Future shores up finances as it completes TI Media acquisition

Future updated the market on the ongoing impact of the Covid-19 coronavirus pandemic on Monday, confirming the signing of a new £30m revolving credit facility, as it completed the acquisition of TI Media.

The FTSE 250 firm had announced the purchase of TI in October, with clearance from the Competition and Markets Authority now allowing it to proceed, conditional on the sale of the World Soccer, Amateur Photographer and Trustedreviews.com titles.

It said on Monday that it has agreed the sales of World Soccer and Amateur Photographer to Kelsey Media, and Trusted Reviews to Incisive Media, with those sales expected to complete in the coming weeks.

In addition, Future noted that earlier in the year, TI Media sold Collective Europe - its digital marketing agency - to Azerion Holding, with Collective Europe identified as a non-core business by Future at the time of the deal.

In the year to December 2019, the combined revenue and EBITDA contribution in relation to the four sold assets was £12m and £0.3m, respectively, with the aggregate purchase price received for then totalling £1.4m.

“The TI Media acquisition continues to offer a compelling strategic and financial rationale, with entry into new market verticals through its leading brands, and expansion within existing markets,” the board said in its statement.

“Leveraging Future's proprietary technology platform and global operating model, we remain excited about the long term opportunity.”

On the Covid-19 pandemic, Future said its audience numbers remained “strong”, and were benefiting from additional users currently “searching for advice and inspiration”, with March being the biggest month ever for Tom's Guide, as more than 22 million users recorded over 28 million sessions, while Live Science had 100 million sessions in the month.

It said its digital revenue performance continued to be encouraging with, to date, continued strength in e-commerce, and although digital advertising was experiencing “some reduction” in yields, that was being offset in the main by audience growth.

As it had previously announced, all material events that were scheduled during April to June had been moved to later in the financial year, and were subject to ongoing review, while less material events have been cancelled for the rest of the company’s financial year.

High street store closures had impacted magazine sales, the board said, adding that while it expected a “significant reduction” in sales in the coming months, its digital copies and subscriptions were performing well.

Future said it had carried out a number of cost saving measures, in order to protect profitability across the group and lessen the economic impact of the pandemic over the coming months.

That included a reduction in the supply of magazines to retail outlets, the acceleration of the closure of a number of marginal magazine titles, a reduction in the variable costs associated with events, a 25% reduction in discretionary costs, and some salary savings, including the furlough of some staff in impacted areas.

The board and the senior management team had also taken a 20% reduction in salary from March.

Looking at TI Media, Future described it as a “less diversified business”, and thus the impact of the pandemic was expected to be more significant.

Magazine newsstand revenues had been impacted during the period of lockdown, with UK newsstand revenues reduced by around 30% since the introduction of such measures on 23 March.

However, subscriptions had been performing well, with demand driving a material year-on-year increase in new sales.

Events - most notably the Decanter World Wine Awards - had also been deferred until later in the financial year.

In order to mitigate the impact of the reduction in revenue, a number of cost savings had been implemented within TI Media, including a reduction of promotional and discretionary costs, smaller print runs to reduce the supply of magazines, the furlough of some staff and role closures, and tiered salary reductions for all staff.

Future announced the signing of a new £30m multi-currency revolving credit facility on Monday as well, which would stand alongside its existing debt facilities, and mature in 12 months.

It said it has been arranged in order to provide the group with additional working capital headroom to maintain the underlying growth momentum of the combined business, while navigating the impact of Covid-19.

The key terms of the new facility mirrored its existing debt facilities, and were being provided by its existing banking syndicate of HSBC, NatWest and Bank of Ireland.

Future said its current net debt was £93m following completion of the TI transaction, with available cash headroom of £69m under the new facilities.

As it had previously announced, Future reiterated on Monday that, with effect from 1 June - following an initial period of transfer of undertakings consultation with the TI Media employees - Rachel Addison would join its board as chief financial officer.

She would replace Penny Ladkin-Brand, who was stepping down from the board to assume the role of chief strategy officer.

“Covid-19 introduces a significant level of uncertainty,” Future said in its statement.

“However, given the group's diversified model, revenue mix benefit, variable cost base, reduction in overheads, and the bank facility headroom … as well as exchange rate benefits, the group is well placed to tackle the challenges that lie ahead.”

Future said it would publish its interim results for the six months ended 31 March on 22 May.

At 0837 BST, shares in Future were up 2.35% at 1,044p.