertainty Intangible assets where there is a range of possible outcomes. (a) Goodwill frequently when there is an indication that it may be impaired. Therefore, the evolution of general economic and financial trends as well as actual economic performance compared to market expectations represent external indicators that are analysed by the Group, Deferred tax in business combinations Goodwill represents the difference between together with internal performance the cost of the acquisition and the fair value of indicators, in order to assess whether an net identifiable assets acquired. impairment test should be performed more In business combinations, deferred tax is Goodwill is stated at cost less any than once a year. calculated at the date of acquisition. Where accumulated impairment losses. Goodwill is IAS 36 Impairment of Assets requires these the fair value (and therefore the acquisition allocated to appropriate groups of cash tests to be performed at the level of each CGU accounting value) of assets acquired is generating units (those expected to benefit or group of CGUs likely to benefit from different from its tax base, a deferred tax asset from the business combination) and it is not acquisition-related synergies, within an or liability is recognised on the temporary subject to amortisation but is tested annually operating segment. difference. The tax base is dependent on the for impairment. expected tax deductions available in the Any impairment of goodwill is recorded in the income statement as a deduction from ANNUAL REPORT AND ACCOUNTS FY 2021 / 139 Financial Statementsoperating profit and is never reversed Inventories Provisions subsequently. Inventories are stated at the lower of cost Provisions are recognised when the Group Other intangible assets with a finite life are and net realisable value. For raw materials, has a present legal or constructive obligation amortised and are tested for impairment only cost is taken to be the purchase price on a as a result of past events, and it is more likely where there is an indication that an first in, first out basis. For finished goods, than not that an outflow of resources will be impairment may have occurred. cost is calculated as the direct cost of required to settle the obligation. 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 Recoverable amount in the ordinary course of business, less settle the obligation at the balance sheet To determine whether an impairment loss applicable variable selling expenses. date, and are discounted to present value should be recognised, the carrying value of the assets and liabilities of the CGUs or where the effect is material. groups of CGUs is compared to their Trade and other receivables recoverable amount. Trade and other receivables are initially Carrying values of CGUs and groups of recognised at fair value and subsequently Derivative financial instruments and hedging activities CGUs tested include goodwill and assets with measured at amortised cost using the The Group uses derivative financial finite useful lives (property, plant and effective interest method, less a loss instruments to reduce exposure to foreign equipment and intangible assets). allowance. The Group applies the IFRS 9 exchange and interest rate risks and The recoverable amount of a CGU is the simplified approach to measuring expected recognises these at fair value in its balance higher of its fair value less costs to sell and its credit losses, which uses a lifetime expected sheet. For instruments for which hedge value in use. Fair value less costs to sell is the loss allowance for all trade receivables. accounting is applied, gains and losses are best estimate of the amount obtainable from Expected loss rates, calculated based on taken to equity. Any changes to the fair value the sale of an asset in an arm’s length historical credit losses, are applied to trade of derivatives not hedge accounted for are transaction between knowledgeable, willing receivables grouped based on days past due. recognised in the income statement. Any parties, less the costs of disposal. This estimate is determined, on 30 September, on new instruments entered into by the Group will be reviewed on a ‘case by case’ basis at the basis of the discounted present value of Cash and cash equivalents inception to determine whether they should expected future cash flows plus a terminal Cash and cash equivalents include cash in qualify as hedges and be accounted for value and reflects general market sentiment hand and deposits held on call with banks. accordingly under IFRS 9. In accordance with and conditions. Bank overdrafts are shown within its treasury policy, the Group does not hold Value in use is the present value of the borrowings in current liabilities on the or issue any derivative financial instruments future cash flows expected to be derived from balance sheet. for trading purposes. the CGUs or group of CGUs. Cash flow projections are based on economic assumptions and forecast trading conditions Trade and other payables Where hedge accounting is not applied, changes in fair value of derivative financial instruments are recognised within profit or drawn up by the Group’s management, as Trade and other payables are initially loss. follows: recognised at fair value and subsequently • cash flow projections are based on measured at amortised cost. three-year business plans; • cash flow projections beyond that time frame are extrapolated by Borrowings Investments The Company’s investments in subsidiary undertakings are stated at the fair value of applying a country-specific growth rate to perpetuity for both the US, Borrowings are recognised initially at fair value, net of transaction costs incurred. consideration payable, including related acquisition costs, less any provisions for Australia and the UK; and Borrowings are subsequently stated at impairment. • the cash flows obtained are discounted amortised cost with any difference between using appropriate rates for the business the proceeds (net of transaction costs) and and the territories concerned. the redemption value recognised in the Exceptional items If goodwill has been allocated to a CGU and income statement over the period of the The Group considers items of income and an operation within that CGU is disposed of, borrowings using the effective interest expense as exceptional and excludes them the goodwill associated with that operation is method. from the adjusted results where the nature of included in the carrying amount of the Borrowings are classified as current the item, or its size, is material and/or is not operation in determining the profit or loss on liabilities unless the Group has an related to the core underlying trading of the disposal. The goodwill allocated to the unconditional right to defer settlement of the Group so as to assist the user of the financial disposal is measured on the basis of the liability for at least 12 months after the statements to better understand the results relative profitability of the operation disposed balance sheet date. and the operations retained. of the core operations of the Group. Details of exceptional items are shown in note 5. 140 / FUTURE PLC Financial Statements Critical accounting assumptions, judgements and estimates (c) Determining the basis on which adjusted operating profit. A decrease of 50 goodwill is allocated and monitored for basis points in the discount rate would The preparation of the financial statements goodwill impairment testing increase the amounts recognised in respect of under IFRS requires the use of certain critical Judgement is applied in the identification of brands by £11.1m and customer relationships accounting assumptions and requires cash-generating units (“CGUs”). Note that the by £0.6m, giving rise to a £2.2m increase in the management to exercise its judgement and to acquisition of Mozo in Australia means that deferred tax liability recognised on make estimates in the process of applying the there is now material goodwill allocated and acquisition, and would reduce the level of Group’s accounting policies. monitored in the Australia operating segment. goodwill by £9.5m. An increase of 50 basis Critical judgements in applying the Group’s accounting policies Goodwill cannot be monitored at a lower level points in the discount rate would reduce the than the operating segment level and amounts recognised in respect of brands by although Australia is not disclosed as a £12.2m and customer relationships by £0.5m, The areas where the Board has made critical reportable segment (as outlined in Note 1 it is giving rise to a £2.4m reduction in the judgements in applying the Group’s aggregated with the UK), this is only because deferred tax liability recognised on accounting policies (apart from those it represents less than 10% of the Group’s acquisition, and would increase the level of involving estimations which are dealt with results (and therefore is not required to be goodwill by £10.3m. A 10% increase in the separately below) are: reported separately under IFRS 8 Operating forecast adjusted operating profit used in the segments). valuation models would increase the amounts (a) Accounting for acquisitions Given the speed of integration of acquisitions recognised in respect of brands by £41.9m and Management applies judgement in and the interdependency of revenues across customer relationships by £5.9m, giving rise to accounting for acquisitions, including the Group, both between its brands, the an increase in the deferred tax liability identifying assets arising from the application Media and Magazine sub-segments and recognised on acquisition of £9.1m, and would of IFRS 3 Business combinations, undertaking globally the Directors remain comfortable, reduce the level of goodwill by £38.7m. A 10% Purchase Price Allocation exercises to allocate with the addition of Australia outlined above, decrease in the forecast adjusted operating value between assets acquired, including the with the continued identification of the UK and profit used in the valuation models would allocation between intangible assets and the US as the other primary groups of CGUs decrease the amounts recognised in respect goodwill, and where relevant valuing used in impairment testing, based on how of brands by £41.7m and customer contingent consideration. Key judgements are goodwill is monitored. made in respect of discount rates, growth rates, royalty rates and the estimated life of intangibles, for which sensitivity analysis has Key sources of estimation uncertainty relationships by £5.9m, giving rise to a reduction in the deferred tax liability recognised on acquisition of £9.0m, and would reduce the level of goodwill by £38.6m. See been provided in section (a) below. See note The following are areas of key sources of notes 12 and 28 for further details. 28 for further detail. estimation uncertainty that may have a significant risk of causing a material (b) Provision for returns (b) Exceptional items adjustment to the carrying amounts of assets Where there is a right of return, the Group Due to the significant acquisition-related and liabilities within the next financial year: provides for estimated unsold copies of activity, there are a number of items which magazines sold via newsstand wholesalers require judgement to be applied in (a) Valuation of acquired intangible assets and distributors. Provisions require the use of determining whether they are exceptional in Acquisitions may result in the recognition of estimates and judgements, and actual results nature. In the current year these include intangible assets, such as titles, trademarks, could vary from these estimates. acquisition related costs of £14.7m, being deal customer lists, subscriber databases, creative The Group has assessed the sensitivity of the fees in respect of the GoCo acquisition services relationships, content, advertising returns provision to a reasonably possible (£10.2m) and the Dennis acquisition (£4.5m), integration and restructuring costs of £2.9m relationships, customer relationships, publishing rights, non-compete agreements change in assumptions, which has been defined as a 10% increase in the provision as a relating to GoCo, a £1.0m net expense on the and eCommerce technology. These assets are result of lower than estimated returns, and a exit of onerous properties, and impairment valued using a discounted cash flow model, 10% decrease in the provision as a result of charge of £8.8m. This relates to a write down Multi-period Excess Earnings Method higher than estimated returns, the impact of of the brand and customer relationship (“MEEM”), or a relief from royalty method. In which would be a £5.2m increase/decrease in intangible assets relating to Look After My applying these valuation methods, a number the provision required and a £2.2m decrease/ Bills which was acquired as part of the GoCo of key assumptions are made in respect of increase in revenue. acquisition, by £4.4m each respectively, as a discount rates, growth rates, royalty rates and result of turbulence in the UK gas and the estimated life of intangibles. During the electricity market which directly impacted the year, such critical estimates have been made auto-switch service offering. See notes 5 and regarding the GoCo acquisition. The Group 28 for further details. has assessed the sensitivity of the GoCo intangible asset values recognised to changes in key assumptions, which have been identified as the discount rate and forecast ANNUAL REPORT AND ACCOUNTS FY 2021 / 141 Financial Statements Notes to the financial statements 1. SEGMENTAL REPORTING The Group is organised and arranged primarily by reportable segment. The Executive Directors consider the performance of the business from a geographical perspective, namely the UK and the US. The Australian business is considered to be part of the UK segment and is not reported separately due to its size. The Group also uses a sub-segment split of Media (websites and events) and Magazines for further analysis. The Group considers that the assets within each geographical segment are exposed to the same risks. (a) Reportable segment (i) Segment revenue Segment: UK US Total Sub-segment 2021 Sub-segment Media £m Magazines £m 220.4 202.4 422.8 176.2 7.8 184.0 Total £m 396.6 210.2 606.8 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 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: Adjusted operating profit prior to intra-group adjuments £m Intra-group adjustments £m Adjusted operating profit £m Adjusted operating profit prior to intra-group adjustments £m Intra-group adjustments £m Adjusted operating profit £m 2021 2020 64.9 130.9 195.8 68.7 (68.7) - 133.6 62.2 195.8 10.6 82.8 93.4 48.5 (48.5) - 59.1 34.3 93.4 Segment: UK US Total 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 largely based in the UK) and licence fees for the use of intellectual property. The increase in the year is driven by the increased operating margin achieved by the Group and 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 adjusted operating profit Share-based payments (including social security costs) Amortisation of acquired intangibles Exceptional items (note 5) Net finance (costs)/income Other expense Profit before tax 142 / FUTURE PLC 2021 £m 195.8 (14.8) (38.3) (27.4) (7.5) - 107.8 2020 £m 93.4 (5.5) (21.6) (15.6) 2.8 (1.5) 52.0 Financial Statements (iii) Segment assets and liabilities Segment: UK US Total (iv) Other segment information Segment: UK US Total Segment assets Segment liabilities Segment net assets 2021 £m 2020 £m 2021 £m 2020 £m 2021 £m 2020 £m 1,356.3 274.8 1,631.1 269.7 341.5 611.2 (738.3) (30.5) (768.8) (192.5) (37.4) (229.9) 618.0 244.3 862.3 77.2 304.1 381.3 Non-current assets Additions to non-current assets Depreciation and amortisation Exceptional items 2021 £m 2020 £m 2021 £m 2020 £m 980.7 221.4 1,202.1 293.1 221.4 514.5 745.0 27.2 772.2 216.7 7.7 224.4 2021 £m 43.2 14.2 57.4 2020 £m 14.1 16.0 30.1 2021 £m 25.9 1.5 27.4 2020 £m 17.0 0.1 17.1 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 £10.0m (2020: £5.9m), of which £8.4m relates to the UK segment (2020: £5.0m) and £1.6m relates to the US segment (2020: £0.9m), and impairment of acquired intangible assets of £8.8m (2020: £0.8m) solely relating to the UK segment, there were no other significant non-cash expenses during the year. (b) Business segment (i) Gross profit by business segment Sub-segment 2021 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 163.5 182.6 346.1 109.4 4.4 113.8 (114.1) (44.8) (158.9) 21.3 1.7 23.0 180.1 143.9 324.0 65.0 138.9 203.9 56.4 6.4 62.8 (59.5) (43.8) (103.3) 11.5 1.7 13.2 2020 Total £m 73.4 103.2 176.6 In the prior year revenue of £43.4m arose from sales to the Group’s largest single customer which operates as an intermediary for digital advertising customers, of which £10.9m is recognised within the UK segment and £32.5m within the US segment. In the current year no single customer exceeds this threshold. 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. Other relates mainly to sales, marketing and editorial related costs that are not directly attributable to Media or Magazines. 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 2021 / 143 Financial Statements Revenue stream Nature, timing and satisfaction of performance obligations Revenue recognition Online advertising revenue The Group 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 consumer 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 and some is recognised on a net 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. 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 and some is recognised on a net basis. 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. The Group 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 the Group’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). 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 and some is recognised on a net basis. 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. 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. 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. Print and digital magazine subscriptions Magazine newsstand circulation and advertising revenue Event income Licensing revenue Publisher services revenue Broadcaster productions 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. Revenue is recognised over time, with the input method used to reflect the transfer of control to the customer. Inputs include costs incurred/labour hours expended, which provide a faithful depiction of the transfer of goods and services, directly relating to the progress of development of the programmes to date, which are commissioned specifically by broadcasters. Price comparison Revenue from price comparison services, acquired as part of the GoCo and Mozo acquisitions in February 2021, represents amounts receivable for insurance, utilities and other product introductions, including click through fees. Performance obligations are satisfied at a point in time, being the point at which a policy is sold, a consumer signs up to a new tariff, or in limited cases when a customer clicks through to a partner website. Upon the completion of a sale, revenue is measured at the fair value of the consideration received or receivable, net of an estimate of cancellations. Rewards Revenue is generated through commission arrangements, primarily based on a fixed percentage of spend. Performance obligations are satisfied at a point in time, when an online voucher transaction is approved by the merchant. Upon usage of a voucher and approval by the merchant, revenue is measured net of an estimate for cancellations. 144 / FUTURE PLC Financial Statements The table below disaggregates revenue according to the timing of satisfaction of performance obligations: Total revenue Over time £m 13.8 Point in time £m Total revenue £m 593.0 606.8 Over time £m 12.3 Point in time £m Total revenue £m 327.3 339.6 2021 2020 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 (282.8) (23.0) (1.2) - (8.7) (10.4) (84.9) (411.0) Adjusting items £m - - (14.8) (27.4) - (38.3) - (80.5) 2021 Statutory results £m (282.8) (23.0) (16.0) (27.4) (8.7) (48.7) (84.9) (491.5) Adjusted results £m (163.0) (13.2) (3.2) - (5.8) (2.7) (58.3) (246.2) 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 1 Other assurance services in the current year relate to the interim review, and in the prior year fees relating to the TI Media acquisition. 5. EXCEPTIONAL ITEMS Acquisition and integration related costs Impairment of assets Total operating charge Disposals Total charge Adjusting items £m - - (5.5) (15.6) - (21.6) - (42.7) 2021 £m 0.56 - 0.56 0.04 0.60 2021 £m 18.6 8.8 27.4 - 27.4 2020 Statutory results £m (163.0) (13.2) (8.7) (15.6) (5.8) (24.3) (58.3) (288.9) 2020 £m 0.43 0.04 0.47 0.29 0.76 2020 £m 14.8 0.8 15.6 1.5 17.1 Exceptional items include acquisition related costs of £18.6m, being deal fees in respect of the GoCo acquisition (£10.2m) and the Dennis acquisition (£4.5m) (2020: relating to the acquisition of TI Media (£3.8m)), integration and restructuring costs of £3.9m consisting of £2.9m relating to the GoCo acquisition (2020: £9.1m relating to the integration of TI Media), as well as a £1.0m net expense on the exit of onerous properties (2020: £1.6m net expense on the exit of onerous properties) following acquisitions, consisting of a £8.0m impairment of right-of-use assets, net of a £6.3m release of lease-related liabilities following the surrender of leases and £0.7m recognition of finance lease receivable. The impairment charge of £8.8m relates to a write down of the brand and customer relationship intangible assets relating to Look After My Bills ('LAMB') which was acquired as part of the GoCo acquisition, by £4.4m each respectively, as a result of turbulence in the UK energy market which directly impacted the auto-switch service offering. Further details of the acquisitions are shown in note 28. ANNUAL REPORT AND ACCOUNTS FY 2021 / 145 Financial Statements    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 2021 £m 133.9 12.7 4.0 10.1 6.0 166.7 Company 2021 £m 1.9 - - - - Group 2020 £m 90.6 8.2 2.4 5.9 2.8 1.9 109.9 1 In the current year, £10.0m (2020: £5.6m) relates to equity-settled and £0.1m (2020: £0.3m) to cash-settled share based payments. Average monthly number of people (including Directors) Production Administration Total Group 2021 No. 1,690 705 2,395 Company 2021 No. - 9 9 Group 2020 No. 1,303 333 1,636 At 30 September 2021, the actual number of people employed by the Group was 2,527 (2020: 2,037). In respect of our reportable segments 2,027 (2020: 1,639) were employed in the UK and 500 (2020: 398) 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 2021 £m 2.7 - 3.5 4.3 10.5 Company 2021 £m 1.9 - - - 1.9 Group 2020 £m 2.6 0.1 1.0 1.0 4.7 Company 2020 £m 1.5 - - - - 1.5 Company 2020 No. - 7 7 Company 2020 £m 1.5 - - - 1.5 Key management personnel are deemed to be the members of the Board of Future plc. It is this Board which has responsibility for planning, directing and controlling the activities of the Group. Zillah Byng-Thorne and Rachel Addison were paid by Future Publishing Limited, a subsidiary company, for their services. In 2021 £0.9m (2020: £0.7m) was recharged to Future plc by Future Publishing Limited in respect of Zillah Byng-Thorne, and £0.5m (2020: £0.2m) was recharged in respect of Rachel Addison. In 2020 £0.3m was recharged in respect of Penny Ladkin-Brand. These recharges are included in the salaries line for the Company in the table above. Further details on the Directors’ remuneration and interests are given in the Directors’ remuneration report on pages 88 to 109. The highest paid Director during the year was Zillah Byng-Thorne (2020: Zillah Byng-Thorne) and details of her remuneration are shown on page 101. 146 / 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 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 Fair value loss on currency option Unwinding of discount on contingent consideration Total reported finance costs Net finance (costs)/income 2021 £m 0.2 0.1 0.3 - 0.3 (5.1) (1.7) (1.0) (7.8) - - (7.8) (7.5) 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) 2.8 For further information in respect of the Group’s debt facilities and changes during the year see note 18. In FY 2020, the £7.6m decrease in fair value of contingent consideration arose in respect of the SmartBrief, Inc acquisition. Similarly, £1.1m arose from unwinding of the discount on the contingent consideration in the prior year, of which £0.8m related to the acquisition of SmartBrief and £0.3m to Mobile Nations. 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 Adjustments in respect of previous years Deferred tax charge/(credit) Total tax charge 2021 £m 30.5 (0.3) 30.2 13.9 (2.4) 11.5 41.7 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% (2020: 19%) Release of provision for uncertain tax positions Expenses not deductible for tax purposes Non-deductible amortisation Share-based payments Non-taxable gain on deferred consideration Effect of different rates of subsidiaries operating in other jurisdictions Effect of change in tax rates Difference in current and deferred tax rates Adjustments in respect of previous years Total tax charge 2021 £m 107.8 20.5 (1.1) 2.3 0.5 2.4 - 4.7 15.6 (0.5) (2.7) 41.7 2020 £m 9.7 0.1 9.8 0.4 (2.5) (2.1) 7.7 2020 £m 52.0 9.9 (1.5) 0.9 - 0.1 (1.9) 2.7 - (0.1) (2.4) 7.7 ANNUAL REPORT AND ACCOUNTS FY 2021 / 147 Financial Statements     Included below is a reconciliation between the statutory and adjusted tax charge: Total statutory tax charge Tax effect of adjusting items: Exceptional items Share based payments Amortisation of acquired intangibles Change in tax rate Fair value loss on currency option Unwinding of discount on contingent consideration Total adjusted tax charge 2021 £m 41.7 1.3 (1.5) 12.4 (15.6) - - 38.3 2020 £m 7.7 2.3 1.0 6.7 - 0.2 0.1 18.0 In the UK Budget of 3 March 2021, it was announced that the main corporation tax rate rate will increase from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on 24 May 2021 within the Finance Bill 2021 and as a result the relevant deferred tax balances have been re-measured with a total impact of £15.6m as shown above. This is made up of an increase in deferred tax liabilities on acquired intangibles of £21.4m, offset by increases in deferred tax assets for share based payments, tax losses and capital allowances of £5.8m. The Directors have assessed the Group’s uncertain tax positions and reduced the level of provision from £4.5m in the prior year to £3.4m in the current year. As a result of this reduction the Group has recognised a tax credit in the year of £1.1m. The provision for uncertain tax positions has been recognised under IAS 12, taking into account the guidance published in IFRIC 23. Further information is given in the accounting policies section on page 138. The adjusted tax charge takes into account amortisation of acquired intangible assets. The tax adjustment of £12.4m in respect of these intangibles represents a 26% effective rate on the underlying adjustment and reflects the mix of UK and US intangibles that are amortised. As set out in the accounting policies the effect of the UK tax rate change has been excluded from the adjusted results of the Group as it results in a one-off non-cash impact on the Group's deferred tax balances that would otherwise significantly distort the Group's core underlying tax charge. 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) 2021 120.6 1.6 (1.6) 2020 98.0 1.0 (1.0) 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. On 29 November 2021 the Board proposed a dividend of 2.8p per share, totalling an estimated £3.4m, in respect of the year ended 30 September 2021, which subject to shareholder consent at the AGM, will be paid on 9 February 2022 to shareholders on the register at close of business on 14 January 2022. A dividend of 1.6p per share totalling £1.6m in respect of the year ended 30 September 2020 was paid on 16 February 2021. 148 / FUTURE PLC Financial Statements 10. EARNINGS PER SHARE Adjusted results pence Adjusting items pence Statutory results pence Adjusted results pence Adjusting items pence Statutory results pence 2021 2020 Basic earnings/(loss) per share Diluted earnings/(loss) per share 134.6 131.9 (75.3) (73.8) 59.3 58.1 76.3 74.7 (29.9) (29.3) 46.4 45.4 Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year. Diluted earnings per share have been calculated by taking into account the dilutive effect of shares that would be issued on conversion into Ordinary shares of awards held under employee share schemes. Adjusted earnings per share 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, exceptional items, amortisation and impairment of intangible assets arising on acquisitions and any related tax effects as well as the impact of the UK tax rate change. The prior year results are also adjusted for fair value movements on contingent consideration (and unwinding of associated discount) and on the currency option (including 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 in fair value of contingent consideration (£m) Unwinding of discount (£m) Fair value loss on currency option (£m) Tax effect of the above adjustments (£m) Change in tax rate (£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 in fair value of contingent consideration (pence) Unwinding of discount (pence) Fair value loss on currency option (pence) Tax effect of the above adjustments (pence) Change in tax rate (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 in fair value of contingent consideration (pence) Unwinding of discount (pence) Fair value loss on currency option (pence) Tax effect of the above adjustments (pence) Change in tax rate (pence) Adjusted diluted earnings per share (pence) 2021 2020 66.1 14.8 27.4 38.3 - - - (12.2) 15.6 150.0 44.3 5.5 17.1 21.6 (7.6) 1.1 1.2 (10.3) - 72.9 111,463,911 95,553,034 2,247,933 2,026,649 113,711,844 97,579,683 59.3 134.6 58.1 131.9 59.3 13.3 24.5 34.4 - - - (10.9) 14.0 134.6 58.1 13.0 24.1 33.7 - - - (10.7) 13.7 131.9 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 ANNUAL REPORT AND ACCOUNTS FY 2021 / 149 Financial Statements11. PROPERTY, PLANT AND EQUIPMENT Group Cost At 1 October 2019 On acquisition Additions Adoption of IFRS 16 Leases Exchange adjustments At 30 September 2020 On acquisition Additions Disposals Exchange adjustments At 30 September 2021 Accumulated depreciation At 1 October 2019 Charge for the year Impairment At 30 September 2020 Charge for the year Disposals Impairment Exchange adjustments At 30 September 2021 Net book value at 30 September 2021 Net book value at 30 September 2020 Net book value at 1 October 2019 Land and buildings £m Plant and machinery £m Equipment, fixtures and fittings £m Right-of-use lease assets £m 1.6 1.9 0.3 - - 3.8 0.6 0.7 (1.6) - 3.5 (0.7) (0.3) - (1.0) (3.2) 1.6 - - 6.1 0.5 0.6 - - 7.2 1.0 3.2 (1.0) - 10.4 (4.7) (1.2) - (5.9) (1.4) 1.0 - 0.1 0.9 0.5 - - - 1.4 0.3 0.3 (0.1) - 1.9 (0.7) (0.2) - (0.9) (0.2) 0.1 - - - 8.3 - 13.5 (0.3) 21.5 3.4 33.9 (4.8) (0.4) 53.6 - (4.1) (1.1) (5.2) (3.9) 4.8 (8.0) 0.1 (2.6) (6.2) (1.0) (12.2) 0.9 2.8 0.9 4.2 1.3 1.4 0.9 0.5 0.2 41.4 16.3 - Total £m 8.6 11.2 0.9 13.5 (0.3) 33.9 5.3 38.1 (7.5) (0.4) 69.4 (6.1) (5.8) (1.1) (13.0) (8.7) 7.5 (8.0) 0.2 (22.0) 47.4 20.9 2.5 Right-of-use assets relate to property leases. The impairment in the year of £8.0m relates to properties which became vacant during the year, see note 5 for further detail. Depreciation is included within administration expenses in the consolidated income statement. 150 / FUTURE PLC Financial StatementsGoodwill £m Publishing rights £m Brands £m Customer relationships £m Subscribers £m Other acquired intangibles £m Other £m Total £m 12. INTANGIBLE ASSETS Group Cost At 1 October 2019 Additions through business combinations Other additions Exchange adjustments At 30 September 2020 Additions through business combinations Other additions Disposal Exchange adjustments At 30 September 2021 Accumulated amortisation and impairment At 1 October 2019 Charge for the year Impairment Exchange adjustments At 30 September 2020 Charge for the year Impairment Disposal Exchange adjustments At 30 September 2021 484.7 97.2 - (7.6) 574.3 384.7 - - (7.8) 951.2 (266.0) - - 1.4 (264.6) - - - 1.6 15.5 75.1 - (0.1) 90.5 - - - (0.1) 90.4 (7.2) (5.9) - - (13.1) (9.0) - - 0.1 61.6 4.5 - (1.8) 64.3 287.7 - - (2.3) 349.7 (6.3) (6.2) - 0.8 (11.7) (15.7) (4.4) - 0.4 16.4 6.0 - (0.7) 21.7 33.5 - - (0.7) 54.5 (1.6) (2.1) - 0.1 (3.6) (5.8) (4.4) - 0.2 (263.0) (22.0) (31.4) (13.6) 12.8 3.4 - (0.6) 15.6 0.1 - - (0.5) 15.2 (2.6) (1.6) - 0.1 (4.1) (1.8) - - 0.2 (5.7) 9.5 11.5 10.2 34.2 5.3 - (1.1) 38.4 5.3 - - (1.1) 42.6 (15.9) (5.8) - 0.5 (21.2) (6.0) - - 0.1 23.2 4.2 3.1 (0.5) 30.0 10.1 7.4 (0.8) (0.7) 46.0 648.4 195.7 3.1 (12.4) 834.8 721.4 7.4 (0.8) (13.2) 1,549.6 (19.8) (319.4) (2.7) (0.8) 0.4 (22.9) (10.4) - 0.8 0.4 (24.3) (0.8) 3.3 (341.2) (48.7) (8.8) 0.8 3.0 (27.1) (32.1) (394.9) 15.5 17.2 18.3 13.9 1,154.7 7.1 3.4 493.6 329.0 Net book value at 30 September 2021 Net book value at 30 September 2020 Net book value at 1 October 2019 688.2 309.7 218.7 Useful economic lives 68.4 77.4 8.3 5-15 years 318.3 52.6 55.3 3-15 years 40.9 18.1 14.8 8-10 years 7-8 years 3-15 years 2 years Acquired intangibles are amortised over their estimated economic lives, typically ranging between two and fifteen years. See accounting policy on page 139 for further details. The other acquired intangibles category in the table above includes assets relating to customer lists, content and software. Included within the summary of acquired intangible assets above are the following individually material assets: - GoCo brand acquired in February 2021, with a net book value (‘NBV’) at 30 September 2021 of £254.8m, a useful economic life (‘UEL’) of 20 years and remaining amortisation period of 19.5 years; - GoCo customer relationships acquired as part of the GoCo acquisition in February 2021 (NBV at 30 September 2021 of £11.4m with a UEL of 4 years and remaining amortisation period of 3.5 years); - Publishing rights relating to TV Weekly magazines, acquired as part of the TI Media acquisition in April 2020 (NBV at 30 September 2021 of £24.8m with a UEL of 15 years and remaining amortisation period of 13.5 years); - Publishing rights relating to Decanter magazine which was acquired as part of the TI Media acquisition (NBV at 30 September 2021 of £7.2m with a UEL of 15 years and remaining amortisation period of 13.5 years); - Publishing rights relating to Country Life magazine which was acquired as part of the TI Media acquisition (NBV at 30 September 2021 of £7.5m with a UEL of 15 years and remaining amortisation period of 13.5 years); - Subscriber asset relating to the email newsletter subscriber database acquired as part of the SmartBrief acquisition in July 2019 (NBV at 30 September 2021 of £6.7m with a UEL of 7 years and remaining amortisation period of 5 years); and - LAMB brand and customer relationships which were both acquired as part of the GoCo acquisition during the year (NBV at 30 September 2021 of £7.3m and £7.0m respectively and with UEL's of 10 and 9 years respectively). 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 ANNUAL REPORT AND ACCOUNTS FY 2021 / 151 Financial Statements these intangibles) are set out in note 28. Other intangibles relate to capitalised software costs and website development costs which are internally generated. An impairment charge of £8.8m has been recognised in the year, relating to a write down of the brand and customer relationship intangible assets relating to LAMB which was acquired as part of the GoCo acquisition, by £4.4m each respectively, as a result of turbulence in the UK energy market which directly impacted the auto-switch service offering (see note 5). The recoverable amounts remaining on the 30 September 2021 balance sheet in respect of these assets are £7.0m in respect of customer relationships and £7.3m in respect of the LAMB brand which reflect the estimated value in use of these intangible assets, calculated using a post tax discount rate of 9.5% (pre-tax discount rate of 12.7%). A change of less/plus 100 basis points in the post tax discount rate would decrease/increase the level of impairment recognised by £0.6m. An increase/decrease in the profits forecast to be generated by the LAMB assets by 25% would decrease/increase the level of impairment recognised by £3.5m. The impairment in the prior 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 2021 consists of £532.2m (2020: £170.9m) relating to the UK, £143.3m (2020: £138.8m) relating to the US and £12.7m (2020: £nil) relating to Australia. The basis for calculating recoverable amounts is described in the accounting policies on page 140. 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. Note that the acquisition of Mozo in Australia means that there is now material goodwill allocated and monitored in the Australia operating segment. Goodwill cannot be monitored at a lower level than the operating segment level and although Australia is not disclosed as a reportable segment (as outlined in Note 1 it is aggregated with the UK), this is only because it represents less than 10% of the Group’s results (and therefore is not required to be reported separately under IFRS 8 Operating segments). Therefore we have performed a separate goodwill impairment assessment for Australia. As detailed in the accounting policies on pages 139, 140 and 141 and with the addition of Australia above the UK, US and Australian segments are considered to be the smallest group of cash generating units (‘CGU’) which independently generate cashflows and at which goodwill is monitored, so impairment testing has been performed at this level. Other assumptions that influence estimated recoverable amounts are set out overleaf: At 30 September 2021 UK US AUS Basis of recoverable amount Source used Value in use Three-year plans Discounted cash flow Value in use Three-year plans Discounted cash flow Value in use Three-year plans Discounted cash flow Growth rate to perpetuity 3.0% 3.0% 3.0% Adjusted EBITDA margins assumed* 39.0% to 45.0% 32.0% to 35.0% 20.0% to 21.0% Post-tax discount rate Pre-tax discount rate 9.0% 10.2% 6.7% 7.9% 7.1% 7.2% * Note that EBITDA margins are after intra-group adjustments for management fees and licence charges. At 30 September 2020 Basis of recoverable amount Source used Growth rate to perpetuity Adjusted EBITDA margins assumed* Post-tax discount rate Pre-tax discount rate UK US Value in use Three-year plans Discounted cash flow Value in use Three-year plans Discounted cash flow 3.0% 31.0% to 40.0% 7.8% 8.3% 3.0% 26.0% 7.8% 9.6% * Note that adjusted EBITDA margins are after intra-group adjustments for management fees and licence charges. 152 / FUTURE PLC Financial Statements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. Adjusted EBITDA margins assumed Adjusted 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 The pre-tax discount rate adjusted for the impact of tax. Pre-tax discount rate Reflects risks relevant to each CGU and the country in which they operate. Adjusted EBITDA has been used in the value in use calculation as it best reflects the cash profits generated by the CGUs. Adjustment has been made for other items, such as rent, which are not included within EBITDA following the adoption of IFRS 16 in the prior year. A reconciliation between adjusted EBITDA and adjusted operating profit has been included below: Adjusted EBITDA Depreciation Amortisation Adjusted operating profit Sensitivity of recoverable amounts 2021 £m 214.9 (8.7) (10.4) 195.8 2020 £m 101.9 (5.8) (2.7) 93.4 At 30 September 2021 the analysis of the recoverable amounts gave rise to the following assessments of sensitivity: The value in use of the UK business, US and Australia business exceeded their carrying values by £1,696.2m, £1,434.9m and £11.2m respectively. 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. Goodwill is not considered to be impaired at 30 September 2021. 13. INVESTMENTS IN GROUP UNDERTAKINGS Company Shares in Group undertakings At 1 October Additions At 30 September 2021 £m 356.3 650.4 1,006.7 2020 £m 142.2 214.1 356.3 Additions of £650.4m include a £640.4m 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 GoCo acquisition and subsequent Group re-organisation. The remaining additions of £10.0m represents the fair value of share-based compensation awards granted to employees of subsidiary undertakings of Future Holdings 2002 Limited. The Directors believe that the carrying values of the investments are supported by their underlying assets. ANNUAL REPORT AND ACCOUNTS FY 2021 / 153 Financial Statements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. Intangible assets £m Share-based payments £m Temporary differences £m Depreciation vs tax allowances £m Tax losses £m Provision for uncertain tax positions £m At 1 October 2019 Acquisitions Credited/(charged) to income statement Charged to equity At 30 September 2020 Acquisitions (Charged)/credited to income statement Credited to equity Exchange adjustment At 30 September 2021 (10.6) (18.0) 2.8 - (25.8) (63.5) (13.2) - 0.1 (102.4) 8.2 - 0.6 (3.7) 5.1 - 2.4 11.7 - 19.2 1.0 2.0 1.2 - 4.2 (1.5) 2.6 - (0.2) 5.1 0.5 6.0 0.2 - 6.7 - - - - 6.7 6.7 6.1 (3.9) - 8.9 - (4.0) - - 4.9 (1.8) - 1.2 - (0.6) - 0.6 - - - Total £m 4.0 (3.9) 2.1 (3.7) (1.5) (65.0) (11.6) 11.7 (0.1) (66.5) In the UK Budget of 3 March 2021, it was announced that the main corporation tax rate will increase from 19% to 25% with effect from 1 April 2023. This change was substantively enacted on 24 May 2021 within the Finance Bill 2021 and as a result the relevant deferred tax balances have been remeasured. The total impact of the remeasurement in deferred tax was £15.6m and is shown through the '(Charged)/credited to income statement' line in the above table. This has been split out below: Current period credit/(charged) to income statement Effect of tax rate change Prior year adjustment Total amount credited/(charged) to the income statement 6.8 (21.4) 1.4 (13.2) (1.1) 3.5 - 2.4 0.6 0.7 1.3 2.6 Intangible assets £m Share-based payments £m Temporary differences £m Depreciation vs tax allowances £m Tax losses £m Provision for uncertain tax positions (1.2) 1.4 (0.2) (4.1) 0.2 (0.1) 0.6 - - - (4.0) 0.6 (11.6) Total £m 1.6 (15.6) 2.4 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 2021 Intangible assets £m Share-based payments £m Temporary differences £m Depreciation vs tax allowances £m 0.2 (102.6) (102.4) 2.6 16.6 19.2 2.1 3.0 5.1 (0.3) 7.0 6.7 Tax losses £m (0.8) 5.7 4.9 Total £m 3.8 (70.3) (66.5) Certain deferred tax assets and liabilities have been offset against each other where they relate to the same jurisdiction. The following analysis shows how deferred tax balances have been offset in the disclosure of assets and liabilities: Deferred tax assets Deferred tax liabilities Total non-current assets Deferred tax assets Deferred tax liabilities Total non-current liabilities Net deferred tax liability 2021 £m 5.5 (1.7) 3.8 33.8 (104.1) (70.3) (66.5) 2020 £m 6.4 (5.4) 1.0 18.6 (21.1) (2.5) (1.5) As at 30 September 2021 the Group has unrecognised capital losses totalling £13.8m (2020: £10.5m) and unrecognised unutilised non- trade loan relationship deficits totalling £2.1m (2020: £1.6m). 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. 154 / FUTURE PLC 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 £1.9m (2020: £1.2m) recognised on the Company's balance sheet is in respect of share-based payments. The Company has no unprovided deferred tax assets or liabilities at 30 September 2021 (2020: £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 2021 £m 82.5 (10.6) 71.9 - 1.6 24.5 98.0 Company 2021 £m - - - 73.9 - - 73.9 Group 2020 £m 59.5 (6.6) 52.9 - 5.8 13.7 72.4 Company 2020 £m - - - 72.6 - - 72.6 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 (net of provision) is set out below: Past due 0-30 days 31-60 days 61-90 days 91+ days Total Group 2021 £m 1.4 1.1 1.4 0.8 4.7 As at 30 September 2021, trade receivables of £10.6m (2020: £6.6m) were impaired and provided for. The individually impaired receivables mainly relate to non-UK wholesalers in the newsstand distribution business and energy customers that have been impacted by the recent energy market disruption 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 2021 £m 6.6 1.8 2.5 (0.3) 10.6 Group 2020 £m 4.7 2.2 1.8 2.3 11.0 Group 2020 £m 3.2 1.3 2.5 (0.4) 6.6 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 2021. 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 energy customers that have been impacted by the recent energy market disruption and specific reserving for acquired entities where the historical records for credit losses are not available. ANNUAL REPORT AND ACCOUNTS FY 2021 / 155 Financial Statements       The expected loss rate and the related allowance for impairment of trade receivables is split by ageing category as follows: 2021 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 68.9 1.7 2.5% 2.6 1.2 1.6 0.5 1.6 0.2 7.8 7.0 46.2% 31.3% 12.5% 89.7% 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 82.5 10.6 Total 59.5 6.6 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 £nil (2020: £7.2m) 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 and so are repayable on demand. 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 2021 £m 324.3 Company 2021 £m 266.4 Group 2020 £m 19.3 Company 2020 £m 0.1 As at 30 September 2021 the £300m consideration required to complete the Dennis acquisition had been drawn down and held in cash in readiness for completion on 1 October 2021, of which £200m was restricted specifically for the acquisition. 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. Over 99.99% of the Group's cash and cash equivalent balance was held with counterparties with a minimum S&P credit rating of A-. The remaining balance related to cash held by the Group. 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 Deferred income Total Group 2021 £m 25.8 - 8.2 11.1 88.6 7.1 140.8 Company 2021 £m - 130.4 - - 0.8 - 131.2 Group 2020 £m 25.4 - 6.3 8.6 67.2 8.7 116.2 Company 2020 £m - 25.9 - 0.1 0.2 - 26.2 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 and so are repayable on demand. 156 / FUTURE PLC Financial Statements        18. FINANCIAL LIABILITIES – INTEREST-BEARING LOANS AND BORROWINGS Non-current liabilities Sterling revolving loan Sterling term loan US dollar revolving loan AUS dollar revolving loan Total Current liabilities Multi-currency overdraft Sterling term loan Total Interest rate at 30 September 2021 Interest rate at 30 September 2020 1.83% 1.83% 1.84% 1.83% 1.80% - 1.90% - Interest rate at 30 September 2021 Interest rate at 30 September 2020 1.00% 1.83% 2.01% - The interest-bearing liabilities are repayable as follows: Within one year Between two and five years Total Group 2021 £m 239.3 159.7 43.8 15.3 458.1 Group 2021 £m 3.1 39.4 42.5 Group 2021 £m 42.5 458.1 500.6 Company 2021 £m 239.3 159.7 43.8 - 442.8 Company 2021 £m - 39.4 39.4 Company 2021 £m 39.4 442.8 482.2 Group 2020 £m 66.6 - 7.0 - 73.6 Group 2020 £m 7.8 - 7.8 Group 2020 £m 7.8 73.6 81.4 Company 2020 £m 66.6 - 7.0 - 73.6 Company 2020 £m 4.3 - 4.3 Company 2020 £m 4.3 73.6 77.9 In both the Group and Company tables interest bearing loans are shown net of unamortised issue costs which amounted to £5.6m (2020: £0.9m). In November 2020, the Group increased its debt facilities to fund the acquisition of GoCo through a £215m two-year term loan. The Group's £30m short dated COVID-19 facility was cancelled at this date as it was no longer required. In July 2021, the Group undertook a further Amend & Extend of its existing £350m debt facilities. The amended facilities comprise a three-year £400m RCF (repayable in July 2024 but with the ability to request two one-year extensions at lender consent), and a £200m term loan which amortises at £10m in March and June 2022 and £20m per quarter thereafter with a final bullet payment on expiry in June 2023 (with one six-month extension option at lender consent). The amended facility was secured at competitive market rates, on substantially similar terms as the previous facility, giving the Group significant headroom and flexibility to pursue its growth strategy. At 30 September 2021, the £300m consideration required to complete the Dennis acquisition had been drawn and held in cash in readiness for completion on 1 October 2021, of which £200m was restricted specifically for the acquisition. 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 £3.8m and these are being amortised over the term of the facility. The bank borrowings and interest are guaranteed by Future plc. The loans have a variable interest margin payable that is linked to a ratchet mechanism, subject to a minimum margin, as the Group's leverage covenant changes. This margin ranges between between 1.75% and 3.00%. The floating rate for borrowings is linked to SONIA ('Sterling Overnight Index Average') plus a baseline CAS (‘Credit Adjustment Spread’) in the case of Sterling, US LIBOR in the case of US Dollar and BBSW (‘Bank Bill Swap Rate’) in the case of AUS Dollar debt. Switch mechanics are in place to migrate US LIBOR debt to SOFR (‘Secured Overnight Financing Rate’) subject to certain trigger events. The Group does not expect there to be a material change to the cost of borrowing from any change to SOFR. The key covenants are set out in the following table where net debt is exclusive of non-current tax and other payables. Net debt/Bank EBITDA Bank EBITDA/Interest Leverage in respect of any Relevant Period shall not exceed 3.00:1.00 Interest Cover in respect of any Relevant Period shall not be less than 4.00:1.00 ANNUAL REPORT AND ACCOUNTS FY 2021 / 157 Financial Statements            Leverage is defined as net debt (excluding capitalised bank arrangement fees and including any non-cash ancillaries), as a proportion of Adjusted EBITDA adjusted for the impact of IFRS 16 and including the 12 month trailing impact of acquired businesses (in line with the Group’s bank covenants definition). Adjusted EBITDA is defined as earnings less interest, tax, depreciation and amortisation and also adjusted for the adjusting items set out in the accounting policies on page 136. The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months and the covenant position at 30 September 2021 is set out in the following table: Net debt/Bank EBITDA Bank EBITDA/Interest 30 September 2021 30 September 2020 Covenant 2021 Covenant 2020 0.8 times 19.4 times 0.6 times 38.8 times < 3.0 times > 4.0 times < 3.0 times > 4.0 times A reconciliation between operating profit and bank EBITDA is provided in the table below: Operating profit Exceptional items Share based payments Depreciation (excluding depreciation of right-of-use assets) Amortisation of intangible assets Net interest payable on lease liabilities Proforma EBITDA from acquisitions Bank EBITDA Group 2021 £m 115.3 27.4 14.8 4.8 48.7 (0.9) 18.8 228.9 Group 2020 £m 50.7 14.8 5.5 1.7 25.1 (0.7) 12.1 109.2 Proforma EBITDA from acquisitions relates to EBITDA from acquired businesses earnt prior to acquisition during the Group's FY 2021 year end. The Group had drawn down £3.1m on its interest-bearing overdraft at 30 September 2021 (30 September 2020: £7.8m). Any drawdown 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 £317.9m and total cash balance, including non-pool accounts of £321.2m. 19. PROVISIONS At 1 October Adoption of IFRS 16 Leases On acquisition Charged in the year Utilised in the year At 30 September Group 2021 £m 5.1 - 0.9 2.2 (2.1) 6.1 Group 2020 £m 2.1 (0.4) 3.8 0.8 (1.2) 5.1 The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property. The majority of the vacant property provision is expected to be utilised over the next two years. Provisions for the Company were £nil (2020: £nil). 20. OTHER NON-CURRENT LIABILITIES Lease liability due in more than one year Group 2021 £m 44.0 Group 2020 £m 18.7 See note 21 for an analysis of the timings of contractual undiscounted cash flows (including interest) for lease liabilities. 158 / FUTURE PLC Financial Statements 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. 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: 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 Lease liabilities Total financial liabilities 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 Lease liabilities Total financial liabilities Note 15 15 16 17 17 18 18 20 Note 15 15 16 17 17 18 18 20 Amortised cost £m 1.9 71.9 1.6 324.3 399.7 (25.8) (99.4) (43.1) (463.1) (48.9) (680.3) Total carrying value £m 1.9 71.9 1.6 324.3 399.7 (25.8) (99.4) (43.1) (463.1) (48.9) (680.3) Amortised cost £m Total carrying value £m 1.6 52.9 5.8 19.3 79.6 (25.4) (79.4) (7.8) (74.5) (24.7) (211.8) 1.6 52.9 5.8 19.3 79.6 (25.4) (79.4) (7.8) (74.5) (24.7) (211.8) 2021 Total fair value £m 1.9 71.9 1.6 324.3 399.7 (25.8) (99.4) (43.1) (463.1) (48.9) (680.3) 2020 Total fair value £m 1.6 52.9 5.8 19.3 79.6 (25.4) (79.4) (7.8) (74.5) (24.7) (211.8) ANNUAL REPORT AND ACCOUNTS FY 2021 / 159 Financial StatementsIn the tables above, total financial liabilities are shown gross of unamortised costs which amounted to £5.6m (2020: £0.9m). The fair value is the amount for which a financial instrument could be exchanged between knowledgeable, willing parties. If an active market exists, the market price is applied. If an active market does not exist a discounted cash flow or generally accepted estimation and valuation technique based on market conditions at the balance sheet date is used to calculate an estimated value. The market value of financial instruments is determined by the use of valuation techniques including estimated discounted cash flows. Treasury overview The Group uses financial instruments where appropriate to raise funding for its operations and to manage the financial risks arising from those operations. The agreements governing the principal instruments entered into were approved by the Board. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, provide returns and benefits for shareholders. The principal financing and treasury exposures faced by the Group arise from foreign currencies, working capital management, the financing of capital expenditure and acquisitions, the management of interest rates on the Group’s debt, the investment of surplus cash and the management of the Group’s debt facilities. The Group manages all of these exposures with an objective of remaining within covenant ratios agreed with the Group’s banks, and the Group has been in compliance with its covenants during the year. These ratios are disclosed in note 18. Currency and interest rate profile The currency and interest rate profile of the Group’s financial assets and liabilities is shown below: Financial assets Financial liabilities Floating rate £m Non- interest bearing £m Total £m Floating rate £m Non- interest bearing £m Net financial (liabilities)/ assets £m Total £m 272.3 50.5 0.6 0.9 - 22.6 43.1 3.5 1.0 5.2 294.9 93.6 4.1 1.9 5.2 (447.1) (43.8) - (15.3) - (154.4) (16.6) (1.5) (1.4) (0.2) (601.5) (60.4) (1.5) (16.7) (0.2) (306.6) 33.2 2.6 (14.8) 5.0 324.3 75.4 399.7 (506.2) (174.1) (680.3) (280.6) - - - - - - 10.6 57.9 4.3 3.7 3.1 79.6 10.6 57.9 4.3 3.7 3.1 79.6 (75.3) (7.0) - - - (113.2) (14.3) (0.6) (1.1) (0.3) (188.5) (21.3) (0.6) (1.1) (0.3) (177.9) 36.6 3.7 2.6 2.8 (82.3) (129.5) (211.8) (132.2) At 30 September 2021 Currency: Sterling US Dollar Euro AU Dollar Other Total At 30 September 2020 Currency: Sterling US Dollar Euro AU Dollar Other Total 160 / FUTURE PLC Financial Statements    Interest rate risk Details of the interest rates on borrowings as at 30 September 2021 are set out in note 18. The Group had £324.3m of interest-bearing assets at 30 September 2021, primarily as a result of drawing down on its debt facility ahead of completion of the Dennis acquisition on 1 October 2021. The Group is also 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 2021 the floating rates to which the Group was exposed were SONIA, US LIBOR and BBSW. The Group’s exposure to interest rates on financial assets and financial liabilities is detailed in the liquidity risk section of this note. For 2021, if interest rates on net debt had been on average 0.5% higher/lower, throughout the year, with all other variables held constant, the post-tax profit for the year would have decreased/increased by £0.6m (2020: £0.3m). There would be no impact on equity excluding retained earnings. Foreign exchange risk Some of the Group’s activities are carried out in countries outside the United Kingdom where transactions are carried out in that country’s own functional currency. Movements in exchange rates can therefore have a significant impact on the Group’s total cash flows, whilst the translation of the results, assets and liabilities of foreign operations into Sterling can have a significant effect on the Group’s reported profits and balance sheet. The main exposure is to movements in the US Dollar against Sterling. The Group’s policy for managing exchange rate risk is summarised as follows: Transaction exposure – the Group manages this by ensuring that transactions are denominated in the local functional currency of the operating units wherever possible. Where this is not possible the use of forward contracts to hedge exposure is considered, however the Group seeks to ensure that its balance sheet positions are naturally hedged wherever possible. The use of forward contracts (or any other derivative financial instrument) is subject to authorisation by the Board. A derivative foreign currency option to buy $30m in June 2020 was acquired in order to hedge the currency exposure arising on contingent consideration relating to the MoNa Mobile Nations, LLC 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 prior 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: 2021 currency risks expressed in USD/GBP £m Reasonable shift Impact on profit after tax if USD strengthens against GBP Impact on profit after tax if USD weakens against GBP Impact on shareholders' funds if USD strengthens against GBP Impact on shareholders' funds if USD weakens against GBP 2020 currency risks expressed in USD/GBP £m Reasonable shift Impact on profit after tax if USD strengthens against GBP Impact on profit after tax if USD weakens against GBP Impact on shareholders' funds if USD strengthens against GBP Impact on shareholders' funds if USD weakens against GBP 10% 2.8 (2.8) 23.3 (23.3) 10% 1.4 (1.4) 19.1 (19.1) ANNUAL REPORT AND ACCOUNTS FY 2021 / 161 Financial Statements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 within other comprehensive income 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, including estimated interest payments but excluding amortisation of bank arrangement fees: Less than one year £m (25.8) (4.9) (99.4) (52.2) (182.3) 30 September 2021 Trade payables Lease liabilities Other liabilities Borrowings Total financial liabilities 30 September 2020 Trade payables Lease liabilities Other liabilities Borrowings Total financial liabilities Between one and two years £m Between two and five years £m Between five and ten years £m - (7.0) - (167.2) (174.2) - (18.4) - (307.3) (325.7) - (18.1) - - Over ten years £m - (11.8) - - (18.1) (11.8) Less than one year £m Between one and two years £m Between two and five years £m Over five years £m (25.4) (6.0) (79.4) (9.1) (119.9) - (5.4) - (1.3) (6.7) - (13.2) - (75.0) (88.2) - (1.9) - - (1.9) Total £m (25.8) (60.2) (99.4) (526.7) (712.1) Total £m (25.4) (26.5) (79.4) (85.4) (216.7) The 2020 disclosure has been restated to show balances gross of unamortised debt issue costs (£0.9m) to ensure consistent treatment with the FY 2021 disclosure and also to include lease liabilities after adoption of IFRS 16. 162 / FUTURE PLC Financial Statements22. ISSUED SHARE CAPITAL Allotted, authorised, issued and fully paid Ordinary shares of 15p each At 1 October Share placing to fund acquisition Issued as consideration for acquisition Share scheme exercises Share Incentive Plan matching shares At 30 September 2021 £m 14.7 - 3.4 - - Number of shares 83,595,421 8,184,906 2,479,031 3,754,818 779 Number of shares 98,014,955 - 22,608,736 - 943 120,624,634 18.1 98,014,955 2020 £m 12.5 1.2 0.4 0.6 - 14.7 On 17 February 2021, the Company issued 22,608,736 Ordinary shares with a value of £415.1m (share price of £18.36) as part- consideration for the acquisition of GoCo Group plc. 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 receive a fixed income. Each share carries the right to one vote at general meetings of the Company. There are no restrictions or agreements known to the Company that may result in restrictions on share transfers or voting rights in the Company. There are no specific restrictions on the size of a holding, on the transfer of shares, or on voting rights, all of which are governed by the provisions of the Articles of Association and prevailing legislation. Further details of acquisitions are shown in note 28. During the year 943 Ordinary shares were issued under the Share Incentive Plan for a combined total cash commitment of £nil. 23. SHARE-BASED PAYMENTS The income statement charge for the year for share-based payments (and related social security costs) was £16.0m (2020: £8.7m), of which £14.8m (2020: £5.5m) is included in ‘adjusting items’ in the income statement see page 137 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, the Value Creation Plan (VCP), Performance Share Plan (PSP), Deferred Annual Bonus Scheme (DABS), Share Incentive Plan (SIP) or Employee Stock Purchase Plan (ESPP) 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 the number of options awarded under the PSP and DABS is shown below: Outstanding at 1 October Granted Share awards exercised Cancelled Outstanding at 30 September Exercisable at 30 September 2021 Number of options/awards 2,056,807 99,093 (659,621) (60,242) 1,436,037 152,715 2020 Number of options/awards 5,227,036 705,849 (3,682,585) (193,493) 2,056,807 274,193 The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £23.845 (2020: £13.829). ANNUAL REPORT AND ACCOUNTS FY 2021 / 163 Financial Statements      A reconciliation of movements in the number of options awarded under the VCP is shown below: Outstanding at 1 October Granted Cancelled Outstanding at 30 September 2021 Number of units - 2,797,674 (219,102) 2,578,572 The above amounts are split equally between the three VCP tranches. A total of 2,940,000 units are available for issue, 980,000 units per tranche, leaving a headroom at 30 September 2021 of 361,428 units. Further details regarding the rules of the scheme can be found on page 92. For options outstanding under the PSP and DABS at 30 September the weighted average exercise prices and remaining contractual lives are as follows: PSP February 2017 November 2017 February 2018 November 2018 May 2019 June 2019 November 2019 February 2020 June 2020 July 2020 September 2020 February 2021 March 2021 May 2021 DABS November 2015 November 2019 November 2020 Total outstanding at 30 September Number of options/awards Weighted average remaining contractual life in years 2021 2020 2021 2020 5,250 144,802 - 667,600 66,884 16,992 269,224 50,000 17,222 61,875 2,500 27,083 2,500 22,000 271,530 504,521 26,122 668,491 77,322 16,992 307,095 50,000 17,222 75,000 2,500 - - - 2,663 37,349 42,093 1,436,037 2,663 37,349 - 2,056,807 - - - - 1 1 1 1 2 2 1 3 3 3 - - 2 2 - - - 1 2 2 2 2 3 3 2 - - - - 1 - 2 The weighted average exercise price for share options outstanding (as well as those granted, exercised or cancelled during the year) at 30 September 2021 is £nil (2020: £nil). The fair value per share for grants made under the PSP during the year and the assumptions used in the calculation are as follows: Grant date Share price at grant date Exercise price Vesting period (years) Expected volatility1 Option life (years) Expected life (years) Risk-free rate Dividend yield Fair value2 Fair value – TSR element3 Fair value – EPS element4 164 / FUTURE PLC PSP PSP 9 Feb 2021 £18.6000 - 3 60% 3 3 0.01% 0.08% £14.7400 £10.8800 £18.6000 17 Mar 2021 £18.3400 - 3 60% 3 3 0.01% 0.08% £14.6100 £10.8800 £18.3400 2021 PSP 19 May 2021 £26.5000 - 3 - 3 3 - - £26.5000 - £26.5000 Financial Statements  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 Notes: PSP PSP PSP  PSP 25 Nov 2019 £14.8000 - 3 47% 3 3 0.47% 0.08% £12.4000 £10.0000 £14.8000 5 Feb 2020 £11.8800 - 3 47% 3 3 0.43% 0.08% £9.2219 £6.5638 £11.8800 1 Jun 2020 £13.0400 - 3 58% 3 3 0.00% 0.08% £10.5863 £8.1326 £13.0400 08 Jul 2020 £12.2600 - 3 58% 3 3 0.00% 0.08% £9.7798 £7.2995 £12.2600 2020 PSP 21 Sep 2020 £18.3200 - 2 60% 2 2 0.00% 0.08% £16.1972 £14.0742 £18.3200 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 Monte Carlo model. 4. 50% of PSP grants which have non-market based performance criteria have been valued using a Black-Scholes model. The fair value per share for grants made under the VCP during the year and the assumptions used in the calculation are as follows: VCP VCP VCP VCP VCP 2021 VCP Grant date 14 Apr 2021 14 Apr 2021 14 Apr 2021 23 Jun 2021 23 Jun 2021 23 Jun 2021 Market capitalisation at grant date £2,361m £2,361m £2,361m £3,420m £3,420m £3,420m Hurdle Vesting period (years) Expected volatility1 Risk-free rate Fair value2 £1,903m £1,903m £1,903m £1,903m £1,903m £1,903m 3 61% 4 57% 5 53% 0.00% 0.00% 0.00% 3 61% 0.21% 4 56% 0.31% 5 53% 0.41% £15.47m £14.01m £12.59m £26.54m £23.49m £20.73m Notes: 1. The expected volatility is based on Future’s historical volatility, averaged over a period equal to the expected life, where possible. 2. A Monte Carlo model has been used to determine the fair value. The fair values provided in this table comprise the fair value of each tranche in total, subject to a cap of £95m per tranche, rather than the value of the award. Value Creation Plan (VCP) The VCP was launched during the year to all employees, with awards being made in April and June 2021. 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. The plan is designed to align the interests of Future employees and shareholders, by incentivising the delivery of exceptional shareholder returns over the long-term. 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 are 980,000 per tranche, of which a small pool is reserved for future hires and promotions. Units vest based on value created in terms of £ TSR, being the growth in Future’s market capitalisation plus net equity cash flows 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 of £19.42. 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. 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 Adjusted diluted 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. ANNUAL REPORT AND ACCOUNTS FY 2021 / 165 Financial Statements 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. Performance criteria in respect of awards granted during the year ended 30 September 2021: 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 23% 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. The award made in May 2021 is not subject to performance conditions. 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, September 2020, February 2021, March 2021 and May 2021. 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 the Chief Executive, Zillah Byng-Thorne, the annual bonus for the year ending 30 September 2021 is to be paid 50% in cash in December 2021 and 50% in Future shares, deferred for two years. For Rachel Addison, who served as Chief Financial Officer until 30 October 2021, the annual bonus is to be paid 100% in cash in December 2021. See page 102 of the Directors' Remuneration Report for further detail. The last grant made under the DABS was in November 2020. 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. Employee Stock Purchase Plan (ESPP) The Future plc Employee Stock Purchase Plan commenced during the year and is open to all employees who are employed and resident in the US. The ESPP is a tax favourable plan pursuant to which employees can save between 1% and 10% of salary (capped at $25,000 in any one calandar year) over a six month savings period, the savings from which are used for purchases of Ordinary shares in the Company at a 15% discount. 166 / FUTURE PLC 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 2021 £m 197.0 - - 197.0 2020 £m 97.2 103.2 (3.4) 197.0 In the prior 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 2021 £m 170.9 411.0 581.9 Company 2021 £m 61.9 411.0 472.9 Group 2020 £m 140.4 30.5 170.9 Company 2020 £m 31.4 30.5 61.9 An amount of £109.0m in the merger reserve arose in previous years following the 1999 Group reorganisation and is non-distributable. The movement in the current year of £411.0m consists of £411.7m relating to the premium on shares issued as consideration for the acquisition of GoCo Group plc, offset by £0.7m of related share issuance costs (2020: settlement of deferred consideration on the acquisition of MoNa Mobile Nations in October 2019 for £21.5m and the acquisition of Barcroft Studios in November 2019 for £9.0m). 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 Issue of treasury shares to employees At 30 September Group 2021 £m (8.8) (4.9) 6.1 (7.6) Group 2020 £m (0.3) (9.1) 0.6 (8.8) During the year the Company purchased 276,132 of its own shares to fund the future vesting of share options, at a total value of £4.9m. The 414,931 (2020: 814,065) shares held by the EBT represent 0.3% (2020: 0.8%) of the Company’s issued share capital. The treasury reserve is non-distributable. The issuance of treasury shares to employees relate to the settlement of PSP awards exercised in the year. Accumulated exchange differences The reserve for accumulated exchange differences comprises the revaluation of the Group's foreign currency entities, principally the US, on consolidation. 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, £4.0m (2020: £2.4m) contributions were made to these plans and at 30 September 2021 the outstanding balance due to be paid over to the plans was £0.7m (2020: £0.3m). ANNUAL REPORT AND ACCOUNTS FY 2021 / 167 Financial Statements          26. COMMITMENTS AND CONTINGENT LIABILITIES (a) Operating lease commitments Following the adoption of IFRS 16 Leases in the prior year, future minimum sub-lease receipts expected under non-cancellable operating subleases at 30 September 2021 total £0.8m (2020: £1.1m). During the year, £0.2m was recognised in the income statement in respect of operating lease rental payments for short-term and low- value leases (2020: £0.8m), and £0.4m (2020: £0.1m) 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 2021 (2020: £nil). (c) Capital commitments There were no material capital commitments as at 30 September 2021 (2020: £nil). 27. RELATED PARTY TRANSACTIONS The Group had no material transactions with related parties in 2021 or 2020 which might reasonably be expected to influence decisions made by users of these financial statements. During the year, the Company had net management fees and recharges receivable of £1.5m (2020: payable of £3.2m) from subsidiary undertakings, the decrease in the year being due to a recharge of certain costs in respect of the GoCo acquisition. The outstanding balance owed at 30 September 2021 was £1.5m (2020: £3.2m). 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 note 6. 28. ACQUISITIONS Acquisition of CinemaBlend On 2 October 2020, Future US, Inc. (a wholly owned subsidiary of Future plc) acquired CinemaBlend, a premium digital entertainment publisher based in the US, for total consideration of $12.75m. 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. The impact of the acquisition on the consolidated balance sheet was: Intangible assets - Brands - Partner relationships Net assets acquired Goodwill Consideration: Cash Total consideration The acquisition has further diversified the Group’s revenues by expanding the Group’s US presence and audience. Goodwill is attributable to the opportunities that exist to further monetise the Group’s brands and audience. The intangibles recognised, including goodwill, are expected to be deductible for tax purposes. 168 / FUTURE PLC Fair value £m 4.8 0.2 5.0 4.9 9.9 9.9 9.9 Financial StatementsIncluded within the Group’s results for the period are revenues of £5.8m and a profit before tax of £3.7m from CinemaBlend (excluding acquired intangible amortisation). This is equal to the revenue and profit before tax that would have been contributed if the acquisition had completed on the first day of the financial year. Acquisition of Mozo Pty Limited On 2 February 2021, Future Publishing (Overseas) Limited (a wholly owned subsidiary of Future plc) acquired 100% of the equity in Mozo Pty Limited (“Mozo”), a price comparison site focused on personal finance products, based in Australia. Total consideration was AUD$31.0m in cash, of which AUD$29.5m was paid on completion, with a further AUD$1.5m deferred consideration which was settled in May 2021. The impact of the acquisition on the consolidated balance sheet was: Tangible assets - Right-of-use lease assets - Other tangible assets Intangible assets - Brand - Partner relationships - Subscriber relationships - Content - Software Cash and cash equivalents Trade and other receivables Trade and other payables Corporation tax payable Lease liability due within one year Non-current liabilities - Provision - Lease liability due in more than a year Deferred tax Net assets acquired Goodwill Consideration: Cash Deferred consideration Total consideration Fair value £m 0.4 0.1 3.2 2.4 0.1 0.1 0.9 1.2 0.6 (0.8) (0.5) (0.1) (0.1) (0.3) (2.4) 4.8 12.4 17.2 16.4 0.8 17.2 The acquisition has further diversified the Group’s revenues by expanding the Group’s price comparison offering and goodwill is attributable to the opportunities that exist to further monetise the Group’s brands and extend the Group’s eCommerce proposition beyond products into services. 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 £3.4m and a profit before tax of £0.7m from Mozo (excluding acquired intangible amortisation). If the acquisition had been completed on the first day of the financial year, it would have contributed £4.9m of revenue and a profit before tax of £1.1m (excluding acquired intangible amortisation) during the period. Gross trade receivables were £0.6m on acquisition, of which £0.6m were expected to be recovered. ANNUAL REPORT AND ACCOUNTS FY 2021 / 169 Financial StatementsAcquisition of GoCo Group plc On 17 February 2021, Future plc acquired 100% of the equity in GoCo Group plc (“GoCo”), a provider of price comparison and auto- switching services. Consideration was £557.2m, of which £142.1m was paid in cash and £415.1m settled via the issue of 22.6m equity shares in Future plc. In addition, GoCo’s existing net debt of £72.0m was settled on acquisition (being debt of £83.2m net of £11.2m cash acquired). Total cost therefore amounted to £629.2m. The acquisition was funded by increasing the Group’s debt facilities through a £215m two year term loan. The impact of the acquisition on the consolidated balance sheet was: Tangible assets - Right-of-use lease assets - Other tangible assets Intangible assets - Brand - Customer relationships - Software Cash and cash equivalents Trade and other receivables Corpration tax receivable Trade and other payables Lease liability due within one year Financial liabilities – interest-bearing loans and borrowings due in less than one year Non-current liabilities - Provisions - Lease liability due in more than one year - Financial liabilities - interest bearing loans and borrowings due in more than one year Deferred tax Net assets acquired Goodwill Consideration: Equity shares Cash Total Consideration Fair value £m 3.0 1.7 279.8 30.5 9.2 11.2 32.6 3.1 (27.3) (0.7) (3.2) (0.8) (2.4) (80.0) (60.7) 196.0 361.2 557.2 415.1 142.1 557.2 The acquisition has significantly strengthened 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 Future and GoCo. Goodwill is attributable to the synergies of the combined Group and the opportunities that exist to extend the Group’s eCommerce proposition beyond products into services. 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 £109.1m and profit before tax of £18.9m from GoCo (excluding deal fees, associated integration costs, acquired intangible amortisation and interest). If the acquisition had been completed on the first day of the financial year, it would have contributed £171.5m of revenue and a profit before tax of £31.5m (excluding deal fees, associated integration costs, acquired intangible amortisation and interest) during the period. Gross trade receivables were £15.4m on acquisition, of which £14.6m were expected to be recovered. 170 / FUTURE PLC Financial StatementsAcquisition of Marie Claire US On 12 May 2021 Future US, Inc. acquired 100% of Marie Claire US, a former joint venture between Marie Claire Album S.A.S. ("MCA") and Hearst Magazines Media Inc. Future has entered into a five year license agreement with MCA to operate in the US and Canada for consideration of £13.3m. The impact of the acquisition on the consolidated balance sheet was: Intangible assets - Customer Relationships - Content Cash and cash equivalents Inventory Trade and other receivables Trade and other payables Non-current liabilities - Deferred tax Net assets acquired Goodwill Consideration: Cash Total consideration Fair value £m 3.0 2.6 0.9 0.1 3.3 (1.0) (1.6) 7.3 6.0 13.3 13.3 13.3 The acquisition follows the enlarged Group’s acquisition of Marie Claire UK in 2020 and builds on the ongoing success of the MarieClaire.co.uk brand. It strengthens the Group's position in the Women's Lifestyle vertical in North America in line with the Group's strategy to achieve brand vertical leadership across English speaking markets. Included within the Group’s results for the period are revenues of £2.6m and a profit before tax of £nil from Marie Claire US (excluding deal fees, associated integration costs, acquired intangible amortisation and interest). If the acquisition had been completed on the first day of the financial year, it would have contributed £11.1m of revenue and a profit before tax of £2.1m during the period. Gross trade receivables were £3.2m on acquisition, of which £3.0m were expected to be recovered. ANNUAL REPORT AND ACCOUNTS FY 2021 / 171 Financial Statements29. SUBSIDIARY UNDERTAKINGS Details of the Company’s subsidiaries at 30 September 2021 are set out below. All subsidiaries are included in the consolidation. Shares of those companies marked with an * are indirectly owned by Future plc through an intermediate holding company. Company name and registered number Ascent Publishing Limited* 02561341 Barcroft Media Limited* 04826405 Barcroft Productions Limited* 07661595 Barcroft Studios Limited* 09432842 Business Energy Online Limited* SC531546 Comary, Inc* 2400371 Energylinx Limited* SC244794 Energylinx for Business Limited* SC431929 Energylinx for Business Trading Limited* SC455901 Future Holdings 2002 Limited 04387886 Future UK Finance Limited* 13651021 Future Publishing Limited* 02008885 Future Publishing (Overseas) Limited* 06202940 Future Publishing Holdings Limited 03430449 Gio Compario Limited* 06998007 GoCo Group plc 06062003 GoCo Limited* 11879977 Go Compare Limited* 06872284 GoCompare.com Limited* 05799376 GoCompare.com Finance Limited 10227007 Look After My Bills Limited 10888203 Marketforce (U.K.) Limited* 00499150 Mozo Pty Limited* ACN 128 199 208 Sapphire Bidco Limited* 11157309 Sapphire Midco Limited* 11157151 Sapphire Topco Limited* 11157141 Sarracenia Limited 04582851 The Global Voucher Group Limited* 09051128 This is the Big Deal, Inc* 6690977 172 / FUTURE PLC Country of incorporation and registered office Nature of business Holding % Class of shares England and Wales1 Non-trading England and Wales1 England and Wales1 Video content production Video content production 100 100 100 England and Wales1 Holding company 100 Scotland3 Dormant USA11 Publishing Scotland3 Domestic energy price comparison Scotland3 Web services Scotland3 Web services England and Wales1 Holding company England and Wales1 Non-trading England and Wales1 Publishing England and Wales1 Publishing 100 100 100 100 100 100 100 100 100 £1 Ordinary shares £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 Ordinary shares Not applicable £10 Ordinary shares £1 Ordinary shares £1 A Ordinary shares £1 Ordinary shares £1 Ordinary shares £1 Ordinary shares 10 pence Ordinary shares £1 Ordinary shares England and Wales1 Holding company 87.5 1 pence Ordinary shares England and Wales2 Dormant 100 £1 Ordinary shares England and Wales2 Non-trading 100 0.0002 pence Ordinary shares England and Wales2 England and Wales2 Dormant Dormant England and Wales2 Price comparison website 100 100 100 1 pence Ordinary shares £1 Ordinary shares £1 Ordinary shares England and Wales2 Non-trading 100 0.0002 pence Ordinary shares England and Wales2 England and Wales1 Dormant Dormant Australia4 Comparison shopping England and Wales1 Non-trading England and Wales1 Non-trading England and Wales1 Non-trading England and Wales1 Dormant England and Wales2 Voucher codes website USA14 Holding company 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 pence Ordinary shares Not applicable Financial StatementsCompany name and registered number This is the Big Deal Limited* 08867458 TI Media Limited* 00053626 Next Commerce Pty Limited* 113 146 786 MoNa Media Canada Limited* BC1198396 Future Publishing s.r.o.* 09393951 Purch Technologies Sarl* 84138050400016 Future Verlag GmbH* HRB12567 Pricepanda Group GmbH* HRB138471B Windsor Support Services Private Limited* U74999DL2011FTC217990 Next Commerce Philippines Inc* CS201517783 Future US, Inc* 1513070 Purch Group LLC* 4560993 Country of incorporation and registered office Nature of business Holding % Class of shares England and Wales2 Energy auto switching service England and Wales1 Holding company Australia4 Comparison shopping Canada5 Digital media publishing Czech Republic6 Non-trading France7 Non-trading 100 100 100 100 100 100 0.000015625 pence Ordinary shares £1 Ordinary shares $1 Ordinary shares Not applicable CZK 1 Ordinary shares Not applicable Germany8 Non-trading 87.5 €1 Ordinary shares Germany8 India9 Philippines10 USA13 USA12 Dormant Dormant Dormant Publishing Trading 100 100 100 100 100 €1 Ordinary shares Rand 10 equity shares ₱ Ordinary shares Not applicable Not applicable 1 Registered office: Quay House, The Ambury, Bath, BA1 1UA, England 8 Registered office: c/o Poruba GbR, Clemensstraße 32, 80803 Munich, Germany 2 Registered office: Imperial House, Imperial Way, Coedkernew, Newport, Wales 9 Registered office: Dpt 610, Prime Towers F 79-80, Okhla Industrial Area, Phase 1 NP10 8UH New Delhi New Delhi DL 110020 India 3 Registered office: C/O Womble Bond Dickinson (Uk) Llp 2, Semple Street, 10 Registered office: 2/F GC Corporate Plaza, 150 Legaspi Street, Legaspi Village, Edinburgh, Scotland, EH3 8BL Makati, Manila, Philippines 4 Registered office: Registered office: Suite 3, Level 10, 100 Walker Street, North 11 Registered office: 108 West 13th Street, New Castle County, Wilmington, DE 19801 Sydney, NSW 2060, Australia 12 Registered office: 251 Little Falls Drive, Wilmington, DE 19808 5 Registered office: 1800-355 St Burrard, Vancouver Colombie Britannique V6C2G8, 13 Registered office: 1401 21st Street, STE R, Sacramento CA 95811, USA Canada 14 Registered office: Corporation Trust Centre, 1209 Orange Street, Wilmington, 6 Registered office: Holečkova 100/9, Smíchov, 150 00 Praha 5, Czech Republic Newcastle DE 19801, USA 7 Registered office: 195 Avenue Charles de Gaulle 92200 Neuilly-sur-Seine, France Ascent Publishing Limited, Future Holdings 2002 Limited, Future Publishing Limited, TI Media Limited, Sapphire Bidco Limited, Sapphire Midco Limited, Sapphire Topco Limited, Barcroft Studios Limited, Barcroft Productions Limited, Barcroft Media Limited, Energylinx Limited, Energylinx for Business Limited, Energylinx for Business Trading Limited, Future UK Finance Limited, GoCo Group plc, Go Compare Limited, GoCompare.com Finance Limited, The Global Voucher Group Limited and This is the Big Deal Limited are exempt from the requirement to file audited financial statements by virtue of Section 479A of the Companies Act 2006. Sarracenia Limited, Marketforce (U.K.) Limited, Business Energy Online Limited, Gio Compario Limited, GoCo Limited and Look After My Bills 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 Dennis On 16 August 2021 the Group announced the acquisition of Dennis (via the acquisition of 100% of the share capital and voting rights of Broadleaf Newco 2 Limited and it's subsidiaries), a leading consumer media subscriptions business, which includes trusted Wealth, Knowledge and B2B technology specialist titles such as Kiplinger, MoneyWeek, The Week & IT Pro. Consideration of £300m was paid on completion on 1 October 2021, funded using the Group's existing debt facilities. The titles acquired by Future are: The Week UK / The Week US, The Week Junior UK / The Week Junior US, MoneyWeek, Kiplinger, Science & Nature, IT Pro, Computer Active, PC Pro, Minecraft World, and Coach. The acquisition will scale the Group's 'Wealth & Savings' vertical, further diversify the Group's revenue by materially increasing the Group's recurring revenues through subscriptions and extending the Group's reach in the North American market, deepen the Group's existing presence in the 'B2B Pro Technology' vertical and enhance the Group's 'Knowledge' vertical with high subscription rates and growth potential. Work has commenced on the purchase price allocation but, because the acquisition is still relatively recent, the Group is not yet able to present reliable estimates of the fair values of the purchase consideration or the identifiable assets and liabilities acquired. The preliminary purchase price allocation will be presented in the Group’s half year report for the six months ending 31 March 2022 that will be published in May 2022. During the year ended 30 September 2021, the Group recognised transaction costs of £4.5m in relation to the acquisition of Dennis (included within net operating expenses). ANNUAL REPORT AND ACCOUNTS FY 2021 / 173 Financial Statements Notice of Annual General Meeting Notice is given that the Annual General Meeting of Future plc (“Future” or the “Company”) will be held at 11.30am on Thursday 3 February 2022 at Future’s London office at 121-141 Westbourne Terrace, Paddington, W2 6JR to consider and, if thought fit, pass the following resolutions: Ordinary Resolutions (1-16) c) all previous unutilised authorities 13. To reappoint Deloitte LLP as Auditor of under section 551 of the Act shall 1. To receive and adopt the Annual Report the Company to hold office until the cease to have effect (save to the including the audited financial conclusion of the next general meeting extent that the same are exercisable statements for the year ended 30 at which accounts are to be laid before pursuant to section 551(7) of the Act September 2021. the Company. 2. To declare a final dividend for the year 14. To authorise the Audit and Risk by reason of any offer or agreement made prior to the date of this resolution which would or might ended 30 September 2021 of 2.8p per Committee to decide the remuneration of the require shares to be allotted or rights ordinary share payable on 9 February Auditor. 2022 to shareholders on the register at to be granted on or after that date). the close of business on 14 January 2022. 15. That: 16. To authorise the Company, and all a) the Directors be authorised, for the companies that are its subsidiaries, at 3. To approve the Directors' Remuneration purposes of section 551 of the any time during the period for which this Report set out on pages 88 to 90 and Companies Act 2006 (the ’Act’), to resolution has effect for the purposes of pages 100 to 109 (inclusive) in the Annual allot shares in the Company or grant section 366 of the Companies Act 2006 Report. rights to subscribe for, or convert any to: security into, shares in the Company: a) make political donations to political 4. To re-elect Richard Huntingford as a i) in accordance with article 3 of parties and/or independent election Director of the Company. the Company's Articles of candidates not exceeding £50,000 in 5. To re-elect Zillah Byng-Thorne as a nominal amount of £6,030,647.12 b) make political donations to political Director of the Company. (such amount to be reduced by organisations other than political the nominal amount of any parties not exceeding £50,000 in 6. To re-elect Meredith Amdur as a Director equity securities (as defined in total; and of the Company. section 560 of the Act) allotted c) incur political expenditure not Association, up to a maximum total; 7. To re-elect Mark Brooker as a Director of the Company. under paragraph (ii) below in excess of £12,063,103.63); and comprising equity securities (as ii) exceeding £50,000 in total, during the period beginning with the date of the passing of this resolution and ending following the conclusion of 8. To re-elect Hugo Drayton as a Director of defined in section 560 of the the Company's next Annual General the Company. Act), up to a maximum nominal Meeting or, if earlier, on 3 May 2023. 9. To re-elect Rob Hattrell as a Director of the Company. amount of £12,063,103.63 (such amount to be reduced by any shares allotted or rights granted under paragraph (i) above) in 10. To elect Penny Ladkin-Brand as Director connection with an offer by way SPECIAL RESOLUTIONS (17-19) Special Resolutions 17 17. That of the Company of a rights issue; a) the Directors be given power, 11. To re-elect Alan Newman as a Director of conclusion of the next Annual b) this authority shall expire at the pursuant to section 570 of the Companies Act 2006, (the ‘Act’): the Company. General Meeting of the Company i) subject to the passing of after the passing of this resolution, resolution 15 to allot equity 12. To elect Anglea Seymour-Jackson as a or, if earlier, at the close of business securities (as defined in section Director of the Company. on 3 May 2023; and 560(1) of the Act) for cash 174 / FUTURE PLC Notice of Annual General Meeting Notice of Annual General Meeting pursuant to the authority conferred on them by that resolution; and Directors may allot equity securities an agreement which would or might in pursuance of such offer or require equity securities to be agreement as if this power had not allotted after it expires and the ii) to sell equity securities (as expired. defined in section 560(1) of the Act) held by the Company as treasury shares (as defined in section 724(5) of the Act) for Special Resolution 18 18. That: Directors may allot equity securities in pursuance of such offer or agreement as if this power had not expired. cash, in either case as if section a) in addition to any authority granted 561 of the Act did not apply to under resolution 17, the Directors be the allotment or sale. given power: Special Resolution 19 19. That, in accordance with the Company's Articles of Association, a general b) the power under paragraph (a) i) subject to the passing of meeting (other than an Annual General above shall be limited to: (i) the allotment of equity securities in connection with a rights issue, open offer or other pre-emptive offer (but in the case of the authorization resolution 15, to allot equity Meeting) may be called on not less than securities (as defined in section 14 clear days' notice. 560(1) of the Companies Act 2006 (the ‘Act’)) for cash pursuant to the authority conferred on them by that granted under resolution 15.a.ii, resolution under section 551 of such powers shall be limited to a the Act; and EXPLANATION OF RESOLUTIONS rights issue only) in favour of holders of ordinary shares in proportion (as nearly as practicable) to the respective ii) to sell equity securities (as defined in section 560(1) of the Act) held by the Company as Ordinary resolutions For each of the following resolutions to be treasury shares (as defined in passed, more than half of the votes cast numbers of ordinary shares held section 724(5) of the Act) for must be in favour of the resolution. by them on the record date for such allotment, but subject to such exclusions or other cash, in either case as if section 561 of the Act did not apply to the allotment or sale, but this arrangements as the Directors power shall be: A. limited to the allotment of Resolution 1: RECEIPT OF ANNUAL REPORT The Directors present to shareholders at the receipts or by virtue of any other transaction which the Board to pay a final dividend of 2.8p per ordinary matter whatsoever. of the Company determines share for the year ended 30 September 2021. (ii) otherwise than pursuant to to be an acquisition or other The dividend, if approved, will be payable on may deem fit to deal with fractional entitlements, legal or practical difficulties which may arise under the laws of any overseas territory, the requirements of any regulatory body or stock exchange or by virtue of shares being represented by depository sub-paragraph (i) above, the allotment or sale of equity securities having a nominal amount not exceeding in aggregate £904,687.54; and c) this authority shall expire at the conclusion of the next Annual General Meeting of the Company equity securities up to a AGM the Reports of the Directors and maximum nominal amount Auditor and the financial statements of the of £904,687.54; and Company for the year ended 30 September B. used only for the purposes 2021. of financing (or refinancing, if the authority is to be used within six months after the original transaction) a Resolution 2: This resolution seeks shareholder approval capital investment of a kind contemplated by the 9 February 2022 to shareholders on the register at the close of business on 14 Statement of Principles on January 2022. Disapplying Pre-Emption Rights most recently published by the Pre- Emption Group prior to the date of this notice; Resolution 3: APPROVAL OF THE DIRECTORS’ REMUNERATION REPORT Resolution 3 seeks shareholder approval for after the passing of this resolution b) this power shall expire at the or, if earlier, at the close of business conclusion of the next Annual on 3 May 2023. General Meeting of the Company the Directors' Remuneration Report on d) the Company may, before this power after the passing of this resolution pages 88 to 90 and pages 100 to 109 of the expires, make an offer or enter into or, if earlier, at the close of business Annual Report. The FY 2021 annual report on an agreement which would or might on 3 May 2023; and remuneration gives details of the require equity securities to be c) the Company may, before this power implementation of the Company's allotted after it expires and the expires, make an offer or enter into Remuneration Policy, approved by ANNUAL REPORT AND ACCOUNTS FY 2021 / 175 shareholders at the AGM in February 2021, in independent auditor. More information treasury. terms of the payments and share awards about the decision to reappoint Deloitte LLP made to the Directors in connection with can be found in the Audit and Risk their performance and that of the Company Committee report on page 85. during the year ended 30 September 2021. Resolution 14 seeks shareholder Resolution 16 It remains the policy of the Company not to It also gives details of how the Company authorisation for the Audit and Risk make political donations or to incur political intends to apply the Remuneration Policy in Committee to decide the Auditor's fee, which expenditure, as those expressions are practice for FY 2022. This vote is advisory is standard practice. and the Directors' entitlement to remuneration is not conditional on it. The Company's Auditor during the year, Deloitte LLP, has audited those parts of the Directors' Remuneration Report that are Resolution 15: AUTHORITY TO ALLOT SHARES At the AGM last year, the Directors were normally understood. However, following broader definitions introduced by the Act, the Directors continue to propose a resolution designed to avoid inadvertent infringement of these definitions. The Act requires companies to obtain required to be audited and their report may given the authority to allot shares without shareholders' authority for donations to be found on pages 116 to 127 of the Annual the prior consent of shareholders for a registered political parties and other political Report. period expiring at the conclusion of the 2022 organisations totalling more than £5,000 in Resolutions 4-12: ELECTION AND RE-ELECTION OF DIRECTORS A biography of each Director, including a AGM or, if earlier, on 10 May 2022. It is any 12-month period, and for any political proposed to renew this authority and to expenditure, subject to limited exceptions. authorise the Directors under section 551 of The definition of donation in this context is the Companies Act 2006 to allot ordinary very wide and extends to bodies such as shares or grant rights to subscribe for or those concerned with policy review, law convert any security into shares in the reform and the representation of the description of the skills and experience they Company for a period expiring at the business community. It could also include contribute to the Board, appears on pages conclusion of the 2023 AGM or, if earlier, special interest groups, such as those 72 to 73 of the Annual Report and is also close of business on 3 May 2023. involved with the environment, which the available on the Company’s website at www. This resolution, which follows the Company and its subsidiaries might wish to futureplc.com/who-we-are/. guidelines issued by the Investment support, even though these activities are not Having been appointed directors since the Association, will allow the Directors to: designed to support or to influence support AGM in 2021, Angela Seymour-Jackson and a. allot ordinary shares up to a for any particular political party. Penny Ladkin-Brand are standing for election for the first time at this AGM. maximum nominal amount of £6,030,647.12 representing In accordance with the recommendations approximately one third (33.33 per Special Resolutions For each of the following resolutions to be of the UK Corporate Governance Code, every cent) of the Company's existing passed, at least 75 per cent of the votes cast Director is required to retire from office at issued share capital and calculated must be in favour of the resolution. every AGM. Any Director eligible, in as at 10 December 2021; and accordance with the Company's Articles of b. allot ordinary shares on a Association, may stand for re-election. The preemptive basis by way of a rights Company's Chair confirms that, following issue to ordinary shareholders up to the evaluation process, as described on page a maximum nominal amount 75, the performance of each Director standing for re-election and election (including any shares allotted under the paragraph above) of Resolution 17 DIRECTORS’ GENERAL POWERS TO DISAPPLY PRE-EMPTION RIGHTS At last year's meeting, a special resolution continues to be effective and that they have each demonstrated a strong commitment to £12,063,103.63 representing approximately two thirds (66.67 per was passed, under sections 570 and 573 of the Companies Act 2006, empowering the their role. cent) of the Company's existing Directors to allot equity securities for cash Resolutions 13-14: REAPPOINTMENT OF AUDITOR AND AUDITOR’S REMUNERATION An independent auditor is required to be issued share capital and calculated without a prior offer to existing as at 10 December 2021. shareholders. It is proposed that this The Directors have no present intention of authority also be renewed. If approved, the allotting shares under this resolution, but resolution will authorise the Board to allot believe that the flexibility allowed by this equity securities (as defined in the resolution may assist them in taking Companies Act 2006) for cash and/or to sell advantage of business opportunities as they ordinary shares held by the Company as arise. treasury shares for cash as if section 561 of If they do exercise this authority, the the Companies Act 2006 did not apply. The appointed at each general meeting at which Directors intend to follow best practice as authority is limited to: accounts are presented to shareholders. recommended by the Investment a) allotments for rights issues and Under Resolution 13 the Directors propose to Association. As at 10 December 2021 the other pre-emptive issues; and reappoint Deloitte LLP as the Company's Company does not have any shares in b) allotments of equity securities or 176 / FUTURE PLC 176 / FUTURE PLC ANNUAL 2021 Notice of Annual General Meeting Notice of Annual General Meeting sale of treasury shares (otherwise as at 10 December 2021: and effective until the Company's next Annual than under paragraph (a) above) up b) used only for the purposes of General Meeting, when it is intended that a to a nominal amount of £904,687.54, which represents approximately 5 per cent of the financing (or refinancing, if the similar resolution will be proposed. authority is to be used within six Note, that if a general meeting is called on months after the original less than 21 clear days' notice, the Company issued share capital of the Company transaction) a transaction which the will arrange for electronic voting facilities to as at 10 December 2021. Board determines to be an acquisition or other capital be available to all shareholders. The flexibility offered by this resolution will be The Directors do not intend to issue more investment of a kind contemplated used where, taking into account the than 7.5 per cent of the issued share capital by the Statement of Principles on circumstances, and noting the of the Company for cash on a non Disapplying Pre-Emption Rights recommendations of the UK Corporate preemptive basis in any rolling three-year published by the Pre-Emption Group Governance Code, the Directors consider period (other than in connection with an and which is announced at the same this appropriate in relation to the business of acquisition or specified capital investment, time as the allotment, or has taken the meeting and in the interests of the as described in the Pre-emption Group's place in the preceding six month Company and shareholders as a whole. Statement of Principles) without prior period and is disclosed in the consultation with shareholders and the announcement of the allotment. Investment Committees of the Investment Association and the Pensions and Lifetime Resolution 18 seeks to renew this authority Savings Association. until the conclusion of the next Annual Resolution 17 will be proposed as a special General Meeting or, if earlier, the close of resolution to renew this authority until the business on 3 May 2023. Prior to its expiry conclusion of the next Annual General the Company may make offers, and enter Meeting or, if earlier, the close of business on into agreements, which would or might, 3 May 2023. Prior to its expiry, the Company require equity securities to be allotted (and may make offers, and enter into agreements, treasury shares to be sold) after the authority which would or might require equity expires and the Board may allot equity securities to be allotted (and treasury shares securities (and sell treasury shares) under to be sold) after the authority expires and any such offer or agreement as if the FURTHER INFORMATION ABOUT THE AGM 1. Information regarding the meeting, including the information required by section 311A of the Act, is available from www.futureplc.com/invest-in-future ATTENDANCE AT THE AGM 2. At the time of writing it is uncertain what the Board may allot equity securities (and authority had not expired. The maximum regulations or public health guidance may sell treasury shares) under any such offer or nominal value of equity securities which be in place at the time of the AGM which agreement as if the authority had not could be allotted if the authorities granted in may include restrictions on the number of expired. resolutions 17 and 18 were both used would people who can gather in public. Any Resolution 18: DIRECTORS' POWERS TO DISAPPLY AN ADDITIONAL FIVE PER CENT PRE-EMPTION RIGHTS In line with the advice published by the Pre-Emption Group and in addition to any authority granted under Resolution 17, this be £1,809,375.08, which represents changes to the arrangements for the AGM approximately 10 per cent of the issued share will be communicated to shareholders capital of the Company as at 10 December before the AGM through our website at 2021. Resolution 19: NOTICE OF GENERAL MEETINGS The notice period for general meetings, as https://https://investor.futureplc.com/ investor-information/ and, where appropriate, by a regulatory information service announcement. In light of this uncertainty, we do strongly encourage shareholders to submit a proxy vote in advance of the AGM and to resolution, to be proposed as a special governed by the Companies Act 2006, is 21 appoint the Chair of the meeting as their resolution, will, if passed, authorise the days. The notice can be less if the proxy, rather than a named person who, if Directors to allot equity securities and/or shareholders approve a shorter notice circumstances change, may not be sell ordinary shares held by the Company as period,however it cannot be shorter than 14 able to attend the meeting. treasury shares for cash, as if section 561 of clear days. AGMs cannot be held at shorter We know that some attendees appreciate the Companies Act 2006 did not apply to notice and must always be held on at least 21 the opportunity to ask Board members any such allotment or sale. This authority clear days' notice. questions. If you have any questions will be: At last year's AGM, shareholders that you would like to ask we would a) limited to the allotment of equity authorised the calling of general meetings encourage you to email them to CoSec@ securities or sale of treasury shares other than an AGM on not less than 14 clear futurenet.com with ‘AGM 2022’ in the up to a nominal amount of days' notice and it is proposed that this heading. The Chair will either answer these £904,687.54 which represents authority be renewed. The authority granted at the meeting or, if more appropriate, reply approximately five per cent of the by this resolution, which will be proposed as to the questioner directly. issued share capital of the Company a special resolution, if passed, will be If you are attending the meeting in person, ANNUAL REPORT AND ACCOUNTS FY 2021 / 177 please bring the attendance card attached to Registrars not later than 11.30am on 1 'Nominated Person') does not have a right to your form of proxy and arrive at Future's February 2022. London office, 121-141 Westbourne Terrace, Paddington, W2 6JR, in sufficient time for registration. Appointment of a proxy does not preclude NUMBER OF SHARES IN ISSUE 5. As at the close of business on 10 appoint a proxy. However, a Nominated Person may, under an agreement with the registered shareholder by whom they were nominated (a 'Relevant Member'), have a right to be appointed (or to have someone a member from attending the meeting and December 2021 (being the last business day else appointed) as a proxy for the meeting. voting in person. If a member has appointed prior to the publication of this notice) the Alternatively, if a Nominated Person does a proxy and attends the meeting in person, Company's issued share capital consisted of not have such a right, or does not wish to we will ask the proxy and holder what action 120,625,005 Ordinary shares of 15 pence exercise it, they may have a right under any they would like to take. each. Each Ordinary share carries one vote. such agreement to give instructions to the APPOINTMENT OF PROXIES 3. Any member entitled to attend and vote at the meeting may appoint one or more proxies to attend, speak and vote in their place. A member may appoint more than one proxy provided that each proxy is There are no shares held in treasury. The Relevant Member as to the exercise of total number of voting rights in the Company voting rights. is therefore 120,625,005. DOCUMENTS AVAILABLE FOR INSPECTION 6. Printed copies of the service contracts of A Nominated Person's main point of contact in terms of their investment in the Company remains the Relevant Member (or, perhaps, the Nominated Person's custodian or broker) and the Nominated Person should continue to contact them (and not the Company) appointed to exercise the rights attached to the Company's Directors and the letters of regarding any changes or queries relating to a different share or shares held by that appointment for the Non-Executive the Nominated Person's personal details shareholder. If you appoint multiple proxies Directors will be available for inspection and their interest in the Company (including for a number of shares in excess of your during usual business hours on any weekday any administrative matters). The only holding, the proxy appointments may be (Saturdays, Sundays and public holidays exception to this is where the Company treated as invalid. A proxy need not be a excluded) at the Company's London office at expressly requests a response from the member of the Company. A proxy card is 121-141 Westbourne Terrace, Paddington, Nominated Person. enclosed. To be effective, proxy cards should W2 6JR and at the Company's registered be completed in accordance with this Notice office at Quay House, The Ambury, Bath, BA1 of Annual General Meeting and the notes to lUA including on the day of the meeting from the proxy form, signed and returned so as to 11.30am until its completion. be received by the Company's Registrars: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY ELIGIBLE SHAREHOLDERS 7. The Company, pursuant to Regulation 41 do so for the meeting and any adjournment(s) thereof by using the of The Uncertificated Securities Regulations procedures described in the CREST Manual. 2001, specifies that only those members on CREST personal members or other CREST not later than 11.30am on 1 February 2022 the register of the Company as at 6pm on 1 sponsored members, and those CREST being two business days before the time February 2022 or, if this meeting is members who have appointed a voting appointed for the holding of the meeting. If adjourned, in the register of members 48 service provider(s), should refer to their you submit more than one valid proxy hours before the time of any adjourned CREST sponsor or voting service provider(s), appointment, the appointment received last meeting, are entitled to attend and vote at who will be able to take the appropriate before the latest time for the receipt of proxies will take precedence. the meeting in respect of the number of shares registered in their name at that time. action on their behalf. For a proxy appointment or instruction ELECTRONIC APPOINTMENT OF PROXIES 4. As an alternative to completing the Changes to entries on the Register after 6pm made using the CREST service to be valid, on 1 February 2022 or, if this meeting is the appropriate CREST message (a 'CREST adjourned, in the register of members 48 Proxy Instruction') must be properly hours before the time of any adjourned authenticated in accordance with Euroclear meeting, will be disregarded in determining UK & Ireland Limited's specifications and printed proxy form, you may appoint a proxy the rights of any person to attend or vote at must contain the information required for electronically by visiting the following the meeting. website: www.investorcentre.co.uk/eproxy. You will be asked to enter the Control Number, the Shareholder Reference Number (SRN) and PIN as printed on your proxy form INDIRECT INVESTORS 8. Any person to whom this notice is sent such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy must, in order to and to agree to certain terms and conditions. who is a person that has been nominated be valid, be transmitted so as to be received To be effective, electronic appointments under section 146 of the Companies Act by the issuer's agent (ID 3RA50) by 11.30am must have been received by the Company’s 2006 (‘Act’) to enjoy information rights (a on 1 February 2022 or, if the meeting is 178 / FUTURE PLC APPOINTMENT OF PROXIES THROUGH CREST 9. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may Notice of Annual General Meeting Notice of Annual General Meeting adjourned, not less than 48 hours before member should contact the Registrars on the time fixed for the adjourned meeting. +44 (0)370 7071443. QUESTIONS AT THE AGM 14. Under section 319A of the Act, the For this purpose, the time of receipt will be If more than one valid proxy appointment is Company must answer any question you taken to be the time (as determined by the submitted, the appointment received last ask relating to the business being dealt with timestamp applied to the message by the before the deadline for the receipt of at the meeting unless: CREST Applications Host) from which the proxies will take precedence. a) answering the question would issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies REVOKING A PROXY 11. In order to revoke a proxy instruction, a interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; appointed through CREST should be signed letter clearly stating a member's b) the answer has already been given communicated to the appointee through intention to revoke a proxy appointment on a website in the form of an other means. must be sent by post or by hand to the answer to a question; or CREST members and, where applicable, Company's Registrars: their CREST sponsors or voting service Computershare Investor Services PLC, providers should note that Euroclear UK & The Pavilions, Ireland Limited does not make available special procedures in CREST for any Bridgwater Road, Bristol BS99 6ZY. particular messages. Normal system Note that the deadlines for receipt of proxy timings and limitations will therefore apply appointments (see above) also apply in in relation to the input of CREST Proxy relation to revocations; any revocation Instructions. It is the responsibility of the received after the relevant deadline will be CREST member concerned to take (or, if the disregarded. CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his/her CREST sponsor or CORPORATE MEMBERS 12. In the case of a member which is a c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. MEMBERS’ RIGHT TO REQUIRE CIRCULATION OF A RESOLUTION TO BE PROPOSED AT THE AGM 15. Under section 338 of the Act, a member or members meeting the qualification criteria set out at note 18 opposite, may, subject to conditions set out at note 19, voting service provider(s) take(s)) such company, any proxy form, amendment or require the Company to give to members action as is necessary to ensure that a revocation must be executed under its notice of a resolution which may properly message is transmitted by means of the common seal or signed on its behalf by an be moved and is intended to be moved at CREST system by any particular time. In this officer of the company or an attorney for that meeting. connection, CREST members and, where the company. Any power of attorney or any applicable, their CREST sponsors or voting other authority under which the documents service providers are referred, in particular, are signed (or a duly certified copy of such to those sections of the CREST Manual power of authority) must be included. A concerning practical limitations of the corporate member can appoint one or MEMBERS’ RIGHT TO HAVE A MATTER OF BUSINESS DEALT WITH AT THE AGM 16. Under section 338A of the Act, a CREST system and timings. more corporate representatives who may member or members meeting the The Company may treat as invalid a exercise, on its behalf, all its powers as a qualification criteria set out at note 18 CREST Proxy Instruction in the member provided that no more than one opposite, may, subject to the conditions set circumstances set out in Regulation 35(5)(a) corporate representative exercises powers out at note 19, require the Company to of the Uncertificated Securities Regulations over the same share. Members considering include in the business to be dealt with at 2001. the appointment of a corporate representative should check their own legal the AGM a matter (other than a proposed resolution) which may properly be included position, the Company's Articles of in the business (a matter of business). AMENDING A PROXY 10. To change a proxy instruction, a member needs to submit a new proxy appointment using the methods set out above. Note that the deadlines for receipt of proxy appointments (see above) also Association and the relevant provision of the Companies Act 2006. JOINT HOLDERS 13. Where more than one of the joint WEBSITE PUBLICATION OF ANY AUDIT CONCERNS 17. Pursuant to Chapter 5 of Part 16 of the Act, where requested by a member or apply in relation to amended instructions; holders purports to vote or appoint a proxy, members meeting the qualification criteria any amended proxy appointment received only the vote or appointment submitted by set out at note 18 below, the Company must after the relevant deadline will be the member whose name appears first on publish on its website a statement setting disregarded. Where a member has the register will be accepted. out any matter that such members propose appointed a proxy using the paper proxy form and would like to change the instructions using another such form, that to raise at the AGM relating to the audit of the Company's accounts (including the auditors' report and the conduct of the ANNUAL REPORT AND ACCOUNTS FY 2021 / 179 audit) that are to be laid before the AGM. electronic form; Where the Company is required to publish (ii) must identify the resolution or such a statement on its website: (a) it may not require the members making the request to pay any the matter of business of which notice is to be given by either setting it out in full or, if expenses incurred by the Company supporting a resolution/ matter in complying with the request; of business sent by another (b) it must forward the statement to the member, clearly identifying the Company's auditors no later than the resolution/matter of business time the statement is made available which is being supported; on the Company's website; and (iii) in the case of a resolution, must (c) the statement may be dealt with as part of the business of the AGM. The request: be accompanied by a statement setting out the grounds for the request; (d) may be in hard copy form or in (iv) must be authenticated by the electronic form and must be authenticated by the person or persons making it (see note 19(d) and (e) below); person or persons making it; and (v) must be received by the Company not later than six weeks before the date of the (e) should either set out the statement AGM; and in full or, if supporting a statement (d) in the case of a request made in hard sent by another member, clearly copy form, such request must be: identify the statement which is being (i) signed by you and state your full supported; and name and address; and (f) must be received by the Company at (ii) sent either: by post to least one week before the AGM. Company Secretary, MEMBERS’ QUALIFICATION CRITERIA 18. In order to be able to exercise the Future plc, Quay House, The Ambury, Bath BA1 lUA; or by fax to +44(0)1225 732266 members' rights set out in notes 15 to 17 marked for the attention of the above the relevant request must be made by: Company Secretary; and (a) a member or members having a right (e) in the case of a request made in to vote at the AGM and holding at electronic form, such request must: least 5% of total voting rights of all (i) state your full name and address; the members having a right to vote on the resolution to which the request relates; or and (ii) be sent to cosec@futurenet.com. (b) at least 100 members having a right Please state 'AGM' in the subject to vote at the AGM and holding, on line of the email. You may not average, at least £100 of paid up share capital. use this electronic address to communicate with the Company for any other purpose. CONDITIONS 19. The conditions are that: (a) any resolution must not, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise); (b) the resolution or matter of business must not be defamatory of any person, frivolous or vexatious; (c) the request: (i) may be in hard copy form or in 180 / FUTURE PLC Notice of Annual General Meeting Notice of Annual General Meeting ANNUAL REPORT AND ACCOUNTS FY 2021 / 181 Shareholder information Financial calendar Annual General Meeting Ex dividend date for the FY21 final dividend FY21 final dividend Announcement of the payment date preliminary results for the year ended 30 September 2022 3 February 2021 13 January 2022 9 February 2022 December 2022 Company website account details. Those selecting this method will receive a tax voucher at their registered address when the corresponding dividend The Company’s website at www.futureplc.com contains the latest information for shareholders, including press releases. Email alerts is paid. Shareholders wishing to benefit from this service should register of the latest news, press releases and financial reports about Future at www.investorcentre.co.uk or call our registrar, Computershare plc may be obtained by registering for the email news alert service Investor Services PLC, for a form by phone on 0870 707 1443 (a text on the website. Share price information The latest price of the Company’s ordinary shares is available on www.londonstockexchange.com. Future’s ticker symbol is FUTR. It is recommended that you consult your financial adviser and verify information obtained before making any investment decision. 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. The account information you provide will not be shared with third parties. It will be held by Computershare as part of your shareholder 182 / FUTURE PLC phone facility for those with hearing difficulties is available on 0870 702 0005) or by post at Computershare Investor Services PLC at the address below. Registered office Quay House The Ambury Bath BA1 1UA Auditor Deloitte LLP Abbots House Abbey Street Reading RG1 3BD Principal clearing bank HSBC Bank plc 8 Canada Square London E14 5HQ Joint stockbroker & advisors Numis Securities Ltd 10 Paternoster Square London EC4M 7LT Solicitor J.P. Morgan Cazenove Simmons & Simmons LLP Tower Bridge House Aurora Floors 5 and 6 Finzels Reach Counterslip Bristol BS1 6BX St. Katharines Way London E1W 1DD Registrar Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE Contacts Future plc and Future Publishing Ltd Registered office Quay House The Ambury Bath BA1 1UA London office 121-141 Westbourne Terrace Paddington London W2 6JR Tel +44 (0)1225 442244 Tel +44 (0)20 7042 4000 Newport office Imperial House Imperial Way Coedkernew Newport Wales NP10 8UH Future US, Inc. 555 11th Street Northwest Suite 600 Washington DC 20004 USA Tel +1 212 378 0448 Future Publishing (Overseas) Ltd Level 10 89 York St North Sydney NSW 2000 Australia Tel +61 2 9955 2677 www.futureplc.com ANNUAL REPORT AND ACCOUNTS FY 2021 / 183 

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