ANNUAL REPORT FY 2020 Contents Strategic Report 6 GROUP OVERVIEW 8 CHAIRMAN’S STATEMENT 12 OUR VISION AND STRATEGY 14 HOW WE EXECUTE OUR STRATEGY • Protect the core, grow existing brands & audiences • Ongoing diversification • Operating leverage • The Future Playbook 22 LENS ONE - GLOBALLY 24 LENS TWO - DIVISIONALLY 26 LENS THREE - VERTICALLY • Future Passions • Future Living • Future B2B 34 CHIEF EXECUTIVE’S REVIEW 38 RISKS AND UNCERTAINTIES 40 SUMMARY OF PRINCIPAL RISKS 44 HOW WE ENGAGE WITH OUR STAKEHOLDERS 49 COVID-19 RESPONSE 50 CORPORATE RESPONSIBILITY Financial Review 56 FINANCIAL REVIEW Ranvir Singh photographed for Woman & Home magazine 2 / FUTURE PLC ANNUAL REPORT FY 2020 Corporate Governance 62 CHAIRMAN’S INTRODUCTION 64 GOVERNANCE FRAMEWORK 66 BOARD OF DIRECTORS 70 NOMINATION COMMITTEE 74 AUDIT AND RISK COMMITTEE 80 DIRECTORS’ REMUNERATION REPORT 84 DIRECTORS’ REMUNERATION POLICY 94 ANNUAL REPORT ON REMUNERATION 104 DIRECTORS' REPORT Financial Statements 112 INDEPENDENT AUDITORS’ REPORT 120 CONSOLIDATED INCOME STATEMENT 120 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 121 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 121 COMPANY STATEMENT OF CHANGES IN EQUITY 122 CONSOLIDATED BALANCE SHEET 123 COMPANY BALANCE SHEET 124 CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 125 NOTES TO THE CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS 127 ACCOUNTING POLICIES 134 NOTES TO THE FINANCIAL STATEMENTS 164 NOTICE OF ANNUAL GENERAL MEETING 174 SHAREHOLDER INFORMATION ANNUAL REPORT AND ACCOUNTS FY 2020 / 3 Strategic Report 6 GROUP OVERVIEW 8 CHAIRMAN’S STATEMENT 12 OUR VISION AND STRATEGY 14 HOW WE EXECUTE OUR STRATEGY • Protect the core, grow existing brands & audiences • Ongoing diversification • Operating leverage • The Future Playbook 22 LENS ONE – GLOBALLY 24 LENS TWO – DIVISIONALLY 26 LENS THREE – VERTICALLY • Future Passions • Future Living • Future B2B 34 CHIEF EXECUTIVE’S REVIEW 38 RISKS AND UNCERTAINTIES 40 SUMMARY OF PRINCIPAL RISKS 44 HOW WE ENGAGE WITH OUR STAKEHOLDERS 49 COVID-19 RESPONSE 50 CORPORATE RESPONSIBILITY 4 / FUTURE PLC Marcus Rashford photographed for FourFourTwo magazine Photographer: Nick Eagle Nick Photographer: ANNUAL REPORT AND ACCOUNTS FY 2020 / 5 Group Overview Future plc is a global platform for specialist media, listed on the London Stock Exchange (symbol: FUTR). These highlights refer to the Group’s Group Overview annual results for the year ended 30 September 2020. Media division KPIs Online users1 (million) Event attendees (thousand) FY 2020 281.8 FY 2020 100 FY 2019 181.0 FY 2019 151 FY 2018 118.0 FY 2018 155 FY 2017 49.0 FY 2017 76 Total global monthly online users to Future websites. Source: Google Analytics Number of visitors to Future events includes 32 in-person events held virtually 1All figures are excluding forums as they are non-commercial websites for in FY 2020 due to COVID-19. which Future does not write content or actively manage or monetise. Previously reported figures have been restated to exclude forums. FY 2020 forums only online users are 17.1m (FY 2019: 25.3m). Online users figures from FY 2019 have also been restated to exclude SmartBrief newsletter subscribers which have been reclassified to email newsletters. eCommerce transactions (million) Email newsletter subscribers (million) FY 2020 13.6 FY 2020 9.4 FY 2019 9.8 FY 2019 7.0 FY 2018 3.2 FY 2017 2.0 Number of transactions made via affiliate links on Future websites. Total subscribers to Future email newsletters. Data available from FY 2019. Magazine division KPIs Total circulation (million) Total subscribers (million) FY 2020 3.8 FY 2020 1.5 FY 2019 1.5 FY 2019 0.9 FY 2018 1.3 FY 2018 0.9 FY 2017 1.0 FY 2017 0.5 Total of each magazine and bookazine circulation per issue. Number of subscribers to Future magazines per issue. 6 / FUTURE PLC Strategic Report Corporate KPIs Revenue (£million) Global audience (million) FY 2020 339.6 FY 2020 393.6 FY 2019 221.5 FY 2019 269.2 FY 20182 130.1 FY 2018 193.4 FY 2017 84.4 FY 2017 85.6 Consolidated Group revenue. Includes magazines and bookazines circulation, online users (excluding forums), event attendees, social media followers (Twitter, Facebook and YouTube) and newsletter subscribers. Adjusted operating profit (£million) FY 2020 93.4 FY 2019 52.2 FY 2018 18.5 FY 2017 8.9 Adjusted operating profit represents earnings before share-based payments (relating to equity-settled awards with vesting periods longer than 12 months) and related social security costs, interest, tax, amortisation of acquired intangible assets, fair value movements on contingent consideration (and unwinding of associated discount) and currency option, and exceptional items, and any related tax effects. Adjusted operating profit margin Reported operating profit (£million) FY 2020 28% FY 2020 50.7 FY 2019 24% FY 2019 26.7 FY 20182 14% FY 2018 5.3 FY 2017 11% FY 2017 0.8 Adjusted operating profit margin is adjusted operating profit as a Consolidated statutory operating profit. percentage of revenue. Adjusted free cash flow (£million) Free cash flow (£million) FY 2020 96.0 FY 2020 87.9 FY 2019 53.7 FY 2019 49.7 FY 2018 17.4 FY 2018 12.3 FY 2017 15.3 FY 2017 10.2 Adjusted free cash flow is defined as adjusted operating cash inflow less Free cash flow is defined as a statutory operating cash inflow less capital expenditure. Adjusted operating cash inflow represents operating capital expenditure. cash inflow adjusted to exclude cash flows relating to exceptional items and settlement of employer's social security costs on share-based payments, and to include lease repayments following adoption of IFRS 16 Leases. Adjusted diluted EPS (p) Leverage FY 2020 74.7 FY 2020 .60x FY 2019 47.5 FY 2019 .74x FY 2018 24.3 FY 2018 .86x FY 20173 18.4 FY 2017 .91x Adjusted diluted EPS represents adjusted profit after tax divided by the For FY 2020 leverage is defined as debt as a proportion of EBITDA adjusted for weighted average dilutive number of shares at the year end date. the impact of IFRS 16 and including the 12-month trailing impact of acquired businesses (in line with the Group’s bank covenants definition). For previous years leverage is defined as total net debt divided by adjusted EBITDA. Notes 2. FY 2018 restated for IFRS 15 Revenue from contracts with customers. 3. Restated for FY 2018 rights issue. ANNUAL REPORT AND ACCOUNTS FY 2020 / 7 Chairman’s Statement Richard Huntingford Chairman’s Statement Chairman’s Chairman ear Shareholders, and scalable technology stack is critical in our ability to In this highly unusual and challenging respond to the changing media landscape; our year, it is my pleasure to report that Future eCommerce capability gives our intent audience what they has continued to thrive, with Future’s need to be guided through online purchases, and our Dcontent now read by one in three people in the UK and US. advertising tech stack provides advertising clients with Global audiences increased rapidly during FY 2020 from a high-value targeted audiences. mix of underlying growth in audience engagement, through new launches and acquisitions, and the increased Value-led business consumption of digital content during the pandemic. As a value-led business, we are driven by our purpose and This growth in audience has helped lead to another defined by our values. We have continued this year to focus exceptional year of results. Revenue for the year increased on embedding our value-based culture. Our values support by 53% to £339.6m, with organic revenue growth of 6% our strategy and the way we execute it, so we rely on our driven by strong organic Media revenue growth of 23% Future Playbook to bring alignment in the way we behave which offset the impact of COVID-19 on Magazines and work. Despite the social, economic and environmental revenue, which declined organically by 29%. Adjusted challenges of this year beyond just the pandemic, we have operating profit increased 79% to £93.4m. These results seen the positive effects of our staff living our values. These were delivered despite the unprecedented challenges challenges have brought out the best in our staff; from arising from the pandemic. innovative solutions to continuing to deliver high-quality content and experiences to our communities and our Clear strategy clients, to support and engagement of cultural change, The Group continues to successfully execute on the inclusion and diversity. We recognise that to continue the strategy of being a global platform for specialist media, success of the business we must continue to facilitate a with scalable, diversified brands, and this has resulted in value-led culture, encouraging and enabling our employees strong financial performance and total shareholder return. to operate in this way. We maintain our focus on our purpose, which is to change people’s lives through sharing Stakeholder engagement knowledge and expertise with others, making pages 44 to 48 it easy and fun for them to do what they want. The proven success of our strategy As you will read later in this Annual Report, makes it enduring. Our commitment to our value-led culture was very much to the producing high-quality content, delivered fore in the boardroom, when the pandemic across multiple platforms, helps us expand unfolded, as we sought to understand, respond the loyal communities and audiences we’ve to and balance the needs and priorities of our built up over many years. different stakeholder groups, whose interests With this content at our heart, the and well-being are dependent on our decision- Group has a diversified range of making. I firmly believe that we got the balance revenue streams from as fairly weighted as could have been consumer direct expected. purchases, advertising, eCommerce and Challenging market events. Our innovative FY 2020 has been a year of significant market challenges, from the COVID-19 8 / FUTURE PLC Strategic Report pandemic to economic, social and political disruption, Investing in growth ABOVE: Barcroft and as we enter the financial year 2021 these challenges The Group has a clear acquisition strategy of buying creates content continue.