TIDMFUTR
RNS Number : 6889N
Future PLC
22 May 2020
22 May 2020
Future plc
INTERIM MANAGEMENT REPORT
FOR THE HALF YEARED 31 MARCH 2020
Strategic momentum continues
Future plc (LSE: FUTR, "Future", "the Group"), the global
platform for specialist media, today publishes results for the six
months ended 31 March 2020.
Highlights
Financial results for the six months ended 31 March 2020
Adjusted results 2020 2019 Var
------ ------ ------
Adjusted operating profit (GBPm)(1) 39.9 22.6 77%
------ ------ ------
Adjusted operating profit margin
(%) 28% 21% +7ppt
------ ------ ------
Adjusted free cash flows (GBPm)(2) 40.0 27.5 45%
------ ------ ------
Adjusted diluted EPS (p) 32.9 20.5 60%
------------------------------------- ------ ------ ------
Statutory results
------------------------------------- ------ ------ ------
Revenue (GBPm) 144.3 108.7 33%
------ ------ ------
Operating profit (GBPm) 24.7 10.0 147%
------ ------ ------
Profit before tax (GBPm) 27.1 8.9 204%
------ ------ ------
Cash generated from operations
(GBPm) 35.7 26.7 34%
------ ------ ------
Diluted EPS (p) 21.8 8.7 151%
------------------------------------- ------ ------ ------
-- The Group has had an exceptionally strong first half with
adjusted operating profit up 77% to GBP39.9m (2019: GBP22.6m)
-- Covid-19 impacted the end of the period, driving an
acceleration of audience growth which with our diversified revenue
strategy helped to offset the impact of a significant slowdown in
newstrade as travel stores shut and the cancellation of three large
events in March
-- Online users have grown to 253m in H1 (2019: 201m), up 26%
year-on-year, 31% organic[i] (3) growth. The global lockdowns have
resulted in audiences around the world searching for advice and
recommendations resulting in the Group achieving a record-breaking
329m online users in March 2020, up 66% year-on-year (i)
-- Overall organic revenue growth totalled 11% due to continued
momentum in Media revenues with organic growth of 21%
-- Improved quality of earnings resulting from the growth in
scale of the Group and revenue mix is reflected in the strong
operating leverage with adjusted operating profit margin increasing
to 28% (2019: 21%)
-- The Group remains highly cash generative with strong adjusted
free cash flow(2) of GBP40.0m (2019: GBP27.5m), which represents
100% of adjusted operating profit (2019: 122%). To date the Group
has not seen any significant negative Covid-19 impact on working
capital
-- Acquisition of TI Media completed on 20 April 2020 with
integration underway. TI Media's performance has been impacted by
the reduction in magazine sales since March, although the strategic
rationale to implement Future's strategy across the TI brands and
audience remains compelling
-- Future's well diversified revenue model and strong balance
sheet, which included current headroom of around GBP77m on existing
banking facilities, leaves the Group well positioned to continue to
adapt to market conditions in these times of unparalleled
uncertainty
Zillah Byng-Thorne, Future's Chief Executive, said:
"We sincerely thank those who have been working to keep all of
us safe through the crisis, particularly those in all aspects of
frontline services. I also want to recognise and thank our staff,
who have rapidly adapted to a new way of working to ensure we can
continue to provide high quality content to our audience
communities at a time when the need for expert advice is acute.
"We are seeing a rapid acceleration in the migration to online
with a significant growth in online users looking for both
entertainment and advice in their areas of interest as well as a
rapid shift towards online retail. Future's diversified business
model, global footprint and strong financial discipline means that
we have been able to withstand the immediate challenges of the
pandemic.
"Despite the impact of Covid-19, the first half of the financial
year has been very strong with adjusted operating profit up 77% and
adjusted free cashflows of 100%(2) of operating profit. This allows
us to continue to invest in the platform through the development of
new functionality and new content to drive revenue in the coming
months and years.
"The acquisition of TI Media, completed in April, introduces
many opportunities for us to add value to their strong portfolio of
brands by utilising our technology platform to build digital
presence, introduce new revenue models and an opportunity to expand
reach beyond the UK, particularly in the US. It also introduces new
content categories and audiences to the Group whose needs we look
forward to meeting in the coming years.
"Our performance in the first half of the current year has been
extremely strong; the downturn due to Covid-19 makes market
conditions uncertain for the remainder of the year. However, due to
our operating model, strategy and diversified revenue streams, the
Group is well placed to navigate the challenges ahead."
1) Adjusted operating profit represents earnings before
share-based payments (relating to equity settled awards with
vesting periods longer than 12 months) and related social security
costs, interest, tax, amortisation of acquired intangible assets,
fair value movements on contingent consideration (and unwinding of
associated discount) and currency option, and exceptional items and
any related tax effects.
2) Adjusted free cash flow is defined as adjusted operating cash
inflow less capital expenditure. Adjusted operating cash inflow
represents operating cash inflow adjusted to exclude cash flows
relating to exceptional items and settlement of employer's NI on
share based payments, and to include lease repayments following
adoption of IFRS 16 Leases.
3) Organic growth defined as the like for like portfolio
excluding acquisitions and disposals made during FY19 and FY20 at
constant FX rates.
Enquiries:
Future plc cosec@futurenet.com
Zillah Byng-Thorne, Chief Executive
Officer
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Penny Ladkin-Brand, Chief Financial
Officer
----------------------
Instinctif Partners future@instinctif.com
----------------------
Kay Larsen/Chantal Woolcock
----------------------
Note to editors
Future is a global platform business for specialist media,
driven by technology, with diversified revenue streams.
The high-growth Media division consists of six complementary
revenue streams including eCommerce, events, digital advertising,
lead generation, email marketing and video production. It operates
in a large number of verticals including technology, gaming and
entertainment, creative and photography, music, home interest,
hobbies and B2B and its brands include TechRadar, PC Gamer, Tom's
Guide, Homebuilding & Renovating Show, GamesRadar+, The
Photography Show, Live Science, Android Central, Guitar World,
MusicRadar, Space.com, NY TV Week, Tom's Hardware, Cyclingnews.com,
Born Different and Amazing Interiors.
The Magazine division focuses on publishing specialist content,
with over 70 publications and over 625 bookazines published per
year, totalling global circulation of 1.3m. The Magazine portfolio
spans technology, gaming and entertainment, music, creative and
photography, hobbies, home interest, sport, TV, women's interest
and B2B. Its titles include Classic Rock, Guitar Player,
FourFourTwo, Homebuilding & Renovating, Digital Camera,
Guitarist, How It Works, Total Film, What Hi-Fi?, ProCycling and
Music Week.
Covid-19 Update
The health and safety of our staff is our utmost priority and so
from the middle of March we moved to full working from home ahead
of local government enforced lockdowns. Whilst many don't have
ideal working conditions, all of our staff have been exceptional
and adapted quickly to the new environment. Thankfully, due to our
global operating model, the technology was already in place and the
change has been almost seamless. To adapt to the reduction in
contact time, we have put increased communication in place
including weekly CEO letters, weekly top 100 leaders calls and
virtual town halls. We are also focused on supporting our staff
through these challenging times, many of whom were finding the
increased costs of being at home and other personal matters
financially challenging. Therefore we have paid all staff a work
from home stipend during the period and also created a hardship
fund for any staff in financial difficulty to access. Finally, we
are offering increased mental health support and virtual
activities, including weekly yoga and mental health first
aiders.
Our many talented staff have been quick to evolve the business
model to the changes in market conditions, including the creation
of virtual events such as the Future Games Show and adapting the
content strategy to respond to evolving audience demands. We have
modified the subscription distribution model to ensure that readers
can continue to access the content they love and increased presence
of magazines on all digital channels. The closure of travel retail
has reduced the profitability of some titles and therefore
regrettably, we have reviewed the portfolio and removed activity
that was loss making or marginal. In addition, cost based measures
including a review of overheads has helped protect profitability.
The Board has also taken a temporary pay cut from March.
In these challenging times, we want to be able to support our
communities and in the UK all staff may take one day of leave per
week to volunteer for the NHS. We also wanted to support our
partners so have evolved the magazine distribution model to make it
easier for warehouse and shop staff to handle our magazines,
swiftly moved to cancel events to minimise costs of partners and
processed requested refunds promptly to support our customers. As a
result of our additional working capital facility we can provide
more flexibility to customers as they look to reopen post
lockdown.
We remain committed to our strategy to grow our business both
organically and through acquisitions and as a result of early
conversations with our banking partners we increased our working
capital facility for 12 months by GBP30m, bring total headroom at
the time of this announcement to around GBP77m. This gives the
Group additional headroom to continue to adapt to market conditions
in these times of unparalleled uncertainty while continuing to
execute on its strategy.
Strategy update
Growing our audience brands and audiences
We have seen significant growth in our online audience over the
first half of this year, with online users growing by 26%
year-on-year to 253m, 31% of which is organic (i) . This growth is
testament to our data-led audience strategy; by triangulating data
from several sources combined with our editorial expertise, we know
what our readers truly want to read and can subsequently generate
highly relevant content ideas. We achieved a record number of
online users in March 2020 of 329m, up 66% year-on-year (i) , as
audiences sought advice on how to work and "hunker down" at home.
Our significant scale and relevant content in B2C means we now
reach 44% of all US internet users[ii].
Ongoing diversification
A core aim of the group is to build a number of different
revenue streams of scale to be able to adapt to market conditions.
2020 has tested this business model, albeit in a way that none of
us would have wished. However, the strategy works, with growth in
some categories and revenue streams more than offsetting challenges
in other areas.
The year started strongly with continued momentum from 2019 in
audience growth and effective monetisation of those online
audiences in digital advertising and eCommerce. As the impact of
the global pandemic became clear, magazine sales and events were
inevitably impacted. Three material events (The Photography Show,
The National Homebuilding & Renovating Show and New York City
TV Week), which would normally be held in March were initially
postponed until later in the year, and, following further advice,
we have now taken the regrettable decision to cancel the consumer
shows with the New York City TV Week now taking place virtually.
