Future PLC — Annual Report 2012

Sep 30, 2012

Future plc Annual Report and Accounts 2012

We reach more than 50 million international consumers every month

Kelly Johnson

Operations Editor, TechRadar US

" I love that I get the chance to work with smart, talented people who are passionate about technology and want to help TechRadar US continue to grow."

Group financial highlights – Statutory Year ended 30 September 2012

Revenue

£123.5m

2011: £141.7m (-13%t)

EBITDAE

£9.4m

2011: £7.8m (+21%s)

EBITDAE represents earnings before interest, tax, depreciation, amortisation and impairment of intangible assets and exceptional items.

Adjusted earnings per share

EBITE

£6.8m

EBITE represents earnings before interest, tax, exceptional items and impairment of intangible assets.

2011: £5.4m (+26%s)

1.1p

2011: 0.4p (+175%s)

Adjusted earnings per share exclude exceptional items, impairment of intangible assets and related tax effects.

Who we are and what we do:

Future plc is an international media group and leading digital publisher, listed on the London Stock Exchange (symbol: FUTR).

and Australia creating 200 publications,

Future sells more than 24 million magazines every year, that's 45 magazines sold every minute. Our most well-known brands include T3, Total Film, Classic Rock and Official Xbox Magazine.

We attract more than 50 million monthly global unique users to our websites, which include techradar.com, gamesradar.com, bikeradar.com and musicradar.com.

We deliver over 100 digital editions, and sold over two million products in the last 12 months through Apple's Newsstand for iPad.

Future exports or syndicates over 200 publications to over 90 countries, making us the UK's number one exporter and licensor of magazine content.

Future is 2012 Consumer Digital Publisher of the Year for both the Association of Online Publishers and the Professional Publishers Association.

We have operations in the UK, US apps, websites and events.

We hold market-leading positions in Technology, Entertainment, Music, Creative and Sport & Auto sectors.

Contents

Operating review

Chairman's statement	01
Future at a glance	02
Chief Executive's review	05
Accelerating	08
Diversifying	10
Internationalising	12

Financial review

Financial review	15
Corporate responsibility	22

Governance & Financial Statements

Board of Directors	24
Directors' report	26
Corporate Governance report	30
Directors' remuneration report	36
Independent auditors' report	44
Financial statements	45
Normalised results	79
Notice of Annual General Meeting	80
Investor information	85

Chairman's statement

The Board is pleased to report a successful year in which Future has delivered good results and made impressive progress in refocusing the business.

Peter Allen Chairman

" The new senior executive management has succeeded in refashioning the business and demonstrated that they have the strategic and execution skills to achieve further progress in the year ahead."

At the end of 2011 the Board took far-reaching decisions to reorganise the Group. We defi ned a clear set of objectives, including a recovery of the US operations and the implementation of a defi ned strategy for global growth as a digital business. These objectives have been met, despite diffi cult trading conditions in media and consumer markets.

We feel we now have a business structure which is fi t for purpose. The new senior executive management has succeeded in refashioning the business and demonstrated that they have the strategic and execution skills to achieve further progress in the year ahead.

We are particularly pleased that the Group has established a powerful position at the centre of the tablet revolution. As technology giants such as Apple, Microsoft, Google and Amazon contend for market leadership, they will undoubtedly fuel demand for the tablet-friendly content in which Future excels. We also see further opportunity in the way Future has applied its unique tablet software skills to partner with other major content owners. This has great potential.

Future has demonstrated an ability to thrive in the global digital media market. It has achieved signifi cant growth in its online traffi c, not just in Technology, Games and Cycling, areas where it has leadership positions, but in markets such as Photography, Music, Film and Crafts. Importantly, the Group has introduced effi cient ways to localise its key digital properties in order to generate increased advertising revenues. This model has been a particular success in the US market.

The improvement in the Group's performance has created greater fi nancial stability. Renewal of dividend payments will be reviewed in 2013, depending on trading conditions.

The Board is confi dent the Group is on track to sustain its digital growth in the period ahead. Future is fast becoming a new kind of business and in the past year has created a solid platform for growth in 2013 and beyond.

Peter Allen Chairman

Financial review

Governance & Financial Statements

Future at a glance

Future produces content across five key vertical markets:

Technology

Consumer Electronics, Computing, Digital Creative

Future's sector-leading technology portfolio is constantly innovating, reflecting the fastmoving markets in which it operates. Today, we reach a bigger international audience than ever before through digital, print and events.

More than 25 million visitors every month use our influential websites. TechRadar is the UK's number one consumer technology website, and has over 17 million global visitors a month. And T3's interactive tablet edition is the UK's biggest selling lifestyle title on Apple's iPad.

Our brands include:

3D World, Computer Arts, Computer Arts Projects, Creative Bloq, ImagineFX, Linux Format, MacFormat, Mac|Life, Maximum PC, net, PC Format, T3, Tap!, tech., Windows 7: Help and Advice, Windows 8: The Official Magazine

Entertainment

Console & PC Gaming, Film

Future holds a unique position in the global games media market, combining the strongest games industry partnerships with an innovative multi-channel approach. We are the only games media owner with audience reach across print, online, apps, cover discs, mobile, on-console and events.

More than 12 million global users visit Future's games websites monthly, and this figure is growing. Total Film is the flagship film brand in the portfolio. Our film brands attract over 30 million page views online every month.

Our brands include:

Comic Heroes, ComputerandVideogames, Edge, GamesMaster, GamesRadar, Nintendo: The Official Magazine, PC Gamer, PlayStation: Official Magazine, SFX, Total Film, Xbox 360: The Official Magazine

Music

Making & Listening

Future is the biggest guitar and music-making publisher in the UK. We continue to lead the market through innovation.

MusicRadar.com is our flagship music-making website. In the last year the site has launched a localised US version, capitalising on US interest. Meanwhile Rhythm maintains its position as the UK's number one drumming magazine.

Our music-listening brands Classic Rock and Metal Hammer continue to evolve and expand. Classic Rock's ground-breaking, collectable Fanpacks – matching new studio albums from iconic artists like Rick Wakeman, Slash and Lynyrd Skynyrd.

Our brands include:

Classic Rock, Computer Music, Future Music, Guitar Techniques, Guitarist, Metal Hammer, MusicRadar, Prog, Rhythm, Total Guitar

Creative

Handmade, Crafts, Photography

Our photography brands serve a wide variety of markets encompassing personal and professional creativity with a combination of print, digital and events.

Future's craft portfolio continues to lead through innovation and inspiration. We continue to evolve our market-leading titles, with new launch Mollie Makes re-defining the contemporary craft market, and The Simple Things launching into the women's lifestyle market this year.

Our brands include:

Crochet Today!, Cross Stitch Collection, CrossStitcher, Digital Camera, Gathered by Mollie Makes, Mollie Makes, N-Photo, PaperCraft Inspirations, Photography Week, PhotoPlus, Practical Photoshop, Simply Knitting, The Knitter, The Making Spot, The Simple Things, Your Family Tree

Sport & Auto

Cycling, Triathlon, Auto & More

Future's depth and reach of content makes us the world's number one cycling publisher, and our portfolio continues to grow. Online, our cycling websites now attract over 5 million global visitors every month. Cyclingnews.com is the world's biggest news and results service for professional cycling, with bulletins from around the globe.

Future's automotive portfolio reaches a broad audience of passionate motoring enthusiasts. Every month, through our specialist motoring magazines, websites and interactive events, we engage nearly 600,000 people.

Our brands include:

BikeRadar, ChopMTB, Classic Ford, Classics Monthly, Cycling News, Cycling Plus, Fast Bikes, Fast Car, Fast Ford, Mini Magazine, Mountain Biking UK, Procycling, Total Vauxhall, Triathlon Plus, What Mountain Bike

FuturePlus

Customer publishing

FuturePlus is our award-winning customer publishing agency. Operating in the UK and US, we develop creative, targeted solutions for branded content across multiple platforms. We believe that great creative content comes from powerful, channel-neutral, strategic thinking – which is why FuturePlus has one of the highest proportions of digital business in the industry.

Some of our key content partners include Page & Moy, Tesco, Best Buy, Coats & Clark, Fender, Auto Trader, Canon and ODEON. We create super-engaging, multi-channel content for these partners by pairing strategic insight with editorial excellence. To really make that content sing we have best-in-class in-house creative, planning, production, web, multimedia, advertising, research and app teams that are the envy of our rivals.

Phil Iwaniuk

Staff Writer, PlayStation: Official Magazine

" It's reassuring that all those years sitting in my pants playing Half Life was invaluable work experience!"

Financial review

Chief Executive's review

This has been a year of substantial progress and Future is now well positioned to grow and diversify revenues as a global digital business. We are a leading force in the new tablet markets and our online audience has grown by 70% to more than 50 million unique users. These advances are opening new opportunities and we will accelerate Future's digital transformation in the year ahead.

Mark Wood Chief Executive

" Future has a strong management team, dynamism, a track record of innovation and a hunger for success."

Overview

Overall, we achieved a substantial improvement in the Group's fi nancial performance in 2012 despite an unfavourable economic climate in many of our core markets. Normalised operating profi t grew by 68% yearon-year and digital revenues have increased by 30% to £20.6m. The restructuring actions taken over the last 18 months have crystallised the £4.5m in annualised savings that we highlighted a year ago.

A key focus in 2012 was on turning round our US operations. We reduced losses, de-risked the print business and put the US on track to return to profi tability in 2013. The UK business again showed resilience despite a challenging trading environment, producing a 13% operating profi t improvement to £9.3m.

The main achievement was to advance our new business models which steadily reduce reliance on print markets and have opened new avenues for global expansion. We are aiming to generate more than half our revenues from digital markets within three to four years.

Framework for Growth

Future has established a formidable position as a global leader in the fast-expanding tablet markets which were ushered in by Apple's iPad. The Group is among global leaders in digital content sales, with over 100 digital titles and gross revenues running at \$1m a month. But the development of our unique tablet software − FutureFolio − offers further opportunities, enabling Future to partner with other content owners to broaden our suite of digital products. Our partnerships with the Jamie Oliver Magazine and Auto Trader pave the way.

In online markets we will continue to build on our fast expansion in audiences over the past year. Our primary focus is on growth markets where we are well positioned. These include our digital businesses in Technology, Cycling and Video Games – three verticals where Future is now a global leader. But we are also developing our other verticals, including Music, Film, Photography, Crafts and Digital Design. We have a scalable model for international expansion following successful localisation of key online properties for the US market.

Future is diversifying the business in promising ways. In the US we have developed a Creative Solutions digital agency managing large-scale advertising campaigns for big brands. In the UK we are scaling up our events business to become a more signifi cant revenue stream.

Future has a strong management team, dynamism, a track record of innovation and a hunger for success. Focusing that energy on commercial opportunities is enabling us to open new routes to growth at speed. Two of them are tablets and online.

Mobile Browsers 8.2m

Accelerating the Tablet Opportunity

Tablets − such as Apple's iPad − are creating a new global market in which consumers pay for content. With the number of tablets in circulation estimated to be more than one billion by 2016, the opportunities for digital content sales continue to expand. There is also ample evidence that tablets are heavily used for leisure-time activities at home – which favours Future's own leisure products.

Future has close working relationships with Apple, Google, Amazon and Microsoft and is seen by these partners as a leader in digital innovation. We have generated gross sales of over £6m on Apple's Newsstand since its launch in October 2011. Our current global sales on all tablet devices are running at \$1m (gross) a month.

Financial review

We have over 100 paid-for digital products on tablets and are launching new formats such as weekly digital magazines. Future's T3 is the top-selling tablet title in the UK, selling around 30,000 copies a month, while MacLife is the top technology title in the US with sales of around 65,000 a month. Around 90% of our digital edition sales are to new customers and 40% are outside our core UK and US markets, pointing to further global opportunities. More than 60% of new customers sign up for subscriptions and the renewal rate is running at over 60%, creating a high-quality long-term revenue stream.

Future has developed its own tablet software – FutureFolio – which enables us to produce highly interactive and video-rich tablet products.

This technology is opening new markets for Future. We are licensing FutureFolio to publishers in the UK, US, Germany, Spain, Portugal, Brazil and Taiwan. We are already signed up to produce 60 digital titles powered by FutureFolio software.

We also see substantial potential in combining Future's tablet software and production skills with other people's content. The launch of the highly interactive Jamie Magazine and Auto Trader's ignition magazine – both on iPad – are early examples. We have other partnerships in place and further launches are scheduled.

The Power of Online

We see similar potential for new revenue growth in online markets, where we have achieved signifi cant traffi c growth over the past year. 50 million unique users a month is a large global audience by any standard. We are fi nding new ways to engage and serve these valuable communities and diversify our revenues.

Future now draws over 25 million unique users a month to its Technology websites, putting it among global leaders in this dynamic market. We also have leading positions in Games (12m) and Cycling (5m).

Governance & Financial Statements

01. MacLife, a leading interactive tablet in the US;

02. Mollie Makes, N-Photo and The Simple Things – all successful print launches;

03. TechRadar US delivered more than six million monthly unique users within 02 six months of launch.

In 2012, we evolved a successful template for low-cost localisation of our key online properties so that we can grow and monetise them more effi ciently in target markets. In April, we launched a US version of TechRadar, the news and reviews website which is our leading online business. TechRadar US more than doubled its traffi c from 2.5m to 6m unique users in six months, becoming the fastest-growing US technology website. We are now able to sell US advertising around the content.

We followed with US versions of our BikeRadar and MusicRadar websites and Australian versions of TechRadar and BikeRadar. Our focus in 2013 will be on exploring opportunities outside Englishlanguage markets. We already have a lowcost and low-risk translation model in place producing content for the German market.

All Future's websites are smartphoneoptimised and we expect advertising revenues from mobile to expand steadily in 2013.

Future has digital know-how in its DNA. We build traffi c using social media, advanced search engine management skills and the use of data analytics to allow modifi cation of content in real time.

Diversifying Our Business

In 2012 Future has made progress in establishing global account management for major advertisers, building on the appeal of the whole Future digital audience. In the US we have developed a new business managing large-scale experiential marketing campaigns for retailers which have included auto maker Hyundai and games publishers Ubisoft and Square Enix. We have already secured signifi cant new business in this area for 2013 and see substantial further potential.

We are expanding and developing our UK events-based business in the year ahead. Planning is underway for business conferences and consumer shows related to our areas of expertise.

A major focus in 2013 will be on deepening relationships with e-commerce retailers and participating more effectively in online commerce beyond our current limited transaction share models.

Seeking New Opportunities in Print

Future sees high-quality, premium magazines having a long-term future as part of our product mix. Two new magazines launched in 2011 – Mollie Makes and N-Photo – were among our most successful and profi table magazines in 2012. We followed Mollie Makes with the launch of The Simple Things, a women's lifestyle magazine, in September. Mollie Makes has demonstrated Future's skills in developing new female-focused content and provides us with an opportunity to extend the range of products for this market in the year ahead.

We generated record UK export revenues for printed magazines in 2012, thanks in part to the production of high-value and timeless

collectibles or 'bookazine' products. We will step up exports in 2013 as we pursue new market opportunities in the US and in Asia.

Against this backdrop our strategy of active portfolio management has seen Future close brands where audiences are in structural decline (PC Plus, What Laptop), and sell non-core brands (US music titles, Trucking and Truckstop News) as well as launching new titles. Where further opportunities emerge we will aim to crystallise them quickly.

Current Trading and Outlook

Current trading is in line with the Board's expectations. Although economic conditions remain challenging, we believe that the Group is well positioned to build on the successes of the past year as digital device sales grow and online audiences continue to expand.

Mark Wood Chief Executive

Acc

Jeff Jones

Global Editor-in-Chief, BikeRadar.com

" Best part of my day? Planting the seeds of creation that will lead to us publishing the best bike-related content on the web."

Future is a business positioned right at the centre of the digital media revolution. Online and on tablet and smartphone, Future is moving faster than ever – with global online unique users up 70% year-on-year to more than 50 million per month, and sales through Apple's Newsstand in excess of two million digital editions in the year since it launched. We understand our consumers and technology – and we're capitalising on our world-class skillsets.

elerating

The Power of Video [01]

Video is a central content element for our online and interactive brands. FY12 has seen phenomenal growth for video across the Group, with over 120 million video views, up 332% year-on-year.

The Entertainment group generated over 50 million views alone across its Film and Games brands in the last year. And our partnership with YouTube meant that this October we joined together to live stream our hmv Gamesmaster Golden Joystick Awards – the world's biggest Games awards. YouTube confi rmed the event generated one of the largest audiences for a live stream in 2012.

Beyond YouTube, T3 secured the world's fi rst unboxing video of the iPhone 5 in September, generating 1.3 million views and pushing T3.com to 4.6 million views in that month alone.

Social Networking

Future's social media audience continues to accelerate, and we now have more than 4.1 million followers across our main social media channels – driving traffi c back to our brands. On Facebook our 'Likes' have risen to over 2.5 million, a 66% increase over the past 12 months. On Twitter, we now reach over 1.3 million followers, an 80% year-onyear increase, which in turn is responsible for driving over 1.8 million online page views each month.

We pride ourselves on engaging with our social media communities, and through this continuous dialogue in our key verticals we have developed a highly successful brand research and development programme, allowing us to de-risk new launches, such as Mollie Makes, The Simple Things and N-Photo, which have all launched with thousands of subscribers already signed up.

Optimising Our Mobile Sites [02]

eMarketer research indicates there will be more than 2.2 billion smartphones in global circulation by 2016. And ABI Research forecasts that smartphone advertising is set to take a greater share in advertising budgets. By 2015 it is predicted this will amount to a \$38 billion industry. Shopping on smartphones, or m-commerce, is also expected to reach sales of \$119 billion by 2015. In 2012 Future optimised all of our video-rich websites for smartphone use, to ensure users can unlock the full potential of our online brands, specifi cally designed for the small screen. Our digital editions are also being developed for smartphone use.

FutureFolio – Building Digital Editions [03]

FutureFolio is the award-winning proprietary software created by Future to power our digital editions. Developed by publishers for publishers – it gives us the versatility to scale production from simple PDF versions to fully-interactive, media rich editions like Total Film, Edge and Tap! Because it reproduces or enhances existing print content digitally, it can be optimised for tablet and smartphone consumption quickly and easily.

One of the key benefi ts of the software is the speed with which exciting content can be created: meaning we can quickly react to news and produce world-class products. For example following the announcement of the iPhone 5 the Tap! and MacFormat teams created one-off digital editions – powered by FutureFolio – literally overnight for sale on Apple's Newsstand the following day.

Future is now a recognised global leader in tablet publishing, with two million copies sold on Apple's Newsstand, 40% of them outside of the US and UK. Around 90% of our tablet sales are to new customers and paid subscription renewals are standing at more than 60%.

Partnering GameFly, Driving Mutual Benefi ts

Accelerating our growth in the global entertainment space, Future this year entered into a strategic partnership with GameFly, a leading Game service. The collaboration encompasses international 360-degree content, e-commerce and advertising.

This partnership will advance Future's charge into the digital space by expanding its GamesRadar Network. Future's media offerings will also be diversifi ed by representing GameFly's mobile app and GameFly media in the advertising marketing sector.

Lyndsey Mayhew

Group Marketing Manager, Creative

" I love working with fantastic creative people on the very best of Future's innovative digital and print

\$1m gross monthly revenues from global digital edition sales

launches and brands." Dive

Future is defi ned by its high quality content and highly engaged, affl uent audiences. Our leading role in the digital media revolution, and our innate creative and innovative approach, makes us perfectly placed to develop new ways to provide content and services to our growing international audiences.

rsifying

The Weekly Opportunity on Tablet

Our app creation software FutureFolio, which powers our digital editions, has allowed us to experiment with new publication frequencies.

The last year has seen the roll-out of a number of new paid-for weekly brands capitalising on our expertise in our key verticals.

May saw the launch of CyclingNewsHD – a must-have weekly package for all followers of international road racing. Photography Week launched in September, packed with rich, interactive video and editorial content to help photographers of all skill levels. And in October we premiered Gathered by Mollie Makes, a weekly brand extension of the hugely popular contemporary craft brand, curating craft projects, videos and photo galleries for those who live and love handmade.

Introducing tech. [01]

Our most recent weekly paid-for tablet launch once again underlines our innovative approach to diversifying existing content sets.

tech., a weekly international tablet magazine aimed at busy technology enthusiasts, launched in November 2012 and comes from the makers of Future's award-winning website TechRadar. The site drives a huge international audience, providing over 17 million global unique users every month with trusted technology news and reviews.

tech. puts its own unique interactive spin on the week's key consumer technology news stories, giving readers a full range of opinions in one bite-size chunk. Calling on TechRadar's deep understanding of the international technology audience, tech. is the week in technology.

Taking FutureFolio Further [02]

Not only does FutureFolio power our own digital editions, other publishers want it to create highly interactive content for their own audiences, opening up new revenue streams.

In October 2012 we partnered with Jamie Oliver's Jamie Magazine in the UK to create a fully HD interactive iPad edition of the recipe and lifestyle brand. Bringing the content to life like never before, it delivers succulent food photography, an Interactive Cook mode, searchable recipes, and emailable shopping lists direct from recipes.

Meanwhile November 2012 saw Future partner with Auto Trader to launch a new interactive tablet product in the UK – ignition. ignition allows readers to use integrated search functionality to load dedicated search results from Auto Trader's full classifi ed listings. The app also includes a live Twitter feed with information about the different vehicles for sale via Auto Trader.

Creating New Brands For New Audiences

2011 saw the launch of Future's Mollie Makes redefi ne the craft market with a wholly contemporary take on handmade. This year Future took things one step further with its fi rst female-focused lifestyle launch: The Simple Things.

The Simple Things was developed fully utilising our world-beating social media skills. Filling a gap in the market for a stylish, contemporary brand in print, on tablet and online – it appeals to a new generation of young mindful consumers inspired by the countryside and keen to embrace a simpler life. The magazine had the most pre-launch subscriptions of any Future title, ever.

Meanwhile we've been busy online, launching Creative Bloq in June. Targeted at an international audience with a broad interest in design – including creative professionals and enthusiasts – the site has quickly acquired more than 285,000 unique users monthly.

Driving Creative Solutions [03]

Future is tapping into new revenues by creating and deploying high profi le brand campaigns for partners. To help Hyundai reach the coveted 'Gen Y' audience in the US in a seamless and authentic way, Future partnered with The Walking Dead writer/creator Robert Kirkman to create a cross platform, one-of-akind experiential programme.

Future created Kirkman's Zombie Survival Machine using a 2013 Hyundai Elantra Coupe. It was the showpiece at Future's booth at the huge annual Comic-Con event in San Diego, where attendees were able to interact with the car and numerous activations including a Zombie target practice and make-up station. The event concluded with The Walking Dead 100th Issue Black Carpet Event, where cast members from AMC's The Walking Dead TV series made an appearance.

Future successfully crafted and delivered a marketing plan that seamlessly included digital, custom video, social media, print and experiential event elements.

Steve Gotobed

Group Art Director Tech

" My proudest moments would be being part of the teams that created Photography Week and N-Photo, both brilliant brands and brilliant teams!"

Intern

Operating review

Apple's iPad £6m

gross revenue from sales on iPad since Apple's Newsstand launched in October 2011

Future's core verticals – Technology, Entertainment, Music, Creative and Sport & Auto – mean that we have high quality content that travels. Our innovation and agility has placed us at the centre of the digital media revolution and the last year has seen massive growth in our international audience. We now reach more than 50 million unique users globally each month and 80% of our tablet sales are to non-UK consumers.

ationalising

TechRadar Becomes Truly Global [01]

This year saw TechRadar become a truly 24/7 global brand. By creating low-cost local market versions of the TechRadar site in the US and Australia, featuring localised content and pricing formats, TechRadar is delivering global content that local consumers – and advertisers – love. Since the launch of the US version in April, TechRadar has already more than doubled traffi c from the US, now delivering over 6 million monthly visits, while Australian traffi c has gone up 144% year-on-year. These audiences can be effi ciently monetised for the fi rst time. Globally, TechRadar is now viewed by more than 17 million unique users per month, up 147% year-on-year.

Future is already applying this low-cost template to leverage UK-created content for other brands into locally targeted – and monetisable – iterations. Cyclingnews.com and BikeRadar have made an incredible impact in the Australian market, with a 137% year-onyear upturn in their joint revenues.

Export Benefi t From Mollie Makes and Bookazines [02]

In 2012, Future's export revenues were up 1% year-on-year, despite the closure of Borders in the US, Future's second largest overseas book and magazine retailer. Success has been driven by the publication of new regular frequency magazines − Mollie Makes, N-Photo – and a range of high-quality, information rich, high-cover priced bookazines. Mollie Makes has been a huge success internationally and, even though it has only been published for 18 months, is ranked as the number one craft title by revenue by Barnes & Noble (our largest US retailer) − in a category of over 460 titles. Bookazine revenue has more than doubled year-on-year and is an area of focus for FY13, when we will publish more bookazines to deliver higher margins.

The New International Newsstand

Future has become a global leader in publishing on the iPad through Apple's Newsstand, with £6 million in gross revenue since its launch in October 2011, and two million products sold in FY12 alone. 80% of our market is outside the UK and close to 90% of subscribers are new customers.

And international partners are showing keen interest in licensing FutureFolio for their own brands. We are working with publishers in the US, Germany, Spain, Portugal, Brazil and Taiwan, and are already signed up to produce 60 digital titles powered by FutureFolio software.

Future Leads The Way In Licensing [03]

We have strategic partnerships with 89 overseas media businesses, and 225 licenses and licensed editions available in 76 countries worldwide – making us the largest UK-based publisher by license. The enhancement of our product offerings make it easier than ever for international partners to utilise our best-inclass content.

These initiatives include the development of our website technology solutions and the introduction of a dedicated translation unit to provide local language content to our digital and print content partners. These foreign language publications, published directly by Future, include the German language version of the Classic Rock Metallica Fanpack and an iPad-only German-language edition of T3 which is available on Apple's Newsstand. In 2012, T3, Future's most licensed magazine with 23 international editions, won the prestigious International Consumer Magazine of the Year Award at the PPA Awards.

MyFavouriteMagazines

We are proud of our magazine subscription business, and now have more subscribers than at any point in the Group's history.

Our Direct Marketing team has been instrumental in driving this growth, with the majority of print subscription revenues being derived from MyFavouriteMagazines.co.uk. Future's largest ecommerce store now delivers £3.4m revenue from international readers.

Future is now also selling the T3 digital magazine as a digital edition or a print + tablet edition direct to consumers from the website.

Operating review

Features Editor, Guitars Group

" Hanging out with Huey Morgan from Fun Lovin' Criminals in Dublin for 48 hours was certainly a highlight. It was a few years ago, but I think I still have a hangover!"

Financial review

This financial review is based on a comparison of the Group's results for the year ended 30 September 2012 with those for the year ended 30 September 2011. In running the business operationally, management use a number of Key Performance Indicators (KPIs) which are set out on page 16.

Statutory results for the year ended 30 September 2012

	2012	2011
Statutory results for the year	£m	£m
Revenue	123.5	141.7
EBITDAE	9.4	7.8
Depreciation charge	(1.1)	(1.2)
Amortisation of intangible assets	(1.5)	(1.2)
EBITE (Operating profit pre exceptional items)	6.8	5.4
Exceptional items and impairment of intangible assets	(3.6)	(21.9)
EBIT (Operating profit/(loss))	3.2	(16.5)
Net finance costs	(2.1)	(1.5)
Pre-tax profit/(loss)	1.1	(18.0)
Earnings per share (pence)	0.1	(5.9)
Adjusted earnings per share (pence)	1.1	0.4
Dividends relating to the year (pence per share)	-	0.5

As noted in the Interim Statement published in May and in the accounting policies on pages 52 to 55, the following changes have been made in the reporting period as follows:

• We are focusing on EBITDAE and EBITE (as defined previously) rather than EBITAE from a profit perspective in recognition of the nature of depreciation and amortisation under IFRS being almost synonymous and treated together rather than separately.
• The estimated useful life of capitalised web development expenditure has been increased to two years rather than one year, which has been used in prior years. This change reflects a more realistic period over which benefits are expected to accrue and is more consistent with market practice. The impact of the change in the current year is a reduction in the amortisation charge of £0.8m.

Normalised results for the year ended 30 September 2012

The normalised results for the Group, and a reconciliation to the statutory results above, are set out on page 79.

Normalised results are presented to reflect better the current size and structure of the business and to give a better indication of the performance of the ongoing business. The normalised results exclude revenues and costs relating to activities closed or divested between 1 October 2010 and 30 September 2012, but include any new activities launched in that period.

2012 £m	2011 £m
117.7	121.9
9.4	6.2
(1.1)	(1.1)
(1.4)	(1.0)
6.9	4.1
(4.7)	(18.3)
2.2	(14.2)
(2.1)	(1.5)
0.1	(15.7)
(0.2)	(5.1)
1.1	0.1

Graham Harding Chief Financial Officer

" FY12 has been a successful year in which we have delivered on the commitments made a year ago. We are now focused on further improving profitability in the year ahead."

Normalised EBITDAE (£m)

Normalised EBITE (£m)

Financial review continued

Group revenue by country 1: UK 81% 2: US 19%

2

1

Review of operations

The review of operations is based primarily on a comparison of normalised results for the year ended 30 September 2012 with those for the year ended 30 September 2011. Unless otherwise stated, change percentages relate to a comparison of these two periods.

Key performance indicators

An update on the key performance indicators is given below:

	2012	2011
Corporate KPIs
EBITDAE:	£9.4m	£6.2m
Year-on-year movement in EBITDAE	+52%	-21%
EBITE:	£6.9m	£4.1m
Year-on-year movement in EBITE	+68%	+8%
Digital KPIs
Year-on-year movement in digital revenues	+30%	+28%
Number of unique users logging onto our websites	51m	30m
Number of digital magazines sold per month (thousands)	239	33
Digital subscriber base (thousands)	235	44
Print KPIs
Number of magazines sold per month	2.1m	2.4m
Print subscriber base (thousands)	818	975
Copies sold as a percentage of copies printed (including subscriptions)	56%	57%
Year-on-year movement in print advertising revenues	-13%	-11%

The KPI trends noted above demonstrate the progress made in the year in digital and in the management of the overall profi tability of the Group.

Analysis of revenue

	2012 £m	2011 £m	Change %
UK	96.4	96.0	-
US	22.0	26.4	-17%
Intra-group	(0.7)	(0.5)
Total revenue	117.7	121.9	-3%

The reportable segments for the Group are the UK-based business (which includes results for our Australian activities) and the US-based business, as set out in the table above. The revenues arising from the UK-based business, which now represents 81% of the Group in revenue terms, continued to be resilient in tough market conditions with increases in digital revenues offsetting the declines in print.

Revenue from the US-based business fell by 17% impacted signifi cantly by the continuing decline in print-related revenues arising from circulation and advertising. This decline has been managed effectively and effi ciently in the context of the restructuring actions taken during the year and has been largely offset by corresponding reductions in the direct cost base and overheads.

In terms of digital and print, the table below sets out the year-on-year movements.

	2012 £m	2011 £m	Change %
Digital	20.6	15.8	+30%
Print	97.1	106.1	-8%
Total revenue	117.7	121.9	-3%

Whilst Group revenue overall fell by 3% (4% in constant currencies) to £117.7m, digital revenues generated from our UK- and US-based businesses continued to show strong growth and were up 30%, helped from a circulation perspective by the launch of Apple's Newsstand and from an advertising perspective from the continuing growth in our audience. Digital revenues of £20.6m represented 18% of the Group revenues with digital advertising now representing 44% of our total advertising revenues (up from 38% last year). In contrast, print based revenues continued to decline in the UK and the US.

Analysis of operating profi t pre exceptional items (EBITE)

	2012 £m	2011 £m	Change %
UK	9.3	8.2	+13%
US	(2.4)	(4.1)	+41%
Total EBITE	6.9	4.1	+68%

Group operating profi t increased by 68% with the most signifi cant year-on-year improvement coming from the US-based business. The UK-based business also saw a smaller increase of £1.1m as it continued to demonstrate its resilience in what continues to be a challenging trading environment.

Further analysis of the key drivers of the increase in operating profi t is provided in the table below which analyses the year-on-year variances across digital activities, print activities, overheads and depreciation and amortisation.

	UK £m	US £m	Group £m
Digital	+1.3	-	+1.3
Print	-1.2	+0.6	-0.6
Overheads	+1.3	+1.2	+2.5
Depreciation and amortisation	-0.3	-0.1	-0.4
Change in EBITE	+1.1	+1.7	+2.8

The table above clearly illustrates the following:

• The progress made in digital activities which is more than offsetting the overall declines in print.

• The impact of the restructuring activities undertaken over the past 18 months across the UK and the US on the overhead base.

Further commentary on those movements is provided in the following pages.

Group digital revenue (£m)

(CAGR: compound annual growth rate)

Group revenue by media

1: Digital 18% 2: Print 82%

UK-based performance

	2012 £m	2011 £m	Change %
Circulation revenue	60.9	60.6	-
Advertising revenue	25.6	26.0	-2%
Customer publishing	4.9	4.7	+4%
Licensing, events and other	5.0	4.7	+6%
Total revenue	96.4	96.0	-
EBITDAE	10.8	9.4	+15%
EBITDAE margin	11%	10%
Depreciation	(0.8)	(0.8)	-
Amortisation	(0.7)	(0.4)	+75%
EBITE	9.3	8.2	+13%
EBITE margin	10%	9%

As noted above UK-based activities continued to be resilient with revenue slightly up at £96.4m. Within this we saw digital revenues increase by 38% to £14.9m, offsetting the declines in print related revenues.

Circulation revenue was flat overall, with the largest negative impact arising from print newstrade, which was down 7%. This decline was offset by increases in print subscriptions of 4%, and digital copy sales – which have increased from 1% of total circulation revenue to 5% of total circulation revenue in the year.

Advertising revenues overall were down 2%, with digital advertising revenues increasing by 11% and print advertising revenues declining by 8%.

The increase of £1.4m in EBITDAE is driven by digital growth and net cost savings across the UK-based business, including the impact of the restructuring that commenced in the summer of 2011 and the senior management changes made in October 2011. Headcount in the UK at the end of September 2012 was 869, a reduction of 81 in actual terms from the end of September 2011.

UK performance by sector is set out in the table below:

2012 2012 2012 2012 2011 2011 Revenue Contrib'n Margin % of Revenue Contrib'n £m £m % Revenue £m £m	2011 Margin %
Entertainment 21.5 5.8 27% 22% 23.8 6.5	27%
Technology 18.9 5.5 29% 20% 20.2 6.6	33%
Music 18.3 4.4 24% 19% 17.5 4.1	23%
Creative 19.6 5.9 30% 20% 16.8 4.8	29%
Sport & Auto 18.1 5.0 28% 19% 17.7 4.5	25%
96.4 26.6 28% 100% 96.0 26.5	28%
Overheads (15.8) (17.1)
EBITDAE 10.8 11% 9.4	10%

We have five similar-sized segments in the UK business. Entertainment and Technology are down year-on-year, impacted by games market cyclicality and investment in digital. By contrast, Music, Creative and Sport & Auto have all shown both revenue and contribution growth as a result of launching new brands and growing existing digital products. The table above also highlights the significant reduction in overheads achieved as a result of headcount and property rationalisation.

UK revenue by media

1: Digital 15% 2: Print 85%

UK revenue by sector

• 1: Entertainment 22%
• 2: Technology 20%
• 3: Music 19%
• 4: Creative 20% 5: Sport & Auto 19%

US-based performance

	2012 \$m	2011 \$m	Change %
Circulation revenue	14.3	19.0	-25%
Advertising revenue	14.3	15.7	-9%
Customer publishing	5.1	6.5	-22%
Licensing, events and other	0.9	1.2	-25%
Total revenue	34.6	42.4	-18%
EBITDAE	(2.2)	(5.1)	+57%
EBITDAE margin	(6%)	(12%)
Depreciation	(0.5)	(0.6)	-17%
Amortisation	(1.0)	(0.9)	+11%
EBITE	(3.7)	(6.6)	+44%
EBITE margin	(11%)	(16%)

The US-based activities have undergone a year of significant change including the sale of the New York Music titles, the rationalisation of a number of print products and a reduction in the number of senior management roles.

Circulation revenue overall fell by 25%, with the largest negative impact arising from print newstrade which was down 31%. Print subscriptions were also down 27% as a result of the proactive elimination of unprofitable subscriptions. Advertising revenues were down 9%, with digital advertising up 14% and print advertising down 29%. Digital advertising in the US now represents 58% of total US advertising revenues.

The improvement of \$2.9m in EBITDAE is driven by the revenue declines being more than offset by cost savings. Significant cost savings have been made to rebase the business, with headcount now at 144 people – a reduction of 78 in actual terms from the end of September 2011 – the majority of whom are now based on one floor in San Francisco.

Since the year end we have announced the closure of PlayStation: The Official Magazine and Nintendo Power as part of our continued active portfolio management.

US performance by sector is set out in the table below:

	2012 Revenue \$m	2012 Contrib'n \$m	2012 Margin %	2012 % of Revenue	2011 Revenue \$m	2011 Contrib'n \$m	2011 Margin %
Entertainment	21.2	3.4	16%	61%	26.9	3.2	12%
Technology	10.1	1.3	13%	29%	12.0	0.4	3%
Music	0.2	(0.2)	(100%)	1%	0.1	(0.4)	(400%)
Creative	1.6	(0.6)	(38%)	5%	2.1	-	-
Sport & Auto	1.5	0.1	7%	4%	1.3	-	-
	34.6	4.0	12%	100%	42.4	3.2	8%
Overheads		(6.2)				(8.3)
EBITDAE		(2.2)	(6%)			(5.1)	(12%)

The above analysis illustrates the following:

• A current focus on Entertainment and Technology in the US, where we have significantly improved margins year-on-year from cost savings and from leveraging more content from the larger UK business.
• The current size of our US Sport & Auto and Technology businesses and the opportunity to grow revenues in those sectors.
• The level of overhead savings in the past year.

US revenue by media

1: Digital 27% 2: Print 73%

US revenue by sector

1: Entertainment 61%

2: Technology 29%

3: Music 1%

4: Creative 5%

5: Sport & Auto 4%

Exceptional items and impairment of intangible assets

Exceptional items and impairment of intangible assets on a statutory basis are analysed in the table to the right.

The restructuring costs in the year arise from the changes to the executive team in October 2011 and changes to senior management, editorial, advertising and central service teams in the US and Australia.

As a result of the restructuring activities in the US, two properties became vacant during the second half of the year. We have been successful in the year in subletting the New York property to the end of the lease but we have provided for the cost of one floor of the San Francisco property to the end of the lease term, in December 2017.

In January 2012 the Group sold its New Yorkbased music division for a consideration of \$2.75m. In May 2012 the Group sold two UKbased trucking titles for a consideration of £1m.

Net finance costs

Net finance costs were £2.1m (2011: £1.5m) reflecting an increase in the average net debt over the period and the cost of restatement and amendment of the credit facility in November 2011.

Taxation

The statutory taxation charge for the year amounted to £0.9m (2011: £1.3m), comprising a current taxation charge of £1.2m (2011: £1.6m) and a deferred taxation credit of £0.3m (2011: £0.3m). The 2012 charge arises in the UK where the standard rate of corporation tax is 25%. In the US, the impact of the current year and brought forward tax losses means that there is no material taxation charge relating to the US.

Overall, the effective rate for the Group when applied to the profit before taxation was 82%.

Earnings per share (EPS)

On a statutory basis, basic EPS for the Group were 0.1p (2011: loss of 5.9p) whilst adjusted EPS were 1.1p (2011: 0.4p). The adjusted calculations are based on the profit/(loss) after taxation which is then adjusted to exclude exceptional items, impairment of intangible assets and related tax effects. The adjusted profit after tax amounted to £3.5m (2011: £1.2m) and the weighted average number of shares in issue was 329.1m (2011: 327.5m).

Dividend

As announced in November 2012, there was no interim dividend and there will be no

Exceptional items and impairment	2012 £m	2011 £m
Restructuring costs	2.1	2.4
Vacant property provision	2.7	1.5
Profit on sale of assets	(1.2)	-
Other costs	-	0.9
Impairment of intangible assets	-	17.1
Total exceptional items and impairment	3.6	21.9

final dividend declared in respect of the year ended 30 September 2012. The Board will review the dividend position again during the year ending 30 September 2013.

The dividend cover policy remains unchanged. Any dividends declared should be covered at least two times by the adjusted earnings per share for the period to which the dividend relates.

Cash flow and net debt

Net debt at 30 September 2011 was £11.8m. During the period there was a cash inflow from operations before cash exceptional items of £6.5m (2011: cash inflow of £4.5m). In addition, there was a cash inflow from the sale of assets which amounted to £2.1m (2011: £nil).

During the year, cash outflows included the following items:

• £1.6m (2011: £3.6m) in dividends paid in respect of the previous financial year
• £4.4m (2011: £0.7m) in exceptional costs
• £2.5m (2011: £3.6m) in respect of capital expenditure
• £1.4m (2011: £1.2m) in net interest payments
• £1.0m (2011: net receipt of £1.3m) in net taxation payments
• £0.5m (2011: £nil) in respect of fees for the restatement of the credit facility

Exchange and other movements accounted for the balance of movements in net debt. As a result of the above net debt at 30 September 2012 was £14.1m, an increase of 19% from September 2011, as expected.

Credit facility and covenants

The Group's credit facility was amended and restated in November 2011 to provide the necessary flexibility for the Group to complete the execution of the restructuring plans through the year ended 30 September 2012. It is due to mature in December 2013. Following the positive results achieved in the year to 30 September 2012 and initial discussions with our existing lenders the Board is confident

of being able to agree a new credit facility in advance of the announcement of the Interim Results in May 2013.

Under the current credit facility interest is calculated as the cost of three-month LIBOR plus an interest margin of between 2.5% and 3.75% dependent on the net debt/EBITDA covenant ratio. The key financial covenants are set out in note 19 on page 67. The Group was in compliance with all of its covenants at 30 September 2012 as set out on page 68.

At 30 September 2012, following a year of tight working capital management, and based on the calculation of 2012 EBITDA for bank purposes, the Group had headroom of £4.7m over and above the level of bank debt. Based on the cash flow cover covenant the Group had headroom of £4.5m over and above the level of cash flow in the 12 months ended 30 September 2012. The agreement of the new credit facility will be a key priority for the Group in the first half of FY13.

Risk and uncertainties

Like all businesses, our business faces risks and uncertainties that could impact on the Group's achievement of its objectives. Risk is accepted as being a part of operating any business and we have therefore established a continuous process of identifying, evaluating and managing risk. There are a number of general business risks to which Future is naturally exposed in the UK and US. In addition, the range of industryspecific risks faced by Future has increased since last year, due to the increasingly digital focus of the media landscape and the increasing number of evolving business models.

Risk and uncertainties

Our internal controls seek to minimise the impact of risks, as explained in our Corporate Governance report on page 33 and during the year we have continued to develop those controls in response to the wider range of risks.

Risk management

Risks	Description	Mitigation
Economic environment	The macro-economic environment continues to be difficult. In both the UK and the US, the outlook for economic growth remains very limited and general trading conditions remain tough. The economic environment, as well as the general move to digital products, has resulted in printed magazine sales and print-related advertising revenues falling.	The Company has proved more resilient than many of its competitors due to the nature of its special-interest content, although more so in the UK where it has greater scale than in the US. It continues to innovate, making available its special-interest content to consumers in print, where we have had a number of successful launches in 2011/2012, as well as in new digital media, including on the various digital newsstands where we have led the way.
Intellectual property	In an increasingly digital world, protection of our intellectual property against piracy is key.	Future leads industry initiatives in relation to piracy and is actively involved in efforts to combat piracy at a national and European level. Future is using a copyright infringement portal which automates the finding of illegal copies and simplifies sending take down notices, with an average success rate of over 70%.
	Future uses, and grants licences to use, various types of third-party content including music, audiovisual material, images and text. As publisher, Future is responsible for any intellectual property or other infringement relating to the same and as licensor, Future is responsible to its licensees.	Future produces guidance and in-house training to educate its staff on the importance of obtaining appropriate rights or licences. Future's legal team reviews all significant licences relating to third-party content and seeks warranties and indemnities relating to the same. Future licences content to third parties based on standard contracts which seek to limit Future's liability. As the digital world emerges Future is developing its existing rights management system to be media neutral.
	The Group produces 'official' magazines, which are published under licence from Microsoft, Sony, Nintendo and L'Equipe, and a number of contract published titles. Loss of any of these contracts would result in a loss of revenue.	The majority of the Group's revenues and profits are derived from the Group's own intellectual property. Future is not excessively reliant upon any one licensor of content.
Financial, treasury and forecasting	Forecasting remains difficult in all consumer markets but this is particularly the case in relation to sales through digital newsstands which are emerging.	Future's forecasting in respect of innovative products will become easier as those products develop a more consistent customer base and stable business models.
	The long lag time for reporting on sales of printed copies and associated retail promotional spend in the US continued to be a challenge in the year.	On printed product a more conservative initial view on sales estimates has been implemented in 2012 and the exposure in the US is being reduced.
	Bad debt continues to be a risk due to the economic climate and the move to digital. This can be relevant to both advertisers and licensees.	Future has continued to manage its receivables very efficiently and is not excessively reliant on any one advertiser, licensee or other partner.
	The Group is exposed to interest rate risk and foreign exchange risk.	Future manages interest rate risk and foreign exchange risk through the use of hedging arrangements (see note 23 to the financial statements for more detail).
	Compliance with bank covenants and refinancing.	Future constantly monitors cashflows and profitability in the context of the bank covenants and has operated within all covenants throughout the year. As the current Credit Agreement expires in December 2013 it is a priority for the Group to agree a new credit facility in FY13.
Innovation	Future is producing products and processes which are at the cutting edge of technology and it is having to invest in, and develop, new business models to allow it to continue to do so.	Future has shifted its focus to the emerging digital world and has resourced accordingly. Future has successfully developed a platform on which to publish its products on the Apple Newsstand and is now adapting that platform to allow it to publish its titles on other digital newsstands. Future continues to be well placed to exploit these new and developing markets.
IT systems and integration	In the event of a total network failure there would be a major impact on the production of magazines and on the operation of websites.	Future's network has at least two diverse routes for all key offices. In addition, all core switches are duplicated in different buildings so there are no single points of failure.
	In the event of all servers failing or loss of server rooms, there would be a major impact on the production of magazines and the operation of websites.	Servers are distributed across several controlled server rooms in different buildings in Bath, London and San Francisco. Future can switch services from one server to another within a few hours. In addition, all mission-critical services have more than one server so there is no single point of failure.
	In the event of a total data loss there would be a major impact on the operational effectiveness of the business.	All business-critical data is stored and fully duplicated on two highly resilient storage devices held in different locations. Either location can be lost without losing any of the data.
Staff	The Group's strong reputation in digital media makes its staff potentially attractive to competitors. There is a risk that key staff will move elsewhere if offered significant increases in remuneration which Future is unable to compete with.	Future employs people who are passionate about their subject and Future invests in the training of those people. In addition, Future offers a number of other staff benefits and steps are taken to ensure that the Group is not excessively reliant upon any one employee.
Regulation	Future's business is subject to a significant amount of legislation, including that relating to publishing.	Future continues to monitor changes to relevant legislation in the UK and the US. In respect of any new legislation brought into effect, Future drafts policies and procedures to ensure awareness, backed up by in-house training, to ensure compliance as far as possible. Two specific examples of this are illustrated below.
Personal data	A loss of personal data triggers the need to notify users and the Information Commissioner's Office (ICO) and Future may suffer reputational risk if it is responsible for the breach.	During 2012 Future suffered one criminal attack of its TechRadar website which resulted in encrypted non-sensitive data being stolen. The police and ICO were notified but there is no evidence of that encryption having being broken and the data used. The ICO has confirmed that Future has taken considerable steps to ensure that such a breach does not occur in the future. We seek to ensure all of our systems comply with best practice as regards to security and we have in place a plan to mitigate the effects on any future hack.
Cookies	New legislation relating to the collection and use of information from cookies or other tracking technology was introduced during the year and all website operators had to review their existing and proposed data practices.	We have worked with an industry-leading supplier of cookie compliance solutions to ensure that our websites: (a) collect cookie data in a manner which is compliant with applicable legislation; and (b) disclose how that data will be used, so as to retain customer loyalty and trust.
E-commerce	Future faces retailer risks as it develops websites through which consumers can buy products directly.	Future seeks to minimise stock and product liability risk through partnerships, and trains its staff on relevant risks.
Raw material costs	As a result of the economic climate and reduced print volumes generally, the cost of printing and raw materials including paper, ink and CD/DVD discs will potentially continue to increase.	Future is reducing its exposure to price increases of raw materials by constantly reviewing pagination and paper requirements and seeking price caps or other contractual protection. It continues to develop its business through innovation and the growth in digital circulation revenues means that our exposure to raw material price increases is significantly reduced.

Corporate responsibility

Corporate responsibility is integral to the way Future conducts its business. We focus our efforts around four key areas where we think we can make a difference.

On Future's behalf, Quartet funds local projects such as Iford Arts. The project enables disadvantaged children from local schools to participate in drama and arts activities.

1. The environment

A responsible approach to the environment is essential to ensure the future sustainability of our business.

Our Head of Production and Procurement is chairman of the PPA (Professional Publishers Association) Environment Committee.

Our environmental policy can be found on our website, www.futureplc.com

Sourcing paper

Paper is the largest raw material we use as a Group. We work hard to make sure that whatever we consume, we do in a way that is ethically responsible and environmentally sustainable. In 2012, 100% of our paper across the Group was sourced from either recycled fibre or sustainable forests where at least one tree is planted for every tree felled in the UK. Future holds the FSC (Forestry Stewardship Council) Chain of Custody certification. This recognises Future's commitment to sourcing paper supplies from sustainable forests. In 2012, over 90% of the paper we used in the UK was FSC certified. We actively encourage our suppliers to work towards FSC certification or one of the other internationally recognised and independently audited certification schemes for environmental care in forest management and conservation.

Graham Harding, Chief Financial Officer, is the Director accountable for Corporate Responsibility (CR) and, with the rest of the Board, regularly assesses the business to ensure responsible actions throughout, and to identify and assess any risks to the Group's short-term and long-term value arising from CR matters.

Recycling and waste

The Group is strongly incentivised to minimise the number of unsold magazines and we employ sophisticated techniques to help achieve this. In the UK Future's unsold magazines are recycled. We also support the PPA's initiative encouraging readers to recycle their magazines after use and we incorporate the WRAP recycle logo in all our magazines. We comply with our obligations under the Producer Responsibility Obligations (Packaging Waste) Regulations. The disposal of waste materials is also included in our print supplier audit.

Plastic packaging

We use plastic film to package magazines at retail and to wrap subscriptions copies for mailing. In 2012 in the UK, Future joined the OPRL (on pack recycling label) scheme to encourage readers to recycle plastic film. Some plastic films are unsuited to recycling and in these instances we use oxo-biodegradable film.

Go Green

Future runs an internal initiative aimed at improving awareness of recycling and energy saving in its UK offices. Driven by Future employees, the campaign encourages employees to use less and recycle more by providing information and recycling facilities. In the UK all of our office copier paper is FSC certified.

Supplier audits

We undertake environmental and ethical audits on our main suppliers which include aspects such as the processing and disposal of effluents, emissions and waste materials.

2. Our people

Future's employees are our most important assets; they are the driving force behind our success as a business.

Developing our people

In 2012 we continued to run skills training for our editorial and publishing teams, advertising teams and central support departments, and increased training in FutureFolio and digital skills.

We continue to focus on, and have increased, training for editors on commissioning, libel, defamation and copyright, as well as new software applications.

Future in the UK holds FSC Chain of Custody certification. This recognises Future's commitment to sourcing paper supplies from well managed forestry.

We have continued our partnership with Bathbased charitable foundation, Quartet.

We are members of the Professional Publishers Association (PPA) and support its initiative encouraging readers to recycle their magazines after use. We incorporate the recycle logo in all our UK magazines.

Future's employee initiative, Go Green, encourages staff to engage in environmentally sustainable practices.

Data across the Group	2012	2011
Code of conduct circulated to all existing and new employees	Yes	Yes
Female employees as a percentage of workforce	36%	34%
Female managers as a percentage of management	28%	29%
Employment of young people under the age of 15	None	None
Consultation and communication procedures in place for all areas of the business	Yes	Yes
Earnings meet at least legal minimum or minimum set by the industry	Yes	Yes
Cases of reported and proven discrimination or harassment	None	None

We have undertaken a complete training needs analysis for our global advertising sales teams and implemented training in the UK, US and Australia to deliver a consistent and high standard.

Training needs are also identified as part of each employee's annual performance appraisal. The 2011 annual appraisal process was deferred due to the restructuring activities but was re-launched in March 2012, and this process was completed in July 2012.

Health and safety

The health and safety of all employees is a key priority for the Group. Future is largely an office-based environment. All companies across the Group comply with relevant legislation and we communicate our health and safety policy to all employees. In the UK, during the year to 30 September 2012, there were no fatalities, one reportable (RIDDOR) injury and 12 minor injuries. There were no fatalities and one minor injury in the US, and no fatalities or injuries in Australia during this period.

Policy on disability

The Group aims to ensure that when considering recruitment, training, career development, promotion or any other aspect of employment, no employee or job applicant is discriminated against, either directly or indirectly, on the grounds of disability. If an employee became disabled while in employment and as a result was unable to perform their duties, we would make every effort to offer suitable alternative employment and assistance with retraining.

Internal communication

Future has policies on employee communication; acceptable use of IT; health and safety; whistleblowing and a commitment to diversity and opportunity. Our employees also have access to free, confidential, employee well-being helplines.

In addition, we hold meetings for all employees at least annually, and extended leadership team meetings where we discuss the financial

performance of the Group and key strategic initiatives. In the UK we have an Employee Involvement Group, which allows employees to comment and play a part in strategic level decision-making. Future's lively culture is echoed in our company intranets and via our monthly CEO newsletter; both of which update employees on industry and business news and celebrate team successes.

3. The community

We actively support the communities in which we operate through charitable donations and by encouraging our people to get involved in community initiatives.

Giving something back

A key tenet of our charitable donation policy is to empower our employees to support charities of their choice. For this reason, we run a charity matching scheme. Employees raise money for their chosen charity and Future matches this amount, subject to a reasonable limit and to qualification under the rules of the scheme. During the year to 30 September 2012, £4,000 was paid under the charity matching scheme (2011: £13,000).

As well as the charity matching scheme, Future makes local charitable donations in the cities where we have offices. The total amount of charitable donations made by the Group in the year was £12,000 (2011: £37,000). In the UK, we continued our partnership with Bath-based charitable foundation, Quartet, who make donations to local charities on our behalf.

Future in the wider community

Future people are actively involved with a number of national organisations including the Professional Publishers Association, European Magazine Media Association, Association of Online Publishers, NABS, European & Leisure Software Publishers Association, the IPA, the Marketing Society and the International Federation of the Periodical Press. We are also represented on The Bath Initiative, a public:private collaboration.

4. Corporate practice

Supplier payments

The Group does not follow an external code on payment practice, but it is our policy to settle the terms of payment with suppliers when agreeing the terms of each transaction; to ensure that suppliers are made aware of the terms of payment; and to pay all suppliers when their invoices become contractually due for payment. The Company had no trade creditors at 30 September 2012 (2011: nil).

Ethics and human rights

Future supports the standards set out in the UN Global Compact on the Responsibilities of Business, and endorses the principle that no underage, forced, or prison labour should be employed; that no one is denied a job because of gender, age, sexual orientation, ethnic origin, religion, affiliation or association and that factories comply with laws protecting the environment. Our supplier audits include an ethical questionnaire.

We work co-operatively with licensees in a number of overseas territories and we do not participate in or support exploitative labour arrangements in any country.

Political contributions

In line with our Group policy, we do not make contributions to any political cause.

More information

Our website www.futureplc.com includes information on our CR policies and practices.

Board of Directors

Peter Allen Independent non-executive Chairman

Mark Wood Chief Executive Officer

Graham Harding Chief Financial Officer

Manjit Wolstenholme Senior independent non-executive

Seb Bishop Independent non-executive

Mark Whiteling Independent non-executive

Mark Millar Company Secretary and General Counsel

Peter Allen Chairman sln

Peter was named Chairman in August 2011. He was Chief Financial Officer of Celltech Group plc between 1992 and 2004. In 2003 he was also appointed Deputy Chief Executive Officer of Celltech until the company was sold in 2004. He was Chief Financial Officer of the electronics company Abacus Group plc from 2005 until the company was sold to Avnet Inc in January 2009. Peter is currently Chairman of Clinigen plc, Chroma Therapeutics Limited and ProStrakan plc and a non-executive Director of Oxford Nanopore Technologies Limited and TMO Renewables Limited.

Manjit Wolstenholme Senior independent non-executive sln

Manjit joined Future as the senior nonexecutive Director in February 2011. She is a non-executive director of Provident Financial plc, Unite Group plc and Aviva Investors. After qualifying as a chartered accountant in 1988 with Price Waterhouse, Manjit spent 13 years with Dresdner Kleinwort, latterly as co-head of investment banking including more than a decade specialising in the media sector. She was a partner at Gleacher Shacklock from 2004 to 2006.

Mark Wood Chief Executive Officer

Mark Wood was named Chief Executive of Future plc in October 2011. He joined Future in April 2009 as an independent non-executive Director and was appointed as Chief Executive of Future UK in September 2010. Mark has been accelerating the growth of Future's digital businesses. In the UK the company has won media industry awards as Digital Publisher of the Year in both 2011 and 2012. Before joining Future Mark was Chief Executive of ITN, the television news organisation, where he developed a range of digital ventures, including a world-leading digital image business. Prior to ITN, Mark was Editor-in-Chief and Head of Media at Reuters. He began his career as a foreign correspondent for Reuters and was based in Berlin, Moscow, Bonn and Vienna.

Seb Bishop

Independent non-executive sl

Seb joined Future as an independent nonexecutive Director in June 2007 and became a member of the Remuneration committee in November 2008. He is the CEO of goop, a digital media and e-commerce company. Prior to goop, Seb was the CEO of (RED) International, the business set up by Bono and Bobby Shriver to fight AIDS in Africa. In 2000, he founded Espotting, the company that pioneered pay-per-click advertising and search marketing in the UK. He expanded Espotting before selling the company to MIVA, a US Nasdaq-quoted company in 2004, and taking up the Presidency of MIVA until 2007. Seb is Chairman of Steak, a digital marketing agency, a Governor of the School of Communication Arts and a member of the World Economic Forum's Young Global Leaders.

Mark Whiteling Independent non-executive sln

Mark joined Future as an independent, nonexecutive Director in October 2010. Mark has a Master of Commerce degree and qualifications as both a New Zealand ACA and an American CPA. He is currently Chief Financial Officer of FTSE 250 company Premier Farnell plc, a leading multi-channel distributor of products and services to design and purchasing professionals globally. His experience includes Group Finance Director of Communisis plc, the pan-European print management/direct mail group and Tibbett & Britten plc, a FTSE 250 logistics company, as well as roles at SmithKline Beecham plc in both the USA and Europe.

Mark Millar Company Secretary and General Counsel

Mark has been Company Secretary and General Counsel since September 2002. He joined from Allen & Overy following more than a decade's experience of City legal work, including a wide range of UK and international commercial and corporate finance experience. He also acts as secretary to all Board committees. He chairs the Publishers Licensing Society, the PPA's Government and Regulatory Committee, the European industry body's copyright task force and is an industry representative on the board of the Copyright Licensing Agency.

Graham Harding Chief Financial Officer

Graham Harding (BA, ACA, MBA) has worked at Future for 12 years initially as Group Financial Controller before becoming the UK Finance Director in 2004 and Chief Financial Officer for the Group in October 2011. During his time at Future he has worked on numerous acquisitions and disposals in the UK, Australia, Europe and the US as well as debt and equity fund raisings. In addition he has taken a leading role in rolling out new system developments in the UK and the US. After obtaining a Classics degree from Durham University he trained with Price Waterhouse in Bristol and Johannesburg, South Africa before leaving to join Bath Press Group plc as Group Financial Controller in 1996. He gained an MBA from Bath University in 1999.

s Member of the Nomination committee

l Member of the Remuneration committee

n Member of the Audit committee

The information presented in this Directors' report relates to Future plc and its subsidiaries. The Chairman's statement, Chief Executive's review, Financial review and Corporate Responsibility statement are each incorporated by reference into, and form part of, this Directors' report.

Principal activity

The principal activity of the Company and its subsidiaries (the 'Group') as a whole is the publishing of special-interest consumer magazines, apps and websites, notably in the areas of Technology, Entertainment, Music, Creative and Sport & Auto sectors.

The Company is incorporated and domiciled in the UK and has subsidiaries operating in the UK, the US and Australia.

Business review

The purpose of the Annual Report is to provide information to the shareholders of the Company.

Reviews of the Group's activities during the year, the position at the year-end and developments since then are set out in the Chairman's statement, Chief Executive's review, the Corporate Governance report and the Financial review. The Financial review explains financial performance, KPIs, the position at the year-end, any post balance sheet events, any likely future developments and a description of the principal risks and uncertainties facing the Group and how these are managed.

The Annual Report contains certain forward-looking statements with respect to the operations, performance and financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results to differ from those anticipated. The forwardlooking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update those forward-looking statements.

Result of 2012 Annual General Meeting

All resolutions put to the Annual General Meeting held on 8 February 2012 were passed unanimously on a show of hands. Shareholders holding more than 85% of all issued shares submitted proxy votes and of these, more than 92% were cast in favour of all resolutions.

Reported financial results

The audited financial statements for the year ended 30 September 2012 are set out on pages 45 to 78. