Company Announcements

Half Year Results

Source: RNS
RNS Number : 0620Z
Future PLC
19 May 2021
 

19 May 2021

FUTURE plc

2021 HALF YEAR RESULTS

 Strategic momentum continues: record HY results, materially ahead of market expectations, with strong organic growth and margin progression

Future plc (LSE: FUTR, "Future", "the Group"), the global platform for specialist media, today publishes its results for the six months ended 31 March 2021.

Highlights

Financial results for the six months ended 31 March 2021

Adjusted results

HY 2021

HY 2020

Var

Revenue (£m)

272.6

144.3

+89%

Adjusted operating profit (£m)1

 89.2

39.9

+124%

Adjusted operating profit margin (%)

33%

28%

+5ppt

Adjusted diluted EPS (p)

65.4

32.9

+99%

Statutory results

HY 2021

HY 2020

Var

Revenue (£m)

272.6

144.3

+89%

Operating profit (£m)

59.7

24.7

+142%

Profit before tax (£m)

56.9

27.1

+110%

Cash generated from operations (£m)

85.9

35.7

+141%

Diluted EPS (p)

40.7

21.8

+87%

 

Financial highlights

Robust first-half performance extending our track record of growth in revenue, operating profit and cash flow:

·     An exceptionally strong first half, with revenue up 89% to £272.6m (HY 2020: £144.3m). Revenue ahead of last year by 21% on an organic2 basis, driven by the Media division's organic2 growth of 30% and in particular digital advertising on-platform organic2 growth of 30% and eCommerce affiliates' organic2 growth of 56%. US achieved revenue growth of 31% on an organic2 basis and UK revenues grew by 5% organically (UK has a higher mix of events and magazines revenues which were impacted more materially by the pandemic). Management estimates that COVID-19 related one-off revenue benefit for eCommerce is in the region of £5m in the period.

·     Improved quality of earnings, resulting from favourable revenue mix, scalability of the model, and platform effect: reflected by the strong adjusted operating profit1 margin of 33%, up 5ppt year-on-year (HY 2020: 28%). Adjusted operating profit¹ up 124% to £89.2m (HY 2020: £39.9m), and statutory operating profit up 142% to £59.7m (HY 2020: £24.7m)

·    The Group remains highly cash generative with strong adjusted free cash flow3 of £93.9m (HY 2020: £40.0m), representing 105% of adjusted operating profit (HY 2020: 100%).

·     Leverage4 of 1.3x (FY 2020: 0.6x) reflecting rapid de-levering of the Group following the acquisition of GoCo, resulting in net debt at half year of £241.3m (FY 2020: £62.1m).

Operational and Strategic Highlights

Future's strategy is to be a global platform for intent-led specialist media underpinned by technology, and enabled by data; with material, scalable, diversified brands. Over the last 6 months the execution of our strategy continued to deliver exceptional results:

·     Record engagement as we meet our audiences' needs, with total reach5 of 419m a month, and online user6 growth of 31% yoy to 311m (HY 2020: 237m).

·     Our high quality of audiences and data has resulted in a 19% increase in direct advertising campaigns which has underpinned digital advertising display yield mix growth of 34%.

·    Future's ability to deliver audiences with intent to retailers resulted in 95% yoy increase in merchants achieving sales from Future sites.

·    Platform effect continues to deliver; even with significant investment in editorial, including the creation of around 150 new roles and around 37 new roles in the technology team in HY 2021, while costs per head reduced 10% yoy.

·     Our successful strategy of accelerating growth through acquisitions continues to deliver:

Ongoing delivery of benefits from TI Media - acquired in April 2020; performance has been ahead of expectations with online user growth of 54% in March 2021 vs prior year, while eCommerce revenues grew 277% in March 2021 vs prior year.

Integration of GoCo - acquired in February 2021 - well advanced with a very strong performance in the period. Cost synergies arising from the transaction are now expected to be £15m per annum (versus earlier forecasts of £10m per annum).

Post-period end, in May 2021 we announced the acquisition of Marie Claire US which strengthens our position in the women's lifestyle vertical in North America, in line with the Group's strategy to achieve brand vertical leadership with a North America-first approach.

Outlook

·     Expect full-year results to be materially ahead of market expectations, underpinned by exceptional H1 performance.

·     While we remain cautious around the wider macroeconomic uncertainties associated with COVID-19, Q3 has started ahead of management expectations

Zillah Byng-Thorne, Future's Chief Executive, said:

 "I am delighted to report the ongoing successful execution of our strategy with record revenue and profit in this half, materially ahead of market expectations. Following an exceptional eCommerce and digital advertising performance during Black Friday and Christmas in Q1, we have carried this strong trading momentum through to the end of the first half.

 

"The progress we continue to make is testament to the diversity of our revenue streams, the agility of our people, and the scalable operating model we have built over time, which generates long-term sustainable growth.

 

"Content and data sit at the heart of our business; the depth of our market-leading, specialist brands means that today we reach one in three people online in the US and UK. Thanks to our expert content, combined with our scalable proprietary technology, we continue to increase our reach; the recent acquisition of Marie Claire US is another enabler of our ongoing focus on vertical leadership.

 

"We know our audiences increasingly seek intent-driven content and authoritative advice to inform their purchasing decisions. We were therefore delighted to acquire GoCo Group and Mozo during the period, accelerating our strategy by extending our eCommerce proposition beyond products into services, further diversifying our revenue streams.

 

"Looking ahead, we are well positioned to sustain the growth momentum we have built over recent years. Whilst we remain cautious about the wider macroeconomic uncertainties associated with COVID-19, we are confident in the outlook for the Group and expect the full year to be materially ahead of market expectations, underpinned by an exceptional H1 performance." 

 

Presentation

A live webcast of the analyst presentation will be available at 08.30 am (UK time) today at https://webcasting.brrmedia.co.uk/broadcast/6087e9640386285386ccb4ae

A copy of the presentation will be available on our website at https://investor.futureplc.com/results-home/

A recording of the webcast will also be made available.

 

The definitions below apply throughout the document.

1) Adjusted operating profit represents profit after tax adjusted for 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, exceptional items and any related tax effects.

2) Organic growth defined as the like for like portfolio excluding acquisitions and disposals made during FY 2020 and FY 2021 at constant FX rates.

3) Adjusted free cash flow is defined as adjusted operating cash inflow less capital expenditure. Adjusted operating cash inflow represents cash generated from operations adjusted to exclude cash flows relating to exceptional items and settlement of employer's taxes on share based payments, and to include lease repayments following adoption of IFRS 16 Leases.

4) Leverage is defined as debt as a proportion of EBITDA adjusted for the impact of IFRS 16 and including the 12 month trailing impact of acquired businesses (in line with the Group's bank covenants definition).

5) Audience reach includes: online users (excluding forums), print and digital magazine and bookazines circulation, email newsletter subscribers, social media followers and event attendees.

6) Online users defined as monthly online users from Google Analytics and, unless otherwise stated, is the monthly average over the financial period. Forums are excluded as they are non-commercial websites for which Future does not write content, and are not actively managed or monetised. HY 2020 online users has been restated to exclude forums.

7) Proforma numbers compare at constant exchange rates the performance of acquisitions on a like for like basis.

Enquiries:

Future plc                                                                                                                              +44 (0)122 544 2244

Zillah Byng-Thorne, Chief Executive Officer

Rachel Addison, Chief Financial 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

Future is a global platform business for specialist media with diversified revenue streams. Its content reaches over 1 in 3 adults online in both the UK and the US.

 

The Media division is high-growth with complementary revenue streams including eCommerce for products and services, events, and digital advertising (including advertising within newsletters). It operates in a number of sectors including technology, games & entertainment, music, home & gardens, sports, TV & film, real life, women's lifestyle and B2B. Its brands include TechRadar, PC Gamer, Tom's Guide, Android Central, Truly, Digital Camera World, Homebuilding & Renovating Show, GamesRadar+, The Photography Show, Top Ten Reviews, Marie Claire, Live Science, Guitar World, MusicRadar, Space.com, What to Watch, Gardening Etc, Adventure and Tom's Hardware.

 

The Magazine division focuses on publishing specialist content, with a combined global circulation of over 3 million delivered through more than 115 magazines, and 410 bookazines published a year. The portfolio spans technology, games & entertainment, sports, music, photography & design, homes & garden, country lifestyle, TV & film and B2B. Its titles include Country Life, Wallpaper, Woman & Home, Classic Rock, Decanter, Guitar Player, FourFourTwo, Homebuilding & Renovating, Digital Camera, Guitarist, How It Works, Total Film, What Hi-Fi? and Music Week.

Strategic and operational update

We have a relentless focus on the sustainable execution of our strategy - to be a leading global platform for intent-led specialist media underpinned by technology, enabled by data with scalable, diversified revenue streams. Our legacy media brands are the fuel that drives our engine, while releasing the benefit of our platform from previous acquisitions. We are focussed on organic growth across all key metrics, delivered as a result of our global approach to our audience reach, and using our operating model to enable a digitally-led publishing strategy.

Our strategy has continued to deliver during the last six months, as we made considerable progress and continued to drive strong organic growth alongside the acquisitions of GoCo, Mozo and the recently announced acquisition of Marie Claire US. This progress helped not only to deliver record results, but also ensure that Future is well placed for continued growth and success.

Growing our audience

Our strategy is centred around meeting our audience's needs, ensuring we continue to be the trusted expert that helps them do the things they love, and make the decisions that matter most to them. As a result of our continued focus on creating the best quality content and experiences for our audiences, our overall audience has grown to 419m (FY 2020: 394m) underpinned by our online users, which have grown 31% year-on-year to 311m (HY 2020: 237m).

The first six months of last year (2020) saw unusual audience spikes associated with the pandemic, while much of this traffic looked for advice from our sites, it was not typical of the normal intent traffic we would expect to see. As we anniversary this period we are seeing some slowdown in our organic audience growth, at 8% in H1, largely driven by declines in LiveScience (30% decline in H1) which was a key area of growth last year. 

Our legacy Future sites continue to perform strongly with stand-out performances from our Tech and Gaming sites, with Gaming online users up 27% in the half. The acquired TI Media brands are benefiting from the Future operating model and centre's of excellence approach, with revised editorial strategies and significantly enhanced SEO skills, coupled with a North America first mindset. This has resulted in online users for TI Media brands growing by 54% in March 2021 on a proforma basis, translating into an increase in eCommerce revenue of 277% against proforma. 

Our new launches have gained good traction, with Fit&Well reaching 586k online users in March 2021 since launch last July and ranking top position in the UK and US for targeted search terms. My Imperfect Life has achieved 360k online users in March 2021 since launch in September last year, whilst Gardening Etc, launched in the summer of last year, is well positioned to capitalise on the peak gardening season, reaching over 1m sessions in March of this year.

Our significant scale and relevant content in B2C means we now reach 33% and 48% of internet users in the US and UK respectively. In addition, our social reach has grown to over 114m followers.

Effective and diversified monetisation

Our world-class content is delivered by our editorial teams who have excelled in responding to audience demands for relevant, useful and engaging content (both online and in print), all whilst largely working from home.

This relevant content, delivering high-intent audiences at scale, together with our data and analytics capability has enabled us to respond to advertisers' needs and capitalise on eCommerce demand. Media revenues grew 30% organically in the period, driven by organic digital advertising growth (on and off-platform) of 26% and eCommerce affiliate organic revenue growth of 56%, while the impact of COVID-19 restrictions on in-person events resulted in revenue from events declining by 81% on an organic basis.

Whilst the backdrop of the last six months has been highly unusual, management believes that the trends noted above are largely reflective of the ongoing momentum in the business. It is our view that the impact of the prolonged UK lockdown in January-March, coupled with the US Government stimulus checks in the US resulted in an estimated £5m of one-off COVID-19 related benefit to eCommerce revenues but we do not believe that the digital advertising performance was materially affected. The Group's magazines and in-person events performance has been adversely impacted by the pandemic.

Future's endemic brands and global scale coupled with our proprietary data platform (Aperture) has enabled us to leverage the knowledge of our audience's interests, preferences and intent to deliver a strong fundamental offering for advertisers. This has translated into a 19% increase in direct sold advertising campaigns which are typically the highest yielding digital advertising inventory and 34% growth in advertising yields partly due to this change in advertising mix.

Our content and industry expertise in the B2B market is translating into a growing and targeted email newsletter subscriber base, driving revenue growth across a number of key categories, with SmartBrief revenue growing 22% underpinned by a number of initiatives including SmartSummits, SmartStudio (delivering growth of 300% in March 2021 vs last year) and key new partner wins.

The mastery of our video creative team has engaged over 80 million followers on social media over the past six months, with 500m average monthly views, delivering AVOD (Advertising-based Video On Demand) revenue growth of 36% (vs proforma) on social channels. Following the acquisition of Barcroft (November 2019) we have created Future Studios, a centre of excellence for video across the Group which has resulted in an increase in the video content distributed across the verticals. Highlights over the period have included launching a new programme of shows, including "Totally Game Season 2" within the gaming vertical, "Totally Rated", a weekly review show across technology and gaming verticals, and "Seriously", a debate show about evergreen topics across our verticals.

In our eCommerce business, our data insight based on real time trading data has enhanced our ability to help our customers on their intent to purchase journey, seamlessly facilitated by our technology and retail partner network. We have continued to focus on ensuring that our content and technology meets our audiences' needs, helping them to make buying decisions. This work has included the continued optimisation of our eCommerce page templates and making improvements to our technology (Hawk) user experience by providing even clearer price comparison to users. The benefit of our proprietary technology platform has meant we were able to test and scale these learnings quickly. This work has been more timely than ever in a world that has seen an increased propensity for consumers to buy online.

Whilst the pandemic has continued to test some parts of our business due to restrictions in distribution and physical access (namely our magazine newsstand, physical events and TV production businesses), the business has continued to innovate with the launch of a number of new products. These range from the launch of 80 new first edition bookazines, 47 virtual events and commissions for new TV shows in the pipeline, greenlit for when filming restrictions are lifted. It has been amazing to see the determination of our teams to bring our content to our audiences, despite the challenges faced.

In addition, our broad portfolio of well-known and well-loved brands has delivered growth in magazine subscriptions, with revenue up 2% on an organic basis and 8% inorganically (TI brands) on a proforma basis, highlighting the resilience of this portfolio. Our magazine subscription business growth during this period is testament to how many of our customers value the time they spend reading their favourite magazine, and despite the challenges posed by retail closures, still sought to enjoy this content via a subscription.

Our financial results evidence our successful and diversified monetisation model, a key contributory factor to our continued operating profit growth.

Continued investment 

The success that Future has seen in the last six months and over the last few years has resulted from creating a scalable business model, with targeted ongoing investment to drive growth, while ensuring centres of excellence reduce redundancy and low cost locations deliver efficiency of spend.  A core part of our strategy is ensuring we deliver growth and returns over the long term and critical to enabling this is continued investment in our technology and people, a capital allocation priority.

Our proprietary tech platform continues to be a business enabler and we now have a total of 40 sites on the Vanilla website platform. In addition, we have been rapidly deploying new ad format functionality and eCommerce improvements to all our sites to unlock further potential for our brands. During the period we launched Kiosq, a new proprietary reusable paywall service for monetising gated editorial content, a strategic priority to enable longer term growth. We also made continued investments within our data science teams including the launch of Aperture, our customer audience data platform. Which when combined with our scale and the high-intent of our audiences, positions us very well in an environment with increased focus on first party data and consumer privacy.

Our team of talented technologists are key to our successful development programme. We have continued to invest in our people to ensure we deliver on our agreed business priorities and headcount has increased by 45% across the technology function in the period, whilst we are targeting growing the total headcount to 133 by the end of the year, a 90% increase vs last year.

While our technology and business model are a core part of our strategy, creating leading content is at our heart and we continue to have a strong commitment to investing in the content that grabs our users' attention and engages audiences like no other.

We have invested in our editorial teams and increased our headcount to extend and deepen our content coverage across our brand portfolio on our legacy and newly acquired brands as well as new launches. During the first half of the year we invested over £35m in the creation of content, with editorial headcount (inclusive of TI colleague transfers) nearly doubling year-on-year to over 1,000.

High-quality operating leverage

Whilst continuing to invest in our business and our people, our scalable operating model and disciplined approach to the integration of our acquisitions has driven exceptional profit results. Our sales, marketing, editorial and overhead costs have reduced year-on-year as a percentage of sales, while we have continued to invest across the board in these areas.

The completion of the TI Media integration in the period, ahead of schedule, has resulted in the delivery of TI Media cost synergy savings in the period of £4m, adding to the recognition of £3m savings in FY 2020. We remain on track to realise the full benefit of £20m cost synergies by FY 2022 which, as previously announced, is £5m higher than we originally estimated at the time of the acquisition.

We are delighted to have delivered a record adjusted operating profit margin of 33%, a 5 percentage point improvement on the prior period, which demonstrates the power of our platform.

Acquisitions

CinemaBlend - Strengthening our position in TV and film vertical 

On 2 October 2020, Future US, Inc. acquired CinemaBlend, a premium digital entertainment publisher based in the US. CinemaBlend is a high-growth digital brand focused on the TV, film and entertainment market. Through its website, podcast series, social media channels and newsletters, CinemaBlend provides a platform for enthusiasts and casual fans to discover, explore and discuss films and TV shows, both on streaming services such as Netflix and linear TV such as HBO.

 

The acquisition of CinemaBlend further strengthened our TV and film vertical whilst continuing to diversify our reach in the US, and is in line with our strategy to hold podium positions across our verticals. Following this acquisition Future was number 4 in Comscore in the US in the Entertainment and Movies vertical in March 2021. Total consideration paid was $12.75m, 9.9x historic EBITDA.

