Future PLC (LON:FUTR)

Future PLC (LON:FUTR)


Share Price
1,042.00 p
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Market Cap
£8.60 m
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Future PLC RNS Release

Notification of Transfer to a Premium Listing


RNS Number : 6222R
Future PLC
01 March 2019
 

THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY ORDINARY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.

 
 

Future plc

Notification of Transfer to a Premium Listing

Future plc ("Future" or the "Company", and, together with its subsidiary undertakings, the "Group") announces that it is proposing to transfer the listing category of its ordinary shares (the "Ordinary Shares") from a Standard Listing (shares) to a Premium Listing (commercial company) on the Official List of the UK Listing Authority ("Official List") in accordance with Rule 5.4A of the Listing Rules (the "Transfer").

The provision of 20 business days' notice (which period has commenced by way of today's announcement) is required to effect the Transfer. No shareholder approval is required in connection with the Transfer. It is anticipated that the Transfer will take effect at 8.00 a.m. on 1 April 2019, conditional on the approval of the UK Listing Authority ("UKLA").

1.     Background to and reasons for the Transfer

Future is a global specialist media business with a portfolio of approximately 170 brands across online, magazines and events. Future's business is comprised of two divisions: "Media" which focuses on eCommerce, live events and digital advertising; and "Magazines" which creates specialist magazines and bookazines.

Future's strategy is to build a global platform business for specialist media with diversified revenue streams. Since the initiation of this strategy in 2016, Future has delivered strong growth in revenue and profitability, with the Media division growing both organically and through acquisitions in the UK and US. Future is focused on becoming a global specialist media business in targeted audience vertical markets, underpinned by its proprietary technology. The Company has scalable, diversified brands and targets market leadership in its niches. The directors of the Company ("Directors") believe that building a platform business allows the Group to unlock and create significant new revenue streams, expanding its brands and reaching audiences in different ways. In the financial year ended 30 September 2018, the Company audited consolidated revenue of £124.6m and adjusted EBITDA of £20.7m.

On 29 May 2014, the Company announced its intention to transfer from the Premium Listing segment to the Standard Listing segment of the Official List. The transfer was approved by shareholders at a general meeting on 15 July 2014 with the change of listing category becoming effective on 13 August 2014. At the time of the transfer to the Standard Listing segment, the Company's market capitalisation was £29m as the business was undergoing a period of significant change.  At that time, the Directors deemed that a transfer to the Standard Listing segment would align the Company's regulatory responsibilities with its size and that this would increase flexibility with regards to mergers and acquisitions as, due to the Company's size at that time, even very small transactions would have required significant disclosure requirements and shareholder approval.

Since being listed on the Standard Listing segment, the Company's trading performance has improved significantly. The Company has also acquired a number of businesses since its transfer to the Standard Listing segment (including Imagine, Home Interest, Purch LLC and Mobile Nations) and these acquisitions have helped the Group to accelerate the implementation of the Group's growth strategy.

A listing on the Standard Listing segment since 2014 has afforded the Company the flexibility to grow the business following what had been a challenging period in its history which required the Group to undergo a period of change as it began to transition its revenue streams from print media to digital media, to simplify the business to focus on key market niches and to strengthen the balance sheet through disposals.

On 18 July 2018, Future announced the proposed acquisition of Purch LLC ("Purch B2C") while also announcing its intention to pursue a Premium Listing on the Official List, subject to meeting all of the requirements of the UKLA.

While the Company remains ambitious and acquisitions are likely to continue to form a part of the Company's future growth strategy, due to the Company's increased scale there is no longer the same requirement for flexibility in terms of executing corporate transactions and the Directors now believe that this is the appropriate time for the Company to transfer back to a listing on the Premium Listing segment of the Official List under Rule 5.4A of the Listing Rules.

The Directors believe that a Premium Listing is the most appropriate listing segment for a company of its size, with a market capitalisation of £561.6m as at close on 28 February 2019, and shareholder profile, with the significant majority of its shares being held by institutional investors. The intention of the transfer to the Standard Listing segment back in 2014 was not to dilute shareholder protections but to allow the Company the flexibility to revitalise the business. Now that the Group is on a stronger operational footing, the Directors believe it is appropriate to formalise the additional shareholder protections associated with the Premium Listing requirements through the Transfer. The Directors believe that the Transfer should provide its shareholders with increased confidence that the Company is adhering to the higher disclosure and governance standards required of companies with a Premium Listing.

 

The Company has made the required applications to the UKLA to approve the Transfer. As at 1 March 2019, the Company has 81,871,820 Ordinary Shares in issue.  All Ordinary Shares will be subject to the Transfer.

 

2.     Effect of the Transfer

No changes to the Company's business have been or are proposed to be made in connection with the Transfer.

The board of Directors (the "Board") believes that the Transfer will bring with it a number of benefits to the Company and its investors and does not consider there to be any particular risk associated with the Transfer. Some of the potential benefits are as follows:

·   increased protections for investors under the Listing Rules as a result of more rigorous standards placed on companies with a Premium Listing, including in relation to significant and related party transactions;

·      the potential for increased trading liquidity of the Company's shares as a result of potential FTSE inclusion; and

·    an enhanced company profile in the UK and internationally associated with a Premium Listing and as a result of potential FTSE inclusion.

Following the Transfer certain additional provisions of the Listing Rules will formally apply to the Company. These provisions, set out under Chapters 6 to 13 (inclusive) of the Listing Rules, relate to the following matters:

·    the application of certain requirements that are specific to companies with a premium listing (Chapter 6). These requirements include Listing Rule 6.4 which requires the Company to carry on an independent business. As the Group has no controlling shareholder and, outside its ordinary course commercial relationships, places no reliance on any single party outside of the Group (in terms of either trading, financing or franchisee rights) and there are no constitutional arrangements that give a third party control over voting rights that would normally be conferred on shareholders, the Group complies with this obligation. Similarly, in respect of Listing Rule 6.6 which relates to maintaining control over its main business activities, the Group's subsidiaries are wholly owned, it is not party to any joint venture arrangements and does not hold any minority stakes in third party businesses. With regard to Listing Rule 6.9, the Group's constitution allows it to comply with the Listing Rules and, as a business incorporated in England, confers on shareholders rights at least equivalent to Listing Rule 9.3.12R in respect of pre-emption rights.

·      the application of the Premium Listing Principles set out in Listing Rule 7.2.1AR (Chapter 7);

·      the requirement to appoint a sponsor in certain circumstances (Chapter 8);

·      the requirement to comply with various continuing obligations, including compliance with all relevant provisions of the UK Corporate Governance Code (or provide an explanation for any non-compliance, if applicable, in its annual financial report) (Chapter 9);

·      the requirement to announce, or obtain shareholder approval for, certain transactions (depending on their size and nature) and for certain transactions with 'related parties' of the Company (Chapters 10 and 11);

·      certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and

·      various specific content requirements that will apply to circulars issued by the Company to its shareholders  (Chapter 13).

 

3.     Working capital

In the opinion of the Company, the Group has sufficient working capital available for the Group's requirements for at least the next 12 months from the date of this announcement (the "Transfer Announcement").

4.     Board and Corporate Governance

The Directors of the Company are:

·      Richard Huntingford (Non-Executive Chairman - Independent)

·      Zillah Byng-Thorne (Chief Executive Officer)

·      Penny Ladkin-Brand (Chief Financial Officer)

·      Hugo Drayton (Non-Executive Director - Independent)

·      Alan Newman (Non-Executive Director - Independent)

·      Rob Hattrell (Non-Executive Director - Independent)

The Board is committed to, and recognises the importance and value of good corporate governance. Since the Company has been listed on the Standard Listing segment, the Board has followed the spirit of the relevant UK Corporate Governance Code (the "Code") on a voluntary basis.

Future intends to comply with the recommendations set out in the 2018 Code on admission to the Premium Listing segment save for provision 38 which recommends that pension contribution rates for executive directors, or payments in lieu, should be aligned with those available to the workforce,  the implementation of which remains under review by the remuneration committee. Any areas of non-compliance with the 2018 Code will be reported on in the Company's 2019 Annual Report.

5.     UK Takeover Code

As the Company has its registered office in the UK and its Ordinary Shares are admitted to trading on the Main Market of the London Stock Exchange, it is currently and, following the Transfer, will remain subject to the UK Takeover Code, with which the Company complies.

6.     Appointment of Sponsor

The Company has appointed Numis Securities Limited ("Numis") to act as its sole Sponsor in relation to the Transfer. Numis is currently joint corporate broker to the Company.

7.     Financial information incorporated by reference

In order to provide a three year track record of the Group, as required by Chapter 6 of the Listing Rules, historical financial information for the Group and certain acquired businesses are incorporated by reference as follows:

Information incorporated by reference

Source document

Page numbers

Audited consolidated financial statements of Future plc for the year ended 30 September 2018, together with the auditors' report thereon

Annual Report and Accounts 2018

Pages 65-70 - Auditors' report

Pages 71-106 - Consolidated financial statements

Audited consolidated financial statements of Future plc for the year ended 30 September 2017, together with the auditors' report thereon

Annual Report and Accounts 2017

Pages 43-48  - Auditors' Report

Pages 49-86  - Consolidated financial statements

Audited consolidated financial statements of Future plc for the year ended 30 September 2016, together with the auditors' report thereon

Annual Report and Accounts 2016

Pages 41-42 - Auditors' Report

Pages 43-78 - Consolidated financial statements

Combined Historical Financial Information of Home Interest  for the years ended 31 December 2015 and 2016, together with the Accountant's Report thereon

Prospectus dated 7 July 2017 relating to the issuance of shares in connection with the acquisition of the Home Interests business (the "Home Interest Prospectus")

Part 9 Section B "Accountant's Report on the combined historical financial information of the Target Companies" on pages 48-49

 

Part 9 Section C "Combined Historical financial information of the Target Companies" on pages 50-70

 

 

Historical Financial Information of Purch Group Inc for the three years ended 31 December 2015, 2016 and 2017, together with the Accountant's Report thereon

Prospectus dated 18 July 2018 relating to the Rights Issue in connection with the acquisition of Purch B2C Group, Inc. (the "Purch Prospectus")

Part 15 Section B "Accountants Report on the Combined Historical Financial Information of the Target" on page 107-108

 

Part 15 Section C "Historical Financial Information of the Target" on pages 109-132

 


The source documents referred to above can be found on the Company's website via the following link https://www.futureplc.com/resources/#results. The non-incorporated parts of the reference documents are not relevant for the purposes of this Transfer Announcement.

 

8.     Further financial information on the Group

The Company completed the acquisition of Home Interest on 1 August 2017, Purch B2C on 5 September 2018 and Mobile Nations on 28 February 2019. The financial information of Home Interest and Purch B2C was included within the consolidated Group financial statements from their respective completion dates.

 

In order to provide a complete three-year track record of the Group, as required by Chapter 6 of the Listing Rules, in addition to the financial information incorporated by reference, audited historical combined financial information for Home Interest, Purch B2C and Mobile Nations from at least the start of the track record period is required to be included in this Transfer Announcement.

 

As such, the following financial information in relation to Home Interest, Purch B2C and Mobile Nations is included in this Transfer Announcement:

 

Home Interest:

a)   the Combined Historical Financial Information of Home Interest for the years ended 31 December 2015 and 2016, as incorporated by reference from the Home Interest Prospectus as set out in paragraph 7 above;

b)   the audited consolidated financial statements of the Group for the years ended 30 September 2017 and 30 September 2018, which include the financial results of Home Interest from 1 August 2017, being the date it was acquired by the Group; and

c)   further Combined Historical Interim Financial Information of Home Interest for the seven month period 1 January 2017 to 31 July 2017 (being the dates between the previous financial information published within the Home Interest Prospectus and the date from which the Home Interest acquisition was completed and the Home Interest results were included in the Group financial statements), accompanied by an Accountant's report thereon, together with unaudited comparatives for the seven month period ended 31 July 2016, as set out in this Transfer Announcement in Sections A and B below. This financial information is prepared in accordance with the accounting policies adopted in the Group's historical financial information and using certain accounting conventions commonly used in the preparation of combined historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000 "Investment Reporting Standards applicable to public reporting engagements on historical financial information" ("SIR 2000").

 

Purch B2C:

a)  the Historical Financial Information of Purch B2C for the years ended 31 December 2015, 2016 and 2017, as incorporated by reference from the Purch Prospectus as set out in paragraph 7 above; and

b)   further Combined Historical Financial Information of Purch B2C for the nine month period 1 January 2018 to 30 September 2018 (to cover the period since the previous financial information published within the Purch Prospectus and the latest financial year end of the Group), accompanied by an Accountant's report thereon, together with comparatives for the year ended 31 December 2017, as set out in this Transfer Announcement in Sections C and D below. This financial information is prepared in accordance with the accounting policies adopted in the Group's historical financial information and using certain accounting conventions commonly used for the preparation of "carve-out" historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000.

 

Mobile Nations:

a)    the Combined Historical Financial Information of Mobile Nations for the 15 month period ended 31 December 2016 and the years ended 31 December 2017 and 2018, accompanied by an Accountant's report thereon, as set out in this Transfer Announcement in Sections E and F below. This financial information is prepared in accordance with the accounting policies adopted in the Group's historical financial information and using certain accounting conventions commonly used in the preparation of combined historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000.

 

9.     FTSE eligibility and qualification

FTSE's Europe, Middle East and Africa (EMEA) Committee meets on a quarterly basis to review the constituents of the FTSE UK index series, incorporating the FTSE 100, FTSE 250 and FTSE SmallCap. It is anticipated that, subject to the Transfer becoming effective and other conditions being met, the Company will be considered for inclusion into the FTSE UK Index Series.

10.  Consents

Numis has given and has not withdrawn its written consent to the inclusion of the reference to its name in the form and context in which it is included in this Transfer Announcement.

PricewaterhouseCoopers LLP has given and not withdrawn its written consent to the inclusion of its accountant's reports on the Combined Interim Historical Financial Information of the Home Interest Companies at Future plc for the seven month period ended 31 July 2017; the Combined Historical Financial Information of Purch B2C for the nine month period ended 30 September 2018; the Combined Historical Financial Information of Mobile Nations for the 15 month period ended 31 December 2016 and the years ended 31 December 2017 and 2018; and the references to each respectively in the form and context in which they are included in this Transfer Announcement.

Enquiries: 

Future plc

via Instinctif Partners

Zillah Byng-Thorne, Chief Executive Officer

Penny Ladkin-Brand, Chief Financial Officer

 

Numis Securities Limited (Sole Sponsor and Joint Broker to Future)

020 7260 1000

Nick Westlake, Mark Lander, Hugo Rubinstein

 

 Nplus1 Singer Capital Markets Limited (Joint Broker to Future)

 020 7496 3000

Mark Taylor, James White

 

Instinctif Partners

020 7457 2077

Kay Larsen

 

 

 

 

 

Section A - ACCOUNTANT'S REPORT ON THE COMBINED INTERIM HISTORICAL FINANCIAL INFORMATION OF THE HOME INTEREST COMPANIES OF FUTURE PLC

The Directors,

Future plc,

Quay House,

The Ambury,

Bath,

BA1 1UA

 

Numis Securities Ltd ("the Sponsor")

10 Paternoster Square

London

EC4M 7LT

 

1 March 2019

 

Dear Ladies and Gentlemen

Combined Interim Historical Financial Information of the Home Interest Companies of Future plc

We report on the Combined Interim Historical Financial Information of the Home Interest Companies of Future plc for the 7-month period ended 31 July 2017 set out in section B below (the "Home Interest Companies Financial Information Table"). The Home Interest Companies Financial Information Table has been prepared for inclusion in an announcement, prepared in accordance with item 5.4.A.5 of the Listing Rules of the United Kingdom Listing Authority (the "Listing Rules"), dated 1 March 2019 (the "Transfer Announcement") of Future plc (the "Company") on the basis of the accounting policies set out in the Summary of Significant Accounting Policies section of the Home Interest Companies Financial Information Table.  This report is required by item 6.2.4R(1) of the Listing Rules and is given for the purpose of complying with that item and for no other purpose.

 

We have not audited or reviewed the financial information for the seven months ended 31 July 2016 which has been included for comparative purposes only, and accordingly do not express an opinion thereon.

