TIDMFUTR
RNS Number : 0123W
Future PLC
07 December 2023
7 December 2023
FUTURE plc
FULL YEAR RESULTS
Future plc (LSE: FUTR, "Future", "the Group"), the global
platform for specialist media, today publishes its results for the
year ended 30 September 2023.
Highlights
Financial results for the year ended 30 September 2023
Adjusted results FY 2023 FY 2022 Reported Constant(1) Organic(2)
Var currency Var
var
-------- -------- --------- ------------ -----------
Revenue (GBPm) 788.9 825.4 (4)% (6)% (10)%
------------------------------------- -------- -------- --------- ------------ -----------
Adjusted EBITDA (GBPm)(3) 276.8 293.8 (6)% (9)% n/a
------------------------------------- -------- -------- --------- ------------ -----------
Adjusted operating profit (GBPm)(4) 256.4 271.7 (6)% (9)% n/a
------------------------------------- -------- -------- --------- ------------ -----------
Adjusted operating profit margin
(%) 32% 33% (1)ppt (1)ppt n/a
------------------------------------- -------- -------- --------- ------------ -----------
Adjusted diluted EPS (p)(7) 140.9p 163.5p (14)% n/a
------------------------------------- -------- -------- --------- ------------ -----------
Adjusted free cash flow (GBPm)(9) 253.2 267.2 (5)% n/a
------------------------------------- -------- -------- --------- ------------ -----------
Statutory results FY 2023 FY 2022 Reported
Var
------------------------------------- -------- -------- --------- ------------ -----------
Revenue (GBPm) 788.9 825.4 (4)%
------------------------------------- -------- -------- --------- ------------ -----------
Operating profit (GBPm) 174.5 188.6 (7)%
-------- -------- --------- ------------ -----------
Operating profit margin (%) 22% 23% (1)ppt
-------- -------- --------- ------------ -----------
Profit before tax (GBPm) 138.1 170.0 (19)%
-------- -------- --------- ------------ -----------
Cash generated from operations
(GBPm) 241.0 268.5 (10)%
-------- -------- --------- ------------ -----------
Diluted EPS (p) 94.1 100.9 (7)%
------------------------------------- -------- -------- --------- ------------ -----------
Financial highlights
-- Revenue of GBP788.9m (FY 2022: GBP825.4m) was down (4)%
year-on-year, impacted by a (10)% organic decline and partially
offset by favourable foreign exchange (mainly USD) and the
contribution of acquisitions.
-- UK revenue declined by (4)% on an organic basis with strong
growth in price comparison and greater resilience in digital
advertising due to the leadership positions.
-- US revenue declined by (19)% on an organic basis with
softness in Media revenue as a result of greater concentration in
the consumer technology verticals as well being less advanced on
the execution of the strategy in comparison to the UK business.
-- Media revenue declined by (13)% on an organic basis
reflecting a challenging advertising market combined with the
impact of consumer pressure on our affiliate product business. This
was partially offset by a strong performance in our price
comparison business (affiliate services).
-- Magazine performance was resilient, down (5)% on an organic
basis, supported by a higher proportion of subscriptions.
-- Profitability remained resilient, despite inflationary
pressures, with adjusted operating profit margin (4) of 32%, only
down (1)ppt year-on-year (FY 2022: 33%). This translated into
adjusted operating profit decline of (6)% to GBP256.4m (FY 2022
GBP271.7m). Statutory operating profit was down (7)% to GBP174.5m
(FY 2022: GBP188.6m).
-- The Group remains highly cash generative with adjusted free
cash flow of GBP253.2m (FY 2022: GBP267.2m), representing 99% of
adjusted operating profit (FY 2022: 98%). Cash generated from
operations was GBP241.0m (FY 2022: GBP268.5m).
-- Capital allocation - three acquisitions completed in the
first half for a combined consideration of c.GBP45m, and a GBP45m
share buyback programme launched with GBP13.1m completed at the end
of September.
-- Leverage(10) reduced to 1.25x (FY 2022: 1.48x) resulting in
net debt(11) at the end of the year of GBP327.2m (FY 2022:
GBP423.6m). Total debt facilities at the end of September 2023 were
GBP900m (FY 2022: GBP660m).
Growth Acceleration Strategy (GAS)
-- Launched Growth Acceleration Strategy "GAS", building on
strong foundations to ensure Future is well-positioned to
capitalise on future opportunities in its attractive and growing
markets. Two-year investment programme of GBP25m-GBP30m to drive
acceleration in a compounding model by:
-- Growing a highly engaged and valuable audience - increased
focus on brand leadership and content
-- Maintained or improved leadership positions(12) in key
strategic verticals, and now have 5 positions in top 3 in the US
and/or UK (FY 2022: 3), enabling higher yields through improved
revenue per user and resilience.
-- Diversifying and increasing revenue per user - adding news
routes of monetisation and driving market-leading positions to
improve yield
-- Digital revenue per online user(13) up +22% year-on-year at
constant currency, reflecting execution of our diversification
strategy in Savings and Fashion & Beauty.
-- Price comparison revenue acceleration in H2, with +8% growth
at constant currency for the full year and vouchers growth of +5%
at constant currency supported by our proprietary technology.
-- Optimising our portfolio - segmentation of the brands in
three categories to focus investment and continuous review of the
portfolio structure to ensure effective capital allocation.
-- Delivering on the strategy will translate into mid-single
organic revenue growth CAGR 23-26, whilst maintaining healthy
adjusted operating margins in the range of 28-30% and strong cash
generation.
Board Change
-- As detailed in a separate announcement today, after over
eight years at the Group, Penny Ladkin-Brand, Chief Financial and
Strategy Officer, has informed the Board of her decision to step
down from the Board later next year.
-- Penny is subject to a twelve-month notice period and the
Board has initiated an external search for her successor.
Outlook
-- The stabilisation of trends gives us the confidence to return
to organic revenue growth in H2 2024, translating into low
single-digit revenue growth in FY 2024.
-- We have initiated a two-year GBP25m-GBP30m investment
programme that will translate into adjusted operating margin in the
range of 28-30%, with GBP20m incremental costs in FY2024.
-- We are confident that the focused execution of our investment
programme will drive accelerating revenue growth of mid-single
digit CAGR over the next three years.
-- Longer-term, we are confident that our diversified strategy
will continue to deliver significant value for shareholders, with
our investment in our new content verticals and capabilities
underpinning our growth ambitions and with our strong cash
generation giving further optionality.
Jon Steinberg, Future's Chief Executive, said:
"Looking back at the prior year, we have delivered a resilient
performance amid a challenging market, with a resilient full-year
profit performance and strong cash generation, reflecting the
diversified nature of our business and the leadership positions we
retain across verticals.
Since joining as CEO in April this year, I have worked with the
Board and leadership team to review our strategy with the clear aim
of ensuring we are optimally positioned for future growth for when
the macro backdrop improves.
Our Growth Acceleration Strategy leverages Future's inherent
strengths, strong financial characteristics and unique proposition,
making active investments in targeted areas where we have clear
growth opportunities. We are excited about executing on this
strategy which is focused on growing a highly engaged and valuable
audience, diversifying and increasing revenue per user, and
optimising our portfolio.
We are confident our strategy will continue to deliver
significant value for shareholders, with our investment in our
leading brands and capabilities underpinning our growth
ambitions."
Presentation
A live webcast of the analyst presentation will be available at
09.00 am (UK time) today at
https://stream.brrmedia.co.uk/broadcast/656481470db298c3dbf7cb0e
A copy of the presentation will be available on our website at:
https://www.futureplc.com/investor-results/
A recording of the webcast will also be made available.
The definitions below apply throughout the document.
1) Constant currency translates the financial statements at
fixed exchange rates to eliminate the effect of foreign exchange on
the financial performance. Constant FX rates is defined as the
average rate for FY 2023.
2) Organic growth is defined as the like for like portfolio in
the period, including the impact of closures and new launches but
excluding FY 2023 acquisitions and those which have not been
acquired for a full financial year, and at constant FX rates.
Constant FX rates is defined as the average rate for FY 2023.
3) Adjusted EBITDA represents operating profit before
share-based payments (relating to equity-settled awards with
vesting periods longer than 12 months) and related social security
costs, amortisation, depreciation, transaction and integration
related costs and exceptional items. Adjusted EBITDA margin is
adjusted EBITDA as a percentage of revenue.
4) Adjusted operating profit represents operating profit before
share-based payments (relating to equity-settled awards with
vesting periods longer than 12 months) and related social security
costs, amortisation of acquired intangible assets, transaction and
integration related costs and exceptional items. This is a key
management incentive metric, used within the Group's Deferred
Annual Bonus Plan.
5) Adjusted profit before tax represents profit before tax
before share-based payments (relating to equity-settled awards with
vesting periods longer than 12 months) and related social security
costs, net finance costs, amortisation of acquired intangible
assets, transaction and integration related costs, exceptional
items, unwinding of discount on contingent consideration and change
in fair value of contingent consideration.
6) Adjusted effective tax rate is defined as the effective tax
rate adjusted for the tax impact of adjusting items and any other
one-off impacts, including adjustments in respect of previous
years.
7) Adjusted diluted earnings per share (EPS) represents adjusted
profit after tax divided by the weighted average dilutive number of
shares at the year end date.
8) Adjusted operating cash flow represents cash generated from
operations adjusted to exclude cash flows relating to transaction
and integration related costs, exceptional items and payment of
accrual for employer's taxes on share-based payments relating to
equity settled share awards with vesting periods longer than 12
months, and to include lease repayments following adoption of IFRS
16 Leases.
9) Adjusted free cash flow is defined as adjusted operating cash
flow less capital expenditure. Capital expenditure is defined as
cash flows relating to the purchase of property, plant and
equipment and purchase of computer software and website
development.
10) Leverage is defined as Net debt as defined below (excluding
capitalised bank arrangement fees and lease liabilities, and
including any non-cash ancillaries), as a proportion of Adjusted
EBITDA and including the 12 month trailing impact of acquired
businesses (in line with the Group's bank covenants
definition).
11) Net debt is defined as the aggregate of the Group's cash and
cash equivalents and its external bank borrowings net of
capitalised bank arrangement fees. It does not include lease
liabilities recognised following the adoption of IFRS 16
Leases.
12) Comscore Media Metrix Demographic Profile, September 2023 -
Mobile and Desktop Age 2+ and Total Mobile 18+ US and UK
13) Online users defined as monthly online users from Google
Analytics and, unless otherwise stated, is the monthly average over
the financial year and excludes Gardening Know How. Forums are
excluded as they are non-commercial websites for which Future does
not write content, and are not actively managed or monetised.
Enquiries:
Future plc
+44 (0)122 544 2244
Jon Steinberg, Chief Executive Officer
Penny Ladkin-Brand, Chief Financial and Strategy Officer
Marion Le Bot, Head of Investor Relations +44 (0)777 564
1509
Media
Headland
+44 (0)203 805 4822
Stephen Malthouse, Rob Walker, Charlie Twigg
future@headlandconsultancy.com
About Future
We are the platform for creating and distributing trusted,
specialist content, to build engaged and valuable global
communities. We operate c.230 brands in diversified content
verticals, with multiple market leading positions and three core
monetisation frameworks: advertising, eCommerce affiliate and
direct consumer monetisation (subscriptions and newstrade magazine
sale). Our content is published and distributed through a range of
formats including websites, email newsletters, videos, magazines
and live events. The successful execution of our strategy is
focused on three pillars: grow engaged audience, diversify and grow
revenue per user and optimise the portfolio.
Chief Executive Officer's review
Media has always been, and will always be, one of the most
dynamic industries and
this year was no different. We have maintained or improved
leadership positions within key verticals, both in the UK and US
through our continued focus on providing expert content to
intent-led audiences.
