AR16 Future plc Annual Report and Accounts 2016 01 Future plc Group overview Future plc is an international media group listed on the London Stock Exchange (symbol: FUTR). These highlights refer to the Group’s annual results for the year ended 30 September 2016. Strategic Report Continuing Revenue Net Cash 01 Group overview 02 Chairman’s statement 03 Chief Executive’s review £59.0m £0.5m 05 Strategic overview 2015: £59.8m 2015: Net Debt £(1.8)m 07 What we do 09 Risks and uncertainties 11 Corporate responsibility Continuing EBITDAE Continuing Exceptional items Financial Review £4.7m £(16.5)m 13 Financial review 2015: £3.6m 2015: £(2.5)m Corporate Governance Continuing EBITE Continuing Loss Before Tax 17 Board of Directors 19 Directors’ report 23 Corporate Governance report 29 Directors’ remuneration report £2.3m £(14.9)m 2015: £0.8m 2015: £(2.3)m 41 Independent auditors’ report Financial Statements Continuing Digital Advertising Unique Users 43 Financial statements 79 Notice of Annual General Meeting 84 Investor information 78% 45.2m of total continuing advertising a month (Q4 up 14% on Q3) revenues (2015: 77%) Continuing Recurring Revenues • EBITDAE represents • Recurring revenues earnings before interest, encompass e-commerce tax, depreciation, and subscriptions. amortisation, impairment • Exceptional items for and exceptional items. 2016 above includes • EBITE represents impairment of intangible £15.0m earnings before assets of £13.0m. interest, tax, impairment 2015: £12.9m and exceptional items. Annual Report and Accounts 2016 02 Strategic Report Chairman’s statement A diversified content business with data at its heart This year the Group has gained significant momentum; by moving to a new divisional structure, Future is benefiting from greater operational efficiency. The high-growth Media division is developing new revenue streams in e-commerce and events, backed up by significant digital advertising revenue and the Magazine division has increased operational efficiency through a strengthened magazine portfolio. This has been an extremely good year for The Group continues to develop its brands, Future continues to Future; operating profit before exceptional creating truly global, market-leading items has grown by 188% year-on-year franchises of its digital and events assets and “ produce innovative led by increasing revenues in the Media producing a record-breaking year for user content through expert division, including material and fast-growing reach, with digital users reaching 53 million. e-commerce and events revenue streams. In November 2015 the Group was reorganised insight into what its Future continues to produce innovative into two new divisions, Media and Magazine, content through expert insight into what its to position it for growth. This new divisional customers need. customers need and monetises this through structure has resulted in a more efficient ” a diversified business model including digital operating model which better reflects the advertising, events and magazines. divisions’ different market dynamics. Additionally during the latter part of the year, Peter Allen After a number of challenging years, the team a new Media Services division has been Chairman is now building a track record of delivery established which capitalises on opportunities and the clear strategy to deliver a content to exploit the Group’s capabilities as a content platform business, where we bring audiences platform, focusing on growing revenues in and businesses together through the use of third party relationships, particularly licensing, content, is working. franchising and syndication of its brands, content and technology. We have also completed a number of acquisitions, which have strengthened the On behalf of the Board, I would like to thank portfolio and will result in economies of scale all our employees for their hard work and and enhanced operational profitability. The commitment this year. last of these, Imagine, in October 2016, will have a material impact on revenue and profits. The integration of Imagine is well on track. The Group is committed to being brilliant at the basics, including proprietary, scalable technology, which has resulted in a leaner and simpler business and increased operational Peter Allen efficiency. In addition the Group has adopted Chairman a disciplined approach to investment and a focus on cash generation. 03 Future plc Chief Executive’s Strategic report review Future’s strategy to create a leading global specialist media platform with data at its heart, monetised through diversified revenue streams, has delivered extremely positive results with Media division revenue growth of 14% year-on-year. The Group is also benefiting from its operational leverage and the acquisitions Future has made this year have further strengthened the portfolio. up 43% year-on-year, through strengthened Additionally, our award winning event, The We focus on content that relationships with hardware providers. Photography Show, generated over £2m of revenue and attracted 30,000 visitors this year. “ connects with our substantial Our online audience has never been stronger, audience base and monetises with our global websites breaking our own We continue to innovate in the Magazine records. During our peak season pre- division with a number of launches during the their needs through Christmas we reached 53m online users. year, including introducing new brands into the kids category, while we continue to focus on increasingly diversified We have strong engagement with our users strengthening the performance of our existing revenue streams. through our large social media following, magazines through targeted re-launches. reaching 45m people across Facebook, ” Twitter and YouTube and generating 10m sessions to our websites from social media. Divisions Zillah Byng-Thorne Chief Executive We continue to innovate in our Magazine In November 2015 the Group was reorganised division, including new magazine launches and into two new divisions, Media and Magazine, updates to existing titles. to enable a more efficient operating model to be employed in each division, reflecting their different market dynamics. Data-led content strategy Diversified revenue The Media division, underpinned by leading The Group made significant progress in the We understand the value of diversified revenues global brands, is focused on building fast- last financial year, both operationally and within media and continue to concentrate growing digital and diversified revenues. financially. on developing material, recurring new cash Future has invested in the rapidly growing generative products in order to take advantage revenue streams of e-commerce and Future is a global content platform for of a fast changing media landscape. We have events and continues to innovate in digital specialist media with scalable, diversified clearly diversified revenue streams in digital advertising. brands that has data at its heart. Data drives advertising, e-commerce, events, licensing, Future’s strategy by helping the Group retail, subscriptions, contract publishing and The Media division focuses on being at the understand its audience’s needs and third party sales. forefront of digital innovation, in particular the particularly the path to purchase, which allows high-growth technology and games markets. it to provide value for its partners, clients and Our e-commerce business goes from strength It has a number of leading brands including itself. This creates loyal communities. This to strength; enriching users’ experience and techradar, PC Gamer, GamesRadar+, The has been most evident in the Group’s providing price comparison and purchase Photography Show, Generate and Golden fast-growing e-commerce business, where options. We have our own proprietary price Joysticks. revenue is up 187% year-on-year. comparison technology, “Hawk”, which provides us with a powerful position in the UK online The Magazine division is specialist and Our data-led content strategy underpins our technology market compared to many other brand-led. It has over 80 magazines and move to a diverse revenue business, with large consumer technology websites. Our bookazines and is the number one digital e-commerce and events showing notable acquisition of Next Commerce in August 2016 consumer magazine publisher in the UK. rates of growth. Additionally, a major further builds on the range of our product The division is focused on creating the best re-alignment of the cost base and tight categories, introducing a significantly improved content in the market in an efficient operation management of the decline of the print taxonomy, while also expanding our reach into and continues to tightly manage the portfolio. business have resulted in further growth in Australia and South East Asia. In addition, we have made a number of operating profit. During the year we completed acquisitions this year within existing and new the re-organisation of the business into two We have a strong digital advertising revenue verticals, which strengthen our portfolio and distinct divisions; Media, which is focused on stream, advertising targeted at individuals based provide synergistic benefits. global scalable brands, and Magazine, which on behavioural segmentation and a technology is focused on market-leading specialist stack that capitalises on the growth in In October 2016, we established a new content. programmatic while maximising digital yield. We division, Media Services, in order to bring provide access to