The media business has proved resilient through the lockdown, with
the online editorial team springing into action to support their
communities with advice on deals and stock availability of the
equipment they needed for lockdown. Live Science in particular has
seen YoY growth of 164%(i) in April 2020, driven by informative
news and insight on the Coronavirus. The strong audience
performance more than offset some reduction in advertising yields
we saw during March, and the continued strength in eCommerce which
has seen YoY growth of 89%, of which 68% is organic, also offset
any negative revenue impacts arising from the pandemic.
The B2B verticals, formed from the acquisitions of NewBay Media
in 2018, SmartBrief in 2019 and internal investment to drive new
organic audiences, have also helped to provide resilience in the
Group. SmartBrief performance has continued strongly despite the
impact of Covid-19, with our email newsletter proving to be popular
as audiences search for advice from all sources. The Technology
& Learning division has been supporting school districts in the
US to address remote schooling needs with remote schooling
webinars. SmartBrief performance has been strong with EBITDA in the
half of $4.3m vs $3.1m (adjusted for IFRS 16 Leases to ensure
comparability) in the comparable period prior to acquisition.
The integration of Barcroft Studios, a video production company
acquired in November 2019, is now offering an additional source of
revenue with its real life videos watched by millions. We are
starting to work together to leverage Barcroft's expertise in
social audiences to drive audience engagement in social ecosystems
for other Future content categories. In addition, the Barcroft team
are working with the games editorial team on a new series focussed
on video gamers' stories.
Our audience is truly global and in particular, we continue to
expand our reach in the US, with 60% of Group revenue now coming
from the US (52% in 2019). In addition to our network of franchise
partners who license our brands and systems outside the UK and US,
we also launched TechRadar Español for Spanish speaking audiences
during 2019, with the audience starting to show promising signs of
growth.
High-quality operating leverage
As the business scales we continue to invest in both our
technology and our processes to supercharge our back office
operations in order to ensure we can scale and deliver enhanced
value on acquisitions. Our operating model delivers efficiencies
which enable us to optimise our core business and acquisitions with
a focus on improving operating margins.
The scalability of our proprietary tech platform has also
allowed us to migrate a further eight websites onto our Vanilla web
platform in the last six months, including Fourfourtwo.com and
Laptopmag.com, resulting in a total of 29 sites now being on the
centralised platform. This centralised approach, leveraging
Future's platform, has reduced technology costs across the Group,
while at the same time allowing us to rapidly deploy new
functionality such as ad units or eCommerce improvements to all the
sites.
The strength of our operating leverage is evident from the
strong growth in adjusted operating profit margin, increasing from
21% at 31 March 2019 to 28% this year despite a significant
increase in headcount of 27% year-on-year.
Continued investment
We continue to innovate and invest in our core business, with
five new online brands launched on our central web platform Vanilla
in the last 12 months, with two being in the last six months. We
are able to take existing brands and unlock their full potential,
such as the expansion of our Media Technology brands with Next TV
and the extension of our B2B education brand with Tech &
Learning University.
Late in 2019, following the integration of the Mobile Nations
team into Future, we launched FUTR-Labs to provide an innovation
incubator. FUTR-Labs consists of an agile team that can rapidly
build and incubate new revenue streams. The primary focus of the
team to date has been on the development of lead generation
technology to provide data capture for eCommerce sales where the
research journey happens online but with the final sale occurring
offline. The new technology, Falcon, has been built directly into
the Future technology stack to facilitate scaling in due course.
The next phase of development includes building out the sales
expertise and go-to-market strategy.
Whilst costs have been a focus to ensure that we are able to
manage the challenges of Covid-19, we believe it is a priority to
continue to invest in the ongoing growth in the business. As a
result, we have ring-fenced the investment in Falcon, the new site
launches in the US (see acquisitions section below) and the
improvement of our processes over the next few months.
During the first half of the year we invested over GBP16.6m in
the creation of content, with editorial headcount increasing 21%
year-on-year. While our technology and business model are a core
part of our success, creating leading content is at our heart and
we continue to have a strong commitment to investing here to meet
our audiences' changing needs.
Acquisitions
Barcroft Studios
The Group acquired Barcroft Studios in November 2019 for a total
consideration of GBP23.4m, of which 40% was satisfied by the issue
of shares, with the remainder paid in cash. Barcroft is an
independent studio that creates original content, which is then
published on a variety of owned and operated social sites in
addition to being distributed across mass media channels. This has
added a significant new revenue stream in video production, which
presents opportunities to further monetise Future's existing brands
through video.
Whilst Covid-19 has impacted commissioned shows, Barcroft's
diversified business model has meant that this has been partially
offset by increased advertising-based video on demand (AVOD) views,
as well as innovation in self filming and the new opportunities the
Barcroft business model creates within the Future portfolio.
TI Media acquisition completed
TI Media is a UK-based, print-led consumer magazine and digital
publisher with deep industry heritage and a portfolio that
incorporates 38 brands including Decanter, Country Life, Wallpaper
and Woman & Home. TI Media brings to Future a presence in the
Wine, Golf, Equestrian, Country Living, TV Listings and Gardening
verticals and deepens and extends Future's strength and position in
Home, Cycling and Country Sports. The acquisition of TI Media
completed on 20 April 2020, following agreement from the CMA to
dispose of just three brands; World Soccer, Amateur Photographer
and Trusted Reviews. All three of the brands have now been
sold.
The TI Media acquisition offers a compelling strategic and
financial rationale through entry into new market verticals via
leading brands and expansion within existing markets. It is still
at a relatively early stage into the planned integration of the
businesses, however, detailed project plans are in place and good
progress has been made so far. The planned integration of TI into
Future is following our standard model with a senior level steering
committee overseeing two core workstreams. The first workstream is
focusing on integration of the two organisations with a new
organisational design and back office and systems integration. The
second element is around the realisation of the investment thesis
with better monetisation of the current digital assets and creation
of new digital assets through leveraging the rich content heritage
and expertise within TI Media. We are particularly excited about
the opportunities presented and are planning to launch the first
new brand benefiting from the acquisition in June.
The immediate next integration steps include: leveraging
Future's proprietary technology platform on the current TI Media
digital properties; migrating the TI websites which have the
largest global opportunity onto Future's vanilla website platform;
and the launch of new websites in TI Media's content verticals. It
is early days but we remain excited about the long term opportunity
to create value.
The challenges facing magazines as a result of Covid-19 has
required us to pivot some of our thinking around the long term
operating model and we are now preparing for the likely
acceleration in online readership and a migration of more
advertising revenues into digital. This will ensure we have the
agility in the organisation design to deliver a sustainable
business whilst we deploy the Future strategy, which is a critical
part of our work. In the short term we are working with the
existing TI team to ensure we share all of Future's learnings
around responding to the immediate challenges. While TI had
implemented a reduction in hours across the entire workforce, in
keeping with our values, we sought to reverse that decision for all
but the most senior staff.
Current trading and outlook
The second half of the financial year has continued to show
strong momentum and, as a result of the quick action undertaken, we
have been able to minimise the impact on the business of
Covid-19-related issues. The ongoing strong growth in audiences has
helped offset any softness in advertising, as well as maintaining
the positive eCommerce trends seen in the first half of the year.
The Board therefore remains confident in achieving its expectations
for the full year.
Financial summary
HY20 HY19
GBPm GBPm
------------------------------------- ------ ------
Revenue 144.3 108.7
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Adjusted operating profit(1) 39.9 22.6
Adjusted net finance costs(4) (0.8) (1.1)
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Adjusted profit before tax(1) 39.1 21.5
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Operating profit 24.7 10.0
Net finance costs 2.4 (1.1)
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Profit before tax 27.1 8.9
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Basic earnings per share (p) 22.3 9.2
Adjusted basic earnings per share
(p)(1) 33.7 21.5
Adjusted diluted earnings per share
(p)(1) 32.9 20.5
------------------------------------- ------ ------
1) Adjusted operating profit represents earnings before
share-based payments (relating to equity settled awards with
vesting periods longer than 12 months) and related social security
costs, interest, tax, amortisation of acquired intangible assets,
fair value movements on contingent consideration (and unwinding of
associated discount) and currency option, exceptional items and any
related tax effects. Adjusted profit before tax represents adjusted
operating profit less adjusted net finance costs.
2) Adjusted free cash flow is defined as adjusted operating cash
inflow less capital expenditure. Adjusted operating cash inflow
represents operating cash inflow adjusted to exclude cash flows
relating to exceptional items and settlement of employer's NI on
share based payments, and to include lease repayments following
adoption of IFRS 16 Leases.
3) Organic growth defined as the like for like portfolio
excluding acquisitions and disposals made during FY19 and FY20 at
constant FX rates.
4) Adjusted net finance costs represent net finance costs before
fair value movements on contingent consideration (and unwinding of
associated discount) and currency option.
Items described as adjusted in the table above exclude the items
detailed as 'adjusting' in the 'Reconciliation of non-statutory
measures' section below. Adjusted items are non-GAAP measures.
Following the Group's adoption of IFRS 16 Leases from 1 October
2019, the Chief Operating Decision Maker ("CODM") reviews adjusted
operating profit as a key financial metric, rather than adjusted
EBITDA, to include depreciation on right-of-use assets.
Reconciliation of non-statutory measures
Adjusted operating profit reconciles to statutory profit before
tax as follows:
HY20 HY19
GBPm GBPm
---------------------------------------------------------- ------- --------
Adjusted operating profit 39.9 22.6
---------------------------------------------------------- ------- --------
Adjusted net finance costs (0.8) (1.1)
---------------------------------------------------------- ------- --------
Adjusted profit before tax 39.1 21.5
---------------------------------------------------------- ------- --------
Adjusting items:
Share based payments (including related social security
costs) (1.7) (5.2)
Exceptional items (4.4) (2.3)
Amortisation of acquired intangibles (9.1) (5.1)
---------------------------------------------------------- ------- --------
Unwinding of discount on contingent consideration (0.8) -
---------------------------------------------------------- ------- --------
Fair value gain on contingent consideration 5.2 -
---------------------------------------------------------- ------- --------
Fair value loss on currency option (1.2) -
---------------------------------------------------------- ------- --------
Statutory profit before tax 27.1 8.9
---------------------------------------------------------- ------- --------
The financial review is based primarily on a comparison of
adjusted results for the six months ended 31 March 2020 with those
for the six months ended 31 March 2019. Unless otherwise stated,
change percentages relate to a comparison of these two periods.
A key objective of the Group is the diversification of revenues
and the first half results show good progress on the achievement of
this objective with a significant increase in the revenue mix from
Media and also the US.
Revenue Sub-segment HY20 Sub-segment HY19
GBPm GBPm
----------------------------- -------------- ------ -------------- ------ ------ ------
UK US Total UK US Total YoY 2019
GBPm GBPm GBPm GBPm GBPm GBPm Var Full
Year
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Digital display advertising
on platform 14.1 33.7 47.8 10.8 29.6 40.4 18% 80.4
Digital display advertising
off platform 3.8 14.5 18.3 - 1.1 1.1 1564% 8.5
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
eCommerce 11.4 28.0 39.4 7.0 13.8 20.8 89% 46.3
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Other 6.1 3.4 9.5 8.8 4.6 13.4 (29)% 19.7
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Total Media 35.4 79.6 115.0 26.6 49.1 75.7 52% 154.9
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Print & digital content 16.8 2.0 18.8 18.8 2.0 20.8 (10)% 42.8
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Other 6.2 4.3 10.5 7.1 5.1 12.2 (14)% 23.8
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Total Magazines 23.0 6.3 29.3 25.9 7.1 33.0 (11)% 66.6
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Total revenue 58.4 85.9 144.3 52.5 56.2 108.7 33% 221.5
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Group revenue was GBP144.3m (2019: 108.7m), reflecting the
impact of FY19 and HY20 acquisitions which contributed GBP26.0m of
revenue. Media revenue increased by GBP39.3m, despite the
cancellation of events in March which reduced events revenue in the
period by GBP5.5m.
Both Future's UK and US operations have performed well in H1,
with UK revenue up 11% to GBP58.4m (2019: GBP52.5m) and US revenue
up 53% to GBP85.9m (2019: GBP56.2m). The US achieved revenue growth
of 19% on an organic(3) basis at constant currency (19% at actual
currency). As a result, 60% of Group revenue (net of revenue
between segments) is now derived from the US. US revenue has also
been boosted by the addition of GBP14.3m of revenue from
SmartBrief.
Underlying Media revenue organic(3) growth of 21% at constant
currency (21% at actual currency) has also been very strong over
this period as a result of organic digital advertising growth of
14% representing an increase of GBP5.5m and organic eCommerce
growth of GBP13.8m, 68% growth YoY.
The Magazine division performed in line with our expectations
with revenue decreasing by 11% to GBP29.3m (2019: GBP33.0m), and
includes the impact of store closures in March, which we estimate
impacted the underlying performance by 3%. The organic revenue
performance for magazines is a decline of 12% meaning that until
the impact of Covid-19 at the end of March, the performance was
ahead of historic trends (FY19 H1 organic decline 11%).
As a content-led business Future seeks to meet the needs of its
specialist communities which it measures through the strength of
its audience and the effective monetisation of that audience. In
the first half of the year Future saw its online audience increase
to 253m(i) through the increased scale and diversification of the
Group, with organic audience growth of 31%.
Operating profit
Statutory operating profit increased by GBP14.7m to GBP24.7m
(2019: GBP10.0m). Statutory operating margin increased by 8ppt to
17% (2019: 9%). The Group's adjusted operating profit increased to
GBP39.9m (2019: GBP22.6m), reflecting the strong growth of the
Media division and the operating leverage provided by the increased
scale of the Group.
An additional receivables provision of GBP1.8m was recognised in
the period reflecting the Group's assessment of underlying credit
risk given the significant uncertainty arising from the Covid-19
pandemic, however to date we have not experienced any significant
deterioration in collections.
Adoption of IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 October 2019,
resulting in the recognition on the balance sheet of assets and
liabilities relating to leases previously accounted for as
operating leases. On transition the Group has applied the modified
retrospective approach, with the right-of-use asset measured as if
IFRS 16 had always applied and the difference between lease assets
and lease liabilities recognised within retained earnings.
Comparative periods have not been restated.
Adoption of the standard has resulted in an increase in reported
assets of GBP16.0m, which includes a deferred tax asset of GBP0.7m,
and an increase in reported liabilities of GBP16.8m, with the
balance of GBP0.8m being recognised within retained earnings at 1
October 2019.
In the income statement the operating lease rent expense has
been replaced by depreciation of right-of-use assets (GBP1.6m in
the period) and finance costs on lease liabilities (GBP0.2m).
Operating profit has increased by GBP0.2m as a result of applying
IFRS 16 Leases from 1 October 2019, compared to what would have
been reported under IAS 17, with no impact on total earnings. Prior
periods have not been restated.
Earnings per share
HY20 HY19
----- ------
Adjusted basic earnings per share (p) 33.7 21.5
Basic earnings per share (p) 22.3 9.2
Adjusted diluted earnings per share (p) 32.9 20.5
Diluted earnings per share (p) 21.8 8.7
----------------------------------------- ----- ------
Adjusted earnings per share is based on profit after taxation
which is then adjusted to exclude share-based payments (relating to
equity-settled share awards with vesting periods longer than 12
months) and associated social security costs, fair value movements
on contingent consideration (and unwinding of associated discount)
and currency option, exceptional items, amortisation of acquired
intangible assets and any related tax effects.
The adjusted profit after tax amounted to GBP31.7m (2019:
GBP17.6m) and the weighted average diluted number of shares in
issue was 96.4m (2019: 85.9m), the increase reflecting the issue of
8.2m shares in November 2019 to fund the TI Media acquisition, the
issue of 1.8m shares to settle the remaining deferred consideration
for the acquisition of Mobile Nations and the issue of 0.7m shares
as consideration for the acquisition of Barcroft Studios.
Statutory exceptional items
Exceptional costs amounted to GBP4.4m (2019: GBP2.3m) and relate
largely to the acquisition costs associated with Barcroft Studios
and TI Media (GBP4.3m) and the integration of SmartBrief (GBP0.1m),
as well as other integration-related costs (GBP0.2m), offset by a
credit (GBP0.2m) for the post-transition IFRS 16 impact of
subletting an onerous property.
Net finance costs and refinancing
The Group agreed a new GBP30m multi-currency Revolving Credit
Facility ("RCF") in April. The RCF, which stands alongside Future's
existing debt facilities and matures in April 2021, has been
arranged in order to provide the Group with additional working
capital headroom to maintain the underlying growth momentum of the
combined business, whilst navigating the impact of Covid-19. The
key terms of the RCF mirror the Group's existing debt facilities
and is being provided by the Group's existing banking syndicate of
HSBC, Natwest and Bank of Ireland.
Adjusted finance costs reduced to GBP0.8m (2019: GBP1.1m),
reflecting the receipt of the placing proceeds ahead of the
completion of TI Media, which together with the Group's continued
strong cash generation enabled the repayment of the previous
draw-down of the RCF to fund the Mobile Nations acquisition. The
Group has continued to focus on efficient management of its cash
position.
At 31 March 2020 the Group was in a net cash position of
GBP52.7m and had headroom of over GBP180m on its available bank
facilities. Subsequent to the reporting date the Group completed
the acquisition of TI Media which increased net debt to around
GBP85m (with headroom on available facilities of around GBP77m) at
the time of this announcement. This equates to leverage of under 1x
net debt: EBITDA (adjusted for IFRS 16 lease charge) on a proforma
basis.
Taxation
The tax amount for the six months ended 31 March 2020 is based
on the effective rate, estimated on a full year basis, being
applied to the statutory profit for the six months ended 31 March
2020.
The Group's adjusted effective tax rate is 19% (2019: 18%) which
reflects a credit of GBP0.7m arising on the part release of a
provision recognised for uncertain tax positions and a further
deferred tax credit of GBP0.8m as a result of changes in tax rates
(both in the UK future enacted rate and the Group's estimated US
state and Federal blended rate).
The Group's statutory effective tax rate is 23% (2019: 16%) with
the difference between the statutory rate and adjusted effective
rates being the impact of certain exceptional items not being
deductible for tax purposes and the impact of changes in tax rates
on the deferred tax asset relating to acquired intangibles.
Cash flow and net debt
Net cash at 31 March 2020 was GBP52.7m (2019: net debt of
GBP38.8m).
Adjusted operating cash inflow was GBP42.2m (2019: GBP29.2m).
Adjusting items are shown in the table below. Exceptional cash
flows of GBP2.8m represent the acquisitions of Barcroft Studios and
TI Media (GBP2.3m), the integration of SmartBrief (GBP0.1m), vacant
property lease repayments (GBP0.2m) as well as other historic
acquisition integration-related costs (GBP0.2m). Lease repayments
have been included in adjusted operating cash flows to ensure
consistency with operating profit following adoption of IFRS 16
Leases.
Capital expenditure was GBP2.2m (2019: GBP1.7m) in the
period.
A reconciliation of adjusted free cash flow to cash flow from
operations is included below:
HY20 HY19
GBPm GBPm
------------------------------------------- ------ ------
Adjusted free cash flow 40.0 27.5
------------------------------------------- ------ ------
Cash flows related to capital expenditure 2.2 1.7
------------------------------------------- ------ ------
Adjusted operating cash inflow 42.2 29.2
Cash flows related to exceptional items (2.8) (2.5)
------------------------------------------- ------ ------
Settlement of NI on share based payments (5.5) -
------------------------------------------- ------ ------
Lease repayments (IFRS 16) 1.8 -
------------------------------------------- ------ ------
Cash generated from operations 35.7 26.7
------------------------------------------- ------ ------
Principal risks and uncertainties
Other than the impact of Covid-19 as outlined earlier, the
principal risks and uncertainties for the six months are largely
unchanged from those detailed in the Group's Annual Report and
Accounts for the year ended 30 September 2019. Reference should be
made to pages 35 to 38 of the 2019 Annual Report and Accounts for
more detail on the potential impact of risks and examples of
mitigation.
The nature of the Group's business means there are no specific
risks to the Group associated with Brexit other than the impact of
general economic uncertainty on consumer sentiment.
Going concern
As part of the half year process and in light of the ongoing
Covid-19 pandemic the Directors have undertaken a detailed going
concern review. This included reviewing the Group's forecasts and
projections, and assessing the headroom on the Group's combined
multicurrency Revolving Credit Facility ("RCF") of GBP165m,
following the GBP30m increase in the facility in April and banking
covenants after applying a severe but plausible Covid-19 downside
forecast to those projections.
The most extreme downside scenario modelled the impact of both a
severe downturn in trading resulting in material reduction in
digital advertising revenues (35% reduction for the period to June
and 20% from then until September), in magazine revenues (75%
reduction in newsstand and print advertising and a 50% reduction in
print licensing for the period to July 2020) and in event revenues
(assumed the cancellation of all remaining events in this financial
year) offset by some mitigating cost reduction and profit
protection actions. The same scenario was run for TI Media
portfolio with the same assumptions other than a 50% reduction in
newstrade and print advertising. The scenario also assumed a
significant lengthening of the Group's working capital cycle to
reflect an increase in delays in receipts from customers of up to
30 days.
Even in this most extreme downside scenario the Group would be
able to operate well within the level of its current available RCF
and covenants with a minimum level of headroom of over GBP40m.
After due consideration, the Directors have concluded that there
is a reasonable expectation that the Group has adequate resources
to continue in operational existence for at least 12 months from
the date of this report. For this reason the Directors continue to
adopt the going concern basis in preparing the condensed interim
financial information for the six months ended 31 March 2020.
Condensed consolidated interim financial statements
Consolidated income statement
for the six months ended 31 March 2020
6 months to 31 March 6 months to 31 March 2019
2020
Non-GAAP Non-GAAP
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
Note GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 1,2 144.3 - 144.3 108.7 - 108.7
Net operating
expenses 3 (104.4) (15.2) (119.6) (86.1) (12.6) (98.7)
----------------------- ---- ---------- ---------- ---------- --------------- ---------- -----------------
Operating profit 39.9 (15.2) 24.7 22.6 (12.6) 10.0
Finance income 6 0.2 5.2 5.4 - - -
Finance costs 6 (1.0) (2.0) (3.0) (1.1) - (1.1)
----------------------- ---- ---------- ---------- ---------- --------------- ---------- -----------------
Net finance costs 6 (0.8) 3.2 2.4 (1.1) - (1.1)
----------------------- ---- ---------- ---------- ---------- --------------- ---------- -----------------
Profit before
tax 1 39.1 (12.0) 27.1 21.5 (12.6) 8.9
Tax on profit/(loss) 7 (7.4) 1.3 (6.1) (3.9) 2.5 (1.4)
----------------------- ---- ---------- ---------- ---------- --------------- ---------- -----------------
Profit for the
period attributable
to owners of
the parent 31.7 (10.7) 21.0 17.6 (10.1) 7.5
----------------------- ---- ---------- ---------- ---------- --------------- ---------- -----------------
Earnings per 15p Ordinary share
6 months to 31 March 2020 6 months to 31 March 2019
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
Note pence pence pence pence pence pence
Basic earnings
per share 9 33.7 (11.4) 22.3 21.5 (12.3) 9.2
Diluted earnings
per share 9 32.9 (11.1) 21.8 20.5 (11.8) 8.7
------------------ ----- --------- ---------- ---------- --------- ---------- ----------
Consolidated statement of comprehensive income
for the six months ended 31 March 2020
6 months 6 months
to 31 March to 31 March
2020 2019
GBPm GBPm
---------------------------------------------------- ------------- -------------
Profit for the period 21.0 7.5
----------------------------------------------------- ------------- -------------
Items that may be reclassified to the consolidated
income statement
Currency translation differences 2.3 (0.8)
----------------------------------------------------- ------------- -------------
Other comprehensive income/(expense) for
the period 2.3 (0.8)
----------------------------------------------------- ------------- -------------
Total comprehensive income for the period
attributable to owners of the parent 23.3 6.7
----------------------------------------------------- ------------- -------------
Consolidated statement of changes in equity
for the six months ended 31 March 2020
Issued Share
share premium Merger Treasury Accumulated Total
capital account reserve reserve losses equity
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- --------- --------- --------- ------------ --------
Balance at 1 October
2019 12.5 97.2 140.4 (0.3) (36.4) 213.4
----------------------- ------ --------- --------- --------- --------- ------------ --------
Retained earnings
impact of adopting
IFRS 16 10 - - - - (0.8) (0.8)
----------------------- ------ --------- --------- --------- --------- ------------ --------
Restated balance
at 1 October 2019 12.5 97.2 140.4 (0.3) (37.2) 212.6
----------------------- ------ --------- --------- --------- --------- ------------ --------
Profit for the
period - - - - 21.0 21.0
----------------------- ------ --------- --------- --------- --------- ------------ --------
Currency translation
differences - - - - 2.3 2.3
Other comprehensive
income for the
period - - - - 2.3 2.3
Total comprehensive
income for the
period - - - - 23.3 23.3
Share capital
issued during
the period 13,14 2.2 99.8 30.5 - - 132.5
Acquisition of
own shares 14 - - - (3.8) (0.5) (4.3)
Share schemes
- Value of employees'
services 5 - - - - 2.7 2.7
- Deferred tax
on share options - - - - 1.7 1.7
Dividends paid
to shareholders - - - - (1.0) (1.0)
Balance at 31
March 2020 14.7 197.0 170.9 (4.1) (11.0) 367.5
----------------------- ------ --------- --------- --------- --------- ------------ --------
Balance at 1 October
2018 12.2 97.2 124.9 (0.3) (61.4) 172.6
----------------------- ------ --------- --------- --------- --------- ------------ --------
Profit for the
period - - - - 7.5 7.5
----------------------- ------ --------- --------- --------- --------- ------------ --------
Currency translation
differences - - - - (0.8) (0.8)
Other comprehensive
expense for the
period - - - - (0.8) (0.8)
Total comprehensive
income for the
period - - - - 6.7 6.7
Share capital
issued during
the period 13 0.2 - 4.1 - - 4.3
Share schemes
- Value of employees'
services 5 - - - - 1.9 1.9
- Deferred tax
on share options - - - - 1.5 1.5
Dividends paid
to shareholders - - - - (0.4) (0.4)
Balance at 31
March 2019 12.4 97.2 129.0 (0.3) (51.7) 186.6
----------------------- ------ --------- --------- --------- --------- ------------ --------
Consolidated balance sheet
as at 31 March 2020
31 March 31 March 30 September
2020 2019 2019
Note GBPm GBPm GBPm
------------------------------------------ ----- --------- --------- -------------
Assets
Non-current assets
Property, plant and equipment 10 14.3 1.7 2.5
Intangible assets - goodwill 11 231.6 205.5 218.7
Intangible assets - other 11 112.5 68.9 110.3
Investments 0.2 0.2 0.2
Financial asset - derivative - 0.6 -
Deferred tax 2.4 2.3 3.7
------------------------------------------ ----- --------- --------- -------------
Total non-current assets 361.0 279.2 335.4
------------------------------------------ ----- --------- --------- -------------
Current assets
Corporation tax recoverable 0.5 0.1 1.1
Trade and other receivables 12 47.7 35.4 41.9
Cash and cash equivalents 181.8 5.7 6.6
Finance lease receivable 10 1.8 - -
Financial asset - derivative 12 - - 1.4
------------------------------------------ ----- --------- --------- -------------
Total current assets 231.8 41.2 51.0
------------------------------------------ ----- --------- --------- -------------
Total assets 592.8 320.4 386.4
------------------------------------------ ----- --------- --------- -------------
Equity and liabilities
Equity
Issued share capital 13 14.7 12.4 12.5
Share premium account 197.0 97.2 97.2
Merger reserve 170.9 129.0 140.4
Treasury reserve (4.1) (0.3) (0.3)
Accumulated losses (11.0) (51.7) (36.4)
Total equity 367.5 186.6 213.4
------------------------------------------ ----- --------- --------- -------------
Non-current liabilities
Financial liabilities - interest-bearing
loans and borrowings 129.1 44.5 42.6
Lease liability due in more than
one year 10 11.1 - -
Deferred tax 4.8 - 0.4
Provisions 1.8 2.4 2.1
Contingent consideration 12 - 29.3 10.9
Other non-current liabilities - 0.5 0.4
------------------------------------------ ----- --------- --------- -------------
Total non-current liabilities 146.8 76.7 56.4
------------------------------------------ ----- --------- --------- -------------
Current liabilities
Financial liabilities - interest-bearing
loans and borrowings - - 4.3
Trade and other payables 64.6 54.7 62.4
Corporation tax payable 3.2 2.4 6.0
Lease liability due within one
year 10 4.5 - -
Contingent consideration 12 6.2 - -
Deferred consideration 12 - - 43.9
Total current liabilities 78.5 57.1 116.6
------------------------------------------ ----- --------- --------- -------------
Total liabilities 225.3 133.8 173.0
------------------------------------------ ----- --------- --------- -------------
Total equity and liabilities 592.8 320.4 386.4
------------------------------------------ ----- --------- --------- -------------
Consolidated cash flow statement
for the six months ended 31 March 2020
6 months
6 months to to
31 March 31 March
2020 2019
GBPm GBPm
---------------------------------------------- ---- ------------ ----------
Cash flows from operating activities
Cash generated from operations 35.7 26.7
Interest paid (0.5) (0.4)
Interest paid on lease liabilities (0.3) -
Tax paid (2.2) (1.0)
---------------------------------------------------- ------------ ----------
Net cash generated from operating activities 32.7 25.3
---------------------------------------------------- ------------ ----------
Cash flows from investing activities
Purchase of property, plant and equipment (0.5) (0.4)
Purchase of computer software and website
development (1.7) (1.3)
Purchase of magazine titles and events - (1.7)
Purchase of subsidiary undertakings, net (33.6) (41.1)
of cash acquired
Disposal of magazine titles and trademarks - 0.5
Net cash used in investing activities (35.8) (44.0)
---------------------------------------------------- ------------ ----------
Cash flows from financing activities
Proceeds from share issue 104.4 -
Cost of share issue (3.2) -
Acquisition of own shares (3.8) -
Dividends paid (1.0) (0.4)
Draw down of bank loans 133.5 52.2
Repayment of bank loans (50.1) (32.4)
Bank arrangement fees (0.3) (0.7)
Repayment of principal element of lease (1.8) -
liabilities
Settlement/(purchase) of derivative 0.3 (0.7)
---------------------------------------------------- ------------ ----------
Net cash generated from financing activities 178.0 18.0
---------------------------------------------------- ------------ ----------
Net increase/(decrease) in cash and cash
equivalents 174.9 (0.7)
Cash and cash equivalents at beginning of
period 6.6 6.4
Exchange adjustments 0.3 -
Cash and cash equivalents at end of period 181.8 5.7
---------------------------------------------------- ------------ ----------
Notes to the consolidated cash flow statement
for the six months ended 31 March 2020
A. Cash generated from operations
The reconciliation of profit for the period to cash flows
generated from operations is set out below:
6 months
to 6 months
31 March to 31 March
2020 2019
GBPm GBPm
---------------------------------------------------- ---- ---------- -------------
Profit for the period 21.0 7.5
Adjustments for:
Depreciation charge 2.4 0.4
Amortisation of intangible assets 10.1 5.8
Share schemes
- Value of employees' services 2.7 1.9
- National insurance costs on share schemes 0.4 3.3
Net finance (income)/costs (2.4) 1.1
Tax charge 6.1 1.4
Cash generated before changes in working
capital and provisions 40.3 21.4
Movement in provisions (0.2) (0.4)
(Increase)/decrease in trade and other receivables (3.0) 1.4
(Decrease)/increase in trade and other payables (1.4) 4.3
Cash generated from operations 35.7 26.7
---------------------------------------------------------- ---------- -------------
B. Analysis of net debt
30 September Cash Other non- Exchange 31 March
2019 flows cash changes movements 2020
GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------- ------- -------------- ----------- ---------
Cash and cash equivalents 6.6 174.9 - 0.3 181.8
Debt due within one
year (4.3) 4.3 - - -
Debt due after more
than one year (42.6) (87.4) (0.1) 1.0 (129.1)
--------------------------- ------------- ------- -------------- ----------- ---------
Net (debt)/cash (40.3) 91.8 (0.1) 1.3 52.7
--------------------------- ------------- ------- -------------- ----------- ---------
During the period the Group agreed a new GBP30m multi-currency
Revolving Credit Facility ("RCF"). The RCF, which stands alongside
Future's existing debt facilities and matures in April 2021, has
been arranged in order to provide the Group with additional working
capital headroom to maintain the underlying growth momentum of the
business, whilst navigating the impact of Covid-19. The key terms
of the RCF mirror the Group's existing debt facilities and is being
provided by the Group's existing banking syndicate of HSBC, Natwest
and Bank of Ireland. The existing facility of GBP90m has an initial
maturity of February 2023 and includes an incremental GBP45m
accordion option which was fully drawn in March 2020 in advance of
the completion of the TI Media acquisition.
C. Reconciliation of movement in net debt
6 months 6 months
to to
31 March 31 March
2020 2019
GBPm GBPm
-------------------------------------------------- ---------- ----------
Net debt at start of period (40.3) (17.8)
Increase/(decrease) in cash and cash equivalents 174.9 (0.7)
Movement in borrowings (83.1) (19.8)
Other non-cash changes (0.1) 0.4
Exchange movements 1.3 (0.9)
Net cash/(debt) at end of period 52.7 (38.8)
-------------------------------------------------- ---------- ----------
Basis of preparation
This unaudited condensed consolidated interim financial
information for the six months ended 31 March 2020 has been
prepared in accordance with International Accounting Standard 34
Interim Financial Reporting as adopted by the European Union, and
in accordance with the Disclosure Guidance and Transparency Rules
of the Financial Conduct Authority.
The interim financial information contained in the Interim
Report should be read in conjunction with the Annual Report for the
year ended 30 September 2019.
The Interim Report does not constitute statutory accounts as
defined in section 434 of the Companies Act 2006 and has not been
audited. A copy of the statutory financial statements for the year
ended 30 September 2019 has been filed with the Registrar of
Companies. The auditors' report on those accounts was unqualified,
and it did not contain any statements under section 498(2) or
section 498(3) of the Companies Act 2006. The auditors have carried
out a review of the Interim Report and their review report is
included at the back of this report.
Having considered the Group's funding position and latest
forecasts, the Directors believe that there is a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis in preparing
the condensed interim financial information.
As stated in the financial statements for the year ended 30
September 2019 the following amendments to existing standards have
been applied where applicable: amendments as a result of Annual
Improvements 2015-2017 Cycle; and amendment to IFRS 9
Prepayment
features with negative compensation and modifications of
financial liabilities . The Group has adopted IFRS 16 Leases and
IFRIC 23 Uncertainty over income tax treatments from 1 October
2019. The accounting policies adopted, methods of computation and
presentation are otherwise consistent with those set out in the
Group's statutory accounts for the financial year ended 30
September 2019.
There has been no material impact from the adoption of new
standards, amendments to standards or interpretations which are
relevant to the Group, other than as set out below.
The Group has adopted IFRS 16 Leases from 1 October 2019,
resulting in the recognition on balance sheet of assets and
liabilities relating to leases previously accounted for as
operating leases. On transition the Group has applied the modified
retrospective approach, with the right-of-use asset measured as if
IFRS 16 had always applied and the difference between lease assets
and lease liabilities recognised within retained earnings.
Comparative periods have not been restated.
Adoption of the standard has resulted in an increase in reported
assets of GBP16.0m, which includes a deferred tax asset of GBP0.7m,
and an increase in reported liabilities of GBP16.8m, with the
balance of GBP0.8m being recognised within retained earnings at 1
October 2019.
In the income statement the operating lease rent expense has
been replaced by depreciation of right-of-use assets and finance
costs on lease liabilities.
The Group has taken advantage of the following practical
expedients on transition to:
-- rely on our assessment of where leases exist under current
reporting standards IAS 17 Leases and IFRIC 4 Determining Whether
an Arrangement Contains a Lease;
-- exclude low-value leases;
-- exclude short-term leases, being those with a term of 12
months or less from 1 October 2019;
-- rely on our assessment of onerous leases under IAS 37
Provisions, contingent liabilities and contingent assets applied
immediately before the date of initial application as an
alternative to performing an impairment review;
-- use hindsight when determining the lease term where the
contract includes options to extend or terminate; and
-- exclude initial direct costs from the measurement of the right-of-use asset.
Although there is no change to actual cash outflows, under IFRS
16 repayments relating to the principal portion of the lease
liability are presented within cash flows from financing activities
and the portion relating to the repayment of interest presented
within cash flows from operating activities. Payments relating to
short-term and low-value leases will continue to be included in
cash flows from operating activities.
The Group's accounting policy for leases under IFRS 16 is as
follows:
Property leases are recognised on the balance sheet as a
right-of-use asset and corresponding lease liability at the date
the leased asset is available for use. Lease liabilities are
measured at the present value of payments less lease incentives
receivable. Right-of-use assets are measured equal to the value of
the lease liability plus restoration costs.
Lease payments are discounted using the interest rate implicit
in the lease (for leases existing on transition the incremental
borrowing rate).
Short-term and low-value leases (as defined by IFRS 16) are
recognised on a straight-line basis as an expense in the income
statement.
Finance costs are charged to the income statement over the lease
term, at a constant periodic rate of interest. Right-of-use assets
are depreciated over the lease term on a straight-line basis. Each
lease payment is allocated between the liability and finance
cost.
IFRIC 23 Uncertainty over income tax treatments provides
guidance and clarifies how to apply the recognition and measurement
requirements in IAS 12 Income taxes where there is uncertainty over
income tax treatments. IFRIC 23 has been applied in the measurement
of the provision recognised. The adoption of the standard has not
had a material impact on the financial statements.
Presentation of non-statutory measures
The Directors believe that adjusted results and adjusted
earnings per share provide additional useful information on the
core operational performance of the Group to shareholders, and
review the results of the Group on an adjusted basis internally.
The term 'adjusted' is not a defined term under IFRS and may not
therefore be comparable with similarly titled profit measurements
reported by other companies. It is not intended to be a substitute
for, or superior to, IFRS measurements of profit. Adjustments are
made in respect of:
Share-based payments - share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12
months), together with associated social security costs, are
excluded from the adjusted results of the Group as the Directors
believe they result in a level of charge that would distort the
user's view of the core trading performance of the Group.
Exceptional items - the Group considers items of income and
expense as exceptional and excludes them from the adjusted results
where the nature of the item, or its size, is material and not
related to the core underlying trading of the Group so as to assist
the user of the financial statements to better understand the
results of the core operations of the Group. Details of exceptional
items are shown in note 4.
Amortisation of acquired intangible assets - the amortisation
charge for those intangible assets recognised on business
combinations is excluded from the adjusted results of the Group
since they are non-cash charges arising from non-trading investment
activities. As such, they are not considered to be reflective of
the core trading performance of the Group.
Change in the fair value of contingent consideration - the Group
excludes the remeasurement of these acquisition-related liabilities
from its adjusted results as the impact of remeasurement can vary
significantly depending on the underlying acquisition's
performance. The unwinding of the discount on contingent
consideration is also excluded from the Group's adjusted results on
the basis that it is non-cash and the balance is driven by the
Group's assessment of the relevant discount rate to apply.
Excluding these items ensures comparability with prior periods.
Changes in the fair value of currency option - the Group has
excluded this from its adjusted results as the option was acquired
in order to hedge USD exposure to acquisition related contingent
consideration and does not relate to the core underlying trading
performance of the Group.
The tax related to adjusting items is the tax effect of the
items above, calculated using the standard rate of corporation tax
in the relevant jurisdiction.
A reconciliation of adjusted operating profit to profit before
tax is shown below:
6 months to 6 months to
31 March 31 March
2020 2019
GBPm GBPm
-------------------------------------------------------- ------------ ------------
Adjusted operating profit 39.9 22.6
Adjusted net finance costs (0.8) (1.1)
-------------------------------------------------------- ------------ ------------
Adjusted profit before tax 39.1 21.5
Adjusting items:
Share based payments (including social security costs) (1.7) (5.2)
Exceptional items (4.4) (2.3)
Amortisation of acquired intangibles (9.1) (5.1)
Unwinding of discount on contingent consideration (0.8) -
Fair value gain on contingent consideration 5.2 -
Fair value loss on currency option (1.2) -
Profit before tax 27.1 8.9
-------------------------------------------------------- ------------ ------------
A reconciliation of adjusted free cash flow to cash generated
from operations is shown below:
6 months to 6 months to
31 March 31 March
2020 2019
GBPm GBPm
------------------------------------------- ------------ ------------
Adjusted free cash flow 40.0 27.5
Cash flows related to capital expenditure 2.2 1.7
Adjusted operating cash inflow 42.2 29.2
Cash flows related to exceptional items (2.8) (2.5)
------------------------------------------- ------------ ------------
Settlement of NI on share based payments (5.5) -
------------------------------------------- ------------ ------------
Lease repayments (IFRS 16) 1.8 -
------------------------------------------- ------------ ------------
Cash generated from operations 35.7 26.7
------------------------------------------- ------------ ------------
A reconciliation between adjusted and statutory earnings per
share measures is shown in note 9.
Notes to the financial information
for the six months ended 31 March 2020
1. Segmental reporting
The Group is organised and arranged primarily by reportable
segment. The Executive Directors consider the performance of the
business from a geographical perspective, namely the UK and the US.
The Australian business is considered to be part of the UK segment
and is not reported separately due to its size.
Following the Group's adoption of IFRS 16 Leases from 1 October
2019, the Chief Operating Decision Maker ("CODM") reviews adjusted
operating profit as a key financial metric, rather than adjusted
EBITDA, to include depreciation on right-of-use assets (see note 10
for further detail). This has been reflected in the tables
below.
Segment revenue
Sub-segment 6 months to Sub-segment 6 months to
31 March 2020 31 March 2019
GBPm GBPm
------- ------------------ --------------- ------------------ ---------------
Media Magazines Total Media Magazines Total
GBPm GBPm GBPm GBPm GBPm GBPm
------- ------ ---------- --------------- ------ ---------- ---------------
UK 35.4 23.0 58.4 26.6 25.9 52.5
US 79.6 6.3 85.9 49.1 7.1 56.2
Total 115.0 29.3 144.3 75.7 33.0 108.7
------- ------ ---------- --------------- ------ ---------- ---------------
Transactions between segments are carried out at arm's
length.
Segment adjusted operating profit
6 months to 6 months to
31 March 2020 31 March 2019
GBPm GBPm
------- --------------------------------------- ---------------------------------------
Underlying Underlying
adjusted Adjusted adjusted Adjusted
operating Intragroup operating operating Intragroup operating
profit adjustments profit profit adjustments profit
GBPm GBPm GBPm GBPm GBPm GBPm
------- ----------- ------------- ----------- ----------- ------------- -----------
UK 1.6 18.4 20.0 7.3 4.8 12.1
US 38.3 (18.4) 19.9 15.3 (4.8) 10.5
Total 39.9 - 39.9 22.6 - 22.6
------- ----------- ------------- ----------- ----------- ------------- -----------
Operating profit is used by the Executive Directors to assess
the performance of each segment.
A reconciliation of total segment adjusted operating profit to
profit before tax is provided as follows:
6 months to 6 months to
31 March 31 March
2020 2019
GBPm GBPm
-------------------------------------------------------- ------------ ------------
Total segment adjusted operating profit 39.9 22.6
Share based payments (including social security costs) (1.7) (5.2)
Amortisation of acquired intangibles (9.1) (5.1)
Exceptional items (4.4) (2.3)
Net finance income/(costs) 2.4 (1.1)
Profit before tax 27.1 8.9
-------------------------------------------------------- ------------ ------------
2. Revenue
The table below disaggregates revenue according to the timing of
satisfaction of performance obligations:
Over 6 months to 31 March 6 months to 31 March
time Point in time 2020 Over time Point in time 2019
GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------ -------------- ----------------------- ---------- -------------- ------------------------
Total revenue 2.8 141.5 144.3 3.0 105.7 108.7
--------------- ------ -------------- ----------------------- ---------- -------------- ------------------------
See note 1 for disaggregation of revenue by geography.
3. Net operating expenses
Operating profit is stated after charging:
6 months to 31 March 2020 6 months to 31 March 2019
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results GBPm
GBPm GBPm GBPm GBPm GBPm
------------------- -------------- --------------- -------------- --------------- --------------- --------------
Cost of sales (69.3) - (69.3) (60.4) - (60.4)
Share based
payments
(including social
security costs) - (1.7) (1.7) - (5.2) (5.2)
Exceptional items
(note 4) - (4.4) (4.4) - (2.3) (2.3)
Depreciation (2.4) - (2.4) (0.4) - (0.4)
Amortisation (1.0) (9.1) (10.1) (0.7) (5.1) (5.8)
Other
administration
expenses (31.7) - (31.7) (24.6) - (24.6)
Total (104.4) (15.2) (119.6) (86.1) (12.6) (98.7)
------------------- -------------- --------------- -------------- --------------- --------------- --------------
4. Exceptional items
6 months to 6 months to
31 March 31 March
2020 2019
GBPm GBPm
------------------------------------------- ------------ ------------
Premium listing costs - 0.8
Acquisition and integration related costs 4.6 1.5
Vacant property provision movement (0.2) -
Total 4.4 2.3
------------------------------------------- ------------ ------------
5. Employee costs
6 months to
6 months to 31 March
31 March 2020 2019
GBPm GBPm
--------------------------------- --------------- ------------
Wages and salaries 46.1 32.4
Social security costs 3.9 5.8
Other pension costs 0.8 0.6
Share schemes
- Value of employees' services 2.7 1.9
--------------------------------- --------------- ------------
Total employee costs 53.5 40.7
--------------------------------- --------------- ------------
The table above includes the all-employee profit pool bonus.
IFRS 2 Share-based Payment requires an expense for equity
instruments granted to be recognised over the appropriate vesting
period, measured at their fair value at the date of grant.
The fair value has been calculated using the Monte Carlo and
Black-Scholes models, using the most appropriate model for each
scheme. Assumptions have been made in these models for expected
volatility, risk-free rates and dividend yields.
Key management personnel compensation
6 months to 6 months to
31 March 2020 31 March 2019
GBPm GBPm
Salaries and other short-term employee benefits 1.2 1.2
Share schemes
- Value of employees' services 1.6 0.9
Total 2.8 2.1
------------------------------------------------- --------------- ---------------
Key management personnel are deemed to be the members of the
Board of Future plc. It is this Board which has responsibility for
planning, directing and controlling the activities of the
Group.
6. Finance income and costs
6 months to 6 months to
31 March 31 March
2020 2019
Note GBPm GBPm
Interest payable on interest-bearing loans and borrowings 0.6 0.6
Amortisation of bank loan arrangement fees 0.1 0.5
Interest payable on lease liabilities 0.3 -
-------------------------------------------------------------- ------ ------------ ------------
Adjusted finance costs 1.0 1.1
-------------------------------------------------------------- ------ ------------ ------------
Unwinding of discount on contingent consideration 0.8 -
Fair value loss on currency option 12 1.2 -
-------------------------------------------------------------- ------ ------------ ------------
Total reported finance costs 3.0 1.1
-------------------------------------------------------------- ------ ------------ ------------
Interest receivable on interest-bearing loans and borrowings (0.2) -
-------------------------------------------------------------- ------ ------------ ------------
Adjusted finance income (0.2) -
-------------------------------------------------------------- ------ ------------ ------------
Fair value gain on contingent consideration 12,16 (5.2) -
-------------------------------------------------------------- ------ ------------ ------------
Total reported finance income (5.4) -
-------------------------------------------------------------- ------ ------------ ------------
Net finance (income)/costs (2.4) 1.1
-------------------------------------------------------------- ------ ------------ ------------
During the period the Group agreed a new GBP30m multi-currency
Revolving Credit Facility ("RCF"), which stands alongside Future's
existing debt facilities and matures in April 2021. See note B to
the cash flow statement for further detail.
7. Tax on profit
The tax amount for the six months ended 31 March 2020 is based
on the effective rate of 19% (2019: 18%), estimated on a full year
basis by territory, being applied to the taxable profits or losses
of each territory for the six months ended 31 March 2020.
8. Dividends
6 months to
6 months to 31 March
Equity dividends 31 March 2020 2019
-------------------------------------------------------- --------------- ------------
Number of shares in issue at end of period (million) 98.0 82.5
Dividends paid and payable in period (pence per share) 1.0 0.5
Dividends paid and payable in period (GBPm) (1.0) (0.4)
-------------------------------------------------------- --------------- ------------
Interim dividends are recognised in the period in which they are
paid and final dividends are recognised in the period in which they
are approved. The dividend in respect of the year ended 30
September 2019 was paid on 14 February 2020. The Board has not
proposed a dividend for the six months ended 31 March 2020.
9. Earnings per share
Basic earnings per share are calculated using the weighted
average number of Ordinary shares in issue during the period.
Diluted earnings per share have been calculated by taking into
account the dilutive effect of shares that would be issued on
conversion into Ordinary shares of awards held under employee share
schemes.
Adjusted earnings per share remove the effect of share based
payments, exceptional items, amortisation of intangible assets
arising on business combinations, changes in fair value and
unwinding of discount on contingent consideration, changes in fair
value on currency option, and any related tax effects from the
calculation.
6 months to 6 months to
31 March 31 March
2020 2019
----------------------------------------------------------------- ------------ ------------
Adjustments to profit after tax:
Profit after tax (GBPm) 21.0 7.5
Share based payments (including social security costs) (GBPm) 1.7 5.2
Exceptional items (GBPm) 4.4 2.3
Amortisation of acquired intangibles (GBPm) 9.1 5.1
Fair value gain on contingent consideration (GBPm) (5.2) -
Unwinding of discount on contingent consideration (GBPm) 0.8 -
Fair value loss on currency option (GBPm) 1.2 -
Tax effect of the above adjustments (GBPm) (1.3) (2.5)
Adjusted profit after tax (GBPm) 31.7 17.6
----------------------------------------------------------------- ------------ ------------
Weighted average number of shares in issue during the period:
- Basic 94,011,413 81,719,444
- Dilutive effect of share options 2,438,143 4,132,152
- Diluted 96,449,556 85,851,596
Basic earnings per share (in pence) 22.3 9.2
Adjusted basic earnings per share (in pence) 33.7 21.5
Diluted earnings per share (in pence) 21.8 8.7
Adjusted diluted earnings per share (in pence) 32.9 20.5
----------------------------------------------------------------- ------------ ------------
The adjustments to profit after tax have the following effect:
Basic earnings per share (pence) 22.3 9.2
Share based payments (including social security costs) (pence) 1.8 6.4
Exceptional items (pence) 4.7 2.8
Amortisation of acquired intangibles (pence) 9.7 6.2
Fair value gain on contingent consideration (pence) (5.5) -
Unwinding of discount on contingent consideration (pence) 0.9 -
Fair value loss on currency option (pence) 1.3 -
Tax effect of the above adjustments (pence) (1.5) (3.1)
----------------------------------------------------------------- ------------ ------------
Adjusted basic earnings per share (pence) 33.7 21.5
----------------------------------------------------------------- ------------ ------------
Diluted earnings per share (pence) 21.8 8.7
Share based payments (including social security costs) (pence) 1.8 6.1
Exceptional items (pence) 4.6 2.7
Amortisation of acquired intangibles (pence) 9.4 5.9
Fair value gain on contingent consideration (pence) (5.4) -
Unwinding of discount on contingent consideration (pence) 0.8 -
Fair value loss on currency option (pence) 1.2 -
Tax effect of the above adjustments (pence) (1.3) (2.9)
---------------------------------------------------------------- ------ ------
Adjusted diluted earnings per share (pence) 32.9 20.5
---------------------------------------------------------------- ------ ------
10. Adoption of IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 October 2019,
resulting in the recognition on balance sheet of assets and
liabilities relating to property leases previously accounted for as
operating leases. On transition the Group has applied the modified
retrospective approach, with the right-of-use asset measured as if
IFRS 16 had always applied and the difference between lease assets
and lease liabilities recognised within retained earnings.
Comparative periods have not been restated.
The balance sheet impact at transition on 1 October 2019 is
included in the table below:
1 October 2019
GBPm
----------------------------------------------------------------- ------------------------
Right-of use assets 13.5
Finance lease receivables (net investment in subleases) 1.8
Deferred tax asset 0.7
----------------------------------------------------------------- ------------------------
Total assets 16.0
----------------------------------------------------------------- ------------------------
Lease liabilities due within one year (4.6)
Lease liabilities due in more than one year (13.0)
Net release of provisions for vacant property and dilapidations 0.4
Derecognition of lease incentive 0.4
----------------------------------------------------------------- ------------------------
Total liabilities (16.8)
Retained earnings reduction on transition (0.8)
----------------------------------------------------------------- ------------------------
Lease liabilities were measured at the present value of
remaining lease payments, discounted using the incremental
borrowing rate on 1 October 2019 on a lease-by-lease basis.
Although there is no change to actual cash outflows, under IFRS
16 repayments relating to the principal portion of the lease
liability are presented within cash flows from financing activities
and the portion relating to the repayment of interest presented
within cash flows from operating activities. Payments relating to
short-term and low-value leases will continue to be included in
cash flows from operating activities.
Post-transition impact
Following the adoption of IFRS 16 Leases, the Chief Operating
Decision Maker ("CODM") reviews adjusted operating profit as a key
financial metric, rather than adjusted EBITDA, to include
depreciation on right-of-use assets. There has been an increase in
operating profit in the period of GBP0.2m a result of applying the
standard, due to the charge being split between depreciation and
interest, however there has been a net nil impact on total
earnings. The income statement impact for the six months to 31
March 2020 is included in the table below:
Six months to 31 March 2020
----------------------- -------------------------------------------------------------------
Applying Applying previous accounting standard
IFRS 16 IAS 17
GBPm
GBPm
----------------------- ------------------ -----------------------------------------------
Rent expense - 1.8
Depreciation 1.6 -
Interest payable 0.2 -
Total 1.8 1.8
----------------------- ------------------ -----------------------------------------------
11. Intangible assets
Goodwill Acquired intangibles Other Total
GBPm GBPm GBPm GBPm
------------------------------------------------------ --------- --------------------- ------- --------
Cost
At 1 October 2018 364.0 121.6 20.0 505.6
Additions through business combinations 78.1 51.6 0.1 129.8
Other additions - - 2.6 2.6
Adjustments to fair value on prior year acquisitions 39.2 (37.8) - 1.4
Disposal (0.2) - - (0.2)
Exchange adjustments 3.6 5.1 0.5 9.2
At 30 September 2019 484.7 140.5 23.2 648.4
------------------------------------------------------ --------- --------------------- ------- --------
Additions through business combinations 13.0 10.9 - 23.9
Other additions - - 1.7 1.7
Exchange adjustments (0.3) (0.3) - (0.6)
At 31 March 2020 497.4 151.1 24.9 673.4
------------------------------------------------------ --------- --------------------- ------- --------
Accumulated amortisation and impairment
------------------------------------------------------ --------- --------------------- ------- --------
At 1 October 2018 (264.2) (20.1) (17.9) (302.2)
------------------------------------------------------ --------- --------------------- ------- --------
Charge for the period - (13.1) (1.4) (14.5)
------------------------------------------------------ --------- --------------------- ------- --------
Exchange adjustments (1.8) (0.4) (0.5) (2.7)
------------------------------------------------------ --------- --------------------- ------- --------
At 30 September 2019 (266.0) (33.6) (19.8) (319.4)
------------------------------------------------------ --------- --------------------- ------- --------
Charge for the period - (9.1) (1.0) (10.1)
------------------------------------------------------ --------- --------------------- ------- --------
Exchange adjustments 0.2 - - 0.2
------------------------------------------------------ --------- --------------------- ------- --------
At 31 March 2020 (265.8) (42.7) (20.8) (329.3)
------------------------------------------------------ --------- --------------------- ------- --------
Net book value at 31 March 2020 231.6 108.4 4.1 344.1
------------------------------------------------------ --------- --------------------- ------- --------
Net book value at 30 September 2019 218.7 106.9 3.4 329.0
------------------------------------------------------ --------- --------------------- ------- --------
Acquired intangibles relate mainly to brands, subscriber
databases, trademarks, advertising relationships, creative services
relationships, customer relationships, publishing rights, content,
non-compete agreements and customer lists. These assets are
amortised over their estimated economic lives, typically ranging
between one and fifteen years.
Any residual amount arising as a result of the purchase
consideration being in excess of the value of acquired assets is
recorded as goodwill.
Further details regarding the intangible assets acquired during
the year through business combinations are set out in note 16.
Other intangibles relate to capitalised software costs and
website development costs which are internally generated.
Amortisation is included within administration expenses in the
consolidated income statement.
12. Financial instruments
The Group applies the simplified approach to recognise lifetime
credit losses for trade receivables. The GBP5.0m provision includes
the recognition in the period of a one-off GBP1.8m reflecting
incremental bad debt risk in the Group's markets which are most
exposed to the Covid-19 pandemic lockdown measures. Although to
date we have not experienced any significant deterioration in
collections, there remains a significant level of uncertainty.
31 March 30 September
2020 2019
GBPm GBPm
-------------------------------------------------------------------- --------- -------------
Allowance for bad debt - based on historical write offs per IFRS 9 3.2 3.2
Additional provision 1.8 -
-------------------------------------------------------------------- --------- -------------
Total allowance for bad debt 5.0 3.2
-------------------------------------------------------------------- --------- -------------
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 31 March 2020:
31 March 2020 30 September 2019
Level 2 Level 3 Level 2 Level 3
Fair value Fair value Fair value Fair value
GBPm GBPm GBPm GBPm
----------------------------- ------------- ------------ ------------ ------------
Assets
Financial asset- derivative - - 1.4 -
Liabilities
Deferred consideration - - - (43.9)
Contingent consideration - (6.2) - (10.9)
----------------------------- ------------- ------------ ------------ ------------
The contingent consideration of GBP6.2m (30 September 2019:
GBP10.9m) relates to the acquisition of SmartBrief, LLC
("SmartBrief")(see note 16 for further details).
The SmartBrief contingent consideration has been valued using a
scenario-based approach drawing from internal projections and
forecasts. The outcome is then discounted to reflect the market
risk related to contingent consideration and underlying achievement
of the gross profit target. The discount rate of 10% was determined
using a Capital Asset Pricing Model (CAPM) approach. During the
period, a fair value gain on contingent consideration of GBP5.2m
has been recognised, reflecting the Directors' best estimate of the
value at the date of settlement based on current gross profit
forecasts. EBITDA generated from SmartBrief continues to
over-perform compared to its performance prior to acquisition.
The main level 3 inputs used in valuing the contingent
consideration are gross profit and the discount rate, as shown in
the table below.
Assumption SmartBrief, LLC
--------------- ----------------
Discount rate 10%
Gross profit $26.4m - $31.5m
---------------- ----------------
The table below sets out the sensitivity of level 3 inputs to a
10% change in the assumptions, which is considered to be a
reasonably possible alternative assumption:
Assumption Increase/(decrease) Increase/(decrease) in liability
-------------- -------------------- ---------------------------------
Discount rate 10% GBPnil
Discount rate (10)% GBPnil
Gross profit 10% GBP0.6m
Gross profit (10)% GBP(0.6)m
-------------- -------------------- ---------------------------------
At 30 September 2019 deferred consideration of GBP43.9m related
to the acquisition of MoNa Mobile Nations, LLC ("MoNa"). The MoNa
deferred consideration was settled in the period with 50% being
issued in shares (1,792,534 shares in Future plc issued in October
2019), and 50% in cash (which was paid on 28 February 2020).
In the comparative period, a derivative foreign currency option
to buy $30m in June 2020 was acquired in order to hedge the
currency exposure arising on the MoNa contingent consideration.
Following the acceleration of settlement of contingent
consideration for MoNa, this was closed out, resulting in a fair
value loss of GBP1.2m being charged to the income statement in the
period. There were no transfers between levels in the current or
prior period.
13. Issued share capital
During the period 3,755,148 Ordinary shares (31 March 2019:
353,350) with a nominal value of GBP563,272 (31 March 2019:
GBP53,003) were issued by the Company pursuant to share scheme
exercises throughout the period.
Additionally, 1,792,534 Ordinary shares were issued in
settlement of the contingent consideration for the acquisition of
MoNa Mobile Nations, LLC, with a value of GBP21.8m (share price of
GBP12.18); 686,497 Ordinary shares were issued on the acquisition
of Barcroft Studios, with a value of GBP9.1m (share price of
GBP13.22); and 8,184,906 Ordinary shares were issued on the
acquisition of TI Media, with a value of GBP104.4m (share price of
GBP12.75).
As at 31 March 2020 there were 98,014,506 Ordinary shares in
issue (31 March 2019: 82,487,107; 30 September 2019:
83,595,421).
14. Reserves
Share premium account
Share premium has increased in the period by GBP99.8m, being the
GBP103.0m excess of proceeds received over the nominal value of new
shares issued on the acquisition of TI Media, net of share placing
costs of GBP3.2m.
Merger reserve
The merger reserve has increased in the period by GBP30.5m,
relating to the premium on shares issued as consideration for the
acquisition of Barcroft Studios of GBP9.0m, and the premium on
shares issued to part settle the Mobile Nations contingent
consideration of GBP21.5m.
See note 16 for further details of the acquisitions.
Treasury reserve
The treasury reserve represents the cost of shares in Future plc
held by the Employee Benefit Trust (EBT) to satisfy awards made by
the trustees. During the period, 0.3m shares were purchased in the
market at a total value of GBP3.8m.
15. Contingent assets, contingent liabilities and deferred liabilities
At 31 March 2020 there were no material contingent assets (31
March 2019: GBPnil). The Group has a contingent liability of
GBP6.2m recognised on the balance sheet for variable deferred
contingent consideration on the acquisition of SmartBrief, LLC (31
March 2019: GBP29.3m in relation to MoNa Mobile Nations, LLC).
During the period, the contingent consideration for MoNa Mobile
Nations, LLC was agreed and settled in full (see note 12 for
further details).
See note 16 for further details regarding the acquisition.
16. Acquisitions
Acquisition of Barcroft Studios
On 30 November 2019, Future Holdings 2002 Limited (a wholly
owned direct subsidiary of Future plc) acquired 100% of the equity
in Barcroft Studios Limited ("Barcroft"), a small independent
studio that creates original content, which is published on a
variety of owned and operated social sites and distributed across
mass media channels. Total consideration was GBP23.4m (9.4x
multiple of last 12 months EBITDA) of which 40% was satisfied by
the issue of shares, with the remainder paid in cash.
The impact of the acquisition on the consolidated balance sheet
was:
Fair value
GBPm
---------------------------------------------------------------- -----------
Tangible assets 0.5
Intangible assets
- Brands 4.5
- Customer relationships 2.7
- Content 3.1
- Non-compete 0.6
Cash and cash equivalents 2.0
Trade and other receivables 3.0
Trade and other payables (3.3)
Financial liabilities - interest bearing loans and borrowings (0.2)
Deferred tax (2.1)
---------------------------------------------------------------- -----------
Net assets acquired 10.8
---------------------------------------------------------------- -----------
Goodwill 12.6
---------------------------------------------------------------- -----------
23.4
---------------------------------------------------------------- -----------
Consideration:
Cash 14.3
Equity shares 9.1
---------------------------------------------------------------- -----------
Total consideration 23.4
---------------------------------------------------------------- -----------
The acquisition has further diversified the Group's revenues
with the addition of video production expertise and goodwill is
attributable to the opportunities that exist to further monetise
the Group's existing brands through video. The intangibles
recognised, including goodwill, are not expected to be deductible
for tax purposes.
Included within the Group's results for the period are revenues
of GBP4.0m and a profit before tax of GBP0.4m from Barcroft
(excluding deal fees, associated integration costs and acquired
intangible amortisation).
If the acquisition had been completed on the first day of the
financial year, it would have contributed GBP6.9m of revenue and a
profit before tax of GBP1.0m (excluding deal fees, associated
integration costs and acquired intangible amortisation) during the
period.
Gross trade receivables were GBP2.1m, of which GBP2.0m on
acquisition were expected to be recovered.
Acquisition of SmartBrief, LLC - update to contingent
consideration and fair values
In the prior year on 29 July 2019 Future plc acquired
SmartBrief, Inc. (following the acquisition, the legal form of the
entity was changed from an Incorporation to an LLC). An update to
the fair value of the assets has been performed, with no change to
the values previously disclosed other than an increase of GBP0.3m
in the deferred tax liability. Fair values are detailed below and
are now considered to be final:
Fair value
GBPm
---------------------------------------------------------------- -----------
Tangible assets 0.4
Intangible assets
- Subscriber base 10.6
- Brand 2.8
- Software 2.6
- Other intangible assets 2.5
Cash 2.3
Trade and other receivables 5.7
Trade and other payables (6.6)
Financial liabilities - interest bearing loans and borrowings (3.8)
Deferred tax (4.6)
---------------------------------------------------------------- -----------
Net assets acquired 11.9
---------------------------------------------------------------- -----------
Goodwill 31.7
---------------------------------------------------------------- -----------
43.6
---------------------------------------------------------------- -----------
Consideration:
Equity shares 11.6
Cash 21.2
---------------------------------------------------------------- -----------
Consideration 32.8
---------------------------------------------------------------- -----------
Contingent consideration 10.8
---------------------------------------------------------------- -----------
Total consideration 43.6
---------------------------------------------------------------- -----------
At the 31 March 2020 the estimate of contingent consideration
was reduced to GBP6.2m. This movement reflects both the impact of
discounting and a reduction in fair value of GBP5.2m. See note 12
for further detail.
MoNa Mobile Nations, LLC - settlement of deferred
consideration
On 11 October 2019 the Group announced the acceleration of the
payment of the contingent consideration in respect of MoNa Mobile
Nations, LLC, which the Group acquired on 1 March 2019. A total
contingent consideration of $55m was agreed, split equally between
cash and the issuance of new shares in Future plc. See notes 12 and
13 for further detail.
Acquisition of TI Media
On 30 October 2019 the Group announced the proposed acquisition
of TI Media for a total consideration of GBP140 million in cash. TI
Media is a UK-based, print-led consumer magazine and digital
publisher with deep industry heritage and a portfolio that
incorporates 41 brands including Decanter, Country Life, Wallpaper*
and Woman & Home. TI Media brings to Future a presence in the
Wine, Golf, Equestrian, Country Living, TV Listings and Gardening
verticals and deepens and extends Future's strength and position in
Home, Cycling, Consumer Technology and Country Sports.
On 16 March 2020, it was announced that the CMA had found that
the purchase of TI Media did not raise competition concerns,
subject to the sale of three closely competing products: World
Soccer; Amateur Photographer; and the technology website
Trustedreviews.com. The Group subsequently agreed the sales of
World Soccer and Amateur Photographer to Kelsey Media, and Trusted
Reviews to Incisive Media, which completed in May 2020.
The acquisition was completed on 20 April 2020. The acquisition
was part funded by raising proceeds of GBP104.4m, net of costs of
GBP3.2m, through a placing of 8,184,906 new ordinary shares in
November 2019, with the balance being settled through exercise of
the GBP45m accordion option.
As the acquisition completed on 20 April 2020, soon after the
reporting date, the fair values of the intangible assets acquired
are in the process of being determined. Being so close to the
reporting date, it is impractical to disclose the impact of the
acquisition on Group revenue and profits had the acquisition
completed on the first day of the period. These disclosures will be
included in the Annual Report 2020.
Statement of Directors' responsibilities
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
A list of current Directors is maintained on the Future plc
website, www.futureplc.com
By order of the Board
Directors
Richard Huntingford
Independent Non-Executive Chairman
Zillah Byng-Thorne
Chief Executive Officer
Penny Ladkin-Brand
Chief Financial Officer
Hugo Drayton
Independent Non-Executive
Alan Newman
Independent Non-Executive
Rob Hattrell
Independent Non-Executive
Meredith Amdur
Independent Non-Executive
22 May 2020
The maintenance and integrity of the Future plc website is the
responsibility of the Directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Independent review report to Future plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Future plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
half-year results announcement of Future plc for the 6 month period
ended 31 March 2020. Based on our review, nothing has come to our
attention that causes us to believe that the interim financial
statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated balance sheet as at 31 March 2020;
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated cash flow statement for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half year
results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in the basis of preparation to the interim
financial statements, the financial reporting framework that has
been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The half-year results announcement, including the interim
financial statements, is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-year results announcement in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half-year results announcement based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-year
results announcement and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Bristol
22 May 2020
[i] Online users are sourced from Google Analytics and, unless
otherwise stated, reflect the monthly average over the half year
period.
[ii] Source: comScore Media Metrix Demographic Profile, March
2020 - Desktop Age 2+ and Total Mobile 18+
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR PPUACAUPUPGG
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Future (AQSE:FUTR.GB)
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부터 7월(7) 2023 으로 7월(7) 2024
