Future Regulatory News (FUTR)

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

Financial highlights

? Revenue of £788.9m (FY 2022: £825.4m) 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 margin4 of 32%, only down (1)ppt year-on-year (FY 2022: 33%). This translated into adjusted operating profit decline of (6)% to £256.4m (FY 2022 £271.7m). Statutory operating profit was down (7)% to £174.5m (FY 2022: £188.6m).

? The Group remains highly cash generative with adjusted free cash flow of £253.2m (FY 2022: £267.2m), representing 99% of adjusted operating profit (FY 2022: 98%). Cash generated from operations was £241.0m (FY 2022: £268.5m).

? Capital allocation - three acquisitions completed in the first half for a combined consideration of c.£45m, and a £45m share buyback programme launched with £13.1m completed at the end of September.

? Leverage10 reduced to 1.25x (FY 2022: 1.48x) resulting in net debt11 at the end of the year of £327.2m (FY 2022: £423.6m). Total debt facilities at the end of September 2023 were £900m (FY 2022: £660m).

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 £25m-£30m 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 positions12 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 user13 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 £25m-£30m investment programme that will translate into adjusted operating margin in the range of 28-30%, with £20m 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 £7.0m of additional investment with £5.5m 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 £10.0m of additional investment with £8.0m 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 £6.5m of additional investment with £3.5m 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 £2.5m of which £1.5m 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 £2.0m of additional investment with £1.5m 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 £25m-£30m investment programme that will translate into adjusted operating margin in the range of 28-30%, with £20m 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.

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:

Revenue

Group revenue was down (4)% in the year to £788.9m (FY 2022: £825.4m), 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 £47.1m to revenue in the year.

UK revenue declined by (5)% or £(22.9)m to £476.6m (FY 2022: £499.5m). 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 £(13.6)m to £312.3m (FY 2022: £325.9m) 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 £(20.3)m or (4)% and organically by (13)% to £514.9m (FY 2022: £535.2m).

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 £48.8m 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 £11.0m 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 £2.3m 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 £(16.2)m or (6)% to £274.0m (FY 2022: £290.2m). 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.

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 £(15.3)m to £256.4m (FY 2022: £271.7m) with organic profit performance partially offset by contributions from acquisitions and favourable foreign exchange. Statutory operating profit decreased by £(14.1)m to £174.5m (FY 2022: £188.6m) and statutory operating margin decreased by (1)ppt to 22% (FY 2022: 23%) driven by the performance in adjusted operating profit, and includes £8.4m of restructuring costs, of which £2.0m is included in transaction and integration related costs and £6.4m in exceptional items.

Earnings per share

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 £169.9m (FY 2022: £198.1m).

Transaction and integration related costs

Transaction and integration related costs of £6.5m incurred in the year reflect £5.3m of deal-related fees, £2.0m of restructuring costs related to recent acquisitions net of £0.8m released following settlement of a provision for historic legal claims recognised on the Dennis opening balance sheet, of which £8.9m was paid in the year (FY 2022: £3.6m relating to the Dennis and Who What Wear acquisitions, £1.2m relating to restructuring and other integration related costs). £0.9m relates to acquired properties which are onerous (FY 2022: £9.7m).

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 £6.4m relating to restructuring costs (FY 2022: £2.1m) and £0.9m relating to onerous properties (FY 2022: £1.3m).

Other adjusting items

Amortisation of acquired intangibles of £59.4m (FY 2022: £58.3m) 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 £0.9m to £7.8m (FY 2022: £6.9m). 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, £400m 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 £160m 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 £500m RCF, taking the maturity date out to July 2025.

