AR16Future plcAnnual Report and Accounts2016
Strategic Report
01 Group overview02 Chairman’sstatement03 ChiefExecutive’sreview 05 Strategicoverview07 Whatwedo09 Risksanduncertainties11 Corporateresponsibility
Financial Review 13 Financialreview
Corporate Governance
17 BoardofDirectors19 Directors’report23 CorporateGovernancereport29 Directors’remunerationreport41 Independentauditors’report
Financial Statements
43 Financialstatements 79 NoticeofAnnualGeneralMeeting84 Investorinformation
Continuing EBITE
£2.3m 2015: £0.8m
Continuing Revenue
£59.0m 2015: £59.8m
Continuing EBITDAE
£4.7m 2015: £3.6m
Continuing Digital Advertising
78% of total continuing advertising revenues (2015: 77%)
•EBITDAErepresentsearningsbeforeinterest,tax,depreciation,amortisation,impairmentandexceptionalitems.•EBITErepresentsearningsbeforeinterest,tax,impairmentandexceptionalitems.
Net Cash
£0.5m 2015: Net Debt £(1.8)m
Unique Users
45.2m a month (Q4 up 14% on Q3)
Continuing Exceptional items
£(16.5)m 2015: £(2.5)m
Continuing Loss Before Tax
£(14.9)m 2015: £(2.3)m
Continuing Recurring Revenues
£15.0m 2015: £12.9m
•Recurringrevenuesencompasse-commerceandsubscriptions.•Exceptionalitemsfor2016aboveincludesimpairmentofintangibleassetsof£13.0m.
Future plc is an international media group listed on the London Stock Exchange (symbol: FUTR). These highlights refer to the Group’s annual results for the year ended 30 September 2016.
Group overview01 Future plc
02AnnualReportandAccounts2016
Chairman’s statement
ThisyeartheGrouphasgainedsignificantmomentum;bymovingtoanewdivisionalstructure,Futureisbenefitingfromgreateroperationalefficiency.Thehigh-growthMediadivisionisdevelopingnewrevenuestreamsine-commerceandevents,backedupbysignificantdigitaladvertisingrevenueandtheMagazinedivisionhasincreasedoperationalefficiencythroughastrengthenedmagazineportfolio.
A diversified content business with data at its heart
ThishasbeenanextremelygoodyearforFuture;operatingprofitbeforeexceptionalitemshasgrownby188%year-on-yearledbyincreasingrevenuesintheMediadivision,includingmaterialandfast-growinge-commerceandeventsrevenuestreams.Futurecontinuestoproduceinnovativecontentthroughexpertinsightintowhatitscustomersneedandmonetisesthisthroughadiversifiedbusinessmodelincludingdigitaladvertising,eventsandmagazines.
Afteranumberofchallengingyears,theteamisnowbuildingatrackrecordofdeliveryandtheclearstrategytodeliveracontentplatformbusiness,wherewebringaudiencesandbusinessestogetherthroughtheuseofcontent,isworking.
Wehavealsocompletedanumberofacquisitions,whichhavestrengthenedtheportfolioandwillresultineconomiesofscaleandenhancedoperationalprofitability.Thelastofthese,Imagine,inOctober2016,willhaveamaterialimpactonrevenueandprofits.TheintegrationofImagineiswellontrack.
TheGroupiscommittedtobeingbrilliantatthebasics,includingproprietary,scalabletechnology,whichhasresultedinaleanerandsimplerbusinessandincreasedoperationalefficiency.InadditiontheGrouphasadoptedadisciplinedapproachtoinvestmentandafocusoncashgeneration.
TheGroupcontinuestodevelopitsbrands,creatingtrulyglobal,market-leadingfranchisesofitsdigitalandeventsassetsandproducingarecord-breakingyearforuserreach,withdigitalusersreaching53million.InNovember2015theGroupwasreorganisedintotwonewdivisions,MediaandMagazine,topositionitforgrowth.Thisnewdivisionalstructurehasresultedinamoreefficientoperatingmodelwhichbetterreflectsthedivisions’differentmarketdynamics.Additionallyduringthelatterpartoftheyear,anewMediaServicesdivisionhasbeenestablishedwhichcapitalisesonopportunitiestoexploittheGroup’scapabilitiesasacontentplatform,focusingongrowingrevenuesinthirdpartyrelationships,particularlylicensing,franchisingandsyndicationofitsbrands,contentandtechnology.
OnbehalfoftheBoard,Iwouldliketothankallouremployeesfortheirhardworkandcommitmentthisyear.
Peter Allen Chairman
“ Futurecontinuestoproduceinnovativecontentthroughexpertinsightintowhatitscustomersneed.”
Peter Allen Chairman
Strategic Report
Strategic reportChief Executive’s review
03 Future plc
Future’sstrategytocreatealeadingglobalspecialistmediaplatformwithdataatitsheart,monetisedthroughdiversifiedrevenuestreams,hasdeliveredextremelypositiveresultswithMediadivisionrevenuegrowthof14%year-on-year.TheGroupisalsobenefitingfromitsoperationalleverageandtheacquisitionsFuturehasmadethisyearhavefurtherstrengthenedtheportfolio.
Data-led content strategy
TheGroupmadesignificantprogressinthelastfinancialyear,bothoperationallyandfinancially.
Futureisaglobalcontentplatformforspecialistmediawithscalable,diversifiedbrandsthathasdataatitsheart.DatadrivesFuture’sstrategybyhelpingtheGroupunderstanditsaudience’sneedsandparticularlythepathtopurchase,whichallowsittoprovidevalueforitspartners,clientsanditself.Thiscreatesloyalcommunities.ThishasbeenmostevidentintheGroup’sfast-growinge-commercebusiness,whererevenueisup187%year-on-year.
Ourdata-ledcontentstrategyunderpinsourmovetoadiverserevenuebusiness,withe-commerceandeventsshowingnotableratesofgrowth.Additionally,amajorre-alignmentofthecostbaseandtightmanagementofthedeclineoftheprintbusinesshaveresultedinfurthergrowthinoperatingprofit.Duringtheyearwecompletedthere-organisationofthebusinessintotwodistinctdivisions;Media,whichisfocusedonglobalscalablebrands,andMagazine,whichisfocusedonmarket-leadingspecialistcontent.
InOctober2016,weestablishedanewdivision,MediaServices,whichisfocusedondeliveringhighmarginrevenuesthroughmonetisingourIPfranchise,licensingandcontractpublishingdeals.
Weareexpandingourglobalreachthroughorganicgrowth,acquisitionsandstrategicpartnerships.TheglobalmediabrandsinourMediadivisionhaveperformedstronglythisyear;twoofourleadingbrands,techradar.comandPCGamer.com,haveshownsignificantgrowth.Techradarrevenuewasup49%year-on-year,aresultofleveragingcontenttoharnesse-commerce,andPCGamerrevenue
up43%year-on-year,throughstrengthenedrelationshipswithhardwareproviders.
Ouronlineaudiencehasneverbeenstronger,withourglobalwebsitesbreakingourownrecords.Duringourpeakseasonpre-Christmaswereached53monlineusers.
Wehavestrongengagementwithourusersthroughourlargesocialmediafollowing,reaching45mpeopleacrossFacebook,TwitterandYouTubeandgenerating10msessionstoourwebsitesfromsocialmedia.
WecontinuetoinnovateinourMagazinedivision,includingnewmagazinelaunchesandupdatestoexistingtitles.
Diversified revenue
Weunderstandthevalueofdiversifiedrevenueswithinmediaandcontinuetoconcentrateondevelopingmaterial,recurringnewcashgenerativeproductsinordertotakeadvantageofafastchangingmedialandscape.Wehaveclearlydiversifiedrevenuestreamsindigitaladvertising,e-commerce,events,licensing,retail,subscriptions,contractpublishingandthirdpartysales.
Oure-commercebusinessgoesfromstrengthtostrength;enrichingusers’experienceandprovidingpricecomparisonandpurchaseoptions.Wehaveourownproprietarypricecomparisontechnology,“Hawk”,whichprovidesuswithapowerfulpositionintheUKonlinetechnologymarketcomparedtomanyotherlargeconsumertechnologywebsites.OuracquisitionofNextCommerceinAugust2016furtherbuildsontherangeofourproductcategories,introducingasignificantlyimprovedtaxonomy,whilealsoexpandingourreachintoAustraliaandSouthEastAsia.
Wehaveastrongdigitaladvertisingrevenuestream,advertisingtargetedatindividualsbasedonbehaviouralsegmentationandatechnologystackthatcapitalisesonthegrowthinprogrammaticwhilemaximisingdigitalyield.Weprovideaccesstouniqueaudiences,focusingonstrategicrelationshipsandcreativesolutions.
Oureventsbusinesshastakensignificantstridesforwardintheyear,includingthehostingoffivenewevents.Wehavebuiltonourglobalbrandsbyproducingourcreativeanddesignconference,Generate,infourlocations:NewYork,Sydney,LondonandSanFrancisco.
TheacquisitionsofNobleHouseMediaandassetsfromBlazePublishinghavesignificantlystrengthenedtheeventsportfoliowithshowsincludingTheLondonAcousticShow,TheLondonDrumShowandtheMobileIndustryAwards.
Additionally,ourawardwinningevent,ThePhotographyShow,generatedover£2mofrevenueandattracted30,000visitorsthisyear.
WecontinuetoinnovateintheMagazinedivisionwithanumberoflaunchesduringtheyear,includingintroducingnewbrandsintothekidscategory,whilewecontinuetofocusonstrengtheningtheperformanceofourexistingmagazinesthroughtargetedre-launches.
Divisions
InNovember2015theGroupwasreorganisedintotwonewdivisions,MediaandMagazine,toenableamoreefficientoperatingmodeltobeemployedineachdivision,reflectingtheirdifferentmarketdynamics.
TheMediadivision,underpinnedbyleadingglobalbrands,isfocusedonbuildingfast-growingdigitalanddiversifiedrevenues.Futurehasinvestedintherapidlygrowingrevenuestreamsofe-commerceandeventsandcontinuestoinnovateindigitaladvertising.
TheMediadivisionfocusesonbeingattheforefrontofdigitalinnovation,inparticularthehigh-growthtechnologyandgamesmarkets.Ithasanumberofleadingbrandsincludingtechradar,PCGamer,GamesRadar+,ThePhotographyShow,GenerateandGoldenJoysticks.
TheMagazinedivisionisspecialistandbrand-led.Ithasover80magazinesandbookazinesandisthenumberonedigitalconsumermagazinepublisherintheUK.Thedivisionisfocusedoncreatingthebestcontentinthemarketinanefficientoperationandcontinuestotightlymanagetheportfolio.Inaddition,wehavemadeanumberofacquisitionsthisyearwithinexistingandnewverticals,whichstrengthenourportfolioandprovidesynergisticbenefits.
InOctober2016,weestablishedanewdivision,MediaServices,inordertobringfocusandresourcesonhighermarginrevenues.TheMediaServicesdivisioniscentredaroundofferingourcontentexpertisetothirdpartycustomers,encompassingourlicensingandcontentpublishingbusinessesandfocusingongrowingourlicensingrevenuesforbothdigitalandprintbrands.Inaddition,thisdivisionisexploringopportunitiesinnon-coremarketstofranchiseourevents.WearealsoreinvigoratingourfocusonFusion,ourcontractpublishingbusiness,withaclearaimofpartneringwithotherbusinessesintheircontentsolutions.
“ Wefocusoncontentthatconnectswithoursubstantialaudiencebaseandmonetisestheirneedsthroughincreasinglydiversifiedrevenuestreams.”
Zillah Byng-Thorne ChiefExecutive
04AnnualReportandAccounts2016
Acquisitions
TheGrouphasstrengtheneditsportfolioovertheyearwithkeybolt-onacquisitions.AddingportfolioenhancingbrandsmeansthatwecanachieveeconomiesofscalethroughourcoreUKpublishingoperationsandenhanceoperationalprofitability.
Theseacquisitionshaveallowedustotakeadvantageofafragmentedmarket.TheyhaveprovidedtheGroupwithanumberofcomplementarytitlestoourexistingportfolioandaddedthenewportfoliooffieldsportsandalsoasteptowardthehighvalueB2Bmarketwiththemobilecategory.
InApril2016,FutureacquiredNobleHouseMedia,amulti-platformpublisherspecialisingintechnologyandthemobileindustry.TheacquisitionaddedexpertiseinthemobileindustryandfurtherstrengthenedFuture’stechnologyportfolio,includingaddingleadingmagazinebrandsMobileChoice,WirelessandMobileandtheprestigiousMobileChoiceAwardsandMobileIndustryAwards.
InMay2016,FutureacquiredassetsfromBlazePublishing,amagazinepublisherandeventorganiser,inthemusicandfieldsportssectors.ThisacquisitionstrengthensFuture’spositionasthemarketleaderinmusicpublishingintheUK,inlinewithourstrategytotakeleadershippositions.
InAugust2016,weacquiredNextCommerce,adigitalshoppingcomparisonbusinesswithoperationsinAustraliaandacrossSouthEastAsia.NextCommerceoperatesGetprice.com.auandPricepanda.comandhaswebsitesinsixcountrieslistingover19.5millionproducts.Inlinewithourstrategythisstrengthensourpresenceine-commercethroughtheirmarket-leadingtechnologyandpracticesforretailers,publishersandconsumersintheregion,whileatthesametimeprovidingafargreatertaxonomythatcanbemigratedintotheFutureHawksoftware.
InJune2016,FutureagreedtermstoacquireImaginePublishing.ThetransactioncompletedinOctober2016.Imaginehasaportfolioof18periodicalmagazinesandpublishesover300bookazinesacrosstheknowledge,history,science,games,techandcreativeverticals.Italsohasastronglicensing,webanddigitaleditionbusiness.
TheImagineacquisitionbringssignificantcostsynergyopportunitiesandcashgeneration,whichcanbedeployedintothecoregrowthareasofthebusiness.TheintegrationofImagineintotheGroupisproceedingtoplanand,whileonlyonemonthin,weareconfidentofdeliveringtheestimatedannualisedcostsynergiesof£3.0m.
Fund raising
TheGroupraisednetproceedsof£3.1minNovember2015viaanequityplacing,toaccelerategrowthandprofitgeneration,particularlyintheMediadivision.Thesefundshaveprovidedworkingcapitalfor,andenabledinvestmentin,theGroup’shighgrowthrevenuestreams,e-commerceandevents,inadditiontoinvestmentintherestructuringofthebusiness.
Current trading and outlook
TheGrouphasaclearstrategy,whichisresultinginimprovedfinancialandoperationalperformance,particularlyincreasedEBITDAEmarginsandcashconversion.
Futurehassubstantiallyincreaseditsportfolioandoverallscale,bothfromorganicgrowthacrossthebusinessandtargetedacquisitions.Thecontinuedfocusonoperationalimprovementsandtheincreasedsizeofthebusinessisresultingineconomiesofscalewithinthebusinessandenhancedoperationalprofitability.
Recurringrevenuestreamsnowrepresent25%oftotalrevenue,comparedto22%inthelastfinancialyear.Theseareamixofsubscriptionrevenuesandhighlypredictablee-commerceincome.
TheBoardexpectsthesetrendstocontinueintothecurrentfinancialyearwhich,atthisearlystage,isperforminginlinewithourexpectations.
Zillah Byng-ThorneChiefExecutive
Strategic Report
Wereach45.4mpeoplethroughsocialmedia
Wereach45.2musersthroughourwebsites
Wesell739,000magazinesandbookazinespermonth
Over38,000peopleattendedourevents
Keydetailsoftheacquisitionswehavemadein2016areincludedbelow:
Acquisition Revenue* Deferred Consideration
NextCommerce £3.3mDeferredconsiderationofupto£550kpayableinFutureplcsharesatendofJanuary2017ifrevenuetargetsexceeded
NobleHouseMedia £0.9m None
AssetsofBlazePublishing £3.1m Upto£320kpayableagainstachievementofgrosscontributiontargets
ImaginePublishing £16.4m None
*RevenuefiguresobtainedfrommostrecentannualfinancialinformationorinthecaseofBlaze,financialinformationrelatingtotheacquiredassets
A global platform for specialist media
Strategic overview
05 Future plc
Future’spurposeissimple;changingpeople’slivesthroughsharingourknowledgeandexpertisewithotherstomakeiteasierandmorefunforthemtodowhattheywant.
Ourcontentispoweredbyourcommunitiesandwebaseeverythingwedoaroundclustersoflike-mindedenthusiastswhoarepassionateabouttheirinterests.Fromvideogamestotechnologyweprovidecontentandexperiencesthatinform,entertainandunitethesecommunities.
Weunderstandwhatisimportantandvaluabletoourpassionateaudiencesandasaresultwearepositionedtodevelopnewprofitablerevenuemodelstofulfiltheirneeds.Wedothisbyinnovatingwithscalabletechnology,uniqueandrelevantcontentandalowcostoperatingmodel.
Ourstrategycentresonleveragingtheconnectionwehavewithouraudiencetomonetisetheconsumer’sneed.
Media
Futureisaplatformbusinesswithadata-ledcontentstrategy.Thecontentcreatesaconnectionwiththeaudience,providingvalueforourclients,fromouraffiliatepartnerstoouradvertisersandalsoforourownbusiness.
Ourstrategymeansthatweunderstandthecustomerpathtopurchase,makingourplatformtheplacewherecontent,codeandcommerceconnect.
Throughourdatainsightsweunderstandwhatouraudiencewantandwheretheywantitwhichenablesustoproducecontentspecialisedandtailoredtothemthroughbuyingguides,reviewsandhow-to’s.
Wehavestrongdigitaladvertisingandcontentsolutionsrevenuescreatedthroughthemeaningfulrelationshipswehavewithourstrategicpartners. TheMediadivision’sstrategyisbasedarounditsglobalandmarket-leadingbrandsandtheconsumerneedthateachfulfils,aswellasadata-ledcontentstrategy.Thedivisionisfocusedonbuildingfast-growingdigitalanddiversifiedrevenues,mostnotablyine-commerceandevents.
DiscoverOureditorialexpertiseandSEOleadershiphelpsurfacecontentthatinformsthepurchasedecisionsofinfluentialconsumers.Ourproficiencyinaidingconsumerdiscoverabilityisakeyfeatureofourbusiness.Techradarisanexcellentexampleofthis;wherewebelieve85%oftheaudiencearriveonthesiteaspartoftheresearchphasefortechnologygoodsand26%goontobuy.
WeareexpertsinSEO;techradarrankednumberoneonGooglesearchforiPhone7whenitlaunched,representingtechradarasaworld-renownedbrandandresultinginthesitehavingitsfourthbiggestdayofalltimewith1.7millionsessions.Millionsofpeoplerelyonusforleadingcontenttrends;PokémonGolaunchedinJuly2016andbytheendofthemonthourPokémonGocontenthadbeenviewed6.2milliontimes.
Ouronlineaudiencehasneverbeenstronger.Attheendof2015anumberofoursitesbroketheirownrecords,whenPCGamer.comreached10millionusers,up37%year-on-year,andtechradarreached22millionusers,up14%year-on-year.InDecember2015,GamesRadar+reached11millionusersand103millionpageviews,thelargesteverwithusersup29%year-on-year.
Wearemarketleaders,holdingthenumberonemarketpositionsintheUKinonlineconsumertechnology,onlinecreative&designandtheglobalnumberonepositioninPCgaming.
EngageWeareexpertsatengagingwithouraudiencebyconnectingthroughcrediblecontentandmeaningfulexperiencesandweempowerouraudiencetoshareandengagewithusandourcommunity.
Futurehassignificantreachonsocialmediawithourgamingbrandshaving12.3millionFacebookfans–farlargerthanourtwobiggestcompetitors,makingusamarket-leadinggamingsocialmediacommunity.
OurcoverageofFallout4inNovember2015wasGamesRadar+’sbiggestsocialmediasuccess,creatingonemillionreferrals–morethandoubleanormalweekday.AdditionallyourYouTubevideoviewsforFallout4reached120,000inasingleday.
Wearecommittedtofulfillingconsumerneedbydeliveringtherightexperience.Wehavedevelopedoureventsbusinessusingtheconnectionwecreatewithouraudiencethroughcontenttoattractthemtoattendourevents.Award-winningThePhotographyShowtookplaceagaininMarch2016,increasingitsnetcontribution17%year-on-year.TheGoldenJoysticksinOctober2015wasthemostsuccessfulyetresultingin9millionvotes,13.5millionpageviewsand770,000users.
PurchaseWearethenewstorefrontdirectlydrivingthepurchaseoftechnologyproducts,gaminghardwareandsoftwarethroughour“Hawk”engine,ouruniqueproprietarypricecomparisondatabase.Hawkhasnowachievedsignificantscalegeneratingover£107millionofgrossrevenueforourcustomersinthelast12months,up199%year-on-year.Weexisttohelpourreadersmakethemostinformedbuyingdecision,servethemthebestdealsontheproductstheydesireandofferguidanceonhowtobesttakeadvantageoftheirgearonceitarrives.
Hawkwasdevelopedin-housetobescalableacrossmultiplebrandsandrobustatahighvolumeoftransactions.Futureservesuptheproductandpricinginformationbasedonanalgorithmthatdeterminesthebestmatchingproductfromitsdatabase.UsingtheGroup’stestedandprovenmethodologyithasimprovedvolumesandconversiontocreateamaterialnewrevenuestream.
FutureiswellplacedtobenefitfromBlackFridayandCyberMondaybytargetingdealsinthetechnologysector.InNovember2015werankednumberoneonGoogleforBlackFridaysearchterms,throughoutthebuild-upandintothedaysthemselves.InNovember201545%oftrafficwentfromtechradarstraighttoashoppingandclassifiedwebsite,comparedto
Strategic Report
26%inMarch2016.Hawkprovidesreal-timepricinginformationonover222millionproductofferingscoveringthemajorityofconsumerproductsinNorthAmericaandWesternEurope.
Magazine
WeareoneofthemostsignificantspecialistmagazineandbookazinepublishersintheUKwithaportfoliocoveringninedifferentsectorsandtitlesavailableinprintanddigitalformats.FutureisamarketleaderforbookazinesintheUK,apositionfurtherstrengthenedbyouracquisitionofImaginePublishing.Additionally,wearethelargestpublisherofdigitalmagazinesintheUK.
TheMagazinedivision’sstrategyistoincreasetheGroup’sefficiencybylaunchingnewpropositionswhilsttightlymanagingthecostbase.Itisalsotakingadvantageofafragmentedmarketthroughacquisitions,whichenablethebusinesstobenefitfromeconomiesofscale.
Thisinnovationcontinueswithanumberofmagazinelaunchesandre-launches,includinglaunchingProfessionalPhotographyinOctober2015toreinforceFuture’smarket-leadingpositioninphotography.
Re-launchesincludedComicHeroesinOctober2015andre-designsofMacFormatinJanuary2016,OfficialXboxinApril2016andTotalFilminJune2016.There-launchofTotalFilmmagazinesawcopysalesincreaseby36%.
Wecontinuetocloselymanagethedeclineinrevenueofthemagazineportfolio.InlinewithtightlymanagingthecostbasetheGroupalsocompletedacomprehensivereviewofitsprocurementprocesses.Asexpected,thishasidentifiedaround£0.6millionofsavings.
Leaner, simpler
Weprideourselvesonbeingbrilliantatthebasicsandkeepingourbusinessleanandsimple,fromproducingmarket-leadingandaward-winningbrandstotightlymanagingourcostbaseandusingsimplebutscalabletechnology.
Wehavedevelopedasingleproprietaryplatformtomanageourwebsitesandhavemigratedallcorebrandsontothisplatform,allowingscalabledevelopmentoftemplatechangesandnewadformats.Wehavealsorolledoutaproprietarybuiltcontentmanagementsystemacrossthedivision,whichisfastandefficientandisdesignedtosupportmulti-mediaeditorialcontentandsupports24hourglobaleditorialcoverage.Thecombinationofthesetwodevelopmentsmeansthatthesignificantamountofcontentpublishedisswiftlyandefficientlymanaged,whiletheoperationasawholecanbeeasilyscaledwithoutanyadditionaloperatingcosts.
Additionally,wehaveupgradedourinternalsystemsinfinanceandadvertisingsales.
Media Services
Ournewdivision,MediaServices,whichweestablishedinOctober2016,strengthensourfocusoncontentpublishing,licensingandothernewopportunitiestofranchiseourdigitalbrandsandeventsinnon-coremarkets.
Weleverageourexpertiseincreatingpremiumandauthoritativecontenttoworkwithleadingbrandstoelevatetheirconversationwithconsumers.Wealreadyhaveanestablishedlicensingrevenuestream,licensingourmagazinecontentto31countries,with68%ofrevenueonannualcontracts,aswellaspublishingtechradarIndiaviaafranchisecontract.
06
The Future Values
We are part of the audience and their communityOurpassionforourproductsmakesuspartofthecommunityweengagewith
We are proud of our past and excited about our futureWeareoneteam,onecompanywithbigambitions
We all row the boatWemovefasterwheneveryonepullsinthesamedirection
Let’s do this!Takethebestdecisionswecaninthefaceofuncertainty–thengoforit!
Results matter, success feels goodWerestlesslylooktoimprove,becreativeandunashamedlycommercialinourventures
It’s the people in the boat that matterHavingtherightteamintheboatismissioncritical
AnnualReportandAccounts2016
Media brands
OurMediadivisionconsistsofanumberofglobalonlinebrandsandeventsnotablyinthetechnology,games,entertainmentandphotographysectors.
OurinfluentialtechnologywebsitesmakeFuturealeadingauthorityonallthingstech.Wecovereverythingfromlifestylegadgetstoauto-tech,bringingouraudiencethelatestdevelopmentsinphones,computing,tablets,wearablesandmore.
Ourflagshiptechnologywebsite,techradar,isthenumberoneconsumertechnologywebsiteintheUK.Ourtechnologybrandsreachover25millionusersaswellas4millionacrossFacebook,TwitterandYouTube.85%oftechradar’saudienceisgeneratedfromtrafficfromsearchengines.Techradargenerated£15millionworthofsalesacrossBlackFridayweekend2015.
Future’siconicgamingbrandsareavoiceofauthorityforgamersworldwide.Wereach15millionusersacrossouronlinegamingbrandsand35millionacrossoursocialmediachannelsmakingusaglobalmarket-leadingsocialcommunityofgamers.Future’srenownedgamingportfolioisthevoiceofauthorityforgamersworldwideandhasinfluencedgamingcultureforover30years.Weholdauniquepositionintheglobalgamesmediamarket,combiningthestrongestgamesindustrypartnershipswithaninnovativemultichannelapproach.GamesRadar+blendsgaming,TVandmovieentertainment,PCGameristhenumberonePCgameswebsiteontheplanetandtheGoldenJoystickAwardsisoneoftheworld’sbiggestconsumer-votedgamingawardsevent.
TheMediadivisionisalsohometotheUK’slargesteventforenthusiastandprofessionalphotographers;theaward-winningandphenomenallysuccessfulThePhotographyShow.
CreativeBloqisthenumberonecreative&designcontentwebsiteintheUKandthe
US,reachingover4millionwebdesigners,developers,graphicdesignersand3Dartistseachmonth.WealsohostthehighlysuccessfulGenerateconferences,theglobaleventforwebdesignersanddevelopers,whichtakeplaceinNewYork,Sydney,LondonandSanFrancisco.
ThisyearsawthesecondPCGamingShowatE3inJune.Theshowwasamassivesuccessresultingin449,000viewsoftheeventonTwitchand2.1millionusersviewingE3contentonourwebsites.E3alsohadapositiveimpactwithincreased(news-focused)traffictoPCGamer,whichbroughtwithitahealthyincreaseincommissionrevenue(28%onPCGamer).
InMarchwelaunchedthePCGamerWeekenderinLondonwhichwassuccessfulintermsofvisitorsandsponsors.
Thisyear’sT3Awardswereaphenomenalsuccesswithattendeewill.i.amdeclaring“threeyearsfromnowtheT3AwardswillbetheGrammysandtheBritsonsteroids”.
Technology and photography brands include:techradarT3GizmodoUKLifehackerUKITProPortalThePhotographyShowMobileChoiceConsumerAwards
Games & entertainment brands include:GamesRadar+PCGamerKotakuUKGoldenJoysticksPCGamingShowatE3PCGamerWeekender
Creative & design brands include:CreativeBloqGenerateconferences
Music brands include:MusicRadarTheLondonAcousticShowTheLondonBassGuitarShowTheLondonDrumShow
Magazine
TheMagazinedivisionpublishesanumberofspecialinterestmagazinesandbookazinesinbothprintanddigitalformatinthegames,entertainment,technology,photography,musicandfieldsportssectors.
Ourgamingprinttitlescovereveryonefromdedicatedindustryprofessionalstopassionateconsolegamers,includingtheofficialPlayStationmagazineandglobalprintPCgamingbrand,PCGamer.
Ourdynamic,market-leadingspecialisttechnologymagazinesprovidein-depthinsightsuchasMacFormatandMaximumPC.TheGroup’sacquisitionofNobleHouseMediasawFutureenterthetechnologyB2Bsector,withtopbrandsincludingconsumermobilemagazine,MobileChoice,aswellastrademagazinesWirelessandMobile.
Future’sfilmmagazinesconnectwithfilmandTVloversworldwide.OurportfolioincludestheiconicmoviemagazineTotalFilm,theequallyrenownedandbest-sellingsciencefictiontitleSFX,andthegenre-specificbrandsCrimeSceneandComicHeroes.Ourcombinationofauthorityandaccessensuresthatouraudiencestaysontopofthelatestmovie,TVandfictionnews.InJune2016TotalFilmre-launchedwithanewtagline“TheSmarterMovieMagazine”andalargersizethatreflectsthepassionatemodernfilmconsumerandgivesgreaterdepthofcoveragetothelatestfilms.AsaresultTotalFilmhasseenaremarkablespikeinsalesfollowingthere-launchwitha36%increaseissue-on-issue.
FutureistheUK’sleadingpublisherofmagazinesaboutphotography.Ourmagazinesofferpracticaladviceandinspirationtophotographersofallskilllevels.
Our divisionsWhat we do
07 Future plc
Futureplcisaninternationalmediabusinessorganisedintotwodivisions,MediaandMagazine.
Themarket-leadingDigitalCameramagazinecoversD-SLRandCSChobbyists,CanonfansturntoPhotoPlus,N-Photois100%Nikon-focused,whileProfessionalPhotographymeetstheneedsoftheworkingprofessional.
Ourmusicportfolioinformsandinspiresmusic-makerstobeevengreateratthethingtheylove;we’vegotitcoveredonguitars,drumsandhi-tech.
Weproducemarket-leadingcreativeanddesignprintmagazinesincludingnet,ImagineFX,3DWorldandComputerArts.
OuracquisitionofassetsfromBlazePublishinghasenteredusintoanewvertical,fieldsports.
ThroughouracquisitionofImaginePublishing,wehavegainedmagazineswithinthehistory,knowledgeandsciencesectors.
Technology and photography brands include:T3MacFormatMaximumPCMobileChoiceDigitalCameraN-PhotoPhotoPlus
Games & entertainment brands include:OfficialPlayStationPCGamerSFXTotalFilm
Creative & design brands include:3DWorldComputerArtsnet
Music brands include:GuitaristRhythmComputerMusicAcousticMagazine
Field sports brands include:AirgunShooterSportingRifleBowInternational
Media Services
OurnewMediaServicesdivision,whichweestablishedinOctober2016,encompassesourcontentpublishingbusinessFutureFusionandourlicensingbusiness.
FutureFusionisourin-housecreativeserviceagency.Wecreatecontentforglobalaudiencesacrossourmedianetworkandbeyond.Ourclientsaresomeoftheworld’sbiggestbrandswithinoursectorsandwealsooperateinnon-coresectorssuchastravelandmotoringprovidingown-brandedcontentforourclients.
Welicenseandsyndicateoureasilytransferablecontentto31overseasmarketsandwecontinuetobethenumberonelicensingpartnerinourspecialistsectorsformediaaroundtheworld,withmarket-leadingcontentdeliverysystemsandefficientbusinessprocesses.
Additionally,thedivisionhasdedicatedresourcetofocusonareasinourbusinessthathavegoodgrowthprospects,whichincludeopportunitiesinnon-coremarketstofranchiseourdigitalbrandsandeventsaswellasdrivinggrowthinlicensingandFutureFusion.
Strategic Report
AnnualReportandAccounts2016 08
Business review
Business review
Key Performance IndicatorsThekeyperformanceindicatorsarepresentedonacontinuingbasis.
2016 2015
Corporate KPIsEBITDAE(£m): 4.7 3.6EBITE(£m): 2.3 0.8Media Division KPIsNumberofusersvisitingourwebsites(monthly) 45.2m 48.5mNumberofeventattendees(thousands) 38.3 32.0Numberofe-commercetransactions(thousands) 1,128 563Magazine Division KPIsNumberofcopiessoldpermonth(thousands) 739 818Subscriberbase(thousands) 399 466Copiessoldasapercentageofcopiesprinted (includingsubscriptions)
45% 50%
09 Future plc
Risks and uncertainties
Likeallbusinesses,ourbusinessfacesrisksanduncertaintiesthatcouldimpacttheGroup’sachievementofitsobjectives.Riskisacceptedasbeingapartofoperatinganybusinessandwehavethereforeestablishedacontinuousprocessofidentifying,evaluatingandmanagingrisk.
Risks and uncertainties
Risk management
Risks Description Mitigation
Operating environment Thestructuralchangeinouroperatingenvironmentandthepaceofthetransitionfromprintremainarealrisk.Thereisariskthatprintcirculationvolumesandprintadvertisingrevenuesdeclineatafasterratethananticipatedanddigitalrevenuesdonotgrowataratetooffsetthedecline.
Futurecontinuestoinnovate,makingavailableitsspecial-interestcontenttoconsumersinprint,wherewehavehadanumberofsuccessfullaunches.Wecreatebest-in-classcontenttocreateanemotionalconnectionwithouraudiencesofengagedenthusiasts,whorepresentanattractiveaudienceforadvertisers.Wehavebecomeanintegralpartofthepurchasecyclewhichcanbemonetisedviaaffiliatesande-commerce.
Debt financing Futurehadabankfacilitytotalling£5.0mat30September2016.Failuretocomplywiththefinancialcovenantsofthefacilitycouldresultinadditionalfinancecostsandthepossiblewithdrawalofthefacility.
Futurecontinuallymonitorsitscashflowsandcovenantsandhasoperatedwithinallitscovenantsthroughouttheyear.FollowingtheacquisitionofImagine,theGroupsecurednewfacilitiestotalling£14.0mwhichexpireinJune2021.
Intellectual property Futureuses,andgrantslicencestoitslicenseesallowingthemtouse,varioustypesofthird-partycontentincludingmusic,audiovisualmaterial,photos,imagesandtext.Asapublisher,Futureisresponsibleforanyintellectualpropertyorotherinfringementrelatingtothesameandaslicensor,Futureisresponsibletoitslicensees.
Futureproducesguidanceandin-housetrainingtoeducateitsstaffontheimportanceofobtainingappropriaterightsorlicencesandhasadedicatedin-houserightsmanagementteam.Future’slegalteamreviewsallsignificantlicencesrelatingtothird-partycontentand,whereappropriate,seekswarrantiesandindemnitiesrelatingtothesame.FuturelicensescontenttothirdpartiesbasedonstandardcontractswhichseektolimitFuture’sliability.
Financial Thelonglagtimeforreportingonsalesofexportedprintedcopiescontinuestobeanareaofforecastinguncertainty.
Forecastingremainsdifficultinallconsumermarkets.Aswecontinuetodiversifyourrevenuestreams,newactivitiesareinherentlymoredifficulttoforecastaccurately.
Advertisingpipelinescanbesubjecttoslippage,withtheriskthatresultingrevenueispushedintolateraccountingperiods.
TheGroupisexposedtointerestrateriskandforeignexchangerisk.
Thesignificantissuesconsideredinrelationtothefinancialstatementsfortheyearended30September2016aresetoutintheAuditCommitteesectionoftheCorporateGovernancereportonpage27.
Onprintedproduct,inparticularbookazines,amoreconservativeinitialviewonsalesestimatescontinueswithemergingtrendsbecomingmoreapparent.
Future’sforecastinginrespectofinnovativeproductswillbecomeeasierasthoseproductsdevelopamoreconsistentcustomerbaseandstablebusinessmodels.
Carefulmonitoringofthepipelineandbookingstoclosethegapintheeventofanyshortfall.
TheDirectorsconsiderFuture’sexposuretointerestrateandforeignexchangerisktobelowandthereforetherearenohedgesinplace(seenote22tothefinancialstatementsformoredetail).
ReviewbyAuditCommitteewithexternalauditor.
IT Thebusinessisincreasinglydependentontechnology.
Intheeventofatotalnetworkorserverfailure,ordataloss,therewouldbeamajorimpactontheproductionofmagazines,operationofwebsitesandtheoperationaleffectivenessofthebusiness.
Future’snetworkhasatleasttwodiverseroutesforallkeyofficesandbusiness-criticaldataisheldonthreehighlyresilientstoragedevicesindifferentlocations.Inaddition,allcoreswitchesareduplicatedindifferentbuildingssotherearenosinglepointsoffailure.ServersaredistributedacrosstwomaindatacentrelocationsandseveralcontrolledserverroomsindifferentbuildingsinBathandSanFrancisco.Futurecanswitchservicesfromoneservertoanotherwithinafewhours.Inaddition,allmission-criticalserviceshavemorethanoneserversothereisnosinglepointoffailure.FurtherinvestmentintheITinfrastructurehasbeenmadein2016andmoreisalreadyunderwayin2017.
Staff TheGroup’sstrongreputationasaleadingcontentprovidermakesitsstaffpotentiallyattractivetocompetitors.ThereisariskthatkeystaffwillmoveelsewhereifofferedsignificantincreasesinremunerationwithwhichFutureisunabletocompete.
Futureemployspeoplewhoarepassionateabouttheirsubject.Futureoffersanumberofstaffbenefitsandincentiveprogrammestoattractandretainkeystaff,andstepsaretakentoensurethattheGroupisnotexcessivelyreliantuponanyoneemployee.
Personal data and cyber fraud
AlossofpersonaldataoracyberattackwouldtriggertheneedtonotifyusersandtheInformationCommissioner’sOffice(ICO)andFuturemaysufferreputationalrisk,aswellasasignificantfinancialpenalty,ifitisresponsibleforthebreach.