 

Responsibilities

 

The Directors of the Company are responsible for preparing the Home Interest Companies Financial Information Table in accordance with International Financial Reporting Standards as adopted by the European Union. It is our responsibility to form an opinion as to whether the Home Interest Companies Financial Information Table gives a true and fair view, for the purposes of the Transfer Announcement and to report our opinion to you.

 

Basis of opinion

 

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this report or our statement, required by and given solely for the purposes of complying with item 6.2.4R(1) of the Listing Rules, consenting to its inclusion in the Transfer Announcement.

 

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the Home Interest Companies' circumstances, consistently applied and adequately disclosed.

 

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.

 

Opinion

 

In our opinion, the Home Interest Companies Financial Information Table gives, for the purposes of the Transfer Announcement dated 1 March 2019, a true and fair view of the state of affairs of the Home Interest Companies as at 31 July 2017 and of their profits, cash flows and changes in invested capital for the period then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

 

Yours faithfully

 

 

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

 

PricewaterhouseCoopers LLP, 2 Glass Wharf, Bristol, BS2 0FR

T: +44 (0) 117 955 7779, F: +44 (0) 117 309 2005, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525.  The registered office of

PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.  PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

SECTION B - COMBINED INTERIM HISTORICAL FINANCIAL INFORMATION OF THE HOME INTEREST COMPANIES OF FUTURE PLC

Combined income statement

for the 7-month periods ended 31 July 2017 and 31 July 2016 and the year ended 31 December 2016

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

Note

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Revenue

1

7.3

7.3

12.8

 

 

 

 

 

Net operating expenses

2

(6.5)

(5.5)

(9.7)

 

 

 

 

 

Operating profit and profit before tax

2

0.8

1.8

3.1

 

 

 

 

 

Tax charge

4

(0.1)

(0.3)

(0.6)

 

 

 

 

 

Profit for the period attributable to the shareholders of the Home Interest Companies

 

 

0.7

 

1.5

 

2.5

 

There are no other items of comprehensive income other than the profit for the period.

 

Combined statement of changes in invested capital

For the 7-month periods ended 31 July 2017 and 31 July 2016 and the year ended 31 December 2016

 

 

 

 

 

Total

Invested capital

 

 

 

Note

£m

 

 

 

 

 

Balance at 1 January 2016

 

 

 

(0.1)

Profit for the 7-month period

 

 

 

1.5

Total comprehensive income for the 7-month period

 

 

 

1.5

Net transfer to Centaur Media

 

 

15

(1.8)

Balance at 31 July 2016 (unaudited)

 

 

 

(0.4)

Profit for the 5-month period

 

 

 

1.0

Total comprehensive income for the 5-month period

 

 

 

1.0

Net transfer from Centaur Media

 

 

15

 (2.1)        

Balance at 31 December 2016

 

 

 

(1.5)

Profit for the 7-month period

 

 

 

0.7

Total comprehensive income for the 7-month period

 

 

 

0.7

Net transfer to Centaur Media

 

 

15

(0.1)

Balance at 31 July 2017

 

 

 

(0.9)

 

 

 

 

                                                                                                                                                                                    

 

                                                                                                                                                                     

                                                                                                                                                                     

 

Combined balance sheet

as at 31 July 2017, 31 July 2016 and 31 December 2016

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

Note

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

5

-

0.1

-

Intangible assets - other

6

0.1

0.2

0.1

Total non-current assets

 

0.1

0.3

0.1

Current assets

 

 

 

 

Inventories

7

0.3

0.6

0.5

Trade and other receivables

8

2.1

4.1

3.6

Corporation tax recoverable

 

0.1

-

-

Cash

9

0.9

0.1

0.2

Total current assets

 

3.4

4.8

4.3

Total assets

 

3.5

5.1

4.4

Invested capital and liabilities

 

 

 

 

Invested capital

 

 

 

 

Invested capital

15

(0.9)

(0.4)

(1.5)

Total invested capital

 

(0.9)

(0.4)

(1.5)

Non-current liabilities

 

 

 

 

Provisions

10

0.1

-

-

Total non-current liabilities

 

0.1

-

-

Current liabilities

 

 

 

 

Trade and other payables

11

4.3

4.4

5.3

Corporation tax payable

 

-

1.1

0.6

Total current liabilities

 

4.3

5.5

5.9

Total liabilities

 

4.4

5.5

5.9

Total invested capital and liabilities

 

3.5

5.1

4.4

 

 

 

Combined cash flow statements

for the 7-month periods ended 31 July 2017 and 31 July 2016 and the year ended 31 December 2016

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

Note

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

Cash generated from operations

A

1.6

1.5

4.5

Tax (paid)/received

 

(0.8)

0.3

(0.5)

Net cash generated from operating activities

 

0.8

1.8

4.0

Cash flow from financing activities

 

 

 

 

Net transfers to Centaur Media

15

(0.1)

(1.8)

(3.9)

Net cash used in financing activities

 

(0.1)

(1.8)

(3.9)

Net increase in Cash

 

0.7

-

0.1

Cash at start of period

 

0.2

0.1

0.1

Cash at end of period

 

0.9

0.1

0.2

 

 

Notes to the combined cash flow statements

for the 7-month periods ended 31 July 2017 and 31 July 2016 and the year ended 31 December 2016

 

A.    Cash used in operations

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

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Profit for the period

 

0.7

1.5

2.5

Adjustments for :

 

 

 

 

Amortisation of intangible assets

 

-

0.1

0.2

Tax charge

 

0.1

0.3

0.6

 

 

 

 

 

Profit before changes in working capital and provisions

 

 

0.8

 

1.9

 

3.3

Decrease/(increase) in inventories

 

0.2

(0.1)

-

Decrease in trade and other receivables

 

1.5

0.1

0.6

(Decrease)/increase in trade and other payables

 

(1.0)

(0.4)

0.6

Increase in provisions

 

0.1

-

-

Cash generated from operations

 

1.6

1.5

4.5

               

 

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General information

 

The Home Interest Companies were acquired by the Future plc group on 1 August 2017 and were previously owned by Centaur Media plc ('Centaur Media'). The business of the Home Interest Companies consists of three key brands: Homebuilding & Renovating, Period Living and Real Homes, and comprises seven exhibitions, print and digital assets. The Home Interest Companies are domiciled in the United Kingdom. Future plc's registered office is Quay House, The Ambury, Bath, BA1 1UA. 

 

I.      The Home Interest Companies' accounting policies

 

A.     Basis of preparation

 

This combined interim historical financial information of the Home Interest Companies was derived from the financial statements and accounting records, prepared in accordance with FRS 101 and subsequently adjusted to comply with International Financial Reporting Standards as adopted by the European Union ('IFRS'), of Ascent Publishing Limited and Centaur Consumer Exhibitions Limited as separate legal entities. The combined historical financial information for the 7-months ended 31 July 2017 and comparative 7-months ended 31 July 2016 has been prepared specifically for the purposes of this Announcement and in accordance with the UK Listing Rules, and in accordance with this basis of preparation. The accounting policies applied and disclosed below are consistent with those used by Future plc in its annual financial statements for the year ended 30 September 2018 and these policies have been applied consistently to all periods presented.

 

The combined interim historical financial information is prepared applying the guidance of IAS 34 'Interim Financial Reporting'.

 

The combined interim historical financial information has been prepared on a going concern basis under the historical cost convention. On 1 August 2017 the Home Interest Companies were acquired by Future Publishing Limited - a subsidiary of Future plc ('Future') and all assets, liabilities and trade were hived up into the Future plc group entities in which the trade has continued. Funding of the operations after the hive up is provided by Future plc.

 

This combined interim historical financial information does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006.

 

IFRS does not provide for the preparation of combined  historical financial information, or for the specific accounting treatment set out below. Accordingly, in preparing the combined  historical financial information, certain accounting conventions commonly used for the preparation of combined historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000 (Investment Reporting Standards applicable to public reporting engagements on combined historical financial information) issued by the UK Auditing Practices Board have been applied.

 

The combined historical financial information has been prepared on a combined basis applying the principles underlying the consolidation procedures of IFRS 10 "Consolidated Financial Statements".

 

The following summarises the accounting and other principles applied in preparing the combined historical financial information:

 

·      The business of the Home Interest Companies did not comprise a separate legal group during the two 7-month periods ended 31 July 2017 and 31 July 2016 and year ended 31 December 2016 and therefore it is not meaningful to present share capital or an analysis of reserves. The invested capital represents a combination of the overall receivables and payables with Centaur Media, funding balances with Centaur Media and equity investment by Centaur Media in the Home Interest Companies, which cannot be separately identified or allocated throughout the period from 1 January 2016 through to 31 July 2017.

 

·      The combined statement of comprehensive income of the Home Interest Companies reflects allocations of general corporate expenses from Centaur Media including, but not limited to, executive management, directors, finance, legal, information technology, human resources, events and exhibition operations, digital and data operations and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, headcount or other relevant measures. These allocations have been considered to be a reasonable reflection of the utilisation of services by, or the benefits provided to, the Home Interest Companies. These allocations may not, however, reflect the expenses the business of the Home Interest Companies would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the business of the Home Interest Companies had been a standalone company would depend on a number of factors, including the chosen organisational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.

 

·      The combined statement of financial position of the Home Interest Companies at 31 July 2016 and 31 December 2016 includes Centaur Media's assets and liabilities that were held and management by Centaur Media but are specifically identifiable or otherwise attributable to the Home Interest Companies. Further details are given in note 15.

 

·      The assets and liabilities presented as at 31 July 2017 reflect the combined financial position of the Home Interest Companies immediately prior to the acquisition by Future and prior to the hive up of the assets, liabilities and trade into the existing business of Future that was completed on 1 August 2017.

 

·      Centaur Media's cash has not been assigned to the Home Interest Companies for any of the periods presented because those cash balances are not directly attributable to the Home Interest Companies. The Home Interest Companies reflect transfers of cash to and from Centaur Media's cash management system as a component of invested capital on the combined statement of financial position.

 

·      Centaur Media's long-term debt has not been attributed to the Home Interest Companies for any of the periods presented because Centaur Media's borrowings are not the legal obligation of the Home Interest Companies nor were they transferred to the Home Interest Companies pursuant to the Share Purchase Agreement.

 

·      The combined historical financial information includes the Home Interests Companies' net assets and results of operations as described above. All intercompany transactions and accounts within the combined businesses of the Home Interest Companies have been eliminated.

 

·      Intercompany transactions between the Home Interest Companies and Centaur Media plc are considered to be effectively settled as if the Home Interest Companies and Centaur Media plc were not part of a group in the combined historical financial information at the time the transaction is recorded. It has been assumed that all the transactions have been settled at the balance sheet date on a usual third party arms' length basis with commercial payment terms. The total net effect of the settlement of these intercompany transactions is reflected in the combined statement of cash flows within financing activities and on the combined statement of financial position within invested capital.

 

·      The Home Interest Companies' operations have historically been included in the tax returns filed by the respective legal entities, Ascent Publishing Limited and Centaur Exhibitions Limited. Income tax expense and other income tax related information contained in this combined historical financial information is presented on the basis of these combined returns after adjustments for the tax effect of allocations of general corporate overheads from Centaur Media as described above. Where tax liabilities have been paid, either directly or indirectly, by Centaur Media, this has been reflected as a cash flow of the Home Interest Companies.

 

·      Current tax receivable/payable and deferred tax assets and liabilities were determined based on the analysis of the Home Interest Companies' current tax position and temporary differences at each period -end and assessment of how these relate directly or indirectly to the Home Interest Companies' business.

 

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Home Interest Companies' accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the combined historical financial information are disclosed below in C, 'Critical accounting estimates and assumptions'.

 

B.     Accounting policies

 

Segment reporting

 

The Home Interest Companies are organised and arranged primarily by brand. Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers who are considered to be the Board of Executive Directors of the Home Interest Companies.

 

Revenue recognition

 

Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. Revenue from services rendered is recognised in the income statement over the period the service is provided or once the service has been completed, as applicable.

 

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Home Interest Companies' activities. Revenue is shown net of value-added tax and discounts. The following recognition criteria also apply:

 

·      Magazine newsstand circulation and advertising revenue is recognised according to the date that the related publication goes on sale.

 

·      Online advertising revenue is recognised over the period during which the advertisements are placed.

 

·      Revenue from subscriptions to publications and digital services is deferred and recognised on a straight-line basis over the subscription period.

 

·      Event income is recognised when the event has taken place.

 

·      Other revenue is recognised at the time of sale or provision of service.

 

Employee benefits

 

(a) Pension obligations

 

The Home Interest Companies' have a defined contribution plan pension scheme for the benefit of employees. The Home Interest Companies pay contributions into a privately administered pension plan, which is held separately to the Home Interest Companies. The Home Interest Companies have no further payment obligations once the contributions have been paid. Contributions are charged to the income statement when employer contributions become payable.

 

(b) Bonus plans

 

The Home Interest Companies recognise a liability and an expense for bonuses taking into consideration targeted trading performance.

 

Leases

 

Leases in which the Home Interest Companies assume substantially all the risks and rewards of ownership of the leased assets are classified as finance leases. All other leases are classed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

 

Tax

 

Tax on the profit or loss for the year comprises current tax and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity in which case it is recognised in equity. The tax charge for the interim period is recognised by applying the full year effective rate to the profit for the period, in accordance with IAS 34

 

Current tax is payable based on taxable profits for the year, using tax rates that have been enacted or substantively enacted at the balance sheet date, along with any adjustment relating to tax payable in previous years. Management periodically evaluates items detailed in tax returns where the tax treatment is subject to interpretation. Taxable profit differs from net profit in the income statement in that income or expense items that are taxable or deductible in other years are excluded - as are items that are never taxable or deductible. Current tax assets relate to payments on account not offset against current tax liabilities.

 

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the combined historical financial information. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled in the appropriate territory.

 

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

 

Deferred tax assets and liabilities are offset against each other where they relate to the same jurisdiction and there is a legally enforceable right to offset.

 

Property, plant and equipment

 

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

 

Depreciation

 

Depreciation is calculated using the straight-line method to allocate the cost of property, plant and equipment less residual value over estimated useful lives, as follows:

 

·      Leasehold improvements - ten years or period of the lease if shorter.

·      Equipment, fixtures and fittings - between one and five years.

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

 

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

 

 

 

Intangible assets

 

(a) Brands and publishing rights

 

Separately acquired brands and publishing rights intangible assets are shown at historical cost. Brands and publishing rights acquired in a business combination are recognised at fair value at the acquisition date. Amortisation is calculated using the straight-line method to allocate the cost of these intangibles over their estimated useful lives (between three and ten years). Brands and publishing rights intangible assets are tested for impairment only where there is an indication that an impairment may have occurred.

 

(b) Computer software and website development

 

Non-integral computer software purchases are stated at cost less accumulated amortisation. Costs incurred in the development of websites and unique software products are capitalised only where the cost can be directly attributed to developing the website or software product to operate in the manner intended by management and only to the extent of the future economic benefits expected from its use. These costs are amortised on a straight-line basis over their estimated useful lives (between one and three years). Costs associated with maintaining computer software or websites are recognised as an expense as incurred. Computer software and website development intangible assets are tested for impairment only where there is an indication that an impairment may have occurred.

 

Inventories

 

Inventories related to costs of events that have yet to take place. Inventories are stated at the lower of cost and net realisable value.

 

Trade and other receivables

 

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less a provision for impairment.

 

A provision for impairment of trade receivables is established when there is objective evidence that the Home Interest Companies will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income within net operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against net operating expenses in the statement of comprehensive income.

 

Cash

 

Cash includes cash in hand and deposits repayable on demand whose original maturity is less than three months.

 

Provisions

 

Provisions are recognised when the Home Interest Companies have a legal or constructive present obligation as a result of a past event, it is probable that they will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.

 

Trade and other payables

 

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

 

Invested capital

 

Net transfers to and from Centaur Media are included within invested capital. The components of net transfers to Centaur Media are included within the combined statement of changes in equity.

 

Invested capital in the combined statement of financial position and statement of changes in equity represents Centaur Media's historical investment in the Home Interest Companies, the net effect of transactions with and allocations from Centaur Media and the Home Interest Companies accumulated earnings. See note 15 for further information about transactions between the Home Interest Companies and Centaur Media.

 

New or revised accounting standards and interpretations

 

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after the dates shown below which the Home Interest Companies have chosen not to adopt early. This include the following standard which is relevant to the Home Interest Companies:

 

·      IFRS 9 Financial instruments (effective 1 January 2018).

·      IFRS 15 Revenue from contracts with customers (effective 1 January 2018).

·      IFRS 16 Leases (effective 1 January 2019).

 

Following the acquisition of the Home Interest companies by Future, the trade and net assets of the Home Interest Companies was hived up into other Future group entities. Therefore financial information for just the Home Interest Companies has not and will not be prepared under the above standards.

 

Future has adopted IFRS 9 and 15 with effect from 1 October 2018, applying IFRS 15 on a fully retrospective basis. No adjustment to revenue recognition has been recognised in respect of the Home Interest business and IFRS 9 will not have a signficant impact on Future's financial statements.

 

Future is still in the process of assessing the full impact of IFRS 16 which will be adopted with effect from 1 October 2019. This standard would have a material impact on the financial information of the Home Interest Companies by virtue of the operating lease arrangements currently disclosed in note 14.

 

The Home Interest Companies do not expect that any other standards and amendments issued but not yet effective will have a material impact on results or net assets.

 

C. Critical accounting estimates and assumptions

 

The preparation of the historical financial information under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying the Home Interest Companies' accounting policies. The areas requiring a higher degree of judgement or areas where assumptions and estimates are significant to the historical financial information are discussed below:

 

Critical accounting estimates and assumptions

Recoverability of trade receivables

 

The recoverability of trade receivables is a significant accounting estimate. The Home Interest Companies use all available evidence to determine the appropriate level of provision for impairment of trade receivables, including known disputes, historical trends in write-offs, collections post year end and the ageing of the receivables.

 

All balances past due are reviewed, with those greater than 90 days past due considered to carry a higher level of credit risk. Specific provision is made against customer balances with known credit issues or where debt has been referred to a collection agency. The remaining past due balances are then analysed, with balances relating to revenue recognised in advance, customers on payment plans and non-payment resulting from administrative queries considered to be of lower risk. A judgement is applied to the net balance based on historic experience on a percentage basis taking into account both the age and the reason items remain unpaid. Further details are given in note 12.

                                                                                                                         

Notes to the Combined historical financial information

 

1.     Segmental reporting

 

The Board of Directors of Home Interest Companies has been identified as the chief operating decision maker, reviewing the Home Interest Companies' internal reporting on a monthly basis in order to assess performance and allocate resources. The Home Interest Companies are organised and managed by the following reportable segments:

 

·      Home Building and Renovating: produces the Home Building and Renovating magazine (print and digital) specialising in home building, renovating and improvement projects.

·      Home Building Shows: organises a number of events in the UK specialising in home building, renovating and improvement projects.

·      Real Homes: produces the Real Homes magazine (print and digital) which specialises on home transformation projects.

·      Period Living: produces the Period Living magazine (print and digital) which specialises renovating and redecorating period homes.

 

The Board of Directors uses revenue and gross contribution at a segment level to assess performance of the segments. Revenue is defined as per the accounting policies. There are no intersegment revenues or large customers. Gross contribution is the profit measure used by management and has been reconciled to profit before tax below.

 

Assets and liabilities are managed in aggregate and not individually for the segments therefore they are not allocated to any segment.

 

(i)    Revenue by segment

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Home Building and Renovating

 

1.8

1.9

3.3

Home Building Shows

 

3.7

3.5

6.5

Real Homes

 

0.9

1.0

1.6

Period Living

 

0.9

0.9

1.4

Total segment revenue

 

7.3

7.3

12.8

 

(ii)   Gross contribution by segment

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Home Building and Renovating

 

0.8

0.9

1.6

Home Building Shows

 

1.9

1.8

3.2

Real Homes

 

0.2

0.2

0.4

Period Living

 

0.2

0.2

0.3

Total segment gross contribution

 

3.1

3.1

5.5

 

(iii)          Reconciliation of segment gross contribution to profit before tax

 

A reconciliation of total segment gross contribution from continuing operations to profit before tax from continuing operations is provided as follows:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Total segment gross contribution

 

3.1

3.1

5.5

Amortisation

 

-

(0.1)

(0.2)

Other overheads

 

(2.3)

(1.2)

(2.2)

Profit before tax

 

0.8

1.8

3.1

 

Other overheads include allocations of general corporate expenses from Centaur Media. See note 15.

 

2.     Net operating expenses

 

Operating profit is stated after charging:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Cost of sales

 

(4.0)

(3.8)

(6.6)

Distribution expenses

 

(0.2)

(0.2)

(0.2)

Amortisation

 

-

(0.1)

(0.2)

Other administration expenses

 

(2.3)

(1.4)

(2.7)

Total

 

(6.5)

(5.5)

(9.7)

 

3.     Directors and employees

 

The aggregate remuneration of employees comprised:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Wages and salaries

 

1.7

1.2

1.9

Social security costs

 

0.2

0.1

0.2

Other pension costs

 

0.1

-

0.1

Total

 

2.0

1.3

2.2

 

Average monthly number of people

 

The average number of employees, including directors, was:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

 

Unaudited

 

 

 

 

 

 

Editorial

 

24

24

24

Sales

 

20

20

20

Production

 

11

11

11

Administration

 

1

1

1

Total

 

56

56

56

 

Key management compensation

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Short-term employment benefits

 

0.2

0.2

0.4

 

Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any directors (whether executive or otherwise) of the entity. This comprises three individuals in 2017 and three individuals in 2016.

 

4.     Tax

 

The tax charged in the consolidated income statement for continuing operations is analysed below:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

UK corporation tax

 

 

 

 

Current tax at 19.43% (2016: 20.00%)

on profit for the period

 

 

0.1

 

0.3

 

0.6

Current tax

 

0.1

0.3

0.6

Deferred tax origination and reversal of temporary differences

 

 

 

 

Current period charge (see note 8)

 

-

-

-

Deferred tax

 

-

-

-

Total tax charge on continuing operations

 

0.1

0.3

0.6

 

The tax assessed in each period is the same as the standard rate of corporation tax in the UK for the relevant period.

 

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Profit before tax

 

0.8

1.8

3.1

Profit before tax at the standard UK tax rate

of 19.43% (2016: 20.00%)

 

 

0.1

 

0.3

 

0.6

Adjustments in respect of previous periods

 

-

-

-

Total tax charge on continuing operations

 

0.1

0.3

0.6

 

Factors affecting future tax charges:

 

Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 (on 26 October 2015) and Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 17% from 1 April 2020. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in this financial information. The deferred tax asset recognised by the Home Interest Companies in relation to accelerated capital allowances was £39,000 at 31 July 2017, £36,000 at 31 July 2016 and £39,000 at 31 December 2016.

 

5.     Property, plant and equipment

 

Property, plant and equipment comprised the following as at 31 July 2017:

 

Leasehold

improvements

Fixtures and fittings

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2017 and 31 July 2017

 

0.1

0.1

0.2

 

 

 

 

 

Accumulated depreciation

 

 

 

 

At 1 January 2017 and 31 July 2017

 

(0.1)

(0.1)

(0.2)

 

 

 

 

 

Net book value at 31 July 2017

 

-

-

-

Net book value at 31 December 2016

 

-

-

-

 

Property, plant and equipment comprised the following as at 31 July 2016:

 

Leasehold

improvements

Fixtures and fittings

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2016 and 31 July 2016 (unaudited)

 

0.1

0.2

0.3

 

 

 

 

 

Accumulated depreciation

 

 

 

 

At 1 January 2016 and 31 July 2016 (unaudited)

 

(0.1)

(0.1)

(0.2)

 

 

 

 

 

Net book value at 31 July 2016 (unaudited)

 

-

0.1

0.1

Net book value at 31 December 2015

 

-

0.1

0.1

 

Property, plant and equipment comprised the following as at 31 December 2016:

 

Leasehold

improvements

Fixtures and fittings

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2016

 

0.1

0.2

0.3

Disposals

 

-

(0.1)

(0.1)

At 31 December 2016

 

0.1

0.1

0.2

 

 

 

 

 

Accumulated depreciation

 

 

 

 

At 1 January 2016 and 31 December 2016

 

(0.1)

(0.1)

(0.2)

 

 

 

 

 

Net book value at 31 December 2016

 

-

-

-

Net book value at 31 December 2015

 

-

0.1

0.1

 

6.     Intangible assets

 

Intangible assets comprised the following as at 31 July 2017:

 

 

 

 

 

Software

Brand and publishing rights

 

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2017 and 31 July 2017

 

0.4

1.7

2.1

 

 

 

 

 

Accumulated amortisation

 

 

 

 

At 1 January 2017 and 31 July 2017

 

(0.3)

(1.7)

(2.0)

 

 

 

 

 

Net book value at 31 July 2017

 

0.1

-

0.1

Net book value at 31 December 2016

 

0.1

-

0.1

 

Intangible assets comprised the following as at 31 July 2016:

 

 

 

 

 

Software

Brand and publishing rights

 

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2016 and 31 July 2016 (unaudited)

 

0.4

1.7

2.1

 

 

 

 

 

Accumulated amortisation

 

 

 

 

At 1 January 2016

 

(0.1)

(1.7)

(1.8)

Charge for the period

 

(0.1)

-

(0.1)

At 31 July 2016 (unaudited)

 

(0.2)

(1.7)

(1.9)

 

 

 

 

 

Net book value at 31 July 2016 (unaudited)

 

0.2

-

0.2

Net book value at 31 December 2015

 

0.3

-

0.3

 

 

Intangible assets comprised the following as at 31 December 2016:

 

 

 

 

 

Software

Brand and publishing rights

 

 

Total

 

 

£m

£m

£m

 

 

 

 

 

Cost

 

 

 

 

At 1 January 2016 and 31 December 2016

 

0.4

1.7

2.1

 

 

 

 

 

Accumulated amortisation

 

 

 

 

At 1 January 2016

 

(0.1)

(1.7)

(1.8)

Charge for the period

 

(0.2)

-

(0.2)

At 31 December 2016

 

(0.3)

(1.7)

(2.0)

 

 

 

 

 

Net book value at 31 December 2016

 

0.1

-

0.1

Net book value at 31 December 2015

 

0.3

-

0.3

 

Amortisation charges are included in administration expenses.

 

7.     Inventories

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Work in progress

 

0.3

0.6

0.5

 

The movement in inventories is recognised in cost of sales.

 

8.     Trade and other receivables

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Trade receivables (net of provision - note 12)

 

1.6

3.4

3.0

Other receivables

 

0.2

0.4

0.2

Prepayments and accrued income

 

0.3

0.3

0.4

Total

 

2.1

4.1

3.6

 

 

 

9.     Cash

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Cash at bank and in hand

 

0.9

0.1

0.2

 

10.  Provisions

 

Movements in provisions are set out below.

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Dilapidations provision

 

 

 

 

At start of period

 

-

-

-

Additional provisions in the period

 

0.1

-

-

At end of period

 

0.1

-

-

 

The Home Interest Companies' dilapidations provision represents a best estimate of the present obligation in relation to the probable economic outflow that will be required under repair obligations at various intervals and at the expiry of the leases. These provisions are expected to be utilised within the next five years.

 

11.  Trade and other payables

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Trade payables

 

0.2

0.3

1.0

Other taxation and social security

 

0.2

0.1

0.5

Other payables

 

-

-

-

Accruals and deferred income

 

3.9

4.0

3.8

Total

 

4.3

4.4

5.3

 

12.  Financial instruments

 

Financial risk management

 

The determination of financial risk management policies and the treasury function operated at a Centaur Media plc group level. Policies are set to reduce risk as far as possible without unduly affecting the operating effectiveness of the Home Interest Companies.

 

The Home Interest Companies' activities expose them to a variety of financial risks, the most significant being credit risk as discussed below.

 

The Home Interest Companies do not have any derivative financial instruments.

 

Categories of financial instruments

 

The Home Interest Companies have the below categories of financial instruments. The carrying amounts are considered to be a reasonable approximation of the fair values.

 

 

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

Note

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Assets measured at amortised cost

 

 

 

 

Cash and bank balances

9

0.9

0.1

0.2

Trade receivables - net

8

1.6

3.4

3.0

Other receivables

8

0.2

0.4

0.2

Total financial assets

 

2.7

3.9

3.4

 

 

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

Note

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Liabilities measured at amortised cost

 

 

 

 

Trade payables

11

0.2

0.3

1.0

Accruals

11

0.5

0.6

0.5

Other payables

11

-

-

-

Total financial liabilities

 

0.7

0.9

1.5

 

Credit risk

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for the Companies. The Home Interest Companies' principal financial assets are trade receivables. The carrying amount of financial assets recorded in the historical financial information, which is net of impairment losses, represents the maximum exposure of credit risk. The Home Interest Companies are not considered to be subject to any significant concentrations of credit risk.

 

Trade receivables

 

Trade receivables consist of a large number of customers, of varying sizes and spread across diverse geographies. The Home Interest Companies do not have significant exposure to credit risk in relation to any single counterparty or group of counterparties having similar characteristics. The Home Interest Companies' exposure to credit risk is influenced predominantly by the circumstances of individual customers as opposed to industry or geographic trends.

 

The business assesses the credit quality of customers based on their financial position, past experience and other qualitative and quantitative factors. The Home Interest Companies' policy requires customers to pay in accordance with agreed payment terms, which are generally 30 days from the date of invoice. Under normal trading conditions, the Home Interest Companies are exposed to relatively low levels of risk, and potential losses are mitigated as a result of a diversified customer base and the requirement for events and certain premium content subscription invoices to be paid in advance of service delivery.

 

The credit control function within Centaur Media group finance department monitored the outstanding debts of the Home Interest Companies, and trade receivables balances are analysed by the age and value of outstanding balances.

 

Any trade receivable balance which is objectively determined to be uncollectible is written off the ledger, with a charge taken through the Statement of Comprehensive Income. The Home Interest Companies also records a provision for estimated impairment losses on its trade receivables balances. All balances past due are reviewed, with those greater than 90 days past due considered to carry a higher level of credit risk. Specific provision is made against customer balances with known credit issues or where debt has been referred to a collection agency. The remaining past due balances are then analysed, with balances relating to revenue recognised in advance, customers on payment plans and non-payment resulting from administrative queries considered to be of lower risk. A judgement is applied to the net balance based on historic experience on a percentage basis taking into account both the age and the reason items remain unpaid.

 

Impairment losses are taken through administrative expenses in the Statement of Comprehensive Income.

 

An additional charge for impairment of trade receivables of £0.5m has been made during the 7-month period to 31 July 2017 (£nil has been made during 7-month period to 31 July 2016, and £0.3m has been made during the 12 month period ended 31 December 2016) in excess of the charge which would arise under normal trading conditions and recorded in operating profit. Following the disappointing working capital performance in 2015, and notwithstanding the return to strong cash generation in 2016, there remains a legacy of old debt which arose during a period of disruption during the second half of 2015 and into the early part of 2016 arising from the implementation of a new accounting system. Whilst the Home Interest Companies continue to make every effort in collecting all amounts due to it, given the age and magnitude of this outstanding debt, the directors believe there remains significant uncertainty in being able to collect these amounts and therefore consider the value of this debt to be impaired. In addition with the transfer of the business to Future, this also impacted the ability to recover certain outstanding debtors.  The underlying risk profile of the Home Interest Companies' debtors has not fundamentally worsened; however, the ageing has made the debt balances harder to collect.

 

The gross ageing of trade receivables according to their original due date is detailed below:

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Past due

 

 

 

 

0-30 days

 

1.3

1.7

2.2

31-60 days

 

0.2

0.7

0.2

61-90 days

 

0.2

0.2

0.2

91+ days

 

0.8

0.9

0.8

Total

 

2.5

3.5

3.4

 

Trade receivables that are less than 3 months past due are generally not considered to be impaired, except where specific credit issues or delinquency in payments have been identified. At 31 July 2017, debtors greater than 90 days had been fully provided for. As at 31 July 2016 debtors greater than 90 days past due with a carrying value of £0.8m which have not been provided against and at 31 December 2016 £0.3m.

 

In making the assessment that these amounts are not impaired, the directors have considered the quantum of amounts included in gross trade receivables which relate to amounts not yet included in income, including pre-event debt included in deferred income and amounts relating to VAT. The credit quality of trade receivables not yet due nor impaired has been assessed as acceptable.

 

 

The movement in the Home Interest Companies' provision for trade receivables during the period is as follows:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

At start of period

 

0.4

0.2

0.2

Provision for receivables impaired

 

0.5

-

0.3

Receivables written off during the period

 

-

(0.1)

(0.1)

At end of period

 

0.9

0.1

0.4

 

Liquidity risk and interest rate risk

 

The Home Interest Companies are cash generative, have no debt and hence are not exposed to significant liquidity or interest rate risk.

 

Currency risk

 

The Home Interest Companies operate predominantly in the UK and have minimal exposure to foreign currency risk. There are no assets and liabilities denominated in foreign currencies.

 

13.  Pensions

 

The Home Interest Companies contribute to individual and collective money purchase pension schemes in respect of directors and employees once they have completed a requisite period of service. The charge in the periods in respect of these defined contribution schemes is included in note 3. Included within other payables is an amount of £14,000 (31 July 2016: £nil) (31 December 2016: £13,000) in respect of the pension schemes.

 

14.  Commitments and contingent liabilities

 

Operating lease commitments

 

At the balance sheet date, the Home Interest Companies had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Within one year

 

0.1

0.1

0.1

Between one and five years

 

0.5

0.4

0.5

After five years

 

-

0.2

-

Total

 

0.6

0.7

0.6

 

Operating lease payments represent rentals payable by the Home Interest Companies on its office property.

 

1.    

 

15.  Related party transactions

 

Transactions and balances between Ascent Publishing Limited and Centaur Consumer Exhibitions Limited have been eliminated. The remuneration of key management personnel and directors is set out in note 3.

 

Prior to Centaur Media plc's disposal of the Home Interest Companies, Centaur Media conducted a strategic review of the division, a continuing business, which is a predominantly standalone entity that is focused on a B2C audience and is distinct from the rest of the Centaur Media group, identifying the division as non-core. As a result of this strategic review process, the Home Interest Companies were set to be acquired by Future.

 

The combined statement of comprehensive income of the Home Interest Companies reflects allocations of general corporate expenses from Centaur Media including, but not limited to, directors, finance, legal, information technology, human resources, events and exhibition operations, digital and data operations and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, headcount or other relevant measures. These allocations have been considered to be a reasonable reflection of the utilisation of services by, or the benefits provided to, the Home Interest Companies. These allocations are set out below.

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Directors

 

0.2

0.1

0.2

Finance

 

0.2

0.3

0.4

Legal

 

0.1

0.1

0.1

Information technology

 

0.1

0.1

0.2

Human resources

 

0.1

0.1

0.1

Events and exhibition operations

 

-

0.1

0.1

Digital and data operations

 

0.1

-

0.2

Other

 

0.1

0.2

0.3

Total general corporate allocations

 

0.9

1.0

1.6

 

These allocations may not, however, reflect the expenses the Home Interest Companies would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the Home Interest Companies had been a standalone company would depend on a number of factors, including the chosen organisational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.

 

Invested capital on the combined statement of financial position and in the combined statement of changes in equity represents Centaur Media's historical investment in the Home Interest Companies, the net effect of transactions with and allocations to Centaur Media and the Home Interest Companies' accumulated earnings.

 

 

Net transfers to Centaur Media are included within invested capital. The components of net transfers to Centaur Media in the combined statement of changes in invested capital for all periods presented were as follows:

 

 

 

7-months ended

31 July

2017

7-months ended

31 July

2016

Year

ended 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Cash pooling and general financing activities

 

(1.0)

(3.0)

(6.0)

Corporate allocations

 

0.9

1.0

1.6

Reversal of recharges from Centaur Media

 

(0.1)

(0.1)

(0.1)

Income taxes

 

0.1

0.3

0.6

Total net transfers to Centaur Media per combined statement of changes in invested capital

 

 

(0.1)

 

(1.8)

 

(3.9)

 

The combined balance sheet of the Home Interest Companies reflects balances with third parties which are held and managed by Centaur Media but pertain to the Home Interest Companies. These balances were as follows:

 

 

 

As at

31 July

2017

As at

31 July

2016

As at 31 December 2016

 

 

£m

£m

£m

 

 

 

Unaudited

 

 

 

 

 

 

Prepaid expenses

 

0.4

0.3

0.2

Trade payables

 

(0.3)

(0.6)

(1.0)

Accrued expenses

 

(0.9)

(0.9)

(0.3)

Social security and other taxes

 

(0.1)

(0.1)

(0.1)

Total net liabilities held by Centaur Media per combined balance sheet

 

 

(0.9)

 

 (1.3)

 

(1.2)

 

 

16.  Principal subsidiaries

 

The combined historical financial information of the Home Interest Companies represents the assets, liabilities, results and cash flows of the Home Interest Companies carved out from the parent company, Centaur Media. The combined historical information of the Home Interest Companies includes the specific legal entities in Centaur Media listed below, as well as assets, liabilities, results and cash flows pertaining to the Home Interest Companies carved-out from other Centaur Media legal entities.

Details of principal subsidiaries are provided below:

 

Company name and

registered number

Country of incorporation

 

Nature of business

 

 

 

Ascent Publishing Limited

02561341

 

England and Wales

Creation and distribution of information

Centaur Consumer Exhibitions Limited

07276298

England and Wales

Organisation of exhibitions

 

17.  Post balance sheet event

 

All assets, liabilities and trade of the Home Interest Companies were hived up into existing entities in the Future group directly after acquisition of the Home Interest Companies by Future on 1 August 2017.

 

 

Section C - ACCOUNTANT'S REPORT ON THE COMBINED HISTORICAL FINANCIAL INFORMATION OF PURCH B2C

The Directors,

Future plc,

Quay House,

The Ambury,

Bath,

BA1 1UA

 

Numis Securities Ltd ("the Sponsor")

10 Paternoster Square

London

EC4M 7LT

 

1 March 2019

 

Dear Ladies and Gentlemen

Combined Historical Financial Information of Purch B2C

We report on the Combined Historical Financial Information of Purch B2C for the 9 month period ended 30 September 2018 set out in section D below (the "Purch B2C Financial Information Table"). The Purch B2C Financial Information Table has been prepared for inclusion in an announcement, prepared in accordance with item 5.4A.5 of the Listing Rules of the United Kingdom Listing Authority (the "Listing Rules"), dated 1 March 2019 (the "Transfer Announcement") of Future plc (the "Company") on the basis of the accounting policies set out in the Summary of Significant Accounting Policies section of the Purch B2C Financial Information Table.  This report is required by item 6.2.4R(1) of the Listing Rules and is given for the purpose of complying with that item and for no other purpose.

 

Responsibilities

 

The Directors of the Company are responsible for preparing the Purch B2C Financial Information Table in accordance with International Financial Reporting Standards as adopted by the European Union. It is our responsibility to form an opinion as to whether the Purch B2C Financial Information Table gives a true and fair view, for the purposes of the Transfer Announcement and to report our opinion to you.

 

Basis of opinion

 

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this report or our statement, required by and given solely for the purposes of complying with item 6.2.4R(1) of the Listing Rules, consenting to its inclusion in the Transfer Announcement.

 

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information of Purch B2C. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information of Purch B2C and whether the accounting policies are appropriate to Purch B2C's circumstances, consistently applied and adequately disclosed.

 

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information of Purch B2C is free from material misstatement whether caused by fraud or other irregularity or error.

 

Opinion

 

In our opinion, the Purch B2C Financial Information Table gives, for the purposes of the Transfer Announcement dated 1 March 2019, a true and fair view of the state of affairs of Purch B2C as at 30 September 2018 and of its losses, cash flows and changes in invested capital for the period then ended in accordance with International Financial Reporting Standards as adopted by the European Union. 

 

Yours faithfully

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

 

PricewaterhouseCoopers LLP, 2 Glass Wharf, Bristol, BS2 0FR

T: +44 (0) 117 955 7779, F: +44 (0) 117 309 2005, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525.  The registered office of

PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.  PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

 

 

SECTION D - COMBINED HISTORICAL FINANCIAL INFORMATION OF PURCH B2C

Income statement

for the nine months ended 30 September 2018 and the year ended 31 December 2017

 

 

 

 

Nine months ended 30 September 2018

Year ended 31 December 2017

 

Note

$m

$m

 

 

 

 

Revenue

1

46.6

63.5

Net operating expenses

2

(64.7)

(65.9)

Other income

 

0.2

0.3

Operating (loss) and loss before tax

 

(17.9)

(2.1)

Tax on profit / (loss)

4

0.3

0.7

(Loss) for the period/year attributable to the Shareholders of Purch

 

(17.6)

(1.4)

 

 

A statement of comprehensive income has not been presented as there are no other items of comprehensive income/(expense) other than the loss on ordinary activities after tax for the period.

 

 

 

 

Statement of changes in invested capital
 

for the year ended 31 December 2017 and the nine months ended 30 September 2018

 

 

 

Total invested capital

 

Note

$m

Balance at 31 December 2016

 

                                  28.9

Loss for the year

 

                                  (1.4)

Total comprehensive loss for the year

 

(1.4)

Share based payments

 

0.6

Net transfer from the Retained Group

15

                                    3.1

Balance at 31 December 2017

 

                                  31.2

Loss for the period

 

                                 (17.6)

Total comprehensive loss for the period

 

(17.6)

Share based payments

 

0.5

Net transfer from the Retained Group

15

                                    5.6

Change in allocation upon acquisition

 

(0.7)

Balance at 30 September 2018

 

                                  19.0

 

Balance sheet

 

 

as at 30 September 2018 and 31 December 2017

 

 

30 September 2018

31 December 2017

 

Note

$m

$m

Assets

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

5

         0.3

         1.2

Intangible assets - other

6

       10.6

       21.3

Total non-current assets

 

       10.9

       22.5

Current assets

 

 

 

Trade and other receivables

8

       15.6

       18.3

Cash and cash equivalents

9

            1.5

            1.0

Total current assets

 

       17.1

       19.3

Total assets

 

       28.0

       41.8

 

 Capital and reserves and liabilities

 

 

 

 Capital and reserves

 

 

 

Invested capital

 

       19.0

       31.2

Total Invested capital

 

       19.0

       31.2

Non-current liabilities

 

 

 

Deferred tax

7

              -  

              0.3  

Other non-current liabilities

 

            0.1

            0.3

Total non-current liabilities

 

           0.1

           0.6

Current liabilities

 

 

 

Trade and other payables

10

         8.9

         10.0

Corporation tax payable

 

              -  

              -  

Total current liabilities

 

         8.9

         10.0

Total liabilities

 

         9.0

         10.6

Total invested capital and liabilities

 

       28.0

       41.8

 

Cash flow statements

for the nine months ended 30 September 2018 and year ended 31 December 2017

 

Nine months ended 30 September 2018

Year ended 31 December 2017

 

$m

$m

 

 

 

Cash flows from operating activities

 

 

Cash generated from/(used in) operations (A)

1.1

0.9

Tax paid

-

-

Net cash generated from/(used in) operating activities

1.1

0.9

Cash flows from investing activities

 

 

Cash inflow from escrow account

-

1.3

Payment of acquisition-related contingent consideration

-

(0.5)

Payment of acquisition-related holdback liability

-

(0.7)

Purchase of property, plant and equipment

(0.8)

(0.4)

Additions to intangible assets

(4.7)

(3.0)

Net cash (used in)/generated from investing activities

(5.5)

(3.3)

Cash flows from financing activities

 

 

Net transfers from the Retained Group

5.6

3.1

Change in allocation upon acquisition

(0.7)

-

Net cash generated from financing activities

4.9

3.1

Net increase in cash and cash equivalents

0.5

0.7

Cash and cash equivalents at beginning of period / year

1.0

0.3

Cash and cash equivalents at end of period / year

1.5

1.0

 

 

 

Notes to the cash flow statements

for the nine months ended 30 September 2018 and year ended 31 December 2017

 

A. Cash used in operations

The reconciliation of (loss)/profit for the period to cash generated from/(used in) operations is set out below:

 

Nine months ended 30 September 2018

Year ended 31 December 2017

 

$m

$m

 

 

 

Loss for the year

(17.6)

(1.4)

Adjustments for:

 

 

Depreciation charge

0.5

0.4

Amortisation of intangible assets

3.1

4.6

Loss on disposal of property, plant and equipment

1.1

-

Impairment of intangibles

12.3

-

Share-based payments

0.5

0.6

Deferred tax

(0.3)

(0.7)

 

(0.4)

3.5

Decrease/(increase) in trade and other receivables

2.7

(3.6)

(Decrease)/increase in related party payables

1.0

(0.5)

(Decrease)/increase in trade and other payables

(2.2)

1.5

Cash generated from operations

1.1

0.9

 

 

 

 

 

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General information          

The business of Purch B2C is to operate several websites and includes publishing original content. The content focuses primarily on technology, science, and outdoor leisure and provides original videos, news, reviews and reference articles daily on the internet. Purch B2C also operates online marketplaces for buyers and sellers of small and medium sized business products. Purch B2C monetises these websites through the sale of online advertising and performance marketing (lead generation). Purch B2C is domiciled in the United States of America, and its principal place of business is 11 West 42nd Street, 15th Floor, New York, NY 10036, USA.

I.         Purch B2C's accounting policies

A         Basis of preparation

This historical financial information of Purch B2C was derived from the financial statements and accounting records, prepared in accordance with US GAAP, of Purch Group Inc and subsequently adjusted to comply with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The historical financial information for the nine months ended 30 September 2018 has been prepared specifically for the purposes of this document and in accordance with the UK Listing Rules, and in accordance with this basis of preparation. The accounting policies applied and disclosed below, as well as the format of the financial information, are consistent with those expected to be applied by Future plc in its annual financial statements for the year ended 30 September 2019 and these policies have been applied consistently to all periods presented.

The historical financial information has been prepared on a going concern basis under the historical cost convention. The business of Purch B2C is planned to continue operating as previously following the acquisition by Future US inc (a subsidiary of Future plc) ('Future') on 4th September 2018 with appropriate levels of funding available to be able to operate at adequate levels of both liquidity and capital for the foreseeable future.

This historical financial information does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006.

The basis of preparation describes how the historical financial information has been prepared in accordance with IFRS.

IFRS does not provide for the preparation of "carve-out" historical financial information, or for the specific accounting treatment set out below. Accordingly, in preparing the historical financial information, certain accounting conventions commonly used for the preparation of "carve-out" historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000 (Investment Reporting Standards applicable to public reporting engagements on historical financial information) issued by the UK Auditing Practices Board have been applied.

The following summarises the accounting and other principles applied in preparing the historical financial information:

·      The business of Purch B2C did not comprise a separate single legal entity during the year ended 31 December 2017 and the nine months ended 30 September 2018 and, therefore, it is not meaningful to present share capital or an analysis of reserves. Prior to acquisition the invested capital represented a combination of the overall receivables and payables with the remainder of the Purch group that was not acquired by Future (the "Retained Group"), funding balances with the Retained Group and equity investment by the Retained Group in Purch B2C, which cannot be separately identified or allocated.  

 

·      At the date of acquisition, there was a difference in net assets between amounts recognised on the carve-out basis as described below and the actual assets and liabilities acquired by Future. This difference has been shown as a movement in invested capital. 

 

·      The income statement of Purch B2C to the point of acquisition includes allocations of general corporate expenses from the Retained Group including, but not limited to, employee, technology, facilities, professional services, offices, human resources, sales and marketing costs. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, headcount or other relevant measures. These allocations have been considered to be a reasonable reflection of the utilisation of services by, or the benefits provided to, Purch B2C. These allocations may not, however, reflect the expenses the business of Purch B2C would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if the business of Purch B2C had been a standalone company would depend on a number of factors, including the chosen organisational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.

 

·      Prior to the point of acquisition the income statement includes centrally allocated overhead costs. Post acquisition the income statement includes charges from the Retained Group for services provided under a transitional services agreement, these charges include IT support, Finance and HR costs.

 

·      The balance sheet of Purch B2C at 30 September 2018 reflects Purch B2C stand-alone assets and liabilities. The comparative balance sheet at 31 December 2017 includes Purch Group's asset and liabilities that are specifically identifiable or otherwise attributable to Purch B2C.The cash balance recognised in the balance sheet at 31 December 2017 represents cash held by certain legal entities within Purch B2C and does not include an allocation of cash from the Retained Group.  Transfers of cash to and from the Retained Group up to the date of acquisition have been shown as a component of invested capital.

 

·      The Retained Group's long-term debt has not been attributed to Purch B2C for any of the periods presented because the Retained Group's borrowings are not the legal obligation of Purch B2C and did not transfer to Purch B2C pursuant to the Acquisition Agreement.

 

·      The Retained Group maintained various benefit and share based compensation plans. Purch B2C's employees participated in those programs and a portion of the cost of those plans is included in Purch B2C's historical financial information. The credit entry is shown as a component of invested capital.

 

·      The historical financial information includes Purch B2C's net assets and results of operations on the basis as described above. All intercompany transactions and accounts within the businesses of Purch B2C have been eliminated.

 

·      In the period prior to the date of acquisition, intercompany transactions between Purch B2C and the Retained Group are considered to be effectively settled as if Purch B2C and the Retained Group were not part of a group in the historical financial information at the time the transaction is recorded. It has been assumed that all the transactions have been settled at the balance sheet date on a usual third-party arms' length basis with commercial payment terms. The total net effect of the settlement of these intercompany transactions is reflected in the statement of cash flows within financing activities and on the balance sheet within invested capital.

 

·      Purch B2C has historically been included in the tax returns filed by the respective legal entity. Income tax expense and other income tax information contained in the historical financial information to the point of acquisition is presented based on the effective tax rate of the Purch as applied to Purch B2C's profits and losses. Post acquisition, the tax rate applicable to the Future Plc sub group domiciled in the USA has been applied to the Purch B2C profits.

 

·      Tax balances relating to separate legal entities with Purch B2C have been recognised based on the tax returns for the legal entities. Deferred tax balances arising on assets acquired through a business combination have been directly allocated to Purch B2C if the underlying assets or liabilities relate to Purch B2C's business.

 

·      The share-based payment charge has been calculated for Purch and allocated to Purch B2C as part of general corporate expenses. It is not therefore practical or appropriate to provide information on the number of share options granted and exercised as required by IFRS.  From the date of acquisition, no further share based payment charge exists. 

 

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying these accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the historical financial information are disclosed below in II, "Critical accounting estimates and assumptions."

B         Accounting policies

Segment reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Purch B2C is organised and managed as a single reportable segment although revenue information is split between Advertising and Performance.

Revenue recognition

Purch B2C adopted IFRS 15 "Revenue from Contracts with Customers" with effect from 1 January 2018 using the fully retrospective method for initial application.  Management have conducted a thorough analysis of all material revenue streams and customer contracts and reviewed sales and accounting processes to identify the need for changes.

Management have assessed the impact of implementing IFRS 15 on the balance sheet and income statement for previous periods.  The previous revenue recognition policies resulted in an outcome that is not significantly different to that achieved in applying the measurement principles of IFRS 15, therefore no adjustments have been made to the income statement or balance sheet in previous periods

Purch B2C generates revenue through multiple channels including affiliate commissions, lead generation, direct advertising, and programmatic advertising.

Purch B2C provides informational reviews and ranking of technology and outdoor products. Purch B2C earns commissions when purchases of these products are made through the featured links. Revenues related to these commissions are recognized at the time of the related product sale.

Lead generation revenue is generated from the sale of prospective consumer interest or inquiry into a third-party business' products or services. Leads are primarily generated via search engine marketing results and then sold to third-party businesses. Revenues related to the sale of leads is recognized when leads are delivered to the customers.

Direct advertising revenue is generated through the sale of advertising space on Purch B2C-owned or network websites. Advertising is sold on either a fixed-fee basis or cost-per-impression basis. The performance obligation is satisfied over time; measured either as the fulfilment of impressions over time or evenly over the period which the advert is displayed.  Direct advertising agreements are generally short term and can be cancelled by either party at short notice.

Revenues from programmatic advertising are generated on a cost-per-impression basis each time an ad is displayed or on a cost-per-click basis each time a user clicks on a text link within the body of an article hosted on a Purch B2C website.  The performance obligation is satisfied over time; measured either as the fulfilment of impressions over time or as the click-based activity occurs.  Programmatic advertising agreements are generally short term and can be cancelled by either party at short notice.

Employee benefits

(a) Pension obligations

Purch had a defined contribution plan pension scheme for the benefit of employees. Purch pays contributions into a privately administered pension plan, which is held separately to Purch B2C. Purch B2C has no further payment obligations once the contributions have been paid. Contributions are charged to the income statement when employer contributions become payable.

(b) Bonus plans

Purch B2C recognises a liability and an expense for bonuses taking into consideration targeted trading performance. Purch B2C did not have any accrued bonuses at the point of acquisition as all schemes were settled. Further bonuses were accrued post acquisition based on the targeted trading performance.

(c) Share-Based Compensation

The fair value of the employee services received in exchange for the grant of share-based payment awards in the shares of Purch is recognised as an expense. The amount to be expensed over the service period is based on the grant-date fair value.  The fair value of each option granted is estimated using the Black-Scholes option valuation model and is recognised on a straight-line basis over the requisite service period, if the awards contain a service vesting feature.

The calculation of fair value includes assumptions regarding the number of cancellations and excludes the impact of any non-market vesting conditions.  Non-market vesting conditions are included in the assumptions about the numbers of awards that are expected to vest. At each balance sheet date, the estimate of the number of awards expected to vest is reassessed and, to the extent that the expected levels of achievement change, share-based compensation is adjusted in the period of change and recorded in the income statement, with a corresponding adjustment to invested capital.

Leases

Leases in which Purch B2C assume substantially all the risks and rewards of ownership of the leased assets are classified as finance leases. All other leases are classed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Tax

Tax on the profit or loss for the year comprises current tax and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity in which case it is recognised in equity.

Current tax is payable based on taxable profits for the year, using tax rates that have been enacted or substantively enacted at the balance sheet date, along with any adjustment relating to tax payable in previous years. Management periodically evaluates items detailed in tax returns where the tax treatment is subject to interpretation. Taxable profit differs from net profit in the income statement in that income or expense items that are taxable or deductible in other years are excluded - as are items that are never taxable or deductible. Current tax assets relate to payments on account not offset against current tax liabilities.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial information. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled in the appropriate territory.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset against each other where they relate to the same jurisdiction and there is a legally enforceable right to offset.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation

Depreciation is calculated using the straight-line method to allocate the cost of property, plant and equipment less residual value over estimated useful lives, as follows:

• Leasehold improvements - ten years or period of the lease if shorter.

• Equipment, fixtures and fittings - between one and five years.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

Intangible assets

(a) Business Combinations - Purch B2C includes the results of operations of the businesses that it acquires as of the respective dates of acquisition. Purch B2C allocates the fair value of the purchase price of acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Contingent consideration is initially recognised at fair value and subsequent changes to the estimate of deferred consideration are recognised in the income statement.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to appropriate cash generating units and it is not subject to amortisation but is tested annually for impairment.

(b) Other intangible assets

Other intangible assets which include; customer lists, media content, domain names and developed technology, are shown at historical cost. Amortisation is calculated using the straight-line method to allocate the cost of these intangible assets over their estimated useful lives (between three and ten years). Intangible assets are tested for impairment only where there is an indication that an impairment may have occurred.

(c) Internally developed software

Non-integral computer software purchases are stated at cost less accumulated amortisation. Costs incurred in the development of new websites and unique software are capitalised only where the cost can be directly attributed to developing the website or software products to operate in the manner intended by management and only to the extent of the future economic benefits expected from its use. These costs are amortised on a straight-line basis over their estimated useful lives (between one and three years). Costs associated with maintaining websites or computer software include internally generated salary costs and are recognised as an expense as incurred.

Impairment tests and Cash-Generating Units (CGUs)

A CGU is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

Goodwill is not amortised but tested for impairment at least once a year or more frequently when there is an indication that it may be impaired. Therefore, the evolution of general economic and financial trends as well as actual economic performance compared to market expectations represent external indicators that are analysed by Purch B2C, together with internal performance indicators, in order to assess whether an impairment test should be performed more than once a year.

IAS 36 'Impairment of Assets' requires these tests to be performed at the level of each CGU or group of CGUs likely to benefit from acquisition-related synergies, within an operating segment.

Any impairment of goodwill is recorded in the income statement as a deduction from operating profit and is never reversed subsequently.

Other intangible assets with a finite life are amortised and are tested for impairment only where there is an indication that an impairment may have occurred.

Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less a loss allowance.

Purch B2C applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables have been grouped based on the days past due.  The expected loss rates applied to these groupings are based on the payment profiles of sales over a period of 12 months from 1 January 2017 to 31 December 2017 and the corresponding historical credit losses experienced within this period.

The loss allowance as at 30 September 2018 and 1 January 2018 (on adoption of IFRS 9) was determined on that basis for trade receivables.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits repayable on demand or maturing within three months of the balance sheet date.

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Invested capital

Net transfers to and from the Retained Group are included within invested capital. The components of net transfers to the Retained Group are included within the statement of changes in invested capital.

Prior to acquisition the invested capital in the statement of financial position and statement of changes in equity represented the Retained Group's historical investment in Purch B2C, the net effect of transactions with and allocations from the Retained Group and Purch B2C's accumulated earnings. See note 15 for further information about transactions between Purch B2C and the Retained Group.

Post acquisition and at 30 September 2018 the movement in invested capital includes the net adjustment in balance sheet assets as a result of amending the allocated HFI balance sheet to reflect the actual assets acquired rather than taking an allocation.  The adjustment principally impacts the fixed and intangible asset balances.

 

New or revised accounting standards and interpretations

Purch B2C adopted IFRS 15 "Revenue from Contracts with Customers" with effect from 1 January 2018 using the fully retrospective method for initial application.  Management have conducted an analysis of all material revenue streams and customer contracts and reviewed sales and accounting processes to identify the need for changes. No adjustments to prior year balances have been deemed necessary.

IFRS 9 'Financial Instruments' is effective for Purch B2C for the period ended 30 September 2018. Application of IFRS 9 introduces a new expected loss impairment model. Adoption of the standard has not resulted in a significant adjustment to the balance sheet, but has result in increased disclosure. 

Purch B2C is continuing to assess the impact of adopting IFRS 16, which will be effective for the year  beginning 1 October 2019.

Purch B2C does not expect that any other standards and amendments issued but not yet effective will have a material impact on results or net assets. 

C.         Critical accounting estimates and assumptions

Critical judgements in applying the accounting policies

The preparation of the historical financial information under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying Purch B2C's accounting policies. The areas requiring a higher degree of judgment are as follows:

i)             Deferred tax asset recognition - Purch has not recognised a deferred tax asset for losses carried forward as there is insufficient certainty about their recoverability. Accordingly, such deferred tax assets have not been allocated to Purch B2C, in accordance with the Basis of Preparation.

 

ii)            Internally generated intangible assets - management are required to assess the point from which it is appropriate to capitalise internal development costs relating to websites and other software based on the their confidence in expected future economic benefits.

 

iii)           Level of Cash Generating Unit for impairment testing - Goodwill recognised on the balance sheet at 31 December 2017 includes the acquisitions of Active Junky, Inc and the ShopSavvy.com business. These were both sold post acquisition by Future and the value assigned to each has accordingly been impaired to the amount realised. The value of the remaining goodwill is supported by the purchase price paid by Future for the overall Purch B2C business.

 

iv)           Revenue recognition - a significant amount of Purch B2C's advertising revenue is generated through contracts with advertising agencies who are acting on behalf of the end-customer. In determining the appropriate level of revenue to recognise, it is necessary to assess whether under IFRS 15 these agencies are acting as the principal customer or as agents. This can involve significant judgement around which party has control over the services being provided to the end customer. Generally Purch B2C has assessed that in situations where it has no control over the price charged by the agent to the end customer, that its principal customer is the agency and therefore revenue is measured based on the amounts charged to the agency rather than the amount paid by the end customer.

 

Estimates

Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable in the circumstances. The key estimates used in the preparation of this historical financial information that could result in a material change in the carrying value of assets or liabilities within the next twelve months:

i)             Impairment of trade receivables - management have made provision for the impairment of trade receivables based on the aging of receivables, historical collection experience and various other factors. Actual recovery of receivables has, and will continue, to differ from the amount provided. The historical movements in the provision, which show the amounts charged each year and amounts subsequently released when balances are collected, are shown in note 12.

 

ii)            Allocation of central costs - the nature of this historical financial information is such that it includes a significant level of general corporate expenses of Purch that have been allocated to Purch B2C. This allocation requires a significant level of judgment to be applied as to the level of costs relating to Purch B2C and has been done on the basis of various metrics, including headcount.

 

Notes to the historical financial information

1.     Segmental information

 

The Board of Directors of Purch has been identified as the Chief Operating Decision ('CODM') maker until the acquisition by Future on 4 September 2018. From this point the Executive Directors of Future plc are identified as the CODM, reviewing Purch B2C's internal reporting on a monthly basis in order to assess performance and allocate resources. Purch B2C is organised and managed as a single reportable segment, although revenue is analysed between Advertising and Performance revenue: 

•     Advertising:  Advertising revenue is generated through the sale of advertising space on Company-owned or network websites. Advertising is sold on an either fixed-fee basis or a cost-per-impression basis.

•     Performance: Performance revenue is generated from the sale of prospective consumer interest, inquiry into a 3rd party business or a sales commission.

Revenue is defined as per the accounting policies. There are no intersegment revenues. The impact of individually significant customers is disclosed in note 13.

Operating expenses were managed across the Purch business as a whole and have been allocated to Purch B2C as explained in the Basis of Preparation. As such the Board of Directors did not review profit at a segment level. Similarly, assets and liabilities are managed in aggregate and hence there is only one operating segment.

 Analysis of Revenue

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

Advertising

32.0

40.3

Performance

14.6

23.2

Total segment revenue

46.6

63.5

 

Revenues have been further analysed based on the timing of revenue recognition.

 

 

 

2018

 

 

2017

 

 

Advertising

Performance

Total

Advertising

Performance

Total

 

$m

$m

$m

$m

$m

$m

Segment revenue

32.0

14.6

46.6

40.3

23.2

63.5

Inter-segment revenue

-

-

-

-

-

-

Revenue from external customers

32.0

14.6

46.6

40.3

23.2

63.5

 

 

 

 

 

 

 

Timing of revenue recognition

 

 

 

 

 

 

At a point in time

32.0

12.1

44.1

40.3

20.0

60.3

Over time

-

2.5

2.5

-

3.2

3.2

 

 

2.     Net operating expenses

 

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

Cost of sales

(22.3)

(30.7)

Impairment of Intangible Assets

(12.3)

-

Personnel costs (note 4)

(12.3)

(15.5)

Technology

(5.4)

(5.8)

Amortisation

(3.1)

(4.6)

Share based payments

(0.5)

(0.6)

Depreciation

(0.5)

(0.4)

Other

(8.3)

(8.3)

Net operating expenses

(64.7)

(65.9)

 

 

3.     Employees

 

The aggregate remuneration of employees comprised

 

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

Wages and salaries

15.3

19.8

Fringe benefits

3.3

4.3

Bonus and commissions

2.3

3.5

Intercompany Allocations

1.1

1.8

Total

22.0

29.4

Less: amounts included in cost of sales

7.7

11.2

Less: amounts capitalised

2.0

2.7

Total

12.3

15.5

 

 

Average annual number of people

The average annual number of employees was

 

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

Business intelligence

5

6

Content

84

80

Development

36

44

Product

27

29

Fulfilment

1

2

Sales and marketing

34

29

Finance

7

8

Total

194

198

 

Key management compensation

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

Wages and salaries

1.0

0.9

Fringe benefits

0.2

0.1

Bonus and commissions

0.9

1.3

Share-based compensation

0.2

0.3

Total

2.3

2.6

 

Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any directors (whether executive or otherwise) of the entity. This comprises 100 percent of the costs of two individuals and an apportionment of the costs of five individuals in 2018 and 2017.

 

4.     Tax

 

The tax credit in the consolidated income statement for continuing operations is analysed below:

 

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

US corporation tax

 

 

Current tax at 24% (2017: 35%) on the profit for the year

-

-

Adjustments in respect of previous years

-

-

Current tax

-

-

Deferred tax origination and reversal of temporary differences

 

 

Current year credit (note 8)

(0.3)

(0.7)

Deferred tax

(0.3)

(0.7)

Total tax credit on continuing operations

(0.3)

(0.7)

 

The tax assessed in each year differs from the standard rate of corporation tax in the US for the relevant year. The differences are explained below:

 

 

Nine months ended 30 September

Year ended 31 December

 

2018

2017

 

$m

$m

Loss before tax

(17.9)

(2.1)

Loss before tax at the standard US tax rate of 24% (2017: 35%)

(4.3)

(0.5)

Deferred tax not recognised

4.0

(0.2)

Total tax credit on continuing operations

(0.3)

(0.7)

 

 Factors affecting future tax charges:

 

Purch B2C has historically been part of Purch and therefore the tax charge above reflects an allocation of the total group tax position as described in the basis of preparation. Following completion of the Acquisition Agreement, Purch B2C will operate as a separate business and therefore will be subject to their own tax charge on a stand-alone basis. This may differ from the effective rate shown above.

 

5.     Property and equipment

 

Purch B2C Companies

Equipment

$m

Furniture & fixtures

$m

Purchased software

$m

Leasehold improvements

$m

Construction in process

$m

Total

$m

Cost

 

 

 

 

 

 

At 1 January 2017

            2.3

1.0

            0.1

             0.4

              -

      3.8

Additions

0.2

0.2

-

-

0.1

0.5

At 31 December 2017

       2.5

           1.2

           0.1

           0.4

             0.1

     4.3

Additions

        0.3

           0.1

                -

               0.3

   -

0.7

Disposals

(2.7)

      (0.6) 

(0.1)

 (0.7)  

(0.1)  

(4.2)

At 30 September 2018

          0.1

0.7

          -

            -

              -

0.8

 

 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

 

At 1 January 2017

(1.9)

(0.3)

(0.1)

         (0.3)

            -  

    (2.6)

Charge for the year

(0.2)

(0.1)

           -

          (0.1)

            -  

     (0.4)

At 31 December 2017

       (2.1)

(0.5)

(0.1)

         (0.4)

             -  

   (3.1)

Charge for the year

(0.3)

(0.2)

           -

-

             -  

      (0.5)

Disposals

2.4

0.2

0.1

0.4

                  -  

3.1

At 30 September 2018

-

(0.5)

-

-

              -  

(0.5)

 

 

 

 

 

 

 

Net book value at 30 September 2018

         0.1

0.2

     -

      -

        -

0.3

Net book value at 31 December 2017

            0.4

          0.7

              -

          -

             0.1

 1.2

Net book value at 1 January 2017

0.4

0.7

               -

0.1

-

1.2

 

6.     Intangible assets

 

Purch B2C Companies

Goodwill

$m

Customer list

$m

Media content

$m

Domain names

$m

Developed technology

$m

Internally developed software

$m

Total

$m

Cost

 

 

 

 

 

 

 

At 1 January 2017

         11.8

2.0

0.9

3.0

5.1

6.2

        29.0

Additions

 

 

 

 

 

2.9

2.9

At 31 December 2017

       11.8

      2.0

         0.9

       3.0

       5.1

      9.1

     31.9

 Additions

 

 

 

 

2.5

         2.2

     4.7

At 30 September 2018

      11.8

      2.0

         0.9

       3.0

      7.6

     11.3

    36.6

 

 

 

 

 

 

 

  

Accumulated amortisation

 

 

 

 

 

 

  

At 1 January 2017

              -  

(1.2)

(0.7)

(0.8)

(1.2)

(2.1)

(6.0)

Charge for the year

-  

(0.3)

      (0.2)

         (0.3)

         (1.0)

         (2.8)

      (4.6)

At 31 December 2017

             -  

     (1.5)

         (0.9)

        (1.1)

      (2.2)

     (4.9)

      (10.6)

Charge for the year

             -  

          (0.1)

       -

       (0.1)

     (0.7)

    (2.2)

   (3.1)

Impairment

(8.5)

-

-

(0.6)

(2.2)

(1.0)

(12.3)

At 30 September 2018

(8.5)  

       (1.6)

        (0.9)

     (1.8)

    (5.1)

     (8.1)

   (26.0)

 

 

 

 

 

 

 

 

Net book value at 30 September 2018

   3.3

        0.3

            -

     1.2

2.5

      3.3

     10.6

Net book value at 31 December 2017

          11.8

               0.5

               -

            1.9

            2.9

            4.2

          21.3

Net book value at 1 January 2017

           11.8

0.8

0.2

2.2

3.9

4.1

23.0

Goodwill impairment assessment

The impairment charge of $12.3m recognised during the period relates to the previous acquisitions of the ShopSavvy.com and Active Junky, Inc businesses. These assets have been impaired to reflect the value realised by Future on the subsequent disposal of these businesses in November and December 2018 respectively.

The remaining goodwill recognised on the balance sheet at 30 September 2018 relates to several historic acquisitions of websites. The value of this goodwill is supported by the purchase price paid by Future for the overall Purch B2C business.

7.     Deferred tax assets and liabilities

 

The major deferred tax assets recognised by Purch B2C are in relation to intangible assets acquired in a business combination, amounting to $0.0m at 30 September 2018 and $0.3m at 31 December 2017. Deferred tax assets relating to losses carried forward by Purch have not been recognised due to insufficient certainty over when they could be utilised and hence have not been allocated to Purch B2C.

 

8.     Trade and other receivables

 

 

30 September 2018

31 December 2017

 

$m

$m

Trade receivables

           15.0

           17.7

Provision for impairment of trade receivables

               (0.7)

               (0.4)

Trade receivables net

              14.3

              17.3

Prepaid expenses

                   1.0

                   0.9

Other current assets

                     0.3

                     0.1

Total

              15.6

              18.3

 

9.     Cash and cash equivalents

 

  

30 September 2018

31 December 2017

 

$m

$m

Cash at bank and in hand

 1.5

1.0

Total

  1.5

1.0

 

10.  Trade and other payables

 

 

30 September 2018

31 December 2017

 

$m

$m

Trade payables

                2.3

                2.7

Payroll and benefit related expenses

                1.4

                2.9

Accruals

4.0

4.1

Deferred revenue

                   0.1

                   0.2

Intercompany payables

1.1

0.1

Other payables

-

-

Total

                8.9

                10.0


The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

 

 

11.  Recognised fair value measurements


The following table presents the liabilities at 1 January 2017, which are recognised and measured at fair value in the historical financial information. There were no liabilities at 30 September 2018 and 31 December 2017 recognised and measured at fair value in the historical financial information. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standards. An explanation of each level follows underneath the table.

 

Fair value measurements at 1 January, 2017 ($m)

 

Level 1

Level 2

Level 3

Total

Active Junky, Inc. contingent consideration payable

               -  

               -  

            0.5

            0.5

Total

               -  

               -  

            0.5

            0.5

 

Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

The earnout liabilities were recognized at the completion date for each acquisition equal to the estimated fair value of the acquisition-related contingent consideration based on the probability of achievement of certain performance Purch B2Cs. Changes in the fair value of such contingent earnout liabilities subsequent to the acquisition completion date are recognized as a component of other expense, net in the combined income statement in the periods the estimated fair value changes until the amount of such contingent obligation becomes fixed and determinable. In developing these fair value estimates at the date of acquisition and at each reporting period, Purch considers revenue projections, historical results, general macroeconomic environment, industry trends, and the probability of the achievement of the performance Purch B2Cs.

These fair value measurements are based on significant inputs not observed in the market and reflect management's assumptions. There were no significant inter-relationships between unobservable inputs that materially affect fair values.

The following table indicates the change in the Level 3 financial instrument for the nine months ended 30 September 2018 and the year ended 31 December 2017:

 

2018

$m

2017

$m

Balance at 1 January

            -

             0.5

Active Junky, Inc. contingent consideration earnout liability

               -

               -

Active Junky, Inc. contingent consideration earnout payment

           -

           (0.5)

AnandTech.com contingent consideration earnout payment

-

-

Change in fair value of Active Junky, Inc. earnout liability

               -

               -

Balance at 30 September and 31 December, respectively

               -  

               -  

 

12.  Financial Instruments

 

Financial risk management

The determination of financial risk management policies and the treasury function is managed by Purch. Policies are set to reduce risk as far as possible without unduly affecting the operating effectiveness of Purch B2C.

Purch B2C's activities expose it to a variety of financial risks, the most significant being credit risk as discussed below. Purch B2C do not have any derivative financial instruments.

Categories of financial instruments

Purch B2C has the below categories of financial instruments.

 

 

30 September 2018

31 December 2017

 

Note

$m

$m

Cash and bank balances

9

1.5

                 1.0

Trade Receivables - net

8

             14.3

             17.3

Total financial assets

 

             15.8

             18.3

Trade payables

10

2.3

               2.7

Accruals

10

4.0

               4.1

Others payables

10

-

-

Total financial liabilities

 

6.3

               6.8


Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for Purch B2C. Financial instruments, which potentially subject Purch B2C to concentration of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable. Purch B2C places its cash and cash equivalents with major financial institutions, which management assesses to be of high-credit quality, to limit the exposure of each investment.

Trade receivables

Trade accounts receivable are derived primarily from the sale of advertising and generally have 30-day terms. With the exception of two customers as noted below, credit risk with respect to accounts receivable is dispersed due to the large number of customers. In addition, Purch's credit risk is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. The credit quality of trade receivables not yet due nor impaired has been assessed as acceptable.

As of 30 September 2018, two customers individually accounted for 35 per cent. and 12 per cent. of Purch B2C's accounts receivable, respectively. As of December 31, 2017, two customers individually accounted for 21 per cent. and 14 per cent. of Purch B2C's accounts receivable, respectively. For the nine months ended 30 September 2018, two customers individually accounts for 25 per cent and 14 per cent of net revenues, respectively. For the year ended 31 December 2017, one customer individually accounted for 26 per cent of net revenues. 

The gross aging of trade receivables according to their original due date is detailed below:

 

 

 

30 September 2018

31 December 2017

Past due

$m

$m

0-30 days

            9.5

            13.7

31-60 days

              1.7

              2.3

61-90 days

                 1.7

                 0.8

91+ days

                 2.1

                 0.9

Total

            15.0

            17.7


The movement in provision for trade receivables during the year is as follows:

 

2018

$m

2017

$m

At 1 January

                  (0.4)

                  (0.7)

Provision for receivables impaired

                  (0.6)

                  (0.4)

Collection of previously provisioned receivables

                   -

                   0.6

Receivables written off during the year

                   0.3

                   0.1

At 30 September and 31 December, respectively

                  (0.7)

                  (0.4)

 

30 September 2018

Current

$m

More than 30 days past due

$m

More than 60 days past due

$m

More than 120 days past due

$m

Total

$m

 

 

 

 

 

 

Gross carrying amount - trade receivables

9.5

1.7

1.7

2.1

15.0

Loss Allowance

0.1

0.0

0.0

0.6

0.7

Expected Loss Rate

0.3%

0.5%

1.1%

30.6%

 

             

 

Liquidity risk and Interest rate risk

 Purch B2C has no debt and hence is not exposed to significant liquidity or interest rate risk.

Currency risk

Purch B2C operates predominantly in the US and has minimal exposure to foreign currency risk. The are no assets and liabilities denominated in foreign currencies.

13.  Share-based payments

 

The income statement charge for share-based payments was $0.5m for the nine months ended 30 September 2018 and $0.6m for the year ended 31 December 2017. This charge has been included within administration expenses.

These charges arise when employees are granted awards under Purch's 2008 Plan and 2012 Plan. The charge equates to the fair value of the award and has been calculated using the Black-Scholes model. Assumptions have been made in this model for expected volatility, risk-free rates, expected life, and dividend yields.

There were no grants made during the nine months ended 30 September 2018. The weighted average fair value per share for grants made during the year ended 31 December 2017 and the weighted average assumptions used in the calculation are as follows:

 

2017

Share price

$2.14

Exercise price

$2.14

Expected volatility

43.70%

Expected life (years)

5.49

Risk-free rate

1.44%

Dividend yield

0.00%

Fair Value

$0.70


The share-based payment charge has been calculated for Purch and allocated to Purch B2C as part of general corporate expenses as described in the Basis of Preparation. It is not therefore practical or appropriate to provide information on the number of share options granted, exercised and outstanding.

14.  Commitments and contingent liabilities

 

Operating lease commitments

Purch B2C leases its various office facilities under operating lease agreements. The terms of certain lease agreements provide for rental payments on a graduated basis. Purch B2C recognizes rent expense on a straight-line basis over the lease period and records a deferred rent liability for the difference. Rent expense under operating leases is recognised, net of the amortisation of any deferred rent, on a straight-line basis over the terms of the leases.

At the balance sheet date, Purch B2C had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

 

30 September 2018

31 December 2017

 

$m

$m

Within one year

               1.4

               1.9

Between one and five years

               1.6

               3.4

After five years

                     -  

                     -  

Total

               3.0

               5.3


Operating lease payments represent rentals payable by Purch B2C Companies on its office properties.

Legal Matters

Purch B2C is at times involved in various claims and legal actions that arise in the normal course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on Purch B2C's financial position or results of operations.

15.  Related party transactions

 

The remuneration of key management personnel and directors is set out in note 4.

 

The income statement of Purch B2C reflects allocations of general corporate expenses from Purch including, but not limited to, employee, technology, facilities, professional services, office, human resources, sales and marketing costs. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, headcount or other relevant measures. These allocations have been considered to be a reasonable reflection of the utilisation of services by, or the benefits provided to, Purch B2C. These allocations were as follows:

 

 

Nine Months Ended 30 September 2018

Year ended 31 December 2017

Operating Expense Type

$m

$m

Employees cost

       6.0

       10.1

Technology

         2.7

         3.3

Facilities

         1.2

         1.7

Professional services

            0.5

            0.7

Human resources

            0.2

            0.4

Office expenses

            0.5

            0.3

Sales and marketing

            0.1

            0.2

Total General Corporate Allocations

       11.2

       16.7


These allocations may not, however, reflect the expenses Purch B2C would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if Purch B2C had been a standalone company would depend on a number of factors, including the chosen organisational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure.

Invested capital on the balance sheet and in the statement of changes in invested capital represents Purch's historical investment in Purch B2C, the net effect of transactions with and allocations to the Retained Group and Purch B2C's accumulated earnings.

During the nine months ended 30 September 2018 and the year ended 31 December 2017, Purch B2C was charged $1.4m and $2.2m, respectively, by the Retained Group in relation to general corporate expenses. Intercompany transactions between Purch B2C and the Retained Group are considered to be effectively settled as if Purch and Retained Group were not part of a group in the historical financial information at the time the transaction is recorded. It has been assumed that all the transactions have been settled at the balance sheet date on a usual third-party arms' length basis with commercial payment terms. The total net effect of the settlement of these intercompany transactions is reflected in the statement of cash flows within financing activities and on the balance sheet within invested capital. Net transfers from the Retained Group are included within invested capital. The components of net transfers from the Retained Group in the statement of changes in equity for all periods presented were as follows:  
 

 

Nine months ended 30 September 2018

Year ended 31 December 2017

 

$m

$m

Cash pooling and general financing activities

         (5.6)

         (13.6)

Corporate allocations

           11.2

           16.7

Total net transfers from the Retained Group per statement of changes in invested capital

             5.6

             3.1


The balance sheet of Purch B2C at 31 December 2017 reflected balances with third parties which are held and managed by Purch but pertain to Purch B2C. These balances are detailed below. The amounts at 30 September 2018 reflect balances held and managed by Future pertaining to Purch B2C.

 

 

 

 

30 September 2018

31 December 2017

 

$m

$m

Trade receivables - net

-

           16.2

Prepaid expenses

-

                0.9

Other current assets

-

                0.3

Related party payables

-

               (0.1)

Trade payables

(1.0)

           (2.2)

Accruals & other liabilities

-

           (6.5)

Deferred rent

-

              (0.3)

Total net assets held by Purch per balance sheet

(1.0)

8.3

 

16.  Principal subsidiaries

 

The historical financial information of Purch B2C represents the assets, liabilities, results and cash flows of Purch B2C carved out from the parent company, Purch. The historical information of Purch includes the specific legal entities listed below, as well as assets, liabilities, results and cash flows pertaining to Purch B2C carved-out from other Purch legal entities.

 

Details of principal subsidiaries are provided below:

 

Company name and registered number

Country of

incorporation

Nature of business

Active Junky

United States

Affiliate advertising for outdoor gear retailers

Shop Savvy

United States

Mobile application - online pricing comparison

 

 

17.  Post balance sheet event

 

Future disposed of the ShopSavvy.com website and the trade and assets of Active Junky, Inc in November and December 2018 respectively, both for undisclosed amounts. The underlying carrying amount of these assets has been adjusted to reflect the value realised. As a result an impairment charge of $12.3m (relating to goodwill and other intangibles associated with these assets) has been recognised during the period. 

 

Section E - ACCOUNTANT'S REPORT ON THE COMBINED HISTORICAL FINANCIAL INFORMATION OF MOBILE NATIONS

The Directors,

Future plc,

Quay House,

The Ambury,

Bath,

BA1 1UA

 

Numis Securities Ltd ("the Sponsor")

10 Paternoster Square

London

EC4M 7LT

 

1 March 2019

 

Dear Ladies and Gentlemen

Combined Historical Financial Information of Mobile Nations

We report on the Combined Historical Financial Information of Mobile Nations for the years ended 31 December 2018 and 2017 and the 15 month period ended 31 December 2016, set out in section F below (the "Mobile Nations Financial Information Table"). The Mobile Nations Financial Information Table has been prepared for inclusion in an announcement, prepared in accordance with item 5.4A.5 of the Listing Rules of the United Kingdom Listing Authority (the "Listing Rules"), dated 1 March 2019 (the "Transfer Announcement") of Future plc (the "Company") on the basis of the accounting policies set out in the Summary of Significant Accounting Policies section of the Mobile Nations Financial Information Table.  This report is required by item 6.2.4R(1) of the Listing Rules and is given for the purpose of complying with that item and for no other purpose.

 

Responsibilities

 

The Directors of the Company are responsible for preparing the Historical Financial Information of Mobile Nations in accordance with International Financial Reporting Standards as adopted by the European Union. It is our responsibility to form an opinion as to whether the Combined Historical Financial Information of Mobile Nations gives a true and fair view, for the purposes of the Transfer Announcement and to report our opinion to you.

 

Basis of opinion

 

Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in accordance with this report or our statement, required by and given solely for the purposes of complying with item 6.2.4R(1)  of the Listing Rules, consenting to its inclusion in the Transfer Announcement.

 

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information of Mobile Nations. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information of Mobile Nations and whether the accounting policies are appropriate to Mobile Nations' circumstances, consistently applied and adequately disclosed.

 

We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information of Mobile Nations is free from material misstatement whether caused by fraud or other irregularity or error.

 

Opinion

 

In our opinion, the Mobile Nations Financial Information Table gives, for the purposes of the Transfer Announcement dated 1 March 2019, a true and fair view of the state of affairs of Mobile Nations as at 31 December 2018, 2017 and 2016 and of its profits, cash flows and changes in invested capital for the periods then ended in accordance with International Financial Reporting Standards as adopted by the European Union.  

 

Yours faithfully

 

 

 

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

 

 

PricewaterhouseCoopers LLP, 2 Glass Wharf, Bristol, BS2 0FR

T: +44 (0) 117 955 7779, F: +44 (0) 117 309 2005, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525.  The registered office of

PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH.  PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.

 

 

SECTION F - COMBINED HISTORICAL FINANCIAL INFORMATION OF MOBILE NATIONS

Income statements

for the years ended 31 December 2018 and 31 December 2017 and 15 months ended 31 December 2016

 

 

 

Year ended 31 December

Year ended 31 December

15 Months ended 31 December

 

 

2018

2017

2016

 

Note

$'000

$'000

$'000

Revenue

1

           16,351

            12,469

                 12,533

Net operating expenses

2

            (8,702)

             (7,486)

                 (7,614)

Operating profit and profit before tax

 

             7,649

              4,983

                  4,919

Taxation

 

                    -

                     -

                         -

Profit for the year / period attributable to the Shareholders of Mobile Nations

 

7,649

4,983

4,919

 

A statement of comprehensive income has not been presented as there are no other items of comprehensive income other than the profit after tax for any of the Years/period.

 

Statements of changes in invested capital

for the years ended 31 December 2018 and 31 December 2017 and 15 months ended 31 December 2016

 

 

 

Total invested capital

 

 

$'000

Balance at 01 October 2015

 

2,705

Total comprehensive income for the period

 

4,919

Transfer to investors

 

(4,268)

Balance at 31 December 2016

 

3,356

Total comprehensive income for the year

 

4,983

Transfer to investors

 

(3,458)

Balance at 31 December 2017

 

4,881

Total comprehensive income for the year

 

7,649

Transfer to investors

 

(5,017)

Balance at 31 December 2018

 

7,513

 

Balance sheet

as at 31 December 2018, 31 December 2017, 31 December 2016 and 1 October 2015

 

 

 

31 December

31 December

31 December

01 October

 

 

2018

2017

2016

2015

 

Note

$'000

$'000

$'000

$'000

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

4

                     17

                    27

                      30

                       2

Intangible assets

5

               1,009

                  584

                   506

                   255

Total non-current assets

 

               1,026

                  611

                   536

                   257

Current assets

 

 

 

 

 

Trade and other receivables

6

               4,647

              3,449

                1,771

               1,665

Prepaid expenses and other current assets

 

                  257

                  194

                        7

                     10

Cash and cash equivalents

7

               2,150

              1,259

                1,254

               1,221

Total current assets

 

               7,054

              4,902

                3,032

               2,896

Total assets

 

               8,080

              5,513

                3,568

               3,153

 

 

 

 

 

 

Capital and reserves and liabilities

Capital and reserves

 

 

 

 

 

Invested capital

 

               7,513

              4,881

                3,356

               2,705

Total Invested capital

 

               7,513

              4,881

                3,356

               2,705

Current liabilities

 

 

 

 

 

Trade and other payables

8

                  464

                  582

                   212

                   448

Deferred revenue

 

                  103

                    50

                         -

                        -

Total current liabilities

 

                  567

                  632

                   212

                   448

Total liabilities

 

                  567

                  632

                   212

                   448

Total invested capital and liabilities

 

               8,080

              5,513

                3,568

               3,153

 

Cash flow statements

for the years ended 31 December 2018 and  31 December 2017 and 15 months ended 31 December 2016

 

 

 

Year ended

Year ended

15 Months ended

 

 

31 December

31 December

31 December

 

 

2018

2017

2016

 

 

$'000

$'000

$'000

Cash flows from operating activities

 

 

 

 

Cash generated from operations (A)

 

              6,770

               3,859

                   4,772

Net cash generated from operating activities

 

              6,770

               3,859

                   4,772

Cash flows from investing activities

 

 

 

 

Purchase of property, plant and equipment

 

                (141)

                    (93)

                     (110)

Additions to intangible assets

 

                (721)

                 (303)

                     (361)

Net cash used in from investing activities

 

                (862)

                 (396)

                     (471)

Cash flows from financing activities

 

 

 

 

Transfer to investors

 

            (5,017)

              (3,458)

                  (4,268)

Net cash used in from financing activities

 

            (5,017)

              (3,458)

                  (4,268)

 

 

 

 

 

Net increase in cash and cash equivalents

 

                 891

                       5

                         33

Cash and cash equivalents at beginning of year / period

 

              1,259

               1,254

                   1,221

Cash and cash equivalents at end of year /period 

 

              2,150

                   1,254

 

 

 

Notes to the cash flow statements

for the years ended 31 December 2018 and 31 December 2017 and 15 months ended 31 December 2016

 

A. Cash generated from operations

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

 

 

 

Year ended 31

Year ended 31

15 Months ended

 

 

December

December

December

 

 

2018

2017

2016

 

 

$'000

$'000

$'000

Profit for the year

 

             7,649

             4,983

                 4,919

Adjustments for:

 

 

 

 

Depreciation

 

                151

                  95

                      82

Amortisation

 

                295

                225

                    110

 

 

             8,095

             5,303

                 5,111

 

 

 

 

 

Increase in trade and other receivables

 

            (1,198)

            (1,678)

                   (106)

Decrease/(increase) in prepaid expenses and other assets

 

                 (62)

               (187)

                        3

(Decrease)/increase in trade and other payables

 

               (118)

                371

                   (236)

Increase in deferred revenue

 

53

50

-

Cash generated from operations

 

             6,770

             3,859

                 4,772

 

 

 

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General information          

The business of Mobile Nations ("Mobile Nations") consists primarily of the activities of two legal entities , Axel Ltd. Co. ("Axel") and Breaksclusive, Inc. d/b/a Wordshopped ("Breaksclusive"), who together operate as a digital publisher focused on shopping enablement, creating content in the consumer technology products and accessories sector. Mobile Nations owns and operates websites and also distributes its content across social media platforms. Axel Ltd. Co. generates revenue through: (i) selling ad space on Mobile Nations's websites; (ii) commissions earned through affiliate e-commerce programs; (iii) sponsorship for merchants to appear on one of Mobile Nations's websites; and (iv) creating marketing and advertising campaigns on a customer's behalf to be published on the customer's platforms. Breaksclusive employs and manages a large number of the content creation employees for the Mobile Nations brands. All revenue reported by Breaksclusive consists of billing employee and contractor time to Axel and is eliminated during consolidation. Mobile Nations is domiciled in the United States of America, and its principal place of business is 360 Central Avenue, Suite 800, St. Petersburg, FL 33701, USA.

I.         Mobile Nations' accounting policies

A.         Basis of preparation

This combined historical financial information of Mobile Nations is compiled in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). The combined historical financial information for the years ended 31 December 2018 and 2017 and 15 months ended 31 December 2016 have been prepared specifically for the purposes of this document and in accordance with the UK Listing Rules, and in accordance with this basis of preparation. The accounting policies applied and disclosed below, as well as the format of the financial information, are consistent with those expected to be applied by Future plc in its annual financial statements for the year ended 30 September 2019 and these policies have been applied consistently to all periods presented.

The business of Mobile Nations is planned to continue operating as previously following the acquisition by Future US inc (a subsidiary of Future plc) ('Future') on 28 February 2019 with appropriate levels of funding available to be able to operate at adequate levels of both liquidity and capital for the foreseeable future.

This historical financial information does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006.

The basis of preparation describes how the historical financial information has been prepared in accordance with IFRS.

IFRS does not provide for the preparation of combined historical financial information, or for the specific accounting treatment set out below. Accordingly, in preparing the historical financial information, certain accounting conventions commonly used for the preparation of "carve-out" historical financial information for inclusion in investment circulars as described in the Annexure to SIR 2000 (Investment Reporting Standards applicable to public reporting engagements on historical financial information) issued by the UK Auditing Practices Board have been applied.

The following summarises the accounting and other principles applied in preparing the historical financial information:

·      The business of Mobile Nations did not comprise a separate single legal entity during any of the periods presented and, therefore, it is not meaningful to present share capital or an analysis of reserves. The invested capital represents the net equity of the investors in the combined business. 

 

·      In 2016 and 2017, Axel operated an e-commerce business that was subsequently divested. Since these activities were distinct from the Mobile Nations business being acquired by Future the results of operations of these activities have been excluded from the combined historical financial information. Cash flows relating to these activities have been treated as net transfers to investors within movements in invested capital.

 

·      Axel has also held a number of fixed asset investments that do not form part of the Mobile Nations business being acquired. These fixed asset investments have also been excluded from the combined historical financial information and have been treated as if they have been separately held by the investors in the company. Hence cash flows within Axel relating to the acquisition or disposals of these investments have been treated as net cash transfers to investors within movements in invested capital.

 

·      There are no income taxes included within this historical financial information as Axel Co Ltd operates as a Limited Liability Company, which is disregarded for income tax purposes under the US Internal Revenue Code. Instead, its partners are taxed on the profits accruing to them as a result of its activities. Accordingly no current or deferred tax has been recognised.  There are no material income taxes relating to Breaksclusive, Inc.             
 

The preparation of financial information in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying these accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the historical financial information are disclosed below in C, "Critical accounting estimates and assumptions."

B.         Accounting policies

Segment reporting

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Mobile Nations is organised and managed as a single reportable segment.

Revenue recognition

Mobile Nations adopted IFRS 15 "Revenue from Contracts with Customers" with effect from 1 January 2018 using the fully retrospective method for initial application.  Management have conducted a thorough analysis of all material revenue streams and customer contracts and reviewed sales and accounting processes to ensure compliance with IFRS 15.        

Mobile Nations generates revenue through multiple channels including affiliate commissions, direct advertising, programmatic advertising, sponsorship and marketing services.

Mobile Nations provides informational reviews and ranking of consumer electronic products. Mobile Nations earns affiliate commissions when purchases of these products are made through the featured links. Revenues related to these commissions are recognized at the time of the related product sale.

Direct advertising revenue is generated through the sale of advertising space on Mobile Nations-owned or network websites. Advertising is sold on either a fixed-fee basis or cost-per-impression basis. The performance obligation is satisfied over time; measured either as the fulfilment of impressions over time or evenly over the period which the advert is displayed.  Direct advertising agreements are generally short term and can be cancelled by either party at short notice.

Revenues from programmatic advertising are generated on a cost-per-impression basis each time an ad is displayed or on a cost-per-click basis each time a user clicks on a text link within the body of an article hosted on a Mobile Nations website.  The performance obligation is satisfied over time; measured either as the fulfilment of impressions over time or as the click-based activity occurs.  Programmatic advertising agreements are generally short term and can be cancelled by either party at short notice.

Sponsorship revenue is generated through the sale of custom promotional campaigns on Mobile Nations-owned websites and social channels. Sponsorship campaigns are sold on a fixed-fee basis. The performance obligation is satisfied over time; measured evenly over the period which the campaign is ongoing. Sponsorship agreements are generally short term and can be cancelled by either party at short notice. Licensing revenue (reported within sponsorship) consists of brands licensing quotes or award accolades relating to their products to be used on their website or in digital/print ads. The performance obligation depends on the terms of license.

Marketing Services revenue is generated through content created on the customer's behalf and published on customer's websites and social media accounts. Marketing Services agreements are generally short term and can be cancelled by either party at short notice. Revenue from marketing services is recognised evenly over the period to which the services relate.

Employee benefits

Mobile Nations recognises a liability and an expense for bonuses taking into consideration targeted trading performance.

Commissions paid to employees that are directly related to winning customer contracts are capitalised within other assets and are amortised over the period of the contract within employee expenses.

Leases

Leases in which Mobile Nations assume substantially all the risks and rewards of ownership of the leased assets are classified as finance leases. All other leases are classed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation

Depreciation is calculated using the straight-line method to allocate the cost of property, plant and equipment less residual value over estimated useful lives, as follows:

• Computer equipment - between one and three years.

• Equipment, fixtures and fittings - between one and five years.

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

Intangible assets

 (a) Other intangible assets

Other intangible assets which include; websites, media content, trademarks and software, are shown at historical cost. Amortisation is calculated using the straight-line method to allocate the cost of these intangible assets over their estimated useful lives (between three and ten years). Intangible assets are tested for impairment only where there is an indication that an impairment may have occurred.

(b) Capitalised development costs

Costs incurred in the development of new websites and unique software are capitalised only where the cost can be directly attributed to developing the website or software products to operate in the manner intended by management and only to the extent of the future economic benefits expected from its use. These costs are amortised on a straight-line basis over their estimated useful lives (which is two years following the year of capitalisation). Costs associated with maintaining websites or computer software include internally generated salary costs and are recognised as an expense as incurred.

Impairment tests

 

Intangible assets with a finite life are amortised and are tested for impairment only where there is an indication that an impairment may have occurred.

 

Trade and other receivables

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less a loss allowance.

Mobile Nations applies the IFRS 9 from 1 January 2018 using a simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables have been grouped based on the days past due.  The expected loss rates applied to these groupings are based on the payment profiles of sales over a period of 12 months from 1 January 2018 to 31 December 2018 and the corresponding historical credit losses experienced within this period.

The loss allowance as at 31 December 2018 and 1 January 2018 was determined on that basis for trade receivables.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits repayable on demand or maturing within three months of the acquisition date.

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

Invested capital

Net transfers from Mobile Nations to the investors, or cash flows within Axel relation to operations and investments that do not form part of the Mobile Nations business, are included within the statement of changes in invested capital.

New or revised accounting standards and interpretations

 

Mobile Nations is continuing to assess the impact of adopting IFRS 16, which will be effective for the year  beginning 1 October 2019.

 

Mobile Nations does not expect that any other standards and amendments issued but not yet effective will have a material impact on results or net assets. 

C.         Critical accounting estimates and assumptions

Critical judgements in applying the accounting policies

The preparation of the historical financial information under IFRS requires the use of certain critical accounting assumptions and requires management to exercise its judgement and to make estimates in the process of applying Mobile Nations's accounting policies. The areas requiring a higher degree of judgment are as follows:

 

v)             Internally generated intangible assets - management are required to assess the point from which it is appropriate to capitalise internal development costs relating to websites and other software based on the their confidence in expected future economic benefits.

 

vi)           Revenue recognition - a significant amount of Mobile Nations's revenue is generated through contracts with advertising agencies and other providers who are acting on behalf of the end-customer. In determining the appropriate level of revenue to recognise, it is necessary to assess whether under IFRS 15 these agencies are acting as the principal customer or as agents. This can involve significant judgement around which party has control over the services being provided to the end customer. Generally Mobile Nations has assessed that in situations where it has no control over the price charged by the agent to the end customer, that its principal customer is the agency and therefore revenue is measured based on the amounts charged to the agency rather than the amount paid by the end customer.

 

 

Estimates

 

Management bases its estimates on historical experience and on various other assumptions that management believes to be reasonable in the circumstances. There are no key estimates used in the preparation of this historical financial information that could result in a material change in the carrying value of assets or liabilities within the next twelve months.
 

Notes to the historical financial information

 

 

1.     Segmental information

 

The Board of Directors of Mobile Nations has been identified as the Chief Operating Decision ('CODM') maker for each of the periods presented. Mobile Nations is organised and managed as a single reportable segment, although revenue is analysed between revenue types:

 

•     Programmatic & PMP: 

Open auction: Consists of real-time bidding ("RTB") for advertising inventory on Mobile Nations's websites.

PMP: Private Marketplace involves the same processes of open auction bidding, with the ability of the advertiser to receive more data and metrics before placing the ad.

•     Affiliate e-commerce: Consists of direct links to a merchant website for a product/service that has been highlighted within one of Mobile Nations's content pieces.

•     Direct Advertising: Consists of pre-determined agreements with larger merchants to sell advertising space directly on Mobile Nations's websites.

•     Sponsorships:

Sponsorships: Sponsorship revenue consist of a merchant offering to pay a contracted amount for appearance on one of Mobile Nations's websites that highlights commentary around the merchant's product.

Licensing: Consists of brands licensing quotes or award accolades relating to their products to be used on their website or in digital/print ads.

•     Marketing services: Mobile Nations creates advertising campaigns on the customer's behalf and publishes the content on customers' websites and social media accounts.

Revenue is defined as per the accounting policies. The impact of individually significant customers is disclosed in note 9. All revenue is generated in the United States of America.

 

Analysis of Revenue

 

 

Year ended 31 December

Year ended 31 December

15 Months ended 31 December

 

 

2018

2017

2016

 

 

$'000

$'000

$'000

Programmatic & PMP

 

              4,857

             4,521

                 7,315

Affiliate E-Commerce

 

              5,556

             3,537

                 2,049

Direct Advertising

 

              2,674

             2,266

                 2,040

Sponsorships

 

              1,833

             1,561

                    399

Marketing Services

 

              1,431

                584

                    730

Total segment revenue

 

            16,351

            12,469

               12,533

 

Revenues have been further analysed based on the timing of revenue recognition. All the Affiliate E-commerce revenue is recognised at a point in time and the rest of the revenue is recognised over time.

 

 

2.     Net operating expenses

 

 

Year ended 31 December

Year ended 31 December

15 Months ended 31 December

 

2018

2017

2016

 

$'000

$'000

$'000

Consumables expensed

                   11

                  17

                        10

Employee costs

               2,749

              2,418

                   2,345

Contractor costs

               2,299

              2,316

                   2,733

Amortisation

                 295

                 225

                      110

Depreciation

                 151

                  95

                        82

Other administration expenses

               3,197

              2,415

                   2,334

Net operating expenses

               8,702

              7,486

                   7,614

 

3.     Employees

 

The aggregate remuneration of employees comprised

 

Year ended 31 December

Year ended 31 December

15 Months ended 31 December

 

2018

2017

2016

 

$'000

$'000

$'000

Wages and salaries

              2,741

              2,377

                   2,251

Fringe Benefits

                 180

                 186

                      174

Taxes

                 199

                 158

                      161

Total

              3,120

              2,721

                   2,586

Less: amounts capitalized

                 371

                 303

                      241

Total

              2,749

              2,418

                   2,345

 

Average annual number of people

 

The average annual number of employees was

 

Year ended 31

Year ended 31

15 Months ended

 

December

December

31 December

 

2018

2017

2016

Business Intelligence

                     2

                    2

                         2

Content

                   23

                  19

                       15

Development

                     4

                    5

                         5

Product

                     1

                    1

                         1

Sales and Marketing

                     4

                    3

                         2

Finance

                     1

                    1

                         1

Total

                   35

                  31

                       26

 

Key management compensation

 

Year ended 31

Year ended 31

15 Months ended

 

December

December

31 December

 

2018

2017

2016

 

$'000

$'000

$'000

Total

                 475

                  478

                      587


Key management is defined as those persons having authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly, including any directors (whether executive or otherwise) of the entity.

 

 

4.     Property and equipment

 

 

 

 

Computer equipment, fixtures and fittings

 

 

 

$'000

Cost

 

 

 

 

At 01 October 2015

 

 

 

              58

Additions

 

 

 

             110

Disposals

 

 

 

                 -

At 31 December 2016

 

 

 

             168

Additions

 

 

 

              93

Disposals

 

 

 

               (3)

At 31 December 2017

 

 

 

             258

Additions

 

 

 

             141

Disposals

 

 

 

                 -

At 31 December 2018

 

 

 

             399

 

 

 

 

 

Accumulated depreciation

 

 

 

 

At 01 October 2015

 

 

 

              56

Charge for the year

 

 

 

              82

Disposals

 

 

 

                 -

At 31 December 2016

 

 

 

             138

Charge for the year

 

 

 

              95

Disposals

 

 

 

               (2)

At 31 December 2017

 

 

 

             231

Charge for the year

 

 

 

             151

Disposals

 

 

 

                 -

At 31 December 2018

 

 

 

             382

 

 

 

 

 

Net book value

 

 

 

 

Net book value at 01 October 2015

 

 

 

                2

Net book value at 31 December 2016

 

 

 

              30

Net book value at 31 December 2017

 

 

 

              27

Net book value at 31 December 2018

 

 

 

              17

 

 

 

5.     Intangible assets

 

 

Acquired websites and software

Trademarks

Capitalised Development costs

Total

 

$'000

$'000

$'000

$'000

Cost

 

 

 

 

 

At 01 October 2015

 

           244

                20

                 111

       375

Additions

 

             60

                   -

                 301

       361

Disposals

 

                 -

                   -

                      -

            -

At 31 December 2016

 

           304

                20

                 412

       736

Additions

 

                 -

                   -

                 303

       303

Disposals

 

              (7)

                   -

                      -

          (7)

At 31 December 2017

 

           297

                20

                 715

   1,032

Additions

 

           350

                   -

                 371

       721

Disposals

 

                 -

                 (1)

                      -

          (1)

At 31 December 2018

 

           647

                19

             1,086

   1,752

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 01 October 2015

 

           116

                  4

                     -

       120

Charge for the year

 

             22

                  2

                   86

       110

Disposals

 

                 -

                   -

                      -

            -

At 31 December 2016

 

           138

                  6

                   86

       230

Charge for the year

 

             19

                  1

                 205

       225

Disposals

 

              (7)

                   -

                      -

          (7)

At 31 December 2017

 

           150

                  7

                 291

       448

Charge for the year

 

             22

                   -

                 273

       295

Disposals

 

                 -

                   -

                      -

            -

At 31 December 2018

 

           172

                  7

                 564

       743

 

 

 

 

 

 

Net book value

 

 

 

 

 

Net book value at 01 October 2015

 

           128

                16

                 111

       255

Net book value at 31 December 2016

 

           166

                14

                 326

       506

Net book value at 31 December 2017

 

           147

                13

                 424

       584

Net book value at 31 December 2018

 

           475

                12

                 522

   1,009

 

 

6.     Trade and other receivables

 

Year ended

Year ended

Year ended

Period ended

 

31 December

31 December

31 December

01 October

 

2018

2017

2016

2015

 

$'000

$'000

$'000

$'000

Trade receivables

           4,633

            3,449

             1,826

               1,702

Provision for impairment of trade receivables

                    -

                     -

                  (67)

                    (37)

Trade receivables net

           4,633

            3,449

             1,759

               1,665

Unbilled receivables

                 14

                     -

                   12

                        -

Total

           4,647

            3,449

             1,771

               1,665

 

The provision for impairment charged to the income statement in 2016 and 2015 was subsequently utilised in 2017.  There have been no other material bad debt expenses recognised in any of the periods presented.
 

7.     Cash and cash equivalents

 

Year ended 31 December

Year ended 31 December

Year ended 31 December

Period ended 01 October

 

2018

2017

2016

2015

 

$'000

$'000

$'000

$'000

Cash at bank and in hand

            2,150

            1,259

           1,254

           1,221

Total

            2,150

            1,259

           1,254

           1,221

 

8.   Trade and other payables

 

Year ended

Year ended

Year ended

Period ended

 

31 December

31 December

31 December

01 October

 

2018

2017

2016

2015

 

$'000

$'000

$'000

$'000

Trade payables

                119

              295

                43

              317

Other payables

                143

              190

              167

              130

Customer deposits

                    -

                78

                  -

                  -

Accrued expenses

                202

19

2

1

Total

                464

              582

              212

              448

 

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-term nature.

 

9.     Recognised fair value measurements

 

There were no assets or liabilities at 31 December 2018, 31 December 2017 or 31 December 2016 that were recognised and measured at fair value in the historical financial information.

 

10.  Financial Instruments

 

Financial risk management

 

The determination of financial risk management policies and the treasury function is managed by the CFO. Policies are set to reduce risk as far as possible without unduly affecting the operating effectiveness of Mobile Nations.

 

Mobile Nations's activities expose it to a variety of financial risks, the most significant being credit risk as discussed below. Mobile Nations do not have any derivative financial instruments.

 

Categories of financial instruments

 

Mobile Nations has the below categories of financial instruments, recognised at amortised cost:

 

 

 

Year ended 31 December

Year ended 31 December

Year ended 31 December

Period ended 01 October

 

 

2018

2017

2016

2015

 

Note

$'000

$'000

$'000

$'000

Cash and bank balances

7

           2,150

           1,259

            1,254

           1,221

Trade Receivables - net

6

           4,633

           3,449

            1,759

           1,665

Total financial assets

 

           6,783

           4,708

            3,013

           2,886

Trade payables

8

              119

              295

                43

              317

Other payables

8

              143

              268

              167

              130

Total financial liabilities

 

              262

              563

              210

              447

 

Credit risk

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss for Mobile Nations. Financial instruments, which potentially subject Mobile Nations to concentration of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable. Mobile Nations places its cash and cash equivalents with major financial institutions, which management assesses to be of high-credit quality, to limit the exposure of each investment.

 

Trade receivables

 

Trade accounts receivable are derived primarily from the sale of advertising and generally have 30-day terms. With the exception of two customers as noted below, credit risk with respect to accounts receivable is dispersed due to the large number of customers. In addition, Mobile Nations's credit risk is mitigated by a relatively short collection period. Collateral is not required for accounts receivable. The credit quality of trade receivables not yet due nor impaired has been assessed as acceptable.

 

As of 31 December 2018, three customers individually accounted for 35 percent, 26 percent and 21 percent of Mobile Nations' accounts receivable, respectively. As of December 31, 2017, three customers individually accounted for 47 percent, 23 percent and 19 percent of Mobile Nations' accounts receivable, respectively. As of December 31, 2016, two customers individually accounted for 66 percent and 20 percent of Mobile Nations' accounts receivable, respectively. For the year ended 31 December 2018, three customers individually accounted for 44 percent, 23 percent and 15 percent of net revenues, respectively. For the year ended 31 December 2017, three customers individually accounted for 54 percent, 17 percent and 14 percent of net revenues, respectively. For the fifteen months ended 31 December 2016, two customers individually accounted for 76 percent and 11 percent of net revenues, respectively.

 

The gross aging of trade receivables according to their original due date is detailed below:

 

 

Year ended

Year ended

Year ended

Period ended

 

31 December

31 December

31 December

01 October

 

2018

2017

2016

2015

$'000

$'000

$'000

$'000

0-30 days

           4,529

             3,447

             1,765

            1,580

31-60 days

                27

                   2

                  36

                 10

61-90 days

                56

                    -

                   6

                 18

91+ days

                21

                    -

                  19

                 94

Total

           4,633

             3,449

             1,826

            1,702

 

Liquidity risk and Interest rate risk

 

Mobile Nations has no debt and hence is not exposed to significant liquidity or interest rate risk.

 

Currency risk

 

Mobile Nations operates predominantly in the US and has minimal exposure to foreign currency risk. The are no assets and liabilities denominated in foreign currencies.

 

11.  Commitments and contingent liabilities

 

Legal Matters

 

Mobile Nations is at times involved in various claims and legal actions that arise in the normal course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on Mobile Nations' financial position or results of operations.

 

12.  Related party transactions

 

The remuneration of key management personnel and directors is set out in note 3.

 

Amounts transferred to investors are shown in the Statement of changes in invested capital.

 

The following represents a summary of amounts paid to related parties (in the form of other companies controlled by certain directors of Mobile Nations) for expenses incurred.

 

 

Year ended

Year ended

15 Months ended

 

31 December

31 December

31 December

 

2018

2017

2016

Operating Expense Type

$'000

$'000

$'000

Plane rental

                   53

                   19

                    26

 

Although transactions between the Future plc group and Mobile Nations do not represent related party transactions during the periods stated, they represent a significant part of Mobile Nations business. Sales from Mobile Nations to companies now within the Future plc group were as follows:

 

 

Year ended

Year ended

15 Months ended

 

31 December

31 December

31 December

 

2018

2017

2016

 

$'000

$'000

$'000

Sales to companies now within the Future plc group

7,157

6,664

9,251

 

13.  Other subsidiaries

 

In addition to Axel and Breaksclusive, the following subsidiaries form part of the Mobile Nations business

 

Company name and registered number

Country of incorporation

Nature of business

Mobile Nations LLC, L12000001404

 Florida, USA

 Holding Company

Mona Network LLC, L16000161192

 Florida, USA

 Holding Company

 

14.  Post balance sheet events

 

On 28 February 2019, Future plc acquired 100% of the Mobile Nations business for an initial cash consideration of $55 million with a further $5 million to be satisfied through the issue to the vendors of 615,166 new ordinary shares. Variable deferred consideration up to a total value of $60 million will be paid, subject to the meeting of financial targets based on the year ending 31 March 2020. The deferred consideration is expected to be split equally between cash and the issuance of new shares in Future, although Future retains the right to pay the full balance in all cash.

 

 

 

 

IMPORTANT NOTICE:

The contents of this Transfer Announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any ordinary shares or other securities in connection with the proposals described in this Transfer Announcement. This Transfer Announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This Transfer Announcement does not constitute a recommendation regarding any securities.

This Transfer Announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Transfer Announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, the Company's earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this Transfer Announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The contents of this paragraph relating to forward-looking statements are not intended to qualify the statement made as to the sufficiency of working capital in this Transfer Announcement.

Subject to the Company's regulatory obligations, including under the Listing Rules, the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, the Market Abuse Regulation (EU) No 596/2014 and the Financial Services and Markets Act 2000 ("FSMA"), neither the Company nor Numis undertakes any obligation to update publicly or revise any forward-looking statement whether as a result of new information, future events or otherwise. None of the statements made in this Transfer Announcement in any way obviates the requirements of the Company to comply with its regulatory obligations. The timetable to Transfer set out in this Transfer Announcement is subject to change and amendment. There can be no assurance that the Transfer will become effective in the timeframe set out in this Transfer Announcement or at all.

Save as expressly set out herein, the contents of the Company's website do not form part of this Transfer Announcement.

Numis Securities Limited ("Numis"), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for the Company and for no one else in connection with the Transfer and will not be responsible to any person other than the Company for providing the protections afforded to clients of Numis, nor for providing advice in relation to the Transfer, the content of this Transfer Announcement or any matter referred to in this Transfer Announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by the FSMA or the regulatory regime established thereunder, neither Numis nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Numis in connection with this Transfer Announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this Transfer Announcement, including its accuracy, completeness or verification or for any other statement purported to be made by Numis, or on behalf of Numis in connection with the Company or the Transfer. Numis accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of Numis, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this Transfer Announcement or any such statement.

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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