Net finance costs increased to £36.4m (FY 2022: £18.6m) which includes external interest payable of £29.7m reflecting the utilisation of the Group's debt facilities to fund the ActualTech and Gardening Know How acquisitions, and higher interest rates; £3.7m in respect of the amortisation of arrangement fees relating to the Group's bank facilities; £0.7m unwinding of discount on contingent consideration relating to the ActualTech acquisition; and £0.6m increase in fair value of contingent consideration to the ActualTech acquisition. A further £2.6m of interest was recognised in relation to lease liabilities, offset by £0.2m 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 £300.0m (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 £24.7m (FY 2022: £47.8m), comprising a current tax charge of £44.3m (FY 2022: £38.3m) and a deferred tax credit of £19.6m (FY 2022: charge of £9.5m). 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 rate6 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 £23.0m to £107.2m (FY 2022: £130.2m) 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 £18.6m to £34.4m in the period (FY 2022: £53.0m) primarily reflecting the write-down of right-of-use assets and leasehold improvements on onerous properties of £10.7m, primarily attributable to property leases inherited via the acquisition of Dennis (included within transaction and integration related costs) and depreciation of £8.8m, offset by capital expenditure of £2.0m.

Intangible assets decreased by £76.4m to £1,639.4m (FY 2022: £1,715.8m) driven by amortisation (£71.0m) and an FX headwind of £63.8m. This was partially offset by the in-year acquisitions of ActualTech and Gardening Know How (£49.1m) and capitalisation of website development costs (£9.3m).

Trade and other receivables decreased by £10.7m to £123.5m (FY 2022: £134.3m) primarily due to a £5m reduction in current trading net of the returns provision and a £10m improvement in cash collection during the period

Trade and other payables decreased by £15.4m to £128.4m (FY 2022: £143.8m) 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 £14.2m, primarily due to payment of £8.9m 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 £327.2m (FY 2022: £423.6m) 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 £22m to finance the share buyback programme.

During the year, there was a cash inflow from operations of £241.0m (FY 2022: £268.5m, HY 2022: £138.1m) reflecting strong cash generation. Adjusted operating cash inflow was £265.4m (FY 2022: £278.8m). A reconciliation of cash generated from operations to adjusted free cash flow is included below:

¹ Relating to equity-settled share awards with vesting periods longer than twelve months.

Other significant movements in cash flows include acquisitions totalling £47.5m (FY 2022: £113.1m), net repayment of bank loans and overdraft (net of arrangement fees) of £52.3m (FY 2022: £372.3m), acquisition of own shares of £24.5m (FY 2022: £7.9m), lease payments of £6.0m (FY 2022: £5.4m) and the balance reflecting the Group's strong cash generation. The Group paid a dividend in the period of £4.1m (FY 2022: £3.4m). Foreign exchange and other movements accounted for the balance of cash flows.

Adjusted free cash flow decreased to £253.2m (FY 2022: £267.2m), 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 £500m RCF which runs to July 2026 and the £400m 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 £7.4m (FY 2022: £115.3m). This is primarily driven by deferred income of £58.5m 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

Earnings per Ordinary share

Consolidated statement of comprehensive income

for the year ended 30 September 2023

Consolidated statement of changes in equity

for the year ended 30 September 2023

Consolidated balance sheet

as at 30 September 2023

Consolidated cash flow statement

for the year ended 30 September 2023

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:

B. Analysis of net debt

C. Reconciliation of movement in net debt

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:

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:

A reconciliation of adjusted EBITDA and adjusted operating profit to profit before tax is shown below:

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:

¹ Relating to equity-settled share awards with vesting periods longer than 12 months.

Reconciliation between revenue and organic revenue at constant currency:

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

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:

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:

(b) Business segment

(i) Gross profit by business segment

'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:

3. Net operating expenses

Operating profit is stated after charging:

4. Transaction and integration related costs

Transaction and integration related costs of £6.5m incurred in the year reflect £5.3m of prospective and executed deal-related fees, £2.0m of restructuring costs related to recent acquisitions net of £0.8m released following settlement of a provision for historic legal claims recognised on the Dennis opening balance sheet, of which £8.9m was paid in the year (FY 2022: £3.6m relating to the Dennis and Who What Wear acquisitions, £1.2m relating to restructuring and other integration related costs).

£0.9m relates to acquired properties which are onerous (FY 2022: £9.7m).

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

Exceptional costs incurred in the period include £6.4m relating to restructuring costs (FY 2022: £2.1m) and £0.9m relating to onerous properties (FY 2022: £1.3m).

6. Finance income and costs

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:

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:

Included below is a reconciliation between the statutory and adjusted tax charge: