Future Plc Annual Report and Accounts 2014
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2014 Future plc Annual Report and Accounts 01 Future plc Group overview Future plc is an international media group and leading digital publisher, listed on the London Stock Exchange (symbol: FUTR). These highlights refer to the Group’s annual results for the year ended 30 September 2014. Strategic Report Continuing Revenue Net Cash 01 Group overview 02 Chairman’s statement 03 Chief Executive’s review £66.0m £ 7. 5 m 05 Business model 2013: £82.6m 2013: Net Debt £(6.9)m 07 What we do 08 Business review 09 Risks and uncertainties 11 Corporate responsibility Continuing EBITDAE Continuing Loss before tax Financial Review £(7.0)m £(35.4)m 13 Financial review 2013: £(0.6)m 2013: £(2.2)m Corporate Governance Continuing EBITE Continuing Exceptional items 17 Board of Directors 19 Directors’ report 23 Corporate Governance report 29 Directors’ remuneration report £(10.3)m £(24.3)m 41 Independent auditors’ report 2013: £(3.4)m 2013: £2.6m Financial Statements Continuing Digital Advertising Continuing Users 45 Financial statements 82 Notice of Annual General Meeting 87 Investor information 66% 57m of total advertising revenues (2013: 61%) a month (+10% year-on-year) EBITDAE represents EBITE represents Exceptional items for earnings before interest, earnings before 2014 above includes tax, depreciation, interest, tax, impairment impairment of intangible amortisation, impairment and exceptional items. assets of £16.8m. and exceptional items. Annual Report and Accounts 2014 02 Strategic Report Chairman’s statement Transformational Year This has been a year of signifi cant change for Future and the fi nancial results in 2014 do not refl ect the transformational activity that has been implemented. The strategy agreed by the Board and communicated at the half year is already beginning to show positive results, with our continuing business returning to profi t in the last quarter. Financial Review At the heart of the strategy is content that On 1 October 2014, we appointed Richard We enter 2015 with the connects with our audiences. During the Haley as our Chief Financial Offi cer. We are Corporate Governance transformation, this has remained a key focus delighted to have Richard join Future during “ transformation activity for the business. It is particularly encouraging this time of change and he brings experience largely completed, our that the changes already made have resulted from both the Media and Retail sectors. in Future having its highest ever number of organisation right-sized online users during September 2014. In addition, Mark Whiteling is retiring as a non-executive Director and Chairman of the and a new strategy Having spent three years driving the digital Audit Committee. I would like to thank him for that builds on our transition within the business, Mark Wood his contribution to Future over the last four stepped aside as Chief Executive in March years. I am pleased to announce Hugo Drayton existing strengths. of this year and returned to a non-executive joined the Board as non-executive Director with role with the Business. I am delighted to have effect from 1 December 2014. Hugo brings with ” Mark’s continued support and experience on him a wealth of Media and Digital experience. the Board and would like to thank him for his Peter Allen commitment to Future. On behalf of the Board, I would like to thank Chairman all our employees for their hard work and At the same time Zillah Byng-Maddick, our dedication during a particularly challenging Chief Financial Offi cer, was appointed Chief period. The Group couldn’t have achieved the Executive. She has led the transformation transformation and signifi cant change over the programme, building on Mark’s digital past year without the positive approach of our innovations, to create a leaner, simpler staff, both current and past. business focused on higher margin activities. During the year we disposed of our non-core Financial Statements portfolios for proceeds of £24.8m, paid down our debt and have agreed new banking facilities. We enter 2015 with the transformation activity largely completed, our organisation right-sized Peter Allen and a new strategy that builds on our existing Chairman strengths. We have seen positive momentum in Q4 and are encouraged about the trends as we enter 2015. 03 Future plc Chief Executive’s Strategic report review The Group initiated a root and branch review of the organisation in March 2014. Future’s market leading content continues to be valuable to a number of audiences, be they customers or clients. However, the organisational complexity was impacting on the Group’s ability to generate sustainable margins and the transition to a Digital and Diversified content business. Future has undertaken, and “ now largely completed, a substantial Transformation Customers programme. It is now D E E Entertain focusing on areas where it N R sees the highest potential. E M M O T O N T E ” E H S T C U s o I S C H I w w N E N A Zillah Byng-Maddick G H C ONTENT e T O T i T Chief Executive t H A o G L v that E N O . I D e C . S I CONNECTS . U G R T S E Y T N O O The Future Wheel M M E R By connecting with our audience’s content N E needs, Future has created a sustainable E business model that meets those needs during D the entirety of the customer experience, whilst Engage at the same time ensuring that we operate as efficiently as possible to support margin growth as the customer’s needs evolve. Clients Brilliant at the Basics Leaner, Simpler Business Future has undertaken, and now largely Content that connects Financial performance completed, a substantial Transformation programme. The Group has been simplified, The strategy has content at its heart: creating Overall revenue from continuing operations was the balance sheet strengthened and non-core content that connects with audiences, £66.0m (2013: £82.6m) and EBITDAE was a loss assets sold. It is now focusing on areas where customers and consumers is at the centre of of £7.0m (2013: £0.6m loss), with the positive Future sees the highest potential, being the everything we do. This supports the two key impact of the Transformation programme largely growing consumer technology market, games, customer experiences – “review led” content not reflected in the 2014 result. entertainment, music and photography. and “how to” content. During the second half of the year a number The five portfolios are: Technology, Future has changed the way it works by no of key elements of the new strategy were Games and Film, Music, Photography longer operating as individual brands but completed, including the restructuring of the US and Creative, and the Group continues instead as content teams, underpinned by and UK operations and property rationalisation, to create new adjacent revenue streams. experts, who create content for all mediums with over £15m of annualised overhead savings 41% of revenues now come from Digital of the business, with editorial teams creating being realised. These activities will deliver and Diversified activities compared to shared portfolio content for all platforms in the significant margin benefits in 2015. 37% in 2013. business as opposed to a brand-led structure. As a result of disposals and the restructuring, Future enters 2015 a leaner, simpler business The Group’s portfolio enables it to be at the Future has notably strengthened its balance with a strategy that focuses on its core centre of an increasingly digital and technology- sheet. The year-end net cash position was competency of content that connects its led world. The brands and content created help £7.5m and the Group also agreed an amended customers and clients. to connect consumers with these trends and and restated credit facility with its lenders. ensure that Future meets their evolving needs. The timing of restructuring payments and the Annual Report and Accounts 2014 04 Strategic Report TechRadar is the UK’s The Photography No. 1 publisher of biggest consumer Show is the largest digital magazines technology site annual photography in the UK show in Europe working capital related to the disposals means TechRadar, the news and reviews site, which areas of expertise, including the creation that the majority of this cash balance will unwind is Future’s top brand, grew its users by 27% to of a new Product and Technology team during 2015. The Group expects the underlying 26 million during the year, with 41% of the users and Consumer a Commercial revenue team. business to be cash generative in 2015. accessing the site from their mobile devices. Financial Review The structure reflects the best of Future whilst The second half performance of the continuing Future has seen strong growth in audience bringing in external experts to allow the team business was significantly better than the reach for its total portfolio in Q4 with to focus on digital, retail, technology and first half. With an encouraging fourth quarter, particularly strong growth of 36% from the data. The last member of the new executive Future saw the continuing operations of the Technology portfolio, which holds the market management team joined the business on Group return to profit. leading position in the UK, and the Games 1 October 2014, which puts the Group in a portfolio, which maintains its number two stronger position going into 2015. The Group enters the 2014-15 financial year position in the UK market. with its business in a stronger and more stable position. Off the back of strong growth in audience Current trading and outlook reach in Digital Design (up 12%) and Photography (up 21%), Creativebloq and Whilst 2014 has been a disappointing year, Restructuring Digitalcameraworld have reached number it has been a critical year in putting in place the two positions in their UK markets.