Futureseekstoensureallofitssystemscomplywithbestpracticeasregardstosecurityandhasinplaceaplantomitigatetheeffectsofanyhack.TheGroupiscontinuallyinvestingandupgradingitsITsystemsandprocessestoensurethattheyaresufficientlyrobustandappropriateforthedigitalage.
Noattacksweresufferedin2016.
10AnnualReportandAccounts2016
Risk management
Risks Description Mitigation
Operating environment Thestructuralchangeinouroperatingenvironmentandthepaceofthetransitionfromprintremainarealrisk.Thereisariskthatprintcirculationvolumesandprintadvertisingrevenuesdeclineatafasterratethananticipatedanddigitalrevenuesdonotgrowataratetooffsetthedecline.
Futurecontinuestoinnovate,makingavailableitsspecial-interestcontenttoconsumersinprint,wherewehavehadanumberofsuccessfullaunches.Wecreatebest-in-classcontenttocreateanemotionalconnectionwithouraudiencesofengagedenthusiasts,whorepresentanattractiveaudienceforadvertisers.Wehavebecomeanintegralpartofthepurchasecyclewhichcanbemonetisedviaaffiliatesande-commerce.
Debt financing Futurehadabankfacilitytotalling£5.0mat30September2016.Failuretocomplywiththefinancialcovenantsofthefacilitycouldresultinadditionalfinancecostsandthepossiblewithdrawalofthefacility.
Futurecontinuallymonitorsitscashflowsandcovenantsandhasoperatedwithinallitscovenantsthroughouttheyear.FollowingtheacquisitionofImagine,theGroupsecurednewfacilitiestotalling£14.0mwhichexpireinJune2021.
Intellectual property Futureuses,andgrantslicencestoitslicenseesallowingthemtouse,varioustypesofthird-partycontentincludingmusic,audiovisualmaterial,photos,imagesandtext.Asapublisher,Futureisresponsibleforanyintellectualpropertyorotherinfringementrelatingtothesameandaslicensor,Futureisresponsibletoitslicensees.
Futureproducesguidanceandin-housetrainingtoeducateitsstaffontheimportanceofobtainingappropriaterightsorlicencesandhasadedicatedin-houserightsmanagementteam.Future’slegalteamreviewsallsignificantlicencesrelatingtothird-partycontentand,whereappropriate,seekswarrantiesandindemnitiesrelatingtothesame.FuturelicensescontenttothirdpartiesbasedonstandardcontractswhichseektolimitFuture’sliability.
Financial Thelonglagtimeforreportingonsalesofexportedprintedcopiescontinuestobeanareaofforecastinguncertainty.
Forecastingremainsdifficultinallconsumermarkets.Aswecontinuetodiversifyourrevenuestreams,newactivitiesareinherentlymoredifficulttoforecastaccurately.
Advertisingpipelinescanbesubjecttoslippage,withtheriskthatresultingrevenueispushedintolateraccountingperiods.
TheGroupisexposedtointerestrateriskandforeignexchangerisk.
Thesignificantissuesconsideredinrelationtothefinancialstatementsfortheyearended30September2016aresetoutintheAuditCommitteesectionoftheCorporateGovernancereportonpage27.
Onprintedproduct,inparticularbookazines,amoreconservativeinitialviewonsalesestimatescontinueswithemergingtrendsbecomingmoreapparent.
Future’sforecastinginrespectofinnovativeproductswillbecomeeasierasthoseproductsdevelopamoreconsistentcustomerbaseandstablebusinessmodels.
Carefulmonitoringofthepipelineandbookingstoclosethegapintheeventofanyshortfall.
TheDirectorsconsiderFuture’sexposuretointerestrateandforeignexchangerisktobelowandthereforetherearenohedgesinplace(seenote22tothefinancialstatementsformoredetail).
ReviewbyAuditCommitteewithexternalauditor.
IT Thebusinessisincreasinglydependentontechnology.
Intheeventofatotalnetworkorserverfailure,ordataloss,therewouldbeamajorimpactontheproductionofmagazines,operationofwebsitesandtheoperationaleffectivenessofthebusiness.
Future’snetworkhasatleasttwodiverseroutesforallkeyofficesandbusiness-criticaldataisheldonthreehighlyresilientstoragedevicesindifferentlocations.Inaddition,allcoreswitchesareduplicatedindifferentbuildingssotherearenosinglepointsoffailure.ServersaredistributedacrosstwomaindatacentrelocationsandseveralcontrolledserverroomsindifferentbuildingsinBathandSanFrancisco.Futurecanswitchservicesfromoneservertoanotherwithinafewhours.Inaddition,allmission-criticalserviceshavemorethanoneserversothereisnosinglepointoffailure.FurtherinvestmentintheITinfrastructurehasbeenmadein2016andmoreisalreadyunderwayin2017.
Staff TheGroup’sstrongreputationasaleadingcontentprovidermakesitsstaffpotentiallyattractivetocompetitors.ThereisariskthatkeystaffwillmoveelsewhereifofferedsignificantincreasesinremunerationwithwhichFutureisunabletocompete.
Futureemployspeoplewhoarepassionateabouttheirsubject.Futureoffersanumberofstaffbenefitsandincentiveprogrammestoattractandretainkeystaff,andstepsaretakentoensurethattheGroupisnotexcessivelyreliantuponanyoneemployee.
Personal data and cyber fraud
AlossofpersonaldataoracyberattackwouldtriggertheneedtonotifyusersandtheInformationCommissioner’sOffice(ICO)andFuturemaysufferreputationalrisk,aswellasasignificantfinancialpenalty,ifitisresponsibleforthebreach.
Futureseekstoensureallofitssystemscomplywithbestpracticeasregardstosecurityandhasinplaceaplantomitigatetheeffectsofanyhack.TheGroupiscontinuallyinvestingandupgradingitsITsystemsandprocessestoensurethattheyaresufficientlyrobustandappropriateforthedigitalage.
Noattacksweresufferedin2016.
01 Identificationofrisks
02 Evaluationoflevelofrisksandcontrolsinplacetomanagethoserisks
03 Actiontakentomanagerisks
04 Risksreportedandmonitored
01. I
DENTIFy 02. EVALUATE03. ACT
04. REPORT
Future’s assessment
of risks
There are a number of general business risks to which Future is naturally exposed in the UK and US. In addition, the range of industry-specific risks faced by Future continues to increase, due to the increasingly digital focus of the media landscape and the increasing number of evolving business models.
Ourinternalcontrolsseektominimisetheimpactofrisks,asexplainedinourCorporateGovernancereportonpage25,andduringtheyearwehavecontinuedtodevelopthosecontrolsinresponsetothewiderrangeofrisks.
Strategic Report
11 Future plc
Corporate responsibility
CorporateresponsibilityisintegraltothewayFutureconductsitsbusiness.Wefocusoureffortsaroundthreekeyareaswherewethinkwecanmakeadifference.
Responsible business
1. The environment
Aresponsibleapproachtotheenvironmentisessentialtoensurethefuturesustainabilityofourbusiness.
Sourcing paperPaperisthelargestrawmaterialweuseasaGroup.Weworkhardtomakesurethatwhateverweconsume,wedoinawaythatisethicallyresponsibleandenvironmentallysustainable.In2016,100%ofourpaperacrosstheGroupwassourcedfromeitherrecycledfibreorsustainableforestswhereatleastonetreeisplantedforeverytreefelled.IntheUK,FutureholdstheFSC(ForestryStewardshipCouncil)ChainofCustodycertification.ThisrecognisesFuture’scommitmenttosourcingpapersuppliesfromsustainableforests.
In2016,over90%ofthepaperweusedintheUKwasFSCcertified.WeactivelyencourageoursupplierstoworktowardsFSCcertificationoroneoftheotherinternationallyrecognisedandindependentlyauditedcertificationschemesforenvironmentalcareinforestmanagementandconservation.
Recycling and wasteTheGroupisstronglyincentivisedtominimisethenumberofunsoldmagazinesandweemploysophisticatedtechniquestohelpachievethis.IntheUK,Future’sunsoldmagazinesarerecycled.WealsosupportthePPA’sinitiativeencouragingreaderstorecycletheirmagazinesafteruseandweincorporatetheWRAPrecyclelogoinallourmagazines.WecomplywithourobligationsundertheProducerResponsibilityObligations(PackagingWaste)Regulations.Thedisposalofwastematerialsisalsoincludedinourprintsupplieraudit.
Supplier auditsWeundertakeenvironmentalandethicalauditsonourmainsupplierswhichincludeaspectssuchastheprocessinganddisposalofeffluents,emissionsandwastematerials,andtheuseoflabour.
2. Our people
Future’semployeesareourmostimportantassets;theyarethedrivingforcebehindoursuccessasabusiness.
Health and safetyThehealthandsafetyofallemployeesisakeypriorityfortheGroup.Futureislargelyanoffice-basedenvironment.AllcompaniesacrosstheGroupcomplywithrelevantlegislationandwecommunicateourhealthandsafetypolicytoallemployees.IntheUK,duringtheyearto30September2016,therewerenofatalities,noreportable(RIDDOR)injuries,andnominorinjuries.TherewerenofatalitiesorinjuriesintheUSorAustraliaduringthisyear.
Policy on disabilityTheGroupaimstoensurethatwhenconsideringrecruitment,training,careerdevelopment,promotionoranyotheraspectofemployment,noemployeeorjobapplicantisdiscriminatedagainst,eitherdirectlyorindirectly,onthegroundsofdisability.
Ifanemployeebecamedisabledwhileinemploymentandasaresultwasunabletoperformtheirduties,wewouldmakeeveryefforttooffersuitablealternativeemploymentandassistancewithretraining.
Internal communicationFuturehaspoliciesonemployeecommunication,acceptableuseofIT,healthandsafetyandwhistle-blowing,andwehaveacommitmenttodiversityandopportunity.
Weholdregulartownhallsessionsforallemployees,andextendedleadershipteammeetingswherewediscusskeystrategicinitiativesandtheperformanceofthebusiness.IntheUKweheldanallcompanyconferenceinOctober2016.Theseinitiativesensurethatcommunicationisconstantlyimprovingacrossthebusiness,reinforcethebuildingofapositiveworkingenvironmentwherewecelebratesuccessesandalsohelptoensurethereisalignmentacrossthebusiness.Ourenvironmentisonewhereweencourageemployeestofreelygivetheirviewsandcontributetoinitiatives,asthiscontinuouslydevelopsandimprovesourofferingforthebenefitofourconsumersandclients.
3. The community
Giving something back IntheUKtheGrouphasworkedinpartnershipwithBath-basedcharitablefoundationQuartet,whomakedonationstolocalcharitiesonourbehalf.
Future in the wider communityFuturepeoplehavebeenactivelyinvolvedintheyearwithanumberofnationalorganisationsincludingtheProfessionalPublishersAssociation,EuropeanMagazineMediaAssociation,AssociationofOnlinePublishers,NABS,European&LeisureSoftwarePublishersAssociation,theIPA,theMarketingSocietyandtheInternationalFederationofthePeriodicalPress.
Employment data across the Group 2016
Splitoffemale:maleemployeesasat30September2016 32%:68%Splitoffemale:maleDirectorsoftheCompanyasat30September2016 3:2Splitoffemale:malemembersoftheExecutiveCommitteeasat30September2016 1:5Earningsmeetatleastlegalminimumorminimumsetbyindustry yesCasesofreportedandprovendiscriminationorharassment NoneConsultationandcommunicationproceduresinplaceforallareasofthebusiness yesCodeofconductcirculatedtoallexistingandnewemployees yesEmploymentofyoungpeopleundertheageof15 None
FutureintheUKholdsFSCChainofCustodycertification.ThisrecognisesFuture’scommitmenttosourcingpapersuppliesfromwellmanagedforestry.
WearemembersoftheProfessionalPublishersAssociation(PPA)andsupportitsinitiativeencouragingreaderstorecycletheirmagazinesafteruse.WeincorporatetherecyclelogoinallourUKmagazines.
WeworkinpartnershipwithBath-basedcharitablefoundation,Quartet.
Strategic Report
12AnnualReportandAccounts2016
Statement of Greenhouse Gas (GHG) Emissions for the Group
Global GHG emissions in tonnes of CO2 equivalent:
Emissions from 2013 (base year) 2016
Total Total
Thecombustionoffuel:gasforheatingandfuel; forvehicles(Scope1)
UK 470 131US 102 -Total 572 131
Thepurchaseofelectricity:heat,steamorcooling bytheGroupforitsownuse(Scope2)
UK 1,310 493US 376 8Total 1,686 501
Total Emissions (CO2e Tonnes) 2,258 632Total Revenue £112.3m £59.0mIntensity Ratio (CO2e Tonnes per £1m) 20.1 10.7
WehavereportedonalloftheemissionsourcesrequiredundertheCompaniesAct2006(StrategicReportandDirectors’Reports)Regulations2013.
Theemissionssourcesfallwithinourfinancialstatements.Wedonothaveresponsibilityforanyemissionsourcesthatarenotincludedinourfinancialstatements.
Methodology:WehaveusedtheUKGovernment’sEnvironmentalReportingGuidance.Wehaveappliedthe2016DEFRAGHGConversionFactorRepositorytocalculatetheCO2e.AsaGroupwithonlyoffice-basedactivitiesandnomanufacturingactivities,undertheGHGProtocolCorporateStandard,ouremissionsfallunderScope1(thecombustionoffuel)andScope2(thepurchaseofelectricity).
Notes:
• Scope1–Timeperiodsforcombustionofgasforheating–figuresforallofficesareforthefinancialyear.Allfiguresareestimatesbasedon%shareofofficespacewithinleasedbuildingsexceptforUKBathofficeswhichareactualconsumptionwherewholebuildingsorfloorswithinbuildingshavetheirownmeters.
• Scope1–Timeperiodsforcombustionoffuelinvehicles–onlytheUKoperatesleasedvehiclesandfiguresfortheconsumptionoffuelarebasedonaveragedannualmileage.
• Scope2–Timeperiodsforconsumptionofelectricity–figuresfortheUKandUSofficesareforthefinancialyear.FiguresfortheAustralianofficearepro-ratedfromtypical(August2016)monthlyconsumption.Allfiguresareestimatesbasedon%shareofofficespacewithinleasedbuildingsexceptfortheUSofficein2016andUKBathofficeswhichareactualconsumptionwherewholebuildingsorfloorswithinbuildingshavetheirownmeters.
• Scope2–ElectricitySources–Noelectricitywaspurchasedfromownedorcontrolledsources.
• FugitiveEmissions–theGroupbenefitsfromairconditioninginsomeofitsleaseholdbuildings.Thescaleofemissionsfromleaksisverysmall(estimatedtobelessthan0.5%oftotalemissions)andisdeemedtobeimmaterialtooverallreportingandtrends.
• BaseYear-Financialyear2013isourbaselineyear.
• IntensityRatio-weareusing‘Tonnesper£1millionrevenue’.
• Wehavemaintainedourfocusonotherenvironmentalimpacts,particularlyinitiativestoreducewasteandtocontinuesourcingallourmagazinepaperfromsustainableforestry.
Financial review
13 Future plc
ThefinancialresultsdemonstratethattheGroupisprogressingwellwiththeOptimisationphaseofitsstrategy,withexcitingtimesaheadfollowingtheacquisitionofImagine.
Optimisation
Financial summaryThefinancialreviewisbasedprimarilyonacomparisonofcontinuingresultsfortheyearended30September2016withthosefortheyearended30September2015.Unlessotherwisestated,changepercentagesrelatetoacomparisonofthesetwoperiods.
Continuingoperations2016
£m2015£m
Revenue 59.0 59.8EBITDAE 4.7 3.6Depreciationcharge (0.4) (0.5)Amortisationofintangibleassets (2.0) (2.3)Operatingprofitpre-exceptionalitems 2.3 0.8Exceptionalitems (3.5) (2.5)Impairment (13.0) -Operatingloss (14.2) (1.7)Netfinancecosts (0.7) (0.6)Lossbeforetax (14.9) (2.3)
Losspershare(p) (4.0) (0.6)Adjustedearningspershare(p) 0.4 0.0
Revenue
Grouprevenuewas£59.0m(2015:£59.8m)reflectingthecontinuedchangeinthebusinesswiththenewrevenuestreamsgrowingstronglywhilsttheprintrevenues,asexpected,continuetodecline.UKrevenuewas£44.7m(2015:£47.3m)andintheUS£15.2m(2015:£13.4m).
TheGroup’sfocusisonbuildingrecurringrevenuestreams,whichhaveannuitylikequalities.Theseencompasse-commerceandsubscriptions,andnowrepresent25%oftheGroup’stotalrevenue(2015:22%).
Media
Mediarevenuehasincreasedby14%to£23.9m(2015:£20.9m),drivenbytheGroup’sfastgrowingrevenuestreams,e-commerceandevents.
IntheUK,Mediarevenuesincreasedby8%to£14.1m(2015:£13.1m),drivenbythenewrevenuestreamsofe-commerceandevents.Inonlyitsthirdyear,ThePhotographyShowatBirmingham’sNECgeneratedrevenuegrowthof12%year-on-year.DigitaladvertisingintheUKnowrepresents69%(2015:72%)ofUKadvertisingrevenues.
TheUSalsodeliveredstronggrowth,up24%year-on-yearto£10.4m(2015:£8.4m),withrevenuefromaffiliatesbeingthebiggestdriverofthisgrowth.DigitaladvertisingintheUSnowrepresents88%(2015:85%)ofUSadvertisingrevenues.
Magazine
Magazinerevenuedeclinedinlinewithexpectationsto£35.1m(2015:£38.9m),reflectingthemarket’soverallstructuraldecline.Afocusonsubscriptionrevenues,however,hasincreasedthemixofrecurringrevenuesinthisdivisionto30%from29%in2015.Thedivisionisconstantlylookingforwaystoinnovateandlaunchedfivenewmagazinesintheyear.
“ Operating profit pre-exceptional items has grown 188% year-on-year to £2.3m, reflecting improvements in operational efficiency.”
Penny Ladkin-Brand ChiefFinancialOfficer
andCompanySecretary
Group revenue 2015
1:Media35%2:Magazine65%
Financial Review
14AnnualReportandAccounts2016
EBITDAE
TheGroup’sEBITDAEwasup31%to£4.7m(2015:£3.6m),ofwhich£2.8m(2015:£3.3m)wasUKand£1.9m(2015:£0.3m)wasUS.TheswinginprofitmarginsbetweentheUKandUSisinlargepartareflectionofthestrategytocreateoperationalcentresofexcellenceinlowercostenvironments,withallofthebackofficecostsfortheGroupnowlocatedintheUK.Duringthecourseoftheyear,globalfunctionswereintroducedformostoperationalteams,allowingresourcestobelocatedinthemostfinanciallyandoperationallyeffectivelocations.ThishashelpedtoimprovetheoverallGroupprofitabilitythroughgreateroperationalgearingandallowedtheUSoperationstogrowfromstrengthtostrength.
Future’sheadcountwasfurtherreducedfrom521to449employeesandrationalisationoftheGroup’soverheadbasecontinuedwithafocusonprocessre-engineering.AllwebsiteshavenowbeenmigratedontotheGroup’sproprietaryplatformandaglobalcontentmanagementsystemmigration(CMS);thefinalCMSmigrationwillbecompletedinQ1.ThisputstheGroupinastrongpositiontobenefitfromeconomiesofscaleasthenumberofbrandsincreases.AllacquisitionsmadeduringFY16havebeenfullyintegratedintotheGroup’soperationsandsystems.
Exceptional items and impairment
Exceptionalcostswere£3.5m(2015:£2.5m).Restructuringcostsof£1.8mincludeheadcountreductionandtransformationexpenses.Acreditof£0.5mwasrecognisedasdilapidationcostsforlegacyofficeswerelowerthanoriginallyexpected.
ThebalanceofexceptionalcostsprincipallycompriseacquisitionrelatedcostsinrespectoftheacquisitionofMiura(Holdings)Limited,theultimateparentcompanyofImaginePublishingLimited,whichwascompletedon21October2016.
Anon-cashimpairmentchargeof£13.0mhasbeenrecognisedagainstgoodwillattributabletotheUKbusiness.ThisreflectsashiftintheunderlyingprofitabilityandcashflowsoftheGroupandthecontinueddeclineofprint.
Net finance costs
Netfinancecostswere£0.7m(2015:£0.6m)withtheincreaserepresentingasmallforeignexchangeloss(profitin2015)reflectingthevolatilityofcurrencymarkets.
TheGrouppre-taxlosswas£14.9m(2015:£2.3m).
Taxation
Thetaxcreditfortheyearamountedto£0.5m(2015:£0.3m),comprisingacurrenttaxchargeof£1.3m(2015:creditof£0.3m)andadeferredtaxcreditof£1.8m(2015:£nil)predominantlyrelatedtotherecognitionofaportionofUSlosses.ThecurrenttaxchargearisesintheUKwherethestandardrateofcorporationtaxis20%.
OveralltheeffectiveratefortheGroupwhenappliedtothelossbeforetaxwas3%(2015:13%).TheGroupcontinuestofocusoncompliancewithtaxauthoritiesinallterritoriesinwhichitoperates.
Group revenue 2016
1:Media41%2:Magazine59%
1
2
1
2
Financial review
15 Future plc
(Loss)/earnings per share
2016 2015
Basiclosspershare(p) (4.0) (0.6)Adjustedearningspershare(p) 0.4 0.0
Adjustedearningspershareisbasedonthelossaftertaxationwhichisthenadjustedtoexcludeexceptionalitems,impairmentandrelatedtaxeffects.Thecontinuingadjustedprofitaftertaxamountedto£1.5m(2015:£0.1m)andtheweightedaveragenumberofsharesinissuewas362m(2015:333m).
Dividend
TheBoardisnotrecommendingafinaldividendfortheyear(2015:£nil).
Cash flow and net debt
Netcashat30September2016was£0.5m(2015:netdebt£1.8m),animprovementof£2.3mintheyear.
FollowingtheacquisitionofImagine,theGrouprefinancedImagine’sexistingdebtandsettledoutstandingfeesandotherdealrelatedcosts,totalling£7.4m.
Duringtheyear,therewasacashinflowfromoperationsbeforeexceptionalitemsof£6.5m(2015:£2.3moutflow)arisingfromanimprovementinworkingcapitalandtradingperformance.
Thiswasoffsetby£3.4m(2015:£5.2m)ofexceptionalrestructuringpaymentsmadeintheyear,£1.9m(2015:£2.0m)ofcapitalexpenditure,netproceedsfromashareplacingof£3.1mandpaymentsof£0.9mtofundacquisitions(netofcashacquired).Foreignexchangeandothermovementsaccountedforthebalanceofcashflows.
Credit facility and covenants
TheGrouphadavailablefacilitiesofupto£5.0mat30September2016.FollowingtheacquisitionofImaginetheGroupsecurednewdebtfacilitiestotalling£14.0mexpiringinJune2021.Furtherdetailsofthesenewfacilitiesareincludedwithinnote19.
Going concern
Afterdueconsideration,theDirectorshaveconcludedthatthereisareasonableexpectationthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.ForthesereasonstheDirectorscontinuetoadoptthegoingconcernbasisinpreparingtheconsolidatedfinancialstatementsfortheyearended30September2016.
Post balance sheet event
On21October2016theGroupannouncedthecompletionoftheacquisitionofMiura(Holdings)Limited,theholdingcompanyandultimateparentcompanyofImaginePublishingLimited,forequityconsiderationof£15.3m.
1
2
3
Financial Review
16AnnualReportandAccounts2016
Key performance indicators (KPIs)
ManagementusesanumberofKPIstomeasuretheGroup’soperationalandfinancialperformance,themostimportantoftheseKPIsaresetoutonpage8.
Conclusion
TheGrouphasmovedintoaperiodofoptimisation,withtheacquisitionofImagineprovidingadditionalscaleandcashgenerationandpresentinganumberofexcitingopportunities.TheGroupiswellplacedtoachieveitsambitionsfor2017andbeyond.
TheStrategicReport(whichcomprisestheGroupoverview,Chairman’sstatement,ChiefExecutive’sreview,Strategicoverview,Whatwedo,RisksanduncertaintiesandCorporateresponsibilitysections)andtheFinancialReviewareapprovedbytheBoardofDirectorsandsignedonitsbehalfby:
Penny Ladkin-BrandChiefFinancialOfficerandCompanySecretary13December2016
Strong leadershipBoard of Directors
17 Future plc
Peter AllenIndependentnon-executiveChairman
Zillah Byng-ThorneChiefExecutive
Manjit WolstenholmeSeniorindependent non-executive
Penny Ladkin-Brand ChiefFinancialOfficerandCompanySecretary
Hugo DraytonIndependentnon-executive
James HanburyDeputyChairman
18AnnualReportandAccounts2016
Peter Allen Chairman sln
PeterwasnamedChairmaninAugust2011.HewasChiefFinancialOfficerofCelltechGroupplcbetween1992and2004.In2003hewasalsoappointedDeputyChiefExecutiveOfficerofCelltechuntilthecompanywassoldin2004.HewasChiefFinancialOfficeroftheelectronicscompanyAbacusGroupplcfrom2005untilthecompanywassoldtoAvnetIncinJanuary2009.PeteriscurrentlyChairmanofClinigenplc,AdvancedMedicalSolutionsGroupplc,OxfordNanoporeTechnologiesLimitedandDiurnalLimited.
James Hanbury DeputyChairman sl
JameswasappointedDeputyChairmaninOctober2016astherepresentativeofDisruptiveCapitalInvestmentsLimited.PriortohisappointmenthewasChairmanofImaginePublishing,whichwasacquiredbyFutureinOctober2016.JamesjoinedtheBoardofImagineinMarch2014soonafterleavingIncisiveMedia,apublishingbusinessheco-foundedin1994.HehasalsopreviouslychairedtheBusinessMediaCouncilofthePPA.JamesalsoactsasanadvisertoanumberofVCbackedbusinesses,isatrusteeforacharitabletrustandhassetupandchairsWARpaint,afundraisingorganisationforseveralarmedforcescharities.
Penny Ladkin-Brand ChiefFinancialOfficer andCompanySecretaryPennywasappointedasChiefFinancialOfficerandCompanySecretaryon3August2015,havingjoinedthebusinessasinterimChiefFinancialOfficerinJune2015.PriortothisshewasCommercialDirectoratAutoTraderGroupplc.Pennyisacharteredaccountantwithabackgroundindigitalmediaandexpertiseindigitalmonetisationmodels.
Zillah Byng-Thorne ChiefExecutive
ZillahwasappointedasChiefExecutiveon1April2014.ShejoinedFutureinNovember2013asChiefFinancialOfficerandCompanySecretary.PriortoherappointmenttotheFutureplcBoard,shewasCFOofTraderMediaGroup–ownerofAutoTrader–from2009to2012,andinterimCEOofTraderMediafrom2012to2013.Beforethis,ZillahwasCommercialDirectorandCFOatFitnessFirstLimitedandChiefFinancialOfficeroftheThresherGroup.Zillahiscurrentlyanon-executiveDirectorofPaddyPowerBetfairplcandGocompare.comGroupplc.Zillahisaqualifiedaccountantandcorporatetreasurer.
Manjit Wolstenholme Seniorindependentnon-executive sln
ManjitjoinedFutureastheseniornon-executiveDirectorinFebruary2011.SheisChairmanofProvidentFinancialplcandCALAGroup,andanon-executiveDirectorofUniteGroupplcandCMCMarketsplc.Afterqualifyingasacharteredaccountantin1988withPricewaterhouseCoopers,Manjitspent13yearswithDresdnerKleinwort,latterlyasco-headofinvestmentbankingincludingmorethanadecadespecialisinginthemediasector.ShewasapartneratGleacherShacklockfrom2004to2006.
Hugo Drayton Independentnon-executive sl
HugojoinedFutureon1December2014.HeisCEOoftheadvertisingtechnologybusiness,InSkinMedia.PriortoISM,hespenttwoyearsasCEOofbehaviouraltargetingspecialist,Phorm,followingtwoyearsasEuropeanManagingDirectorofAdvertising.com.Hespent10yearsatTheTelegraphGroup,asGroupManagingDirector,andpreviouslyasMarketing&NewMediaDirector.HugoisaTrusteeoftheBritishSkinFoundation,chairedtheBritishInternetPublishers’Alliance,andisaregularcontributortotradepressandpublishingconferences.
Corporate G
overnance
s
MemberoftheNominationCommittee
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MemberoftheRemunerationCommittee
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MemberoftheAuditCommittee
19 Future plc
Principal activity
TheprincipalactivityoftheCompanyanditssubsidiaries(the‘Group’)asawholeisthepublishingofspecial-interestconsumermagazines,appsandwebsites,andtheoperationofeventsnotablyintheareasof:Technology;GamesandEntertainment;Photography;CreativeandFieldSports.
TheCompanyisincorporatedanddomiciledintheUKandhassubsidiariesoperatingintheUK,theUSandAustralia.
Business review
ThepurposeoftheAnnualReportistoprovideinformationtotheshareholdersoftheCompany.
ReviewsoftheGroup’sactivitiesduringtheyear,thepositionattheyear-endanddevelopmentssincethenaresetoutintheChairman’sstatement,ChiefExecutive’sreview,theCorporateGovernancereportandtheFinancialreview.TheFinancialreviewandStrategicreportexplainfinancialperformance,KPIs,thepositionattheyear-end,anypostbalancesheetevents,anylikelyfuturedevelopmentsandadescriptionoftheprincipalrisksanduncertaintiesfacingtheGroupandhowthesearemanaged.
TheAnnualReportcontainscertainforward-lookingstatementswithrespecttotheoperations,performanceandfinancialconditionoftheGroup.Bytheirnature,thesestatementsinvolveuncertaintysincefutureeventsandcircumstancescancauseresultstodifferfromthoseanticipated.Theforward-lookingstatementsreflectknowledgeandinformation
availableatthedateofpreparationofthisAnnualReportandtheCompanyundertakesnoobligationtoupdatethoseforward-lookingstatements.
Result of 2016 Annual General Meeting
AllresolutionsputtotheAnnualGeneralMeetingheldon3February2016werepassedunanimouslyonashowofhands.Shareholdersholdingmorethan80%ofallissuedsharessubmittedproxyvotesandofthese,morethan87%werecastinfavourofallresolutions.
Reported financial results
Theauditedfinancialstatementsfortheyearended30September2016aresetoutonpages43to78.DetailsoftheGroup’sresultsaresetoutintheconsolidatedincomestatementonpage44andinthenotestothefinancialstatementsonpages54to78.
Dividends
TheBoard’spolicyisthatdividendsshouldbecoveredatleasttwicebyadjustedearningspershare.TheCompany’sEmployeeBenefitTrust(EBT)waivesitsentitlementtoanydividends.
Share capital
TheCompanyhasasingleclassofsharecapitalwhichisdividedintoOrdinarysharesofonepennyeach.TherightsandobligationsattachingtotheCompany’sOrdinarysharesandprovisionsgoverningtheappointmentandreplacementof,aswellasthepowersof,theDirectors,aresetoutintheCompany’sArticlesofAssociation,copiesofwhichcanbeobtainedfromCompaniesHouseintheUKorbywritingtotheCompanySecretary.SaveforrestrictionsthatmayfromtimetotimebesetoutintheCompany’sArticlesofAssociationorimposedbylawsandregulations(includingtheListingRulesoftheFinancialConductAuthority),therearenorestrictionsonthevotingrightsattachingtotheOrdinarysharesoronthetransferoftheOrdinaryshares.TheArticlesofAssociationmaybeamendedonlybyaspecialresolutionoftheCompany’sshareholders.
Detailsofallmovementsinsharecapitalaregiveninnote23onpage72.Asat30September2016,thenumberofsharesinissuewas368.8million.Thisrepresentsanincreaseof10.3%comparedwiththenumberofsharesinissueasat30September2015.InNovember2015,33.4millionshareswereissuedbywayofaplacingofOrdinarysharesintheCompany.ThebalanceofsharesissuedduringtheyearwereissuedinsatisfactionofemployeeshareawardsvestingorShareIncentivePlanmatchingshareawardsduringtheyear.
Directors’ report
Fortheyearended30September2016
Significant shareholdings
At13December2016,theCompanyhadbeennotifiedofthefollowingsignificantinterestsinitsOrdinaryshares:
Shareholder NumberofsharesPercentageof
issuedsharecapital
AberforthPartnersLLP 96,694,195 17.63%DisruptiveCapitalInvestmentsLimited 93,313,544 17.01%SchrodersPlc 85,721,792 15.63%Henderson 75,119,794 13.70%InvestecAssetManagementLtd 28,892,556 5.27%HeraldInvestment 20,765,000 3.79%MrDamianButt 19,412,128 3.54%MrStevenBoyd 18,186,778 3.32%MrMarkKendrick 16,291,461 2.97%
454,397,248 82.86%Directors’holdings(seeopposite) 3,415,444 0.62%Totalofsignificantholdings 457,812,692 83.48%Totalnumberofsharesinissue 548,430,719 100%
TheinformationpresentedinthisDirectors’reportrelatestoFutureplcanditssubsidiaries.TheChairman’sstatement,ChiefExecutive’sreview,FinancialreviewandCorporateresponsibilitystatementareeachincorporatedbyreferenceinto,andformpartof,thisDirectors’report.
Directors’ report
20AnnualReportandAccounts2016
Directors
BiographicaldetailsoftheDirectorsholdingofficeasat13December2016aresetoutonpage18.
Directors’shareholdingsintheCompany’ssharecapitalaresetoutabove.NoDirectorhasanyinterestinanyothersharecapitaloftheCompanyoranyotherGroupcompany,nordoesanyDirectorhaveamaterialinterestinanycontractofsignificancetotheGroup.
Significant agreements
TheprovisionsoftheEuropeanDirectiveonTakeoverBids(asimplementedintheUKintheCompaniesAct2006)requiretheCompanytodiscloseanysignificantagreementswhichtakeeffect,alterorterminateuponachangeofcontroloftheCompany.Incommonwithmanyothercompanies,theGroup’sbankfacility(detailsofwhicharesetoutinnote19onpage67)isterminableuponchangeofcontroloftheCompany.Incommonwithmarketpractice,awardsundercertainoftheGroup’slong-termincentiveplans(detailsofwhicharesetoutintheDirectors’remunerationreportonpage31andnote24onpage72)willvestorpotentiallybeexchangeableintoawardsoverapurchaser’ssharecapitaluponchangeofcontroloftheCompany.ThereisalsoachangeofcontrolprovisionintheserviceagreementsofthetwoexecutiveDirectors,exercisablewithinthreemonthsofachangeofcontrolbytheCompanyorononemonth’snoticebytheexecutivetoexpirenolaterthanthreemonthsfromthedateofthechangeofcontrol.
Financial instruments
InformationinrelationtotheGroup’suseoffinancialinstrumentsissetoutinnote22onpages68to71.
Corporate governance
TheBoard’sreportonthissubjectissetoutonpages23to28.
Political contributions
Nopoliticalcontributionsweremadeduringeitherthecurrentorprioryears.
Conflicts of interest
TheBoardhasasetofprocedurestoensurethat:(i)conflictsofinterestareraisedbyDirectors(andanypotentialDirectorspriortoappointment);(ii)appropriateguidelinesarefollowedbeforeanyconflictisauthorised(includingensuringthatonlyDirectorswhohavenointerestinthematterbeingconsideredwillbeabletotaketherelevantdecisionandintakingthedecisiontheDirectorsactinawaytheyconsider,ingoodfaith,willbemostlikelytopromotetheCompany’ssuccess);and(iii)recordsarekeptofconflictsofinterestandauthorisations.TheDirectorsaresatisfiedthattheBoard’spowersofauthorisationofconflictsareoperatingeffectivelyandthattheprocedureshavebeenfollowed.Theproceduresandanyauthorisationswillcontinuetobereviewedannually.
Corporate responsibility
TheBoardconsidersthatissuesofcorporateresponsibilityareimportant.TheBoard’sreport,includingtheGroup’spoliciesonemployeeinvolvementanddisability,andastatementonGreenhouseGasEmissionsfortheGroup,issetoutonpages11and12.
Annual General Meeting 2016
AttheCompany’seighteenthAnnualGeneralMeeting,whichwillbeheldonWednesday1February2017at10:30amatFuture’sLondonofficeat1-10PraedMews,London,W21QY,anumberofresolutionswillbeproposed.TheresolutionsaresetoutintheNoticeofAnnualGeneralMeetingonpages79to80andanexplanationofallproposedresolutionsisprovidedbelow.
Ordinary resolution 1 – Financial statements
ShareholderswillbeaskedtoapprovethefinancialstatementsoftheCompanyforthefinancialyearended30September2016,togetherwiththereportsoftheDirectorsandauditors.Theauditedfinancialstatementsappearonpages43to78.
Ordinary resolution 2 – Directors’ remuneration implementation report
ShareholderswillbeaskedtoapprovetheDirectors’remunerationimplementationreportforthefinancialyearended30September2016,whichissetoutonpages30to35.
Ordinary resolution 3 – Directors’ remuneration policy report
ShareholderswillbeaskedtoapprovetheDirectors’remunerationpolicyforthethreeyearperiodcommencingon1October2016,whichissetoutonpages36to39.
Notes:1. AllholdingsarebeneficialandincludetheDirectors’personalholdingsandthoseoftheirspouses.2. On21October2016JamesHanburyreceived470,040sharesasconsiderationforhisshareholdinginMiura(Holdings)Limitedandon25November2016hepurchased110,000shares,resultingina
totalholdingof580,040shares.3.On2December2016,PennyLadkin-Brandpurchased121,815sharesandsheisalsodeemedtobeinterestedinthe119,331sharespurchasedbyherhusbandon5December2016,resultingina
totalholdingof391,146shares.4. DetailsoftheshareoptionsandawardsforexecutiveDirectorsaresetoutonpage33.Nosuchoptionsorawardsaregrantedtonon-executiveDirectors.
Directorsinofficeat30September2016Balanceasat
30September2015Purchases
duringtheyearBalanceasat
30September2016
ExecutiveZillahByng-Thorne 421,369 670,000 1,091,369PennyLadkin-Brand - 150,000 150,000Non-executivePeterAllen 1,000,000 100,000 1,100,000ManjitWolstenholme 207,889 45,000 252,889HugoDrayton - - -Total 1,629,258 965,000 2,594,258
Directors’ shareholdings (audited)
Corporate G
overnance
21 Future plc
Ordinary resolutions 4 to 9 – Election of James Hanbury and annual re-election of other Directors
FollowingJamesHanbury’sappointmenttotheBoardon21October2016,hestandsforelectiontoconfirmhisappointment.
Consistentwithourpolicysince2004,allDirectorsareproposedforre-election.BiographicaldetailsofallDirectorsaresetoutonpage18.
FollowingarigorousevaluationandtakingintoaccounttheneedforprogressiverefreshingoftheBoard,theBoardconfirmsthattheperformanceofeachexecutiveandnon-executiveDirectoroftheCompanycontinuestobeeffectiveanddemonstratescommitmenttotherole.TheNominationCommitteehascarefullyconsideredthetimecommitmentsrequiredfromandthecontributionmadebyeachDirectorandboththeNominationCommitteeandtheBoardunanimouslyrecommendthatJamesHanburybeelectedasaDirectorandeachDirectorstandingforre-electionbere-elected.
Ordinary resolutions 10 and 11 – Auditors
AresolutionproposingthereappointmentofPricewaterhouseCoopersLLPasauditorsoftheCompanyandauthorisingtheDirectorstodeterminetheirremunerationwillbeproposedattheAnnualGeneralMeeting.AnexplanationregardingtheBoard’sproposaltoreappointPricewaterhouseCoopersLLPasauditorscanbefoundonpage28intheCorporateGovernancereport.
Ordinary resolution 12 – To authorise the Directors to issue and allot new Ordinary shares
Undertheprovisionsofsection551oftheCompaniesAct2006(the2006Act),theDirectorsmayallotandissueOrdinarysharesonlyifauthorisedtodosobytheCompany’sArticlesofAssociationorbyshareholdersatashareholders’meeting.ConsistentwithguidanceissuedbytheInvestmentAssociationthisresolutionwill,ifpassed,authorisetheDirectorstoallotsharesuptoamaximumnominalvalueof£3,656,200asfollows:
(a)inrelationtoapre-emptiverightsissueonly,equitysecurities(asdefinedbysection560ofthe2006Act)uptoamaximumnominalamountof£3,656,200whichrepresentsapproximatelytwothirdsoftheCompany’sissuedOrdinaryshares(excludingtreasuryshares)asat13December2016.ThismaximumisreducedbythenominalamountofanyRelevantSecuritiesallottedunderparagraph12.2oftheNoticeofAGM;and
(b)inanyothercase,RelevantSecuritiesuptoamaximumnominalamountof£1,828,100whichrepresentsjustunderonethirdoftheCompany’sissuedOrdinarysharesasat13December2016.Thismaximumisreducedbythenominalamountofanyequitysecuritiesallottedunderparagraph12.1oftheNoticeofAGMinexcessof£1,828,100.Ifgranted,thisauthoritywouldreplaceallpreviousauthoritiesgrantedinthisconnection.Theauthoritygrantedbythisresolutionwillexpireon31March2018or,ifearlier,followingtheconclusionofthenextAGMoftheCompany.IftheDirectorsexercisetheauthoritygrantedunderparagraph12.1oftheNoticeofAGM,theywillallstandforre-electionatthefollowingAGM.
TheDirectorsdonothaveanypresentintentionofexercisingthisauthorityotherthaninconnectionwithanyexercisesundershareoptionandothershareincentiveschemes,butintendtoseekthisauthorityeachyear.Inaddition,theremaybecircumstanceswhereitwouldbeappropriatefortheCompanytoissuenewOrdinaryshares,suchasanacquisitionwhereitmightbeappropriatefortheconsiderationtobesettledinwhole,orinpart,bytheissueofnewOrdinaryshares.TheCompanydoesnotholdanysharesintreasury.
Ordinary resolution 13 – Approval of political donations
ItremainsthepolicyoftheCompanynottomakepoliticaldonationsortoincurpoliticalexpenditure,asthoseexpressionsarenormallyunderstood.However,followingbroaderdefinitionsintroducedbythe2006Act,theDirectorscontinuetoproposearesolutiondesignedtoavoidinadvertentinfringementofthesedefinitions.
The2006Actrequirescompaniestoobtainshareholders’authorityfordonationstoregisteredpoliticalpartiesandotherpoliticalorganisationstotallingmorethan£5,000inany12-monthperiod,andforanypoliticalexpenditure,subjecttolimitedexceptions.Thedefinitionofdonationinthiscontextisverywideandextendstobodiessuchasthoseconcernedwithpolicyreview,lawreformandtherepresentationofthebusinesscommunity.Itcouldalsoincludespecialinterestgroups,suchasthoseinvolvedwiththeenvironment,whichtheCompanyanditssubsidiariesmightwishtosupport,eventhoughtheseactivitiesarenotdesignedtosupportortoinfluencesupportforanyparticularpoliticalparty.
Ordinary resolution 14 – Share Consolidation
TheBoardhasbeenadvisedthattheCompanyislikelytobenefitfromaconsolidationofitssharecapitalintermsofreducedsharepricevolatilityandimprovedliquidity.Thisresolutionwilleffecta15for1consolidationoftheCompany’sOrdinarysharecapital(“ShareConsolidation”).
IfapprovedbyshareholdersattheAGMthetotalnumberofissuedOrdinaryshareswillbereducedandthenominalvalueoftheOrdinaryshareswillchangefrom1penceto15pence.AllOrdinarysharesinthecapitaloftheCompanywillbeconsolidatedandeachshareholder’spercentageholdinginthetotalissuedsharecapitaloftheCompanyimmediatelybeforeandaftertheimplementationoftheShareConsolidationwill(saveinrespectoffractionalentitlements)remainunchanged.
TheShareConsolidationisconditionalonthenewOrdinarysharesbeingadmittedtothestandardlistingsegmentoftheOfficialListandbeingadmittedtotradingontheLondonStockExchange’smainmarketforlistedsecurities.ThenewOrdinaryshareswillrankequallywithoneanotherandhavethesamerights,includingvotinganddividendrights,astheexistingOrdinaryshares.
PleaserefertotheFutureplc:ShareConsolidation:FrequentlyAskedQuestions(acopyofwhichisavailableontheCompany’swebsite)forfurtherinformationanddetailsontheShareConsolidation.
Special resolution 15 – Disapplication of statutory pre-emption rights
Resolution15authorisestheDirectorsincertaincircumstancestoallotequitysecuritiesforcashotherthaninaccordancewiththestatutorypre-emptionrights(whichrequireacompanytoofferallallotmentsforcashfirsttoexistingshareholdersinproportiontotheirholdings).Therelevantcircumstancesareeitherwheretheallotmenttakesplaceinconnectionwitharightsissueortheallotmentislimitedtoamaximumnominalamountof£548,430,representingapproximately10%ofthenominalvalueoftheissuedordinarysharecapitaloftheCompanyasat13December2016beingthelatestpracticabledatebeforepublicationofthisnotice.Unlessrevoked,variedorextended,thisauthoritywillexpireattheconclusionofthenextAGMoftheCompanyor31March2018,whicheveristheearlier.TheBoardconfirmsthatitwillonlyallotsharesrepresentingmorethan5%oftheissuedordinarysharecapitaloftheCompany(excludingtreasuryshares)forcashpursuanttotheauthorityreferredtoinparagraph(b)ofresolution15,wherethatallotmentisinconnectionwithanacquisition
Directors’ report
Fortheyearended30September2016
22AnnualReportandAccounts2016
orspecifiedcapitalinvestment(withinthemeaninggiveninthePre–EmptionGroup’sStatementofPrinciples)whichisannouncedcontemporaneouslywiththeallotment,orwhichhastakenplaceintheprecedingsix-monthperiodandisdisclosedintheannouncementoftheallotment.Inrespectoftheauthorityreferredtoinparagraph(b)ofresolution15,theBoardalsoconfirmsitsintentiontofollowtheprovisionsofthePre–EmptionGroup’sStatementofPrinciplesregardingcumulativeusageofauthoritieswithinarollingthree–yearperiodwherethePrinciplesprovidethatusageinexcessof7.5%ofissuedordinarysharecapitaloftheCompany(excludingtreasuryshares)shouldnottakeplacewithoutpriorconsultationwithshareholders,exceptinconnectionwithanacquisitionorspecifiedcapitalinvestmentasreferredtoabove.
Special resolution 16 – General meetings on 14 days’ notice
NoticeperiodsforAGMsmustgiveatleast21days’clearnotice.Forothergeneralmeetings,theoldminimumnoticeperiodof14dayswasincreasedto21daysbytheCompanies(Shareholders’Rights)Regulations2009,unlessshareholdersapproveashorterperiodofatleast14cleardays.Intheinterestsofgreaterefficiency,resolution16seekstorenewapprovalfornoticeperiodsofatleast14cleardays.
Special resolutions 17 and 18 – Amendments to the Company’s Articles of Association
Resolutions17and18containproposedchangestothearticlesofassociationoftheCompany.Thechangeproposedinresolution17,whichisinlinewithcurrentmarketpractice,allowstheDirectorstodonateanysmallamounts(lessthan£3.00)arisingfromaShareConsolidationtocharity.Thechangeproposedinresolution18,ifapprovedbyshareholdersattheAGM,willallowtheBoardofDirectorstopassaBoardresolutiontochangethenameoftheCompany.TheDirectorsarecurrentlyconsideringarebrandingprojectandthisflexibilitywillassistwiththelaunchofthenewbrand.DetailsofanychangeofnamewillbeannouncedinaccordancewiththerequirementsoftheListingRules.
Action to be taken
AformofproxyisincludedwiththisAnnualReportforuseinconnectionwiththeAnnualGeneralMeeting.PleasecompleteandreturntheforminaccordancewiththeinstructionsprintedonittoComputershareInvestorServicesplc,ThePavilions,BridgwaterRoad,BristolBS996ZYassoonaspossibleand,inanyevent,nolaterthan10:30amonMonday
30January2017.ThereturnoftheformofproxywillnotpreventyoufromattendingtheAnnualGeneralMeetingandvotinginpersonifyouwishtodoso.FurtherinformationabouttheAGM,includingaboutelectronicappointmentofproxies,isprovidedonpages81to83.
Recommendations
TheBoardbelievesthateachoftheresolutionstobeproposedattheAnnualGeneralMeetingisinthebestinterestsoftheCompanyanditsshareholdersasawhole.Accordingly,theDirectorsunanimouslyrecommendthatyouvoteinfavourofalloftheresolutionsproposed,astheyintendtodoinrespectoftheirownbeneficialholdings.
Annual General Meeting procedures and result
Asinpreviousyears,theCompanywill:(a)indicatethelevelofproxieslodgedoneachresolutiontogetherwiththebalanceforandagainsteachresolutionandthenumberofabstentions;(b)announcetheresultsofvotingtotheLondonStockExchange;and(c)posttheresultsofvotingonourcorporatewebsite,www.futureplc.com.
Disclosure of information to the auditors
TheDirectorsconfirmthattheyhavecompliedwiththerelevantprovisionsofthe2006Actinpreparingthefinancialstatements.
Inaddition,eachoftheDirectorsconfirmsthat,sofarastheyareaware,thereisnorelevantauditinformationofwhichtheauditorsareunaware.EachDirectorhastakenallreasonablestepstoensurethattheyareawareofanyrelevantauditinformationandthattheauditorsareawareofanyrelevantauditinformation.
Statement of Directors’ responsibilities
TheDirectorsareresponsibleforpreparingtheAnnualReport,theDirectors’remunerationreportandthefinancialstatementsinaccordancewithapplicablelawandregulations.
CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear.UnderthatlawtheDirectorshavepreparedtheGroupandParentcompanyfinancialstatementsinaccordancewithInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion.UndercompanylawtheDirectorsmustnotapprovethefinancialstatementsunlesstheyaresatisfiedthattheygiveatrueandfairviewofthestateofaffairsoftheGroupandtheCompanyandoftheprofitorlossoftheGroupforthatperiod.Inpreparing
thesefinancialstatements,theDirectorsarerequiredto:
::selectsuitableaccountingpoliciesandthenapplythemconsistently;
:: makejudgementsandaccountingestimatesthatarereasonableandprudent;
:: statewhetherapplicableIFRSsasadoptedbytheEuropeanUnionhavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;
:: preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.
TheDirectorsareresponsibleforkeepingadequateaccountingrecordsthataresufficienttoshowandexplaintheCompany’stransactionsanddisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtheGroupandenablethemtoensurethatthefinancialstatementsandtheDirectors’remunerationreportcomplywiththeCompaniesAct2006and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandtheGroupandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
TheDirectorsareresponsibleforthemaintenanceandintegrityoftheCompany’swebsite.LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.
EachoftheDirectors,whosenamesandfunctionsarelistedintheBoardofDirectorssectiononpages17and18,confirmthattothebestoftheirknowledge:
(a) theGroupfinancialstatements,whichhavebeenpreparedinaccordancewithIFRSsasadoptedbytheEU,giveatrueandfairviewoftheassets,liabilities,financialpositionandlossoftheGroup;and
(b) theStrategicreportandFinancialreviewincludeafairreviewofthedevelopmentandperformanceofthebusinessandthepositionoftheGroup,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthatitfaces.
ApprovedbytheBoardofDirectorsandsignedonitsbehalfby:
Penny Ladkin-BrandChiefFinancialOfficer andCompanySecretary13December2016
Corporate G
overnance
Our approach to corporate governanceInthisreport,weprovidedetailontheroleoftheBoardofDirectors,followedbyamoredetailedfocusontheworkofeachofthethreekeycommittees:theAuditCommittee,theNominationCommitteeandtheRemunerationCommittee.Together,thesegiveaclearinsightintohowwemanagecorporategovernanceprinciplesandprocesseswithintheGroup.
AsaStandardListedentitytheGroupisnotrequiredtocomplywiththerequirementsoftheUKCorporateGovernanceCode(September2014)(the“Code”)andthereforetheGrouphasnotadoptedtheCode,howevertheDirectorscontinuetocomplywiththespiritoftheCode.
1. Board of Directors
Membership of the BoardTheBoardconsistsoftwoexecutiveandfournon-executiveDirectors.BiographiesofDirectorsanddetailsoftheirothertimecommitmentsaresetoutonpage18.
Board changes during the yearMarkWoodservedasanon-executiveDirectoruntil3February2016ashedidnotseekre-electiontotheBoard.TherewerenootherBoardchangesduringtheyearended30September2016,howeverJamesHanburywasappointedtotheBoardasDeputyChairmanon21October2016.
Role of the non-executive DirectorsThenon-executivesplayacriticalroleontheBoardinoverseeingandscrutinisingtherunningofthebusinessandinensuringthatcorporategovernanceremainsatthetopoftheagenda.
Thenon-executiveDirectorsallservethree-yearterms,terminablebyeitherpartyonthreemonths’noticeatanytimeandsubjecttotheirelectionandannualre-electionorremovalbyshareholders.Althoughannualre-electionisnotarequirementforFuture,webelieveitisthebestwaytoensurenon-executivesaredirectlyaccountabletoshareholders.
Allofthenon-executiveDirectors,withtheexceptionofJamesHanbury,areconsideredtobeindependentbytheBoard.JamesHanburywasappointedtotheBoardasarepresentative
ofDisruptiveCapitalInvestmentsLimited,theCompany’ssecondlargestshareholderfollowingcompletionoftheImagineacquisition,whichhastherighttoappointaDirectortotheBoarduntilsuchtimeasitsshareholdingintheCompanyfallsbelow10percentoftheissuedsharecapital.Consequently,theBoarddoesnotconsiderthatJamesHanburymeetstherelevantindependencecriteria.ManjitWolstenholmeistheSeniorindependentnon-executiveDirector.Thereisagenuinemixofviewsandinsights,aswellasexperience.
Eachnon-executiveDirectorisexpectedtocommit20daysayeartotheirroletoallowforpreparationfor,andattendanceat,BoardandCommitteemeetingsandkeepingintouchwiththeseniormanagementteam,shareholdersandotherstakeholders.
Roles of the Chairman and Chief ExecutiveThedutiesandresponsibilitiesoftheBoardareeffectivelydividedsothattheChairmanleadstheBoardandtheChiefExecutiveleadsthebusiness.
Board meetingsTheBoardhadeightscheduledmeetingsduringthefinancialyearandattendanceissummarisedopposite.TheBoardhadoneunscheduledtelephonemeetingtodiscussandapproveaspectsoftheImagineacquisition,duringwhichtheChairmanandChiefExecutivewerepresent.
AllDirectorsareawareoftheneedtobeavailableandthereisaclearcontactprocess.BoardmeetingsaresometimesprecededbyaninformaldinnerwhereBoardDirectorscanmeetwithanddiscussbusinessissueswiththeGroup’sseniormanagementteam.
ThereisaregularandcomprehensiveexchangeofinformationbetweenmeetingstoensureBoardmembersarewellinformedtoparticipateeffectivelyinmeetings.DirectorsreceiveaBoardpackbeforeeachmeetingwithminutesofthepreviousmeeting,allpapersforagendaitems,areportfromtheCompanySecretarysummarisinganykeylegalissuesandprovidinganyregulatory/legislativeupdates,andasummaryofshareownershipandrecentsharedealing.SimilarpacksareprovidedforallCommitteemeetings.Betweenmeetings,theBoardreceivesamonthlyBoardreportwrittenbytheexecutiveDirectorswhichsummarisesfinancialandoperationalperformanceandprovidesupdatesonkeyprogrammeswithinthebusiness.
Effectivecorporategovernancerequiresnotjustcompliancewithlegislativeandregulatoryrequirements,butalsoapplyingtheprincipleofgoodgovernanceintheboardroomandthroughoutthebusiness.
Good PracticeCorporate Governance report
23 Future plc
Quick find contents
Board of Directors Page23
Audit Committee Page26 Nomination CommitteePage28
Remuneration CommitteePage28
“ Thenon-executivesplayacriticalroleontheBoardinoverseeingandscrutinisingtherunningofthebusinessandinensuringthatcorporategovernanceremainsatthetopoftheagenda.”
Penny Ladkin-Brand ChiefFinancialOfficer andCompanySecretary
ThereisawrittenscheduleofmattersreservedfortheBoardwhichsetsoutthosemattersthatrequireBoardapprovalincludingsettingstrategy,approvingbudgetsandfinancialstatementsandsettinguppolicies.Itwasnotedthat41mattershadbeenconsideredbytheBoardduringtheyear.ThescheduleisavailableontheCompany’swebsiteatwww.futureplc.com.TheBoarddelegatesday-to-dayoperationalmatterstotheGroup’sseniormanagementteam.
DirectorAttendance
(8scheduledmeetings)
PeterAllen 8 of 8 ZillahByng-Thorne 8 of 8ManjitWolstenholme 8 of 8 HugoDrayton 7 of 8PennyLadkin-Brand 8 of 8MarkWood(resigned3February2016) 2 of 2
Boarddecisionsaremadeunanimouslywheneverpossible,butcanbemadebymajority.IfDirectorshaveconcernsthatcannotberesolvedabouttherunningoftheCompanyoraproposedaction,theirconcernsarerecordedintheminutes.Nosuchconcernsaroseintheyear.TheBoardregularlyappointsasub-committeeconsistingofatleasttwoDirectorsinordertofinaliseandapprovethosemattersthathavebeenapprovedinprinciplebytheBoard,subjecttofinalamendmentsonly.Apermanentsub-committeeconsistingofatleasttwoDirectorsexiststoapprovetheissueandallotmentofnewsharesinsatisfactionofemployeeshareschemes.
TheBoardhasanumberofnominatedadvisers(aslistedonpage85).Duringthelastfinancialyearmeetingswereregularlyheldwithkeyadviserstokeepthemawareofissues,andPricewaterhouseCoopersLLPattendedAuditCommitteemeetingsandbriefingswithmembersoftheexecutiveandseniorfinanceteams.
Advice and supportAllDirectorshaveaccesstotheCompanySecretarywhocanadvisethemonissuesofgovernance,bestpracticeandanyotherlegislativeorregulatorymatters.
TheappointmentandremovaloftheCompanySecretaryisaBoarddecision.TheDirectorsmayalsotakeindependentprofessionaladviceattheCompany’sexpenseprovidedthattheygivenoticetotheChairman.Nosuchadvicewassoughtduring2016.TheCompanymaintainsappropriateinsuranceforitsDirectors.
Effective Development
Training and inductionTheBoard’straininganddevelopmentpolicyrequiresthatallnewDirectorsshouldreceiveappropriateinductiononjoiningtheBoard,bothinrespectoftheGroup’sactivitiesasawholeandofeachoperatingcompanyindividually.OngoingtrainingforDirectorsisavailableasappropriatewhetherbypresentationstotheBoardbyseniormanagementormoreformallywhereindividualDirectorsrequesttrainingonspecificissues.ThetraininganddevelopmentneedsofeachindividualDirectorareassessedanddiscussedaspartoftheannualBoardperformanceevaluationprocess.
24AnnualReportandAccounts2016
Summary of performance evaluation
Objectivesfor2016 Stepstakenduring2016
Ensurerobuststrategicgrowthplan Strategyinplacetodeliverdiversifiedrevenuesthroughamixoforganicgrowthandacquisitions.
Successionplanning Internaltalentmatrixdevelopedtoidentifyfuturesuccessors.
Corporate G
overnance
Terms of reference for the Audit, Remuneration and Nomination Committees
ThetermsofreferenceforallCommitteesareavailableon theCompany’swebsiteat www.futureplc.com
i
Corporate Governance report
25 Future plc
TheBoardencouragesappropriatetraining,andregularupdatesandrefreshersessionsareprovidedbytheCompanySecretaryandtheCompany’slegaladvisersandauditors,toinformtheBoardorrelevantCommitteesofimportantchangesinlegislation,regulationandbestpractice.
Performance evaluation
TheDirectorscompletedadetailedBoardperformanceevaluationquestionnaireaspartoftheannualperformanceevaluationprocess.EachquestionnairewasanalysedandtheresultswerepresentedtotheBoardfordiscussion.TheChairmandiscussedtheBoard’sperformanceduringtheyearandanyspecificrequirementsfortraininganddevelopmentwitheachDirector.DuringtheprocesstheBoardalsocompareditsperformancewiththeresultsandrecommendationsfromtheprioryear’sperformanceevaluationsandnotedthattheBoardhadmadesignificantprogressindealingwiththerisksandchallengesidentifiedfortheyear.TheBoardconsidersthisexercisetobeofsignificantvalueinensuringafunctionalandeffectiveBoardandCommittees.
TheChairmanalsometwiththenon-executiveDirectorsduringtheyearwithouttheexecutiveDirectors,inordertoassesstheperformanceoftheexecutiveDirectors.
Going concernTheDirectorsarerequiredtomakeanassessmentoftheGroup’sabilitytocontinuetotradeasagoingconcern.
TheDirectorshavegiventhismatterdueconsiderationandhaveconcludedthatitisappropriatetopreparetheGroupfinancialstatementsonagoingconcernbasis.Thethreemainconsiderationswereasfollows:
a)StrengthoftheGroup’scashflowFollowingcompletionofthetransformationprojectattheendof2015,theGrouphasgeneratedincreasedprofit(beforeexceptionalitems)andhasseenacorrespondingincreaseinthecashflowfromoperationsduringtheyear.
b)ContinuedsupportoftheGroup’sbankFollowingthecompletionoftheacquisitionofImaginePublishing,theGroupnegotiated
anew£14.0mbankfacilitywithHSBCBankplcwhichreplacedtheprevious£5.0mfacilitywithSantanderplc.Thenewfacilityexpireson23June2021andissubjecttocertainfinancialcovenants.TheBoardengagesinregulardialoguewiththebanktokeepitinformedoftheGroup’sperformanceonamonthlybasis.
c)AcquisitionofImaginePublishingTheacquisitionofImagine,inOctober2016,hasstrengthenedtheportfolioandwillenabletheGrouptobenefitfromeconomiesofscaleandenhancedoperationalprofitability.TheImaginebusinessisstronglycashgenerative,whichwillallowtheGrouptoinvestfurtherincoregrowthareas.Furthermore,theacquisitionofferssignificantcostsynergyopportunitiesandtheBoardisconfidentthattheestimatedannualisedcostsynergiesof£3.0mwillbedelivered.
Financial covenant complianceKeycovenantsaretestedquarterly.Duetothechangeofbankersnocovenanttestingwasrequiredatyear-end,howevertheGroupwasinfullcompliancewithallcovenantsatalltestingdatesduringtheyear.UnderthenewcreditfacilitytheGrouphascovenantsinrespectofnetdebt/bankEBITDAEandbankEBITDAE/interest.Furtherdetailsareincludedwithinnote19.
Risk management and internal controlsDetailsoftheprincipalrisksandtheGroup’sapproachtomanagingthemaresetoutonpages9and10.TheBoardconductedanannualreviewoffinancial,operational,legalandcomplianceriskswiththeassistanceofmembersoftheGrouplegalandfinanceteamsandtheExecutiveCommitteetoensurethatthereisasoundsystemofinternalcontrolsinplaceandthatthesearesufficienttomanage(ratherthaneliminate)thoseriskseffectively.Nosignificantfailingsorweaknesseswereidentifiedaspartofthisreview.
TheinternalcontrolsthatareinplacetoensureeffectiveriskmanagementarestructuredtoensureatimelyflowofinformationwithintheGroupandaclearstructureofdelegatedauthorityandresponsibility.ThemainfeaturesoftheGroup’sinternalcontrolandriskmanagementsystemsareexplainedfurtherinthefollowingparagraphs.
“ Goodcorporategovernanceisessentialforthelong-termsuccessoftheCompany.”
Peter Allen Chairman
26AnnualReportandAccounts2016
TheBoardapprovesasetofcontroldocumentswhichspecify:
(i)variousfinancialandtreasurypoliciestobefollowedacrosstheGroup;and
(ii)thepowersofdelegatedauthorityacrosstheGroup.
TheGroupfinanceteammanagesthefinancialreportingprocessesensuringthatthereisappropriatecontrolandreviewofthefinancialinformationincludingtheproductionoftheconsolidatedfinancialstatements.GroupfinanceissupportedbycommercialfinancedirectorsthroughouttheGroupwhohavetheresponsibilityandaccountabilitytoprovideinformationinaccordancewithourpoliciesandprocedures.
TheExecutiveCommitteeholdsmonthlymanagementmeetingswithcombinedUKandUSseniormanagementinordertoprovideaproperopportunityforfinancialresultsandotherbusinessandoperationalissuestobeexploredandaddressedinatimelymanner.
Internal auditTheAuditCommitteeandtheBoardhaveagainduring2016reconsideredwhetherthereisaneedforaninternalauditfunction.Itwasconcludedthat,whilstanindependentinternalauditdepartmentwiththenecessarytechnicalskillsisnotcurrentlyjustified,theCommitteeshouldcontinuetoreviewthissubjecteachyear.
Whistle-blowing policyAspartofitsinternalcontrols,theGrouphasawhistle-blowingpolicywhichisupdatedregularlyandpublishedontheGroup’sintranettoencourageemployeestoreport,ingoodfaith,anygenuinesuspicionsoffraud,briberyormalpracticeinordertoidentifyanyproblemswithintheGroupatanearlystage.Thepolicyisalsodesignedtoensurethatanyemployeewhoraisesagenuineconcernisprotected.
Relations with shareholders/communicationWeaimtohaveanopenrelationshipwithourshareholders,andshareholderscanfindup-to-dateinformationonGroupactivitiesontheCompany’swebsiteatwww.futureplc.com.ThereisaspecificInvestorRelationssectiononthatsitewhichincludeslinkstoalloftheGroup’spublicannouncementsmadeviathe
RegulatoryNewsServiceoftheLondonStockExchangeincludingtheCompany’slatestannualandinterimresults.
AllDirectorsareavailabletomeetshareholdersattheAGMoronrequestbycontactingtheChairmanorCompanySecretary.Becausemorethan80%oftheCompany’ssharesareheldbymajorinstitutions,theexecutiveDirectorsholdaseriesofmeetingspresentingtheinterimandannualresultstotheseinstitutionsinordertoupdatethemontheprogressofthebusinessandgaugetheirviewsfollowingtheanalystpresentationsoftheresults.
InorderthatallDirectorsareawareoftheviewsofshareholders,BoardpacksincludeanoteofviewsasexpressedbyshareholdersduringmeetingsheldwithDirectorsorasreportedtoDirectorsthroughtheCompany’sbrokers,togetherwithcopiesofanalysts’notes,pressarticlesandotherrelevantinformation.
2. Audit Committee
MemberAttendance
(3scheduledmeetings)
ManjitWolstenholme1
(Chairman) 3 of 3
PeterAllen 3 of 3
1.TheChairmanoftheCommittee,ManjitWolstenholme,hasrecentandrelevantfinancialexperience.
TheAuditCommittee’sprimaryobjectiveistoprovideeffectivefinancialgovernanceandmonitortheintegrityoftheGroup’sfinancialstatementsandinternalcontrols.
TheAuditCommitteemeetsbeforetheinterimandannualresultsannouncementsandreviewstherelevantfinancialresultswiththeexecutivemanagementteamandtheexternalauditors.TheAuditCommitteealsomeetsseparatelyforthepurposesofplanningtheauditprocess,monitoringitseffectiveness,reviewingtheGroup’srelationshipwiththeexternalauditorsandundertakingadetailedreviewoftheGroup’sinternalcontrolsandriskmanagementsystems.Itconsideredwhetherthe2016AnnualReportwasfair,balancedandunderstandableandadvisedtheBoardaccordingly.
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overnance
Re-election of Directors
WearenotrequiredtoofferallourDirectorsupforannualelection,however,allourDirectorstakeindividualandcollectiveresponsibilityforthedecisionsthattheBoardmakesandarehappytoletshareholdersjudgetheirperformancebystandingforannualre-election.WehavefollowedthispracticesincetheAGMin2005.
i
TheAuditCommitteecarriesoutthefunctionsrequiredbyrule7.1.3oftheDisclosureandTransparencyRules.
Significant financial reporting judgements TheAuditCommitteediscussedthekeyrisksandjudgementswithmanagementandtheauditorsaspartoftheauditplanningprocessinJuly2016.Atthesametimetheydiscussedandagreeduponappropriatelevelsofmaterialityinthecontextoftheanticipatedresultsfortheyear.Asaresultofthosediscussionsanauditplanwasagreedandsubsequentlyexecuted.
Thesignificantjudgementsconsideredinrelationtothefinancialstatementsfortheyearended30September2016,whichwereoriginallyidentifiedanddiscussedaspartoftheplanningprocessreferredtoabove,aresetoutbelowandwereaddressedasfollows:
1.RevenuerecognitionTheareaofrevenuewhichcarriesthemostjudgementisnewstraderevenue(bothdomesticandexport).Managementhascarefullyconsideredtheestimatesofreturnsmadeinrespectofnewstraderevenuesandtherecognitionofrevenuesonthelargeradvertisingcontractsandhaveconcludedthattheyareappropriate.TheestimatesandjudgementsmadehavebeendiscussedwiththeauditorsandtheAuditCommittee.
2.Carryingvalueofgoodwillandlonglivedassets.IAS36requiresanimpairmenttesttobeperformedforgoodwillonanannualbasisorwherethereisanindicationofimpairment.ManagementpreparedadetailedimpairmentassessmentoftheUKbusinessat30September2016andconcludedthatanimpairmentof£13.0mwasrequired.
Thekeyassumptionsmadeinthatassessmentwereasfollows:
-Longtermgrowthratetoperpetuity2.0%-EBITDAEmarginsassumed2.4%to3.7%-Discountrate(post-tax)8.2%
TheAuditCommitteeagreedwithmanagement’sconclusionthatanimpairmentof£13.0mwasrequiredinordertoreflectthevalueinuseoftheUKbusiness,reflectingashiftintheunderlyingprofitabilityandcashflowsoftheGroupandthecontinueddeclineofprint.
3.GoingconcernTheAuditCommitteehasconsideredthegoingconcernassumptionassetoutonpage25.Managementprepareddetailedassessmentsofgoingconcernthatsetoutallrelevantconsiderations.ThesewerereviewedindepthbytheAuditCommittee,whoconfirmedthattheseassessmentscontinuedtosupportthepositionoftheGroupasagoingconcern.
4.ExceptionalitemsDuetotherestructuringofthebusinessintotwodivisionsandcontinuedtransformationalactivitythereareanumberofitemsconsideredexceptionalinnature.TheAuditCommitteeconsideredtheitemsandconcludedthattheseitemsshouldbepresentedasexceptional.
5.TaxTheAuditCommitteehasreviewedthetaxpositionoftheGroupwithmanagementandtheauditors.Duringtheyear,theCommitteehasbeenactivelyinvolvedinconsideringanyareasofjudgementrelatingtotaxpositionsintheUK,USandAustralia.
Audit feesTheAuditCommitteehasreviewedtheremunerationreceivedbyPricewaterhouseCoopersLLPfornon-auditworkconductedduringthefinancialyear.Thefeesfornon-auditworkwerehigherthantheauditfeeduetoworkperformedinareportingaccountantcapacity,taxationservicesandduediligenceinrespectoftheImagineacquisition.Forfurtherdetailsregardingfeespaid,seenote3tothefinancialstatementsonpage55.
Auditor independenceTheAuditCommitteemonitorstheCompany’ssafeguardsagainstcompromisingtheobjectivityandindependenceoftheexternalauditorsbyperforminganannualreviewofnon-auditservicesprovidedtotheGroupandtheircost,reviewingwhethertheauditorsbelievethereareanyrelationshipsthatmayaffecttheirindependenceandobtainingwrittenconfirmationfromtheauditorsthattheyareindependent.TheCommitteehasreviewedtheGroup’sauditindependencepolicyandiscomfortablethatitalignstotheFinancialReportingCouncil’slatestguidance.
Corporate Governance report
27 Future plc
“ TheAuditCommittee’sprimaryobjectiveistoprovideeffectivefinancialgovernance.”
Manjit Wolstenholme Chairman of the Audit Committee
28AnnualReportandAccounts2016
Forthefinancialyearended30September2016,theAuditCommitteehasconducteditsreviewoftheauditors’independenceandconcludedthatnoconflictofinterestexistsbetweenPricewaterhouseCoopersLLPauditandnon-auditwork,andthattheirinvolvementinnon-auditmatters,which(asnotedopposite)mainlycomprisedadviceinrespectoftheImagineacquisitionandtaxation,wasthemosteffectivewayofconductingtheGroup’sbusinessduringtheyear.
Auditor appointment policyTheAuditCommitteehasrevieweditspolicyforappointingauditorsandawardingnon-auditwork.
TheGrouphasusedPricewaterhouseCoopersLLPforduediligenceandreportingaccountantworkontheacquisitionofImagine.TheAuditCommitteeconsideredwhetherthisconstitutedathreattoindependenceandconfirmedthatitwascomfortablethattherewereappropriatesafeguardsinplace.GiventherecentchangesintheFinancialReportingCouncil’sauditindependenceguidelinestheCommitteehasconfirmedthat,from1October2016,itwillnolongerusePricewaterhouseCoopersLLPforanytaxcomplianceoradvisoryservicesaslongastheyaretheGroup’sauditor.
OntherecommendationoftheAuditCommittee,theBoardhasdecidedthatitisinthebestinterestsoftheCompanytoputaresolutiontoshareholdersthatPricewaterhouseCoopersLLP,whohavebeentheCompany’sexternalauditorfor17years,bereappointedasauditorsfortheforthcomingyear.TheresolutiontoappointPricewaterhouseCoopersLLPwillproposethattheyholdofficeuntiltheconclusionofthenextAnnualGeneralMeetingatwhichaccountsarelaidbeforetheCompany,atalevelofremunerationtobedeterminedbytheDirectors.
3. Nomination Committee
MemberAttendance
(1scheduledmeeting)
PeterAllen(Chairman) 1 of 1ManjitWolstenholme 1 of 1HugoDrayton 0 of 1
FollowingdiscussionoftheskillsandcontributionofeachDirector,theNominationCommitteesupportstheproposedre-electionofallDirectorsstandingforre-electionatthe2017AGMandtheelectionofJamesHanburytoconfirmhisappointmenttotheBoard.Inlinewithbestpractice,eachCommitteememberseekingre-electionwasexcludedfromapprovingtheproposalfortheirre-election.
4. Remuneration Committee
MemberAttendance
(3scheduledmeetings)
ManjitWolstenholme(Chairman) 3 of 3
PeterAllen 3 of 3HugoDrayton 2 of 3
Therewerethreescheduledmeetingsduringtheyear.
TheRemunerationCommitteedeterminestheremunerationpackagesofexecutiveDirectors,includingperformance-relatedawardsandshare-basedincentives,remunerationpolicy,whichincludestheindividualbonustargetsforexecutiveDirectorsandperformancecriteriaattachedtoshare-basedincentives,theremunerationoftheChairman,recommendationsofremunerationlevelsfornon-executiveDirectorsandseniormanagementinlinewithindustryremunerationpackagesandtheimplementationofanynewshare-basedincentiveschemeproposedtobeimplemented.TheDirectors’remunerationreportissetoutonpages29to39.
ApprovedbytheBoardofDirectorsandsignedonitsbehalfby:
Penny Ladkin-BrandChiefFinancialOfficer andCompanySecretary13December2016
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overnance
Investor Relations
ForcopiesofalloftheGroup’spublicannouncementsmade viatheRNSandcopiesof theCommittees’termsof referencevisit
www.futureplc.com/invest-in-future
i
Directors’ remuneration report
Fortheyearended30September2016
29 Future plc
Annual statement
Dearshareholders,
IampleasedtopresenttheDirectors’remunerationreportforthefinancialyearended30September2016.ThisreporthasbeenpreparedonbehalfoftheFutureplcBoardbytheRemunerationCommittee,andhasbeenapprovedbytheFutureplcBoard.
AsrequiredundertheLargeandMedium-sizedCompaniesandGroups(AccountsandReports)(Amendment)Regulations2013(Sl2013/1981)Directors’RemunerationRegulations,thisreportissplitintothreesections:thisletter,anImplementationreport,settingoutdetailsofDirectors’remunerationforthefinancialyearended30September2016,andaRemunerationpolicyreport,settingouttheGroup’sforwardlookingremunerationpolicy(“Policy”)forexecutiveandnon-executiveDirectorsforthethree-yearperiodfrom1October2016.
ThekeychallengesfacedbytheRemunerationCommitteeduringtheyearweredeterminingandsettingincentivesforthenewadditionstotheseniormanagementteamwhichhasevolvedoverthepastyear,ensuringalignmentwiththeexecutiveDirectors,andsettingappropriateperformancetargetsforshort-termandlong-termincentivesforbothexecutiveDirectorsandseniormanagementduringthisperiodofsignificantchangefortheGroup.
ThePolicywillbesubjecttoabindingshareholdervoteattheCompany’sAGMon1February2017andwilltakeeffectimmediatelythereafter.
Duringtheyearto30September2016,theCommitteehasconsideredthelevelandmake-upoftheexecutiveDirectors’remunerationpackages,includingthegrantofshare-basedincentiveawardsandthebasisofperformance-relatedbonuses,detailsofwhicharesetoutintheImplementationreportandthePolicy.TheCommittee,inparticular,focuseditseffortsatthebeginningofthefinancialyearonupdatingtheperformancetargetsofthePerformanceSharePlan(PSP)tobetteraligntotheinterestsofshareholders,aswellasupdatingtherulesoftheDeferredAnnualBonusScheme(DABS).TheCommitteehascommencedconsultationswithmajorshareholdersinrelationtocertainchangestothePSP,including:(i)increasingthemaximumvalueofanawardasapercentageofsalaryto400%inrelationtoanyemployeeshareincentiveschemesonanexceptionalbasis,and(ii)thelevelofdilutionforexistingshareholders.
TheremunerationphilosophyisdesignedtoensurethatrewardforperformanceiscompetitiveandappropriateforthetransformationalphasethattheGrouphasundergoneandtoattractandretainthetalentrequiredtodeliverthegrowthambitionsoftheGroup.Theremunerationpolicyseekstoalignremunerationwithshareholderinterestsbasedontheachievementofstrategicobjectivesandfinancialperformance.Asaresult,remunerationlevelsaredesignedtoreflecttherelativeperformanceofthebusinessfortherelevantperiod.
WebelievethatthePolicywillincentivisetheexecutiveteamtodelivergrowthintheshort,mediumandlongtermandhopetoreceiveyourcontinuedsupportattheCompany’s2017AGM.
Manjit Wolstenholme13December2016
Theremunerationphilosophyisdesignedtoensurethatrewardforperformanceiscompetitiveandappropriateforthefuturedevelopmentof,andresultsdeliveredby,theGroup.Theremunerationpolicyseekstoalignremunerationwithshareholderinterestsbasedontheachievementofstrategicobjectivesandfinancialperformance.
Quick find contents
Implementation reportPage30
Remuneration policy report Page36
30AnnualReportandAccounts2016
Implementation report
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overnance
Remuneration Committee
Threeindependentnon-executiveDirectorsservedontheRemunerationCommitteeduringtheyearto30September2016:ManjitWolstenholmechairstheCommitteeandbothPeterAllenandHugoDraytonservedthroughouttheyear.PennyLadkin-BrandactedasSecretarytotheCommitteethroughouttheyear.
TheCommitteeisresponsiblefordeterminingthebasicannualsalaries,incentivearrangementsandtermsofemploymentofexecutiveDirectors,formakingrecommendationsregardingnon-executiveDirectors’fees,thelevelandmake-upoftheremunerationpackagesofseniormanagers,includingbonusschemesandshare-basedincentives,andensuringthatremunerationpoliciesandpracticesdonotencourageexcessiverisk-taking.TheCommitteeisalsoresponsibleforfixingtheChairman’sremunerationandapprovingthetermsofanynewshare-basedincentiveschemeforanyemployeesoftheGroup,subject,whereappropriate,toshareholderapproval.
ItistheBoardthatisresponsiblefordeterminingtheremunerationofnon-executiveDirectorsfollowingtherecommendationoftheCommitteeassetoutonpage32.
NoDirectorisinvolvedindecidinghisorherownremuneration.Asexplainedonpage24,thetermsofreferenceoftheRemunerationCommittee,reviewedannually,areavailableontheCompany’swebsite.
Performance-related bonus (Annual Bonus Scheme)
Operation of the scheme
Theperformance-relatedbonusissubjecttobothprofitrelatedandsubjectiveindividualperformancecriteria,with20%ofthepotentialmaximumperformance-relatedbonuspayablebeingsubjecttosubjectiveindividualperformancecriteriadeterminedbytheCommittee,althoughtheCommitteehasdiscretiontovarythepotentialtotalmaximumbonus,theweightingofthevariableelementsandthestretchofthetargetsinordertoincentiviseorrecruitexecutiveDirectors,
providedthatthetotalpotentialmaximumbonuspayableforanyyearshallnotexceed150%ofsalaryandthebonusshallonlybepayableforoverperformance.Thepotentialmaximumperformance-relatedbonuspayableundertheAnnualBonusSchemeduring2016was120%ofbasicannualsalarytoZillahByng-ThorneasChiefExecutiveand50%ofbasicannualsalarytoPennyLadkin-BrandasChiefFinancialOfficer.
Paymentofanyperformance-relatedbonusundertheAnnualBonusSchemeisusuallymadeinDecember,followingannouncementofthepreliminaryresultsandconclusionoftheauditinrespectoftheprecedingfinancialyear.Paymentofanyperformance-relatedbonusisalsosubjecttotheexecutiveDirectorbeingintheCompany’semploymentatthetimeofpaymentofsuchperformance-relatedbonusandnothavinggivenorreceivednoticeofterminationofemploymentandcertainothereventsnothavingoccurred.
Single Total Figure of Remuneration (audited)
TheremunerationoftheDirectorsissetoutbelow:
Salary/fees Benefits1 Annualbonus2 PSP2 Pension Total
2016 £’000
2015 £’000
2016£’000
2015£’000
2016 £’000
2015 £’000
2016 £’000
2015 £’000
2016£’000
2015£’000
2016 £’000
2015 £’000
Executive Directors in office as at 30 September 2016ZillahByng-Thorne3 300 296 10 10 - 128 - - 37 37 347 471PennyLadkin-Brand 178 29 - - - 15 - - 8 - 186 44Total for executive Directors 478 325 10 10 - 143 - - 45 37 533 515
Non-executive Directors in office as at 30 September 2016PeterAllen 101 120 - - - - - - - - 101 120ManjitWolstenholme 50 49 - - - - - - - - 50 49HugoDrayton 40 33 - - - - - - - - 40 33Total for non-executive Directors 191 202 - - - - - - - - 191 202
Former non-executive DirectorMarkWood 13 20 - - - - - - - - 13 20
Total 682 547 10 10 - 143 - - 45 37 737 737
Notes:1. BenefitsforexecutiveDirectorscompriseprincipallycarallowance,privatehealthinsuranceandlifeassurance.TherewerenotaxableexpensespaidtoanyDirectorintheyear.2.DetailsrelatingtotheAnnualBonusSchemeandthePerformanceSharePlan(“PSP”)aresetoutonpages30to32.3.Witheffectfrom1July2016,ZillahByng-Thornereceivedacashsupplementinlieuofpensioncontribution.Thisadditionalcashpaymentisnotincludedindeterminingherentitlementtoanybonus,
share-basedincentiveorpensionentitlement.4.JamesHanburywasappointedtotheBoardon21October2016andconsequentlynoremunerationisincludedinthetableabove.
ThefollowingreportprovidesdetailsofDirectors’remunerationfortheyearended30September2016.Insettingremunerationfortheyear,theCommitteeappliedtheprinciplessetoutintheRemunerationpolicyreport.
Directors’ remuneration report
Fortheyearended30September2016
31 Future plc
Performance targets
Theprofitcriteriaforpaymentoftheperformance-relatedbonussetfor2016wasinarangefrom90%to110%targetEBITDAE,asfollows:
::IfEBITDAEismorethan10%belowtargetEBITDAE,noprofit-relatedbonuswillbepayable.
::IfEBITDAEis10%belowtargetEBITDAE,20%ofthepotentialmaximumoftheprofit-relatedbonuswillbepayableintheeventthattheCommitteedetermines,initsabsolutediscretion,thatsuchpaymentismeritedbytheindividual.
::IfEBITDAEis5%belowtargetEBITDAE,35%ofthepotentialmaximumoftheprofit-relatedbonuswillbepayableintheeventthattheCommitteedetermines,initsabsolutediscretion,thatsuchpaymentismeritedbytheindividual.
::IfEBITDAEtargetisachieved,50%ofthepotentialmaximumoftheprofit-relatedbonuswillbepayable.
::IfEBITDAEtargetisexceededby5%,75%ofthepotentialmaximumoftheprofit-relatedbonuswillbepayableintheeventthattheCommitteedetermines,initsabsolutediscretion,thatsuchpaymentismeritedbytheindividual.
::IfEBITDAEtargetisexceededby10%ormore,100%ofthepotentialmaximumoftheprofit-relatedbonuswillbepayable.
::IfEBITDAEfallsinbetweenanyoftheabovelevels,apercentageofthepotentialmaximumprofit-relatedbonuswillbepayable,onaproratabasistothelevelsexpressedabove,intheeventthattheCommitteedetermines,initsabsolutediscretion,thatsuchpaymentismeritedbytheindividual.
TheEBITDAEtargetisnotdisclosedasthisisbelievedtobeacommerciallysensitivenumberbutitissetbytheCommitteetobechallengingandissetbyreferencetothebudgetfortherelevantfinancialyear.TheindividualperformancecriteriasetbytheCommitteeweredesignedtorewardthesuccessfulimplementationofspecificelementsoftheGroup’sfinancialandoperationalstrategy.
Paymentofanypartoftheindividualperformance-relatedbonusissubjecttothe90%EBITDAEfloorbeingachieved.
Actual performance against targets for the year
BasedonEBITDAEperformanceachievedfor2016,andonindividualperformancemeasures,theChiefExecutivewaseligibleforabonusof60%ofsalaryandtheChiefFinancialOfficerwaseligibleforabonusof25%ofsalary.TheseawardswerewaivedbytheexecutiveDirectorsinlieuofatransactionbonuspaidfollowingthesuccessfulcompletionoftheacquisitionofImaginePublishinginOctober2016.
2005 Performance Share Plan (PSP)
Operation of the scheme
ThePSPhasbeeninoperationsince2005andisdesignedtorewardperformanceoverathree-yearperiodinthecontextofperformancetargetswhicharedesignedtoaligntheinterestsoftheexecutiveDirectorswiththoseoftheshareholders.Thosetargetsaresetoutbelowandopposite.Themaximumamountofanawardinanyfinancialyearisnormally100%ofbasicannualsalary.However,inexceptionalcircumstances,whereitisfeltnecessarytoprovidefurtherincentivetotheexecutiveDirectors,awardsofupto200%ofbasicannualsalarymaybeapproved.AwardsunderthisschemearegrantedtoexecutiveDirectorsandkeyseniorexecutivemanagement.ThePSPexpiresinJanuary2025,followingitsrenewalinJanuary2015forafurther10years.
SubjecttotheexecutiveDirectorsremaininginemploymentatthevestingdate,awardsgrantedshallvestsubjecttothefollowingperformancecriteriahavingbeenmetattheendoftherelevantthree-yearmeasurementperiod.
Performance criteria in respect of awards granted between 30 November 2015 and 30 September 2016
Earnings Per Share (50% of award)
EPSforthelastfinancialyearoftheperformanceperiodofatleast1.2pforthispartoftheawardtovest(atthislevelthevestedamountis25%ofthispartoftheaward),withfullvestingat1.5pandonastraight-linebasisbetweentheseamounts.
Net Cash Flow (50% of award)
NetCashFlowforthelastfinancialyearoftheperformanceperiodofatleast£(0.25)mforthispartoftheawardtovest(atthislevelthevestedamountis25%ofthispartoftheaward),withfullvestingat£0.75mandonastraight-linebasisbetweentheseamounts.
Performance criteria in respect of awards granted between 4 February 2015 and 29 November 2015
InFebruary2016,theRemunerationCommitteeexerciseditsdiscretiontochangetheperformancecriteriainrespectof50%ofawardsgrantedbetween4February2015and29November2015fromTSRperformancetonetcashflowinordertobetteraligntheinterestsofparticipantsandshareholders.TherewasnochangetotheEPSperformancecriteriainrespectoftheremaining50%oftheseawards.Therevisedperformancecriteriaareasfollows:
Earnings Per Share (50% of award)
EPSforthelastfinancialyearoftheperformanceperiodofatleast1.0pforthispartoftheawardtovest(atthislevelthevestedamountis25%ofthispartoftheaward),withfullvestingat1.4pandonastraight-linebasisbetweentheseamounts.
Net Cash Flow (50% of award)
NetCashFlowforthelastfinancialyearoftheperformanceperiodofatleast£0.25mforthispartoftheawardtovest(atthislevelthevestedamountis25%ofthispartoftheaward),withfullvestingat£1.25mandonastraight-linebasisbetweentheseamounts.
Performance criteria in respect of awards granted prior to 4 February 2015
Earnings Per Share (50% of award)
GrowthinEPSoverthethreeyearsofatleastannualRetailPriceIndex(RPI)+3%forthispartoftheawardtovest(atthislevelthevestedamountiszero)withfullvestingatannualRPI+8%andonastraight-linebasisbetweenthetwo.
Total Shareholder Return (50% of award)
TheCompany’sTSRperformanceiscomparedagainstabasketofcomparatorcompaniescomprisingatalltimesaminimumof15companies.
32AnnualReportandAccounts2016C
orporate Governance
IftheCompany’sTSRperformanceplacesitbelowmedianranking,noneofthepartoftheawarddependentonTSRperformancewillvest.IftheTSRperformanceplacesitinmedianranking,25%ofthispartoftheawardwillvestthroughto100%iftheCompanyisrankedintheupperquintile,i.e.top20%.Betweenmedianandupperquintile,thispartoftheawardwillvestonaproratastraight-linebasis.
InrespectoftheTSRperformanceforawardsgrantedfrom16December2013to3February2015,theCompany’sTSRperformancewasmeasuredagainstthefollowingbasketofcomparatorcompanies:
Bloomsbury PublishingCentaur MediaEbiquityHaynes PublishingHuntsworthITE GroupJohnston PressM&C SaatchiPearsonQuarto GroupSTV GroupTen AlpsTrinity MirrorWilmington GroupyouGov
Performance against targets in respect of the 17 December 2012 awards
TheCommitteeexerciseditsdiscretiontowaivetherequirementforMarkWoodtoremainemployedwithintheGroupatthevestingdateandtoallowtheawardtovestonaproratabasisinDecember2015,subjecttotherelevantperformancecriteriahavingbeenmet.ThemovementinEPSfortherelevantmeasurementperiodwas-82%forthetotalGroupandTSRperformanceplacedtheCompany16thwithinthegroupof18comparatorcompanies.Consequently,theremainderofthePSPawardgrantedtoMarkWoodon17December2012lapsedinitsentiretyon17December2015.
Performance against targets in respect of the 16 December 2013 awards
TheCommitteeexerciseditsdiscretiontowaivetherequirementforMarkWoodtoremainemployedwithintheGroupatthevestingdateandtoallowtheawardtovestonaproratabasisinDecember2016,subjecttotherelevantperformancecriteriahavingbeenmet.ThemovementinEPSfortherelevantmeasurement
periodwas-33%forthetotalGroupandTSRperformanceplacedtheCompany13thwithinthegroupof16comparatorcompanies.Consequently,thePSPawardgrantedtoZillahByng-ThorneandtheremainderofthePSPawardgrantedtoMarkWoodon16December2013willlapseintheirentiretyon16December2016.
Performance against targets in respect of the 16 July 2014 award
ThemovementinEPSfortherelevantmeasurementperiodwas-33%forthetotalGroupandTSRperformanceplacedtheCompany13thwithinthegroupof16comparatorcompanies.Consequently,thePSPawardgrantedtoZillahByng-Thorneon16July2014willlapseinitsentiretyon16July2017.
Non-executive Directors’ remuneration
Non-executiveDirectorsdonotparticipateinanyoftheCompany’sshareincentivearrangements,nordotheyreceiveanybenefits.Theirfeesarereviewedeverythreeyears.TheChairman’sfeesaresetbytheCommittee,andthoseforthenon-executiveDirectorsaresetbytheBoardasawhole.TheChairman’sfeewasreducedfrom£120,000to£95,000witheffectfrom1January2016.
Pension entitlements (audited)
Theonlyelementofremunerationthatispensionableisbasicannualsalary,excludingperformance-relatedbonusesandbenefitsinkind.Employer’spensioncontributionsarepayablefortheexecutiveDirectorsatarateof12.5%fortheChiefExecutiveandupto6%fortheChiefFinancialOfficer.Witheffectfrom1July2016,ZillahByng-Thornereceivesherentitlementtoemployer’spensioncontributionsincashasasalarysupplement.Thisadditionalcashpaymentisnotincludedindeterminingherentitlementtoanyperformance-relatedbonus,share-basedincentiveorpension.
TheliabilityoftheCompanyinrespectoftheexecutiveDirectors’pensionsamountsto£744asat30September2016.Normalretirementageundertheschemerulesis75.
Payments to past Directors (audited)
NopaymentsweremadetoanypastDirectorsduringthefinancialyearended30September2016.
Payments for loss of office (audited)
Duringthefinancialyearto30September2016nopaymentsinrespectoflossofofficeweremade.
Statement of Directors’ shareholding and share interests (audited)
TheCompanyhasapolicyonshareownershipbyexecutiveDirectorswhichrequiresthatanysuchDirectorshouldaccumulateaholdinginsharesoverafiveyearperiodfromappointmentwherethevalueofthosesharesrepresentsatleastonetimessalary.
InrespectofZillahByng-Thorne,therelevantfiveyearperiodcommencedon1November2013andwillendon31October2018.Asat13December2016,ZillahByng-Thornehasaholdingof1,091,369shares,ofwhich191,738werepurchasedatapriceof7.75pon16July2014,185,018werepurchasedatapriceof7.99pon21November2014,44,613werepurchasedatapriceof11.13pon18May2015and670,000werepurchasedatapriceof10.00pon27November2015thenon4December2015the670,000sharesweretransferredtoZillahByng-Thorne’spersonalSIPPbywayofanon-marketsaleandpurchaseatapriceof11.00p.
InrespectofPennyLadkin-Brand,theperiodcommencedon3August2015andwillendon2August2020.Asat13December2016,PennyLadkin-Brandhasaholdingof391,146shares,ofwhich150,000werepurchasedatapriceof10.00pon27November2015,121,815shareswerepurchasedatapriceof12.21pon2December2016and119,331shareswerepurchasedbyherhusbandatapriceof12.61pon5December2016.
DetailsofDirectors’shareholdingsaresetoutonpage20oftheDirectors’report.
Directors’ remuneration report
Fortheyearended30September2016
33 Future plc
Directors’ interests in share schemes (audited)
DetailsofoptionsandothershareincentivesheldbyexecutiveDirectorsandmovementsduringtheyeararesetoutbelow,includingdetailsoftheawardsmadeduringtheyear.
Dateofgrant
Pricepaid
for grant
Earliest exercisedate
Expiry date
Exerciseprice per
share(p)
Balanceat1Oct2015
Grantedduringthe
year3
Vestedduringthe
year
Lapsed unexercised
during theyear
Balance at 30 Sept
2016
PSP1
MarkWood4 17Dec2012 Nil 17Dec2015 N/A Nil 678,159 - - (678,159) -16Dec2013 Nil 16Dec2016 N/A Nil 156,022 - - - 156,022
ZillahByng-Thorne 16Dec2013 Nil 16Dec2016 N/A Nil 2,000,000 - - - 2,000,00016Jul2014 Nil 16July2017 N/A Nil 2,500,000 - - - 2,500,000
30 Nov 2015 Nil 30 Nov 2018 N/A Nil - 2,500,000 - - 2,500,000PennyLadkin-Brand 3Aug2015 Nil 3Aug2018 N/A Nil 1,647,834 - - - 1,647,834
30 Nov 2015 Nil 30 Nov 2018 N/A Nil - 1,250,000 - - 1,250,000Sharesave2
ZillahByng-Thorne 13Dec2013 Nil 1Feb2017 1Aug2017 13.0 69,230 - - - 69,230
Notes:1. TheperformancecriteriawhichapplytoawardsgrantedunderthePSPschemearesetoutonpages31and32.2. DetailsoftheSharesavescheme,whichhasnoperformanceconditions,aresetoutinnote24onpage74.3. ThemarketpriceatthetimeofgrantofthePSPawardon30November15was10.88p.4.FollowingtheterminationofMarkWood’sappointmentasChiefExecutivewitheffectfrom1April2014,theCommitteeexerciseditsdiscretiontowaivetherequirementforMarkWoodtoremainin
employmentonthevestingdateofthePSPawardsgrantedtohimduringhisappointmentasChiefExecutiveandtoallowaportionofthePSPawardsgrantedtohimon18January2012,17December2012and16December2013tovestasnormalon18January2015,17December2015and16December2016respectivelyonaproratabasis(subjecttotherelevantperformancecriteriabeingmet).Theremaining2,564,325optionsgrantedon18January2012lapsedon18January2015andtheremaining678,159optionsgrantedon17December2012lapsedon17December2015sincetherelevantperformancecriteriahadnotbeenmet.The156,022optionsgrantedon16December2013willlapseon16December2016,sincetherelevantperformancecriteriahavenotbeenmet.
Share incentives awarded during the year (audited)
PSP Grants
Date of award % salary Value (£)% vesting at min performance
No. shares awarded Performance period
ZillahByng-Thorne 30November2015 91% £272,000 25% 2,500,000 1October2015–30September2018
PennyLadkin-Brand 30November2015 78% £136,000 25% 1,250,000 1October2015–30September2018
Notes:1. ThevalueofthePSPawardsiscalculatedusingthesharepriceatthedateofgrant,whichwas10.88ppershare.2.ThePSPawardsareexercisableatnilvalue.3.Theperformanceconditionsattachedtothegrantoftheaboveawardsarethesameassetoutonpage31.4. Thepercentagevestingatminimumperformancerepresentsthe25%vestingoftheNetCashFlowelementandthe25%vestingoftheEPSelementoftheaward.
Company performance
TheperformancegraphoppositeshowstheTSRonaholdingofsharesintheCompanycomparedwiththeFTSEAllShareMediaIndex(UKcompanies).
ThefollowingisalistofthecompaniescurrentlyincludedintheFTSEAllShareMediaIndex(UKcompanies):
4 Imprint GroupAscentialAuto Trader GroupBloomsbury PublishingEntertainment One (DI)Euromoney Instl. InvestorGocompare.comInformaITE GroupITVMoneysupermarket.com GP
PearsonRELXRightmoveSTV GroupSkyTarsus GroupTrinity MirrorUBMWPPZoopla Property Group
34AnnualReportandAccounts2016C
orporate Governance
Graph: Past eight financial years ended 30 September 2016Total Shareholder Return: Rebased to Future plc as of 1 October 2008
Chief Executive pay during last eight years
year
Chief Executive single figure
£’000Bonus paid as %
of maximumShare based incentives
vesting as % of maximum
2009(StevieSpring) £423 0% 100%1
2010(StevieSpring) £746 40% 48%2
2011(StevieSpring) £546 0% 100%3
2012(MarkWood) £430 50% 0%4
2013(MarkWood) £331 0% 0%4
2014(ZillahByng-Thorne) £3066 20% 0%5
2015(ZillahByng-Thorne) £471 36% 0%5
2016(ZillahByng-Thorne) £347 0% 0%5
Notes:1. Thisrepresentsshareswhichweregrantedaspartofanexceptionalone-offawardintendedtoaidrecruitmentandretention.Theawardwasnotsubjecttoperformancecriteria.2. ThisrepresentsthefirsttrancheofadeferredbonusshareawardwhichwasnotsubjecttoperformancecriteriaandthePSPawardgrantedinDecember2006whichpartiallyvestedinDecember2009 followingthepartialsatisfactionofTSRperformancecriteria.3. Thisrepresentsthesecondtrancheofadeferredbonusshareawardwhichwasnotsubjecttoperformancecriteria.ThePSPawardgrantedinDecember2007lapsedinDecember2010.4. ThefirstawardsgrantedtoMarkWoodunderthePSPweregrantedinJanuary2012andlapsedon18January2015,sincetherelevantperformancecriteriawerenotmet.5. ThefirstawardsgrantedtoZillahByng-ThorneunderthePSPweregrantedinDecember2013andwilllapseon16December2016,sincetherelevantperformancecriteriawerenotmet.6. ThesinglefigureforZillahByng-Thornefor2014includesfivemonthsofherChiefFinancialOfficersalaryandsixmonthsofhersalaryasChiefExecutive.
Percentage change in remuneration of Chief Executive
Salary Benefits (inc pension) Bonus
2016 2015 % change 2016 2015 % change 2016 2015 % change
Chief Executive £300,000 £300,000 - £47,000 £47,000 - - £127,980 -100%All employees £38,491 £39,621 -2.9% £3,022 £2,931 +3.1% - £285 -100%
Future(rebasedto100) FTSEAll-ShareMediaIndex(UKcompanies)(rebasedto100)
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014 2015 2016
400
Directors’ remuneration report
Fortheyearended30September2016
35 Future plc
Relative importance of spend on pay
Therelativeimportanceofthespendonpayforthebusinessisshowninthetablebelow.
2016£m
2015£m
Grouppay 24.0 26.6GroupoperatingcostsexcludingGrouppay&exceptionalcosts 34.3 33.3Capitalexpenditure 1.9 2.0Dividends - -
ThetableshowstheactualexpenditureoftheGroup,andchangebetweenthecurrentandpreviousyears,onremunerationpaidtoallemployeescomparedtothetotaloperatingcostsfortheGroupexcludingexceptionalcostsandremuneration,andinvestmentincapitalexpenditureanddividends.
Shareholder voting
AtthelastAnnualGeneralMeeting,votesontheDirectors’remunerationreportfortheyearended30September2015werecastasfollows:
For % Discretionary % Against % Abstain
ApprovalofDirectors’remunerationreportfor2015 295,309,192 99.93 28,498 0.01 177,997 0.06 2,200
Implementation of remuneration policy in the year to 30 September 2017
TheRemunerationCommitteeproposesthefollowingchangestotheimplementatonoftheremunerationpolicyfor2017,asoutlinedintheRemunerationpolicyreportonpages36to39,subjecttoshareholderapprovalattheCompany’sAGMon1February2017.
Element Operation of element Max. potential valuePerformance, weighting & time
Basesalary Nochange
ZillahByng-Thorne’ssalaryasChiefExecutiveincreasedto£350,000witheffectfrom21October2016.PennyLadkin-Brand’ssalaryasChiefFinancialOfficerincreasedto£250,000witheffectfrom1October2016.
Nochange
Benefits Nochange Nochange Nochange
AnnualBonus Nochange Nochange1A‘profitpool’stylebonusisproposedfor2017,withamaximumof45%ofsalaryforboththeChiefExecutiveandtheChiefFinancialOfficersubjecttotheachievementofcertainfinancialtargets.
PSP Nochange
TheCommitteerecommendsanincreaseinthemaximumvalueofaone-offawardinexceptionalcircumstancesfrom200%to400%ofbasicannualsalary.
TheCommitteeintendstoamendtheperformancetargetsforawardsmadein2017,inconsultationwithmajorshareholders.TheCommitteeproposesretainingtheweightingbutchangingtheperformancemetricsto50%basedonprofitperformanceand50%basedonsharepriceperformance.
Pension Nochange Nochange Nochange
Notes:1. PerformancetargetsfortheAnnualBonusfor2017arenotdisclosedduetotheircommercialsensitivity.
Advisers to the Remuneration Committee
ErnstandYoungLLPwasappointedduring2016bytheHRdirector,withtheconsentoftheCommittee,toadvisetheCommitteeinrespectofvariousshareincentiveissues.
Compliance with the UK Corporate Governance CodeTheBoardhascompliedfullywiththeprovisionsofSectionDoftheUKCorporateGovernanceCodeinrelationtoDirectors’remunerationpolicyandpractice,andhasfollowedScheduleAtotheCodeinrelationtoperformance-relatedremunerationpolicy.FurtherinformationregardingtheCompany’sapproachtocorporategovernanceissetoutonpages23to28.
36AnnualReportandAccounts2016
Remuneration policy report
Corporate G
overnance
Thepolicysetoutbelowisintendedtoapplyforallfinancialyearsbeginningonorafter1October2016to30September2019,subjecttoshareholderapprovalattheCompany’sAnnualGeneralMeetingon1February2017andshalltakeeffectfollowingtheconclusionofthe2017AGM.
TheCommitteeconsiderstheremunerationpolicyannuallytoensurethatitremainsalignedwiththeGroup’sbusinessneedsandisappropriatelypositionedrelativetothemarket.However,thereisnointentiontoputthepolicyforwardtoshareholdersforapprovalmorefrequentlythaneverythreeyearsunlessanamendmentisproposed.
Approach to recruitment remuneration for executive and non-executive DirectorsTheCommittee’sobjectiveatthetimeofanappointmenttoanewroleistoweightexecutiveDirectors’remunerationpackagestowardsperformance-relatedpay,withperformance-relatedtargetslinkedtofinancialperformanceoftheGroupagainstbudgetandtheGroup’sperformanceagainstbusinessobjectivesanditsstatedstrategy.
AnynewexecutiveDirector’sremunerationpackagewouldincludethesameelementsasthoseoftheexistingexecutiveDirectors,asshowninthenextcolumn.
Element of remuneration Maximum % of salary
Salary Nothigherthanmarketvalue
Benefits Dependentoncircumstances
Pension 12.5%ofbasicannualsalary
Performance- relatedbonus2 150%
Shareincentiveschemes1 100%
Notes:1.PSPschemerulesprovideforawardsofupto100%ofbasicannualsalary,saveinexceptionalcircumstanceswheretheCommitteeisalloweddiscretiontoawardupto400%ofbasicannualsalary.
2.TheCommitteeretainsdiscretiontomakeone-offsignonpaymentsortograntawardsundertheshare-basedincentiveschemeofupto200%ofbasicannualsalarytotheextentthatitisnecessarytorecruitahighcalibreindividual,ortocompensatetheindividualforlossofbonusorotherincentiveawardsgrantedbythepreviousemployer.
3.Intheeventofaninternalpromotion,anycommitmentsmadebytheCompanytoaninternalcandidateshallbehonouredevenifitwouldotherwisebeinconsistentwiththepolicy.
4.IftheDirectorisrequiredtorelocatethenthepolicyistoprovidereasonablerelocation,travelandsubsistencepaymentsatthediscretionoftheCommittee.
Indeterminingthelevelandmake-upofexecutiveDirectors’remuneration,theCommitteecarefullyconsidersthefollowingissues:
(a)RemunerationpackagesofferedtoexecutiveDirectorsshouldbecompetitivewiththoseavailableforcomparablerolesincompaniesoperatinginsimilarmarketsandonasimilar
scale.Theyshouldbesufficientlydesirablesoastoattract,retainandmotivatehighcalibreDirectorstoperformatthehighestlevels,whilstatthesametimeensuringthatrecruitmentandremunerationexpenditureisnotexcessiveanddoesnotencourageexcessiverisk-taking.
(b)TheinterestsofexecutiveDirectorsshouldbealignedwiththoseofshareholdersbyensuringthatasignificantproportionofremunerationislinkedtoGroupperformance.
(c)RemunerationpackagesandemploymentconditionsofexecutiveDirectorsareconsideredinconjunctionwithboththoseofkeyseniormanagers(keepingsuccessionplanninginmind)andallemployeesintheGroupinordertoachieveaconsistentremunerationpolicyacrosstheGroup.TheCommitteehasgivenparticularattentiontoensuringthattheremunerationpackagesofthekeyseniormanagersrecruitedduringtheyeararealignedwiththoseoftheexecutiveDirectors.
(d)Bonuspotentialandshareschemeawardsthatarecappedatapercentageofsalaryarerestrictedifsalariesarelow.
(e)Subjectivecriteriaareappliedtoanelementoftheperformance-relatedbonusoftheChiefExecutiveandChiefFinancialOfficer(withafinancialunderpin)inordertoensurethattheCommitteeretainsdiscretionandtoensurenoperformance-relatedbonusisunjustlyreceived.
Service contracts and payments for loss of office
Executive Directors Contract provision Policy Details
Noticeperiods DirectororCompanyshallbeentitledtoserve6months’notice(inPennyLadkin-Brand’scase)or12months’notice(inZillahByng-Thorne’scase).
ADirectormayberequiredtoworkduringtheirnoticeperiodorbeputongardenleave.
Compensationforlossofoffice Directorshallbeentitledtoreceive6months’salary(inPennyLadkin-Brand’scase)or12months’salary(inZillahByng-Thorne’scase)andbenefitsduringanyunexpirednoticeperiod.
Whileserviceagreementsallowformonthlypaymentsduringnoticeperiodwhicharesubjecttomitigation,theCommitteeretainsdiscretiontomakepaymentsinsuchmannerasisdeemedappropriate,particularlybyreferencetothecircumstancesofthelossofoffice.
Treatmentofshareincentivesontermination
IncentiveswilllapseorvestattheCommittee’sdiscretion,subjecttoperformancecriteriabeingmetandtherulesofthescheme.
TheCommitteehasdiscretiontoallowawardstovestpartiallyorinfullontermination,ortopreserveawards.
Changeofcontrol Intheeventofachangeofcontrol,aDirector mayterminatetheirappointmentonservingnolessthan1month’snotice.
IntheeventofterminationbyeithertheDirectorortheCompany,theDirectorwillbeentitledtoreceive6months’salary.
Non-executive Directors
Noticeperiods 3months’noticefromeitherCompanyorDirector.
Appointedforathreeyearterm,subjecttoannualre-electionbyshareholdersattheCompany’sAGM.
CopiesofDirectors’serviceagreementsandlettersofappointmentareavailableforinspectiononrequestattheCompany’sregisteredoffice.
Directors’ remuneration report
Fortheyearended30September2016
37 Future plc
Remuneration table
Executive Directors
Element Operation Objective & link to strategy Max. potential value Performance measures Changes for 2017Basic annual salary Basicannualsalaryispaidin12equalmonthlyinstalmentsduringtheyearandisreviewedannually.
Whenassessingthelevelofbasicannualsalary,theCommitteetakesintoaccountperformance,marketconditions,remunerationofequivalentroleswithincomparablecompanies,thesizeandscaleofthebusinessandpayintheGroupasawhole.
TheCommitteeretainsdiscretiontopayasalarysupplementtoanexecutiveDirectorforfulfillingtheroleofanotherhigherpaidexecutiveDirectorwhenthatexecutiveDirectorleavestheCompany.
Torecruit,retainandmotivateindividualsofhighcalibre,andreflecttheskills,experienceandcontributionoftherelevantDirector.
CurrentbasicannualsalaryofChiefExecutiveis£350,000andChiefFinancialOfficeris£250,000.Salaryincreasesshallgenerallyreflectmarketconditions,performanceoftheindividual,newchallengesoranewstrategicdirectionforthebusiness.Similarly,theCommitteemayapproveahigherbasicannualsalaryforanewlyappointedDirectorthantheoutgoingDirectorreceivedwhereitconsidersitnecessaryinordertorecruitanindividualofsufficientcalibrefortherole.
Notapplicable. BasicannualsalaryforZillahByng-Thorneincreasedto£350,000witheffectfrom21October2016(beingthecompletiondateoftheacquisitionofImaginePublishing)andforPennyLadkin-Brandincreasedto£250,000witheffectfrom1October2016asaresultofmarketbenchmarking.
Benefits CurrentbenefitsavailabletoexecutiveDirectorsarecarallowance,permanenthealthinsurance,healthcareandlifeassurance.AdditionalbenefitsmaybeofferedifapplicableandsubjecttothemaximumvalueofallbenefitsnotexceedingthemaximumpotentialvaluesetbytheCommittee.
Toensurebroadcompetitivenesswithmarketpractice. TheCompanyshallcontinuetoprovidebenefitstoexecutiveDirectorsatsimilarlevels;whereinsurancecoverisprovidedbytheCompany,thatcovershallbemaintainedatasimilarlevelandtheCompanyshallpaythethencurrentmarketratesforsuchcover.
Notapplicable. Nochange.
Pension TheCompanyshallmakeacontributionuptoamaximumpercentageofbasicannualsalary(currently12.5%fortheChiefExecutiveand6%fortheChiefFinancialOfficer).
Toensurebroadcompetitivenesswithmarketpractice. Totalcostannuallyshallnotexceed15%ofbasicannualsalary. Notapplicable. Nochange.
Performance- related bonus1
TargetsaresetannuallybytheCommittee,basedon(i)financialperformanceagainstbudgetand,attheCommittee’sdiscretion,(ii)individualsubjectiveperformancetargetswhicharedeterminedforeachexecutiveDirector.
TheCommitteeretainsdiscretiontosetthefinancialtargetsbasedontheperformanceduringthepreviousfinancialyearandthebudgetfortheforthcomingyear,andperformanceoftheindividualagainsttheirspecificsubjectiveperformancetargets.
DesignedtorewarddeliveryofshareholdervalueandimplementationoftheGroup’sstrategy.
ForboththeChiefExecutiveandChiefFinancialOfficertheCommitteeretainsdiscretiontovarythepotentialtotalmaximumbonus,theweightingofthevariableelementsandthestretchofthetargetsinordertoincentiviseorrecruitexecutiveDirectors,providedthatthetotalmaximumpotentialbonusforanyoneyearshallnotexceed150%ofbasicannualsalaryandthatthemaximumbonusshallonlybepayableforoverperformance.
Theperformancemeasures,relativeweightingsandtargetsaresetannuallybytheCommittee.DetailsofthemeasuresandtheirrelativeweightingsaredisclosedannuallyintheDirectors’remunerationreportwiththetargetsdisclosedprovidedtheyarenotdeemedtobecommerciallysensitive.TheCommitteeretainsdiscretiontoadjustthetargetsifeventsoccurwhichleadittoconcludethattheyarenolongerappropriate.
TheCommitteealsoretainsdiscretiontoadjusttheoutcomeoftheperformance-relatedbonusforanyperformancemeasureifitconsidersthattobeappropriate.
Nochange.
Long term share-based incentive2
AnnualawardstoexecutiveDirectorsofuptoamaximumof1xbasicannualsalary,withdiscretiontoawarduptoamaximumof4xbasicannualsalaryinexceptionalcircumstances,e.g.recruitmentofaDirectororto“buyout”awardsgrantedbyprioremployer.
TheschemerulesallowtheCommitteediscretiontochangetheperformancetargetsandtheCommitteeshallbeentitledtoexerciseitsdiscretiontochangeperformancecriteriatotheextentthatitreflectsmarketpracticeand/ortheCommitteeconsidersalternativeperformancetargetstobemoreappropriatetothebusiness.
Designedtorewarddeliveryofshareholdervalueinthemedium-to-longterm.
Valueofgrantasamaximumpercentageofsalaryis100%ofbasicannualsalary,howeverinexceptionalcircumstancestheCommitteeretainsdiscretiontograntone-offawardsofavalueupto400%ofbasicannualsalary.
TheperformancetargetsaresetannuallybytheCommitteeanddisclosedannuallyintheDirectors’remunerationreportprovidedtheyarenotdeemedtobecommerciallysensitive.
Awardsvestattheendofthethree-yearperformanceperiod,whentheCommitteewillassessperformanceagainstthetargetssetanddetermine,initsabsolutediscretion,theoveralllevelofvestingoftheaward.
Ahighermaximumforthevalueofone-offawardsinexceptionalcircumstancesunderthePlanof400%ofbasicannualsalaryisproposed.
TheCommitteeintendstomakeaone-offaward,intwotranches,totheexecutiveDirectorsatavalueof400%ofbasicannualsalary,subjecttoshareholderapprovalofthepolicyatthe2017AGM.Thefirsttranche,atavalueof200%ofsalary,wasawardedinNovember2016withthesecondtrancheofafurther200%ofsalarytobeawardedfollowingtheAGMinFebruary2017.
All-employee share plans TheCompanyoperatesaShareIncentivePlan(“SIP”)intheUKwhichqualifiesfortaxbenefits.
TheCommitteeretainsdiscretiontoallowexecutiveDirectorstoparticipateintheSIPonthesametermsasotheremployees.
Toencourageshareownershipbyemployeesandaligntheirinterestswiththoseoftheshareholders.
Themaximumparticipationlevelsforall-employeeshareplanswillbethelimitssetoutinUKtaxlegislation.
Notapplicable. Nochange.
Non-executive Directors
Element Operation Objective & link to strategy Max. potential value Performance measures Changes for 2017Fees1 Non-executiveDirectors’feesarereviewedeverythreeyearsandpaidin12monthlyinstalments.
Currentfeesweresetin2011.Reflectsthetimecommitmentandresponsibilitiesoftheroles. Chairman:£120,000
DeputyChairman:£65,000Othernon-executiveDirectors:£40,000Additionalfeespayable:ChairmanofCommittee:£5,000SeniorindependentDirector:£5,000MemberofCommittee:Nil
Notapplicable. Nochange,sincePeterAllen’sfeeasChairmanremainsat£95,000.
Notes to the table1. Feesarepaidatastandardannualratetoreflectthetime,commitmentandresponsibilitiesoftheroles,withadditionalfeespaidtothosewhochairBoardCommitteestoreflecttheiradditional
responsibilities.Separately,theBoardsetsthefeepayabletotheChairmanoftheBoard.AdditionalfeesforchairingaCommitteeapplyonlyonce,regardlessofthenumberofCommitteesofwhichanon-executiveDirectorisChairman.Non-executiveDirectorsarenotincludedinanyperformance-relatedbonus,shareincentiveschemesorpensionarrangements.
Notes to the table1. Performance-relatedbonustargets:TheperformancetargetsaredeterminedannuallybytheCommitteeandaredesignedtoalignexecutiveDirectors’interestswiththoseoftheCompany’s
shareholdersandtorewardgoodperformancebytheCompany.FinancialtargetsaresetbyreferencetotheCompany’sbudgetfortherelevantfinancialyear,andindividualperformancetargetsaresetbyreferencetotheCompany’sstrategyandgoalsfortherelevantfinancialyear.Thetargetsforthefinancialyearto30September2017arenotdisclosedhereduetotheircommercialsensitivity.
2. PSPperformancetargets:additionaldetailsoftheperformancecriteriaattachingtoPSPawardsgrantedtodatearesetoutonpage31.
38AnnualReportandAccounts2016C
orporate Governance
Remuneration table
Executive Directors
Element Operation Objective & link to strategy Max. potential value Performance measures Changes for 2017Basic annual salary Basicannualsalaryispaidin12equalmonthlyinstalmentsduringtheyearandisreviewedannually.
Whenassessingthelevelofbasicannualsalary,theCommitteetakesintoaccountperformance,marketconditions,remunerationofequivalentroleswithincomparablecompanies,thesizeandscaleofthebusinessandpayintheGroupasawhole.
TheCommitteeretainsdiscretiontopayasalarysupplementtoanexecutiveDirectorforfulfillingtheroleofanotherhigherpaidexecutiveDirectorwhenthatexecutiveDirectorleavestheCompany.
Torecruit,retainandmotivateindividualsofhighcalibre,andreflecttheskills,experienceandcontributionoftherelevantDirector.
CurrentbasicannualsalaryofChiefExecutiveis£350,000andChiefFinancialOfficeris£250,000.Salaryincreasesshallgenerallyreflectmarketconditions,performanceoftheindividual,newchallengesoranewstrategicdirectionforthebusiness.Similarly,theCommitteemayapproveahigherbasicannualsalaryforanewlyappointedDirectorthantheoutgoingDirectorreceivedwhereitconsidersitnecessaryinordertorecruitanindividualofsufficientcalibrefortherole.
Notapplicable. BasicannualsalaryforZillahByng-Thorneincreasedto£350,000witheffectfrom21October2016(beingthecompletiondateoftheacquisitionofImaginePublishing)andforPennyLadkin-Brandincreasedto£250,000witheffectfrom1October2016asaresultofmarketbenchmarking.
Benefits CurrentbenefitsavailabletoexecutiveDirectorsarecarallowance,permanenthealthinsurance,healthcareandlifeassurance.AdditionalbenefitsmaybeofferedifapplicableandsubjecttothemaximumvalueofallbenefitsnotexceedingthemaximumpotentialvaluesetbytheCommittee.
Toensurebroadcompetitivenesswithmarketpractice. TheCompanyshallcontinuetoprovidebenefitstoexecutiveDirectorsatsimilarlevels;whereinsurancecoverisprovidedbytheCompany,thatcovershallbemaintainedatasimilarlevelandtheCompanyshallpaythethencurrentmarketratesforsuchcover.
Notapplicable. Nochange.
Pension TheCompanyshallmakeacontributionuptoamaximumpercentageofbasicannualsalary(currently12.5%fortheChiefExecutiveand6%fortheChiefFinancialOfficer).
Toensurebroadcompetitivenesswithmarketpractice. Totalcostannuallyshallnotexceed15%ofbasicannualsalary. Notapplicable. Nochange.
Performance- related bonus1
TargetsaresetannuallybytheCommittee,basedon(i)financialperformanceagainstbudgetand,attheCommittee’sdiscretion,(ii)individualsubjectiveperformancetargetswhicharedeterminedforeachexecutiveDirector.
TheCommitteeretainsdiscretiontosetthefinancialtargetsbasedontheperformanceduringthepreviousfinancialyearandthebudgetfortheforthcomingyear,andperformanceoftheindividualagainsttheirspecificsubjectiveperformancetargets.
DesignedtorewarddeliveryofshareholdervalueandimplementationoftheGroup’sstrategy.
ForboththeChiefExecutiveandChiefFinancialOfficertheCommitteeretainsdiscretiontovarythepotentialtotalmaximumbonus,theweightingofthevariableelementsandthestretchofthetargetsinordertoincentiviseorrecruitexecutiveDirectors,providedthatthetotalmaximumpotentialbonusforanyoneyearshallnotexceed150%ofbasicannualsalaryandthatthemaximumbonusshallonlybepayableforoverperformance.
Theperformancemeasures,relativeweightingsandtargetsaresetannuallybytheCommittee.DetailsofthemeasuresandtheirrelativeweightingsaredisclosedannuallyintheDirectors’remunerationreportwiththetargetsdisclosedprovidedtheyarenotdeemedtobecommerciallysensitive.TheCommitteeretainsdiscretiontoadjustthetargetsifeventsoccurwhichleadittoconcludethattheyarenolongerappropriate.
TheCommitteealsoretainsdiscretiontoadjusttheoutcomeoftheperformance-relatedbonusforanyperformancemeasureifitconsidersthattobeappropriate.
Nochange.
Long term share-based incentive2
AnnualawardstoexecutiveDirectorsofuptoamaximumof1xbasicannualsalary,withdiscretiontoawarduptoamaximumof4xbasicannualsalaryinexceptionalcircumstances,e.g.recruitmentofaDirectororto“buyout”awardsgrantedbyprioremployer.
TheschemerulesallowtheCommitteediscretiontochangetheperformancetargetsandtheCommitteeshallbeentitledtoexerciseitsdiscretiontochangeperformancecriteriatotheextentthatitreflectsmarketpracticeand/ortheCommitteeconsidersalternativeperformancetargetstobemoreappropriatetothebusiness.
Designedtorewarddeliveryofshareholdervalueinthemedium-to-longterm.
Valueofgrantasamaximumpercentageofsalaryis100%ofbasicannualsalary,howeverinexceptionalcircumstancestheCommitteeretainsdiscretiontograntone-offawardsofavalueupto400%ofbasicannualsalary.
TheperformancetargetsaresetannuallybytheCommitteeanddisclosedannuallyintheDirectors’remunerationreportprovidedtheyarenotdeemedtobecommerciallysensitive.
Awardsvestattheendofthethree-yearperformanceperiod,whentheCommitteewillassessperformanceagainstthetargetssetanddetermine,initsabsolutediscretion,theoveralllevelofvestingoftheaward.
Ahighermaximumforthevalueofone-offawardsinexceptionalcircumstancesunderthePlanof400%ofbasicannualsalaryisproposed.
TheCommitteeintendstomakeaone-offaward,intwotranches,totheexecutiveDirectorsatavalueof400%ofbasicannualsalary,subjecttoshareholderapprovalofthepolicyatthe2017AGM.Thefirsttranche,atavalueof200%ofsalary,wasawardedinNovember2016withthesecondtrancheofafurther200%ofsalarytobeawardedfollowingtheAGMinFebruary2017.
All-employee share plans TheCompanyoperatesaShareIncentivePlan(“SIP”)intheUKwhichqualifiesfortaxbenefits.
TheCommitteeretainsdiscretiontoallowexecutiveDirectorstoparticipateintheSIPonthesametermsasotheremployees.
Toencourageshareownershipbyemployeesandaligntheirinterestswiththoseoftheshareholders.
Themaximumparticipationlevelsforall-employeeshareplanswillbethelimitssetoutinUKtaxlegislation.
Notapplicable. Nochange.
Non-executive Directors
Element Operation Objective & link to strategy Max. potential value Performance measures Changes for 2017Fees1 Non-executiveDirectors’feesarereviewedeverythreeyearsandpaidin12monthlyinstalments.
Currentfeesweresetin2011.Reflectsthetimecommitmentandresponsibilitiesoftheroles. Chairman:£120,000
DeputyChairman:£65,000Othernon-executiveDirectors:£40,000Additionalfeespayable:ChairmanofCommittee:£5,000SeniorindependentDirector:£5,000MemberofCommittee:Nil
Notapplicable. Nochange,sincePeterAllen’sfeeasChairmanremainsat£95,000.
Notes to the table1. Feesarepaidatastandardannualratetoreflectthetime,commitmentandresponsibilitiesoftheroles,withadditionalfeespaidtothosewhochairBoardCommitteestoreflecttheiradditional
responsibilities.Separately,theBoardsetsthefeepayabletotheChairmanoftheBoard.AdditionalfeesforchairingaCommitteeapplyonlyonce,regardlessofthenumberofCommitteesofwhichanon-executiveDirectorisChairman.Non-executiveDirectorsarenotincludedinanyperformance-relatedbonus,shareincentiveschemesorpensionarrangements.
3. AllemployeesoftheGroupreceiveabasicannualsalary,benefits,pensionandannualbonus(subjecttofinancialperformance).Themaximumvalueofremunerationpackagesisbasedontheseniorityandresponsibilitiesoftherelevantrole.DiscretionaryshareincentivesarenotawardedtoemployeesotherthanexecutiveDirectorsandseniormanagers,howevertheCompanyintroducedaShareIncentivePlanin2015inordertoencourageactiveemployeeshareownership.
39 Future plc
Directors’ remuneration report
Fortheyearended30September2016
Total remuneration scenarios
Consideration of employee conditions within the Group
TheCommitteetakesintoconsiderationthepayandconditionsofemployeesacrosstheGroupwhendeterminingremunerationforexecutiveDirectors.
Allemployeesreceiveabasicannualsalary,benefitsandanentitlementtoreceiveabonus,subjecttofinancialperformance,undertheGroup’sprofitimprovementscheme.
DiscretionaryshareincentiveawardsaregrantedtocertainseniormanagersunderthePSPandDABSschemes,thedetailsofwhicharesetoutatnote24onpage74.During2015theGroupintroducedaShareIncentivePlantoreplacetheSharesavescheme,inordertoencourageactiveemployeeshareownership.
Consideration of shareholder views
TheRemunerationCommitteeconsidersshareholderfeedbackreceivedaspartofanydiscussionswithshareholdersandconsultswithshareholdersonspecificmattersasandwhenappropriate.
ApprovedbytheBoardofDirectorsandsignedonitsbehalfby:
Manjit WolstenholmeChairmanoftheRemunerationCommittee13December2016
Notes:1.Annualsalaryisbasedonbasicsalaryforthefinancialyearending30September2017.2.Thevalueofpensionisdeterminedasapercentageofsalary,basedonsalaryfor2017.Thevalueofbenefitsinkindiscalculatedonthebasisofthevaluefor2016.
3.Theremunerationscenariosaboveincludeatransactionbonus,amountingto100%ofbasicannualsalaryfortheChiefExecutiveand50%ofbasicannualsalaryfortheChiefFinancialOfficer,paidfollowingthesuccessfulcompletionoftheacquisitionofImaginePublishinginOctober2016.
4.On-targetperformancewoulddeliver50%ofthemaximumannualbonusfortheChiefExecutiveandtheChiefFinancialOfficer.Maximumperformancewouldresultinthemaximumannualbonuspaymentof45%ofbasicannualsalaryforboththeChiefExecutiveandtheChiefFinancialOfficer.
5.ThefinalyearoftheperformanceperiodinrespectofbothEPSandNetCashFlowtargetsforthePSPawardgrantedtoPennyLadkin-BrandinAugust2015istheyearending30September2017.On-targetperformanceassumesthat50%oftheawardswouldvestwhilemaximumperformancewouldresultin100%oftheawardsvesting.Thevalueofthesharesthatwouldvesthasbeencalculatedusingasharepriceof13.75ppersharebeingthelatestavailableshareprice.
Zillah Byng-Thorne
200
100
300
400
800
500
900
600
1,000
700
Minimum
46%
Target Maximum
44%
54% 48
%52
%
56%
£754,000
£833,000
£912,000
Minimum Target Maximum
Penny Ladkin-Brand
36%
68%
47%
33% 33
%£388,000
£557,000
£727,000
Salary,pension &benefits
Bonus
PSP
200
100
300
400
500
600
700
32%
20%
31%
800
40AnnualReportandAccounts2016C
orporate Governance
41 Future plc
Independent auditors’ report Independent auditors’ report to
the members of Future plc
Report on the financial statements
Our opinion
In our opinion:
• Futureplc’sGroupfinancialstatementsandCompanyfinancialstatements(the“financialstatements”)giveatrueandfairviewofthestateoftheGroup’sandoftheCompany’saffairsasat30September2016andoftheGroup’slossandtheGroup’sandtheCompany’scashflowsfortheyearthenended;
• theGroupfinancialstatementshavebeenproperlypreparedinaccordancewithInternationalFinancialReportingStandards(“IFRSs”)asadoptedbytheEuropeanUnion;
• theCompanyfinancialstatementshavebeenproperlypreparedinaccordancewithIFRSsasadoptedbytheEuropeanUnionandasappliedinaccordancewiththeprovisionsoftheCompaniesAct2006;and
• thefinancialstatementshavebeenpreparedinaccordancewiththerequirementsoftheCompaniesAct2006and,asregardstheGroupfinancialstatements,Article4oftheIASRegulation.
What we have audited
Thefinancialstatements,includedwithintheAnnualReportandAccounts(the“AnnualReport”),comprise:
• theConsolidatedbalancesheetandCompanybalancesheetasat30September2016;
• theConsolidatedincomestatementandConsolidatedstatementofcomprehensiveincomefortheyearthenended;
• theConsolidatedandCompanycashflowstatementsfortheyearthenended;
• theConsolidatedstatementofchangesinequityandtheCompanystatementofchangesinequityfortheyearthenended;
• theAccountingpolicies;and
• theNotestothefinancialstatements,whichincludeotherexplanatoryinformation.
ThefinancialreportingframeworkthathasbeenappliedinthepreparationofthefinancialstatementsisIFRSsasadoptedbytheEuropeanUnionand,asregardstheCompanyfinancialstatements,asappliedinaccordancewiththeprovisionsoftheCompaniesAct2006,andapplicablelaw.
Inapplyingthefinancialreportingframework,theDirectorshavemadeanumberofsubjectivejudgements,forexampleinrespectofsignificantaccountingestimates.Inmakingsuchestimates,theyhavemadeassumptionsandconsideredfutureevents.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion:
• theinformationgivenintheStrategicReportandtheDirectors’reportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththefinancialstatements.
• thepartoftheDirectors’remunerationreporttobeauditedhasbeenproperlypreparedinaccordancewiththeCompaniesAct2006.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
UndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion:
• wehavenotreceivedalltheinformationandexplanationswerequireforouraudit;or
• adequateaccountingrecordshavenotbeenkeptbytheCompany,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or
• theCompanyfinancialstatementsandthepartoftheDirectors’remunerationreporttobeauditedarenotinagreementwiththeaccountingrecordsandreturns.
Wehavenoexceptionstoreportarisingfromthisresponsibility.
42AnnualReportandAccounts2016
Directors’ remuneration
UndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion,certaindisclosuresofDirectors’remunerationspecifiedbylawarenotmade.Wehavenoexceptionstoreportarisingfromthisresponsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the Directors
AsexplainedmorefullyintheStatementofDirectors’responsibilitiessetoutonpage22,theDirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.
OurresponsibilityistoauditandexpressanopiniononthefinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland)(“ISAs(UK&Ireland)”).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.
Thisreport,includingtheopinions,hasbeenpreparedforandonlyfortheCompany’smembersasabodyinaccordancewithChapter3ofPart16oftheCompaniesAct2006andfornootherpurpose.Wedonot,ingivingtheseopinions,acceptorassumeresponsibilityforanyotherpurposeortoanyotherpersontowhomthisreportisshownorintowhosehandsitmaycomesavewhereexpresslyagreedbyourpriorconsentinwriting.
What an audit of financial statements involves
WeconductedourauditinaccordancewithISAs(UK&Ireland).Anauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:
• whethertheaccountingpoliciesareappropriatetotheGroup’sandtheCompany’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;
• thereasonablenessofsignificantaccountingestimatesmadebytheDirectors;and
• theoverallpresentationofthefinancialstatements.
WeprimarilyfocusourworkintheseareasbyassessingtheDirectors’judgementsagainstavailableevidence,formingourownjudgements,andevaluatingthedisclosuresinthefinancialstatements.
Wetestandexamineinformation,usingsamplingandotherauditingtechniques,totheextentweconsidernecessarytoprovideareasonablebasisforustodrawconclusions.Weobtainauditevidencethroughtestingtheeffectivenessofcontrols,substantiveproceduresoracombinationofboth.
Inaddition,wereadallthefinancialandnon-financialinformationintheAnnualReporttoidentifymaterialinconsistencieswiththeauditedfinancialstatementsandtoidentifyanyinformationthatisapparentlymateriallyincorrectbasedon,ormateriallyinconsistentwith,theknowledgeacquiredbyusinthecourseofperformingtheaudit.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.
ColinBates(SeniorStatutoryAuditor)forandonbehalfofPricewaterhouseCoopersLLPCharteredAccountantsandStatutoryAuditorsBristol13December2016
Corporate G
overnance
43
Contents
Consolidatedincomestatement 44
Consolidatedstatementof 44comprehensiveincome
Consolidatedstatementof 45changesinequity Companystatementof 45changesinequity
Consolidatedbalancesheet 46
Companybalancesheet 47
ConsolidatedandCompanycashflowstatements 48
NotestotheConsolidatedandCompanycashflowstatements 49
Accountingpolicies 50
Notestothefinancialstatements 54
Financial statementsFuture plc
Financial statements
44
Consolidated income statement fortheyearended30September2016
Note2016
£m2015£m
Continuing operationsRevenue 1 59.0 59.8
Operating profit before depreciation, amortisation, exceptional items and impairment of intangible assets 1 4.7 3.6
Depreciation 11 (0.4) (0.5)Amortisation 12 (2.0) (2.3)Exceptionalitems 4 (3.5) (2.5)Impairmentofintangibleassets 2 (13.0) -
Operating loss 2 (14.2) (1.7)Financecosts 6 (0.7) (0.6)Net finance costs 6 (0.7) (0.6)Loss before tax 1 (14.9) (2.3)Taxonloss 7 0.5 0.3Loss for the year from continuing operations (14.4) (2.0)Discontinued operationsProfitfortheyearfromdiscontinuedoperations 10 0.2 0.7Loss for the year attributable to owners of the parent (14.2) (1.3)
Earnings per 1p Ordinary share
Note2016
pence2015
pence
Basiclosspershare–TotalGroup 9 (3.9) (0.4)Dilutedlosspershare–TotalGroup 9 (3.9) (0.4)Basiclosspershare–Continuingoperations 9 (4.0) (0.6)Dilutedlosspershare–Continuingoperations 9 (4.0) (0.6)
AspermittedbytheexemptionunderSection408oftheCompaniesAct2006noCompanyincomestatementorstatementofcomprehensiveincomeispresented.
Consolidated statement of comprehensive incomefortheyearended30September2016
2016£m
2015£m
Loss for the year (14.2) (1.3)Items that may be reclassified to the consolidated income statementContinuing operationsCurrencytranslationdifferences 0.3 -Other comprehensive income for the year from continuing operations 0.3 -
Total comprehensive loss for the year attributable to continuing operations (14.1) (2.0)Total comprehensive income for the year attributable to discontinued operations 0.2 0.7Total comprehensive loss for the year attributable to owners of the parent (13.9) (1.3)
Itemsinthestatementabovearedisclosednetoftax.
Financial Statements
AnnualReportandAccounts2016
Consolidated statement of changes in equity fortheyearended30September2016
Group Note
Issuedshare
capital£m
Share premium account
£m
Merger reserve
£m
Treasury reserve
£m
Accumulated losses
£m
Total equity
£m
Balance at 1 October 2014 3.3 24.8 109.0 (0.3) (104.2) 32.6Loss for the year - - - - (1.3) (1.3)Currencytranslationdifferences - - - - - -Other comprehensive income for the year - - - - - -Total comprehensive loss for the year - - - - (1.3) (1.3)Shareschemes-Valueofemployees’services 5 - - - - 0.1 0.1Balance at 30 September 2015 3.3 24.8 109.0 (0.3) (105.4) 31.4Loss for the year - - - - (14.2) (14.2)Currencytranslationdifferences - - - - 0.3 0.3Other comprehensive income for the year - - - - 0.3 0.3Total comprehensive loss for the year - - - - (13.9) (13.9)Sharecapitalissuedduringtheyear 0.4 2.8 - - - 3.2Shareschemes-Valueofemployees’services 5 - - - - 0.5 0.5Balance at 30 September 2016 3.7 27.6 109.0 (0.3) (118.8) 21.2
Company statement of changes in equity fortheyearended30September2016
Company Note
Issuedshare
capital£m
Share premium account
£m
Retained earnings
£m
Total equity
£m
Balance at 1 October 2014 3.3 24.8 10.7 38.8Loss for the year - - (0.9) (0.9)Other comprehensive income for the year - - - -Total comprehensive loss for the year - - (0.9) (0.9)Shareschemes-Valueofemployees’services 5 - - 0.1 0.1Balance at 30 September 2015 3.3 24.8 9.9 38.0Loss for the year - - (6.4) (6.4)Other comprehensive income for the year - - - -Total comprehensive loss for the year - - (6.4) (6.4)Sharecapitalissuedduringtheyear 0.4 2.8 - 3.2Shareschemes-Valueofemployees’services 5 - - 0.5 0.5Balance at 30 September 2016 3.7 27.6 4.0 35.3
Financial statements
45 Future plc
Financial Statements
Consolidated balance sheetasat30September2016
Note2016
£m2015£m
AssetsNon-current assetsProperty,plantandequipment 11 0.5 0.6Intangibleassets-goodwill 12 29.5 40.9Intangibleassets-other 12 3.7 2.9Deferredtax 14 2.4 0.5Total non-current assets 36.1 44.9Current assetsInventories 15 0.4 0.5Corporationtaxrecoverable 0.1 1.2Tradeandotherreceivables 16 12.4 15.3Cashandcashequivalents 17 2.9 2.5Total current assets 15.8 19.5Total assets 51.9 64.4Equity and liabilitiesEquityIssuedsharecapital 23 3.7 3.3Sharepremiumaccount 27.6 24.8Mergerreserve 25 109.0 109.0Treasuryreserve 25 (0.3) (0.3)Accumulatedlosses (118.8) (105.4)Total equity 21.2 31.4Non-current liabilitiesFinancialliabilities-interest-bearingloansandborrowings 19 0.1 -Corporationtaxpayable 7 2.6 3.5Deferredtax 14 0.9 0.7Provisions 20 1.5 2.1Othernon-currentliabilities 21 0.5 0.8Total non-current liabilities 5.6 7.1Current liabilitiesFinancialliabilities-interest-bearingloansandborrowings 19 2.3 4.3Tradeandotherpayables 18 21.4 20.7Corporationtaxpayable 7 1.4 0.9Total current liabilities 25.1 25.9Total liabilities 30.7 33.0Total equity and liabilities 51.9 64.4
Thefinancialstatementsonpages43to78wereapprovedbytheBoardofDirectorson13December2016andsignedonitsbehalfby:
Peter Allen Penny Ladkin-BrandChairman ChiefFinancialOfficer
46AnnualReportandAccounts2016
Company balance sheetasat30September2016
Note2016
£m2015£m
AssetsNon-current assetsInvestmentinGroupundertakings 13 1.0 131.9Total non-current assets 1.0 131.9Current assetsTradeandotherreceivables 16 43.5 46.7Total current assets 43.5 46.7Total assets 44.5 178.6Equity and liabilitiesEquityIssuedsharecapital 23 3.7 3.3Sharepremiumaccount 27.6 24.8Retainedearnings 4.0 9.9Total equity 35.3 38.0Non-current liabilitiesCorporationtaxpayable 7 2.6 3.5Total non-current liabilities 2.6 3.5Current liabilitiesFinancialliabilities-interest-bearingloansandborrowings 19 2.3 4.3Financialliabilities-non-interest-bearingoverdraft 19 1.0 7.9Tradeandotherpayables 18 2.4 124.0Corporationtaxpayable 7 0.9 0.9Total current liabilities 6.6 137.1Total liabilities 9.2 140.6Total equity and liabilities 44.5 178.6
Thefinancialstatementsonpages43to78wereapprovedbytheBoardofDirectorson13December2016andsignedonitsbehalfby:
Peter Allen Penny Ladkin-BrandChairman ChiefFinancialOfficer
FutureplcCompanyregistrationnumber:3757874
Financial statements
47 Future plc
Consolidated and Company cash flow statementsfortheyearended30September2016
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Cash flows from operating activitiesCashgeneratedfrom/(usedin)operations 3.1 (1.4) (7.5) (0.5)Taxreceived 0.1 - 0.5 -Interestpaid (0.4) (0.4) (0.6) (0.5)Taxpaid (0.8) (0.7) (1.0) (0.7)Net cash generated from/(used in) operating activities 2.0 (2.5) (8.6) (1.7)Cash flows from investing activitiesPurchaseofproperty,plantandequipment (0.2) - (0.2) -Purchaseofcomputersoftwareandwebsitedevelopment (1.7) - (1.8) -Purchaseofmagazinetitlesandevents (0.6) - - -Purchaseofsubsidiaryundertakings,netofcashacquired (0.3) - - -Disposalofproperty,plantandequipment - - 1.2 -Disposalofmagazinetitlesandtrademarks - - 0.1 -Netmovementinamountsowedto/bysubsidiaries - 8.3 - (1.8)Net cash (used in)/generated from investing activities (2.8) 8.3 (0.7) (1.8)Cash flows from financing activitiesProceedsfromissueofOrdinarysharecapital 3.3 3.3 - -Costsofshareissue (0.2) (0.2) - -Drawdownofbankloans 4.6 4.6 3.5 3.5Repaymentofbankloans (5.7) (5.7) - -Bankarrangementfees - - (0.2) (0.2)Repaymentoffinanceleases (0.1) - - -Net cash generated from financing activities 1.9 2.0 3.3 3.3Net increase/(decrease) in cash and cash equivalents 1.1 7.8 (6.0) (0.2)Cashandcashequivalentsatbeginningofyear 1.6 (8.8) 7.5 (8.6)Exchangeadjustments 0.2 - 0.1 -Cash and cash equivalents at end of year 2.9 (1.0) 1.6 (8.8)Amountattributabletocontinuingoperations 2.9 (1.0) 1.6 (8.8)
Financial Statements
48AnnualReportandAccounts2016
Notes to the Consolidated and Company cash flow statementsfortheyearended30September2016
A. Cash used in operationsThereconciliationof(loss)/profitfortheyeartocashgeneratedfrom/(usedin)operationsissetoutbelow:
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
(Loss)/profitfortheyear–Continuingoperations (14.4) (6.4) (2.0) (0.9)–Discontinuedoperations 0.2 - 0.7 -Lossfortheyear–TotalGroup (14.2) (6.4) (1.3) (0.9)Adjustmentsfor: Depreciationcharge 0.4 - 0.5 -Amortisationofintangibleassets 2.0 - 2.3 -Impairmentofintangibleassets 13.0 - - -Profitondisposalofmagazinetitlesandtrademarks (0.4) - (0.1) -Profitondisposalofproperty,plantandequipment - - (0.3) -Shareschemes-Valueofemployees’services 0.5 - 0.1 -ImpairmentofinvestmentinGroupundertakings - 131.4 - 0.1DividendreceivablefromGroupundertaking - (130.9) - -Netfinancecosts 0.7 2.9 0.6 1.5Tax(credit)/charge (0.5) 0.1 (0.4) (1.2)Profit/(loss) before changes in working capital and provisions 1.5 (2.9) 1.4 (0.5)Movementinprovisions (0.6) - (0.7) -Decreaseininventories 0.1 - 0.1 -Decrease/(increase)intradeandotherreceivables 3.8 (0.1) (2.8) -(Decrease)/increaseintradeandotherpayables (1.7) 1.6 (5.5) -Cash generated from/(used in) operations 3.1 (1.4) (7.5) (0.5)
B. Analysis of net (debt)/cash
Group
1 October 2015
£mCash flows
£m
Finance leases entered into
£m
Exchange movements
£m
30 September 2016
£m
Cashandcashequivalents 1.6 1.1 - 0.2 2.9Debtduewithinoneyear (3.4) 1.2 (0.1) - (2.3)Debtdueaftermorethanoneyear - - (0.1) - (0.1)Net (debt)/cash (1.8) 2.3 (0.2) 0.2 0.5
Company
1 October 2015
£mCash flows
£m
Other non-cash changes
£m
30 September 2016
£m
Cashandcashequivalents (8.8) 7.8 - (1.0)Debtduewithinoneyear (3.4) 1.1 - (2.3)Net debt (12.2) 8.9 - (3.3)
C. Reconciliation of movement in net (debt)/cash
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Net(debt)/cashatstartofyear (1.8) (12.2) 7.5 (8.6)Increase/(decrease)incashandcashequivalents 1.1 7.8 (6.0) (0.2)Movementinborrowings 1.2 1.1 (3.5) (3.5)Financeleasesenteredinto (0.2) - - -Othernon-cashchanges - - 0.1 0.1Exchangemovements 0.2 - 0.1 -Net cash/(debt) at end of year 0.5 (3.3) (1.8) (12.2)
Financial statements
49 Future plc
Basis of preparation
Thesefinancialstatementshavebeenpreparedunderthehistoricalcostconvention,exceptforderivativefinancialinstrumentsandshareawardswhicharestatedatfairvalue.
Theprincipalaccountingpoliciesappliedinthepreparationoftheconsolidatedfinancialstatementspublishedinthis2016AnnualReportaresetoutonpages50to53.Thesepolicieshavebeenappliedconsistentlytoallyearspresented,unlessotherwisestated.
ThefinancialstatementsoftheGrouphavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)issuedbytheInternationalAccountingStandardsBoard(IASB)andtheInternationalFinancialReportingInterpretationsCommittee’s(IFRIC)interpretationsasadoptedbytheEuropeanUnion,applicableasat30September2016,andthosepartsoftheCompaniesAct2006applicabletocompaniesreportingunderIFRS.
ThegoingconcernbasishasbeenadoptedinpreparingthesefinancialstatementsasstatedbytheDirectorsonpage25.
Discontinued operations and non-current assets held for sale
During2014theSport,CraftandAutoportfoliosweredisposedof.InaccordancewithIFRS5theresultsoftheseoperationsarepresentedasdiscontinuedoperationsintheConsolidatedincomestatement.
WheretheGroupexpectstorecoverthecarryingamountofagroupofassetsthroughasaletransactionratherthanthroughcontinuinguse,theassetsareavailableforimmediatesaleintheirpresentcondition,managementiscommittedtothesaleandasaleishighlyprobableatthebalancesheetdate,theassetsareclassifiedasheldforsale.
Afterclassificationasheldforsale,theassetsaremeasuredatthelowerofthecarryingamountandfairvaluelesscoststosell.Animpairmentlossisrecognisedintheincomestatementforanywrite-downoftheassetstofairvaluelesscoststosell.Againforanysubsequentincreaseinfairvaluelesscoststosellisrecognisedintheincomestatementtotheextentthatitdoesnotexceedthecumulativeimpairmentlosspreviouslyrecognised.Nodepreciationoramortisationischargedinrespectofnon-currentassetsclassifiedasheldforsale.
Ifthegroupofassetsconstitutesaseparatemajorlineofbusinessitisclassifiedasadiscontinuedoperation.
Basis of consolidation
TheconsolidatedfinancialstatementsincorporatethefinancialstatementsofFutureplc(theCompany)anditssubsidiaryundertakings.SubsidiariesareallentitiesoverwhichtheGrouphasthepowertogovernthefinancialandoperatingpolicies,generallyaccompanyingashareholdingofmorethanonehalfofthevotingrights.Theexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingwhetherthe
Groupcontrolsanotherentity.SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyaredeconsolidatedfromthedatethatcontrolceases.ThepurchasemethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheGroup.
Thecostofanacquisitionismeasuredasthefairvalueoftheassetsgiven,equityinstrumentsissuedandliabilitiesincurredorassumedatthedateofexchange,andincludesthefairvalueofanyassetorliabilityresultingfromacontingentconsiderationarrangement.Acquisition-relatedcostsareexpensedasincurred.Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedinabusinesscombinationaremeasuredinitiallyattheirfairvaluesattheacquisitiondate.TheexcessofthecostofacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiablenetassetsacquiredisrecordedasgoodwill.
Inter-companytransactions,balancesandunrealisedgainsontransactionsbetweenGroupcompaniesareeliminated.Unrealisedlossesarealsoeliminatedbutareconsideredanimpairmentindicatoroftheassettransferred.AccountingpoliciesofsubsidiarieshavebeenchangedwherenecessarytoensureconsistencywiththepoliciesadoptedbytheGroup.
Segment reporting
TheGroupisorganisedandarrangedprimarilybygeographicalsegment.OperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtotheChiefOperatingDecisionMakerswhoareconsideredtobetheexecutiveDirectorsofFutureplc.
Revenue recognition
Revenuefromthesaleofgoodsisrecognisedintheincomestatementwhenthesignificantrisksandrewardsofownershiphavebeen
transferredtothebuyer.Revenuefromservicesrenderedisrecognisedinthe incomestatementoncetheservicehas beencompleted.
RevenuecomprisesthefairvalueoftheconsiderationreceivedorreceivableforthesaleofgoodsandservicesintheordinarycourseoftheGroup’sactivities.Revenueisshownnetofvalue-addedtax,estimatedreturns,rebatesanddiscountsandaftereliminatingsaleswithintheGroup.Thefollowingrecognitioncriteriaalsoapply:
• Magazinenewsstandcirculationandadvertisingrevenueisrecognisedaccordingtothedatethattherelatedpublicationgoesonsale.
• Revenuefromthesaleofdigitalmagazinesubscriptionsisrecogniseduniformlyoverthetermofthesubscription.
• Eventincomeisrecognisedwhentheeventhastakenplace.
• Licensingrevenueisrecognisedonthesupplyofthelicensedcontent.
• Otherrevenueisrecognisedatthetimeofsaleorprovisionofservice.
Foreign currency translation
(a) Functional and presentation currencyItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(‘thefunctionalcurrency’).Theconsolidatedfinancialstatementsarepresentedinsterling,whichistheGroup’spresentationcurrency.
(b) Transactions and balancesForeigncurrencytransactionsaretranslatedintothefunctionalcurrencyusingtheexchangerateprevailingatthedateofthetransaction.Foreignexchangegainsandlossesresultingfromthesettlementofsuchtransactions
Accounting policies
Financial Statements
50AnnualReportandAccounts2016
andfromthetranslationatbalancesheetexchangeratesofmonetaryassetsandliabilitiesdenominatedinforeigncurrenciesarerecognisedintheincomestatement,withexchangedifferencesarisingontradingtransactionsbeingreportedinoperatingprofitandwiththosearisingonfinancingtransactionsreportedinnetfinancecostsunless,asaresultofcashflowhedging,theyarereportedinothercomprehensiveincome.
(c) Group companiesTheresultsandfinancialpositionofalltheGroupentitiesthathaveafunctionalcurrencydifferentfromthepresentationcurrencyaretranslatedintothepresentationcurrencyasfollows:
(i) Assetsandliabilitiesforeachbalancesheetaretranslatedattheclosingrateatthedateofthatbalancesheet.
(ii) Incomeandexpensesforeachincomestatementaretranslatedataverageexchangerates.
(iii)Allresultingexchangedifferencesarerecognisedasaseparatecomponent ofequity.
Onconsolidation,exchangedifferences arisingfromthetranslationofthenetinvestmentinforeignoperations,andofborrowingsandothercurrencyinstrumentsdesignatedashedgesofsuchinvestments,aretakentoshareholders’equity.Whenaforeignoperationissold,exchangedifferencesthatwererecordedinequityarerecognisedintheincomestatementaspartofthegainorlossonsale.
Employee benefits
(a) Pension obligationsTheGrouphasanumberofdefinedcontributionplans.FordefinedcontributionplanstheGrouppayscontributionsintoaprivatelyadministeredpensionplanonacontractualorvoluntarybasis.TheGrouphasnofurtherpaymentobligationsoncethecontributionshavebeenpaid.Contributionsarechargedtotheincomestatementastheyareincurred.
(b) Share-based compensationTheGroupoperatesanumberofequity-settled,share-basedcompensationplans. Thefairvalueoftheemployeeservicesreceivedinexchangeforthegrantoftheawardsisrecognisedasanexpense.Thetotalamounttobeexpensedovertheappropriateserviceperiodisdeterminedbyreferencetothefairvalueoftheawards.Thecalculationoffairvalueincludesassumptionsregardingthenumberofcancellationsandexcludestheimpactofanynon-marketvestingconditions(forexample,earningspershare).Non-marketvestingconditionsareincludedinassumptionsaboutthenumberofawardsthatareexpectedtovest.Ateachbalancesheetdate,theGrouprevisesitsestimatesofthenumberofawardsthatareexpectedtovest.Itrecognisestheimpactoftherevisionoforiginalestimates,ifany,intheincomestatement,withacorrespondingadjustmenttoequity.
ThegrantbytheCompanyofshareawardstotheemployeesofsubsidiaryundertakingsistreatedasacapitalcontribution.Thefairvalueofemployeeservicesreceived,measuredbyreferencetothegrantdatefairvalue,isrecognisedoverthevestingperiodasanincreasetoinvestmentinsubsidiaryundertakings,withacorrespondingcredittoequityintheCompany’sfinancialstatements.
SharesintheCompanyareheldintrusttosatisfytheexerciseofawardsundercertain oftheGroup’sshare-basedcompensationplansandexceptionalawards.ThetrustisconsolidatedwithintheGroupfinancialstatements.Thesesharesarepresented intheconsolidatedbalancesheetasa deductionfromequityatthemarketvalue onthedateofacquisition.
(c) Bonus plansTheGrouprecognisesaliabilityandanexpenseforbonusestakingintoconsiderationtheprofitattributabletotheCompany’sshareholdersaftercertainadjustments.TheGrouprecognisesaprovisionwherecontractuallyobligedorwherethereisapastpracticethathascreatedaconstructiveobligation.
Leases
LeasesinwhichtheGroupassumessubstantiallyalltherisksandrewardsofownershipoftheleasedassetsareclassifiedasfinanceleases.Allotherleasesareclassedasoperatingleases.
Assetsheldunderfinanceleasesareincludedeitherasproperty,plantandequipmentorintangibleassetsattheloweroftheirfairvalueatinceptionorthepresentvalueoftheminimumleasepaymentsandaredepreciatedovertheirestimatedeconomiclivesorthefinanceleaseperiod,whicheveristheshorter.Thecorrespondingliabilityisrecordedwithinborrowings.Theinterestelementoftherentalcostsischargedagainstprofitsovertheperiodoftheleaseusingtheactuarialmethod.
Paymentsmadeunderoperatingleases(netofanyincentivesreceivedfromthelessor)arechargedtotheincomestatementonastraight-linebasisovertheperiodofthelease.
Tax
Taxontheprofitorlossfortheyearcomprisescurrenttaxanddeferredtax.Taxisrecognisedintheincomestatementexcepttotheextentthatitrelatestoitemsrecogniseddirectlyinequityinwhichcaseitisrecognisedinequity.
Currenttaxispayablebasedontaxableprofitsfortheyear,usingtaxratesthathavebeenenactedorsubstantivelyenactedatthebalancesheetdate,alongwithanyadjustmentrelatingtotaxpayableinpreviousyears.Managementperiodicallyevaluatesitemsdetailedintaxreturnswherethetaxtreatmentissubjecttointerpretation.Taxableprofitdiffersfromnetprofitintheincomestatementinthatincomeorexpenseitemsthataretaxableordeductibleinotheryearsare
excluded–asareitemsthatarenevertaxableordeductible.Currenttaxassetsrelatetopaymentsonaccountnotoffsetagainstcurrenttaxliabilities.
Deferredtaxisprovidedinfull,usingtheliabilitymethod,ontemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheconsolidatedfinancialstatements.However,deferredtaxisnotaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthanabusinesscombinationthatatthetimeofthetransactionaffectsneitheraccountingnortaxableprofitorloss.Deferredtaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantivelyenactedbythebalancesheetdateandareexpectedtoapplywhentherelateddeferredtaxassetisrealisedorthedeferredtaxliabilityissettledintheappropriateterritory.
Deferredtaxassetsarerecognisedtotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichthetemporarydifferencescanbeutilised.Deferredtaxisprovidedontemporarydifferencesarisingoninvestmentsinsubsidiaries,exceptwherethetimingofthereversalofthetemporarydifferenceiscontrolledbytheGroupanditisprobable thatthetemporarydifferencewillnotreverse intheforeseeablefuture.
Deferredtaxassetsandliabilitiesareoffsetagainsteachotherwheretheyrelatetothesamejurisdictionandthereisalegallyenforceablerighttooffset.
Dividends
AlldividenddistributionstotheCompany’sshareholdersarerecognisedasaliabilityinthefinancialstatementsintheperiodinwhichtheyareapproved.
Property, plant and equipment
Property,plantandequipmentisstatedatcost(ordeemedcost)lessaccumulateddepreciationandimpairmentlosses.Costincludesexpenditurethatisdirectlyattributabletotheacquisitionoftheitems.
Depreciation
Depreciationiscalculatedusingthestraight-linemethodtoallocatethecostofproperty,plantandequipmentlessresidualvalueoverestimatedusefullives,asfollows:
• Landandbuildings–50yearsorperiodoftheleaseifshorter.
• Plantandmachinery–betweenoneand fiveyears.
• Equipment,fixturesandfittings–betweenoneandfiveyears.
Theassets’residualvaluesandusefullivesarereviewed,andadjustedifappropriate,
Financial statements
51 Future plc
ateachbalancesheetdate.Anasset’scarryingamountiswrittendownimmediatelytoitsrecoverableamountiftheasset’scarryingamountisgreaterthanitsestimatedrecoverableamount.
Gainsandlossesondisposalsaredeterminedbycomparingproceedswithcarryingamounts.Theseareincludedintheincomestatement.
Intangible assets
(a) GoodwillInrespectofbusinesscombinationsthathaveoccurredsince1October2004,goodwillrepresentsthedifferencebetweenthecostoftheacquisitionandthefairvalueofnetidentifiableassetsacquired.Inrespectofbusinesscombinationspriortothisdate,goodwillisincludedonthebasisofitsdeemedcost,whichrepresentstheamountrecordedunderpreviousGAAP.
Goodwillisstatedatcostlessany accumulatedimpairmentlosses.Goodwill isallocatedtoappropriatecashgeneratingunits(thoseexpectedtobenefitfromthebusinesscombination)anditisnotsubjecttoamortisationbutistestedannuallyforimpairment.
(b) Titles, trademarks, customer lists, advertising relationships, e-commerce technology and other ‘magazine and website related’ intangiblesMagazine-relatedintangibleassetshaveafiniteusefullifeandarestatedatcostlessaccumulatedamortisation.Assetsacquiredaspartofabusinesscombinationareinitiallystatedatfairvalue.Amortisationiscalculatedusingthestraight-linemethodtoallocatethecostoftheseintangiblesovertheirestimatedusefullives(betweenoneandfifteenyears).
Expenditureincurredonthelaunchofnewmagazinetitlesisrecognisedasanexpense intheincomestatementasincurred.
(c) Computer software and website developmentNon-integralcomputersoftwarepurchasesarestatedatcostlessaccumulatedamortisation.Costsincurredinthedevelopmentofnewwebsitesarecapitalisedonlywherethecostcanbedirectlyattributedtodevelopingthewebsitetooperateinthemannerintendedbymanagementandonlytotheextentofthefutureeconomicbenefitsexpectedfromitsuse.Thesecostsareamortisedonastraight-linebasisovertheirestimatedusefullives(betweenoneandthreeyears).Costsassociatedwithmaintainingcomputersoftwareorwebsitesarerecognisedasanexpenseasincurred.
Impairment tests and Cash-Generating Units (CGUs)
ACGUisdefinedasthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofthecashinflowsfromotherassetsorgroupsofassets.
Goodwillisnotamortisedbuttestedforimpairmentatleastonceayearormorefrequentlywhenthereisanindicationthatitmaybeimpaired.Therefore,theevolutionofgeneraleconomicandfinancialtrendsaswellasactualeconomicperformancecomparedtomarketexpectationsrepresentexternalindicatorsthatareanalysedbytheGroup,togetherwithinternalperformanceindicators,inordertoassesswhetheranimpairmenttestshouldbeperformedmorethanonceayear.
IAS36‘ImpairmentofAssets’requirestheseteststobeperformedatthelevelofeachCGUorgroupofCGUslikelytobenefitfromacquisition-relatedsynergies,withinanoperatingsegment.
Anyimpairmentofgoodwillisrecordedintheincomestatementasadeductionfromoperatingprofitandisneverreversedsubsequently.
Otherintangibleassetswithafinitelifeareamortisedandaretestedforimpairmentonlywherethereisanindicationthatanimpairmentmayhaveoccurred.
Recoverable amount
Todeterminewhetheranimpairmentlossshouldberecognised,thecarryingvalueof theassetsandliabilitiesoftheCGUsor groupsofCGUsiscomparedtotheirrecoverableamount.
CarryingvaluesofCGUsandgroupsofCGUstestedincludegoodwillandassetswithfiniteusefullives(property,plantandequipment,intangibleassetsandnetworkingcapital).
TherecoverableamountofaCGUisthehigherofitsfairvaluelesscoststosellanditsvalueinuse.Fairvaluelesscoststosellisthebestestimateoftheamountobtainablefromthesaleofanassetinanarm’slengthtransactionbetweenknowledgeable,willingparties,lessthecostsofdisposal.Thisestimateisdetermined,on30September,onthebasisofthediscountedpresentvalueofexpectedfuturecashflowsplusaterminalvalueandreflectsgeneralmarketsentimentandconditions.
ValueinuseisthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheCGUsorgroupofCGUs.CashflowprojectionsarebasedoneconomicassumptionsandforecasttradingconditionsdrawnupbytheGroup’smanagement, asfollows:
• cashflowprojectionsarebasedonfive-yearbusinessplans;
• cashflowprojectionsbeyondthattimeframeareextrapolatedbyapplyinga2.0%growthratetoperpetuity;and
• thecashflowsobtainedarediscountedusingappropriateratesforthebusinessandtheterritoriesconcerned.
IfgoodwillhasbeenallocatedtoaCGUandanoperationwithinthatCGUisdisposed,thegoodwillassociatedwiththatoperationisincludedinthecarryingamountoftheoperationindeterminingtheprofitorlossondisposal.Thegoodwillallocatedtothedisposalismeasuredonthebasisoftherelativeprofitabilityoftheoperationdisposedandtheoperationsretained.
Inventories
Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Forrawmaterials,costistakentobethepurchasepriceonafirstin,firstoutbasis.Forworkinprogressandfinishedgoods,costiscalculatedasthedirectcostofproduction.Itexcludesborrowingcosts.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessapplicablevariablesellingexpenses.
Trade and other receivables
Tradeandotherreceivablesareinitiallyrecognisedatfairvalueandsubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,lessaprovisionforimpairment.
AprovisionforimpairmentoftradereceivablesismadewhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectallamountsdueinaccordancewith theoriginaltermsofthereceivables.
Cash and cash equivalents
Cashandcashequivalentsincludecashinhand,depositsheldatcallwithbanksandbankoverdraftsforthepurposeofthecashflowstatement.Bankoverdraftsareshownwithinborrowingsincurrentliabilitiesonthebalancesheet.
Trade and other payables
Tradeandotherpayablesareinitiallyrecognisedatfairvalueandsubsequentlymeasuredatamortisedcostusingthe effectiveinterestmethod.
Financial Statements
52AnnualReportandAccounts2016
Borrowings
Borrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlystatedatamortisedcostwithanydifferencebetweentheproceeds(netoftransactioncosts)andtheredemptionvaluerecognisedintheincomestatementovertheperiodoftheborrowingsusingtheeffectiveinterestmethod. BorrowingsareclassifiedascurrentliabilitiesunlesstheGrouphasanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthebalancesheetdate.
Provisions
ProvisionsarerecognisedwhentheGrouphasapresentlegalorconstructiveobligationasaresultofpastevents,anditismorelikelythannotthatanoutflowofresourceswillberequiredtosettletheobligation.
ProvisionsaremeasuredattheDirectors’bestestimateoftheexpenditurerequiredtosettletheobligationatthebalancesheetdate,andarediscountedtopresentvaluewheretheeffectismaterial.
Derivative financial instruments and hedging activities
TheGroupusesderivativefinancialinstrumentstoreduceexposuretoforeignexchangeandinterestraterisksandrecognisestheseatfairvalueinitsbalancesheet.TheGroupappliescashflowhedgeaccountingunderIAS39inrespectofcertaininstrumentsheld.Forinstrumentsforwhichhedgeaccountingisapplied,gainsandlossesaretakentoequity.Anychangestothefairvalueofderivativesnothedgeaccountedforarerecognisedintheincomestatement.AnynewinstrumentsenteredintobytheGroupwillbereviewedona‘casebycase’basisatinceptiontodeterminewhethertheyshouldqualifyashedgesandbeaccountedforaccordinglyunderIAS39.Inaccordancewithitstreasurypolicy,theGroupdoesnotholdorissueanyderivativefinancialinstrumentsfortradingpurposes.
Investments
TheCompany’sinvestmentsinsubsidiaryundertakingsarestatedatthefairvalue ofconsiderationpayable,includingrelatedacquisitioncosts,lessanyprovisions forimpairment.
Exceptional items
TheGroupclassifiestransactionsasexceptionalwheretheyrelatetoaneventthatfallsoutsidetheordinaryactivitiesofthebusinessandwhereindividuallyorinaggregatetheyhaveamaterialimpactonthefinancialstatements.ThisclassificationexcludesimpairmentchargesmadeonthecarryingvalueofCGUsorgroupsofCGUs.TheseparatereportingofexceptionalitemshelpsprovideabetterpictureoftheGroup’sunderlyingperformance.
Critical accounting assumptions, judgements and estimates
ThepreparationofthefinancialstatementsunderIFRSrequirestheuseofcertaincriticalaccountingassumptionsandrequiresmanagementtoexerciseitsjudgementandtomakeestimatesintheprocessofapplyingtheGroup’saccountingpolicies.Theareasrequiringahigherdegreeofjudgementorareaswhereassumptionsandestimatesaresignificanttothefinancialstatementsarediscussedbelow:
(a) Carrying value of goodwill and other intangiblesTheGroupusesforecastcashflowinformationandestimatesoffuturegrowthtoassesswhethergoodwillandotherintangibleassetsareimpaired.Iftheresultsofanoperationinfutureyearsareadversetotheestimatesusedforimpairmenttesting,animpairmentmaybetriggeredatthatpoint,orareductioninusefuleconomiclifemayberequired.Furtherdetailsareincludedwithinnote12.
(b) TaxationTheGroupissubjecttotaxinallterritories,andjudgementandestimatesoffutureprofitabilityarerequiredtodeterminetheGroup’sdeferredtaxposition.Ifthefinaltaxoutcomeisdifferenttothatassumed,resultingchangeswillbereflectedintheincomestatementorstatementofchangesinequityasappropriate.TheGroupcorporationtaxprovisionreflectsmanagement’sestimationoftheamountoftaxpayableforfiscalyearswithopentaxcomputationswhereliabilitiesremaintobeagreedwithHerMajesty’sRevenueandCustomsandothertaxauthorities.Furtherdetailsareincludedwithinnote7.
(c) Revenue recognitionTheGroupmakesaprovisionforsalesreturnsattheendofeachmonth.TheUKestimateiscalculatedbylookingattheforecastsalesprojectionsforthefollowingmonthofthe titlesthatwereonsaleattheyear-endandprovidingforanyshortfall.TheUSestimateis madebasedonastudyofthehistoriclevels ofreturns.
New or revised accounting standards and interpretations
Certainnewstandards,amendmentsandinterpretationstoexistingstandardshavebeenpublishedthataremandatoryforaccountingperiodsbeginningonorafter1October2016orlaterperiodsbutwhichtheGrouphaschosennottoadoptearly.TheseincludethefollowingstandardswhicharerelevanttotheGroup:
• AnnualimprovementstoIFRSs2012- 2014Cycle.
• AmendmenttoIAS1Presentationoffinancialstatementsonthedisclosureinitiative.
• AmendmenttoIAS16andIAS38Clarificationofacceptablemethodsofdepreciationandamortisation.
• AmendmenttoIFRS2Share-basedpaymenttoclarifytheclassificationandmeasurementofshare-basedpaymenttransactions.
• IFRS9Financialinstruments.
• IFRS15Revenuefromcontracts withcustomers.
• IFRS16Leases. AdoptionofIFRS16Leaseswillresultintherecognitiononthebalancesheetofassetsandliabilitiesrelatingtoleaseswhicharecurrentlyaccountedforasoperatingleases.TheGrouphasnotyetassessedthefullimpactofIFRS16whichwillbeeffectivefortheyearended30September2020.
TheGroupdoesnotexpectthattheotherstandardsandamendmentsissuedbutnotyeteffectivewillhaveamaterialimpactonresultsornetassets.
Financial statements
53 Future plc
1. Segmental reporting
TheGroupisorganisedandarrangedprimarilybyreportablesegment.TheexecutiveDirectorsconsidertheperformanceofthebusinessfromageographicalperspective,namelytheUKandtheUS.TheAustralianbusinessisconsideredtobepartoftheUKsegmentandisnotreportedseparatelyduetoitssize.
(a) Reportable segment(i) Segment revenue
2016£m
2015£m
UK 44.7 47.3US 15.2 13.4Revenuebetweensegments (0.9) (0.9)Total continuing operations 59.0 59.8
Transactionsbetweensegmentsarecarriedoutatarm’slength.
(ii) Segment EBITDAE
2016£m
2015£m
UK 2.8 3.3US 1.9 0.3Total segment EBITDAE from continuing operations 4.7 3.6
EBITDAEisusedbytheexecutiveDirectorstoassesstheperformanceofeachsegment.
AreconciliationoftotalsegmentEBITDAEfromcontinuingoperationstolossbeforetaxfromcontinuingoperationsisprovidedasfollows:
2016£m
2015£m
Total segment EBITDAE from continuing operations 4.7 3.6Depreciation (0.4) (0.5)Amortisation (2.0) (2.3)Exceptionalitems (3.5) (2.5)Impairmentofintangibleassets (13.0) -Netfinancecosts (0.7) (0.6)Loss before tax from continuing operations (14.9) (2.3)
(iii) Segment assets and liabilities
Segment assets Segment liabilities Segment net assets
2016£m
2015£m
2016£m
2015£m
2016£m
2015£m
UK 46.6 60.2 (26.5) (29.0) 20.1 31.2US 5.3 4.2 (4.2) (4.0) 1.1 0.2Total 51.9 64.4 (30.7) (33.0) 21.2 31.4
(iv) Other segment information
Additions to non-current assets
Depreciation and amortisation Impairment charges Exceptional items
2016£m
2015£m
2016£m
2015£m
2016£m
2015£m
2016£m
2015£m
UK 4.6 1.7 1.9 1.9 13.0 - 2.8 2.1US - 0.3 0.5 0.9 - - 0.7 0.4Continuingoperations 4.6 2.0 2.4 2.8 13.0 - 3.5 2.5Discontinuedoperations - - - - - - (0.3) (0.1)Total 4.6 2.0 2.4 2.8 13.0 - 3.2 2.4
Otherthantheitemsdisclosedaboveandashare-basedpaymentschargeof£0.5m(2015:£0.1m)therewerenoothersignificantnon-cashexpensesduringtheyear.
Notes to the financial statements
Financial Statements
54AnnualReportandAccounts2016
1. Segmental reporting (continued)
(b) Business segmentAftergeographicallocation,theGroupwasreorganisedduringtheyearintotwonewsegments.TheMediasegmentcompriseswebsitesandeventsandtheMagazinesegmentcomprisesmagazines.Anadditionalsegment,Other,wasretainedtoreflectunallocatedsalariesandotherdirectcostswhicharenotdirectlychargedtothebusinesssegmentsforinternalreportingpurposes.TheGroupconsidersthattheassetswithineachsegmentareexposedtothesamerisks.
(i) Revenue by business segment
2016£m
2015£m
Media 24.5 21.5Magazine 35.4 39.2Revenuebetweensegments (0.9) (0.9)Total continuing operations 59.0 59.8
(ii) Gross profit by business segment
2016£m
2015£m
Media 19.5 18.3Magazine 23.5 25.2Other (24.8) (27.8)Addback:distributionexpenses 3.6 3.5Total continuing operations 21.8 19.2
2. Operating loss from continuing operations
2016£m
2015£m
Revenue 59.0 59.8Costofsales (37.2) (40.6)Grossprofit 21.8 19.2Distributionexpenses (3.6) (3.5)Administrationexpenses (15.9) (14.9)Exceptionalitems (3.5) (2.5)Impairmentofintangibleassets (13.0) -Operating loss from continuing operations (14.2) (1.7)
3. Fees paid to auditors
2016£m
2015£m
AuditfeesinrespectoftheauditofthefinancialstatementsoftheCompanyandtheconsolidatedfinancialstatements 0.10 0.13Auditrelatedassuranceservices 0.02 0.02
0.12 0.15Taxcomplianceservices 0.05 0.10Taxadvisoryservices 0.03 0.08Servicesrelatingtocorporatefinancetransactions 0.14 -Total fees 0.34 0.33
Financial statements
55 Future plc
4. Exceptional items from continuing operations
2016£m
2015£m
Vacantpropertyprovisionmovements (0.5) 0.4Restructuringandredundancycosts 1.8 2.8Acquisition-relatedcosts 2.3 -Profitondisposalofmagazinetitlesandtrademarks (0.1) -Profitondisposalofproperty - (0.3)Provisionforbaddebts - (0.4)Total charge 3.5 2.5
ThevacantpropertyprovisionmovementduringtheyearrelatestosurplusofficespaceintheUKandtheUS.
Therestructuringandredundancycostsrelatemainlytostaffterminationpaymentsandotherrestructuringandtransformationrelatedactivities.
Theacquisition-relatedcostsrepresentfeesincurredinrespectoftheacquisitionofMiura(Holdings)Limited,theultimateparentcompanyofImaginePublishingLimited,whichwascompletedon21October2016.Furtherdetailsinrespectoftheacquisitionareshowninnote31.
Theprofitondisposalofpropertyin2015relatedtothesaleofoneoftheGroup’sUKpropertiesforcashproceedsof£1.2m.Theprovisionforbaddebtsin2015representsthereleaseofpartofaprovisionmadein2014inrelationtoamountsowedtotheGroupwhichwerenolongerconsideredrecoverablefollowingthefilingforbankruptcyofSourceHomeEntertainmentLLCanditsgroupcompanies,oneoftheGroup’sdistributorsintheUS.
5. Employees from continuing operations
2016£m
2015£m
Wagesandsalaries 21.3 23.6Socialsecuritycosts 2.0 2.2Otherpensioncosts 0.7 0.8Shareschemes-Valueofemployees’services 0.5 0.1Total staff costs from continuing operations 24.5 26.7
Average monthly number of people for continuing operations (including Directors)2016
No.2015No.
Production 399 436Administration 89 94Total 488 530
At30September2016,theactualnumberofpeopleemployedbytheGroupwas449(2015:521).Inrespectofourreportablesegments390(2015:448)wereemployedintheUKand59(2015:73)wereemployedintheUS.
Key management personnel compensation
Group 2016
£m
Company 2016
£m
Group 2015£m
Company2015£m
Salariesandothershort-termemployeebenefits 0.7 0.2 0.9 0.2Shareschemes-Valueofemployees’services 0.2 - - -Total 0.9 0.2 0.9 0.2
KeymanagementpersonnelaredeemedtobethemembersoftheBoardofFutureplc.ItisthisBoardwhichhasresponsibilityforplanning,directingandcontrollingtheactivitiesoftheGroup.
ZillahByng-ThorneandPennyLadkin-BrandwerepaidbyFuturePublishingLimited,asubsidiarycompany,fortheirservices.In2016£0.3m(2015:£0.1m)wasrechargedtoFutureplcbyFuturePublishingLimitedinrespectofZillahByng-Thorneand£0.2m(2015:£nil)wasrechargedinrespectofPennyLadkin-Brand.
FurtherdetailsontheDirectors’remunerationandinterestsaregivenintheDirectors’remunerationreportonpages29to39.ThehighestpaidDirectorduringtheyearwasZillahByng-Thorne(2015:ZillahByng-Thorne)anddetailsofherremunerationareshownonpage30.
Financial Statements
56AnnualReportandAccounts2016
6. Finance income and costs
2016£m
2015£m
Interestpayableoninterest-bearingloansandborrowings (0.1) (0.2)Amortisationofbankloanarrangementfees (0.1) (0.4)Otherfinancecosts (0.3) (0.2)Exchange(losses)/gains (0.2) 0.2Total finance costs (0.7) (0.6)Net finance costs from continuing operations (0.7) (0.6)
7. Tax on loss
Thetaxcreditedintheconsolidatedincomestatementforcontinuingoperationsisanalysedbelow:
2016£m
2015£m
UK corporation taxCurrenttaxat20%(2015:20.5%)onthelossfortheyear - -Adjustmentsinrespectofpreviousyears 1.3 (0.3)Current tax 1.3 (0.3)Deferred tax origination and reversal of temporary differencesCurrentyear(credit)/charge (1.6) 0.1Adjustmentsinrespectofpreviousyears (0.2) (0.1)Deferred tax (1.8) -Total tax credit on continuing operations (0.5) (0.3)
ThetaxassessedineachyeardiffersfromthestandardrateofcorporationtaxintheUKfortherelevantyear.Thedifferencesareexplainedbelow:
2016£m
2015£m
Lossbeforetax (14.9) (2.3)LossbeforetaxatthestandardUKtaxrateof20%(2015:20.5%) (3.0) (0.5)Non-deductibleamortisation&impairment 2.6 -Lossesgeneratedandunrecognised - 0.3LossesandothertimingdifferencesnotrecognisedinrespectoftaxintheUS - 0.2LossesandothertimingdifferencesrecognisedinrespectoftaxintheUS (1.4) -Profitsrelievedagainstbroughtforwardlosses (0.2) (0.1)Othernetdisallowableitems 0.4 0.2Adjustmentsinrespectofpreviousyears 1.1 (0.4)Total tax credit on continuing operations (0.5) (0.3)
In2013theGroupreachedagreementwithHMRCrelatingtothetaxtreatmentofcertainone-offtransactionswhichtookplacein2003.PartofthatagreementwillresultintheGrouppayingtaxof£6.2mplusinterest(comprisinginstalmentsof£85,000permonthoverfiveyearsfromJuly2013andafinalinstalmentof£2.0m).Thetaxpayablewasfullyprovidedforinprioryears’accounts.
Theliabilityinthebalancesheethasbeensplitbasedonthisagreementbetweencurrentliabilitiesandnon-currentliabilities.
TheprioryearadjustmentreflectsareassessmentoftheavailabilityofEUGrouplossreliefavailabletotheGroupasaresultoftheadditionaluncertaintysurroundingtheimpactoftheBrexitvoteonthesuccessoftheclaims.
TheDirectorshaveassessedtheGroup’suncertaintaxpositionsandarecomfortablethattheprovisionsinplacearenotmaterialeitherindividuallyorinaggregateandthatareasonablypossiblechangeinthenextfinancialyearwouldnothaveamaterialimpactontheresultsoftheGroup.
Financial statements
57 Future plc
8. Dividends
Equity dividends 2016 2015
Numberofsharesinissueatendofyear(million) 368.8 334.4Dividendspaidinyear(pencepershare) - -Dividends paid in year (£m) - -
9. Earnings per share
BasicearningspersharearecalculatedusingtheweightedaveragenumberofOrdinarysharesinissueduringtheyear.DilutedearningspersharehavebeencalculatedbytakingintoaccountthedilutiveeffectofsharesthatwouldbeissuedonconversionintoOrdinarysharesofawardsheldunderemployeeshareschemes.
Adjustedearningspershareremovestheeffectofexceptionalitems,impairmentofintangibleassetsandanyrelatedtaxeffectsfromthecalculation.
Total Group 2016 2015
Adjustmentstolossaftertax:Loss after tax (£m) (14.2) (1.3)Exceptionalitems(£m) 3.2 2.4Impairmentofintangibleassets(£m) 13.0 -Taxeffectoftheaboveadjustments(£m) (0.6) (0.5)Adjusted profit after tax (£m) 1.4 0.6
Weightedaveragenumberofsharesinissueduringtheyear:-Basic 362,486,525 332,796,904-Dilutiveeffectofshareoptions 13,074,591 536,550-Diluted 375,561,116 333,333,454Basiclosspershare(inpence) (3.9) (0.4)Adjustedbasicearningspershare(inpence) 0.4 0.2Dilutedlosspershare(inpence) (3.9) (0.4)Adjusteddilutedearningspershare(inpence) 0.4 0.2
Theadjustmentstolossaftertaxhavethefollowingeffect:Basic and diluted loss per share (pence) (3.9) (0.4)Exceptionalitems(pence) 0.9 0.7Impairmentofintangibleassets(pence) 3.6 -Taxeffectoftheaboveadjustments(pence) (0.2) (0.1)Adjusted basic and diluted earnings per share (pence) 0.4 0.2
Financial Statements
58AnnualReportandAccounts2016
9. Earnings per share (continued)
Continuing operations 2016 2015
Adjustmentstolossaftertax:Loss after tax (£m) (14.4) (2.0)Exceptionalitems(£m) 3.5 2.5Impairmentofintangibleassets(£m) 13.0 -Taxeffectoftheaboveadjustments(£m) (0.6) (0.4)Adjusted profit after tax (£m) 1.5 0.1
Weightedaveragenumberofsharesinissueduringtheyear:-Basic 362,486,525 332,796,904-Dilutiveeffectofshareoptions 13,074,591 536,550-Diluted 375,561,116 333,333,454Basiclosspershare(inpence) (4.0) (0.6)Adjustedbasicearningspershare(inpence) 0.4 -Dilutedlosspershare(inpence) (4.0) (0.6)Adjusteddilutedearningspershare(inpence) 0.4 -
Theadjustmentstolossaftertaxhavethefollowingeffect:Basic and diluted loss per share (pence) (4.0) (0.6)Exceptionalitems(pence) 1.0 0.7Impairmentofintangibleassets(pence) 3.6 -Taxeffectoftheaboveadjustments(pence) (0.2) (0.1)Adjusted basic and diluted earnings per share (pence) 0.4 -
Discontinued operations 2016 2015
Adjustmentstoprofitaftertax:Profit after tax (£m) 0.2 0.7Exceptionalitems(£m) (0.3) (0.1)Impairmentofintangibleassets(£m) - -Taxeffectoftheaboveadjustments(£m) - (0.1)Adjusted (loss)/profit after tax (£m) (0.1) 0.5
Weightedaveragenumberofsharesinissueduringtheyear:-Basic 362,486,525 332,796,904-Dilutiveeffectofshareoptions 13,074,591 536,550-Diluted 375,561,116 333,333,454Basicearningspershare(inpence) 0.1 0.2Adjustedbasicearningspershare(inpence) - 0.2Dilutedearningspershare(inpence) 0.1 0.2Adjusteddilutedearningspershare(inpence) - 0.2
Theadjustmentstoprofitaftertaxhavethefollowingeffect:Basic and diluted earnings per share (pence) 0.1 0.2Exceptionalitems(pence) (0.1) -Impairmentofintangibleassets(pence) - -Taxeffectoftheaboveadjustments(pence) - -Adjusted basic and diluted earnings per share (pence) - 0.2
Financial statements
59 Future plc
Financial Statements
60AnnualReportandAccounts2016
10. Discontinued operations
Nooperationswereclassifiedasdiscontinuedduringeitherthecurrentorprioryears.Theprofitfromoperationsdiscontinuedin2014isanalysedbelow.Onlythosecostsdirectlyattributabletothedisposedtitleshavebeenclassifiedwithindiscontinuedoperationsandnoapportionmentofcentraloverheadshasbeenmade.
2016£m
2015£m
Revenue - 0.2Costofsales (0.1) 0.4Gross(loss)/profit (0.1) 0.6Distributionexpenses - (0.1)Administrationexpenses - -Operating (loss)/profit before depreciation, amortisation, exceptional items and impairment of intangible assets (0.1) 0.5
Operating (loss)/profit (0.1) 0.5(Loss)/profit from discontinued operations before tax (0.1) 0.5(Loss)/profit after tax from discontinued operations (0.1) 0.5Gainonsaleofoperations 0.3 0.1Taxonsaleofoperations - 0.1Gainonsaleofoperationsaftertax 0.3 0.2Profit from discontinued operations 0.2 0.7
Thegainonsaleofoperationsin2016relatestothereleaseofaprovisionassociatedwithhistoricmagazinedisposals.Thegainonsaleofoperationsin2015relatedtocontingentconsiderationreceivedinrelationtotheCrafttitles.
11. Property, plant and equipment
Group
Land and buildings
£m
Plant and machinery
£m
Equipment, fixtures and
fittings£m
Total£m
Cost At1October2014 2.9 4.9 2.3 10.1Additions - 0.2 - 0.2Disposals (1.4) - (0.6) (2.0)Exchangeadjustments 0.1 0.1 0.1 0.3At30September2015 1.6 5.2 1.8 8.6Additions - 0.3 - 0.3Disposals (1.1) (2.4) (1.6) (5.1)Exchangeadjustments - 0.2 0.1 0.3At 30 September 2016 0.5 3.3 0.3 4.1
Accumulated depreciationAt1October2014 (2.6) (4.4) (2.1) (9.1)Chargefortheyear (0.1) (0.3) (0.1) (0.5)Disposals 1.4 - 0.5 1.9Exchangeadjustments (0.1) (0.2) - (0.3)At30September2015 (1.4) (4.9) (1.7) (8.0)Chargefortheyear - (0.3) (0.1) (0.4)Disposals 1.1 2.3 1.6 5.0Exchangeadjustments - (0.2) - (0.2)At 30 September 2016 (0.3) (3.1) (0.2) (3.6)
Net book value at 30 September 2016 0.2 0.2 0.1 0.5Netbookvalueat30September2015 0.2 0.3 0.1 0.6Netbookvalueat1October2014 0.3 0.5 0.2 1.0
Depreciationisincludedwithinadministrationexpensesintheconsolidatedincomestatement.
12. Intangible assets
GroupGoodwill
£m
Magazine and website
£mOther
£m Total
£m
Cost At1October2014 285.6 15.2 15.3 316.1Additions - - 1.8 1.8Disposals - (3.1) (2.8) (5.9)Exchangeadjustments 1.9 0.3 0.5 2.7At30September2015 287.5 12.4 14.8 314.7Additionsthroughbusinesscombinations 1.5 1.1 - 2.6Otheradditions - - 1.7 1.7Disposals - (0.2) (0.2) (0.4)Exchangeadjustments 4.9 1.0 1.2 7.1At 30 September 2016 293.9 14.3 17.5 325.7
Accumulated amortisationAt1October2014 (244.7) (15.1) (11.9) (271.7)Chargefortheyear - (0.1) (2.2) (2.3)Disposals - 3.1 2.7 5.8Exchangeadjustments (1.9) (0.3) (0.5) (2.7)At30September2015 (246.6) (12.4) (11.9) (270.9)Chargefortheyear - - (2.0) (2.0)Impairment (13.0) - - (13.0)Disposals - 0.2 0.2 0.4Exchangeadjustments (4.8) (1.0) (1.2) (7.0)At 30 September 2016 (264.4) (13.2) (14.9) (292.5)
Net book value at 30 September 2016 29.5 1.1 2.6 33.2Netbookvalueat30September2015 40.9 - 2.9 43.8Netbookvalueat1October2014 40.9 0.1 3.4 44.4
Magazineandwebsiterelatedassetsrelatemainlytotrademarks,advertisingrelationships,e-commercetechnologyandcustomerlists.Theseassetsareamortisedovertheirestimatedeconomiclives,typicallyrangingbetweenoneandfifteenyears.
Anyresidualamountarisingasaresultofthepurchaseconsiderationbeinginexcessofthevalueofidentifiedmagazinerelatedassetsisrecordedasgoodwill.GoodwillisnotamortisedunderIFRS,butissubjecttoimpairmenttestingeitherannuallyorontheoccurrenceofsometriggeringevent.Goodwillisrecordedandtestedforimpairmentonaterritorybyterritorybasis.
Furtherdetailsregardingtheintangibleassetsacquiredduringtheyearthroughbusinesscombinationsaresetoutinnote29.
Otherintangiblesrelatetocapitalisedsoftwarecostsandwebsitedevelopmentcosts.
Amortisationisincludedwithinadministrationexpensesintheconsolidatedincomestatement.
Impairment assessments for goodwill and other intangiblesThegoodwillbalanceat30September2016and30September2015relatestotheUK.
Thebasisforcalculatingrecoverableamountsisdescribedintheaccountingpolicies.
Trendsintheeconomicandfinancialenvironment,competitionandregulatoryauthorities’decisions,orchangesincompetitorbehaviourinresponsetotheeconomicenvironmentmayaffecttheestimateofrecoverableamounts,aswillunforeseenchangesinthepolitical,economicorlegalsystemsofsomecountries.
Financial statements
61 Future plc
Financial Statements
62AnnualReportandAccounts2016
12. Intangible assets (continued)
Otherassumptionsthatinfluenceestimatedrecoverableamountsaresetoutbelow:
At30September2016
UK
BasisofrecoverableamountSourceused
ValueinuseFiveyearplans
Discountedcashflow
Growthratetoperpetuity 2.0%EBITDAEmarginsassumed 2.4%to3.7%Post-taxdiscountrate 8.2%Pre-taxdiscountrate 10.3%
At30September2015
UK
BasisofrecoverableamountSourceused
ValueinuseFiveyearplans
Discountedcashflow
Growthratetoperpetuity 2.0%EBITDAEmarginsassumed 5.2%to12.4%Post-taxdiscountrate 9.0%Pre-taxdiscountrate 11.3%
Sensitivity of recoverable amountsAt30September2016theanalysisoftherecoverableamountsgaverisetothefollowingassessmentsofsensitivity:
UKAnimpairmentchargehasbeenrecordedintheyearasnotedbelow.Thereforethevalueinuseiseffectivelythesameasthecarryingvalue.Anyfutureperformancewhichfallsslightlyshortofthatusedtodeterminethosevalueswouldbeliabletoresultinafurtherimpairment.Achangeofplusorminus50basispointsinthepost-taxdiscountratewoulddecreaseorincreaserespectivelytherecoverableamountby£1.6m.Likewiseachangeofplusorminus10%intheforecastcashflowsoverthenextfiveyearswouldincreaseordecreaserespectivelytherecoverableamountby£0.6m.
Impairment At30September2016animpairmentchargeof£13.0mhasbeentakenagainstthecarryingvalueoftheUKbusiness.ThisreflectsashiftintheunderlyingforecastprofitabilityandcashflowsoftheUKandthecontinueddeclineofprint.
Financial statements
13. Investments in Group undertakings
Company2016
£m2015£m
Shares in Group undertakingsAt1October 131.9 131.9Provisionforimpairment (130.9) -At30September 1.0 131.9
InSeptember2016theDirectorsreviewedtheirvaluationsoftheCompany’sinvestments.Followingthisreview,andthereceiptofadividendof£130.9m,theCompany’sinvestmentinRhoHoldingsLimitedwaswrittendowntoacarryingvalueof£nilresultinginanimpairmentchargeof£130.9m.
14. Deferred tax assets and liabilities
ThefollowingarethemajordeferredtaxassetsandliabilitiesrecognisedbytheGroup,andthemovementsthereon,duringthecurrentandprioryears.
Intangible assets
£m
Short term timing
differences£m
Depreciation vs tax allowances
£mTax losses
£mTotal
£m
At1October2014and30September2015 (0.7) - 0.4 0.1 (0.2)Acquisitions (0.3) - - - (0.3)Creditedtoincomestatement–Continuingoperations 0.1 0.2 0.1 1.4 1.8
Exchangeadjustment - - - 0.2 0.2At 30 September 2016 (0.9) 0.2 0.5 1.7 1.5
ThechangestothemainrateofcorporationtaxfortheUKannouncedintheJuly2015Budgetweresubstantivelyenactedon18November2015andthechangeannouncedintheMarch2016Budgetwassubstantivelyenactedon15September2016.Thechangesreducedthemainrateofcorporationtaxto19%from1April2017andto17%from1April2020.Asthesechangeshadbeensubstantivelyenactedbeforetheyear-end,anyimpacthasbeenincludedinthesefinancialstatements.
Certaindeferredtaxassetsandliabilitieshavebeenoffsetagainsteachotherwheretheyrelatetothesamejurisdiction.Thefollowingistheanalysisofdeferredtaxbalancesafteroffsetforbalancesheetpurposes:
2016£m
2015£m
Deferredtaxassets 2.4 0.5Deferredtaxliabilities (0.9) (0.7)Net deferred tax asset/(liability) 1.5 (0.2)
Thedeferredtaxassetof£2.4m(2015:£0.5m)isdisclosedasanon-currentassetofwhichtheassetsduewithinoneyeartotal£0.1m(2015:£0.1m).Thedeferredtaxliabilityof£0.9m(2015:£0.7m)isdisclosedasanon-currentliabilityofwhichtheliabilitiesduewithinoneyeartotal£nil(2015:£nil).
Asat30September2016theGrouphas:•unprovideddeferredtaxassetsontaxlossestotalling£5.9m(2015:£16.1m)ofwhich£5.4m(2015:£15.0m)aroseintheUS;and•unprovideddeferredtaxassetsonothertemporarydifferencestotalling£1.1m(2015:£1.1m)ofwhich£1.1m(2015:£1.1m)aroseintheUS.
Deferredtaxassetshavebeenrecognisedinrespectoftaxlossesandothertemporarydifferenceswhereitisprobablethattheseassetswillberecovered.
Nodeferredtaxisrecognisedontheunremittedearningsofoverseassubsidiariesasanyremittedearningswouldnotgiverisetoataxliabilityintheforeseeablefuture.
TheCompanyhasnounprovideddeferredtaxassetsorliabilitiesat30September2016(2015:£nil).
63 Future plc
Financial Statements
64AnnualReportandAccounts2016
15. Inventories
2016£m
2015£m
Rawmaterials 0.1 0.1Workinprogress 0.3 0.3Finishedgoods - 0.1Total 0.4 0.5
Thecostofrawmaterialinventoriesrecognisedasanexpenseandincludedwithincostofsalesamountedto£3.5m(2015:£3.5m).
16. Trade and other receivables
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Current assets:Tradereceivables 9.2 - 11.3 -Provisionsforimpairmentoftradereceivables (0.6) - (0.6) -Tradereceivablesnet 8.6 - 10.7 -AmountsowedbyGroupundertakings - 43.4 - 46.7Otherreceivables 0.3 - 0.5 -Prepaymentsandaccruedincome 3.3 0.1 4.0 -
12.2 43.5 15.2 46.7Non-current assets:Otherreceivables 0.2 - 0.1 -Total 12.4 43.5 15.3 46.7
TheDirectorsconsiderthatthecarryingamountoftradeandotherreceivablesapproximatestheirfairvalue.
Receivablebalancesfromthetwomainmagazinedistributors,oneintheUKsegmentandoneintheUSsegment,represented26%(2015:30%)oftheGroup’stradereceivablesbalanceat30September2016.
TheGrouphasprovidedforestimatedirrecoverableamountsinaccordancewithitsaccountingpolicydescribedonpage52ofthesefinancialstatements.
Creditchecksareobtainedand,ifapplicable,guaranteesputinplacebeforeanewcustomerisacceptedandtermsandcreditlimitsareagreed.Bookingsarenottakenbeforethesefactorshavebeenfulfilled.Inaddition,annualcreditchecksarecarriedoutandfullydocumented.Finaldecisionsoncredittermsaremadebyanappropriateseniormanagerwithinadvertisingorfinance.Intheeventofarequesttoincreaseacustomer’screditlimitthefollowingfactorswillbeconsidered:tradinghistorytodate,reviewofcreditstatusandreviewofthereasonfortheincrease.
IncludedwithintheGroup’stradereceivablesbalancearereceivableswithacarryingamountof£3.0m(2015:£2.9m)whicharepastdueatthereportingdatebutforwhichtheGrouphasnotprovidedastherehasnotbeenasignificantchangeincreditqualityandtheGroupbelievesthattheamountsarestillrecoverable.TheserelatetoadvertisingandlicensingdebtorsintheUKandUS.TheGroupdoesnotholdanysecurityoverthesebalances.Abreakdownoftheageingissetoutbelow:
Past due
Group2016
£m
Group2015£m
0-30days 1.6 0.731-60days 0.8 0.561-90days 0.3 0.591+days 0.3 1.2Total 3.0 2.9
16. Trade and other receivables (continued)
Asat30September2016,tradereceivablesof£0.6m(2015:£0.6m)wereimpairedandprovidedfor.Theindividuallyimpairedreceivablesmainlyrelatetoadvertisingandlicensingcustomers.Itisassessedthataportionofthereceivablesisexpectedtoberecovered.
ThemovementintheGroupprovisionfortradereceivablesduringtheyearisasfollows:
Group2016
£m
Group2015£m
At1October 0.6 1.1Provisionforreceivablesimpaired 0.1 (0.1)Receivableswrittenoffduringtheyear (0.1) (0.4)At 30 September 0.6 0.6
Thecreationandreleaseofprovisionsforimpairedreceivableshavebeenincludedinadministrationexpensesintheincomestatementwiththeexceptionofacreditof£0.4min2015relatingtoadistributorthatfiledforbankruptcywhichwasincludedwithinexceptionalitems,asdescribedinnote4.Amountschargedtotheprovisionarewrittenoffwhenthereisnorealisticexpectationofrecoveringadditionalcash.
Theotherassetclasseswithintradeandotherreceivablesdonotcontainimpairedassets.
Themaximumexposuretocreditriskatthereportingdateisthecarryingvalueofeachclassofreceivablementionedabove.TheGroupdoesnotholdanycollateralassecurityfortradereceivables.
AlltheCompany’sreceivablesarewithGroupundertakings,withtheexceptionof£0.1m(2015:£nil)relatingtoprepaidshareissuecosts,andnoadditionaldisclosureinrelationtocreditriskisrequired.Intereston£0.3m(2015:£0.3m)oftheamountsowedbyGroupundertakingshasbeenchargedatthree-monthLIBOR+2.6%.ThebalanceofamountsowedbyGroupundertakingsisinterest-freewithoutanytermsforrepayment.
17. Cash and cash equivalents
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Cashatbankandinhand 2.9 - 2.5 -Cash and cash equivalents (excluding bank overdraft) 2.9 - 2.5 -
Cashandcashequivalentsincludethefollowingforthepurposesofthecashflowstatements:
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Cashatbankandinhand 2.9 - 2.5 -Bankoverdraft(note19) - (1.0) (0.9) (8.8)Cash and cash equivalents 2.9 (1.0) 1.6 (8.8)
TheGrouphasanumberofauthorisedcounterpartieswithwhomcashbalancesareheldinthecountriesinwhichtheGroupoperates.Creditriskisminimisedbyconsideringthecreditstandingofallpotentialbankersbeforeselectingthembytheuseofexternalcreditratings.98%oftheGroup’scashisheldatcounterpartieswithanS+PcreditratingofBBB+.
Financial statements
65 Future plc
Financial Statements
66AnnualReportandAccounts2016
18. Trade and other payables
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Tradepayables 4.4 - 6.8 -AmountsowedtoGroupundertakings - 0.8 - 124.0Othertaxationandsocialsecurity 0.8 - 0.7 -Otherpayables 0.8 - 1.2 -Accrualsanddeferredincome 15.4 1.6 12.0 -Total 21.4 2.4 20.7 124.0
Tradepayablesandaccrualsprincipallycompriseamountsoutstandingfortradepurchasesandongoingcosts.TheGrouphasfinancialriskmanagementpoliciesinplacetoensureallpayablesarepaidwithintheagreedcreditterms.
TheDirectorsconsiderthatthecarryingamountoftradepayablesapproximatestotheirfairvalue.
AmountsowedtoGroupundertakingsweresettledintheyearthroughassignmentofamountsowedbyotherGroupundertakings.AmountsowedtoGroupundertakingsareunsecuredandinterest-freewithoutanytermsforrepayment.
19. Financial liabilities – loans, borrowings and overdrafts
Non-current liabilities
Interest rate at30 September
2016
Interestrateat30September
2015
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Obligationsunderfinanceleases 9.6% - 0.1 - - -Total 0.1 - - -
Current liabilities
Interest rate at30 September
2016
Interestrateat30September
2015
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Bankoverdraft - 3.0% - - 0.9 0.9Sterlingrevolvingloan 2.5% 3.0% 2.3 2.3 3.4 3.4Total 2.3 2.3 4.3 4.3
Theinterest-bearingloansandoverdraftarerepayableasfollows:
Group2016
£m
Company2016
£m
Group2015£m
Company2015£m
Withinoneyear 2.3 2.3 4.3 4.3Betweenoneandtwoyears 0.1 - - -Total 2.4 2.3 4.3 4.3
Financial statements
67 Future plc
19. Financial liabilities – loans, borrowings and overdrafts (continued)
ThetotalmulticurrencyrevolvingandoverdraftfacilityavailabletotheGroupat30September2016amountedto£5.0m.On21October2016,followingtheacquisitionofImagine,theGroupnegotiatedanewbankfacilitywithHSBCBankplctoreplaceitsexistingfacilitywithSantanderplcandnowhasfacilitiestotalling£14.0m,comprisingan£8.5mtermloan,a£3.5mrevolvingcreditfacilityanda£2.0muncommittedoverdraftfacility.Thenewfacilitiesrunto23June2021.Repaymentsarerequiredinrespectofthetermloanasfollows:
Repayment date Repayment amount30September2017 £600,00030September2018 £800,00030September2019 £1,000,00030September2020 £1,250,00023 June 2021 £4,850,000
TheGrouphasgrantedsecuritytothebanksandtheavailabilityofthefacilityissubjecttocertaincovenants.
Feesrelatingtothenewfacilityamountedto£0.4mandthesewillbeamortisedovertheinitialtermofthefacility(capitalisedfeesrelatingtotheoldfacilitywere£0.1mat30September2016).ThebankborrowingsandinterestareguaranteedbyFutureplc,FutureHoldings2002Limited,FuturePublishingLimited,FutureUS,Inc,FuturePublishing(Overseas)Limited,FutureIPLimited,FutureFolioLimitedandalloftheentitiesacquiredaspartoftheImagineacquisition(beingMiura(Holdings)Limited,Fascination(Holdings)Limited,Skaro(Holdings)Limited,ImaginePublishingGroupLimitedandImaginePublishingLimited).
Interestpayableunderthecurrentcreditfacilityiscalculatedasthecostofone-monthLIBOR(currentlyapproximately0.3%)plusaninterestmarginofbetween2.00%and2.50%,dependentonthelevelofBankEBITDAE.
Thekeycovenantsaresetoutinthefollowingtablewherenetdebtisexclusiveofnon-currenttaxandBankEBITDAEisnotmateriallydifferenttostatutoryEBITDAEonatotalGroupbasis.
Netdebt/BankEBITDAE Periodsfrom31March2017–lessthan2.25times
BankEBITDAE/Interest Periodsfrom31March2017–morethan4.00times
Thecovenantsaretestedquarterlyonthebasisofrollingfiguresforthepreceding12months.Duetothechangeofbankersnocovenanttestingwasrequiredatyear-end,howevertheGroupwasinfullcompliancewithallcovenantsatalltestingdatesduringtheyearended30September2016.
TheCompanyalsohasanon-interest-bearingoverdraftof£1.0m(2015:£7.9m)whichformspartoftheGroupcashpoolingaccountandcanbeoffsetagainstcashbalancesinotherGroupcompanies.
20. Provisions
GroupProperty
£m
At1October2015 2.1Chargedintheyear 0.2Releasedintheyear (0.5)Utilisedintheyear (0.3)At 30 September 2016 1.5
Theprovisionforpropertyrelatestodilapidationsandobligationsundershortleaseholdagreementsonvacantproperty.Thevacantpropertyprovisionisexpectedtobeutilisedoverthenextfiveyears.
ProvisionsfortheCompanywere£nil(2015:£nil).
21. Other non-current liabilities
Group2016
£m2015£m
Otherpayables 0.5 0.8
Otherpayablesconsistmainlyofdeferredpropertyleaseliabilitiesand,in2015,deferredsubscriptionrevenue.
22. Financial instruments
Financial instruments by category
TheGroup’sfinancialassetsandfinancialliabilitiesaresetoutbelow:
Amortised cost 2016
Group Note
Loans and receivables
£m
Other liabilities
£m
Total carrying value
£m
Total fairvalue
£m
Tradereceivablesnet 16 8.6 - 8.6 8.6Otherreceivables 1.7 - 1.7 1.7Cashandcashequivalents 17 2.9 - 2.9 2.9Total financial assets 13.2 - 13.2 13.2Tradepayables 18 - (4.4) (4.4) (4.4)Otherliabilities - (10.3) (10.3) (10.3)Overdraft 19 - - - -Currentborrowings 19 - (2.3) (2.3) (2.3)Non-currentborrowings 19 - (0.1) (0.1) (0.1)Total financial liabilities - (17.1) (17.1) (17.1)
Amortised cost 2015
Group Note
Loans and receivables
£m
Other liabilities
£m
Total carrying value
£m
Total fair value
£m
Tradereceivablesnet 16 10.7 - 10.7 10.7Otherreceivables 2.4 - 2.4 2.4Cashandcashequivalents 17 2.5 - 2.5 2.5Total financial assets 15.6 - 15.6 15.6Tradepayables 18 - (6.8) (6.8) (6.8)Otherliabilities - (10.5) (10.5) (10.5)Overdraft 19 - (0.9) (0.9) (0.9)Currentborrowings 19 - (3.4) (3.4) (3.4)Total financial liabilities - (21.6) (21.6) (21.6)
Totalfinancialliabilitiesareshownnetofunamortisedcostswhichamountedto£0.1m(2015:£0.1m).
Financial Statements
68AnnualReportandAccounts2016
Financial statements
69 Future plc
22. Financial instruments (continued)
TheCompany’sfinancialassetsandliabilitiesaresetoutbelow:
Amortised cost 2016
Company Note
Loans and receivables
£m
Other liabilities
£m
Total carrying value
£m
Total fair value
£m
Otherreceivables 16 43.4 - 43.4 43.4Total financial assets 43.4 - 43.4 43.4Otherliabilities 18 - (2.4) (2.4) (2.4)Overdrafts 19 - (1.0) (1.0) (1.0)Currentborrowings 19 - (2.3) (2.3) (2.3)Total financial liabilities - (5.7) (5.7) (5.7)
Amortised cost 2015
Company Note
Loans and receivables
£m
Other liabilities
£m
Total carrying value
£m
Total fair value
£m
Otherreceivables 16 46.7 - 46.7 46.7Total financial assets 46.7 - 46.7 46.7Otherliabilities 18 - (124.0) (124.0) (124.0)Overdrafts 19 - (8.8) (8.8) (8.8)Currentborrowings 19 - (3.4) (3.4) (3.4)Total financial liabilities - (136.2) (136.2) (136.2)
Totalfinancialliabilitiesareshownnetofunamortisedcostswhichamountedto£0.1m(2015:£0.1m).
Thefairvalueistheamountforwhichafinancialinstrumentcouldbeexchangedbetweenknowledgeable,willingparties.Ifanactivemarketexists,themarketpriceisapplied.Ifanactivemarketdoesnotexistadiscountedcashfloworgenerallyacceptedestimationandvaluationtechniquebasedonmarketconditionsatthebalancesheetdateisusedtocalculateanestimatedvalue.
Themarketvalueoffinancialinstrumentsisdeterminedbytheuseofvaluationtechniquesincludingestimateddiscountedcashflows.
Treasury overviewTheGroupusesfinancialinstrumentstoraisefundingforitsoperationsandtomanagethefinancialrisksarisingfromthoseoperations.TheagreementsgoverningtheprincipalinstrumentsenteredintowereapprovedbytheBoard.
TheprincipalfinancingandtreasuryexposuresfacedbytheGrouparisefromforeigncurrencies,workingcapitalmanagement,thefinancingofcapitalexpenditureandacquisitions,themanagementofinterestratesontheGroup’sdebt,theinvestmentofsurpluscashandthemanagementoftheGroup’sdebtfacilities.TheGroupmanagesalloftheseexposureswithanobjectiveofremainingwithincovenantratiosagreedwiththeGroup’sbanks,andtheGrouphasbeenincompliancewithitscovenantsduringtheyear.Theseratiosaredisclosedinnote19.
ThecapitalstructureoftheGroupisreviewedregularlybytheBoardtoensurethatthedebt/equityratiooffundingremainsappropriatefortheGroup.
Inordertomaintainoradjustthecapitalstructure,theGroupmayreturncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.
Financial Statements
70AnnualReportandAccounts2016
22. Financial instruments (continued)
Currency and interest rate profileThecurrencyandinterestrateprofileoftheGroup’sfinancialassetsandliabilitiesisshownbelow:
Financial assets Financial liabilities
Floating rate£m
Non- interest bearing
£mTotal
£m
Floating rate£m
Fixed rate£m
Non-interest bearing
£m Total
£m
Net financial (liabilities)/
assets£m
At 30 September 2016Currency:Sterling - 4.1 4.1 (2.3) (0.1) (10.2) (12.6) (8.5)USDollar - 7.5 7.5 - - (3.2) (3.2) 4.3Euro - 0.4 0.4 - - (0.2) (0.2) 0.2Other - 1.2 1.2 - - (1.1) (1.1) 0.1Total - 13.2 13.2 (2.3) (0.1) (14.7) (17.1) (3.9)
At30September2015Currency:Sterling - 9.6 9.6 (4.3) - (13.4) (17.7) (8.1)USDollar - 4.7 4.7 - - (3.5) (3.5) 1.2Euro - 0.6 0.6 - - (0.1) (0.1) 0.5Other - 0.7 0.7 - - (0.3) (0.3) 0.4Total - 15.6 15.6 (4.3) - (17.3) (21.6) (6.0)
Interest rate riskDetailsoftheinterestratesonborrowingsasat30September2016aresetoutinnote19.
TheGroup’soverallpolicyonhedginginterestrateriskisasfollows:•Totheextentthatnetdebtisbelow£10mthereisnorequirementtohedgeagainstinterestratefluctuationsonthebalanceofthegrossdebt.•Totheextentthatnetdebtisabove£10maminimumof25%ofthebalanceofthegrossdebtgreaterthan£10mshouldbehedged.
Inapplyingtheabovepolicy,managementtakesfullconsiderationofcashflowprojectionstofixtheperiodforwhichanyhedgingarrangementsareenteredinto.
For2016,ifinterestratesonnetborrowingshadbeenonaverage0.5%higher/lowerwithallothervariablesheldconstant,thepost-taxlossfortheyearwouldhavedecreased/increasedby£nil(2015:£nil).
Therewouldbenoimpactonequityexcludingretainedearnings.
Foreign exchange riskSomeoftheGroup’sactivitiesarecarriedoutincountriesoutsidetheUnitedKingdomwheretransactionsarecarriedoutinthatcountry’sownfunctionalcurrency.MovementsinexchangeratescanthereforehaveasignificantimpactontheGroup’stotalcashflows,whilstthetranslationoftheresults,assetsandliabilitiesofforeignoperationsintosterlingcanhaveasignificanteffectontheGroup’sreportedprofitsandbalancesheet.ThemainexposuresaretomovementsintheUSDollarandAustralianDollaragainststerling.
Financial statements
71 Future plc
22. Financial instruments (continued)
TheGroup’spolicyformanagingexchangerateriskissummarisedasfollows:
• Transactionexposure-theGroupmanagesthisbyensuringthattransactionsaredenominatedinthelocalfunctionalcurrencyoftheoperatingunitswhereverpossible.Wherethisisnotpossibletheuseofforwardcontractstohedgeexposureisconsidered.Theuseofforwardcontracts(oranyotherderivativefinancialinstrument)issubjecttoauthorisationbytheChiefFinancialOfficer.
• Translationexposure–theGroupmatchescurrencyassetswithcurrencyliabilitieswhereverpossible.
ThefollowingtablesummarisestheGroup’ssensitivitytotranslationalcurrencyexposuresat30September:
2016 currency risks expressed in Currency 1/Currency 2£m GBP/USD GBP/AUD
Reasonableshift 10% 10%ImpactonlossaftertaxifCurrency1strengthensagainstCurrency2 (0.5) -ImpactonlossaftertaxifCurrency1weakensagainstCurrency2 0.5 -ImpactonequityexcludingretainedearningsifCurrency1strengthensagainstCurrency2 0.5 -ImpactonequityexcludingretainedearningsifCurrency1weakensagainstCurrency2 (0.5) -
2015currencyrisksexpressedinCurrency1/Currency2£m GBP/USD GBP/AUD
Reasonableshift 10% 10%ImpactonlossaftertaxifCurrency1strengthensagainstCurrency2 - 0.1ImpactonlossaftertaxifCurrency1weakensagainstCurrency2 - (0.1)ImpactonequityexcludingretainedearningsifCurrency1strengthensagainstCurrency2 - (0.1)ImpactonequityexcludingretainedearningsifCurrency1weakensagainstCurrency2 - 0.1
Liquidity riskTheGroupfundsthebusinesslargelyfromcashflowsgeneratedfromoperationsandlong-termdebt.DetailsoftheGroup’sborrowingsaredisclosedinnote19.
TheGroupmonitorsandmanagesthecashfortheGroupandhasmaintainedcommittedbankingfacilitiesasnotedabovetomitigateanyliquidityriskitmayface.Ifnecessary,inter-companyloanswithintheGroupmeetshort-termcashneeds.ThefollowingtableshowstheGroup’sremainingcontractualmaturityforfinancialliabilitiesandderivativefinancialinstruments.ThetablehasbeendrawnupbasedontheundiscountedcashflowsoffinancialliabilitiesbasedontheearliestdateonwhichtheGroupisobligedtopay:
30 September 2016
Less than one year
£m
Between one and two years
£m
Between two and five years
£m
Over five years
£mTotal
£m
Tradepayables (4.4) - - - (4.4)Otherliabilities (9.2) (0.1) (1.0) - (10.3)Overdraft - - - - -Borrowings (2.3) (0.1) - - (2.4)Total financial liabilities (15.9) (0.2) (1.0) - (17.1)
30September2015
Less than one year
£m
Between one and two years
£m
Between two and five years
£m
Over five years
£mTotal
£m
Tradepayables (6.8) - - - (6.8)Otherliabilities (9.3) (0.1) (0.9) (0.2) (10.5)Overdraft (0.9) - - - (0.9)Borrowings (3.4) - - - (3.4)Total financial liabilities (20.4) (0.1) (0.9) (0.2) (21.6)
Financial Statements
72AnnualReportandAccounts2016
23. Issued share capital
2016£m
2015£m
Authorised share capital 600,000,000 Ordinary shares of 1p each 6.0 6.0
2016 2015
Number of shares £m
Numberofshares £m
Allotted, issued and fully paid Ordinary shares of 1p eachAtbeginningofyear 334,441,247 3.3 333,781,473 3.3PlacingofOrdinaryshares 33,440,000 0.4 - -Shareschemeexercises 861,894 - 653,725 -ShareIncentivePlanmatchingshares 15,446 - 6,049 -At end of year 368,758,587 3.7 334,441,247 3.3
On27November2015theCompanycompletedaplacingof33,440,000Ordinaryshareswithanominalvalueof£334,400foratotalcashcommitmentof£3,344,000.Duringtheyear861,894Ordinaryshareswithanominalvalueof£8,619wereissuedbytheCompanypursuanttoshareschemeexercisesandafurther15,446OrdinaryshareswereissuedundertheShareIncentivePlanforatotalcashcommitmentof£nil,asdetailedinnote24.
In2015653,725Ordinaryshareswithanominalvalueof£6,537wereissuedbytheCompanyforatotalcashcommitmentof£nilpursuanttoshareschemeexercisesasdetailedinnote24.
24. Share-based payments
Theincomestatementchargefortheyearforshare-basedpaymentswas£0.5m(2015:£0.1m).Thischargehasbeenincludedwithinadministrationexpenses.
ThesechargesarisewhenemployeesaregrantedawardsundertheGroup’sshareoptionschemes,performanceshareplan(PSP),deferredannualbonusscheme(DABS)orShareIncentivePlan(SIP)andwhenemployeesaregrantedawardsbythetrusteesofTheFutureNetworkplc1999EmployeeBenefitTrust(EBT).ThechargeequatestothefairvalueoftheawardandhasbeencalculatedusingtheMonteCarloandBlack-Scholesmodels,usingthemostappropriatemodelforeachscheme.Assumptionshavebeenmadeinthesemodelsforexpectedvolatility,risk-freeratesanddividendyields.
Areconciliationofmovementsinshareoptionsandothershareincentiveschemesisshownbelow:
2016Number of
options/awards
2016Weighted average
exercise price
2015Numberof
options/awards
2015Weightedaverage
exerciseprice
Outstandingatthebeginningoftheyear 16,182,214 £0.012 12,885,930 £0.027Granted 11,806,730 £0.000 12,293,441 £0.000Shareawardsexercised–newshareissues (861,894) £0.000 (653,725) £0.000Lapsed (6,282,269) £0.021 (8,343,432) £0.017Outstandingat30September 20,844,781 £0.003 16,182,214 £0.012Exercisableat30September 349,304 £0.000 57,052 £0.000
Theweightedaveragesharepriceatthedateofexerciseofshareoptionsandothershareincentiveawardsduringtheyearwas£0.088(2015:£0.104).
Financial statements
73 Future plc
24. Share-based payments (continued)
Foroptionsandothershareincentiveschemesoutstandingat30Septembertheweightedaverageexercisepricesandremainingcontractuallivesareasfollows:
Number of options/awards Weighted average exercise priceWeighted average remaining
contractual life in years
2016 2015 2016 2015 2016 2015
Sharesave PlanDecember2012 - 691,958 £0.140 £0.140 - 1December2013 520,606 805,833 £0.130 £0.130 1 2PSPDecember2012 - 678,159 - - - -December2013 2,156,022 2,156,022 - - - 1July2014 2,500,000 2,500,000 - - 1 2February2015 3,717,353 6,336,415 - - 1 2May2015 1,046,979 1,046,979 - - 2 3August2015 1,647,834 1,647,834 - - 2 3November2015 6,388,860 - - - 2 -September2016 2,415,730 - - - 3 -DABSNovember2009 1,043 1,043 - - - -December2010 5,924 5,924 - - - -January2012 25,304 50,085 - - - -December2012 7,050 159,869 - - - -December2013 102,093 102,093 - - - 1November2015 309,983 - - - - -Total outstanding at 30 September 20,844,781 16,182,214 £0.003 £0.012 2 2
Thefairvaluepershareforgrantsmadeduringtheyearandtheassumptionsusedinthecalculationareasfollows:
2016 2015
DABS PSP PSP PSP PSP PSP
Grantdate 30/11/15 30/11/15 01/09/16 04/02/15 18/05/15 03/08/15Sharepriceatgrantdate £0.1088 £0.1088 £0.088 £0.109 £0.105 £0.106Exerciseprice - - - - - -Vestingperiod(years) 1 3 3 3 3 3Expectedvolatility 50% 50% 49% 55% 54% 54%Optionlife(years) 1 3 3 3 3 3Expectedlife(years) 1 3 3 3 3 3Risk-freerate 0% 1% 0% 1% 1% 1%Dividendyield - - - - - -Fairvalue £0.1088 £0.1088 £0.088 £0.101 £0.099 £0.100Fairvalue–EPSelement - £0.1088 £0.088 £0.109 £0.105 £0.106Fairvalue–cashelement - £0.1088 £0.088 £0.093 £0.093 £0.093
Notes:1.TheexpectedvolatilityisbasedonFuture’shistoricalvolatility,averagedoveraperiodequaltotheexpectedlife,wherepossible.2.TheGrouphasusedtheBlack-Scholesmodeltovalueinstrumentswithnon-market-basedperformancecriteriasuchasearningspershare.Forinstrumentswithmarket-basedperformancecriteria,notablytotalshareholderreturn,theGrouphasusedaMonteCarlomodeltodeterminethefairvalue.TheBlack-Scholesmodelhasbeenusedtovaluealloptionswiththeexceptionof50%ofcertainPSPgrantswhichhavemarket-basedperformancecriteria;theMonteCarlomodelhasbeenusedtovaluetheseawards.
3.InFebruary2016,theperformancecriteriainrespectof50%ofawardsgrantedinFebruary2015,May2015andAugust2015waschangedfromTSRperformancetonetcashflow.Thefairvalueoftheseawardshasbeenrecalculatedasatthedateofthechange.
FutureplcoperatesoneshareoptionschemebeingtheFutureplc2010ApprovedSharesavePlan(2010SharesavePlan)andat30September2016optionshadbeengrantedunderthisscheme.
Financial Statements
74AnnualReportandAccounts2016
24. Share-based payments (continued)
The 2010 Sharesave Plan (the Sharesave Plan)UndertheSharesavePlantheoptionentitlementgrantedtoparticipatingemployeesislinkedtothemonthlycontributionswhichsuchemployeeshaveagreedtopayintotheSharesavePlan(uptoamaximumamountof£250permonth).TheoptionsgrantedundertheSharesavePlanvestonthethirdanniversaryofthegrantofsuchoptions.Wherelegalandregulatoryconstraintspermit,theCompanyusesitsdiscretiontoofferoptionsgrantedundertheSharesavePlanatadiscounttothemarketpriceinforceatthedateoftheinvitationbeingmade.
Other share-based paymentsNofurthershareoptionsaretobegranted.Instead,theGrouphasputintoplaceanumberofalternativeshareincentiveschemes.
Performance Share Plan (PSP)ThePSPisashare-basedincentiveschemeopentotheexecutiveDirectorsandcertainotherkeyseniormanagers,usuallybasedonapercentageoftheparticipant’ssalary.Awardsunderthisschemearesubjecttostretchingperformancecriteriameasuredagainstbothearningspershare(EPS)andeithertotalshareholderreturn(TSR)ornetcashflow,dependingonthedateofgrant.Subjecttotheparticipant’scontinuedemploymentwithintheGroup,awardswillvestthreeyearsafterthedateofgrantassumingthatthefollowingperformancecriteriaareachieved:
Performancecriteriainrespectofawardsgrantedpriorto4February2015
• Amaximumof50%ofanawardwillvestiftheGroup’sgrowthinadjustedEPSisequaltoRPIplus8%,0%willvestiftheGroup’sgrowthinadjustedEPSisequaltoRPIplus3%,andvestingwillbeonaproratastraight-linebasisbetweenthetwo.IfgrowthintheGroup’sadjustedEPSislessthanRPIplus3%,noneofthat50%oftheawardwillvest.
• Theremaining50%oftheawardwillvestiftheCompany’sTSRperformance,comparedtoagroupofsimilarcompanies,placesitinthetopquintileasagainstthecomparatorcompanies.IftheCompany’sTSRperformanceismedian,12.5%oftheawardwillvest,andvestingwillbeonaproratastraight-linebasisbetweenthetwopoints.IftheCompany’sperformanceisbelowmedian,noneofthat50%oftheawardwillvest.Thecomparatorgroupofcompaniesisasdisclosedonpage32ofthisAnnualReport.
Performancecriteriainrespectofawardsgrantedbetween4February2015and29November2015
InFebruary2016,theRemunerationCommitteeexerciseditsdiscretiontochangetheperformancecriteriainrespectof50%ofawardsgrantedbetween4February2015and29November2015fromTSRperformancetonetcashflowinordertobetteraligntheinterestsofparticipantsandshareholders.TherewasnochangetotheEPSperformancecriteriainrespectoftheremaining50%oftheseawards.Therevisedperformancecriteriaareasfollows:
• Amaximumof50%ofanawardwillvestiftheGroup’sadjustedEPSfortheyearended30September2017(thelastfinancialyearoftheperformanceperiod)is1.4p,12.5%willvestiftheGroup’sEPSis1.0p,andvestingwillbeonaproratastraight-linebasisbetweenthetwo.IftheGroup’sadjustedEPSisbelow1.0p,noneofthat50%oftheawardwillvest.
• Theremaining50%oftheawardwillvestiftheGroup’snetcashflowfortheyearended30September2017(thelastfinancialyearoftheperformanceperiod)is£1.25m,12.5%willvestiftheGroup’snetcashflowis£0.25m,andvestingwillbeonaproratastraight-linebasisbetweenthetwo.IftheGroup’snetcashflowisbelow£0.25m,noneofthat50%oftheawardwillvest.
Performancecriteriainrespectofawardsgrantedbetween30November2015and30September2016
• Amaximumof50%ofanawardwillvestiftheGroup’sadjustedEPSfortheyearended30September2018(thelastfinancialyearoftheperformanceperiod)is1.5p,12.5%willvestiftheGroup’sEPSis1.2p,andvestingwillbeonaproratastraight-linebasisbetweenthetwo.IftheGroup’sadjustedEPSisbelow1.2p,noneofthat50%oftheawardwillvest.
• Theremaining50%oftheawardwillvestiftheGroup’snetcashflowfortheyearended30September2018(thelastfinancialyearoftheperformanceperiod)is£0.75m,12.5%willvestiftheGroup’snetcashflowis£(0.25)m,andvestingwillbeonaproratastraight-linebasisbetweenthetwo.IftheGroup’snetcashflowisbelow£(0.25)m,noneofthat50%oftheawardwillvest.
GrantsweremadeunderthePSPinFebruary2015,May2015,August2015,November2015andSeptember2016.
Deferred Annual Bonus Scheme (DABS)TheDABSisashare-basedincentiveschemeopentocertainmanagersacrosstheGroup.ThemaximumvalueofanysharesgrantedundertheDABStoanyoneparticipantwillbeanamountwhichisequaltoafixedpercentageofthateligibleparticipant’sannualbonusforthepreviousfinancialyear.ThenumberofsharesoverwhichanawardistobegrantedtoeachparticipantwillbecalculatedbyreferencetothemarketvalueofanOrdinaryshareintheCompanyonthedateoftheaward.UnlesstheRemunerationCommitteedecidesotherwiseatthedateofgrant,thesharesawardedundertheDABSwillvestsixmonthsafterthedateoftheaward,subjectonlytotheemployeeremainingintheemploymentoftheGroupthroughoutthevestingperiod.
AgrantwasmadeundertheDABSinNovember2015.
Share Incentive Plan (SIP)InApril2015theGroupadoptedaSIPwhichisopentoallUKemployeesincludingtheexecutiveDirectors.Theschemeisataxefficientincentiveplanpursuanttowhichemployeesareeligibletoacquireupto£150(or10%ofsalary,ifless)worthofOrdinarysharesintheCompanypermonthor£1,800perannum.UndertheSIPemployeesareinvitedtosubscribeforPartnershipsharesviasalarydeductions.IfanemployeeagreestobuyPartnershipsharestheCompanycurrentlymatchesthenumberofPartnershipsharesboughtwithanawardofMatchingsharesonthebasisofoneMatchingshareforeveryfourPartnershipshares.MatchingshareawardstodatehavebeenmetbytheissueofOrdinarysharestoYorkshireBuildingSocietyasTrusteeoftheSIP.
Financial statements
75 Future plc
25. Other reserves
Treasury reserveThetreasuryreserverepresentsthecostofsharesinFutureplcpurchasedinthemarketandheldbytheEBTtosatisfyawardsmadebythetrustees.
Group 2016
£m
Group 2015£m
Atbeginningandendofyear (0.3) (0.3)
The1,426,848(2015:1,426,848)sharesheldbytheEBTrepresent0.4%(2015:0.4%)oftheCompany’sissuedsharecapital.Thetreasuryreserveisnon-distributable.
Merger reserveThemergerreserveof£109.0m(2015:£109.0m)arosefollowingthe1999Groupreorganisationandisnon-distributable.
26. Pensions
TheGroupoperatesadefinedcontributionschemeforemployeesresidentintheUnitedKingdom.
IntheUS,theGroupoperatesasection401(K)profitsharingdefinedcontributionplaninrespectofpensions,whichcoverssubstantiallyallFutureUSemployees.Thesection401(K)planallowsemployeestoinvestin29fundsrunbyT.RowePrice,buttheemployees,nottheemployer,havecompletecontroloverwhichfundstheyinvestin,althoughtheyhavenocontroloverthestocksownedbythefunds.
Duringtheyear,£0.7m(2015:£0.8m)contributionsweremadetotheseplansandat30September2016theoutstandingbalanceduetobepaidovertotheplanswas£0.1m(2015:£0.1m).
27. Commitments and contingent liabilities
(a) Operating lease commitmentsAt30September2016,theGrouphadthefollowingtotalfutureleasepaymentsundernon-cancellableoperatingleases:
Land and buildings
£mOther
£m
Total2016
£m
Landandbuildings
£mOther
£m
Total2015£m
Withinoneyear 2.2 - 2.2 2.5 0.1 2.6Betweenoneandfiveyears 6.4 - 6.4 5.8 - 5.8Afterfiveyears 7.0 - 7.0 5.8 - 5.8Total 15.6 - 15.6 14.1 0.1 14.2
Futureminimumsub-leasereceiptsexpectedundernon-cancellablesubleasesat30September2016total£1.8m(2015:£1.5m).
Duringtheyear,£1.6m(2015:£1.9m)wasrecognisedintheincomestatementinrespectofoperatingleaserentalpaymentsand£0.4m(2015:£0.2m)wasrecognisedinrespectofsub-leasereceipts.
TheGroupleasesvariousofficesundernon-cancellableoperatingleaseagreements.Theleaseshavevariousterms,escalationclausesandrenewalrights.TheGroupalsoleasesotherequipmentundernon-cancellableoperatingleaseagreements.
(b) Contingent liabilitiesTherearenocontingentliabilitiesexpectedtoresultinamateriallossfortheGroup.
(c) Capital commitmentsTherewerenomaterialcapitalcommitmentsasat30September2016(2015:£nil).
28. Related party transactions
TheGrouphadnomaterialtransactionswithrelatedpartiesin2016or2015whichmightreasonablybeexpectedtoinfluencedecisionsmadebyusersofthesefinancialstatements.
Duringtheyear,theCompanyhadmanagementchargespayableof£0.5m(2015:£0.2m)tosubsidiaryundertakings.Theoutstandingbalanceowedat30September2016was£0.5m(2015:£0.2m).
Financial Statements
76AnnualReportandAccounts2016
29. Acquisitions
Acquisition of Blaze PublishingOn12May2016,FuturePublishingLimitedacquiredcertainassetsfromBlazePublishingLimitedforcashconsiderationof£0.4m.Inaddition,deferredconsiderationofupto£0.3mispayableby12May2017basedongrosscontributiontargets.
Theimpactoftheacquisitionontheconsolidatedbalancesheetwas:
Book value£m
Fair value adjustment
£m
Provisional fair value
£m
Intangibleassets:-Advertisingrelationships - 0.4 0.4Tradeandotherpayables (0.2) - (0.2)Deferredtaxliabilities - (0.1) (0.1)Net assets acquired (0.2) 0.3 0.1Goodwill 0.6
0.7ConsiderationConsiderationsatisfiedby:Cash-initialconsideration 0.4Cash-deferredconsideration 0.3Total consideration 0.7
ThegoodwillisattributabletothesynergiesexpectedtoariseinintegratingthemagazinesandeventsintothewiderFuturegroup.Theadvertisingrelationshipswillbeamortisedoveraperiodoffifteenyears.
IncludedwithintheGroup’sresultsfortheyeararerevenuesof£0.9mandprofitfortheyearof£nilfromtheBlazeassets.
Iftheacquisitionhadbeencompletedonthefirstdayofthefinancialyear,itwouldhavecontributed£2.8mofrevenueandprofitof£0.1mduringtheyear.
Acquisition of Next Commerce Pty LtdOn15August2016,FuturePublishing(Overseas)Limitedacquired100%ofthesharecapitalofNextCommercePtyLtdforcashconsiderationof£0.3m.Inaddition,deferredconsiderationofupto£0.6m,intheformofsharesinFutureplc,ispayableby24January2017basedonrevenueperformance.
Theimpactoftheacquisitionontheconsolidatedbalancesheetwas:
Book value£m
Fair value adjustment
£m
Provisional fair value
£m
Intangibleassets:-E-commercetechnology - 0.6 0.6Tradeandotherreceivables 0.2 - 0.2Cash 0.1 - 0.1Tradeandotherpayables (0.3) (0.1) (0.4)Deferredtaxliabilities - (0.2) (0.2)Net assets acquired - 0.3 0.3Goodwill 0.6
0.9ConsiderationConsiderationsatisfiedby:Cash-initialconsideration 0.3Deferredconsiderationdueinfutureyears 0.6Total consideration 0.9
ThegoodwillisattributabletothesynergiesexpectedtoariseinleveragingthetechnologyacquiredacrossFuture’sexistingportfolio.Thee-commercetechnologywillbeamortisedoveraperiodoftenyears. IncludedwithintheGroup’sresultsfortheyeararerevenuesof£0.2mandprofitfortheyearof£nilfromNextCommercePtyLtd.
Iftheacquisitionhadbeencompletedonthefirstdayofthefinancialyear,itwouldhavecontributed£2.0mofrevenueandprofitof£0.2mduringtheyear.
Financial statements
77 Future plc
29. Acquisitions (continued)
Acquisition of Noble House Media LimitedOn5April2016,FuturePublishingLimitedacquired100%ofthesharecapitalofNobleHouseMediaLimitedforcashconsiderationof£0.1m.
Theimpactoftheacquisitionontheconsolidatedbalancesheetwas:
Book value£m
Fair value adjustment
£m
Provisional fair value
£m
Intangibleassets:-Eventsacquired - 0.1 0.1Tradeandotherreceivables 0.1 - 0.1Tradeandotherpayables (0.4) - (0.4)Net liabilities acquired (0.3) 0.1 (0.2)Goodwill 0.3
0.1ConsiderationConsiderationsatisfiedby:Cash 0.1Total consideration 0.1
ThegoodwillisattributabletothesynergiesexpectedtoariseinintegratingtheeventsintothewiderFuturegroup.
IncludedwithintheGroup’sresultsfortheyeararerevenuesof£0.3mandlossfortheyearof£(0.1)mfromNobleHouseMediaLimited.
Iftheacquisitionhadbeencompletedonthefirstdayofthefinancialyear,itwouldhavecontributed£0.8mofrevenueandprofitof£nilduringtheyear.
Financial Statements
78AnnualReportandAccounts2016
30. Subsidiary undertakings
DetailsoftheCompany’ssubsidiariesat30September2016aresetoutbelow.Allsubsidiariesareincludedintheconsolidation.Sharesofthosecompaniesmarkedwithan*areindirectlyownedbyFutureplcthroughanintermediateholdingcompany.
Company name and registered numberCountry of
incorporation Nature of business Holding % Class of shares
A&SPublishingCompanyLimited*01584580 EnglandandWales Non-trading 100 £1Ordinaryshares
ECVPriceMalaysiaSdn.Bhd.*1021502-V Malaysia Dormant 100 RM1Ordinaryshares
FutureHoldings(2002)Limited04387886 EnglandandWales Holdingcompany 100 £1Ordinaryshares
FutureIPLimited08207186 EnglandandWales Intellectualproperty 100 £1Ordinaryshares
FuturePublishingLimited*02008885 EnglandandWales Publishing 100 £1Ordinaryshares
FuturePublishing(Overseas)Limited*06202940 EnglandandWales Publishing 100 £1Ordinaryshares
FuturePublishingHoldingsLimited03430449 EnglandandWales Holdingcompany 87.5 1penceOrdinaryshares
FutureUS,Inc*0513070 USA(StateofCalifornia) Publishing 100 Notapplicable
FutureVerlagGmbH*HRB125675 Germany Non-trading 87.5 €1Ordinaryshares
FutureFolioLimited*07956484 EnglandandWales Digitalpublishingsolutions 100 £1Ordinaryshares
FXMInternationalLimited04212478 EnglandandWales Non-trading 100 £1Ordinaryshares
RhoHoldingsLimited00040056 Guernsey Investmentcompany 100 £1Ordinaryshares
NextCommercePhilippinesInc*CS201517783 Philippines Dormant 100 ₱1Ordinaryshares
NextCommercePtyLtd*113 146 786 Australia Comparisonshopping
searchengine 100 $1Ordinaryshares
NobleHouseMediaLimited*03220964 EnglandandWales Publishing 100 £1Ordinaryshares
PricepandaGroupGmbH*HRB138471B Germany Dormant 100 €1Ordinaryshares
PricepandaSingaporePteLtd*201214200D Singapore Dormant 100 €1Ordinaryshares
SarraceniaLimited*04582851 EnglandandWales Dormant 100 £1Ordinaryshares
A&SPublishingCompanyLimited,FutureHoldings(2002)Limited,FutureIPLimited,FuturePublishingLimited,FutureFolioLimited,FXMInternationalLimitedandNobleHouseMediaLimitedareexemptfromtherequirementtofileauditedaccountsbyvirtueofSection479AoftheCompaniesAct2006.SarraceniaLimitedisexemptfromtherequirementtofileauditedaccountsbyvirtueofSection480oftheCompaniesAct2006.
31. Post balance sheet event
On21October2016theCompanycompletedtheacquisitionof100%ofthesharecapitalofMiura(Holdings)Limited,theholdingcompanyandultimateparentcompanyofImaginePublishingLimited,fortotalconsiderationof179,567,841newOrdinarysharesintheCompanywhich,attheclosingpriceof8.5pon20October2016,representsconsiderationof£15.3m.AspartofthistransactiontheGrouprefinanced,enteringintonewbankfacilitiestotalling£14.0m.Furtherdetailsofthesenewfacilitiesareincludedwithinnote19.
Fairvalueinformationontheassetsandliabilitiesacquiredisnotyetavailable.
Notice of Annual General Meeting
Ordinary Business
Ordinary resolutions
1. ToreceiveandadopttheauditedfinancialstatementsoftheCompanyforthefinancialyearended30September2016andthereportsoftheDirectorsandtheauditors(the“AnnualReport”).
2. ToapprovetheDirectors’remunerationimplementationreportassetoutinpages30to35oftheAnnualReportoftheCompanyforthefinancialyearended30September2016.
3. ToapprovetheRemunerationpolicyreportassetoutinpages36to39oftheAnnualReportoftheCompanyforthethreeyearperiodcommencingon1October2016.
4. ToelectasaDirectorJamesHanbury.
5. Tore-electasaDirectorPeterAllen.
6. Tore-electasaDirectorZillah Byng-Thorne.
7. Tore-electasaDirectorPenny Ladkin-Brand.
8. Tore-electasaDirectorManjit Wolstenholme.
9. Tore-electasaDirectorHugoDrayton.
10. ToreappointPricewaterhouseCoopersLLP,CharteredAccountantsandRegisteredAuditors,asauditorsoftheCompanytoholdofficeuntiltheconclusionofthenextGeneralMeetingatwhichaccountsarelaidbeforetheCompany.
11. ToauthorisetheDirectorstodeterminetheremunerationoftheauditorsoftheCompany.
12. That,insubstitutionforanyexistingauthority,theDirectorsbeandareherebygenerallyandunconditionallyauthorisedinaccordancewithsection551oftheCompaniesAct2006(the‘Act’)toexerciseallthepowersoftheCompanytoallotsharesintheCompanyandtograntrightstosubscribefor,ortoconvertanysecurityinto,sharesintheCompany:
12.1 inconnectionwithanofferbywayofarightsissue(comprisingequitysecuritiesasdefinedbysection560oftheAct),uptoanaggregatenominalamountof£3,656,200(suchamounttobereducedbythenominalamountofanyrelevantsecuritiesallottedunderparagraph12.2below):
(a) toholdersofOrdinarysharesinthecapitaloftheCompanyinproportion(asnearlyasmaybepracticable)totheirrespectiveholdingsofOrdinarysharesinthecapitaloftheCompany;and
(b) toholdersofanyotherequitysecurities
asrequiredbytherightsofthosesecuritiesorastheDirectorsotherwiseconsidernecessary,butsubjecttosuchexclusionsorotherarrangementsastheBoardmaydeemnecessaryorexpedientinrelationtotreasuryshares,fractionalentitlements,recorddates,legalorpracticalproblemsinorunderthelawsofanyterritory,ortherequirementsofanyregulatorybodyorstockexchange;and
12.2inanyothercase,uptoanaggregatenominalamountof£1,828,100(suchamounttobereducedbythenominalamountofanyequitysecuritiesallottedunderparagraph12.1aboveinexcessof£1,828,100),atanytimeortimesduringtheperiodbeginningonthedateofthepassingofthisresolutionandendingfollowingtheconclusionoftheCompany’snextAnnualGeneralMeetingor,ifearlier,on31March2018(unlesspreviouslyrevokedorvariedbytheCompanyinGeneralMeeting)savethattheCompanymaybeforeexpiryofthisauthoritymakeanofferoragreementwhichwouldormightrequirerelevantsecuritiestobeallottedafteritsexpiryandtheDirectorsmayallotrelevantsecuritiespursuanttosuchanofferoragreementasiftheauthorityherebyconferredhadnotexpired.
13. That,followingthebroaderdefinitionsintroducedbysections363to365oftheActofthetermsusedin(i),(ii)and(iii)below(whichforthepurposesofthisresolutionhavethemeaningsgivenbytheAct),theCompanyanditssubsidiariesatanytimeduringtheperiodforwhichtheresolutioniseffectivebeauthorisedtogetherto:
(i) makepoliticaldonationstopoliticalpartiesand/orindependentelectioncandidatesnotexceeding£50,000intotal;
(ii) makepoliticaldonationstopoliticalorganisationsotherthanpoliticalpartiesnotexceeding£50,000intotal;and
ThisNoticeofMeetingisimportantandrequiresyourimmediateattention.
Ifyouareinanydoubtastowhatactionyoushouldtake,youshouldconsultyourstockbroker,bankmanager,solicitor,accountantorotherindependentadviserauthorisedundertheFinancialServicesandMarketsAct2000.
IfyouhavesoldorotherwisetransferredallyoursharesinFutureplc,pleaseforwardthisnotice,togetherwiththeaccompanyingdocuments,assoonaspossibleeithertothepurchaserortransferee,ortothepersonwhoarrangedthesaleortransfersothattheycanpassthesedocumentstothepurchaserortransferee.
Notice of Annual General Meeting
NoticeisherebygiventhattheeighteenthAnnualGeneralMeetingofFutureplcwillbeheldonWednesday1February2017atFuture’sLondonoffice,1-10PraedMews,LondonW21QYat10:30amatwhichthefollowingresolutionsnumbered1to14willbeproposedasordinaryresolutions,andresolutionsnumbered15to18willbeproposedasspecialresolutions.
79 Future plc
(iii) incurpoliticalexpenditurenotexceeding£50,000intotal,duringtheperiodbeginningwiththedateofthepassingofthisresolutionandendingfollowingtheconclusionoftheCompany’snextAnnualGeneralMeetingor,ifearlier,on31March2018.
14. That,subjecttoandconditionalupon admissionoftheNewOrdinaryShares (asdefinedbelow)tothestandardlisting segmentoftheOfficialListandtotrading onLondonStockExchangeplc’smain marketforlistedsecuritiesbecoming effective,every15Ordinarysharesof1 penceeachinthecapitalofthe Companyinissueandoutstandingor heldintreasuryasat6.00p.m.on Wednesday,1February2017(orsuch othertimeanddateastheDirectorsmay determine)beconsolidatedinto1 Ordinaryshareof15penceinthecapital oftheCompany(eacha“NewOrdinary Share”),providedthat,wheresuch consolidationresultsinanymember beingentitledtoafractionofaNew OrdinaryShare,suchfractionshall,so faraspossible,beaggregatedwiththe fractionsofNewOrdinarySharesto whichothermembersoftheCompany maybeentitledandtheDirectorsbeand areherebyauthorisedtosell(orappoint anyotherpersontoselltoanyperson), onbehalfoftherelevantmembers,all theNewOrdinarySharesrepresenting suchfractionsatthebestprice reasonablyobtainabletoanyperson, andtopaytheproceedsofsale(netof expenses)indueproportiontothe relevantmembersentitledthereto(save thatanyfractionofapennywhichwould otherwisebepayableshallberounded upordowninaccordancewiththeusual practiceoftheregistraroftheCompany and,subjecttoresolution17being passed,iftheproceedsarelessthan £3.00inthecaseofanyoneshareholder, theywillbedonatedtocharitieschosen bytheCompany)andthatanyDirector (oranypersonappointedbythe Directors)shallbeandishereby authorisedtoexecuteaninstrumentof transferinrespectofsuchshareson behalfoftherelevantmembersandtodo allactsandthingstheDirectorsconsider necessaryorexpedienttoeffectthe transferofsuchsharesto,orin accordancewiththedirectionsof,any buyerofanysuchshares.
Special resolutions
15. That,subjecttothepassingofresolution12,theDirectorsbeandareherebyauthorisedpursuanttoArticle3.2andsection570oftheActtoallotequitysecurities(withinthemeaningofsection560oftheAct)forcashpursuanttotheauthorityconferreduponitforthepurposesofsection551oftheActbyresolution12providedthatsuchauthorityshallbelimitedto:
(a) theallotmentofequitysecuritiesinconnectionwithanofferbywayofarightsissue,openofferorpre-emptiveoffertoholdersofOrdinarysharesontheregisterofmembersoftheCompanyonadatefixedbytheDirectorswheretheequitysecuritiestobeallottedtoexistingshareholdersshallbeinproportion(asnearlyasmaybe)totheirrespectiveholdingsand,iftherightsattachingtoanyotherequitysecuritiessoprovide,infavouroftheholdersofthoseequitysecuritiesinaccordancewithsuchrights,butsubjecttosuchexclusionsorotherarrangementsastheDirectorsconsidernecessaryorexpedientinconnectionwithOrdinarysharesrepresentingfractionalentitlementsoronaccountofeitherlegalorpracticalproblemsarisinginconnectionwiththelawsofanyterritory,oroftherequirementsofanygenerallyrecognisedregulatorybodyorstockexchangeinanyterritory;and
(b) theallotment(otherwisethanpursuanttosub-paragraph(a)above)ofequitysecuritiesuptoanaggregatenominalamountof£548,430(representingjustunder10%oftheissuedsharecapitaloftheCompanyasat13December2016)andsuchauthorityshallexpireattheconclusionoftheCompany’snextAnnualGeneralMeetingor,ifearlier,on31March2018(savethattheCompanymaybeforetheexpiryofsuchauthoritymakeanofferoragreementwhichwouldormightrequireequitysecuritiestobeallottedafteritsexpiryandtheDirectorsmayallotequitysecuritiespursuanttosuchanofferoragreementasifthepowerherebyconferredhadnotexpired).
16. Thatageneralmeeting,otherthananAnnualGeneralMeeting,maybecalledonnotlessthan14cleardays’notice.
17. ThatthearticlesofassociationoftheCompany(the“Articles”)beamendedsoastoaddthefollowingparagraphattheendofArticle2.5:“Whereanymember’sentitlementtoaportionoftheproceedsofsaleamountstolessthanaminimumfiguredeterminedbytheDirectorsfromtimetotime(andifnotsodetermined£3.00),thatmember’sportionmay,attheDirectors’discretion,bedistributedtoaninstitutionwhichisacharityforthepurposesofthelawofEnglandandWales.”
18. ThattheArticlesbeamendedsoastoaddthefollowingArticle27:“PowertochangethenameoftheCompanyTheBoardmaychangethenameoftheCompany.”
OnbehalfoftheBoard
Penny Ladkin-BrandChiefFinancialOfficerandCompanySecretary13December2016
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ents
Notes
Further information about the AGM
1. Informationregardingthemeeting,includingtheinformationrequiredbysection311AoftheAct,isavailablefrom:www.futureplc.com/invest-in-future.
Attendance at the AGM
2. Ifyouwishtoattendthemeetinginperson,pleasebringtheattendancecardattachedtoyourformofproxyandarriveatFuture’sLondonoffice,1-10PraedMews,LondonW21QY,insufficienttimeforregistration.Appointmentofaproxydoesnotprecludeamemberfromattendingthemeetingandvotinginperson.Ifamemberhasappointedaproxyandattendsthemeetinginperson,theproxyappointmentwillautomaticallybeterminated.
Appointment of proxies
3. Anymemberentitledtoattendandvoteatthemeetingmayappointoneormoreproxiestoattend,speakandvoteintheirplace.Amembermayappointmorethanoneproxyprovidedthateachproxyisappointedtoexercisetherightsattachedtoadifferentshareorsharesheldbythatshareholder.Ifyouappointmultipleproxiesforanumberofsharesinexcessofyourholding,theproxyappointmentsmaybetreatedasinvalid.AproxyneednotbeamemberoftheCompany.Aproxycardisenclosed.Tobeeffective,proxycardsshouldbecompletedinaccordancewiththesenotesandthenotestotheproxyform,signedandreturnedsoastobereceivedbytheCompany’sRegistrars:
ComputershareInvestorServicesPLC,ThePavilions,BridgwaterRoad,BristolBS996ZY notlaterthan10:30amonMonday30January2017beingtwobusinessdaysbeforethetimeappointedfortheholdingofthemeeting.Ifyousubmitmorethanonevalidproxyappointment,theappointmentreceivedlastbeforethelatesttimeforthereceiptofproxieswilltakeprecedence.
Electronic appointment of proxies
4. Asanalternativetocompletingtheprintedproxyform,youmayappointaproxyelectronicallybyvisitingthefollowingwebsite:www.investorcentre.co.uk/eproxy.
YouwillbeaskedtoentertheControlNumber,theShareholderReferenceNumber(SRN)andPINasprintedonyourproxyformandtoagreetocertaintermsandconditions.Tobeeffective,electronicappointmentsmusthavebeenreceivedbytheCompany’sRegistrarsnotlaterthan10:30amonMonday30January2017.
Number of shares in issue
5. Asatthecloseofbusinesson13December2016(beingthelastbusinessdaypriortothepublicationofthisnotice)theCompany’sissuedsharecapitalconsistedof548,430,719Ordinarysharesofonepennyeach.EachOrdinarysharecarriesonevote.Therearenosharesheldintreasury.ThetotalnumberofvotingrightsintheCompanyistherefore548,430,719.
Documents available for inspection
6. PrintedcopiesoftheservicecontractsoftheCompany’sDirectorsandthelettersofappointmentforthenon-executiveDirectorswillbeavailableforinspectionduringusualbusinesshoursonanyweekday(Saturdays,Sundaysandpublicholidaysexcluded)attheCompany’sLondonofficeat
1-10PraedMews, London, W21QY
andattheCompany’sregisteredofficeat QuayHouse, TheAmbury, Bath, BA11UA
includingonthedayofthemeetingfrom 10:15amuntilitscompletion.
Eligible shareholders
7. TheCompany,pursuanttoRegulation41ofTheUncertificatedSecuritiesRegulations2001,specifiesthatonlythosemembersontheregisteroftheCompanyasat6pmonMonday30January2017or,ifthismeetingisadjourned,intheregisterofmembers48hoursbeforethetimeofanyadjournedmeeting,shallbeentitledtoattendandvoteatthemeetinginrespectofthenumberofsharesregisteredintheirnameatthattime.ChangestoentriesontheRegisterafter6pmonMonday30January2017or,ifthismeetingisadjourned,intheregisterofmembers48hoursbeforethetimeofanyadjournedmeeting,shallbedisregardedindeterminingtherightsofanypersontoattendorvoteatthemeeting.
Indirect investors
8. Anypersontowhomthisnoticeissentwhoisapersonthathasbeennominatedundersection146oftheActtoenjoyinformationrights(a‘NominatedPerson’)doesnothavearighttoappointaproxy.However,aNominatedPersonmay,underanagreementwiththeregisteredshareholderbywhomtheywerenominated(a‘RelevantMember’),havearighttobeappointed(ortohavesomeoneelseappointed)asaproxyforthemeeting.Alternatively,ifaNominatedPersondoesnothavesucharight,ordoesnotwishtoexerciseit,theymayhavearightunderanysuchagreementtogiveinstructionstotheRelevantMemberastotheexerciseofvotingrights.
ANominatedPerson’smainpointofcontactintermsoftheirinvestmentintheCompanyremainstheRelevantMember(or,perhaps,theNominatedPerson’scustodianorbroker)andtheNominatedPersonshouldcontinuetocontactthem(andnottheCompany)regardinganychangesorqueriesrelatingtotheNominatedPerson’spersonaldetailsandtheirinterestintheCompany(includinganyadministrativematters).TheonlyexceptiontothisiswheretheCompanyexpresslyrequestsaresponsefromtheNominatedPerson.
81 Future plc
Notice of Annual General Meeting
Appointment of proxies through CREST
9. CRESTmemberswhowishtoappointaproxyorproxiesthroughtheCRESTelectronicproxyappointmentservicemaydosoforthemeetingandanyadjournment(s)thereofbyusingtheproceduresdescribedintheCRESTManual.CRESTpersonalmembersorotherCRESTsponsoredmembers,andthoseCRESTmemberswhohaveappointedavotingserviceprovider(s),shouldrefertotheirCRESTsponsororvotingserviceprovider(s),whowillbeabletotaketheappropriateactionontheirbehalf.
InorderforaproxyappointmentorinstructionmadeusingtheCRESTservicetobevalid,theappropriateCRESTmessage(a‘CRESTProxyInstruction’)mustbeproperlyauthenticatedinaccordancewithEuroclearUK&IrelandLimited’sspecificationsandmustcontaintheinformationrequiredforsuchinstructions,asdescribedintheCRESTManual.Themessage,regardlessofwhetheritconstitutestheappointmentofaproxyoranamendmenttotheinstructiongiventoapreviouslyappointedproxymust,inordertobevalid,betransmittedsoastobereceivedbytheissuer’sagent(ID3RA50)by10:30amonMonday30January2017or,ifthemeetingisadjourned,notlessthan48hoursbeforethetimefixedfortheadjournedmeeting.Forthispurpose,thetimeofreceiptwillbetakentobethetime(asdeterminedbythetimestampappliedtothemessagebytheCRESTApplicationsHost)fromwhichtheissuer’sagentisabletoretrievethemessagebyenquirytoCRESTinthemannerprescribedbyCREST.AfterthistimeanychangeofinstructionstoproxiesappointedthroughCRESTshouldbecommunicatedtotheappointeethroughothermeans.
CRESTmembersand,whereapplicable,theirCRESTsponsorsorvotingserviceprovidersshouldnotethatEuroclearUK&IrelandLimiteddoesnotmakeavailablespecialproceduresinCRESTforanyparticularmessages.NormalsystemtimingsandlimitationswillthereforeapplyinrelationtotheinputofCRESTProxyInstructions.ItistheresponsibilityoftheCRESTmemberconcernedtotake(or,iftheCRESTmemberisaCRESTpersonalmemberorsponsoredmemberorhasappointedavotingserviceprovider(s),toprocurethathisCRESTsponsororvotingserviceprovider(s)take(s))suchactionasshallbenecessarytoensurethata
messageistransmittedbymeansoftheCRESTsystembyanyparticulartime.Inthisconnection,CRESTmembersand,whereapplicable,theirCRESTsponsorsorvotingserviceprovidersarereferred,inparticular,tothosesectionsoftheCRESTManualconcerningpracticallimitationsoftheCRESTsystemandtimings. TheCompanymaytreatasinvalidaCRESTProxyInstructioninthecircumstancessetoutinRegulation35(5)(a)oftheUncertificatedSecuritiesRegulations2001.
Amending a proxy
10.Tochangeaproxyinstruction,amemberneedstosubmitanewproxyappointmentusingthemethodssetoutabove.Notethatthedeadlinesforreceiptofproxyappointments(seeabove)alsoapplyinrelationtoamendedinstructions;anyamendedproxyappointmentreceivedaftertherelevantdeadlinewillbedisregarded.Whereamemberhasappointedaproxyusingthepaperproxyformandwouldliketochangetheinstructionsusinganothersuchform,thatmembershouldcontacttheRegistrarson+44(0)3707071443.
Ifmorethanonevalidproxyappointment
issubmitted,theappointmentreceivedlastbeforethedeadlineforthereceiptofproxieswilltakeprecedence.
Revoking a proxy
11.Inordertorevokeaproxyinstruction,asignedletterclearlystatingamember’sintentiontorevokeaproxyappointmentmustbesentbypostorbyhandtotheCompany’sRegistrars:
ComputershareInvestorServicesPLC, ThePavilions,BridgwaterRoad, BristolBS996ZY. Notethatthedeadlinesforreceiptofproxyappointments(seeabove)alsoapplyinrelationtorevocations;anyrevocationreceivedaftertherelevantdeadlinewillbedisregarded.
Corporate members
12. Inthecaseofamemberwhichisacompany,anyproxyform,amendmentorrevocationmustbeexecutedunderitscommonsealorsignedonitsbehalfbyanofficerofthecompanyoranattorneyforthecompany.Anypowerofattorneyoranyotherauthorityunderwhichthedocumentsaresigned(oradulycertifiedcopyofsuchpowerofauthority)mustbeincluded.Acorporatemembercanappointoneormorecorporaterepresentativeswhomayexercise,onitsbehalf,allitspowersasamemberprovidedthatnomorethanonecorporaterepresentativeexercisespowersoverthesameshare.Membersconsideringtheappointmentofacorporaterepresentativeshouldchecktheirownlegalposition,theCompany’sarticlesofassociationandtherelevantprovisionoftheCompaniesAct2006.
Joint holders
13.Wheremorethanoneofthejointholderspurportstovoteorappointaproxy,onlythevoteorappointmentsubmittedbythememberwhosenameappearsfirstontheregisterwillbeaccepted.
Questions at the AGM
14. Undersection319AoftheAct,theCompanymustansweranyquestionyouaskrelatingtothebusinessbeingdealtwithatthemeetingunless:
(a) answeringthequestionwouldinterfereundulywiththepreparationforthemeetingorinvolvethedisclosureofconfidentialinformation;
(b) theanswerhasalreadybeengivenonawebsiteintheformofananswertoaquestion;or
(c) itisundesirableintheinterestsoftheCompanyorthegoodorderofthemeetingthatthequestionbeanswered.
82AnnualReportandAccounts2016Financial Statem
ents
Members’ right to require circulation of a resolution to be proposed at the AGM
15. Undersection338oftheAct,amemberormembersmeetingthequalificationcriteriasetoutatnote18below,may,subjecttoconditionssetoutatnote19,requiretheCompanytogivetomembersnoticeofaresolutionwhichmayproperlybemovedandisintendedtobemovedatthatmeeting.
Members’ right to have a matter of business dealt with at the AGM
16.Undersection338AoftheAct,amemberormembersmeetingthequalificationcriteriasetoutatnote18below,may,subjecttotheconditionssetoutatnote19,requiretheCompanytoincludeinthebusinesstobedealtwithattheAGMamatter(otherthanaproposedresolution)whichmayproperlybeincludedinthebusiness(amatterofbusiness).
Website publication of any audit concerns
17. PursuanttoChapter5ofPart16oftheAct,whererequestedbyamemberormembersmeetingthequalificationcriteriasetoutatnote18below,theCompanymustpublishonitswebsiteastatementsettingoutanymatterthatsuchmembersproposetoraiseattheAGMrelatingtotheauditoftheCompany’saccounts(includingtheauditors’reportandtheconductoftheaudit)thataretobelaidbeforetheAGM.
WheretheCompanyisrequiredtopublish
suchastatementonitswebsite:
(a) itmaynotrequirethemembersmakingtherequesttopayanyexpensesincurredbytheCompanyincomplyingwiththerequest;
(b) itmustforwardthestatementtotheCompany’sauditorsnolaterthanthetimethestatementismadeavailableontheCompany’swebsite;and
(c) thestatementmaybedealtwithaspartofthebusinessoftheAGM.
Therequest:
(d) maybeinhardcopyformorinelectronicformandmustbeauthenticatedbythepersonorpersonsmakingit(seenote19(d)and(e)below);
(e) shouldeithersetoutthestatementinfullor,ifsupportingastatementsentbyanothermember,clearlyidentifythestatementwhichisbeingsupported;and
(f) mustbereceivedbytheCompanyatleastoneweekbeforetheAGM.
Members’ qualification criteria
18.Inordertobeabletoexercisethemembers’rightssetoutinnotes15to17abovetherelevantrequestmustbemadeby:
(a) amemberormembershavingarighttovoteattheAGMandholdingatleast5%oftotalvotingrightsoftheCompany;or
(b) atleast100membershavingarighttovoteattheAGMandholding,onaverage,atleast£100ofpaidupsharecapital.
Conditions
19. Theconditionsarethat:
(a) anyresolutionmustnot,ifpassed,beineffective(whetherbyreasonofinconsistencywithanyenactmentortheCompany’sconstitutionorotherwise);
(b) theresolutionormatterofbusinessmustnotbedefamatoryofanyperson,frivolousorvexatious;
(c) therequest:
(i) maybeinhardcopyformorin electronicform;
(ii) mustidentifytheresolutionorthematter ofbusinessofwhichnoticeistobegivenbyeithersettingitoutinfullor,ifsupportingaresolution/matterofbusinesssentbyanothermember,clearlyidentifyingtheresolution/matterofbusinesswhichisbeingsupported;
(iii)inthecaseofaresolution,mustbeaccompaniedbyastatementsettingoutthegroundsfortherequest;
(iv)mustbeauthenticatedbythepersonorpersonsmakingit;and
(v) mustbereceivedbytheCompanynotlaterthansixweeksbeforethedateoftheAGM;
(d) inthecaseofarequestmadeinhardcopyform,suchrequestmustbe:
(i) signedbyyouandstateyourfullnameandaddress;and
(ii) senteither:bypostto
CompanySecretary, Futureplc, QuayHouse, TheAmbury, BathBA11UA;
orbyfaxto+44(0)1225732266
markedfortheattentionoftheCompanySecretary;and
(e) inthecaseofarequestmadeinelectronic
form,suchrequestmust:
(i) stateyourfullnameandaddress;and
(ii) [email protected].
Pleasestate‘AGM’inthesubjectlineoftheemail.YoumaynotusethiselectronicaddresstocommunicatewiththeCompanyforanyotherpurpose.
83 Future plc
Notice of Annual General Meeting
Financial Statements
Investor information
Registrar and transfer office
TheCompany’sshareregisterismaintainedby:
ComputershareInvestorServicesPLCThePavilionsBridgwaterRoadBristol BS138AETel:+44(0)3707071443
ShareholdersshouldcontacttheRegistrar,Computershare,inconnectionwithchangesofaddress,lostsharecertificates,transfersofsharesandbankmandateformstoenableautomatedpaymentofdividends.
Online information – www.investorcentre.co.uk
OurRegistrar,Computershare,hasaservicetoprovideshareholderswithonlineinternetaccesstodetailsoftheirshareholdings. Theserviceisfree,secureandeasytouse. Toregisterfortheservice,gotowww.investorcentre.co.uk.
Unsolicited mail
Theshareregisterisbylawapublicdocument.Tolimitthereceiptofmailfromotherorganisations,pleaseregisterwiththeMailingPreferenceService,byvisitingwww.mpsonline.org.uk/mpsr/.
Warning to shareholders – ‘boiler room’ scams
Inrecentyears,manycompanieshavebecomeawarethattheirshareholdershavereceivedunsolicitedphonecallsorcorrespondenceconcerninginvestmentmatters.Thesearetypicallyfromoverseas-based‘brokers’whotargetUKshareholders,offeringtosellthemwhatoftenturnouttobeworthlessorhigh-risksharesinUSorUKinvestments.Theseoperationsarecommonlyknownas‘boilerrooms’.These‘brokers’canbeverypersistentandextremelypersuasive.
Itisnotjustthenoviceinvestorthathasbeendupedinthisway;manyofthevictimshadbeensuccessfullyinvestingforseveralyears.Shareholdersareadvisedtobeverywaryofanyunsolicitedadvice,offerstobuysharesatadiscountoroffersoffreecompanyreports.Ifyoureceiveanyunsolicitedinvestmentadvice:
• Makesureyougetthecorrectnameofthepersonandorganisation
• CheckthattheyareproperlyauthorisedbytheFCAbeforegettinginvolvedbyvisiting www.fca.org.uk/register
• ReportthemattertotheFCAeitherbycalling0800 111 6768 orbycompletingthefraudreportingformontheFCAwebsiteat:www.fca.org.uk/consumers/scams/investment-scams/share-fraud-and-boiler-room-scams/reporting-form
• Ifthecallspersist,hangup.
Ifyoudealwithanunauthorisedfirm,youwillnotbeeligibletoreceivepaymentundertheFinancialServicesCompensationScheme.
DetailsofanysharedealingfacilitiesthattheCompanyendorseswillbeincludedincompanymailings.
Moredetailedinformationonthisorsimilaractivitycanbefoundat www.moneyadviceservice.org.uk.
For enquiries of a general nature regarding the Company and for investor relations enquiries please contact Penny Ladkin-Brand at the Company’s Registered Office, or visit www.futureplc.com and select the investor relations section.
Registered office
FutureplcQuayHouseTheAmburyBathBA11UA
Tel+44(0)1225442244
www.futureplc.com/invest-in-future
i
84AnnualReportandAccounts2016
Directors and advisers
Directors
Peter Allen Chairman
James HanburyDeputyChairman
Zillah Byng-ThorneChiefExecutive
Penny Ladkin-BrandChiefFinancialOfficerandCompanySecretary
Manjit WolstenholmeSeniorindependentnon-executiveDirector
Hugo DraytonIndependentnon-executiveDirector
Offices
Registered officeFutureplcQuayHouseTheAmburyBathBA11UATel+44(0)1225442244
London office1-10PraedMewsLondon W21QYTel+44(0)2070424000
Leamington officeFirstfloorUnit4,JephsonCourtTancredCloseLeamingtonSpaCV313RZTel+44(0)1225442244
www.futureplc.com
Companyregistrationnumber3757874RegisteredinEnglandandWales
Advisers
Independent auditorsPricewaterhouseCoopersLLPCharteredaccountantsandstatutoryauditors2GlassWharfBristolBS20FR
BrokerNumisSecuritiesLtd10PaternosterSquareLondon EC4M7LT
Principal bankersHSBCBankplc8CanadaSquareLondonE145HQ
Registrar ComputershareInvestorServicesPLCThePavilionsBridgwaterRoadBristol BS138AE
Financial calendar
Announcement of annual results 23November2016
Annual General Meeting1February2017
Half-year end31March2017
Announcement of interim resultsMay2017
Financial year-end30September2017
85 Future plc
86AnnualReportandAccounts2016
Future plc and Future Publishing LtdRegistered officeQuayHouseTheAmburyBathBA11UA
Tel+44(0)1225442244
Future US, Inc.1LombardStreetSuite200SanFranciscoCA94111USA
Tel+16502382400
www.futureplc.com
London office1-10PraedMewsLondon W21QY
Tel+44(0)2070424000
Future Publishing (Overseas) LtdSuite3,Level10100WalkerStreetNorthSydneyNSW 2060Australia
Tel+61299552677
Leamington officeFirstfloorUnit4,JephsonCourtTancredCloseLeamingtonSpaCV313RZ
Tel+44(0)1225442244
Contacts
Financial Statements