 

We are delighted with the performance of this business which has added value from day one with its high audience growth that reached 24m in HY 2021, which has been capitalised upon by our sales teams.

 

Mozo and GoCo Group - Further diversifying our business model - eCommerce services

Future's diversification strategy continued, with the acquisitions of Mozo and GoCo in February 2021. We now have more opportunity to champion the needs of our customers. Leveraging industry leading technology and knowledge, these businesses provide customers with an expert service of clear and impartial advice, providing comparison services across the products that meet their needs. The acquisitions provide the opportunity to combine leading financial services insight with Future's expertise in customer acquisition and content creation, creating an enhanced brand proposition and monetisation opportunities through Future's revenue diversification strategy. Additionally, these acquisitions enable us to enter a new attractive content vertical - Personal & Home Wealth. This new vertical is in line with the high-intent characteristic of our audiences and our purpose of sharing our knowledge and expertise with others, helping them make important decisions about their homes and their finances.

Mozo

 

On 2 February 2021, the Group completed the acquisition of Mozo for a consideration of AUD$31.0m, 11.1x EBITDA. Mozo is a fast-growing Australian price comparison website focused on personal finance products such as home loans, credit, personal loans, banking and insurance. The Mozo business has been integrated into the existing Future operations in Australia, with a new strengthened local leadership team.  Mozo is also collaborating with the GoCo teams and launched a broadband comparison proposition in May, amongst a number of initiatives.

 

GoCo Group ("GoCo")

 

The Group completed the acquisition of GoCo on the 17th February 2021. The introduction of GoCo to our business brings with it an already strong performance base across its three key business areas of price comparison, auto switching and voucher codes. The Future and GoCo teams have already started to work together on opportunities to leverage performance for the new combined business and we have seen early signs of success. For example, we have run successful trials for GoCompare on display ads to lower customer acquisition costs by reducing ad wastage. In addition, our SEO expertise has already delivered improvement: SEO is now the biggest source of revenue for MyVoucherCodes, translating into strong revenue growth of 82% on a proforma basis and GoCompare has seen ranking improvements from the no.4 slot on car insurance prior to acquisition to no.1 during May.

Having completed the organisational design and majority of the integration work we are now confident in our ability to exceed the previously announced cost synergies. We therefore increase our estimate of cost saving opportunities by 50% to £15m from £10m previously reported. The cost to deliver these changes are expected to be in the region of 31% (as a % of savings realised) vs the 47% previously indicated. This initiative is well underway with £0.5m of realised savings recognised in these reported results since acquisition.

Execution underpinned by values

 

Future operates as a purpose-driven organisation creating value for all stakeholders. Our strategy is clear that we will operate as a responsible business and everything we do is underpinned by our purpose and values which fosters an aligned culture across the organisation. 

 

During the last six months one of the key priorities for our business has been the health and safety of our colleagues and we have continued to work from home in line with local government guidelines. A small number of our offices are open for those members of the team who currently need to work from a physical location due to personal or business reasons. During the winter we paid all colleagues up to a £1,000 stipend due to the increased complexity in their lives as a result of the ongoing pandemic restrictions. In addition we have continued to make hardship payments to any colleagues who may find themselves in financial duress. Over the last 6 months we have paid out in the region of £1.5m to colleagues as a combination of stipend and hardship awards.

 

Results matter, success feels good and communication is ever more important during this extended period of working from home. We remain focussed on strong communication to ensure that our colleagues are connected and supported. The frequent communication programme, including weekly CEO updates and monthly virtual town halls for all staff continues, as does our focus on mental health support with 50 trained mental health first aiders.

 

As we commence the return to office working we are ensuring we follow all government guidelines, and that everything that we can do to ensure the return to offices is as stress free for colleagues as possible, which includes the introduction of lateral flow testing protocols.

 

While our business has continued to perform during the pandemic we believe that for collaboration to flourish we do require a return to office-based working, in particular to ensure that our most junior colleagues have the opportunity to learn through observation. We also realise that many colleagues have enjoyed the flexibility of working from home, and we are delighted to be able to offer to the majority of our colleagues the flexibility to continue to work from home for up to two days a week, with the balance of their time spent back in one of our offices.

 

All employees share in our success, with our Value Creation Plan, as approved by shareholders, launched to our staff in April of this year.

 

We remain proud of and thankful to our colleagues for their ongoing support in what has been an extended period of difficulty for many.                                                                                                                                               

Current trading and outlook

The strength of our performance to date is evidence of the successful execution of our growth strategy and as we look to the second half, we expect continued momentum in organic revenues and are confident that the recent acquisitions will deliver value for the Group. While we remain cautious about the wider macroeconomic uncertainties associated with COVID-19, we are confident in the outlook for the Group and expect the full year to be materially ahead of market expectations, underpinned by an exceptional H1 performance.

Financial summary 

 

HY 2021

£m

HY 2020

£m

Revenue

272.6

144.3

Adjusted operating profit1

89.2

39.9

Adjusted net finance costs4

(2.8)

(0.8)

Adjusted profit before tax1

86.4

39.1

 

 

 

Operating profit

59.7

24.7

Net finance (costs)/income

(2.8)

2.4

Profit before tax

56.9

27.1

 

 

 

Basic earnings per share (p)

41.3

22.3

Adjusted basic earnings per share (p)1

66.4

33.7

Diluted earnings per share (p)

40.7

21.8

Adjusted diluted earnings per share (p)1

65.4

32.9

 

1) Adjusted operating profit represents profit after tax adjusted for 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, exceptional items and any related tax effects. Adjusted profit before tax represents adjusted operating profit less adjusted net finance costs.

2) Adjusted free cash flow is defined as adjusted operating cash inflow less capital expenditure. Adjusted operating cash inflow represents cash generated from operations adjusted to exclude cash flows relating to exceptional items and settlement of employer's taxes on share based payments, and to include lease repayments following adoption of IFRS 16 Leases.

3) Organic growth defined as the like for like portfolio excluding acquisitions and disposals made during FY 2020 and FY 2021 at constant FX rates.

4) Adjusted net finance costs represent net finance costs before fair value movements on contingent consideration (and unwinding of associated discount) and currency option.

Items described as adjusted in the table above exclude the items detailed as 'adjusting' in the 'Reconciliation of non-statutory measures' section below. Adjusted items are non-GAAP measures.

 

Reconciliation of non-statutory measures

Adjusted operating profit reconciles to statutory profit before tax as follows:

 

HY 2021

£m

HY 2020

£m

Adjusted operating profit

89.2

39.9

Adjusted net finance costs

(2.8)

 (0.8)

Adjusted profit before tax

86.4

39.1

Adjusting items:

 

 

Share based payments (including related social security costs)

(2.7)

(1.7)

Exceptional items

(11.5)

(4.4)

Amortisation of acquired intangibles

(15.3)

(9.1)

Unwinding of discount on contingent consideration

-

(0.8)

Fair value gain on contingent consideration

-

5.2

Fair value loss on currency option

-

(1.2)

Statutory profit before tax

56.9

27.1

       

The financial review is based primarily on a comparison of adjusted results for the six months ended 31 March 2021 with those for the six months ended 31 March 2020. Unless otherwise stated, change percentages relate to a comparison of these two periods.

The Group furthered its diversification strategy in the first half with the acquisition of GoCo and Mozo during the period, which accelerated the strategy by extending the Group's eCommerce proposition beyond products into services.

 

 

 

Revenue

Sub-segment

HY 2021

£m

Sub-segment

HY 2020

£m

 

 

 

UK

£m

US

£m

Total

£m

UK

£m

US

£m

Total

£m

YoY Var

2020 Full Year

Digital display advertising on platform

23.9

45.6

69.5

14.1

33.7

47.8

45%

99.6

Digital display advertising off platform

5.7

16.2

21.9

3.8

14.5

18.3

20%

40.6

eCommerce affiliates

41.3

43.9

85.2

11.4

28.0

39.4

116%

79.3

Events, digital licensing, other online

4.4

1.6

6.0

6.1

3.4

9.5

(37%)

17.8

Total Media

75.3

107.3

182.6

35.4

79.6

115.0

59%

237.3

Print & digital content

63.5

1.5

65.0

16.8

2.0

18.8

246%

73.7

Print advertising, licensing, publisher services and other print

22.7

2.3

25.0

6.2

4.3

10.5

138%

28.6

Total Magazines

86.2

3.8

90.0

23.0

6.3

29.3

207%

102.3

Total revenue

161.5

111.1

272.6

58.4

85.9

144.3

89%

339.6

Group revenue was £272.6m (HY 2020: £144.3m), reflecting the impact of FY 2020 and HY 2021 acquisitions which contributed £107.8m of revenue.

In the period, UK revenue increased by 177% to £161.5m (HY 2020: £58.4m) and US revenue increased by 29% to £111.1m (HY 2020: £85.9m). The US achieved revenue growth of 31% on an organic³ basis at constant currency (25% at actual currency). 41% of Group revenue is derived from the US (HY 2020: 60%). UK revenues grew by 5% organically³ (UK has a higher revenue mix of events and magazines revenues which were impacted more materially by the pandemic) and reported revenues include the acquisition of TI Media in April 2020.

Media revenue grew very robustly on an organic³ basis by 30%. The strong growth was mainly driven by digital advertising on platform which was up 30% and eCommerce affiliate growth of 56% year-on-year.

The Magazine division demonstrated an improving trend against pre-pandemic comparators with revenue decreasing on an organic³ basis by 15%.

 

 

Included below is a reconciliation between statutory revenue and organic³ revenue:

 

HY 2021

 HY 2020

Total revenue

272.6

144.3

Revenue from FY 2021 and FY 2020 acquisitions

(107.8)

(4.1)

Organic revenue

164.8

140.2

Currency translation differences

5.3

0.6

Organic revenue at constant currency

170.1

140.8

Operating profit

Statutory operating profit increased by £35.0m to £59.7m (HY 2020: £24.7m). Statutory operating margin increased by 5ppt to 22% (HY 2020: 17%). The Group's adjusted operating profit increased to £89.2m (HY 2020: £39.9m), reflecting the strong growth of the Media division and the operating leverage provided by the increased scale of the Group.

Earnings per share

 

HY 2021

 HY 2020

Adjusted basic earnings per share (p)

66.4

33.7

Basic earnings per share (p)

41.3

22.3

Adjusted diluted earnings per share (p)

65.4

32.9

Diluted earnings per share (p)

40.7

21.8

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, fair value movements on contingent consideration (and unwinding of associated discount) and currency option, exceptional items, amortisation of acquired intangible assets and any related tax effects.

Adjusted profit after tax amounted to £68.3m (HY 2020: £31.7m) and the weighted average diluted number of shares in issue was 104.4m (HY 2020: 96.4m), the increase reflecting the issue of 22.6m shares in February 2021 to part-fund the GoCo acquisition.

Exceptional items

Exceptional costs amounted to £11.5m (HY 2020: £4.4m) and relate largely to deal fees in respect of the GoCo acquisition (£10.2m) and subsequent integration and restructuring of GoCo (£1.8m), as well as a £0.5m write off of a GoCo onerous property liability, offset by a release of £1.0m on surrender of an existing lease liability on which an exceptional charge was previously recognised. Exceptional costs relating to the GoCo acquisition total £12.5m.

Net finance costs and refinancing

In order to fund the acquisition of GoCo the Group agreed a new £215m term loan in November 2020 which amortises at £20m per quarter from June 2021 with a bullet of £95m payable in November 2022. The Group's £30m short dated COVID-19 facility was cancelled as it was no longer required.

The term loan is being provided by the existing members of the Group's banking syndicate which provide the RCF (HSBC, Natwest and Bank of Ireland) as well as the Group's new banking partners; Barclays, Citibank, Fifth Third Bank and Silicon Valley Bank.

Adjusted finance costs increased to £2.8m (HY 2020: £0.8m), reflecting the costs associated with the £215m term loan used to fund the acquisition of GoCo and interest associated with the RCF that has been rapidly paid down following the acquisition of TI Media in April 2020. The Group has continued to focus on efficient management of its cash position.

At 31 March 2021 the Group was in a net debt position of £241.3m and had headroom of £104.1m on its available bank facilities and cash on hand. This equates to leverage of 1.3x (FY 2020: 0.6x) (defined as debt as a proportion of EBITDA adjusted for the impact of IFRS 16 and including the 12-month trailing impact of the acquired businesses, in line with the Group's bank covenants definition).

Taxation

The tax amount for the six months ended 31 March 2021 is based on the effective tax rate, estimated on a full year basis, being applied to the statutory profit for the six months ended 31 March 2021.  The Group's adjusted effective tax rate is 21% (HY 2020: 19%).

The Group's statutory effective tax rate is 26% (HY 2020: 23%) with the difference between the statutory rate and adjusted effective rate being the impact of certain exceptional items not being deductible for tax purposes offset by the impact of share based payment deductions.

In the March 2021 Budget the UK Government announced that legislation will be introduced in Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023.  Then, in April the US Treasury announced their intent to increase the Federal rate of Corporate Income Tax from 21% to 28%.  As neither of these changes had been substantively enacted at the balance sheet date, the deferred tax balances as at 31 March 2021 continue to be measured at a UK rate of 19% and a US Federal rate of 21%.  If the 25% UK tax rate had been used at the balance sheet date, the deferred tax liability would have been £20.0m higher. If the 28% US Federal tax rate had been used the deferred tax liability would have been £0.4m higher.

Cash flow and net debt

Net debt at 31 March 2021 was £241.3m (FY 2020: £62.1m, HY 2020: net cash of £52.7m).

Adjusted operating cash inflow was £98.0m (HY 2020: £42.2m). Adjusting items are shown in the table below. Exceptional cash flows of £15.3m represent deal fees associated with the acquisition of GoCo (£10.1m), restructuring and redundancy costs associated with TI Media (£2.6m) and GoCo (£1.3m) and vacant property lease payments (£1.3m). Lease payments have been included in adjusted operating cash flows to ensure consistency with operating profit following adoption of IFRS 16 Leases.

Capital expenditure was £4.1m (HY 2020: £2.2m) in the period.

 

 

 A reconciliation of cash generated from operations to adjusted free cash flow is included below:

 

HY 2021 £m

HY 2020 £m

Cash generated from operations

85.9

35.7

Cash flows related to exceptional items

15.3

2.8

Settlement of employer's taxes on share based payments

0.1

5.5

Lease payments

(3.3)

(1.8)

Adjusted operating cash inflow

98.0

42.2

Cash flows related to capital expenditure

(4.1)

(2.2)

Adjusted free cash flow

93.9

40.0

Going concern

The Group has produced forecasts which have been modelled for different plausible downside scenarios (considering any potential downsides associated with the COVID-19 pandemic). These scenarios confirm that even in the most severe but plausible downside scenarios, the Group is able to generate profits and positive cash flows. As a result, the Directors have a reasonable expectation that the Group has adequate resources to meet its obligations as they fall due for a period of at least 12 months from the date of these results. Accordingly they continue to adopt the going concern basis in preparing the HY 2021 results.

Principal risks and uncertainties

Other than the addition of 'Legal and Regulatory Risk' following the acquisition of GoCo in February 2021 the principal risks and uncertainties for the six months are largely unchanged from those detailed in the Group's Annual Report and Accounts for the year ended 30 September 2020. Reference should be made to pages 38 to 42 of the 2020 Annual Report and Accounts for more detail on the potential impact of risks and examples of mitigation. Following the acquisition of GoCo, set out below is the Group's assessment of the impact of Legal and Regulatory risk:

Risk and impact

Mitigation

The Group operates in a number of regulated markets (insurance, lending and energy comparison services) and is also subject to competition and data protection laws. Failure to comply with existing regulatory requirements or adapt to changes in the regulatory environment may have a fundamental impact on the Group's reputation, business model and performance.

·      Open and transparent culture

·      Maintain and foster good working relationships with regulators

·      Skilled in-house Legal, Data Protection and Compliance teams with access to specialist external advice, when required

·      Comprehensive regulatory training and development for Board members, senior managers and employees

·      Outsourced internal audit programme to provide assurance on compliance with key regulatory requirements

 

Condensed consolidated interim financial statements

 

Consolidated income statement

for the six months ended 31 March 2021

 

 

 

 

6 months to 31 March 2021

6 months to 31 March 2020

 

Note

Non-GAAP

Adjusted results

£m

Adjusting items

£m

Statutory results

£m

Non-GAAP

Adjusted results

£m

Adjusting items

£m

Statutory results

£m

 

 

 

 

 

 

 

 

Revenue

1,2

272.6

-

272.6

144.3

-

144.3

Net operating expenses

3

(183.4)

(29.5)

(212.9)

(104.4)

(15.2)

(119.6)

Operating profit

1

89.2

(29.5)

59.7

         39.9

(15.2)

24.7

Finance income

6

-

-

-

-

5.2

5.2

Finance costs

6

(2.8)

-

(2.8)

(0.8)

(2.0)

(2.8)

Net finance costs

6

(2.8)

-

(2.8)

(0.8)

3.2

2.4

Profit before tax

1

86.4

(29.5)

56.9

39.1

   (12.0)

27.1

Tax on profit/(loss)

7

(18.1) 

3.7

(14.4)

        (7.4)

1.3

            (6.1)

Profit for the period attributable to owners of the parent

 

68.3

(25.8)

42.5

31.7

(10.7)

21.0

                   

 

 

Earnings per 15p Ordinary share

 

 

 

6 months to 31 March 2021

6 months to 31 March 2020

 

Note

Adjusted results

pence

Adjusting items

pence

Statutory results

pence

Adjusted results

pence

Adjusting items

pence

Statutory results

pence

Basic earnings per share

9

66.4

(25.1)

41.3

33.7

(11.4)

22.3

Diluted earnings per share

9

65.4

(24.7)

40.7

32.9

(11.1)

21.8

 

Consolidated statement of comprehensive income

for the six months ended 31 March 2021

 

 

 

 

6 months to 31 March 2021

6 months to 31 March

2020

 

 

£m

£m

Profit for the period

 

42.5

21.0

Items that may be reclassified to the consolidated income statement

 

 

 

Currency translation differences

 

(16.1)

2.3

Other comprehensive (expense)/income for the period

 

(16.1)

2.3

Total comprehensive income for the period attributable to owners of the parent

 

26.4

23.3

 

Consolidated statement of changes in equity

for the six months ended 31 March 2021                                                                                                                                     

 

 

 

 

Issued share capital

Share

premium

account

Merger reserve

Treasury reserve

Retained earnings

Total equity

Note

£m

£m

£m

£m

£m

£m

Balance at 1 October 2020

 

14.7

197.0

170.9

(8.8)

7.5

381.3

Profit for the period

 

-

-

-

-

42.5

42.5

Currency translation differences

 

-

-

-

-

(16.1)

(16.1)

Other comprehensive expense for the period

 

-

-

-

-

(16.1)

(16.1)

Total  comprehensive income for the period

 

-

-

-

-

26.4

26.4

Share capital issued during the period

12,13

3.4

-  

411.0

-

-

414.4

Acquisition of own shares

13

-

-

-

(4.9)

-

(4.9)

Share schemes

 

 

 

 

 

 

 

- Issue of treasury shares to employees

13

 

 

 

1.2

(1.2)

-

- Value of employees' services

5

-

-

-

-

2.8

2.8

- Deferred tax on share options

 

-

-

-

-

0.8

0.8

Dividends paid to shareholders

 

-

-

-

-

(1.6)

(1.6)

Balance at 31 March 2021

 

18.1

197.0

581.9

(12.5)

34.7

819.2

 

 

 

 

 

 

 

 

Balance at 1 October 2019

 

12.5

97.2

140.4

(0.3)

(36.4)

213.4

Retained earnings impact of adopting IFRS 16

 

-

-

-

-

(0.8)

(0.8)

Restated balance at 1 October 2019

 

12.5

97.2

140.4

(0.3)

(37.2)

212.6

Profit for the period

 

-

-

-

-

21.0

21.0

Currency translation differences

 

-

-

-

-

2.3

2.3

Other comprehensive income for the period

 

-

-

-

-

2.3

2.3

Total comprehensive income for the period

 

-

-

-

-

23.3

23.3

Share capital issued during the period

12

2.2

99.8

30.5

-

-

132.5

Acquisition of own shares

 

-

-

-

(4.3)

-

(4.3)

Share schemes                   

 

 

 

 

 

 

 

- Issue of treasury shares to employees

 

 

 

 

0.5

(0.5)

-

- Value of employees' services

5

-

-

-

-

2.7

2.7

- Deferred tax on share options

 

-

-

-

-

1.7

1.7

Dividends paid to shareholders

 

-

-

-

-

(1.0)

(1.0)

Balance at 31 March 2020

 

14.7

197.0

170.9

(4.1)

(11.0)

367.5

 

 

 

 

 

 

 

 

                         
 

Consolidated balance sheet

as at 31 March 2021

 

 

 

 

31 March 2021

31 March 2020

30 September

2020

 

Note

£m

£m

£m

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

22.6

14.3

20.9

Intangible assets - goodwill

10

679.3

231.6

309.7

Intangible assets - other

10

494.2

112.5

183.9

Investments

 

-

0.2

-

Deferred tax

 

-

2.4

1.0

Total non-current assets

 

1,196.1

361.0

515.5

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

0.9

-

0.7

Corporation tax recoverable

 

-

0.5

1.7

Trade and other receivables

 

105.6

47.7

72.4

Cash and cash equivalents

 

22.9

181.8

19.3

Finance lease receivable

 

1.2

1.8

1.6

Total current assets

 

130.6

231.8

95.7

Total assets

 

1,326.7

592.8

611.2

 

 

 

 

 

Equity and liabilities

 

 

 

 

Equity

 

 

 

 

Issued share capital

12

18.1

14.7

14.7

Share premium account

 

197.0

197.0

197.0

Merger reserve

 

581.9

170.9

170.9

Treasury reserve

 

(12.5)

(4.1)

(8.8)

Retained earnings/(losses)

 

34.7

(11.0)

7.5

Total equity

 

819.2

367.5

381.3

 

 

 

 

 

Non-current liabilities

 

 

 

 

Financial liabilities - interest-bearing loans and borrowings

 

182.8

129.1

73.6

Lease liability due in more than one year

 

17.6

11.1

18.7

Deferred tax

 

65.8

4.8

2.5

Provisions

11

5.5

1.8

5.1

Total non-current liabilities

 

271.7

146.8

99.9

 

 

 

 

 

Current liabilities

 

 

 

 

Financial liabilities - interest-bearing loans and borrowings

 

81.4

-

7.8

Trade and other payables

 

145.8

64.6

116.2

Corporation tax payable

 

1.9

3.2

-

Lease liability due within one year

 

5.9

4.5

6.0

Contingent consideration

 

-

6.2

-

Deferred consideration

 

0.8

-

-

Total current liabilities

 

235.8

78.5

130.0

Total liabilities

 

507.5

225.3

229.9

Total equity and liabilities

 

1,326.7

592.8

611.2

 

 

Consolidated cash flow statement

for the six months ended 31 March 2021

 

 

 

 

6 months to

31 March

2021

6 months to

31 March

2020

 

 

£m

£m

Cash flows from operating activities

 

 

 

Cash generated from operations

 

85.9

35.7

Interest paid

 

(1.7)

(0.5)

Interest paid on lease liabilities

 

(0.5)

(0.3)

Tax paid

 

(6.2)

(2.2)

Net cash generated from operating activities

 

77.5

32.7

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

 

(1.0)

(0.5)

Purchase of computer software and website development

 

(3.1)

(1.7)

Purchase of subsidiary undertakings, net of cash acquired

 

(156.1)

              (33.6)

Net cash used in investing activities

 

(160.2)

(35.8)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from share issue

 

-

104.4

Cost of share issue

 

(0.7)

(3.2)

Acquisition of own shares

 

(4.9)

(3.8)

Dividends paid

 

(1.6)

(1.0)

Draw down of bank loans

 

241.1

133.5

Repayment of bank loans

 

(139.2)

(50.1)

Bank arrangement fees

 

(2.7)

(0.3)

Repayment of principal element of lease liabilities

 

(3.3)

(1.8)

Settlement of derivative

 

-

0.3

Net cash generated from financing activities

 

88.7

178.0

 

 

 

 

Net increase in cash and cash equivalents

 

6.0

174.9

Cash and cash equivalents at beginning of period

Exchange adjustments

 

19.3

(2.4)

6.6

0.3

Cash and cash equivalents at end of period

 

22.9

181.8

 

 

Notes to the consolidated cash flow statement

for the six months ended 31 March 2021

 

A. Cash generated from operations

 

The reconciliation of profit for the period to cash flows generated from operations is set out below:

 

 

 

6 months to

31 March

2021

6 months to  31 March

2020

 

 

£m

£m

Profit for the period

 

42.5

21.0

Adjustments for:

 

 

 

Depreciation charge

 

4.8

2.4

Amortisation of intangible assets

 

18.8

10.1

Share schemes

- Value of employees' services

- National insurance costs on share schemes

 

 

2.8

-

 

2.7

0.4

Net finance costs/(income)

 

2.8

(2.4)

Tax charge

 

14.4

6.1

Cash generated before changes in working capital and provisions

 

86.1

40.3

Movement in provisions

 

(1.0)

(0.2)

Increase in inventories

 

(0.2)

-

Increase in trade and other receivables

 

(1.1)

(3.0)

Increase/(decrease) in trade and other payables

 

2.1

(1.4)

Cash generated from operations

 

85.9

35.7

 

B. Analysis of net debt

 

 

30 September

2020

Cash   flows

On acquisition

Other non-cash changes

 

Exchange movements

31 March

2021

 

£m

£m

£m

£m

£m

£m

Cash and cash equivalents

19.3

(6.4)

12.4

-

(2.4)

22.9

Debt due within one year

(7.8)

(70.1)

(3.2)

(0.3)

-

(81.4)

Debt due after more than one year

(73.6)

(29.1)

(80.0)

(0.3)

                    0.2

(182.8)

Net debt

(62.1)

(105.6)

(70.8)

(0.6)

(2.2)

(241.3)

 

On 25 November 2020 the Group announced a recommended offer for GoCo Group plc ("GoCo"). The transaction completed on 17 February 2021 for consideration of £557.2m comprising £415.1m in equity (via the issue of 22.6m Future plc shares), and £142.1m in cash. In addition,  GoCo's existing net debt of £72.0m was settled on acquisition (being debt of £83.2m net of £11.2m cash acquired). The acquisition was funded by increasing the Group's debt facilities through a £215m two year term loan which amortises at £20m per quarter from June 2021 with a bullet of £95m payable in November 2022. The Group's £30m short dated COVID-19 facility was cancelled on the same date as was no longer required.

 

 

 

 

C. Reconciliation of movement in net debt

 

6 months to

31 March

2021

£m

6 months to

31 March 2020

£m

Net debt at start of period

(62.1)

(40.3)

Increase in cash and cash equivalents

6.0

174.9

Movement in borrowings

(182.4)

(83.1)

Other non-cash changes

(0.6)

(0.1)

Exchange movements

(2.2)

1.3

Net (debt)/cash at end of period

(241.3)

52.7

 

Basis of preparation

 

This unaudited condensed consolidated interim financial information for the six months ended 31 March 2021 has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting in conformity with the requirements of the Companies Act 2006, and in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.

 

The interim financial information contained in the Interim Report should be read in conjunction with the Annual Report for the year ended 30 September 2020.

 

The Interim Report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and has not been audited.  A copy of the statutory financial statements for the year ended 30 September 2020 has been filed with the Registrar of Companies.  The auditors' report on those accounts was unqualified, and it did not contain any statements under section 498(2) or section 498(3) of the Companies Act 2006.  The auditors have carried out a review of the Interim Report and their review report is included at the back of this report. 

 

Having considered the Group's funding position and latest forecasts, the Directors believe that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the condensed interim financial information.

 

As stated in the financial statements for the year ended 30 September 2020 the following amendments to existing standards have been applied where applicable: amendment to IFRS 3 Clarifying the definition of a business, amendment to IAS 1 and IAS 8 Definition of material, and amendment to IFRS 7 and IFRS 9 Amendments regarding pre-replacement issues in the context of the IBOR reform. The accounting policies adopted, methods of computation and presentation are otherwise consistent with those set out in the Group's statutory accounts for the financial year ended 30 September 2020.

 

There has been no material impact from the adoption of new standards, amendments to standards or interpretations which are relevant to the Group.

 

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.

 

Adjustments are made in respect of:

 

Share-based payments - share-based payment expenses (relating to equity-settled 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.

 

Exceptional items - the Group considers items of income and expense as exceptional and excludes them from the adjusted results where the nature of the item, or its size, is material and not related to the core underlying trading of the Group so as to assist the users of the financial statements to better understand the results of the Group. Details of exceptional items are shown in note 4.

 

Amortisation of acquired intangible assets - the amortisation charge for those acquired intangible assets recognised on business combinations as defined in note 10 is excluded from the adjusted results of the Group since they are 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.

 

Change in the fair value of contingent consideration - the Group excludes the remeasurement of these acquisition-related liabilities from its adjusted results as the impact of remeasurement can vary significantly depending on the underlying acquisition's performance. The unwinding of the discount on contingent consideration is also excluded from the Group's adjusted results on the basis that it is non-cash and the balance is driven by the Group's assessment of the relevant

discount rate to apply. Excluding these items ensures comparability between periods.

 

Changes in the fair value of currency option - the Group has excluded this from its adjusted results as the option was acquired in order to hedge USD exposure to acquisition related contingent consideration and does not relate to the core underlying trading performance of the Group.

 

The tax related to adjusting items is the tax effect of the items above calculated using the standard rate of corporation tax in the relevant jurisdiction.

 

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

 

 

6 months to

31 March

2021

£m

6 months to

31 March

2020

£m

Adjusted operating profit

89.2

39.9

Adjusted net finance costs

(2.8)

(0.8)

Adjusted profit before tax

86.4

39.1

 

Adjusting items:

 

 

Share based payments (including social security costs)

(2.7)

(1.7)

Exceptional items

(11.5)

(4.4)

Amortisation of acquired intangibles

(15.3)

(9.1)

Unwinding of discount on contingent consideration

-

(0.8)

Fair value gain on contingent consideration

-

5.2

Fair value loss on currency option

-

(1.2)

Profit before tax

56.9

27.1

 

 

 

A reconciliation of cash generated from operations to adjusted free cash flow is shown below:

 

 

6 months to

31 March

2021

6 months to

31 March

2020

 

£m

£m

Cash generated from operations

85.9

35.7

Cash flows related to exceptional items

15.3

2.8

Settlement of employer's taxes on share based payments

0.1

5.5

Lease payments

(3.3)

(1.8)

Adjusted operating cash inflow

98.0

42.2

Cash flows related to capital expenditure

(4.1)

(2.2)

Adjusted free cash flow

93.9

40.0

 

A reconciliation between adjusted and statutory earnings per share measures is shown in note 9.

 

Notes to the financial information

for the six months ended 31 March 2021

 

 

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 and Magazines for further analysis.

 

Segment revenue

 

Sub-segment

6 months to

31 March 2021

£m

Sub-segment

6 months to

31 March 2020

£m

 

Media

£m

Magazines

£m

Total

£m

Media

£m

Magazines

£m

Total

£m

UK

75.3

86.2

161.5

35.4

23.0

58.4

US

107.3

3.8

111.1

79.6

85.9

Total

182.6

90.0

272.6

115.0

29.3

144.3

Transactions between segments are carried out at arm's length.

 

Segment adjusted operating profit

 

6 months to

31 March

2021

£m

6 months to

31 March

2020

£m

 

Underlying adjusted operating profit

£m

Intragroup adjustments

£m

Adjusted operating

profit

£m

Underlying adjusted operating profit

£m

Intragroup adjustments

£m

Adjusted operating

profit

£m

UK

19.3

34.2

53.5

1.6

18.4

20.0

US

69.9

(34.2)

35.7

38.3

(18.4)

19.9

Total

89.2

-

89.2

39.9

-

39.9

Operating profit is used by the Executive Directors to assess the performance of each segment.

 

A reconciliation of total segment adjusted operating profit to profit before tax is provided as follows:

 

6 months to

31 March

2021

£m

6 months to

31 March

2020

£m

Total segment adjusted operating profit

89.2

39.9

Share based payments (including social security costs)

(2.7)

(1.7)

Amortisation of acquired intangibles

(15.3)

(9.1)

Exceptional items (note 4)

(11.5)

(4.4)

Net finance (costs)/income (note 6)

(2.8)

2.4

Profit before tax

56.9

27.1

 

2.            Revenue

 

The table below disaggregates revenue according to the timing of satisfaction of performance obligations:

 

 

Over

time

£m

Point in time

£m

6 months to 31 March 2021

£m

Over time

£m

Point in time

£m

6 months to 31 March 2020

£m

Total revenue

6.6

266.0

272.6

2.8

141.5

144.3

                       

 

See note 1 for disaggregation of revenue by geography.

 

 

3.            Net operating expenses

 

Operating profit is stated after charging:

 

6 months to 31 March 2021

6 months to 31 March 2020

 

Adjusted results

£m

Adjusting items

£m

Statutory results

£m

Adjusted results

£m

Adjusting items

£m

Statutory results    £m

Cost of sales

(119.5)

-

(119.5)

(66.1)

-

(66.1)

Distribution expenses

(10.8)

-

(10.8)

(3.2)

-

(3.2)

Share based payments (including social security costs)

-

(2.7)

(2.7)

-

(1.7)

(1.7)

Exceptional items (note 4)

-

(11.5)

(11.5)

-

(4.4)

(4.4)

Depreciation

(4.3)

-

(4.3)

(2.4)

-

(2.4)

Amortisation

(3.5)

(15.3)

(18.8)

(1.0)

(9.1)

(10.1)

Other administration expenses

(45.3)

-

(45.3)

(31.7)

-

(31.7)

Total

(183.4)

(29.5)

(212.9)

(104.4)

(15.2)

(119.6)

 

 

4.               Exceptional items

 

 

6 months to

31 March

2021

£m

6 months to

31 March

2020

£m

Acquisition and integration related costs

12.5

4.6

Vacant property liability movement

(1.0)

(0.2)

Total

11.5

4.4

 

Acquisition and integration related costs include deal fees in respect of the GoCo acquisition of £10.2m (HY 2020: £4.3m relating to the acquisitions of Barcroft and TI Media), integration and restructuring costs of £1.8m relating to GoCo (HY 2020: other acquisition-related costs of £0.3m), as well as a £0.5m write off of a GoCo onerous property liability.
 

5.                  Employee costs

 

 

6 months to

31 March 2021

£m

6 months to

31 March

2020

£m

Wages and salaries

68.9

46.1

Social security costs

6.3

3.9

Other pension costs

1.8

0.8

Share schemes

- Value of employees' services

2.8

2.7

Total employee costs

79.8

53.5

 

The table above includes the all-employee profit pool bonus.

 

IFRS 2 Share-based Payment requires an expense for equity instruments granted to be recognised over the appropriate vesting period, measured at their fair value at the date of grant.

