According to Future, the transformation is nearing completion and the business has returned to profitability:
Highlights
* Transformation programme nearing completion
* Growing digital advertising revenue 14% year-on-year
- Digital and Diversified revenues now 50% of total revenues
* Profitable in both the UK and US
* Audience engagement continues to be strong
- Digital reach up 7% year-on-year to 72 million
- Market leadership
- Consumer Technology (in the UK) via TechRadar - audience of 19.9m, up 4% year-on-year; and
- Gaming via PCGamer - audience of 8.2m, up 51% and GamesRadar - audience of 7.9m, up 20%
- Over 480,000 subscribers worldwide
* Balance sheet strengthened, with net cash of £4.7m at 31 March 2015
- Successful refinancing of banking facilities in May 2015
* Positive EBITDAE in the first half which is expected to continue in the second half
Zillah Byng-Maddick, Future's Chief Executive, said: "Both the UK and US businesses have reported profits in the first half - in the US this is the first time in seven years - as the Transformation programme starts to deliver results and puts us on a stable footing.
"Momentum is clearly building, with half our revenues now coming from digital & diversified activities. This is an important milestone for the business.
"We expect the trends seen in the first half to continue into the second half of the current financial year."
Overview
The Transformation programme that commenced in the prior year is now nearing completion. The first half has seen the business stabilised and gaining momentum with the strategy beginning to deliver meaningful results. Future has transitioned to become a digitally diversified content business.
Its strategy has content at its heart; creating content that connects with audiences, customers and consumers is at the centre of everything it does, underpinned by a leaner, simpler business and a strengthened balance sheet.
The Group has resumed from where it left off in the final quarter of FY14 and has achieved a positive EBITDAE in the first half which is set to continue in the second half.
Future's strategy is to create unique award-winning content which underpins its brands. Both the Group's market-leading digital sites (TechRadar and PCGamer) have grown in the first half, with TechRadar now having a global reach of 19.9 million and PCGamer doubling its audience to 8.2million in the last 12 months. This market leadership allows the Group to use analytics to refine the two key consumer experiences delivered - "review led" content and "how to" content.
Future continues to grow its digital and diversified revenues, which are up 2% year-on-year and for the first time account for 50% of total Group revenues. Total revenues are down year-on-year from £35.8m to £30.8m as the Group continues to manage the decline in print and exit loss-making activities. Importantly, gross contribution margin has improved to 28% (2014: 14%) as the Group focuses on more profitable revenue activities.
The Group was profitable in both the UK and US during the first half with EBITDAE of £1.8m (2014: £3.7m loss) reflecting improved operating margin from digital and diversified activities as well as an overall lower cost base. This performance is underpinned by growth in Future's digital and diversified revenues, which includes digital activities, FutureFolio, Future Fusion and events.
The Group's balance sheet has been strengthened, with a cash position of £4.7m at 31 March 2015. Due to the timing of working capital payments some of this is expected to unwind in the second half.
The Group successfully refinanced its bank facilities in May 2015 with maximum committed facilities of £5.5m available until December 2017.
Operational review
The Group made good progress in areas of strategic importance with e-commerce revenues up 250%, events revenues up 15% and digital advertising revenues up 14%.
The quality of the Future digital audience, and the unique data insight available to advertisers has underpinned Future's growing digital advertising revenues. Using the same data analytics to anticipate the next most appropriate experience in the customer online journey on site, enabled Future to capitalise on the ever-growing Black Friday and Cyber Monday online sales period which saw global traffic up by 20% and gross sales order volumes of £3m.
Future continues to hold brand leadership positions in all the verticals it creates content in (Technology, Games & Entertainment and Photography & Creative), with 49 million users a month accessing Future's websites. In the first half creativebloq became the number 1 digital design content website in the UK, the relaunched PC Gamer site has seen audience growth of more than 50% year-on-year, while TechRadar had its largest ever number of page views in March 2015 at 61 million.
The Group has three market leading properties; TechRadar which continues to be Future's largest single online property, reaching on average almost 20 million technology consumers globally every month and PCGamer and GamesRadar which have a combined monthly reach of over 16 million gamers each month, growing nearly 60% in the last 12 months.
The Group's portfolio enables it to be at the centre of an increasingly digital and technology-led world. The brands and content created help to connect consumers with these trends and ensure that Future meets their evolving needs. Future continues to be committed to offering its content wherever customers want it as demonstrated by the multi-platform re-launch of the iconic T3 magazine which has already begun to see promising results.
A strong performance in events was underpinned by The Photography Show which was held in March 2015 at Birmingham's NEC and attended by over 30,000 consumers and professionals. The show was a resounding success with revenues up 42% year-on-year.
The Group re-platformed nearly all of its websites to enable them to be viewed seamlessly on multiple devices. This was a core part of the Transformation strategy, enabling the organisation to be more efficient in the use of its technology expertise, while ensuring all its consumers have an optimal online experience.
The Group continues to look at opportunities to meet its customers needs via content online, in print and (where appropriate) in complementary experiential events.
Current trading and outlook
The Transformation programme that commenced in the prior year is nearing completion. The Group's focus has shifted from clarifying organisational strategy and shape to building momentum and creating stability across key brands and audiences and generating cash and profits.
The business is focused on growing the key digital and diversified revenue streams (advertising, events, licensing and e-commerce) whilst managing a steady decline in print.
Future expects the encouraging trends experienced in the first half to continue into the second half of the financial year. The seasonality of the business means that Q3 is usually the quietest quarter while Q4 is typically the strongest quarter.
