REG - Future PLC - Full Year Results
30/11/2022 07:00
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RNS Number : 0019I Future PLC 30 November 2022
30 November 2022
FUTURE plc
2022 FULL YEAR RESULTS
Diversification strategy delivers record profitability
Continued profit growth and market share gains
Future plc (LSE: FUTR, "Future", "the Group"), the global platform for
specialist media, today publishes its results for the year ended 30 September
2022.
Highlights
Financial results for the year ended 30 September 2022
Adjusted results(1) FY 2022 FY 2021 Var
Adjusted operating profit (£m) 271.7 195.8 +39%
Adjusted operating profit margin (%) 33% 32% +1ppt
Adjusted diluted EPS (p) 163.5 131.9 +24%
Adjusted Free Cash Flow(3) 267.2 199.3 +34%
Statutory results FY 2022 FY 2021 Var
Revenue (£m) 825.4 606.8 +36%
Operating profit (£m) 188.6 115.3 +64%
Profit before tax (£m) 170.0 107.8 +58%
Cash generated from operations (£m) 268.5 197.2 +36%
Diluted EPS (p) 100.9 58.1 +74%
Financial highlights
· Full year revenue up 36% to £825.4m (FY 2021: £606.8m),
reflecting a combination of continued organic(2) growth (2% in the year of
which 5% from Media) and contribution from acquisitions. Strong growth in the
US, with organic growth rates of +7%.
· Excellent full year results with adjusted operating profit(1)
growth of 39% to £271.7m (FY 2021: £195.8m), of which 11% was organic
(including 2% FX), 10% from the platform effect and 18% from acquisitions,
significantly above our sustainable profit growth model target of 25% through
the cycle. Statutory operating profit up 64% to £188.6m (FY 2021: £115.3m).
· Future's platform effect continues to deliver, with an
improvement in adjusted operating profit(1) margin to 33%, an expansion of
+1ppt over the prior year margin of 32% absorbing material inflationary
pressures in FY 2022 (equivalent of (2)ppt) and initial dilutive impact of
acquisitions (a further (2)ppt). Statutory operating margin at 23%, up +4ppt
(FY 2021: 19%).
· The Group remains highly cash generative with adjusted free cash
flow(3) of £267.2m (FY 2021: £199.3m), representing 98% of adjusted
operating profit(1) (FY 2021: 102%). Cash generated from operations was
£268.5m (FY 2021: £197.2m).
· Leverage(4) of 1.48x (FY 2021: 0.8x and increasing to 1.9x
following the Dennis acquisition on 1 October 2021). This reflects continued
rapid de-levering, resulting in net debt at the end of the year of £423.6m
(FY 2021: £176.3m). In May 2022, we extended our RCF facilities by £100m and
in November 2022, we secured a new facility of £400m with a syndicate of
banks and supported by a partial guarantee from UK Export Finance, with
attractive terms. Total facilities at the end of FY22 were £660m and £900m
as of 30 November 2022.
Operational and strategic highlights
· Growing relevant and valuable audiences
o Our leadership position within verticals (#1 consumer technology in US and
UK, #6 beauty and fashion in the US, #4 in the UK; #1 in Homes in the UK)(10)
delivers premium monetisation and growth
o Group online users returned to organic growth in H2 up +2% and +8% on a
reported basis
o Further progress in increasing our online reach(11) in the US by +3ppt to
35%
· Diversifying and growing monetisation
o 36% revenue growth with 17% total audience growth, leveraging our
leadership positions
o Continued progress on diversifying revenue with each of the three main
monetisation routes (Advertising, Direct consumer monetisation and Affiliates)
now representing approximately a third of revenue
o 55% of Affiliates revenue is from services (up from 49% in FY 2021)
o 48% of Magazine revenue is now from subscriptions providing favourable mix
of recurring revenues (up from 26% in FY 2021)
· Creating value from acquisitions
o 5 acquisitions completed since October 2021, adding capability in data,
video and subscribers, while helping to enable leadership positions in Women's
Lifestyle and Wealth content. We have allocated over £400m of capital during
the year while remaining disciplined in approach to leverage.
· 'Our Future, Our Responsibility' - our ESG strategy - was
launched in December 2021 and is now well-progressed in the Group as we make
continued headway against our ambitions.
Outlook
· Future enters FY 2023 in a strong competitive position and we expect
to further strengthen our market positions within our verticals. The agility
of the business model means we expect to deliver modest profit growth in FY
2023.
· The strong balance sheet and cash generation serve the business well
for ongoing investment and growth and we are well-placed to add additional
content and capabilities to further enhance the Future platform.
· Longer-term, we are confident that our diversified strategy will
continue to deliver significant value for shareholders, with our investment in
new content verticals and capabilities underpinning our growth ambitions.
Zillah Byng-Thorne, Future's Chief Executive, said:
"I am pleased to report another year of record results, adding to our
long-term track record, as we delivered sustained growth across all key
metrics, including revenue, profitability and free cash flow. Our performance
is testament to our diversified revenue streams, the strength of our content
and the brilliant teams we have working across our business.
"2022 has been a busy year for us, as we allocated over £400m to complete
five quality earnings-accretive acquisitions which added new capabilities to
the Group and helped us to achieve leadership positions in the 'Women's
Lifestyle' and 'Wealth' content verticals, all whilst continuing to rapidly
de-lever.
"Today our content reaches over 500 million people in the UK and US, and one
in three people online in the UK and US. We have a clear opportunity to build
on the track record we have established in the US to date by replicating our
successful model in newer verticals whilst adding further diversification to
the Group.
"Looking ahead, whilst we are monitoring the macroeconomic climate, we remain
confident in our strategy and the growth opportunities that we are uniquely
placed to capitalise on, which we expect to deliver modest profit growth and
market share gains."
Presentation
A live webcast of the analyst presentation will be available at 09.00 am (UK
time) today at
https://stream.brrmedia.co.uk/broadcast/636e5dd0ce306e2e48f6b99a
A copy of the presentation will be available on our website at:
https://www.futureplc.com/investor-results/
A recording of the webcast will also be made available.
The definitions below apply throughout the document.
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. A
reconciliation between adjusted and statutory profit is shown in note 8.
2) Organic growth defined as the like for like portfolio excluding
acquisitions and disposals made during FY 2021 and FY 2022 and including the
impact of closures and new launches at constant FX rates. Constant FX rates is
defined as the average rate for FY 2022.
3) Adjusted free cash flow is defined as adjusted operating cash flow less
capital expenditure. Capital expenditure is defined as cash flows relating to
the purchase of property, plant and equipment and purchase of computer
software and website development. Adjusted operating cash flow represents cash
generated from operations adjusted to exclude cash flows relating to
exceptional items and payment of 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. Adjusted free cash flow conversion reflects adjusted free cash flow as
a percentage of adjusted operating profit.
4) Leverage is defined as Net debt as defined in below (excluding capitalised
bank arrangement fees and lease liabilities, and including any non-cash
ancillaries), as a proportion of Adjusted EBITDA 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 items referenced
above where applicable.
5) Audience reach includes: online users (excluding forums), print and digital
magazine and bookazines circulation, email newsletter subscribers, social
media followers and event attendees.
6) Online users defined as monthly online users from Google Analytics and,
unless otherwise stated, is the monthly average over the financial period.
Forums are excluded as they are non-commercial websites for which Future does
not write content, and are not actively managed or monetised.
7) Proforma numbers compare at constant exchange rates the performance of
acquisitions on a like for like (as defined above in organic growth
definition) basis.
8) Reference to 'core or underlying' reflects the trading results of the Group
without the impact of amortisation of acquired intangible assets, exceptional
items, share-based payment expenses (relating to equity-settled share awards
with vesting periods longer than 12 months), together with associated social
security costs and any tax related effects that would otherwise distort the
users understanding of the Group's performance. The Directors believe that
adjusted results provide additional useful information on the core operational
performance of the Group, and review the results of the Group on an adjusted
basis internally.
9) Net debt is defined as the aggregate of the Group's cash and cash
equivalents and its external bank borrowings net of capitalised bank
arrangement fees. It does not include lease liabilities recognised following
the adoption of IFRS16 leases.
10) US reach score source: comScore Media Metrix Demographic Profile, October
2022 - Desktop Age 2+ and Total Mobile 18+)
11) US reach score source: comScore Media Metrix Demographic Profile,
September 2022 - Desktop Age 2+ and Total Mobile 18+)
Enquiries:
Future plc
Zillah Byng-Thorne, Chief Executive Officer +44 (0)122 544 2244
Penny Ladkin-Brand, Chief Financial Officer
Marion Le Bot, Head of Investor Relations +44 (0)777 564 1509
Media
Headland +44 (0)203 805 4822
Stephen Malthouse, Rob Walker, Charlie Twigg
future@headlandconsultancy.com
About Future
Future is a global platform business for specialist media with diversified
revenue streams. Its content reaches 1 in 3 adults online in the UK and US.
The Media division is high-growth with complementary revenue streams including
eCommerce for products and services, events, and digital advertising
(including advertising within newsletters and video). It operates in a number
of sectors including technology, games & entertainment, music, home &
gardens, sports, TV & film, real life, knowledge, wealth & savings,
women's lifestyle and B2B. Its brands include TechRadar, PC Gamer, Tom's
Guide, Android Central, Truly, The Week, Kiplinger, GoCompare, Digital Camera
World, Homebuilding & Renovating Show, GamesRadar+, The Photography Show,
Top Ten Reviews, Marie Claire, Live Science, Guitar World, MusicRadar,
Space.com, Who What Wear, What to Watch, Gardening Etc, Adventure and Tom's
Hardware.
The Magazine division focuses on publishing specialist content, with a
combined global circulation of over 4.5 million delivered through more than
106 magazines, and 743 bookazines published a year. The portfolio spans
technology, knowledge, games & entertainment, sports, music, photography
& design, homes & garden, country lifestyle, TV & film and B2B.
Its titles include Country Life, Wallpaper*, Woman & Home, The Week,
Classic Rock, Decanter, Guitar Player, FourFourTwo, Homebuilding &
Renovating, Digital Camera, Guitarist, How It Works, Total Film, What Hi-Fi?
and Music Week.
Strategic and operational update
Future is a global platform for intent-led specialist media underpinned by
technology, enabled by data; with diversified revenue streams. The business
model has a strong track record of driving consistent, high-quality revenue
growth which translates into strong operating margin and cash. Future's
strategy is to grow relevant and valuable audiences to maintain or gain
leadership positions in each of the markets it operates in whilst diversifying
and growing the monetisation of these audiences.
By obtaining podium positions, we become a must-have partner, enabling
monetisation optimisation and resilience through economic cycles. This
resilience is reinforced by the diversified nature of the Group, both from
content verticals, geographical locations and monetisation capabilities.
We are focused on profitable organic growth to drive long-term value through
operating leverage and excellent cash conversion. The strategy is accelerated
with acquisitions. Acquisitions are integrated in full, deploying our
operating model including our global approach to our content, our technology
platform and our audience reach, driving further the Platform Effect.
We have a relentless focus on the sustainable execution of our strategy. This
focus translates into a repeatable, efficient value creation model as
highlighted by our exceptional track record since 2014 of doubling the Group's
profits approximately every two years.
Grow relevant and valuable audiences
Our first strategic objective is to meet the needs of our audience. We are a
trusted expert, helping our audience do the things they love, whether that be
how to clean their bike or which product to buy. Our goal is to be the market
leader in the markets in which we operate, and this should enable us to reach
1 in 2 in the US as we extend our reach in these vertical markets, namely:
Technology, Lifestyle (Fashion & Beauty and Homes), Wealth and B2B while
adding new verticals.
In the period, we have made further progress towards our goal with our US
reach growing by 3ppt to 35% (source: Comscore). We have maintained our
leadership position in Technology and are now number six in Fashion and Beauty
with key organic sites, such as MarieClaire and Woman & Home, growing in
excess of 100% on Comscore. We are number 11 in Homes with our biggest site,
Homes & Gardens growing by over 60% on Comscore. In the UK, our reach is
38%, and we have maintained our leadership position in Tech, whilst
establishing #4 in Fashion & Beauty and #1 in Homes.
Overall audience increased to 506m (FY 2021: 432m) driven by growth in online
users, social followers and subscribers. Online users grew by 3% driven by
acquisitions and partially offset by an organic decline of (5)% for the year
as we lapped lockdown-driven traffic spikes in the prior year, and some
declines in the consumer technology market resulting in lower consumer time
online .
Driving audience is a blend of art and science. The art is delivered by our
expert editorial teams who thrive in responding to audience demands for
relevant, useful and engaging content (both online and in print). The science
is brought by our ability to use data and analytics, recently bolstered by the
acquisition of Waive in March 2022, combined with the expertise of our
editorial teams. The combination allows us to reach high-intent audiences at
scale, providing a brand-safe qualified audience for advertisers and
responding to eCommerce demand.
Our performance highlights the benefit and strength of the content vertical
diversification of the Group, and our technology, enabling us to absorb
unusual market trends and continue to grow audience share and revenues.
Diversify and grow monetisation
The second strategic objective of the Group is to diversify and grow
monetisation. The diversification of revenue streams enables the Group to
continue to perform irrespective of wider economic conditions. Growth in
monetisation is driven by a combination of a content-led approach to acquire
audiences, with a focus on achieving market leadership positions allowing
premium pricing, as well as increasing yield by adding new routes of
monetisation. For example, in FY 2021, we launched Eagle - our voucher
technology. This year, we deployed Eagle on Tom's Guide and it is driving
fantastic results with over 5k transactions in the US in the month of October
alone.
Our oldest division, GETs (Games, Entertainment & Technology) has seen a
double-digit increase in monetisation (digital advertising and affiliate
revenues over online users in FY2022), with over 40% of digital monetisation
coming from affiliates. This highlights the opportunities we have for our
newer verticals to grow yield in the same way. For example, in LKN (Lifestyle,
Knowledge & News) only 20% of digital monetisation comes from affiliates.
Overall, we are currently monetising GETs online users over 1.5x more than LKN
online users presenting an opportunity to increase monetisation as well as
grow the audience in the LKN vertical.
Our 2 strategic objectives are translated into 3 strategic pillars:
sustainable organic growth, the platform effect and creating value from
acquisitions.
Sustainable organic growth
The continued focus on a valuable audience coupled with diversified revenue
streams enables the group to outperform, even in challenging economic
conditions.
Overall organic revenue growth of 2% was driven by Media organic growth of 5%,
with Magazines down (2)% year-on-year. The organic growth in the US revenue
outpaced significantly the UK (+7% vs (1)% respectively) as a result of a
different revenue mix but also more opportunities and more favourable economic
conditions.
H1 2022 H2 2022 FY 2022 FY 2021
Online users (reported) (2)% +8% +3% +8%
Organic revenue growth
Digital ads +10% +4% +7% +27%
Affiliates (10)% (1)% (6)% +36%
Events, digital licensing, other online +86% +40% +54% (17)%
Media revenue +5% +6% +5% +27%
Magazine revenue +3% (8)% (2)% +4%
Total organic revenue growth +4% +1% +2% +23%
UK organic revenue growth +3% (6)% (1)% +17%
US organic revenue growth +6% +9% +7% +27%
Digital advertising revenue has continued to perform strongly, growing +7%
organically in the year. This performance demonstrates market outperformance,
notably in the US with +10% organic growth. This demonstrates the Group's
ability to deliver valuable audiences to advertisers. Future Studios also
contribute to yield expansion. Video on content sites generated 4x the average
yield and grew by 31% organically year-on-year, representing 14% of digital
advertising revenue. The combination of data, scale and leadership positions
in a brand-safe environment provides resilience to our advertising revenue.
Affiliate revenue saw an improvement in the second half, as anticipated and
saw an organic decline of (1)%. In the full year, we saw an organic decline of
(6)% or £(6.6)m, broadly in line with the benefit we saw from the pandemic
related estimated income of c£5m in the prior year that we had noted in
previous results. In the current challenging consumer environment, we continue
to see consumers focusing on deals and events as evidenced by our strong
performance during Prime Day in the Summer, as well as the performance of
Eagle - our voucher technology - on Tom's Guide. In parallel, we have
continued to make progress in diversifying our end-markets with affiliate
revenue per user in our LKN (Lifestyle Knowledge & News) vertical
increasing by 1.6x including 1.8x in our Women's Lifestyle vertical. We have
seen very strong performance from newer categories such as sleep, small
appliances including vacuums and kitchen tech, while we have continued to see
ongoing softness in wider consumer technology.
Other media revenue grew by +54% organically, driven by events which recovered
as restrictions were lifted. During the period, we hosted 111k people over 65
events.
Magazines organic revenue was down (2)% year-on-year, with a decline of (8)%
in H2, as we have lapped the COVID-comparators. With the acquisition of Dennis
in October 2021, subscriptions now represent 49% of the magazines division.
This adds recurring, predictable revenues helping to mitigate the secular
decline in magazines, with proforma revenue growth (including Dennis) for
Subscription of 6% in the year.
The Platform Effect drives strong operating margin
The Platform Effect is more than operating leverage and growing the bottom
line, it is about the multiplier impact of the organic and inorganic
capabilities that deliver unique value creation, in both revenue and profit.
Our financial results evidence our successful and diversified monetisation
model as well as our ability to deploy the Future operating model to drive
scalability and operating leverage. A core part of our strategy is ensuring
that over the long term we continue to deliver profitable growth. Critical to
enabling this is the continued investment in our technology and people. These
investments are leveraged across the business driving the Platform Effect.
We believe our proprietary technology platform is a key source of competitive
advantage. The benefit of having a common platform translates into our ability
to leverage the benefit of continuous investment rapidly across our estate. We
now have a total of 52 sites on the Vanilla website platform (FY 2021: 41).
During the year, we continued to enrich our data audience platform Aperture
and its activations. In addition to its capability of producing high-value
advertising segments, Aperture has launched SmartDiscovery. This leverages our
newly acquired asset Waive to spot content trends as they emerge to drive
audience growth through first-mover advantage. In October, the most read
article - about Ryan Reynolds confirming a documentary on John Candy on
CinemaBlend - was a trend identified by using SmartDiscovery. On average,
where we deploy SmartDiscovery we see a doubling of page views. This
capability lives across our Entertainment vertical, driving efficiency of
content.
Content is at the heart of our purpose and we continuously invest in content
creation to ensure we remain the trusted, authoritative expert for our
audiences. Editorial is our biggest team with over 1,300 editorial colleagues.
Quality, expert, intent-led, content is also a source of operating leverage
with over 50% of our revenue from content being produced in the prior periods
in September.
Our centres of excellence reduce duplication and provide access to talent in
locations with a lower cost of living, delivering efficiency of spend and
agility in an ever-changing landscape, while creating teams of like-minded
experts within the organisation. We will be opening a new hub in Cardiff at
the start of 2023 to leverage the proximity to graduate talent in an
affordable city location.
Whilst continuing to invest in our business and our people, our scalable
operating model and disciplined approach to the integration of our
acquisitions has driven record profit. The cost synergies delivered through
the recent acquisitions coupled with our focus on process re-engineering has
enabled us to continue to invest organically. We have been able to increase
adjusted operating margin despite continued investment in content, people,
technology and infrastructure and cost inflation. Our business model has
allowed us to absorb salary increases to help our employees mitigate the
impact of inflation as well as cost of sales increases notably in our magazine
division.
The adjusted operating profit growth of 39%, of which 11% was organic
(including 2% FX tailwind), 10% from the platform effect and 18% from
acquisitions, is above our sustainable profit growth model of 25% through the
cycle (10% organic, 5% platform effect and 10% from acquisitions).
Creating value through acquisitions
Accelerating the execution of our strategy with value creating acquisitions is
a key part of our capital allocation. We remain highly disciplined when it
comes to acquisitions with 23 deals reviewed for each transaction that we
executed in the past 12 months, as we rigorously ensure that acquisitions have
strong strategic alignment and drive additional value creation.
GoCo Group and Mozo - Further diversifying our business model - eCommerce
services
Future's diversification strategy was demonstrated with the acquisitions of
GoCo and Mozo in February 2021, bringing eCommerce affiliate services into the
Group and establishing our Wealth & Savings vertical. A challenging
consumer backdrop means Savings content is more important than ever, helping
consumers save money and find the right product for everyday necessities.
As we enter the second year of ownership of GoCo, we are pleased with the
performance showing continued signs of success in 2022, including the
re-branding to Go.Compare. Our SEO expertise has already delivered improvement
with consistent progress on car insurance (from #4 in search in September 2021
to #1 in September 2022), home insurance (from #7 in September 2021 to #5 in
September 2022) and life insurance (from #11 in September 2021 to #7 in
September 2022) combined with using our email newsletter capability to drive
further engagement. The rich first-party data from GoCo is enhancing Aperture,
our data platform, allowing us to create super-segments for premium
advertising. Additionally, we have made further progress on diversifying away
from car insurance with 34% of revenue now from verticals other than car
insurance (up +5ppt year on year). This has resulted in Go.Compare growing
revenues at 1% in the period on a proforma basis, despite continued challenges
in the car and energy markets. Furthermore, the work to create a modular tech
stack for the comparator technology is progressing, with our van and my
account proposition going live in October 2022. We are on track to complete
the roll-out of this technology across the comparison verticals in 2023.
Finally, after the launch of Eagle in FY 2021, using the MyVoucherCodes
capability, we have deployed it further in 2022, notably on Tom's Guide and
have seen great traction with ~5k transactions in the US in the month of
October.
The Mozo business, an Australian price comparison website focused on personal
finance products, has been integrated into the existing Future operations in
Australia, providing the opportunity to invest in a new strengthened local
leadership team as we gain scale. Mozo is also collaborating with the GoCo
teams and launched a broadband comparison proposition in May, amongst a number
of initiatives. Mozo revenue grew by 26% year-on-year on a proforma basis
demonstrating the Group's ability to drive value from acquisitions.
Marie Claire US - enhancing our Women's Lifestyle vertical in North America
In May 2021, the Group acquired a joint venture between MCA and Hearst
operating the website MarieClaire.com and its assets. Simultaneously, the
Group entered into a five-year licence agreement with Marie Claire Album
S.A.S. to operate the title in the US and Canada. Marie Claire US is now
integrated into our fast, brand safe platform having migrated to Vanilla at
the end of 2021 and is performing well with significant yield increase on both
direct and indirect advertising revenue.
Dennis - strengthening our Wealth & Savings, Knowledge and B2B verticals
and our North American footprint
In October 2021, we completed the acquisition of Dennis, a leading consumer
media subscriptions business, which includes trusted Wealth, Knowledge and B2B
technology specialist titles such as, Kiplinger, MoneyWeek, The Week & IT
Pro.
The acquisition enables the Group to scale its Wealth & Savings vertical
through the MoneyWeek and Kiplinger brands which we have identified as a
significant strategic vertical opportunity.
In addition, the acquisition has helped to further diversify the Group's
revenue by materially increasing the Group's recurring revenues through
subscriptions, and further extending the Group's reach in the North American
market.
The integration of Dennis completed in the first half and the combined teams
are already working to deliver the strategic plan of the acquisition. Our
proprietary ad tech Hybrid has been deployed across the Dennis brands,
translating into double digit improvement in yields and the new Wealth bureau
is enabling wealth content to sit on other websites such as Woman&Home
with its Smart With Money channel. In the period, we migrated Kiplinger to
Vanilla with further migrations of the remaining Dennis brands scheduled for
FY 2023. Kiplinger newsletter has migrated to the SmartBrief technology,
resulting in a 2.5x increase in ad click-through rates. The performance during
the year has been strong with double-digit revenue growth, demonstrating the
strength and resilience of the subscription business.
Waive - strengthening data insight capabilities
In March 2022, we completed the acquisition of Waive, an artificial
intelligence enabled platform which provides intelligence on emerging content
trends. This acquisition will extend Future's Aperture data platform and
enhanced data science capabilities with the launch of SmartDiscovery, as
mentioned above.
WhatCulture.com - enhancing our Entertainment vertical and video monetisation
capabilities
On 23 March 2022, we completed the acquisition of WhatCulture.com, a
digital-only publisher focused on gaming and entertainment.
This acquisition further strengthens Future's position in video, notably with
its expertise in the monetisation on YouTube. WhatCulture will benefit from
the Future proprietary technology stack and operating model to drive the
platform effect whilst bolstering Future's gaming and entertainment vertical.
The integration is well progressed with payroll, IT and most financial systems
already migrated. The base in Newcastle provides the opportunity for a
Northern hub for video creation across the group going forward.
Who What Wear - bolstering our Women's lifestyle vertical and US reach
On 15 June 2022, we completed the acquisition of Who What Wear, a leading
digital-only Women's lifestyle publisher. The acquisition further strengthens
Future's position in the Women's Lifestyle vertical and gives the Group
greater scale and reach in North America to further monetise its audience.
Combined with the Group's existing business, Future is now the 6th largest
Beauty and Fashion publisher in the US (Source: Comscore MMX Multi Platform
Total Audience September 2022 US). With Future's content already reaching 1 in
3 adults online in the US, the transaction will accelerate Future's scale and
revenue opportunities in the US. The Group's existing Women's Lifestyle brands
will benefit from Who What Wear's leading direct advertising sales
capabilities, whilst Who What Wear will benefit from Future's proprietary
technology stack and operating model to drive the platform effect. Hybrid and
Hawk have been deployed on the site and the migration to Vanilla is scheduled
in the Spring of 2023, once new functionalities have been deployed.
On 18 October 2022, we completed the acquisition of Shortlist.com, a
technology website. We will be able to deploy our tech stack to the website to
drive monetisation, whilst growing our online users and accelerating this
growth through our capabilities.
Execution underpinned by values
Future operates as a purpose-driven organisation creating value for all
stakeholders. Our strategy is to operate as a responsible business and
everything we do is underpinned by our purpose and values which fosters an
aligned culture across the organisation. We are extremely fortunate that our
brands give us the platform and opportunities to influence and inspire people
across the globe to encourage positive change.
Being a responsible employer is an important part of our strategy and in
January 2022 we put in place two tiers of cost of living increases of +2% and
+4%, with the higher amount for colleagues paid less. In all our markets, we
are proud of the fact that we have a Future base level wage that is higher
than any central or local government standard.
This year, we also paid our all-staff annual profit pool bonus scheme in two
instalments (June and December) to help mitigate the immediate inflationary
pressures we have seen. All colleagues, except the Executive Leadership Team
received an initial payment equivalent to 40% of their full-year bonus in
June. The remainder of the annual profit pool bonus will be paid in December,
which means that all colleagues in Future will have received a minimum of
£1,905 as a bonus during the year.
Finally, we have brought forward our annual salary review process from January
2023 to November 2022 with our colleagues receiving at least a +4% increase to
their salary. In addition, for employees with lower salaries in the UK (below
£50k), they will receive a one-off cost of living bonus representing 2% of
their salary in their November pay.
We remain proud of and thankful to our colleagues for their hard work and
ongoing support in these continued challenging times.
In December 2021, we launched our Responsibility strategy - Our Future, Our
Responsibility. Our strategy is articulated around 4 pillars which fall under
2 headers: the Foundations pillars which incorporates Taking Responsibility
and The Culture behind the Company, and the Differentiation pillars which
consist of Shaping the Future and Expanding Horizons. Each pillar is sponsored
by a member of the Executive Team.
During the year, the pillar leads reported progress and achievement to the
Responsibility Board Committee and the Responsibility Steering Committee.
In the Culture behind the Company, we have also been revising our recruitment
process to ensure inclusivity and transparency. Additionally, we foster a
culture where people can do their best work, be themselves and shine. In order
to ensure the effectiveness of our efforts, we have conducted a company-wide
engagement survey, the results of which we are translating into tangible
actions across the Group, notably to ensure clarity and transparency of career
progression.
In Expanding Horizons, we will leverage our experts to share skills and
knowledge on topics of interest to our colleagues and audience.
Shaping the Future will see us taking a leadership position in championing a
safer internet and we've partnered with PPA (UK), supporting them in lobbying
the UK Government on its proposed Online Safety Bill. Additionally, four of
our Future websites are certified as Green by Newsguard and we've recently
published our Responsible Content Framework as a guide for everyone producing
content at Future to ensure we honour our commitments.
In Taking Responsibility, we've already taken action with our print products,
invested in three new intelligent data centre technologies that are 100%
powered by renewable energy.
We will continue to make progress on all pillars by improving our reporting
but also translating the Responsibility strategy into many small intentional
steps that will add to an ambitious programme for the Group over the coming
years. To reflect the increased importance of this, we have also added a
responsibility target to the executive bonus scheme for 2023.
Executive changes
Following the announcement on 20 September 2022 of Zillah Byng-Thorne's
intention to step down as CEO by the end of 2023, the Board appointed a global
executive search firm to undertake the search for Zillah's successor. Good
progress is being made and the Board will provide a further update on this in
due course. In addition, Penny Ladkin-Brand's role has been extended to Group
CFO and Strategy Officer. Penny will continue to lead all finance activities
within the organisation, and will now also focus on inorganic growth
opportunities and execution of the strategy to deliver medium and long-term
growth. In conjunction with this, Penny's notice period has been extended from
six to twelve months.
Outlook
· Future enters FY 2023 in a strong competitive position and we expect
to further strengthen our market positions within our verticals. The agility
of the business model means we expect to deliver modest profit growth in FY
2023.
· The strong balance sheet and cash generation serve the business well
for ongoing investment and growth and we are well-placed to add additional
content and capabilities to further enhance the Future platform.
· Longer-term, we are confident that our diversified strategy will
continue to deliver significant value for shareholders, with our investment in
new content verticals and capabilities underpinning our growth ambitions.
Financial summary
The financial summary is based primarily on a comparison of results for the
year ended 30 September 2022 with those for the year ended 30 September 2021.
Unless otherwise stated, change percentages relate to a comparison of these
two periods. Organic growth defined as the like for like portfolio excluding
acquisitions and disposals made during FY 2021 and FY 2022 at constant FX
rates and including the impact of closures and new launches. Constant FX rates
is defined as the average rate for FY 2022.
FY 2022 FY 2021
£m £m
Revenue 825.4 606.8
Adjusted operating profit 271.7 195.8
Adjusted profit before tax 253.1 188.3
Operating profit 188.6 115.3
Profit before tax 170.0 107.8
Basic earnings per share (p) 101.4 59.3
Diluted earnings per share (p) 100.9 58.1
Adjusted basic earnings per share (p) 164.4 134.6
Adjusted diluted earnings per share (p) 163.5 131.9
( )
The Directors believe that adjusted results provide additional useful
information on the core operational performance of the Group, and review the
results of the Group on an adjusted basis internally. See the section below
for a reconciliation between adjusted and statutory results.
A reconciliation of adjusted operating profit to profit before tax is shown
below:
FY 2022 FY 2021
£m £m
Adjusted operating profit 271.7 195.8
Adjusted net finance costs (18.6) (7.5)
Adjusted profit before tax 253.1 188.3
Adjusting items:
Share-based payments (including social (6.9) (14.8)
security costs)
Exceptional items (note 4) (17.9) (27.4)
Amortisation of acquired intangibles (58.3) (38.3)
Profit before tax 170.0 107.8
Revenue
Revenue Segment FY 2022 Segment FY 2021
£m £m
UK US Total UK US Total YoY Var Organic
£m £m £m £m £m £m YoY Var
Digital ads 67.8 163.4 231.2 61.5 125.1 186.6 +24% +7%
Affiliates 194.4 78.3 272.7 142.4 73.8 216.2 +26% (6)%
Events, digital licensing and other media 22.0 9.3 31.3 16.5 3.5 20.0 +57% +54%
Total Media 284.2 251.0 535.2 220.4 202.4 422.8 +27% +5%
Newstrade 85.2 0.8 86.0 84.4 0.9 85.3 +1% (2)%
Subscriptions 75.8 65.0 140.8 45.1 2.0 47.1 +199% (11)%
Print advertising, licensing and other print 54.3 9.1 63.4 46.7 4.9 51.6 +23% +5%
Total Magazines 215.3 74.9 290.2 176.2 7.8 184.0 +58% (2)%
Total revenue 499.5 325.9 825.4 396.6 210.2 606.8 +36% +2%
Group revenue increased 36% or £218.6m to £825.4m (FY 2021: £606.8m),
achieved organically (increase of 2% at constant currency and 5% at actual
currency) and through acquisition, with FY 2021 and FY 2022 acquisitions net
of disposals contributing £308.3m to revenue in the period.
UK revenue grew by 26% or £102.9m to £499.5m (FY 2021: £396.6m). Total UK
organic revenues declined 1% with 1% organic revenue growth in Media being
offset by a 3% decline in Magazines. UK Media organic growth of 1% was driven
by digital advertising (+1%) as well as the recovery in events (+47%) which
were previously impacted by the pandemic, partially offset by the decline in
Affiliates revenue as expected.
Performance was strong in the US where growth of 55% or £115.7m to £325.9m
(FY 2021: £210.2m) and was supported by organic growth of 7% reflecting
strong growth in digital advertising and a stronger affiliates performance
despite the impact of the comparators.
Media revenue increased by £112.4m or 27% and by 5% organically. Organic
digital advertising revenue grew 7% despite the impact of lower online
audiences and organic affiliate revenue was down 6%, with the decline broadly
equal to the COVID one-off performance in the prior year. Events recovered and
grew by 62% to over £15m.
Magazine revenue increased by 58% to £290.2m (FY 2021: £184.0m), including
the full-year impact of the Dennis acquisition which continued to perform well
with subscription revenues growing on a proforma basis by 6%. In the organic
portfolio, subscriptions declined by 11% as we returned to a normalised level
of subscribers post pandemic, whilst newstrade held up well with a marginal
decline at 2% organic reduction over the prior year and advertising growing on
an organic basis by 5%. Magazine organic revenue performance marginally
decreased by 2% as we are now through the COVID comparators.
Included below is a reconciliation between statutory revenue and organic
revenue:
FY 2022 FY 2021
£m £m
Total revenue 825.4 606.8
Revenue from FY 2022 and FY 2021 acquisitions (308.4) (115.2)
Organic revenue 517.0 491.6
Impact of FX at constant rates 0.3 13.3
Organic revenue at constant currency 517.3 504.9
Operating profit
Cost of sales have increased year-on-year driven by inflation, mostly in
magazines with increases to paper and printing costs due to high energy prices
as well as the inclusion of acquisitions and their respective costs. Other
costs have increased due to inflationary pressures on salary and wages, and
our ongoing investment in editorial, technology, infrastructure and people.
Despite the impact of investments and inflation combined with the initial
dilutive impact of acquisitions, the Group has delivered an improved adjusted
operating margin of 33% (FY 2021: 32%). This is a testament of the strength of
the platform and the ability to create operating leverage. As a result,
adjusted operating profit increased by £75.9m to £271.7m (FY 2021: £195.8m)
driven by both organic profit growth and contributions from acquisitions.
Statutory operating profit increased by £73.3m to £188.6m (FY 2021:
£115.3m) and statutory operating margin improved to 23% (FY 2021: 19%) driven
by the performance in adjusted operating profit combined with lower relative
adjusting items.
Earnings per share
FY 2022 FY 2021
Basic earnings per share (p) 101.4 59.3
Adjusted basic earnings per share (p) 164.4 134.6
Diluted earnings per share (p) 100.9 58.1
Adjusted diluted basic earnings per share (p) 163.5 131.9
Basic earnings per share are calculated using the weighted average number of
ordinary shares in issue during the period of 120.5m (FY 2021: 111.5m), the
increase reflecting the weighted impact of the issue of 22.6m shares to fund
the acquisition of GoCo in the prior year.
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 of intangible assets arising
on acquisitions and any related tax effects. Adjusted profit after tax was
£198.1m (FY 2021: £150.0m).
Exceptional items
Exceptional items include acquisition and integration related costs of £4.7m
including £2.9m and £1.2m relating to the Dennis and Who What Wear
acquisitions respectively, in addition to £1.7m and £0.6m of restructuring
costs attributable to the review of titles in our portfolio and building of a
finance centre of excellence in Bath (2021: £13.1m in respect of the GoCo
acquisition and £4.5m in respect of the Dennis acquisition). A total of
£10.9m has been recognised in respect of onerous properties, partly
reflecting extended time frames in subletting existing onerous property leases
as well as £5.7m relating to properties acquired as part of the Dennis
acquisition (2021: £1.0m net expense on the exit of onerous properties).
During 2021, the impairment charge of £8.8m related 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.
Other adjusting items
Acquired amortisation increased by £20.0m to £58.3m (FY 2021: £38.3m)
reflecting amortisation arising from the in-year acquisitions of Dennis, What
Culture and Who What Wear and the acquisition of GoCo in FY2021.
Share-based payment expenses (relating to equity-settled share awards with
vesting periods longer than 12 months), together with associated social
security costs decreased by £7.9m to £6.9m (FY 2021: £14.8m). The nature of
the scheme means that a charge is booked irrespective of the likelihood of
achieving the vesting targets, however, this was mitigated by a reduction for
expected associated employers' national insurance.
Net finance costs
Net finance costs increased to £18.6m (FY 2021: £7.5m) which includes
external interest payable of £13.6m reflecting the drawdown of the RCF to
fund the Dennis and Clique Brands Inc. (Who What Wear) acquisitions, higher
interest rates and £2.8m in respect of the amortisation of arrangement fees
relating to the Group's bank facilities.
Leverage at 30 September 2022 was 1.48 times down from 1.9 times following the
Dennis acquisition on 1 October (excluding other cash movements) (FY 2021: 0.8
times).
In November 2022, we secured a new facility of £400m with a syndicate of
banks and supported by a partial guarantee from UK Export Finance, with
attractive terms. Therefore, total facilities at the end of November 2022 were
£900m.
Including commitment fees, external interest payable in FY 2023 is expected to
increase to £27m, reflecting a blended interest rate of 7.2% on average gross
debt of £378.2m. The total forecast net finance cost for FY23 of £32.5m
also includes £3.0m in respect of amortisation of arrangement fees and £2.5m
of IFRS16 related interest costs.
Taxation
The tax charge for the year amounted to £47.8m (FY 2021: £41.7m), comprising
a current tax charge of £38.3m (FY 2021: £30.2m) and a deferred tax charge
of £9.5m (FY 2021: £11.5m credit). The current tax charge arises in the UK
where the standard rate of corporation tax is 19% and in the US where the
Group pays a blended Federal and State tax rate of 28%.
The Group's adjusted effective tax rate is 21.75% (FY 2021: 20.30%).
The Group's statutory effective tax rate is 28.12% (FY 2021: 28.69%) with the
difference between the statutory rate and adjusted effective rates
attributable to movements on the Group's share-based payments and other
non-deductible costs.
The Group's deferred tax liability increased by £63.7m to £130.2m (FY 2021:
£66.5m) mainly as a result of the deferred tax liabilities recognised in
respect of the acquisition of Dennis and Who What Wear.
For FY2023, the Group expects adjusted tax rate to be at 24%.
Dividend
The Board is recommending a final dividend of 3.4p per share for the year
ended 30 September 2022, payable on 14 February 2023 to all shareholders on
the register at close of business on 20 January 2023.
Balance sheet
Property, plant and equipment increased by £5.6m to £53.0m in the period (FY
2021: £47.4m) reflecting the acquisition of Dennis (£13.2m) and acquisition
of Who What Wear (£5.0m) offset by depreciation (£9.1m) and impairment of
right of use assets (£6.6m), primarily attributable to property leases
inherited via the acquisition of Dennis (included within exceptionals).
Intangible assets increased by £561.1m to £1,715.8m (FY 2021: £1,154.7m)
mainly reflecting the in-year acquisitions of Dennis, WhatCulture, Waive and
Who What Wear (£513.8m) and capitalisation of website development costs
(£9.0m) offset by amortisation (£71.3m) and the impact of FX (£109.6m).
Trade and other receivables increased by £36.3m to £134.3m (FY 2021:
£98.0m) primarily driven by the acquisition of Dennis (£20.9m on
acquisition) and the acquisition of Who What Wear (£9.9m on acquisition).
Trade and other payables inclusive of deferred income increased by £58.9m to
£199.7m (FY 2021: £140.8m) primarily driven by the acquisition of Dennis
(£60.7m on acquisition). Provisions increased by £15.3m, primarily due to
the £10.0m provision for legal costs being recognised on the Dennis opening
balance sheet relating to historic litigation claims.
Cash flow and net debt
Net debt at 30 September 2022 was £423.6m (FY 2021: £176.3m) reflecting the
Dennis, Waive, WhatCulture and Who What Wear acquisitions, offset by strong
cash generation.
During the year, there was a cash inflow from operations of £268.5m (FY 2021:
£197.2m) reflecting the Group's strong trading performance.
Adjusted operating cash inflow was £278.8m (FY 2021: £210.4m). A
reconciliation of cash generated from operations to adjusted free cash flow is
included below:
FY 2022 FY 2021
£m £m
Cash generated from operations 268.5 197.2
Cash flows related to exceptional items 13.7 22.7
Settlement of employer's NI on share based payments¹ 2.0 (3.4)
Lease payments following adoption of IFRS 16 Leases (5.4) (6.1)
Adjusted operating cash inflow 278.8 210.4
Cash flows related to capital expenditure (11.6) (11.1)
Adjusted free cash flow 267.2 199.3
¹ Relating to equity-settled share awards with vesting periods longer than 12
months.
Other significant movements in cash flows include £11.6m (FY 2021: £11.1m)
of capital expenditure, net repayment of bank loans and overdraft (net of
arrangement fees) of £372.3m, with £298.6m relating to debt settled on
completion of the Dennis acquisition and the balance reflecting the Group's
strong cash generation (FY 2021: net drawdown of £334.8m) and lease payments
of £5.4m (FY 2021: £6.1m). The Group paid a dividend in the period of £3.4m
(FY 2021: £1.6m). Foreign exchange and other movements accounted for the
balance of cash flows.
Adjusted free cash flow increased to £267.2m (FY 2021: £199.3m),
representing 98% of adjusted operating profit (FY 2021: 102%), reflecting the
ongoing efficient cash management by the Group.
Going concern
The Group has produced forecasts which have been modelled for different
plausible downside scenarios, and include the impact of the increase in the
Group's facilities of £240m, following the completion of a £400m UK Export
Finance facility in November 2022 and the subsequent immediate repayment of
the term loan. These scenarios confirm that even in the most severe but
plausible downside scenarios, the Group is able to generate profits and
positive cash flows.
At the period end the Group had net current liabilities of £115.3m (FY 2021:
net current assets of £234.9m or net current liabilities of £65.1m on an
underlying basis if the cash related to the Dennis acquisition is excluded).
This is primarily driven by the current portion of the term loan (£79.5m),
deferred income of £55.8m (which is materially higher following the
acquisition of Dennis) and the nature of the Group's magazine business where
the profile of cash receipts from wholesalers is often ahead of payment of
certain magazine related costs. The Group has consistently delivered adjusted
free cash flow conversion of around 100% and is forecast to generate
sufficient cash flows to meet its liabilities as they fall due.
After due consideration, the Directors have concluded that there is a
reasonable expectation that the Group has adequate resources to continue in
operational existence for at least 12 months from the date of this report. For
this reason, the Directors continue to adopt the going concern basis in
preparing the consolidated financial statements for the FY 2022 results.
Consolidated income statement
for the year ended 30 September 2022
2022 2021
Note Non -GAAP Statutory results Non -GAAP Statutory results
Adjusted results Adjusting items £m Adjusted results Adjusting items £m
£m £m £m £m
Revenue 1,2 825.4 - 825.4 606.8 - 606.8
Net operating expenses 3 (553.7) (83.1) (636.8) (411.0) (80.5) (491.5)
Operating profit 271.7 (83.1) 188.6 195.8 (80.5) 115.3
Finance income 5 0.1 - 0.1 0.3 - 0.3
Finance costs 5 (18.7) - (18.7) (7.8) - (7.8)
Net finance costs (18.6) - (18.6) (7.5) - (7.5)
Profit before tax 1 253.1 (83.1) 170.0 188.3 (80.5) 107.8
Tax (charge)/credit 6 (55.0) 7.2 (47.8) (38.3) (3.4) (41.7)
Profit for the year attributable to owners of the parent 198.1 (75.9) 122.2 150.0 (83.9) 66.1
Earnings Ordinary share
Note 2022 2021
pence pence
Basic earnings per share 8 101.4 59.3
Diluted earnings per share 8 100.9 58.1
Consolidated statement of comprehensive income
for the year ended 30 September 2022
2022 2021
£m £m
Profit for the year 122.2 66.1
Items that may be reclassified to the consolidated income statement
Currency translation differences 80.8 (12.3)
Other comprehensive income/(expense) for the year 80.8 (12.3)
Total comprehensive income for the year attributable to owners of the parent 203.0 53.8
Consolidated statement of changes in equity
for the year ended 30 September 2022
Issued Share Accumulated exchange differences Retained earnings/(losses
Note share premium account Merger Treasury reserve £m £m Total
capital £m reserve £m equity
£m £m £m
Balance at 30 September 2020 14.7 197.0 170.9 (8.8) 2.2 5.3 381.3
Profit for the year - - - - - 66.1 66.1
Currency translation differences (net of tax) - - - - (12.3) - (12.3)
Other comprehensive expense for the year - - - - (12.3) - (12.3)
Total comprehensive income for the year - - - - (12.3) 66.1 53.8
Share capital issued during the year 14 3.4 - 411.0 - - - 414.4
Acquisition of own shares - - - (4.9) - - (4.9)
Share schemes
- Issue of treasury shares - - - 6.1 - (6.1) -
to employees
- Share-based payments - - - - - 10.0 10.0
- Current tax on options - - - - - (2.4) (2.4)
- Deferred tax on options - - - - - 11.7 11.7
Dividends paid to shareholders 7 - - - - - (1.6) (1.6)
Balance at 30 September 2021 18.1 197.0 581.9 (7.6) (10.1) 83.0 862.3
Profit for the year - - - - - 122.2 122.2
Currency translation differences (net of tax) - - - - 80.8 - 80.8
Other comprehensive expense for the year - - - - 80.8 - 80.8
Total comprehensive income for the year - - - - 80.8 122.2 203.0
Acquisition of own shares - - - (7.9) - - (7.9)
Share schemes
- Issue of treasury shares - - - 7.5 - (7.5) -
to employees
- Share-based payments - - - - - 11.3 11.3
- Current tax on options - - - - - 3.1 3.1
- Deferred tax on options - - - - - (7.7) (7.7)
Dividends paid to shareholders 7 - - - - - (3.4) (3.4)
Balance at 30 September 2022 18.1 197.0 581.9 (8.0) 70.7 201.0 1,060.7
Consolidated balance sheet
as at 30 September 2022
Note 2022 2021
£m £m
Assets
Non-current assets
Property, plant and equipment 53.0 47.4
Intangible assets - goodwill 9 1,069.6 688.2
Intangible assets - other 9 646.2 466.5
Deferred tax - 3.8
Total non-current assets 1,768.8 1,205.9
Current assets
Inventories 1.2 1.0
Corporation tax recoverable 13.4 -
Deferred tax 5.1 -
Trade and other receivables 134.3 98.0
Cash and cash equivalents 10 29.2 324.3
Finance lease receivable 6.1 1.9
Total current assets 189.3 425.2
Total assets 1,958.1 1,631.1
Equity and liabilities
Equity
Issued share capital 14 18.1 18.1
Share premium account 197.0 197.0
Merger reserve 581.9 581.9
Treasury reserve (8.0) (7.6)
Accumulated exchange differences 70.7 (10.1)
Retained earnings 201.0 83.0
Total equity 1,060.7 862.3
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings 11 369.0 458.1
Lease liability due in more than one year 55.8 44.0
Deferred tax 131.7 70.3
Provisions 12 21.4 6.1
Deferred income 14.9 -
Total non-current liabilities 592.8 578.5
Current liabilities
Financial liabilities - interest-bearing loans and borrowings 11 83.8 42.5
Trade and other payables 143.8 133.7
Deferred income 55.8 7.1
Corporation tax payable 1.0 2.1
Lease liability due within one year 12.1 4.9
Deferred consideration 4.5 -
Deferred Tax 3.6 -
Total current liabilities 304.6 190.3
Total liabilities 897.4 768.8
Total equity and liabilities 1,958.1 1,631.1
Consolidated cash flow statement
for the year ended 30 September 2022
2022 2021
£m £m
Cash flows from operating activities
Cash generated from operations 268.5 197.2
Net interest paid on bank facilities (13.7) (4.9)
Interest paid on lease liabilities (2.1) (0.9)
Tax paid (50.1) (25.7)
Net cash generated from operating activities 202.6 165.7
Cash flows from investing activities
Purchase of property, plant and equipment (2.6) (3.7)
Purchase of computer software and website development (9.0) (7.4)
Purchase of subsidiary undertakings, net of cash acquired (113.1) (169.3)
Settlement of receivable from sellers 8.0 -
Net cash used in investing activities (116.7) (180.4)
Cash flows from financing activities
Costs of share issue - (0.7)
Acquisition of own shares (7.9) (4.9)
Drawdown of bank loans 95.7 559.4
Repayment of bank loans (467.1) (213.6)
Drawdown/(repayment) of overdraft 1.0 (4.6)
Bank arrangement fees (1.9) (6.4)
Repayment of principal element of lease liabilities (5.4) (6.1)
Dividends paid (3.4) (1.6)
Net cash generated from financing activities (389.0) 321.5
Net increase in cash and cash equivalents (303.1) 306.8
Cash and cash equivalents at beginning of year 324.3 19.3
Effects of exchange rate changes on cash and cash equivalents 8.0 (1.8)
Cash and cash equivalents at end of year 29.2 324.3
Notes to the consolidated cash flow statement
for the year ended 30 September 2022
A. Cash generated from operations
The reconciliation of profit for the year to cash generated from operations is
set out below:
2022 2021
£m £m
Profit for the year 122.2 66.1
Adjustments for:
Depreciation 9.1 8.7
Impairment charge on tangible assets 6.6 1.0
Amortisation of intangible assets 71.3 48.7
Impairment charge on intangible assets - 8.8
Share-based payments 11.3 10.0
Net finance costs 18.6 7.5
Tax charge 47.8 41.7
Cash generated from operations before changes in working capital and 286.9 192.5
provisions
Movement in provisions 0.5 0.2
Increase in inventories (0.2) (0.2)
(Increase)/decrease in trade and other receivables (3.8) 8.9
Decrease in trade and other payables (14.9) (4.2)
Cash generated from operations 268.5 197.2
B. Analysis of net debt
1 October Cash flows On Other non-cash changes Exchange 30 September
2021 £m acquisition £m movements 2022
£m £m £m £m
Cash and cash equivalents 324.3 (316.1) 13.0 - 8.0 29.2
Debt due within one year (42.5) (38.3) (2.4) (0.6) - (83.8)
Debt due after more than one year (458.1) 410.8 (296.2) (2.2) (23.3) (369.0)
Net debt (176.3) 56.4 (285.6) (2.8) (15.3) (423.6)
1 October Cash flows On Other non-cash changes Exchange movements 30 September
2020 £m acquisition £m £m 2021
£m £m £m
Cash and cash equivalents 19.3 293.5 13.3 - (1.8) 324.3
Debt due within one year (7.8) (31.4) (3.2) (0.1) - (42.5)
Debt due after more than one year (73.6) (303.2) (80.0) (1.6) 0.3 (458.1)
Net debt (62.1) (41.1) (69.9) (1.7) (1.5) (176.3)
C. Reconciliation of movement in net debt
2022 2021
£m £m
Net debt at start of year (176.3) (62.1)
(Decrease)/increase in cash and cash equivalents (303.1) 306.8
Decrease/(increase) in borrowings 73.9 (417.8)
Other non-cash changes (2.8) (1.7)
Exchange movements (15.3) (1.5)
Net debt at end of year (423.6) (176.3)
Accounting policies
Compliance statement and basis of preparation
Future plc (the Company) is incorporated and registered in England and Wales
and is a public company limited by shares. The financial statements
consolidate those of Future plc and its subsidiaries (the Group).
The Consolidated Financial Statements have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006 and UK adopted IFRSs. The principal accounting 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 contingent and deferred consideration, which is
measured at fair value.
The going concern basis has been adopted in preparing these financial
statements.
Status of this preliminary announcement
The financial information contained in this audited preliminary announcement
does not constitute the Company's statutory accounts for the years ended 30
September 2022 or 2021. Statutory accounts for 2021, which were prepared under
International Financial Reporting Standards as adopted by the EU, have been
delivered to the registrar of companies, and those for 2022 will be delivered
in due course. Full financial statements for the year ended 30 September 2022
will shortly be posted to shareholders.
New or revised accounting standards and interpretations adopted in the year
The following standards and amendments became effective in the year:
− amendments to IFRS 4, IFRS 7, IFRS 9, IFRS 16 and IAS 39
regarding replacement issues in the context of the IBOR reform; and
− amendments to IFRS 16 relating to the extension of the exemption
from assessing whether a COVID-19 related rent concession is a lease
modification.
There has been no material impact from the adoption of new standards,
amendments to standards or interpretations which are relevant to the Group.
New accounting standards, amendments and interpretations that are issued but
not yet applied by the Group
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for accounting periods beginning on or
after 1 October 2022 and which the Group has chosen not to adopt early. These
include the following standards which are relevant to the Group:
− amendment to IAS 1 Amendments regarding the classification of
liabilities and Amendments regarding the disclosure of accounting policies;
− IAS 8 Amendments regarding the definition of accounting
estimates;
− IAS 12 Amendments regarding deferred tax on leases and
decommissioning obligations;
− IAS 16 Amendments prohibiting a company from deducting from the
cost of property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use;
− IAS 37 Amendments regarding the costs to include when assessing
whether a contract is onerous;
− IFRS 3 Amendments updating a reference to the Conceptual
Framework;
− IFRS 9 Amendments relating to fees in the '10 per cent' test for
derecognition of financial liabilities;
− IFRS 16 Amendments to clarify how a seller-lessee subsequently
measures sale and leaseback transactions; and
− Annual Improvements to IFRS Standards 2018-2020 Cycle.
The Group does not expect that the standards and amendments issued but not yet
effective will have a material impact on results or net assets.
Presentation of non-statutory measures
The Directors believe that adjusted results and adjusted earnings per share
provide additional useful information on the core operational performance of
the Group to shareholders, and review the results of the Group on an adjusted
basis internally. The term 'adjusted' is not a defined term under IFRS and may
not therefore be comparable with similarly titled profit measurements reported
by other companies. It is not intended to be a substitute for, or superior to,
IFRS measurements of profit.
Adjustments are made in respect of:
Share-based payments - share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12 months),
together with associated social security costs, are excluded from the adjusted
results of the Group as the Directors believe they result in a level of charge
that would distort the user's view of the core trading performance of the
Group.
Exceptional items - the Group considers items of income and expense as
exceptional and excludes them from the adjusted results where the nature of
the item, or its size, is material and/or is not related to the core trading
of the Group so as to assist the user of the financial statements to
understand the results of the core underlying operations of the Group. The
prior year impairment charge recognised in respect of acquired intangible
assets have been excluded from the adjusted results of the Group and included
within exceptional items as they are non-cash and related to acquired
intangible assets for which amortisation is already considered to be an
adjusting item. As such it was not considered to be reflective of the core
trading performance of the Group. Details of exceptional items are shown in
note 4.
Amortisation of acquired intangible assets - the amortisation charge for those
intangible assets recognised on business combinations is excluded from the
adjusted results of the Group since they are non-cash charges arising from
non-trading investment activities. As such, they are not considered to be
reflective of the core trading performance of the Group.
The following adjustment is only relevant in the context of the prior year
results:
Impact of the UK tax rate change - this was substantively enacted in the UK in
May 2021 and resulted in tax rates increasing from 19% to 25% in 2023. This
was excluded from the adjusted results of the Group as it resulted in a
one-off non-cash impact on the Group's deferred tax balances and would have
otherwise significantly distorted the Group's core tax charge.
The tax related to adjusting items is the tax effect of the items above,
calculated using the standard rate of corporation tax in the relevant
jurisdiction.
Reference to 'core or underlying' reflects the trading results of the Group
without the impact of amortisation of acquired intangible assets, exceptional
items, share-based payment expenses (relating to equity-settled share awards
with vesting periods longer than 12 months), together with associated social
security costs and any tax related effects that would otherwise distort the
users understanding of the Group's performance. In the prior year this also
excludes the impact of the UK tax rate change and impairment charge in respect
of acquired intangible assets.
A summary table of all measures is included below:
Closest equivalent statutory measure Definition
APM
Adjusted operating profit Operating profit 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
and exceptional items.
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 commentary.
Adjusted profit before tax Profit before tax 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, exceptional items, and any related tax effects.
Adjusting items are shown in the table below and defined in the 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 8.
Adjusted effective tax rate Effective tax rate Adjusted effective tax rate is defined as the effective tax rate adjusted for
the tax impact of adjusting items and any other one-off impacts that distort a
user's view of the tax charge that would be expected to arise on the core
trading profit of the Group on a recurring basis. The tax impact of adjusting
items is provided in note 6.
Adjusted operating cash flow Operating cash flow Adjusted operating cash flow represents cash generated from operations
adjusted to exclude cash flows relating to exceptional items and payment of
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.
Adjusted free cash flow Free cash flow Adjusted free cash flow is defined as adjusted operating cash flow less
capital expenditure. Capital expenditure is defined as cashflows relating to
the purchase of property, plant and equipment and purchase of computer
software and website development.
Net debt The aggregation of cash and debt Net debt is defined as the aggregate of the Group's cash and cash equivalents
and its external bank borrowings net of capitalised bank arrangement fees. It
does not include lease liabilities recognised following the adoption of IFRS
16 Leases.
A reconciliation of adjusted operating profit to profit before tax is shown
below:
2022 2021
£m £m
Adjusted operating profit 271.7 195.8
Adjusted net finance costs (18.6) (7.5)
Adjusted profit before tax 253.1 188.3
Adjusting items:
Share-based payments (including social (6.9) (14.8)
security costs)
Exceptional items (note 4) (17.9) (27.4)
Amortisation of acquired intangibles (58.3) (38.3)
Profit before tax 170.0 107.8
A reconciliation between adjusted and statutory earnings per share measures is
shown in note 8.
Notes
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
Sub-segment 2022 Sub-segment 2021
£m £m
Media Magazines Total Media Magazines Total
£m £m £m £m £m £m
Segment:
UK 284.2 215.3 499.5 220.4 176.2 396.6
US 251.0 74.9 325.9 202.4 7.8 210.2
Total 535.2 290.2 825.4 422.8 184.0 606.8
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:
2022 2021
£m £m
Adjusted operating Intra-group Adjusted Adjusted operating Intra-group Adjusted
profit prior to adjustments operating profit profit prior to intra-group adjustments adjustments operating profit
intra-group £m £m £m £m £m
adjustments
£m
UK 60.5 88.2 148.7 64.9 68.7 133.6
US 211.2 (88.2) 123.0 130.9 (68.7) 62.2
Total 271.7 - 271.7 195.8 - 195.8
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 following acquisitions.
A reconciliation of total segment adjusted operating profit to profit before
tax is provided as follows:
2022 2021
£m £m
Adjusted operating profit 271.7 195.8
Share-based payments (including social security costs) (6.9) (14.8)
Amortisation of acquired intangibles (58.3) (38.3)
Exceptional items (note 4) (17.9) (27.4)
Net finance costs (18.6) (7.5)
Profit before tax 170.0 107.8
(b) Business segment
(i) Gross profit by business segment
Sub-segment 2022 Sub-segment 2021
£m £m
Media Magazines Other Add back distribution expenses Total Media Magazines Other Add back distribution expenses Total
£m £m £m £m £m £m £m £m £m £m
Segment:
UK 203.3 127.5 (136.2) 31.1 225.7 163.5 109.4 (114.1) 21.3 180.1
US 224.0 54.3 (80.8) 11.4 208.9 182.6 4.4 (44.8) 1.7 143.9
Total 427.3 181.8 (217.0) 42.5 434.6 346.1 113.8 (158.9) 23.0 324.0
No end-customer, or other single customer or group of customers under common
control contributed 10% or more to the Group's revenue in either the current
or prior year. The above analysis excludes the impact of intra-group
adjustments.
2. Revenue
The Group applies IFRS 15 Revenue from contracts with customers. See note 1
for disaggregation of revenue by sub-segment.
Timing of satisfaction of performance obligations
Revenue is recognised in the income statement when control passes to the
customer. If the customer simultaneously receives and consumes the benefits of
the contract, revenue is recognised over time. Otherwise, revenue is
recognised at a point in time.
The table below disaggregates revenue according to the timing of satisfaction
of performance obligations:
2022 2021
£m £m
Over Point in Total Over Point in Total
time time revenue time time revenue
£m £m £m £m £m £m
Total revenue 16.2 809.2 825.4 13.8 593.0 606.8
3. Net operating expenses
Operating profit is stated after charging:
2022 Adjusted 2021
Adjusted Adjusting Statutory results Adjusting Statutory
results items results £m items results
£m £m £m £m £m
Cost of sales (390.7) - (390.7) (282.8) - (282.8)
Distribution expenses (42.5) - (42.5) (23.0) - (23.0)
Share-based payments (including social security costs) (0.5) (6.9) (7.4) (1.2) (14.8) (16.0)
Exceptional items (note 4) - (17.9) (17.9) - (27.4) (27.4)
Depreciation (9.1) - (9.1) (8.7) - (8.7)
Amortisation (13.0) (58.3) (71.3) (10.4) (38.3) (48.7)
Other administration expenses (97.9) - (97.9) (84.9) - (84.9)
(553.7) (83.1) (636.8) (411.0) (80.5) (491.5)
4. Exceptional items
2022 2021
£m £m
Acquisition and integration related costs 4.7 18.6
Restructuring costs 2.3 -
Onerous property costs 10.9 -
Impairment of intangible assets - 8.8
Total charge 17.9 27.4
Exceptional items include acquisition and integration related costs of £4.7m
including £2.9m and £1.2m relating to the Dennis and Who What Wear
acquisitions respectively, in addition to £1.7m and £0.6m of restructuring
costs attributable to the review of titles in our portfolio and building of a
finance centre of excellence in Bath (2021: £13.1m in respect of the GoCo
acquisition and £4.5m in respect of the Dennis acquisition). A total of
£10.9m has been recognised in respect of onerous properties, partly
reflecting extended time frames in subletting existing onerous property leases
as well as £5.7m relating to properties acquired as part of the Dennis
acquisition (2021: £1.0m net expense on the exit of onerous properties).
Further details in respect of the acquisitions are shown in note 18.
During 2021 the impairment charge of £8.8m related 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.
5. Finance income and costs
2022 2021
£m £m
Interest receivable on interest-bearing loans and borrowings - 0.2
Interest receivable on sub-leases 0.1 0.1
Total reported finance income 0.1 0.3
Interest payable on interest-bearing loans and borrowings (13.6) (5.1)
Amortisation of bank loan arrangement fees (2.8) (1.7)
Interest payable on lease liabilities (2.3) (1.0)
Total reported finance costs (18.7) (7.8)
Net finance costs (18.6) (7.5)
For further information in respect of the Group's debt facilities and changes
during the year see note 11.
6. Tax on profit
The tax charged in the consolidated income statement is analysed below:
2022 2021
£m £m
Corporation tax
Current tax on the profit for the year 43.6 30.5
Adjustments in respect of previous years (5.3) (0.3)
Current tax charge 38.3 30.2
Deferred tax origination and reversal of temporary differences
Current year charge 7.8 13.9
Adjustments in respect of previous years 1.7 (2.4)
Deferred tax charge 9.5 11.5
Total tax charge 47.8 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:
2022 2021
£m £m
Profit before tax 170.0 107.8
Profit before tax at the standard UK tax rate of 19% (2021: 19%) 32.3 20.5
Release of provision for uncertain tax positions - (1.1)
Expenses not deductible for tax purposes 1.4 2.3
Non-deductible amortisation - 0.5
Share-based payments 11.1 2.4
Effect of different rates of subsidiaries operating in other jurisdictions 6.6 4.7
Effect of change in tax rates - 15.6
Difference in current and deferred tax rates - (0.5)
Adjustments in respect of previous years (3.6) (2.7)
Total tax charge 47.8 41.7
Included below is a reconciliation between the statutory and adjusted tax
charge:
2022 2021
£m £m
Total statutory tax charge 47.8 41.7
Tax effect of adjusting items:
Exceptional items 4.0 1.3
Share based payments (9.6) (1.5)
Amortisation of acquired intangibles 12.8 12.4
Adjustments in respect of previous years - (15.6)
Total adjusted tax charge 55.0 38.3
The Directors have assessed the Group's uncertain tax positions and are
maintaining a provision of £3.4m (2021: £3.4m). The provision for uncertain
tax positions has been recognised under IAS 12, taking into account the
guidance published in IFRIC 23.
7. Dividends
Equity dividends 2022 2021
Number of shares in issue at end of year (million) 120.9 120.6
Dividends paid in year (pence per share) 2.8 1.6
Dividends paid in year (£m) 3.4 1.6
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 2022 the Board proposed a dividend of 3.4p per share, totalling
an estimated £4.1m, in respect of the year ended 30 September 2022, which
subject to shareholder consent at the AGM, will be paid on 14 February 2023 to
shareholders on the register at close of business on 20 January 2023.
A dividend of 2.8p per share totalling £3.4m in respect of the year ended 30
September 2021 was paid on 9 February 2022.
8. Earnings per share
2022 2021
Adjusted results Adjusting items Statutory results Adjusting results Adjusted items Statutory results
pence pence pence pence pence pence
Basic earnings/(loss) per share 164.4 (63.0) 101.4 134.6 (75.3) 59.3
Diluted earnings/(loss) per share 163.5 (62.6) 100.9 131.9 (73.8) 58.1
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 of intangible assets arising
on acquisitions and any related tax effects. In the prior year, the results
were also adjusted for the impairment charge in respect of intangible assets
and the impact of the UK tax rate change.
2022 2021
Adjustments to profit after tax:
Profit after tax (£m) 122.2 66.1
Share-based payments (including social security costs) (£m) 6.9 14.8
Exceptional items (£m) 17.9 27.4
Amortisation of intangible assets arising on acquisitions (£m) 58.3 38.3
Tax effect of the above adjustments (£m) (7.2) (12.2)
Change in tax rate (£m) - 15.6
Adjusted profit after tax (£m) 198.1 150.0
Weighted average number of shares in issue during the year:
- Basic 120,505,969 111,463,911
- Dilutive effect of share options 652,687 2,247,933
- Diluted 121,158,656 113,711,844
Basic earnings per share (in pence) 101.4 59.3
Adjusted basic earnings per share (in pence) 164.4 134.6
Diluted earnings per share (in pence) 100.9 58.1
Adjusted diluted earnings per share (in pence) 163.5 131.9
The adjustments to profit after tax have the following effect:
Basic earnings per share (pence) 101.4 59.3
Share-based payments (including social security costs) (pence) 5.7 13.3
Exceptional items (pence) 14.9 24.5
Amortisation of intangible assets arising on acquisitions (pence) 48.4 34.4
Tax effect of the above adjustments (pence) (6.0) (10.9)
Change in tax rate (pence) - 14.0
Adjusted basic earnings per share (pence) 164.4 134.6
Diluted earnings per share (pence) 100.9 58.1
Share-based payments (including social security costs) (pence) 5.7 13.0
Exceptional items (pence) 14.8 24.1
Amortisation of intangible assets arising on acquisitions (pence) 48.1 33.7
Tax effect of the above adjustments (pence) (6.0) (10.7)
Change in tax rate (pence) - 13.7
Adjusted diluted earnings per share (pence) 163.5 131.9
9. Intangible assets
Goodwill Publishing rights Brands Customer relationships Subscribers Other acquired Other Total
£m £m £m £m £m intangibles £m £m
£m
Cost
At 1 October 2020 574.3 90.5 64.3 21.7 15.6 38.4 30.0 834.8
Additions through business combinations 384.7 - 287.7 33.5 0.1 5.3 10.1 721.4
Other additions - - - - - - 7.4 7.4
Disposal - - - - - - (0.8) (0.8)
Exchange adjustments (7.8) (0.1) (2.3) (0.7) (0.5) (1.1) (0.7) (13.2)
At 30 September 2021 951.2 90.4 349.7 54.5 15.2 42.6 46.0 1,549.6
Additions through business combinations 302.6 - 128.4 - 62.0 19.1 1.7 513.8
Other additions - - - - - - 9.0 9.0
Exchange adjustments 86.4 0.5 23.5 3.3 9.2 4.7 2.5 130.1
At 30 September 2022 1,340.2 90.9 501.6 57.8 86.4 66.4 59.2 2,202.5
Accumulated amortisation and impairment
At 1 October 2020 (264.6) (13.1) (11.7) (3.6) (4.1) (21.2) (22.9) (341.2)
Charge for the year - (9.0) (15.7) (5.8) (1.8) (6.0) (10.4) (48.7)
Impairment - - (4.4) (4.4) - - - (8.8)
Disposal - - - - - - 0.8 0.8
Exchange adjustments 1.6 0.1 0.4 0.2 0.2 0.1 0.4 3.0
At 30 September 2021 (263.0) (22.0) (31.4) (13.6) (5.7) (27.1) (32.1) (394.9)
Charge for the year - (7.5) (27.4) (7.8) (9.4) (6.2) (13.0) (71.3)
Exchange adjustments (7.6) (0.4) (4.3) (1.3) (2.0) (2.8) (2.1) (20.5)
At 30 September 2022 (270.6) (29.9) (63.1) (22.7) (17.1) (36.1) (47.2) (486.7)
Net book value at 30 September 2022 1,069.6 61.0 438.5 35.1 69.3 30.3 12.0 1,715.8
Net book value at 30 September 2021 688.2 68.4 318.3 40.9 9.5 15.5 13.9 1,154.7
Net book value at 1 October 2020 309.7 77.4 52.6 18.1 11.5 17.2 7.1 493.6
Useful economic lives 5-15 3-20 years 8-10 7-11 3-15 2
years years years years years
Acquired intangibles are amortised over their estimated economic lives,
typically ranging between two and twenty years. The other acquired intangibles
category in the table above includes assets relating to customer lists,
content and websites.
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 2022 of £241.5m, a useful economic life ('UEL') of 20
years and remaining amortisation period of 18.5 years;
- GoCo customer relationships acquired as part of the GoCo
acquisition in February 2021, with a net book value ('NBV') at 30 September
2022 of £8.0m, a UEL of 4 years and remaining amortisation period of 2.5
years;
- Publishing rights relating to TV Weekly magazines, acquired as
part of the TI Media acquisition in April 2020, with a net book value ('NBV')
at 30 September 2022 of £23.0m, a UEL of 15 years and remaining amortisation
period of 12.5 years);
- Dennis Brand acquired in October 2021, with a net book value
('NBV') at 30 September 2022 of £26.0m, a useful economic life ('UEL') of 20
years and remaining amortisation period of 19 years;
- Dennis subscriber relationships acquired in October 2021, with a
net book value ('NBV') at 30 September 2022 of £27.7m, a useful economic life
('UEL') of 11 years and remaining amortisation period of 10 years;
- The Week US brand acquired in October 2021, with a net book
value ('NBV') at 30 September 2022 of £40.6m, a useful economic life ('UEL')
of 20 years and remaining amortisation period of 19 years;
- The Week US subscriber relationships acquired in October 2021,
with a net book value ('NBV') at 30 September 2022 of £19.9m, a useful
economic life ('UEL') of 7 years and remaining amortisation period of 6 years;
- Kiplinger brand acquired in October 2021, with a net book value
('NBV') at 30 September 2022 of £26.5m, a useful economic life ('UEL') of 20
years and remaining amortisation period of 19 years;
- Kiplinger subscriber relationships acquired in October 2021,
with a net book value ('NBV') at 30 September 2022 of £13.0m, a useful
economic life ('UEL') of 7 years and remaining amortisation period of 6 years;
- Who What Wear brand acquired in June 2022, with a net book value
('NBV') at 30 September 2022 of £35.6m, a useful economic life ('UEL') of 15
years and remaining amortisation period of 14.75 years; and
- Who What Wear Advertising relationships acquired in June 2022,
with a net book value ('NBV') at 30 September 2022 of £14.1m, a useful
economic life ('UEL') of 13 years and remaining amortisation period of 12.75
years.
Any residual amount arising as a result of the purchase consideration being in
excess of the value of acquired assets is recorded as goodwill.
Further details regarding the intangible assets acquired during the year
through business combinations are set out in note 18.
Other intangibles relate to capitalised software costs and website development
costs which are internally generated.
No reasonably possible change in assumptions would result in a reduction of
this impairment.
Amortisation is included within administration expenses in the consolidated
income statement.
Impairment assessments for goodwill
The net book value of goodwill at 30 September 2022 consists of £603.0m
(2021: £532.2m) relating to the UK, £453.6m (2021: £143.3m) relating to the
US and £13.0m (2021: £12.7m) relating to Australia.
At 30 September 2022 the Group performed its annual impairment assessment of
goodwill and concluded that no impairment of goodwill was required.
10. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash
flow statements:
2022 2021
£m £m
Cash and cash equivalents 29.2 324.3
As at 30 September 2021, the £300m of 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.
11. Financial liabilities - interest-bearing loans and borrowings
Non-current liabilities
Interest rate at Interest rate at 2022 2021
30 September 30 September £m £m
2022 2021
Sterling revolving loan 4.32% 1.83% 115.5 239.3
Sterling term loan 3.99% 1.83% 80.0 159.7
US dollar revolving loan 4.98% 1.84% 161.5 43.8
AU dollar revolving loan 4.68% 1.83% 12.0 15.3
Total 369.0 458.1
Current liabilities
Interest rate at Interest rate at 2022 2021
30 September 30 September £m £m
2022 2021
Multi-currency overdraft 1.00% 1.00% 4.2 3.1
Sterling term loan 3.99% 1.83% 79.6 39.4
Total 83.8 42.5
The interest-bearing liabilities are repayable as follows:
2022 2021
£m £m
Within one year 83.8 42.5
Between two and five years 369.0 458.1
Total 452.8 500.6
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.
In May 2022 the Group exercised the first one year extension option and also
increased the size of its Revolving Credit Facility ('RCF') from £400m to
£500m. The enlarged and extended facility is now repayable in July 2025 and
there were no changes to covenants arising as a result. In July 2022 the Group
exercised its six month extension option on the Term Loan, taking the maturity
date of this facility out to 31 December 2023.
Interest bearing loans are shown net of unamortised issue costs which amounted
to £5.0m (2021: £5.6m).
12. Provisions
Property Other Total
£m £m £m
At 1 October 2021 6.1 - 6.1
On acquisition 2.5 10.9 13.4
Charged in the year 3.0 - 3.0
Utilised in the year (2.5) (0.1) (2.6)
Foreign exchange movement - 1.5 1.5
At 30 September 2022 9.1 12.3 21.4
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 three years. A
provision for legal costs of £10.0m was recognised on the Dennis opening
balance sheet relating to historic litigation claims, which are expected to be
settled within the next 12 months.
13. 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 IFRS 9 classification
Cash and cash equivalents Amortised cost
Trade and other receivables Amortised cost
There has not been a significant impact on the carrying amounts of assets
held.
All financial assets and liabilities are classed as level 1.
14. Issued share capital
2022 2021
Number of Number of
shares £m shares £m
Allotted, authorised, issued and fully paid Ordinary shares of 15p each
At 1 October 120,624,634 18.1 98,014,955 14.7
Issued as consideration for acquisition - - 22,608,736 3.4
Share scheme exercises 229,113 - - -
Share Incentive Plan matching shares 2,183 - 943 -
At 30 September 120,855,930 18.1 120,624,634 18.1
During the year 229,113 Ordinary shares with a nominal value of £34,367 were
issued by the Company pursuant to share scheme exercises throughout the
period. 2,183 Ordinary shares were issued under the Share Incentive Plan for a
combined total cash commitment of £nil (2021: 943 ordinary shares, total cash
commitment of £nil).
In the prior year, 22,608,736 Ordinary shares were issued as
part-consideration for the acquisition of GoCo Group plc, with a value of
£415.1m (share price of £18.36).
Further details of acquisitions are shown in note 18.
15. Reserves
Share premium account
Share premium represents the excess of proceeds received over the nominal
value of new shares issued.
Treasury reserve
The treasury reserve represents the cost of shares in Future plc purchased in
the market and held by the Employee Benefit Trust ('EBT') to satisfy awards
made by the trustees.
During the year the Company purchased 522,795 of its own shares to fund the
future vesting of share options, at a total value of £7.9m and 450,404 shares
held by the EBT were used to satisfy the vesting of share options (2021:
276,132 shares were purchased, at a total value of £4.9m).
Merger reserve
During the current year there was no movement on the merger reserve. In the
prior year the merger reserve increased by £411.0m, consisting 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.
Accumulated exchange differences
The reserve for accumulated exchange differences comprises the revaluation of
the Group's foreign currency entities, principally the US and Australia, on
consolidation.
16. Contingent liabilities
There were no material contingent liabilities as at 30 September 2022 or 30
September 2021.
17. Related party transactions
The Group had no material transactions with related parties in 2022 or 2021
which might reasonably be expected to influence decisions made by users of
these financial statements.
18. Acquisitions
Acquisition of Dennis
On 1 October 2021, Future acquired Dennis Publishing, a leading consumer media
subscriptions business, which includes trusted Wealth, Knowledge and B2B
technology specialist titles such as Kiplinger, MoneyWeek, The Week & IT
Pro.
The consideration was £1.0m, however the acquired debt of £298.6m was
required to be repaid immediately following the acquisition. Transaction fees
of £4.5m were incurred as part of the acquisition in the prior year.
The impact of the acquisition on the consolidated balance sheet was:
Fair value
£m
Tangible assets
-Right-of-use lease assets 11.2
- Other tangible assets 2.0
Intangible assets
- Brand 89.5
- Advertiser relationships 5.9
- Subscriber relationships 61.9
- Software 1.5
Cash and cash equivalents 0.8
Inventory 0.1
Trade and other receivables 20.9
Finance lease receivable due within 1 year 0.5
Corporation tax receivable 0.4
Trade and other receivables due in more than 1 year 0.6
Finance lease receivables due in more than 1 year 2.2
Trade and other payables (60.7)
Lease liability due within one year (1.9)
Financial liabilities - interest bearing loans and borrowings (2.4)
due in less than one year
Non-current liabilities
- Provisions (13.4)
- Deferred income (10.8)
- Lease liability due in more than one year (14.1)
- Financial liabilities - interest bearing loans and (296.2)
borrowings due in more than one year
Deferred tax (26.3)
Net assets acquired (228.3)
Goodwill 229.3
1.0
Consideration: 1.0
Cash
Total consideration 1.0
The acquisition has scaled the Group's 'Wealth & Savings' vertical,
further diversified 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, deepened the Group's existing presence in the 'B2B
Pro Technology' vertical and enhanced the Group's 'Knowledge' vertical with
high subscription rates and growth potential. Goodwill is attributable to the
synergies of the combined Group and the opportunities noted above. The
intangibles recognised, including goodwill, are not expected to be deductible
for tax purposes.
At HY 2022 provisional values were included in the above. These have since
been updated and finalised to increase provisions (from £7.1m to £13.4m) to
reflect additional legal costs as well as recognising a deferred tax asset of
£2.7m on the basis that the costs, once settled, are expected to be tax
deductible.
Included within the Group's results for the period are revenues of £129.6m
from Dennis. Given that Dennis is now fully integrated and using the Group's
shared back office functions it is impractical to disclose the profit before
tax generated as it is not monitored at this level internally.
The acquisition was completed on the first day of the financial year and so
the amounts included within the Group's results reflect its ownership for the
full period.
Gross trade receivables were £5.6m on acquisition, of which £5.2m were
expected to be recovered. The assets and liabilities acquired included an £8m
receivable from the sellers related to titles not purchased.
Acquisition of WhatCulture
On 23 March 2022, the Group acquired WhatCulture, an entertainment-based
website, for total consideration of £22.7m. WhatCulture further strengthens
Future's position in video, notably with its expertise in the monetisation on
YouTube and will benefit from the Future proprietary technology stack and
operating model to drive the platform effect whilst bolstering Future's gaming
and entertainment verticals, forming part of the Group's UK cash generating
unit.
The impact of the acquisition on the consolidated balance sheet was:
Fair value
£m
Tangible assets
- Land and buildings 0.4
Intangible assets
- Brand 5.7
Cash 3.6
Trade and other receivables 0.5
Trade and other payables (0.1)
Deferred tax (1.4)
Net assets acquired 8.7
Goodwill 14.0
22.7
Consideration:
Cash 18.2
Deferred consideration 4.5
Total Consideration 22.7
Goodwill is attributable to the opportunities that exist to further monetise
the Group's brands and audience and is not expected to be deductible for tax
purposes.
Included within the Group's results for the period are revenues of £2.1m from
WhatCulture (excluding deal fees, associated integration costs, acquired
intangible amortisation and interest). Given that WhatCulture is now fully
integrated and using the Group's shared back office functions it is
impractical to disclose the profit before tax generated as it is not monitored
at this level internally.
If the acquisition had been completed on the first day of the financial year,
it would have contributed £4.3m of revenue during the period.
Gross trade receivables were £0.4m on acquisition, of which £0.4m were
expected to be recovered.
Acquisition of Who What Wear
On 15 June 2022, the Group completed the acquisition of Who What Wear, a
leading digital-only women's lifestyle publisher based in the US from Clique
Brands Inc for consideration of $127.2m. Transaction fees of £1.2m were
incurred as part of the acquisition.
Who What Wear is a brand highly-regarded by both consumers and advertisers
with a strong social presence and diverse revenue streams ranging from digital
advertising to eCommerce.
The acquisition further strengthens Future's position in the Women's Lifestyle
vertical and gives the Group greater scale and reach in North America to
further monetise its audience. With Future's content already reaching 1 in 3
adults online in the US, the transaction will accelerate Future's scale and
revenue opportunities in the US. The Group's existing Women's Lifestyle brands
will benefit from Who What Wear's leading direct advertising sales
capabilities, whilst Who What Wear will benefit from Future's proprietary
technology stack and operating model to drive the platform effect.
The provisional impact of the acquisition on the consolidated balance sheet
was:
Provisional
Fair value
£m
Tangible assets
- Right-of-use lease asset 4.7
- Other tangible assets 0.3
Intangible assets
- Brand 34.2
- Advertiser relationships 12.2
- Software 0.1
Cash and cash equivalents 7.1
Trade and other receivables 9.9
Trade and other payables (6.1)
Lease liability due within one year (1.1)
Non-current liabilities
- Lease liability due in more than one year (3.6)
Deferred tax (11.8)
Net assets acquired 45.9
Goodwill 59.3
105.2
Consideration:
Cash 105.2
Total Consideration 105.2
The values included above are considered to be final other than the
consideration (and any subsequent flow on impact to goodwill) as completion
accounts are in the process of being finalised and agreed with the seller.
Included within the Group's results for the period are revenues of £9.0m from
Who What Wear (excluding deal fees, associated integration costs, acquired
intangible amortisation and interest). Given that Who What Wear is now fully
integrated and using the Group's shared back office functions it is
impractical to disclose the profit before tax generated as it is not monitored
at this level internally.
If the acquisition had been completed on the first day of the financial year,
it would have contributed £33.0m of revenue during the period.
Gross trade receivables were £7.8m on acquisition, of which £7.5m are
expected to be recovered.
19. Post balance sheet events
On 23 November 2022, the Group further extended its committed debt facilities
with a 5 year, £400m term facility partially guaranteed by UK Export Finance.
The facility, maturing November 2027, has a 12 month availability period and
amortises from year 3. It was secured at competitive market rates, on
substantially similar terms to, and with the same covenants as, the Groups
RCF. On signing, the first £160m was utilised to prepay the Groups existing
Term Loan maturing 31 December 2023.
Acquisition of ShortList Media Ltd
On 18 October 2022, we completed the acquisition of ShortList Media Ltd
(trading as Shortlist.com), a technology website, adding the much respected
technology and lifestyle brand and its archive of hundreds of evergreen
articles for consideration of £0.3m. We will be able to deploy our tech stack
to the website to drive monetisation, whilst growing our online users and
accelerating this growth through our capabilities.
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