 

The fair value has been calculated using the Monte Carlo and Black-Scholes models, using the most appropriate model for each scheme. Assumptions have been made in these models for expected volatility, risk-free rates and dividend yields.

 

Key management personnel compensation

 

6 months to

31 March 2021

£m

6 months to

31 March 2020

£m

Salaries and other short-term employee benefits

1.3

1.2

Share schemes

- Value of employees' services

 

1.9

 

1.6

Total

3.2

2.8

 

Key management personnel are deemed to be the members of the Board of Future plc.

 

6.          Finance income and costs

 

 

 

6 months to

31 March

2021

£m

6 months to

31 March

2020

£m

Interest payable on interest-bearing loans and borrowings

 

(1.7)

(0.4)

Amortisation of bank loan arrangement fees

 

(0.6)

(0.1)

Interest payable on lease liabilities

 

(0.5)

(0.3)

Adjusted finance costs

 

(2.8)

(0.8)

 

 

 

 

Unwinding of discount on contingent consideration

 

-

(0.8)

Fair value loss on currency option

 

-

(1.2)

Total reported finance costs

 

(2.8)

(2.8)

 

 

 

 

Fair value gain on contingent consideration

 

-

5.2

Total reported finance income

 

-

5.2

Net finance (costs)/income

 

(2.8)

2.4

         

 

During the period the Group increased its debt facilities to fund the acquisition of GoCo through a £215m two-year term loan which amortises at £20m per quarter from June 2021 with a bullet of £95m payable in November 2022. The Group's £30m short dated COVID-19 facility was cancelled as it was no longer required. See note B to the cash flow statement for further detail.

 

7.        Tax on profit

 

The tax amount for the six months ended 31 March 2021 is based on the effective tax rate, estimated on a full year basis, being applied to the statutory profit for the six months ended 31 March 2021.  The Group's adjusted effective tax rate is 21% (HY 2020: 19%).

The Group's statutory effective tax rate is 26% (HY 2020: 23%) with the difference between the statutory rate and adjusted effective rate being the impact of certain exceptional items not being deductible for tax purposes offset by the impact of share based payment deductions.

In the March 2021 Budget the UK Government announced that legislation will be introduced in Finance Bill 2021 to increase the main rate of UK corporation tax from 19% to 25%, effective 1 April 2023.  Then, in April the US Treasury announced their intent to increase the Federal rate of Corporate Income Tax from 21% to 28%.  As neither of these changes had been substantively enacted at the balance sheet date, the deferred tax balances as at 31 March 2021 continue to be measured at a UK rate of 19% and a US Federal rate of 21%. If the 25% UK tax rate had been used at the balance sheet date, the deferred tax liability would have been £20.0m higher. If the 28% US Federal tax rate had been used the deferred tax liability would have been £0.4m higher.

8.            Dividends

 

 

 

Equity dividends

6 months to

31 March 2021

6 months to

31 March

2020

Number of shares in issue at end of period (million)

               120.6

98.0

Dividends paid and payable in period (pence per share)

1.6

1.0

Dividends paid and payable in period (£m)

(1.6)

(1.0)

 

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. The dividend in respect of the year ended 30 September 2020 was paid on 16 February 2021. The Board has not proposed a dividend for the six months ended 31 March 2021.

 

9.            Earnings per share

 

Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the period.  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 remove the effect of share based payments, exceptional items (note 4), amortisation of intangible assets arising on business combinations, changes in fair value and unwinding of discount on contingent consideration, changes in fair value on currency option, and any related tax effects from the calculation.

 

 

 

 

6 months to

31 March

2021

6 months to

31 March

2020

Adjustments to profit after tax:

 

 

Profit after tax (£m)

42.5

21.0

Share based payments (including social security costs) (£m)

2.7

1.7

Exceptional items (£m)

11.5

4.4

Amortisation of acquired intangibles (£m)

15.3

9.1

Fair value gain on contingent consideration (£m)

-

(5.2)

Unwinding of discount on contingent consideration (£m)

-

0.8

Fair value loss on currency option (£m)

-

1.2

Tax effect of the above adjustments (£m)

(3.7)

(1.3)

Adjusted profit after tax (£m)

68.3

31.7

 

Weighted average number of shares in issue during the period:

 

 

- Basic

102,791,476

94,011,413

- Dilutive effect of share options

1,591,646

2,438,143

- Diluted

104,383,122

96,449,556

Basic earnings per share (pence)

41.3

22.3

Adjusted basic earnings per share (pence)

66.4

33.7

Diluted earnings per share (pence)

40.7

21.8

Adjusted diluted earnings per share (pence)

65.4

32.9

 

 

 

The adjustments to profit after tax have the following effect:

 

 

Basic earnings per share (pence)

41.3

22.3

Share based payments (including social security costs) (pence)

2.6

1.8

Exceptional items (pence)

11.2

4.7

Amortisation of acquired intangibles (pence)

14.9

9.7

Fair value gain on contingent consideration (pence)

-

(5.5)

Unwinding of discount on contingent consideration (pence)

-

0.9

Fair value loss on currency option (pence)

-

1.3

Tax effect of the above adjustments (pence)

(3.6)

(1.5)

Adjusted basic earnings per share (pence)

66.4

33.7

 

Diluted earnings per share (pence)

40.7

21.8

Share based payments (including social security costs) (pence)

2.6

1.8

Exceptional items (pence)

11.0

4.6

Amortisation of acquired intangibles (pence)

14.7

9.4

Fair value gain on contingent consideration (pence)

-

(5.4)

Unwinding of discount on contingent consideration (pence)

-

0.8

Fair value loss on currency option (pence)

-

1.2

Tax effect of the above adjustments (pence)

(3.6)

(1.3)

Adjusted diluted earnings per share (pence)

65.4

32.9

 

 

 

10.          Intangible assets

 

 

Goodwill

£m

Acquired intangibles

£m

Other

£m

Total

£m

Cost

 

 

 

 

At 1 October 2019

484.7

140.5

23.2

648.4

Additions through business combinations

97.2

94.3

4.2

195.7

Other additions

-

-

3.1

3.1

Exchange adjustments

(7.6)

(4.3)

(0.5)

(12.4)

At 30 September 2020

574.3

230.5

30.0

834.8

Additions through business combinations

378.5

321.1

10.1

709.7

Other additions

-

-

3.1

3.1

Exchange adjustments

(11.0)

(6.7)

(0.9)

(18.6)

At 31 March 2021

941.8

544.9

42.3

1,529.0

Accumulated amortisation and impairment

 

 

 

 

At 1 October 2019

(266.0)

(33.6)

(19.8)

(319.4)

Charge for the period

-

(21.6)

(2.7)

(24.3)

Impairment

-

-

(0.8)

(0.8)

Exchange adjustments

1.4

1.5

0.4

3.3

At 30 September 2020

(264.6)

(53.7)

(22.9)

(341.2)

Charge for the period

-

(15.3)

(3.5)

(18.8)

Exchange adjustments

2.1

1.7

0.7

4.5

At 31 March 2021

(262.5)

(67.3)

(25.7)

(355.5)

 

 

 

 

 

Net book value at 31 March 2021

679.3

477.6

16.6

1,173.5

Net book value at 30 September 2020

309.7

176.8

7.1

493.6

               

Acquired intangibles relate mainly to brands, subscriber databases, trademarks, advertising relationships, creative services relationships, customer relationships, publishing rights, content, non-compete agreements and customer lists. These assets are amortised over their estimated economic lives, typically ranging between one and fifteen years.

 

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 period through business combinations are set out in note 15.

 

Other intangibles relate to capitalised software costs and website development costs.

 

Amortisation is included within administration expenses in the consolidated income statement.

 

 

 

11.          Provisions

 

 

 

 

6 months to

31 March 2021

6 months to

31 March

2020

Property

                   4.6

1.8

Other

0.9

-

Total

5.5

1.8

 

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 five years.

 

12.          Issued share capital

 

During the period no Ordinary shares were issued by the Company pursuant to share scheme exercises throughout the period (31 March 2020: 3,755,148 with a nominal value of £563,272). 442 Ordinary shares were issued under the Share Incentive Plan for a combined total cash commitment of £nil.

 

22,608,736 Ordinary shares were issued on the acquisition of GoCo Group plc, with a value of £415.1m (share price of £18.36).

 

As at 31 March 2021 there were 120,624,133 Ordinary shares in issue (31 March 2020: 98,014,506; 30 September 2020: 98,014,955).

 

13.          Reserves

 

Merger reserve

 

The merger reserve has increased in the period by £411.0m, consisting of £411.7m relating to the premium on shares issued as consideration for the acquisition of GoCo Group plc, offset by £0.7m of related share issuance costs. See note 15 for further details of the acquisition.

 

Treasury reserve

 

The treasury reserve represents the cost of shares in Future plc held by the Employee Benefit Trust ('EBT') to satisfy awards made by the trustees. During the period, 0.3m shares were purchased in the market at a total value of £4.9m, and 0.3m shares were transferred out of the treasury reserve to satisfy the issue of share option exercises in the period, at a value of £1.2m.

 

14.          Contingent assets, contingent liabilities and deferred liabilities

 

At 31 March 2021 there were no material contingent assets or liabilities (31 March 2020: contingent liability of £6.2m relating to variable deferred contingent consideration on the acquisition of SmartBrief, LLC).

 

The Group has a deferred liability of £0.8m recognised on the balance sheet at 31 March 2021 for deferred consideration on the acquisition of Mozo, which was settled in May 2021 (see note 15).

 

 

 

15.          Acquisitions                                    

 

Acquisition of CinemaBlend

 

On 2 October 2020, Future US, Inc. (a wholly owned subsidiary of Future plc) acquired CinemaBlend, a premium digital entertainment publisher based in the US, for total consideration of $12.75m. CinemaBlend is a high-growth digital brand focused on the TV, film and entertainment market. Through its website, podcast series, social media channels and newsletters, CinemaBlend provides a platform for enthusiasts and casual fans to discover, explore and discuss films and TV shows, both on streaming services such as Netflix and linear TV such as HBO.

 

The impact of the acquisition on the consolidated balance sheet was:

 

 

Fair value

£m

Intangible assets

     - Brand

     - Partner relationships

 

4.8

0.2

Net assets acquired

5.0

Goodwill

4.9

 

9.9

Consideration:

Cash

 

9.9

Total consideration

9.9

 

The acquisition has further diversified the Group's revenues by expanding the Group's US presence and audience. Goodwill is attributable to the opportunities that exist to further monetise the Group's brands and audience. 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 £2.8m and a profit before tax of £1.7m from CinemaBlend (excluding acquired intangible amortisation). This is equal to the revenue and profit before tax that would have been contributed if the acquisition had completed on the first day of the financial year.

 

Acquisition of Mozo Pty Limited

 

On 2 February 2021, Future Publishing (Overseas) Limited (a wholly owned subsidiary of Future plc) acquired 100% of the equity in Mozo Pty Limited ("Mozo"), a price comparison site focused on personal finance products, based in Australia. Total consideration was AUD$31.0m in cash, of which AUD$29.5m was paid on completion, with a further AUD$1.5m deferred consideration which was settled in May 2021.

 

 

 

The impact of the acquisition on the consolidated balance sheet was:

 

 

Provisional fair value

£m

Tangible assets

     - Right-of-use lease asset

     - Other tangible assets

Intangible assets

     - Brand

     - Partner relationships

     - Subscriber relationships

     - Content

     - Software

Cash and cash equivalents

Trade and other receivables

Trade and other payables

Corporation tax payable

Lease liability due within one year

 

Non-current liabilities

     - Provision

     - Lease liability due in more than one year

Deferred tax

 

0.4

0.1

 

3.2

2.4

0.1

0.1

0.9

1.2

0.6

(0.8)

(0.5)

(0.1)

 

 

(0.1)

(0.3)

(2.4)

Net assets acquired

4.8

Goodwill

12.4

 

17.2

Consideration:

Cash

Deferred consideration

 

16.4

0.8

Total consideration

17.2

 

The acquisition has further diversified the Group's revenues by expanding the Group's price comparison offering and goodwill is attributable to the opportunities that exist to further monetise the Group's brands and extend the Group's eCommerce proposition beyond products into services. The intangibles recognised, including goodwill, are not expected to be deductible for tax purposes.

 

Included within the Group's results for the period are revenues of £0.9m and a profit before tax of £0.2m from Mozo (excluding acquired intangible amortisation).

 

If the acquisition had been completed on the first day of the financial year, it would have contributed £2.4m of revenue and a profit before tax of £0.5m (excluding acquired intangible amortisation) during the period.

 

Gross trade receivables were £0.6m on acquisition, of which £0.6m were expected to be recovered.

 

The fair values included for the Mozo acquisition are described as 'provisional' as the acquisition occurred within three months of the balance sheet date and so further time is required in order to fully ascertain the fair value of assets and liabilities acquired.

 

Acquisition of GoCo Group plc

 

On 17 February 2021, Future plc acquired 100% of the equity in GoCo Group plc ("GoCo"), a provider of price comparison and auto-switching services. Consideration was £557.2m, of which £142.1m was paid in cash and £415.1m settled via the issue of 22.6m equity shares in Future plc. In addition, GoCo's existing net debt of £72.0m was settled on acquisition (being debt of £83.2m net of £11.2m cash acquired). The acquisition was funded by increasing the Group's debt facilities through a £215m two year term loan.

 

The impact of the acquisition on the consolidated balance sheet was:

 

 

Provisional fair value

£m

Tangible assets

     - Right-of-use lease assets

     - Other tangible assets

3.0

1.7

Intangible assets

     - Brand

     - Customer relationships

     - Software

Cash and cash equivalents

Trade and other receivables

Corporation tax receivable

Trade and other payables

Lease liability due within one year

Financial liabilities - interest bearing loans and borrowings due in less than one year

Non-current liabilities

     - Provisions

     - Lease liability due in more than one year

     - Financial liabilities - interest bearing loans and borrowings due in more than one year

Deferred tax

 

279.8

30.5

9.2

11.2

32.6

3.1

(27.3)

(0.7)

(3.2)

 

 

(0.8)

(2.4)

(80.0)

 

(60.7)

Net assets acquired

196.0

Goodwill

361.2

 

557.2

Consideration:

Equity shares

Cash

 

415.1

142.1

Consideration

557.2

 

In addition to the £557.2m consideration in the table above, GoCo's existing net debt of £72.0m was settled on acquisition (being debt of £83.2m net of £11.2m cash acquired). Total consideration therefore amounted to £629.2m. The acquisition has significantly strengthened the Group's proposition of seeking to address the growing consumer demand for informed and value driven purchasing decisions enabled by intent driven content, and provides a unique opportunity to capitalise on the combination of the Group's deep audience insight with GoCo's expertise in price comparison and the proprietary technology of both the Future Group and the GoCo Group. Goodwill is attributable to the synergies of the combined Group and the opportunities that exist to extend the Group's eCommerce proposition beyond products into services. The intangibles recognised, including goodwill, are not expected to be deductible for tax purposes.

 

Included within the Group's results for the period are revenues of £22.7m and a profit before tax of £3.9m from GoCo (excluding deal fees, associated integration costs, acquired intangible amortisation and interest).

 

If the acquisition had been completed on the first day of the financial year, it would have contributed £85.0m of revenue and a profit before tax of £18.2m (excluding deal fees, associated integration costs, acquired intangible amortisation and interest) during the period.

 

Gross trade receivables were £15.4m on acquisition, of which £14.6m were expected to be recovered.

 

The fair values included for the GoCo acquisition are described as 'provisional' as the acquisition occurred within three months of the balance sheet date and so further time is required in order to fully ascertain the fair value of assets and liabilities acquired.

 

16.          Post balance sheet events

 

Acquisition of Marie Claire US

 

On 12 May 2021 Future US, Inc. acquired 100% of Marie Claire US, a former joint venture between Marie Claire Album S.A.S. ("MCA") and Hearst Magazines Media Inc. Future has entered into a five year license agreement with MCA to operate in the US and Canada. Marie Claire US reached 17.5  million monthly online users in 2020 with revenue of $19.1m of which approximately half represents digital media revenue.

 

The acquisition follows the Group's acquisition of Marie Claire UK in 2020 and builds on the ongoing success of the MarieClaire.co.uk brand. It strengthens the Group's position in the women's lifestyle vertical in North America in line with the Group's strategy to achieve brand vertical leadership across English speaking markets.

 

 

Statement of Directors' responsibilities

 

We confirm that to the best of our knowledge:

 

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting in conformity with the requirements of the Companies Act 2006;

 

• the interim management report includes a fair review of the information required by:

 

a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

A list of current Directors is maintained on the Future plc website, www.futureplc.com

 

By order of the Board

 

Directors

 

Richard Huntingford

Independent Non-Executive Chairman

 

Zillah Byng-Thorne

Chief Executive Officer

 

Rachel Addison

Chief Financial Officer

 

Hugo Drayton

Senior Independent Non-Executive

 

Alan Newman

Independent Non-Executive

 

Rob Hattrell

Independent Non-Executive

 

Meredith Amdur

Independent Non-Executive

 

Mark Brooker

Independent Non-Executive

 

Angela Seymour-Jackson

Independent Non-Executive

 

19 May 2021

 

The maintenance and integrity of the Future plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

 

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

 

 

 

Independent review report to Future plc

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2021 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated statement of cash flows and related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" in conformity with the requirement of the Companies Act 2006 and as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2021 is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting" in conformity with the requirement of the Companies Act 2006 and as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Use of our report

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

 

Deloitte LLP

Statutory Auditor

Reading, United Kingdom

19 May 2021

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