However, we need to make sure we are always looking forward. We
have therefore taken the opportunity to look closely at our
strategy and the markets we operate in to ensure that Future
remains at the forefront of the industry and is best placed to
capitalise on future opportunities.
What is clear is that our track record of innovation, adding new
routes to monetisation through organic and inorganic growth, has
served us well. The outcome of the strategy review is a focused and
refreshed strategy - Growth Acceleration Strategy or GAS, like the
fuel you put in a car. This strategy requires a two-year investment
programme that will translate into accelerating organic revenue
growth of mid-single digit CAGR over the next three years for the
Group. This would translate into high-single digit to low
double-digit growth for Media and mid-single digit decline in
Magazines. Our financial characteristics of healthy adjusted
operating margins (28-30%) and strong cash flow generation would
remain.
GAS will build on our strong foundation of innovation and
content expertise, but, at the same time, recognises the
requirement for a rigorous focus, and greater diversification in
the way in which our audiences reach our content.
Since joining, I have been incredibly impressed by the breadth
and depth of talent and
the diversified nature of the business and as such, I want to
build on this strong foundation.
Our strategic objectives
Our strategy is structured around a simple equation: grow
engaged users and grow revenue per user and apply this to as many
monetisation routes available.
Our Growth Acceleration Strategy (GAS) is supported by five
strategic priorities:
1. Operating model
2. Expert content
3. US digital advertising
4. Social monetisation
5. Organisational health
1. Operating model .
We are dividing the portfolio into three categories and each
category will have specific actions and investment levels. This
will allow increased focus on return on investment.
Firstly, the Hero brands, which represent about 50% of the
Group's revenue and about twelve brands. Hero brands are leading
brands operating in attractive verticals with high profitability.
These brands will be the priority for investment in terms of
content, consumer experience and sales to gain or maintain market
share. These brands are where we see the biggest current revenue
opportunities.
Secondly, the Halo brands, which represent about 30% of the
Group's revenue. Halo brands are in growing underlying markets and
have stable profitability. Their important characteristic is that
they add scale to the Hero brands, enabling sales activation for
larger media buys. Halo brands will indirectly benefit from
investment in Hero brands and the group sales team, as media buys
that begin with a Hero brand can be expanded for reach and scale to
Halo brands. Whilst many of these brands are potential hero brands
of the future, they are a secondary priority for investment in the
near term.
Finally, Cash Generators, which represent about 20% of the
Group's revenue. These brands operate in markets with more limited
opportunity and require little investment. Whilst most of these
brands will have declining revenue, we maintain a focus on
profitability and conversion of profits to cash.
Fuelling the operating model will require GBP7.0m of additional
investment with GBP5.5m falling into FY 2024.
2. Expert content
Key to our operating model remains great content which drives
the audience. We are evolving our approach to content for reviews
and news, focused on improving the overall user experience notably
through video and improved buying guides. This priority is about
ensuring our content is expert, authoritative and trustworthy.
Driving content will require GBP10.0m of additional investment
with GBP8.0m falling into FY 2024.
3. US digital advertising
The US digital advertising market is seven times the size of the
UK market. Yet, as it stands today, our US digital revenue is only
twice the size of our UK revenue. The delta is driven by disparity
in leadership positions between the UK and US and a more
established UK sales team. In the UK our well-established team is
able to drive a higher value mix of advertising revenue through a
greater share of direct sales, premium programmatic advertising and
branded content. We are putting in place the actions to replicate
the UK expertise in the US which will translate into GBP6.5m of
additional investment with GBP3.5m falling into FY 2024. The
resilience of our UK business highlights the strength of what we
have built and gives us the confidence that we can replicate this
successful playbook in the US and to reach relative parity in each
geographic region.
4. Social monetisation
Our brands reach 217m users on social platforms. We aim to
generate greater revenues from these audiences through branded
content and evolving our eCommerce proposition. Branded content is
a format of content that can be sponsored by a brand, it can be
created in collaboration with a brand or with full editorial
independence. Unlike traditional digital advertising, branded
content is less dependent on audience volumes. Who What Wear, the
brand we acquired in June 2022, is the lighthouse for this type of
advertising product. Over 50% of Who What Wear's revenue comes from
branded content compared to 28% for the Group's digital advertising
revenue - highlighting the opportunity we have. This investment in
social monetisation will be supported by sales and content
investment but additionally requires GBP2.5m of which GBP1.5m falls
into FY 2024.
5. Organisational health
The final strategic priority is about ensuring we have an
engaged workforce that has the process and tools to perform to the
best of their abilities. After launching a new HR system this year,
we are working on the roll-out of a new sales system that will
better track sales pipelines and salesperson productivity to ensure
our investment is paying back.
We continue to invest in our people and systems to ensure we are
building a world-class organisation that can drive our acceleration
of revenue growth. This will require GBP2.0m of additional
investment with GBP1.5m falling into FY 2024.
Execution underpinned by values
We operate as a purpose-driven organisation creating value for
all stakeholders. We aim to operate as a responsible business and
everything we do is underpinned by our purpose and values which
fosters an aligned culture across the organisation. We are
extremely fortunate that our brands give us the platform and
opportunities to influence and inspire people across the globe to
encourage positive change.
I've been incredibly impressed by the depth of talent and energy
throughout Future, and I want to personally thank our colleagues
for their hard work.
Outlook
-- The stabilisation of trends gives us the confidence to return
to organic revenue growth in H2 2024, translating into low
single-digit revenue growth in FY 2024.
-- We have initiated a two-year GBP25m-GBP30m investment
programme that will translate into adjusted operating margin in the
range of 28-30%, with GBP20m incremental costs in FY 2024.
-- We are confident that the focused execution of our investment
programme will drive accelerating revenue growth of mid-single
digit CAGR over the next three years.
-- Longer-term, we are confident that our diversified strategy
will continue to deliver significant value for shareholders, with
our investment in our new content verticals and capabilities
underpinning our growth ambitions and with our strong cash
generation giving further optionality.
Financial summary
The financial summary is based primarily on a comparison of
results for the year ended 30 September 2023 with those for the
year ended 30 September 2022. Unless otherwise stated, change
percentages relate to a comparison of these two periods.
FY 2023 FY 2022
GBPm GBPm
-------------------------------------- -------- --------
Revenue 788.9 825.4
-------------------------------------- -------- --------
Adjusted EBITDA 276.8 293.8
Adjusted operating profit 256.4 271.7
Adjusted profit before tax (5) 221.3 253.1
-------------------------------------- -------- --------
Operating profit 174.5 188.6
Profit before tax 138.1 170.0
-------------------------------------- -------- --------
Basic earnings per share (p) 94.7 101.4
Diluted earnings per share (p) 94.1 100.9
Adjusted basic earnings per share (p) 141.8 164.4
Adjusted diluted earnings per share
(p) 140.9 163.5
-------------------------------------- -------- --------
The Directors believe that adjusted results provide additional
useful information on the core operational performance of the
Group, and review the results of the Group on an adjusted basis
internally. See the section below for a reconciliation between
adjusted and statutory results.
A reconciliation of adjusted EBITDA and adjusted operating
profit to operating profit and profit before tax is shown
below:
FY 2023 FY 2022
GBPm GBPm
------------------------------------------ -------- --------
Adjusted EBITDA 276.8 293.8
------------------------------------------ -------- --------
Depreciation (8.8) (9.1)
Amortisation of non-acquired intangibles (11.6) (13.0)
Adjusted operating profit 256.4 271.7
Adjusted net finance costs (35.1) (18.6)
Adjusted profit before tax 221.3 253.1
Adjusting items:
Share-based payments (including social
security costs) (7.8) (6.9)
Transaction and integration related costs (7.4) (14.5)
Exceptional items (7.3) (3.4)
Amortisation of acquired intangibles (59.4) (58.3)
Operating profit 174.5 188.6
Net finance costs (1.3) -
Profit before tax 138.1 170.0
------------------------------------------ -------- --------
Revenue
FY 2023 FY 2022
GBPm GBPm
---------------------------- ---------- ----------
Total revenue 788.9 825.4
Revenue from FY 2023 and
FY 2022 acquisitions which
have not been acquired for
a full financial year (47.1) (15.1)
---------------------------- ---------- ----------
Organic revenue 741.8 810.3
---------------------------- ---------- ----------
Impact of FX at constant
rates (0.9) 15.1
---------------------------- ---------- ----------
Organic revenue at constant
currency 740.9 825.4
---------------------------- ---------- ----------
Group revenue was down (4)% in the year to GBP788.9m (FY 2022:
GBP825.4m), with the benefit of acquisitions and foreign exchange
translation offsetting organic decline (decline of (10)% at
constant currency and (6)% at actual currency). FY 2022
acquisitions which have not been acquired for a full financial year
and FY 2023 acquisitions and FY 2023 disposals contributed a net
GBP47.1m to revenue in the year.
Revenue FY 2023 FY 2022 YoY Var Organic
GBPm GBPm YoY Var
--------------------- -------- -------- -------- ---------
Advertising & other 86.9 89.8 (3)% (7)%
--------------------- -------- -------- -------- ---------
Affiliates 193.9 194.4 flat flat
--------------------- -------- -------- -------- ---------
Media 280.8 284.2 (1)% (2)%
--------------------- -------- -------- -------- ---------
Magazines 195.8 215.3 (9)% (7)%
--------------------- -------- -------- -------- ---------
Total UK 476.6 499.5 (5)% (4)%
--------------------- -------- -------- -------- ---------
Advertising & other 159.1 172.7 (8)% (25)%
--------------------- -------- -------- -------- ---------
Affiliates 75.0 78.3 (4)% (25)%
--------------------- -------- -------- -------- ---------
Media 234.1 251.0 (7)% (25)%
--------------------- -------- -------- -------- ---------
Magazines 78.2 74.9 +4% flat
--------------------- -------- -------- -------- ---------
Total US 312.3 325.9 (4)% (19)%
--------------------- -------- -------- -------- ---------
Advertising & other 246.0 262.5 (6)% (19)%
--------------------- -------- -------- -------- ---------
Affiliates 268.9 272.7 (1)% (8)%
--------------------- -------- -------- -------- ---------
Media 514.9 535.2 (4)% (13)%
--------------------- -------- -------- -------- ---------
Magazines 274.0 290.2 (6)% (5)%
--------------------- -------- -------- -------- ---------
TOTAL REVENUE 788.9 825.4 (4)% (10)%
--------------------- -------- -------- -------- ---------
UK revenue declined by (5)% or GBP(22.9)m to GBP476.6m (FY 2022:
GBP499.5m). Total UK organic revenues was stronger than in the US
with a decline of (4)% with (2)% organic revenue decline in Media
and (7)% in Magazines. This resilient performance was driven by a
more diversified revenue mix combined with more established
positions in the market. UK Media organic performance was driven by
a resilient (7)% decline in digital advertising and other media,
whilst affiliates were flat as a result of strong growth of +8% in
price comparison offset by a decline in affiliate products. The
relatively stronger UK performance demonstrates how market
leadership creates resilience, notably through a higher mix of
direct advertising.
US revenue declined by (4)% or GBP(13.6)m to GBP312.3m (FY 2022:
GBP325.9m) with the benefit of favourable foreign exchange and the
contribution from acquisitions, notably Who What Wear and
ActualTech being more than offset by organic decline. Organic
decline of (19)% was driven by an unfavourable mix with a high
proportion of digital advertising and affiliate product revenue,
two categories impacted by challenging market dynamics. Magazines,
which are a small proportion of the US revenue, were flat in the
year, helped by +3% organic growth in subscriptions.
Media revenue decreased by GBP(20.3)m or (4)% and organically by
(13)% to GBP514.9m (FY 2022: GBP535.2m).
Organic digital advertising revenue declined by (19)% despite
improved revenue per user due to the impact of lower online
audiences. Importantly, the yield has remained very resilient as a
result of the quality of our audience, and a favourable mix with
more direct advertising. This demonstrates the Group's ability to
deliver valuable audiences to advertisers. Organic other digital
revenue decreased (2)% organically due to phasing shifts of a big
event into FY 2024, the Photography Show.
Organic affiliate revenue decline, improved to (8)% compared to
the first half, with the growth in price comparison (+8%) and
vouchers (+5%) partially offsetting a decline of (28)% in ecommerce
products. This performance highlights the benefit of the strategy
of diversification. In Affiliate products, we have been impacted by
the wider macroeconomy through lower demand as seen in the lower
audience numbers as well as a reduction in the average basket size.
The decline was particularly strong in the Consumer Technology
vertical, correlating with the performance of hardware
manufacturers in this market. In our price comparison business,
performance was strong, notably in car and home insurance,
benefiting from a high volume of quotes due to high renewal
premia.
Media revenues included GBP48.8m relating to the in-year
acquisitions of Shortlist Media, ActualTech and Gardening KnowHow
and the prior year acquisitions of Who What Wear and What Culture.
ActualTech made a strong start to life within the group
contributing GBP11.0m of revenue within the year and more
importantly completing the product set in B2B to enable a full
stack advertising solution in our emerging B2B platform. Gardening
Know How contributed GBP2.3m of revenue to the Group in the year
and also helped to move the Homes vertical into a leadership
position, with our Homes vertical now the third largest network in
the US. Gardening Know How is anticipated to go live on Vanilla,
Future's website platform during H1 FY24 to provide a stronger
platform for audience recovery and unlocking future growth.
Magazine revenue declined by GBP(16.2)m or (6)% to GBP274.0m (FY
2022: GBP290.2m). Magazine organic revenue was down (5)%
year-on-year, an improvement on the historic secular decline rate.
Subscriptions experienced a (4)% organic decline as customers did
not renew pandemic subscriptions which is a strong performance
given market trends. Subscriptions now represent 49% of the
Magazines revenue, providing a robust source of recurring revenue.
The rest of the magazine portfolio was down (6)% organically. This
resilience was driven by the strength of our brands which are
highly specialist and touch people's passions.
FY FY Reported
2023 2022 change
------------------------------- ------ ------ ---------
Consumer B2C 567.7 618.1 (8)%
------------------------------- ------ ------ ---------
Price Comparison (Go.Compare) 158.0 146.2 +8%
------------------------------- ------ ------ ---------
B2B 63.2 61.1 +3%
------------------------------- ------ ------ ---------
Revenue 788.9 825.4 (4)%
------------------------------- ------ ------ ---------
Revenue for Consumer B2C was impacted by the challenging digital
advertising market, consumer spend on affiliate and decline in
magazines. Revenue for our price comparison business grew +8% in
the year due to favourable market conditions. Revenue in our B2B
business grew +3% in the year thanks to the inclusion of an
acquisition, ActualTech partially offset by organic decline of (8%)
due to challenging market conditions.
Operating profit
Cost of sales were broadly flat year-on-year with inflation,
mostly in magazines with increases to paper and printing costs due
to high energy prices as well as the inclusion of acquisitions and
their respective costs, offset by a reduction in volumes.
Other costs have decreased despite the inclusion of acquisitions
and their respective costs as well as inflationary pressures on
salary and wages, driven by cost savings initiatives from the
restructuring programme conducted this year for which the costs
have been recognised as exceptional items. These cost decreases
(translating into a +2ppt impact on the adjusted operating profit
margin) relate to offices, staff location and re-prioritisation of
investment.
As a result, the Group adjusted operating profit margin has only
declined by (1)ppt to 32% (FY 2022: 33%), despite a (1)ppt headwind
from revenue mix with a lower revenue decline from the Magazines
business in lower gross contribution compared to Media business as
well as a (2)ppt headwind from cost inflation on magazine cost of
sales and on salaries. This is a testament of the strength of the
platform and the cost agility of the Group, even in the challenging
macroeconomic environment. As a result, adjusted operating profit
decreased by GBP(15.3)m to GBP256.4m (FY 2022: GBP271.7m) with
organic profit performance partially offset by contributions from
acquisitions and favourable foreign exchange. Statutory operating
profit decreased by GBP(14.1)m to GBP174.5m (FY 2022: GBP188.6m)
and statutory operating margin decreased by (1)ppt to 22% (FY 2022:
23%) driven by the performance in adjusted operating profit, and
includes GBP8.4m of restructuring costs, of which GBP2.0m is
included in transaction and integration related costs and GBP6.4m
in exceptional items.
Earnings per share
FY 2023 FY 2022
---------------------------------------------- -------- --------
Basic earnings per share (p) 94.7 101.4
Adjusted basic earnings per share (p) 141.8 164.4
Diluted earnings per share (p) 94.1 100.9
Adjusted diluted basic earnings per share (p) 140.9 163.5
---------------------------------------------- -------- --------
Basic earnings per share is calculated using the weighted
average number of ordinary shares in issue during the period of
119.8m (FY 2022: 120.5m), the decrease reflecting the share buyback
programme which commenced in August 2023.
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 twelve
months) and associated social security costs, transaction and
integration related costs, exceptional items, amortisation of
intangible assets arising on acquisitions, unwinding of discount on
contingent consideration and change in fair value of contingent
consideration and any related tax effects. Adjusted profit after
tax was GBP169.9m (FY 2022: GBP198.1m).
Transaction and integration related costs
Transaction and integration related costs of GBP6.5m incurred in
the year reflect GBP5.3m of deal-related fees, GBP2.0m of
restructuring costs related to recent acquisitions net of GBP0.8m
released following settlement of a provision for historic legal
claims recognised on the Dennis opening balance sheet, of which
GBP8.9m was paid in the year (FY 2022: GBP3.6m relating to the
Dennis and Who What Wear acquisitions, GBP1.2m relating to
restructuring and other integration related costs). GBP0.9m relates
to acquired properties which are onerous (FY 2022: GBP9.7m).
Deal-related fees include work related to the Group considering
its strategic options regarding its B2B operations. The Group has
been supported in its considerations by external advisers with
their associated costs.
Exceptional items
Exceptional costs incurred in the period include GBP6.4m
relating to restructuring costs (FY 2022: GBP2.1m) and GBP0.9m
relating to onerous properties (FY 2022: GBP1.3m).
Other adjusting items
Amortisation of acquired intangibles of GBP59.4m (FY 2022:
GBP58.3m) includes incremental amortisation arising from the
in-year acquisitions of ActualTech and Gardening Know How.
Share-based payment expenses (relating to equity-settled share
awards with vesting periods longer than twelve months), together
with associated social security costs increased by GBP0.9m to
GBP7.8m (FY 2022: GBP6.9m). The nature of the all-employee Value
Creation Plan scheme means that a charge is booked irrespective of
the likelihood of achieving the vesting targets.
Net finance costs and refinancing
On 23 November 2022, the Group further extended its committed
debt facilities with a five-year, GBP400m term facility partially
guaranteed by UK Export Finance (the 'EDG term facility'). The
facility, maturing November 2027, has a twelve-month availability
period and amortises from year 3. It was secured at competitive
market rates, on substantially similar terms to, and with the same
covenants as, the Group's Revolving Credit Facility ('RCF'). On
signing, the first GBP160m was utilised to prepay the Group's
previous Term Loan maturing 31 December 2023. In May 2023, the
Group exercised the second one-year extension option on its GBP500m
RCF, taking the maturity date out to July 2025.
Net finance costs increased to GBP36.4m (FY 2022: GBP18.6m)
which includes external interest payable of GBP29.7m reflecting the
utilisation of the Group's debt facilities to fund the ActualTech
and Gardening Know How acquisitions, and higher interest rates;
GBP3.7m in respect of the amortisation of arrangement fees relating
to the Group's bank facilities; GBP0.7m unwinding of discount on
contingent consideration relating to the ActualTech acquisition;
and GBP0.6m increase in fair value of contingent consideration to
the ActualTech acquisition. A further GBP2.6m of interest was
recognised in relation to lease liabilities, offset by GBP0.2m of
interest income on sublet properties.
Leverage at 30 September 2023 was 1.25 times, down from 1.48
times at 30 September 2022, demonstrating the Group's ability to
continue to de-lever quickly.
The Group has entered into interest rate swap agreements which
swap the interest profile on a notional GBP300.0m (2022: nil) on
the Group's EDG term facility to mitigate the risk of fluctuations
in interest rates whereby it receives a variable interest rate
based on SONIA and pays a fixed blended rate of 4.19%.
Taxation
The tax charge for the year amounted to GBP24.7m (FY 2022:
GBP47.8m), comprising a current tax charge of GBP44.3m (FY 2022:
GBP38.3m) and a deferred tax credit of GBP19.6m (FY 2022: charge of
GBP9.5m). The current tax charge arises in the UK where the
standard rate of corporation tax in FY2023 is 22% and in the US
where the Group pays a blended Federal and State tax rate of
28%.
The Group's FY 2023 adjusted effective tax rate (6) was 23.3%
(FY 2022: 21.75%). The increase in rate in FY 2023 reflects the
increase in the UK rate of corporation tax that took effect on 1
April 2023.
The Group's statutory effective tax rate, inclusive of
adjustments in respect of previous years, has reduced to 17.9% (FY
2022: 28.12%). Excluding the adjustments in respect of previous
years, the FY 2023 statutory tax rate was 24.9% (FY22: 30.2%). The
adjustments in respect of previous years recorded in FY 2023
reflect revisions to prior year estimates where new information
became available as the Group completed its actual tax returns, as
well as the correction of a number of immaterial items. This
decreased the Group's actual FY 2022 corporation tax and deferred
tax liabilities against that estimated at the time of the Group
accounts. The difference between the statutory tax rate of 24.9%
and the adjusted effective tax rate of 23.3% is attributable to the
tax effect of the movements on the Group's share-based payments and
other non-deductible costs.
The Group's net deferred tax liability decreased by GBP23.0m to
GBP107.2m (FY 2022: GBP130.2m) mainly as a result of the
amortisation of acquired intangibles reducing deferred tax
liabilities and the increase of deferred tax assets for other
temporary timing differences.
Dividend
The Board is recommending a final dividend of 3.4p per share for
the year ended 30 September 2023, payable on 13 February 2024 to
all shareholders on the register at close of business on 19 January
2024.
Balance sheet
Property, plant and equipment decreased by GBP18.6m to GBP34.4m
in the period (FY 2022: GBP53.0m) primarily reflecting the
write-down of right-of-use assets and leasehold improvements on
onerous properties of GBP10.7m, primarily attributable to property
leases inherited via the acquisition of Dennis (included within
transaction and integration related costs) and depreciation of
GBP8.8m, offset by capital expenditure of GBP2.0m.
Intangible assets decreased by GBP76.4m to GBP1,639.4m (FY 2022:
GBP1,715.8m) driven by amortisation (GBP71.0m) and an FX headwind
of GBP63.8m. This was partially offset by the in-year acquisitions
of ActualTech and Gardening Know How (GBP49.1m) and capitalisation
of website development costs (GBP9.3m).
Trade and other receivables decreased by GBP10.7m to GBP123.5m
(FY 2022: GBP134.3m) primarily due to a GBP5m reduction in current
trading net of the returns provision and a GBP10m improvement in
cash collection during the period
Trade and other payables decreased by GBP15.4m to GBP128.4m (FY
2022: GBP143.8m) primarily driven by the payment of the FY 2022
profit pool bonus in the period, a focus on timely payments as well
as the impact of FX. Provisions decreased by GBP14.2m, primarily
due to payment of GBP8.9m for settlement of the provision for
historic legal claims recognised on the Dennis opening balance
sheet.
Cash flow and net debt
Net debt at 30 September 2023 was GBP327.2m (FY 2022: GBP423.6m)
after reflecting the ActualTech and Gardening Know How acquisitions
and share buyback programme which commenced in August 2023.
The increase in cash is due to the build-up of GBP22m to finance
the share buyback programme.
During the year, there was a cash inflow from operations of
GBP241.0m (FY 2022: GBP268.5m, HY 2022: GBP138.1m) reflecting
strong cash generation. Adjusted operating cash inflow was
GBP265.4m (FY 2022: GBP278.8m). A reconciliation of cash generated
from operations to adjusted free cash flow is included below:
FY 2023 FY 2022
GBPm GBPm
-------------------------------------------------- -------- --------
Cash generated from operations 241.0 268.5
Cash flows related to transaction and integration
related costs 15.6 7.1
Cash flows related to exceptional items 13.4 6.6
Settlement of social security costs on share
based payments(1) 0.5 2.0
Lease payments following adoption of IFRS 16
Leases (6.0) (5.4)
-------------------------------------------------- -------- --------
Adjusted operating cash inflow 264.5 278.8
Cash flows related to capital expenditure (11.3) (11.6)
-------------------------------------------------- -------- --------
Adjusted free cash flow 253.2 267.2
-------------------------------------------------- -------- --------
(1) Relating to equity-settled share awards with vesting periods
longer than twelve months.
Other significant movements in cash flows include acquisitions
totalling GBP47.5m (FY 2022: GBP113.1m), net repayment of bank
loans and overdraft (net of arrangement fees) of GBP52.3m (FY 2022:
GBP372.3m), acquisition of own shares of GBP24.5m (FY 2022:
GBP7.9m), lease payments of GBP6.0m (FY 2022: GBP5.4m) and the
balance reflecting the Group's strong cash generation. The Group
paid a dividend in the period of GBP4.1m (FY 2022: GBP3.4m).
Foreign exchange and other movements accounted for the balance of
cash flows.
Adjusted free cash flow decreased to GBP253.2m (FY 2022:
GBP267.2m), representing 99% of adjusted operating profit (FY 2022:
98%), reflecting the ongoing efficient cash management by the
Group.
Going concern
The Group has produced forecasts which have been modelled for
different plausible downside scenarios using the Group's existing
GBP500m RCF which runs to July 2026 and the GBP400m UKEF facility
which amortises over the next five years, with a final bullet
payment on expiry in November 2027. These scenarios confirm that
even in the most severe but plausible downside scenarios, the Group
is able to generate profits and positive cash flows.
At the year end the Group had net current liabilities of GBP7.4m
(FY 2022: GBP115.3m). This is primarily driven by deferred income
of GBP58.5m relating to subscriptions and the nature of the Group's
magazine business where the profile of cash receipts from
wholesalers is often ahead of the payment of certain magazine
related costs. The Group has consistently delivered adjusted free
cash flow conversion of around 100% and is forecast to generate
sufficient cash flows to meet its liabilities as they fall due. The
reduction in net current liabilities since 30 September 2022 is
primarily due to the repayment of the term loan, with the existing
UKEF and RCF facilities all classed as non-current.
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 twelve months
from the date of this report. For this reason, the Directors
continue to adopt the going concern basis in preparing the
consolidated financial statements for the FY 2023 results.
Consolidated income statement
for the year ended 30 September 2023
2023 2022
------------------------------------------- ----- ------- -------
Note GBPm GBPm
------------------------------------------- ----- ------- -------
Revenue 1,2 788.9 825.4
Net operating expenses 3 (614.4) (636.8)
------------------------------------------- ----- ------- -------
Operating profit 174.5 188.6
------------------------------------------- ----- ------- -------
Finance income 6 0.9 0.1
Finance costs 6 (37.3) (18.7)
------------------------------------------- ----- ------- -------
Net finance costs (36.4) (18.6)
------------------------------------------- ----- ------- -------
Profit before tax 138.1 170.0
Tax charge 7 (24.7) (47.8)
------------------------------------------- ----- ------- -------
Profit for the year attributable to owners
of the parent 113.4 122.2
------------------------------------------- ----- ------- -------
Earnings per Ordinary share
Note 2023 2022
pence pence
--------------------------- ----- ------- -------
Basic earnings per share 9 94.7 101.4
--------------------------- ----- ------- -------
Diluted earnings per share 9 94.1 100.9
--------------------------- ----- ------- -------
Consolidated statement of comprehensive income
for the year ended 30 September 2023
2023 2022
GBPm GBPm
----------------------------------------------------- ------ ------
Profit for the year 113.4 122.2
----------------------------------------------------- ------ ------
Items that may be reclassified to the consolidated
income statement
Currency translation differences (42.9) 80.8
----------------------------------------------------- ------ ------
Gain on cash flow hedge (net of tax) 4.4 -
----------------------------------------------------- ------ ------
Other comprehensive (expense)/income for the year (38.5) 80.8
----------------------------------------------------- ------ ------
Total comprehensive income for the year attributable
to owners of the parent 74.9 203.0
----------------------------------------------------- ------ ------
Consolidated statement of changes in equity
for the year ended 30 September 2023
Cash
Issued Share Capital flow Accumulated
share premium redemption Merger Treasury hedge exchange Retained Total
capital account reserve reserve reserve reserve differences earnings equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Balance at 30
September
2021 18.1 197.0 - 581.9 (7.6) - (10.1) 83.0 862.3
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Profit for the
year - - - - - - - 122.2 122.2
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Currency
translation
differences
(net
of tax) - - - - - - 80.8 - 80.8
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Other
comprehensive
expense for
the
year - - - - - - 80.8 - 80.8
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Total
comprehensive
income for
the
year - - - - - - 80.8 122.2 203.0
Acquisition of
own shares - - - - (7.9) - - - (7.9)
Share schemes
- Issue of
treasury
shares
to employees - - - - 7.5 - - (7.5) -
- Share-based
payments - - - - - - - 11.3 11.3
- Current tax
on options - - - - - - - 3.1 3.1
- Deferred tax
on options - - - - - - - (7.7) (7.7)
Dividends paid
to
shareholders 8 - - - - - - - (3.4) (3.4)
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Balance at 30
September
2022 18.1 197.0 - 581.9 (8.0) - 70.7 201.0 1,060.7
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Profit for the
year - - - - - - - 113.4 113.4
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Currency
translation
differences - - - - - - (42.9) - (42.9)
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Gain on cash
flow hedge 16 - - - - - 5.9 - - 5.9
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Deferred tax
on cash flow
hedge - - - - - (1.5) - - (1.5)
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Other
comprehensive
expense for
the
year - - - - - 4.4 (42.9) - (38.5)
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Total
comprehensive
income for
the
year - - - - - 4.4 (42.9) 113.4 74.9
Acquisition of
own shares (0.3) - 0.3 - (11.4) - - (13.5) (24.9)
Share schemes
- Issue of
treasury
shares
to employees - - - - 4.1 - - (4.1) -
Share- based
payments - - - - - - - 7.6 7.6
- Current tax
on options - - - - - - - (0.1) (0.1)
- Deferred tax
on options - - - - - - - 0.6 0.6
Dividends paid
to
shareholders 8 - - - - - - - (4.1) (4.1)
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Balance at 30
September
2023 17.8 197.0 0.3 581.9 (15.3) 4.4 27.8 300.8 1,114.7
-------------- ------ -------- -------- ----------- --------- ---------- -------- ------------ --------- --------
Consolidated balance sheet
as at 30 September 2023
2023 2022
Note GBPm GBPm
------------------------------------------ ------ ------- -------
Assets
Non-current assets
Property, plant and equipment 34.4 53.0
Intangible assets - goodwill 10 1,053.6 1,069.6
Intangible assets - other 10 585.8 646.2
Financial asset - derivative 14 6.0 -
------------------------------------------ ------ ------- -------
Total non-current assets 1,679.8 1,768.8
------------------------------------------ ------ ------- -------
Current assets
Inventories 1.3 1.2
Corporation tax recoverable 0.3 13.4
Deferred tax 12.8 5.1
Trade and other receivables 123.5 134.3
Cash and cash equivalents 11 60.3 29.2
Finance lease receivable 3.3 6.1
------------------------------------------ ------ ------- -------
Total current assets 201.5 189.3
------------------------------------------ ------ ------- -------
Total assets 1,881.3 1,958.1
------------------------------------------ ------ ------- -------
Equity and liabilities
Equity
Issued share capital 15 17.8 18.1
Share premium account 16 197.0 197.0
Capital redemption reserve 16 0.3 -
Merger reserve 16 581.9 581.9
Treasury reserve 16 (15.3) (8.0)
Cash flow hedge reserve 16 4.4 -
Accumulated exchange differences 16 27.8 70.7
Retained earnings 300.8 201.0
------------------------------------------ ------ ------- -------
Total equity 1,114.7 1,060.7
------------------------------------------ ------ ------- -------
Non-current liabilities
Financial liabilities - interest-bearing
loans and borrowings 12 387.5 369.0
Lease liability due in more than one year 35.5 55.8
Deferred tax 115.5 131.7
Provisions 13 7.2 21.4
Deferred income 11.9 14.9
------------------------------------------ ------ ------- -------
Financial liability - derivative 14 0.1 -
------------------------------------------ ------ ------- -------
Total non-current liabilities 557.7 592.8
------------------------------------------ ------ ------- -------
Current liabilities
Financial liabilities - interest-bearing
loans and borrowings 12 - 83.8
Trade and other payables 128.4 143.8
Deferred income 58.5 55.8
Corporation tax payable - 1.0
Lease liability due within one year 9.3 12.1
Deferred consideration - 4.5
Contingent consideration 14,19 8.2 -
Deferred tax 4.5 3.6
------------------------------------------ ------ ------- -------
Total current liabilities 208.9 304.6
------------------------------------------ ------ ------- -------
Total liabilities 766.6 897.4
------------------------------------------ ------ ------- -------
Total equity and liabilities 1,881.3 1,958.1
------------------------------------------ ------ ------- -------
Consolidated cash flow statement
for the year ended 30 September 2023
2023 2022
GBPm GBPm
------------------------------------------------------ ------- -------
Cash flows from operating activities
Cash generated from operations 241.0 268.5
Net interest paid on bank facilities (22.3) (13.7)
Interest paid on lease liabilities (2.3) (2.1)
Tax paid (33.6) (50.1)
------------------------------------------------------ ------- -------
Net cash generated from operating activities 182.8 202.6
------------------------------------------------------ ------- -------
Cash flows from investing activities
Purchase of property, plant and equipment (2.0) (2.6)
Purchase of computer software and website development (9.3) (9.0)
Purchase of subsidiary undertakings, net of cash
acquired (47.5) (113.1)
Settlement of receivable from sellers - 8.0
Net cash used in investing activities (58.8) (116.7)
------------------------------------------------------ ------- -------
Cash flows from financing activities
Acquisition of own shares (24.5) (7.9)
Drawdown of bank loans 375.1 95.7
Repayment of bank loans (416.7) (467.1)
(Repayment)/drawdown of overdraft (4.2) 1.0
Bank arrangement fees (6.5) (1.9)
Repayment of principal element of lease liabilities (6.0) (5.4)
Dividends paid (4.1) (3.4)
------------------------------------------------------ ------- -------
Net cash used in financing activities (86.9) (389.0)
------------------------------------------------------ ------- -------
Net increase/(decrease) in cash and cash equivalents 37.1 (303.1)
Cash and cash equivalents at beginning of year 29.2 324.3
Effects of exchange rate changes on cash and cash
equivalents (6.0) 8.0
------------------------------------------------------ ------- -------
Cash and cash equivalents at end of year 60.3 29.2
------------------------------------------------------ ------- -------
Notes to the consolidated cash flow statement
for the year ended 30 September 2023
A. Cash generated from operations
The reconciliation of profit for the year to cash generated from
operations is set out below:
2023 2022
GBPm GBPm
-------------------------------------------- ------- -------
Profit for the year 113.4 122.2
-------------------------------------------- ------- -------
Adjustments for:
Depreciation 8.8 9.1
Impairment charge on tangible assets 10.3 6.6
Gain on exit of leases (10.2) -
Amortisation of intangible assets 71.0 71.3
Share-based payments 7.6 11.3
Net finance costs 36.4 18.6
Tax charge 24.7 47.8
Cash generated from operations before
changes in working capital and provisions 262.0 286.9
-------------------------------------------- ------- -------
(Decrease)/increase in provisions (12.1) 0.5
(Increase) in inventories (0.1) (0.2)
Decrease/(increase) in trade and other
receivables 7.6 (3.8)
(Decrease) in trade and other payables (16.4) (14.9)
-------------------------------------------- ------- -------
Cash generated from operations 241.0 268.5
-------------------------------------------- ------- -------
B. Analysis of net debt
Net Other
1 October cash On non-cash Exchange 30 September
2022 flows acquisition changes movements 2023
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- ------- ------------- ---------- ----------- -------------
Cash and cash equivalents 29.2 33.0 4.1 - (6.0) 60.3
Debt due within
one year (83.8) 83.8 - - - -
Debt due after more
than one year (369.0) (31.6) - (3.7) 16.8 (387.5)
---------------------------- -------- ------- ------------- ---------- ----------- -------------
Net debt (423.6) 85.2 4.1 (3.7) 10.8 (327.2)
---------------------------- -------- ------- ------------- ---------- ----------- -------------
Net Other
1 October cash On non-cash Exchange 30 September
2021 flows acquisition changes movements 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------- -------- ------------- ---------- ----------- -------------
Cash and cash equivalents 324.3 (316.1) 13.0 - 8.0 29.2
Debt due within
one year (42.5) (38.3) (2.4) (0.6) - (83.8)
Debt due after more
than one year (458.1) 410.8 (296.2) (2.2) (23.3) (369.0)
---------------------------- -------- -------- ------------- ---------- ----------- -------------
Net debt (176.3) 56.4 (285.6) (2.8) (15.3) (423.6)
---------------------------- -------- -------- ------------- ---------- ----------- -------------
C. Reconciliation of movement in net debt
2023 2022
GBPm GBPm
-------------------------------------------------- -------- --------
Net debt at start of year (423.6) (176.3)
Increase/(decrease) in cash and cash equivalents 37.1 (303.1)
Decrease in borrowings 52.2 73.9
Amortisation of loan issue costs (3.7) (2.8)
Exchange movements 10.8 (15.3)
-------------------------------------------------- -------- --------
Net debt at end of year (327.2) (423.6)
-------------------------------------------------- -------- --------
Accounting policies
Compliance statement and basis of preparation
Future plc (the Company) is incorporated and registered in
England and Wales and is a public company limited by shares. The
financial statements consolidate those of Future plc and its
subsidiaries (the Group).
The Consolidated Financial Statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and UK adopted
IFRSs. The principal accounting policies have been applied
consistently to all years presented, unless otherwise stated below.
These financial statements have been prepared under the historical
cost convention, except for contingent and deferred consideration
and financial instruments, which are measured at fair value.
The going concern basis has been adopted in preparing these
financial statements.
Status of this preliminary announcement
The financial information contained in this audited preliminary
announcement does not constitute the Company's statutory accounts
for the years ended 30 September 2023 or 2022. Statutory accounts
for 2022, which were prepared in conformity with the requirements
of the Companies Act 2006 and UK adopted IFRSs, have been delivered
to the registrar of companies, and those for 2023 will be delivered
in due course. Full financial statements for the year ended 30
September 2023 will shortly be posted to shareholders.
New or revised accounting standards and interpretations adopted
in the year
The following amendments to existing standards became effective
in the year:
- IAS 16 Amendments prohibiting a company from deducting from
the cost of property, plant and equipment amounts received from
selling items produced while the company is preparing the asset for
its intended use;
- IAS 37 Amendments regarding the costs to include when
assessing whether a contract is onerous;
- IFRS 3 Amendments updating a reference to the Conceptual Framework;
- IFRS 9 Amendments relating to the fees in the '10 per cent'
test for derecognition of financial liabilities; and
- Annual Improvements to IFRS Standards 2018-2020 Cycle.
The Group has entered into interest rate swaps in the year, with
the hedge accounting requirements of IFRS 9 Financial instruments
being applied. The effective portion of the derivative is
recognised in other comprehensive income and reclassified to profit
or loss when the qualifying asset, being the Group's borrowings,
impacts profit or loss.
There has been no material impact from the adoption of new
standards, amendments to standards or interpretations which are
relevant to the Group.
New accounting standards, amendments and interpretations that
are issued but not yet applied by the Group
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory for
accounting periods beginning on or after 1 October 2023 and which
the Group has chosen not to adopt early. These include the
following standards which are relevant to the Group:
- IAS 1 Amendments regarding the classification of liabilities,
Amendments regarding the disclosure of accounting policies, and
Amendment regarding the classification of debt with covenants;
- IFRS 7 Amendments regarding supplier financial arrangements;
- IFRS 16 Amendments to clarify how a seller-lessee subsequently
measures sale and leaseback transactions;
- IAS 7 Amendments regarding supplier finance arrangements;
- IAS 8 Amendments regarding the definition of accounting estimates;
- IAS 12 Amendments regarding deferred tax on leases and
decommissioning obligations and Amendments to provide a temporary
exception to the requirements regarding deferred tax assets and
liabilities related to pillar two income taxes;
- IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information; and
- IFRS S2 Climate-related Disclosures.
The Group does not expect that the standards and amendments
issued but not yet effective will have a material impact on results
or net assets.
Presentation of non-statutory measures
The Directors believe that adjusted results and adjusted
earnings per share provide additional useful information on the
core operational performance of the Group to shareholders, and
review the results of the Group on an adjusted basis internally.
The term 'adjusted' is not a defined term under IFRS and may not
therefore be comparable with similarly titled profit measurements
reported by other companies. It is not intended to be a substitute
for, or superior to, IFRS measurements of profit.
During the year the Group has introduced a new Alternative
Performance Measure ('APM'): Transaction and integration related
costs. Transactions such as acquisitions are a key part of the
Group's strategy and a material amount of these costs are typically
incurred, however the timing and scale will vary year on year.
Transaction and integration costs will also vary depending on the
scale and complexity of corporate transactions and may cross
financial years. Splitting these costs out from the broader
category of exceptional items is intended to allow a user of the
financial statements to assess the impact of these activities on
our results. Costs which were included as exceptional in the
comparative period have been included within transaction and
integration related costs on a consistent basis with the current
period.
During the period the Board has started to monitor performance
using a new adjusted performance measure, Adjusted EBITDA in line
with the Group's strategy of strengthening its position in the
US.
Adjustments are made in respect of:
Adjusting Explanation
item
----------------- ------------------------------------------------------------------
Share-based Share-based payment expenses (relating to equity-settled
payments 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.
Transaction Although transactions are a key part of the Group's
and integration strategy, the Group adjusts for costs relating to
related the completion and subsequent integration of acquisitions
costs and other corporate transactions, initiated within
12 months of the completion date, as these costs
are not related to the core trading of the Group
and not doing so would distort the Group's results,
so as to assist the user of the financial statements
to understand the results of the core underlying
operations of the Group. Details of transaction and
integration related costs are shown in note 4.
Exceptional The Group considers items of income and expense as
items exceptional and excludes them from the adjusted results
where the nature of the item, or its size, is material
and/or is not related to the core trading of the
Group so as to assist the user of the financial statements
to understand the results of the core underlying
operations of the Group. Details of exceptional items
are shown in note 5.
Amortisation The amortisation charge for those intangible assets
of acquired recognised on business combinations is excluded from
intangible the adjusted results of the Group since they are
assets 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. This is consistent with industry peers and
how certain external stakeholders monitor the performance
of the business.
Amortisation Adjusted EBITDA excludes the amortisation charge
of non acquired for computer software and website development, as
intangible well as amortisation of acquired intangible assets,
assets, depreciation and interest.
depreciation
and interest
Unwinding The Group excludes the unwinding of the discount
of discount on contingent consideration from the Group's adjusted
on contingent results on the basis that it is non-cash and the
consideration balance is driven by the Group's assessment of the
relevant discount rate to apply. Excluding this item
ensures comparability with prior periods.
Change in The Group excludes the remeasurement of these acquisition-related
the fair liabilities from its adjusted results as the impact
value of of remeasurement can vary significantly. During the
contingent year the underlying agreement of the contingent consideration
consideration in relation to ActualTech was changed, resulting
in a change in the fair value (see note 19 for further
detail).
----------------- ------------------------------------------------------------------
The tax related to adjusting items is the tax effect of the
items above and adjustments in respect of the prior year,
calculated using the standard rate of corporation tax in the
relevant jurisdiction.
Reference to 'core or underlying' reflects the trading results
of the Group without the impact of amortisation of acquired
intangible assets, transaction and integration related costs,
exceptional items, share-based payment expenses (relating to
equity-settled share awards with vesting periods longer than 12
months), together with associated social security costs, unwinding
of discount on contingent consideration and any tax related effects
that would otherwise distort the users understanding of the Group's
performance.
A summary table of all measures is included below:
Closest Definition
APM equivalent
statutory
measure
--------------- ---------------- ----------------------------------------------------
Adjusted Operating Adjusted EBITDA represents operating profit
EBITDA profit before share-based payments (relating to
equity-settled awards with vesting periods
longer than 12 months) and related social
security costs, amortisation, depreciation,
transaction and integration related costs
and exceptional items.
Adjusted EBITDA margin is adjusted EBITDA
as a percentage of revenue.
Adjusting items are shown in the table below
and defined in the commentary.
Adjusted Operating Adjusted operating profit represents operating
operating profit profit before share-based payments (relating
profit to equity-settled awards with vesting periods
longer than 12 months) and related social
security costs, amortisation of acquired
intangible assets, transaction and integration
related costs and exceptional items.
This is a key management incentive metric,
used within the Group's Deferred Annual Bonus
Plan.
Adjusted operating profit margin is adjusted
operating profit as a
percentage of revenue.
Adjusting items are shown in the table below
and defined in the commentary.
Adjusted Profit Adjusted profit before tax represents profit
profit before before before tax before share-based payments (relating
tax tax to equity-settled awards with vesting periods
longer than 12 months) and related social
security costs, net finance costs, amortisation
of acquired intangible assets, transaction
and integration related costs, exceptional
items, unwinding of discount on contingent
consideration and change in fair value of
contingent consideration.
Adjusting items are shown in the table below
and defined in the commentary.
Adjusted Diluted Adjusted diluted earnings per share (EPS)
diluted earnings represents adjusted profit after tax divided
earnings per share by the weighted average dilutive number of
per share shares at the year end date.
This is a key management incentive metric,
used within the Group's Performance Share
Plan.
A reconciliation is provided in note 9.
Adjusted Effective Adjusted effective tax rate is defined as
effective tax rate the effective tax rate adjusted for the tax
tax rate impact of adjusting items and any other one-off
impacts, including adjustments in respect
of previous years. The tax impact of adjusting
items is provided in note 7.
Adjusted Operating Adjusted operating cash flow represents cash
operating cash flow generated from operations adjusted to exclude
cash flow cash flows relating to transaction and integration
related costs, exceptional items and payment
of accrual for employer's taxes on share-based
payments relating to equity settled share
awards with vesting periods longer than 12
months, and to include lease repayments following
adoption of IFRS 16 Leases.
Adjusted Free cash Adjusted free cash flow is defined as adjusted
free cash flow operating cash flow less capital expenditure.
flow Capital expenditure is defined as cashflows
relating to the purchase of property, plant
and equipment and purchase of computer software
and website development.
Net debt The aggregation Net debt is defined as the aggregate of the
of cash Group's cash and cash equivalents and its
and debt external bank borrowings net of capitalised
bank arrangement fees. It does not include
lease liabilities recognised following the
adoption of IFRS 16 Leases.
--------------- ---------------- ----------------------------------------------------
A reconciliation of adjusted EBITDA and adjusted operating
profit to profit before tax is shown below:
2023 2022
GBPm GBPm
------------------------------------------------------- ------ ------
Adjusted EBITDA 276.8 293.8
------------------------------------------------------- ------ ------
Depreciation (8.8) (9.1)
Amortisation of non-acquired intangibles (11.6) (13.0)
Adjusted operating profit 256.4 271.7
Share-based payments (including social security costs) (7.8) (6.9)
Transaction and integration related costs (note 4) (7.4) (14.5)
Exceptional items (note 5) (7.3) (3.4)
Amortisation of acquired intangibles (59.4) (58.3)
------------------------------------------------------- ------ ------
Operating profit 174.5 188.6
------------------------------------------------------- ------ ------
Net finance costs (36.4) (18.6)
------------------------------------------------------- ------ ------
Profit before tax 138.1 170.0
------------------------------------------------------- ------ ------
A reconciliation between adjusted and statutory earnings per
share measures is shown in note 9.
A reconciliation of cash generated from operations to adjusted
free cash flow is shown below:
2023 2022
GBPm GBPm
--------------------------------------------------- ------- -------
Cash generated from operations 241.0 268.5
Cash flows related to transaction and integration
related costs 15.6 7.1
Cash flows related to exceptional items 13.4 6.6
Settlement of social security costs on share based
payments(1) 0.5 2.0
Lease payments (6.0) (5.4)
--------------------------------------------------- ------- -------
Adjusted operating cash inflow 264.5 278.8
Cash flows related to capital expenditure (11.3) (11.6)
--------------------------------------------------- ------- -------
Adjusted free cash flow 253.2 267.2
--------------------------------------------------- ------- -------
(1) Relating to equity-settled share awards with vesting periods
longer than 12 months.
Reconciliation between revenue and organic revenue at constant
currency:
2023 2022
GBPm GBPm
---------------------------- ------- -------
Total revenue 788.9 825.4
Revenue from FY 2023 and
FY 2022 acquisitions which
have not been acquired for
a full financial year (47.1) (13.3)
---------------------------- ------- -------
Organic revenue 741.8 812.1
---------------------------- ------- -------
Impact of FX at constant
rates (0.9) 15.1
---------------------------- ------- -------
Organic revenue at constant
currency 740.9 827.2
---------------------------- ------- -------
Notes
1. Segmental reporting
The Group is organised and arranged primarily by reportable
segment. The Executive Directors consider the performance of the
business from a geographical perspective, namely the UK and the US.
The Australian business is considered to be part of the UK segment
and is not reported separately due to its size. The Group also uses
a sub-segment split of Media (websites and events) and Magazines
for further analysis. The Group considers that the assets within
each geographical segment are exposed to the same risks.
(a) Reportable segment
(i) Segment revenue
2023 2022
Sub-segment GBPm Sub-segment GBPm
--------- -------------------------- ------ -------------------------- ------
Media Magazines Total Media Magazines Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------- --------- --------------- ------ --------- --------------- ------
Segment:
UK 280.8 195.8 476.6 284.2 215.3 499.5
US 234.1 78.2 312.3 251.0 74.9 325.9
--------- --------- --------------- ------ --------- --------------- ------
Total 514.9 274.0 788.9 535.2 290.2 825.4
--------- --------- --------------- ------ --------- --------------- ------
Transactions between segments are carried out at arm's
length.
(ii) Segment adjusted operating profit
Adjusted operating profit is used by the Executive Directors to
assess the performance of each segment. Operating profit for the
Media and Magazines sub-segments is not reported internally, as
overheads are not fully allocated on this basis. The table below
shows the impact of intra-group adjustments on the adjusted
operating profit for the UK and US segments:
2023 2022
GBPm GBPm
------ ------------------- ------------- ----------- ------------------- ------------- -----------
Adjusted operating
Adjusted operating profit prior
profit prior to Adjusted to Adjusted
intra-group Intra-group operating intra-group Intra-group operating
adjustments adjustments profit adjustments adjustments profit
GBPm GBPm GBPm GBPm GBPm GBPm
------ ------------------- ------------- ----------- ------------------- ------------- -----------
UK 70.6 69.9 140.5 60.5 88.2 148.7
US 185.8 (69.9) 115.9 211.2 (88.2) 123.0
------ ------------------- ------------- ----------- ------------------- ------------- -----------
Total 256.4 - 256.4 271.7 - 271.7
------ ------------------- ------------- ----------- ------------------- ------------- -----------
Intra-group adjustments relate to the net impact of charges from
the UK to the US in respect of management fees (for back office
revenue functions such as finance, HR and IT which are largely
based in the UK) and licence fees for the use of intellectual
property.
A reconciliation of total segment adjusted operating profit to
profit before tax is provided as follows:
2023 2022
GBPm GBPm
------------------------------------------------------- ------ ------
Adjusted operating profit 256.4 271.7
Share-based payments (including social security costs) (7.8) (6.9)
Amortisation of acquired intangibles (59.4) (58.3)
Transaction and integration related costs (note 4) (7.4) (14.5)
Exceptional items (note 5) (7.3) (3.4)
Net finance costs (36.4) (18.6)
Profit before tax 138.1 170.0
------------------------------------------------------- ------ ------
(b) Business segment
(i) Gross profit by business segment
2023 2022
Sub-segment GBPm Sub-segment GBPm
------ ------ ---------- ------------------------ ------ ------ ---------- ----------------------- ------
Add back Add back
distribution distribution
Media Magazines Other expenses Total Media Magazines Other expenses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------ ------ ---------- -------- -------------- ------ ------ ---------- ------- -------------- ------
Segment:
UK 200.0 109.3 (133.0) 27.6 203.9 203.3 127.5 (136.2) 31.1 225.7
US 205.1 55.4 (88.5) 12.4 184.4 224.0 54.3 (80.8) 11.4 208.9
------ ------ ---------- -------- -------------- ------ ------ ---------- ------- -------------- ------
Total 405.1 164.7 (221.5) 40.0 388.3 427.3 181.8 (217.0) 42.5 434.6
------ ------ ---------- -------- -------------- ------ ------ ---------- ------- -------------- ------
'Other' relates mainly to sales, marketing and editorial related
costs that are not directly attributable to Media or Magazines.
No end-customer, or other single customer or group of customers
under common control contributed 10% or more to the Group's revenue
in either the current or prior year. The above analysis excludes
the impact of intra-group adjustments.
2. Revenue
The Group applies IFRS 15 Revenue from contracts with customers.
See note 1 for disaggregation of revenue by sub-segment.
Timing of satisfaction of performance obligations
Revenue is recognised in the income statement when control
passes to the customer. If the customer simultaneously receives and
consumes the benefits of the contract, revenue is recognised over
time. Otherwise, revenue is recognised at a point in time.
The table below disaggregates revenue according to the timing of
satisfaction of performance obligations:
2023 2022
GBPm GBPm
-------------- ----- -------- -------- ----- -------- --------
Over Point in Total Over Point in Total
time time revenue time time revenue
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ----- -------- -------- ----- -------- --------
Total revenue 17.4 771.5 788.9 16.2 809.2 825.4
-------------- ----- -------- -------- ----- -------- --------
3. Net operating expenses
Operating profit is stated after charging:
2023 2022
Statutory Statutory
results results
GBPm GBPm
-------------------------------- ----------- -----------
Cost of sales (400.6) (390.7)
Distribution expenses (40.0) (42.5)
Share-based payments (including
social security costs) (7.8) (7.4)
Transaction and integration
related costs (note 4) (7.4) (14.5)
Exceptional items (note 5) (7.3) (3.4)
Depreciation (8.8) (9.1)
Amortisation (71.0) (71.3)
Other administration expenses (71.5) (97.9)
---------------------------------- ----------- -----------
(614.4) (636.8)
-------------------------------- ----------- -----------
4. Transaction and integration related costs
2023 2022
GBPm GBPm
------------------------------------------ ------ ------
Transaction and integration related costs 6.5 4.8
Onerous property costs 0.9 9.7
Total charge 7.4 14.5
------------------------------------------ ------ ------
Transaction and integration related costs of GBP6.5m incurred in
the year reflect GBP5.3m of prospective and executed deal-related
fees, GBP2.0m of restructuring costs related to recent acquisitions
net of GBP0.8m released following settlement of a provision for
historic legal claims recognised on the Dennis opening balance
sheet, of which GBP8.9m was paid in the year (FY 2022: GBP3.6m
relating to the Dennis and Who What Wear acquisitions, GBP1.2m
relating to restructuring and other integration related costs).
GBP0.9m relates to acquired properties which are onerous (FY
2022: GBP9.7m).
Deal-related fees include work related to the Group considering
its strategic options regarding its B2B operations. The Group has
been supported in its considerations by external advisers with
their associated costs.
Further details in respect of the acquisitions are shown in note
19.
5. Exceptional items
2023 2022
GBPm GBPm
----------------------- ------ ------
Restructuring costs 6.4 2.1
Onerous property costs 0.9 1.3
Total charge 7.3 3.4
----------------------- ------ ------
Exceptional costs incurred in the period include GBP6.4m
relating to restructuring costs (FY 2022: GBP2.1m) and GBP0.9m
relating to onerous properties (FY 2022: GBP1.3m).
6. Finance income and costs
2023 2022
GBPm GBPm
---------------------------------------------------------- ------ ------
Interest payable on interest-bearing loans and borrowings (29.7) (13.6)
Amortisation of bank loan arrangement fees (3.7) (2.8)
Interest payable on lease liabilities (2.6) (2.3)
Increase in fair value of contingent consideration (0.6) -
---------------------------------------------------------- ------ ------
Unwinding of discount on contingent consideration (0.7) -
Total reported finance costs (37.3) (18.7)
---------------------------------------------------------- ------ ------
Interest receivable on interest-bearing loans and
borrowings 0.7 -
------ ------
Interest receivable on lease liabilities 0.2 0.1
Total reported finance income 0.9 0.1
---------------------------------------------------------- ------ ------
Net finance costs (36.4) (18.6)
---------------------------------------------------------- ------ ------
For further information in respect of the Group's debt
facilities and changes during the year see note 12.
7. Tax on profit
The tax charged in the consolidated income statement is analysed
below:
2023 2022
GBPm GBPm
--------------------------------------------------- ------ ------
Corporation tax
Current tax on the profit for the year 49.5 43.6
Adjustments in respect of previous years (5.2) (5.3)
--------------------------------------------------- ------ ------
Current tax charge 44.3 38.3
--------------------------------------------------- ------ ------
Deferred tax origination and reversal of temporary
differences
Current year (credit)/charge (15.0) 7.8
Adjustments in respect of previous years (4.6) 1.7
--------------------------------------------------- ------ ------
Deferred tax (credit)/charge (19.6) 9.5
--------------------------------------------------- ------ ------
Total tax charge 24.7 47.8
--------------------------------------------------- ------ ------
The adjustments in respect of previous years relate to
estimation revisions identified when preparing the current year tax
provision due to new information becoming available when the Group
completed its tax returns, as well as the correction of a number of
immaterial items.
The tax assessed in each year differs from the standard rate of
corporation tax in the UK for the relevant year. The differences
are explained below:
2023 2022
GBPm GBPm
------------------------------------------------------ ------ ------
Profit before tax 138.1 170.0
------------------------------------------------------ ------ ------
Profit before tax at the standard UK tax rate of 22%
(2022: 19%) 30.4 32.3
Expenses not deductible for tax purposes 1.5 1.4
Non-deductible amortisation (0.4) -
Share-based payments 0.1 11.1
Effect of different rates of subsidiaries operating
in other jurisdictions 3.4 6.6
Effect of change in tax rate (0.5) -
Adjustments in respect of previous years (9.8) (3.6)
------------------------------------------------------ ------ ------
Total tax charge 24.7 47.8
------------------------------------------------------ ------ ------
Included below is a reconciliation between the statutory and
adjusted tax charge:
2023 2022
GBPm GBPm
------------------------------------------ ------ ------
Total statutory tax charge 24.7 47.8
------------------------------------------ ------ ------
Tax effect of adjusting items:
Exceptional items 1.9 1.6
Transaction and integration related costs 0.3 0.1
Share based payments (0.1) (10.9)
Amortisation of acquired intangibles 14.8 12.8
Adjustments in respect of previous years 9.8 3.6
Total adjusted tax charge 51.4 55.0
------------------------------------------ ------ ------
The Directors have assessed the Group's uncertain tax positions
and have recorded a provision of GBP5.3m (2022: GBP3.4m). The
provision for uncertain tax positions has been recognised under IAS
12, taking into account the guidance published in IFRIC 23.
8. Dividends
Equity dividends 2023 2022
--------------------------------------------------- ----- -----
Number of shares in issue at end of year (million) 119.1 120.9
Dividends paid in year (pence per share) 3.4 2.8
--------------------------------------------------- ----- -----
Dividends paid in year (GBPm) 4.1 3.4
--------------------------------------------------- ----- -----
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.
On 6th December the Board proposed a dividend of 3.4p per share,
totalling an estimated GBP3.9m, in respect of the year ended 30
September 2023, which subject to shareholder consent at the AGM,
will be paid on 13 February 2024 to shareholders on the register at
close of business on 19 January 2024.
A dividend of 3.4p per share totalling GBP4.1m in respect of the
year ended 30 September 2022 was paid on 14 February 2023.
9. Earnings per share
2023 2022
------------------------ --------- ---------- ---------- --------- ---------- ----------
Adjusted Adjusting Statutory Adjusted Adjusting Statutory
results items results results items results
pence pence pence pence pence pence
------------------------ --------- ---------- ---------- --------- ---------- ----------
Basic earnings/(loss)
per share 141.8 (47.1) 94.7 164.4 (63.0) 101.4
Diluted earnings/(loss)
per share 140.9 (46.8) 94.1 163.5 (62.6) 100.9
------------------------ --------- ---------- ---------- --------- ---------- ----------
Basic earnings per share are calculated using the weighted
average number of Ordinary shares in issue during the year. Diluted
earnings per share have been calculated by taking into account the
dilutive effect of shares that would be issued on conversion into
Ordinary shares of awards held under employee share schemes.
Adjusted earnings per share is based on profit after taxation
which is then adjusted to exclude share-based payments (relating to
equity settled share awards with vesting periods longer than 12
months) and associated social security costs, transaction and
integration related costs, exceptional items, amortisation and
impairment of intangible assets arising on acquisitions, unwinding
of discount and change in fair value of contingent consideration,
and any related tax effects. In the prior year, the results were
also adjusted for the impact of the UK tax rate change.
2023 2022
--------------------------------------------------- ----------- -----------
Adjustments to profit after tax:
Profit after tax (GBPm) 113.4 122.2
Share-based payments (including social security
costs) (GBPm) 7.8 6.9
Transaction and integration related costs (GBPm) 7.4 14.5
Exceptional items (GBPm) 7.3 3.4
Amortisation of intangible assets arising on
acquisitions (GBPm) 59.4 58.3
Unwinding of discount on contingent consideration
(GBPm) 0.7 -
Increase in fair value of contingent consideration
(GBPm) 0.6 -
Tax effect of the above adjustments and the
impact of tax items relating to prior years
(GBPm) (26.7) (7.2)
Adjusted profit after tax (GBPm) 169.9 198.1
--------------------------------------------------- ----------- -----------
Weighted average number of shares in issue during
the year:
- Basic 119,786,409 120,505,969
- Dilutive effect of share options 763,756 652,687
- Diluted 120,550,165 121,158,656
Basic earnings per share (in pence) 94.7 101.4
Adjusted basic earnings per share (in pence) 141.8 164.4
Diluted earnings per share (in pence) 94.1 100.9
Adjusted diluted earnings per share (in pence) 140.9 163.5
--------------------------------------------------- ----------- -----------
The adjustments to profit after tax have the
following effect:
Basic earnings per share (pence) 94.7 101.4
Share-based payments (including social security
costs) (pence) 6.5 5.7
Transaction and integration related costs 6.2 12.1
Exceptional items (pence) 6.1 2.8
Amortisation of intangible assets arising on
acquisitions (pence) 49.6 48.4
Unwinding of discount on contingent consideration
(pence) 0.6 -
Increase in fair value of contingent consideration
(pence) 0.5 -
Tax effect of the above adjustments and the
impact of tax items relating to prior years
(pence) (22.4) (6.0)
Adjusted basic earnings per share (pence) 141.8 164.4
--------------------------------------------------- ----------- -----------
Diluted earnings per share (pence) 94.1 100.9
Share-based payments (including social security
costs) (pence) 6.5 5.7
Transaction and integration related costs 6.1 12.0
Exceptional items (pence) 6.1 2.8
Amortisation of intangible assets arising on
acquisitions (pence) 49.3 48.1
Unwinding of discount on contingent consideration
(pence) 0.6 -
Increase in fair value of contingent consideration
(pence) 0.5 -
Tax effect of the above adjustments and the
impact of tax items relating to prior years
(pence) (22.3) (6.0)
Adjusted diluted earnings per share (pence) 140.9 163.5
--------------------------------------------------- ----------- -----------
10. Intangible assets
Other
Publishing Customer Advertiser acquired
Goodwill rights Brands relationships Subscribers relationships intangibles Other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Cost
At 1 October
2021 951.2 90.4 349.7 54.5 15.2 1.7 40.9 46.0 1,549.6
Additions
through
business
combinations 302.6 - 128.4 - 62.0 19.1 - 1.7 513.8
Other
additions - - - - - - - 9.0 9.0
Exchange
adjustments 86.4 0.5 23.5 3.3 9.2 2.1 2.6 2.5 130.1
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
At 30
September
2022 1,340.2 90.9 501.6 57.8 86.4 22.9 43.5 59.2 2,202.5
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Additions
through
business
combinations 29.2 - 10.5 7.4 - - 2.0 - 49.1
Other
additions - - - - - - - 9.3 9.3
Exchange
adjustments (49.1) (0.3) (14.9) (1.7) (4.8) (1.8) (1.5) (1.3) (75.4)
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
At 30
September
2023 1,320.3 90.6 497.2 63.5 81.6 21.1 44.0 67.2 2,185.5
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Accumulated
amortisation
and
impairment
At 1 October
2021 (263.0) (22.0) (31.4) (13.6) (5.7) (1.6) (25.5) (32.1) (394.9)
--------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Charge for
the
year - (7.5) (27.4) (7.8) (9.4) (1.0) (5.2) (13.0) (71.3)
Exchange
adjustments (7.6) (0.4) (4.3) (1.3) (2.0) (0.4) (2.4) (2.1) (20.5)
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
At 30
September
2022 (270.6) (29.9) (63.1) (22.7) (17.1) (3.0) (33.1) (47.2) (486.7)
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Charge for
the
year - (6.4) (28.7) (8.6) (9.7) (1.7) (4.3) (11.6) (71.0)
Exchange
adjustments 3.9 0.2 3.0 0.7 1.2 0.2 1.2 1.2 11.6
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
At 30
September
2023 (266.7) (36.1) (88.8) (30.6) (25.6) (4.5) (36.2) (57.6) (546.1)
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Net book
value
at 30
September
2023 1,053.6 54.5 408.4 32.9 56.0 16.6 7.8 9.6 1,639.4
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Net book
value
at 30
September
2022 1,069.6 61.0 438.5 35.1 69.3 19.9 10.4 12.0 1,715.8
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Net book
value
at 1 October
2021 688.2 68.4 318.3 40.9 9.5 0.1 15.4 13.9 1,154.7
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Useful 5-15 3-20 8-10 7-11 9-15 3-10 2
economic years years years years years years years
lives
------------- --------- ----------- ------- -------------- ------------ -------------- ------------ ------ -------
Acquired intangibles are amortised over their estimated economic
lives, typically ranging between three and ten years. The other
acquired intangibles category in the table above includes assets
relating to customer lists, content and websites.
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 19.
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.
Impairment assessments for goodwill
The net book value of goodwill at 30 September 2023 consists of
GBP603.0m (2022: GBP603.0m) relating to the UK, GBP438.9m (2022:
GBP453.6m) relating to the US and GBP11.7m (2022: GBP13.0m)
relating to Australia.
At 30 September 2023 the Group performed its annual impairment
assessment of goodwill and concluded that no impairment of goodwill
was required.
11. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes
of the cash flow statements:
2023 2022
GBPm GBPm
-------------------------- ------ ------
Cash and cash equivalents 60.3 29.2
-------------------------- ------ ------
The increase in cash is due to the build up of GBP22m as at 30
September 2023 in order to finance the share buyback programme (see
notes 15 and 16 for further detail).
12. Financial liabilities - interest-bearing loans and
borrowings
Amounts drawn down on the Group's borrowing facilities, net of
unamortised issue costs are as follows. All borrowings are floating
rate with the applicable rates at 30 September shown below. This
excludes the impact of any interest rate swaps.
Non-current liabilities
Interest rate Interest rate
at at
30 September 30 September 2023 2022
2023 2022 GBPm GBPm
----------------------------- -------------- -------------- ------ ------
Sterling term loan - 3.99% - 80.0
Export development guarantee
term facility 7.04% - 295.2 -
Sterling revolving loan - 4.32% - 115.5
US dollar revolving loan 7.43% 4.98% 81.8 161.5
AU dollar revolving loan 6.06% 4.68% 10.5 12.0
----------------------------- -------------- -------------- ------ ------
Total 387.5 369.0
----------------------------- -------------- -------------- ------ ------
Current liabilities
Interest rate Interest rate
at at
30 September 30 September 2023 2022
2023 2022 GBPm GBPm
------------------------- --------------- -------------- ------ ------
Multi-currency overdraft - 1.00% - 4.2
Sterling term loan - 3.99% - 79.6
Total - 83.8
------------------------------------------ -------------- ------ ------
The interest-bearing liabilities are repayable as follows:
2023 2022
GBPm GBPm
--------------------------- ------ ------
Within one year - 83.8
Between one and two years 20.0 -
--------------------------- ------ ------
Between two and five years 367.5 369.0
--------------------------- ------ ------
Total 387.5 452.8
--------------------------- ------ ------
On 23 November 2022, the Group further extended its committed
debt facilities with a five-year, GBP400m EDG term facility
partially guaranteed by UK Export Finance. The facility, maturing
November 2027, has a twelve-month availability period and amortises
from year three. It was secured at competitive market rates, on
substantially similar terms to, and with the same covenants as, the
Group's Revolving Credit Facility ('RCF'). On signing, the first
GBP160m was utilised to prepay the Group's previous Term Loan
maturing 31 December 2023.
In May 2023 the Group exercised the second one-year extension
option on its GBP500m RCF, taking the repayment date out to July
2026.
Interest bearing loans are shown net of unamortised issue costs
which amounted to GBP7.7m (2022: GBP5.0m).
13. Provisions
Property Other Total
GBPm GBPm GBPm
------------------------------ --------- ------ ------
At 1 October 2022 9.1 12.3 21.4
Charged(released) in the year 0.3 (1.0) (0.7)
Utilised in the year (2.7) (8.9) (11.6)
Foreign exchange movement - (1.9) (1.9)
------------------------------ --------- ------ ------
At 30 September 2023 6.7 0.5 7.2
------------------------------ --------- ------ ------
The provision for property relates to dilapidations and
obligations under short leasehold agreements on vacant property.
The majority of the vacant property provision is expected to be
utilised over the next three years. The reduction in other
provisions is primarily due to payment of GBP8.9m for settlement of
the provision for historic legal claims recognised on the Dennis
opening balance sheet.
14. Financial instruments
The Group applies IFRS 9 Financial Instruments. For the Group's
financial assets and liabilities, the following table shows the
measurement categories under IFRS 9:
Financial asset IFRS 9 classification
------------------------------------- ---------------------------------
Cash and cash equivalents Amortised cost
Trade and other receivables Amortised cost
Interest bearing loans and borrowings Amortised cost
------------------------------------- ---------------------------------
Lease liabilities Amortised cost
------------------------------------- ---------------------------------
Contingent consideration Fair value through profit or loss
------------------------------------- ---------------------------------
Derivative - interest rate swap Fair value through profit or loss
------------------------------------- ---------------------------------
There has not been a significant impact on the carrying amounts
of assets held.
Financial asset - derivative
The Group has exposure to changes in cash flows due to changes
in interest rates. To manage this risk, during the year the Group
entered into floating-to-fixed interest rate swaps to hedge a
proportion of its floating rate exposure to fixed rates. The swaps
have similar critical terms to the floating leg of swaps that form
part of the fair value hedges, such as the reference rate, reset
dates, notional amounts, payment dates and maturities. The full
fair value of a hedging derivative is classified as a non-current
asset or liability if the remaining maturity of the hedged item is
more than twelve months and as a current asset of liability, if the
maturity of the hedged item is less than twelve months.
There was no ineffectiveness to be recorded from the use of
interest rate swaps. The Group did not enter into any netting
arrangements.
The following table presents the Group's financial assets and
liabilities that are measured at fair value at 30 September
2023:
Level 2 Level 3
Fair value Fair value
Financial asset GBPm GBPm
--------------------------------- ------------ ------------
Assets
Financial asset - derivative 6.0 -
Liabilities
Financial liability - derivative (0.1) -
Contingent consideration - (8.2)
--------------------------------- ------------ ------------
All other financial assets and liabilities are classed as level
1.
Contingent consideration
At 30 September 2023 contingent consideration of GBP8.2m
($10.0m) related to the acquisition of ActualTech, LLC
("ActualTech") (see note 19 for further details). During the year
the terms of the earn-out agreement were updated. This resulted in
a fair value expense of GBP0.6m in the year (after discounting of
GBP0.7m) being recognised in the income statement.
The contingent consideration for ActualTech has been valued
using a scenario-based approach drawing from internal EBITDA
projections and weighting them according to the perceived
probability of being achieved. The outcome is then discounted to
reflect the market risk related to the earn-out and underlying
achievement of the EBITDA targets.
The discount rate was determined using a Capital Asset Pricing
Model (CAPM) approach.
The main level 3 inputs used in valuing the contingent
consideration were a discount rate of 13% and EBITDA.
A 10% change in the discount rate, which is considered to be a
reasonably possible alternative assumption, would give rise to less
than GBP0.1m impact on the quantum of the liability recognised.
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:
Increase/(decrease)
Assumption Increase/(decrease) in liability (GBPm)
-------------- -------------------- ---------------------
Discount rate +10% -
Discount rate (10)% -
EBITDA +10% 1.5
EBITDA (10)% (0.2)
-------------- -------------------- ---------------------
15. Issued share capital
2023 2022
--------------------------------------- -------------------- --------------------
Number Number
of GBPm of GBPm
shares shares
--------------------------------------- ----------- ------- ----------- -------
Allotted, authorised, issued and fully
paid Ordinary shares of 15p each
At 1 October 120,855,930 18.1 120,624,634 18.1
Share scheme exercises - - 229,113 -
Share buyback (1,784,349) (0.3) - -
Share Incentive Plan matching shares 5,554 - 2,183 -
--------------------------------------- ----------- ------- ----------- -------
At 30 September 119,077,135 17.8 120,855,930 18.1
--------------------------------------- ----------- ------- ----------- -------
During the year, 5,554 Ordinary shares were issued under the
Share Incentive Plan for a combined total cash commitment of GBPnil
(2022: 2,183 ordinary shares, total cash commitment of GBPnil).
Given the retained cash in the business, on 4 August 2023 the
Group commenced a share buyback programme, resulting in a reduction
in share capital of 1.8m shares in the year, at a nominal value of
GBP0.3m and a total cost of GBP13.1m.
16. Reserves
Share premium account
Share premium represents the excess of proceeds received over
the nominal value of new shares issued.
Treasury reserve
The treasury reserve represents the cost of shares in Future plc
purchased in the market and held by the Employee Benefit Trust
('EBT') to satisfy awards made by the trustees.
During the year the Company purchased 1,125,000 of its own
shares to fund the future vesting of share options, at a total
value of GBP11.4m and 259,918 shares held by the EBT were used to
satisfy the vesting of share options at a total value of GBP4.1m
(2022: 522,795 shares were purchased, at a total value of
GBP7.9m).
Capital redemption reserve
A capital redemption reserve of GBP0.3m was created during the
year, being the nominal value of shares purchased and cancelled as
part of the share buyback programme (see note 15 for further
detail).
Merger reserve
During the current year there was no movement on the merger
reserve.
Accumulated exchange differences
The reserve for accumulated exchange differences comprises the
revaluation of the Group's foreign currency entities, principally
the US and Australia, on consolidation.
Cash flow hedge reserve
During the year the Group entered into interest rate swaps, in
order to hedge against fluctuations in interest rates. The cash
flow hedge reserve represents the cumulative amount of gains and
losses on the interest rate swap deemed effective.
17. Contingent liabilities
There were no material contingent liabilities as at 30 September
2023 or 30 September 2022.
18. Related party transactions
The Group had no material transactions with related parties in
2023 or 2022 which might reasonably be expected to influence
decisions made by users of these financial statements.
19. Acquisitions
Acquisition of Shortlist
On 18 October 2022, Future completed the acquisition of
ShortList Media Limited (trading as Shortlist.com), a technology
website, for consideration of GBP0.2m.
Acquisition of ActualTech LLC
On 30 November 2022 the Group acquired ActualTech LLC
("ActualTech"), a provider of content marketing solutions for B2B
marketers, for initial cash consideration of GBP32.2m (inclusive of
GBP3.3m cash acquired, representing an Enterprise Value of $36m).
On acquisition a further variable deferred consideration up to a
total value of $24 million could be paid, subject to meeting
certain financial targets based on the twelve-month period ending
31 December 2023. The table below includes GBP6.9m ($8.3m) as
contingent consideration, which represents its fair value at the
date of acquisition. At the reporting date, the fair value of the
contingent consideration had increased to GBP8.2m ($10.0m) due to
discounting and an increase in its fair value at 30 September 2023
as a result of a change to the terms of the earn-out agreement,
which increased the maximum earn out payable to $25 million. 100%
of the voting equity interest was acquired.
The impact of the acquisition on the consolidated balance sheet
was:
Fair value
GBPm
------------------------------ -----------
Intangible assets
- Brand 3.4
- Customer relationships 7.4
- Database 0.3
- Software 0.5
Cash and cash equivalents 3.3
Trade and other receivables 1.4
Trade and other payables (0.6)
------------------------------ -----------
Net assets acquired 15.7
------------------------------ -----------
Goodwill 23.4
------------------------------ -----------
39.1
------------------------------ -----------
Consideration:
Cash 32.2
Contingent consideration 6.9
------------------------------ -----------
Total consideration 39.1
------------------------------ -----------
ActualTech specialises in webinars, white papers, syndication
and content marketing on owned platforms. The acquisition further
diversifies the Group by strengthening its position in the B2B
vertical and provides greater scale and reach in North America to
further monetise its highly-valuable B2B audience. In addition, the
Group will be leveraging ActualTech's webinar capabilities and its
US expertise within the Group's existing portfolio.
Goodwill is attributable to the opportunities associated with
future returns from new customer relationships. The intangibles
recognised, including goodwill, are expected to be deductible for
tax purposes.
Included within the Group's results for the period are revenues
of GBP11.0m and a profit before tax of GBP4.5m from ActualTech
(excluding acquired intangible amortisation).
If the acquisition had been completed on the first day of the
financial year, it would have contributed GBP13.1m of revenue and a
profit before tax of GBP5.3m (excluding acquired intangible
amortisation) during the period.
Gross trade receivables were GBP1.4m on acquisition, of which
GBP1.4m were expected to be recovered.
Acquisition of Gardening Know How
On 7 February 2023, the Group acquired Gardening Know How, a
specialist interest site for gardening based in the US, for total
consideration of GBP14.8m (inclusive of GBP0.8m cash acquired,
representing an Enterprise Value of $17m). The Gardening Know How
acquisition brings additional expertise to the Group, strengthening
the Group's strategic Homes vertical. 100% of the voting equity
interest was acquired.
The impact of the acquisition on the consolidated balance sheet
was:
Fair value
GBPm
============================== -----------
Intangible assets
- Brand 7.1
- Content 1.2
Cash and cash equivalents 0.8
Trade and other receivables 0.3
Trade and other payables (0.1)
============================== -----------
Net assets acquired 9.3
------------------------------ -----------
Goodwill 5.5
------------------------------ -----------
14.8
------------------------------ -----------
Consideration:
Cash 14.8
------------------------------ -----------
Total consideration 14.8
------------------------------ -----------
Goodwill is attributable to future premium advertising
relationships and new evergreen content. The intangibles
recognised, including goodwill, are expected to be deductible for
tax purposes.
Included within the Group's results for the period are revenues
of GBP2.3m. Gardening Know How has been integrated into the Future
business, including use of the Group's shared back office
functions, therefore individual profits for the business cannot be
separately identified. The website is expected to be migrated to
our tech platform in H1 2024. The migration will drive better
monetisation of the website and will help recover a challenging FY
2023 performance. The FY 2023 performance was driven by lower
online users.
Gross trade receivables were GBP0.3m on acquisition, of which
GBP0.3m were expected to be recovered.
Disposal of titles
On 28 April the Group disposed of The Shooting Times &
Country, Sporting Gun, www.shootinguk.co.uk and The Shooting Show
for total consideration of GBP0.2m, of which GBP0.1m is deferred
for twelve months, resulting in a gain on disposal of GBP0.1m.
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END
FR MZMGZVNFGFZG
(END) Dow Jones Newswires
December 07, 2023 02:00 ET (07:00 GMT)
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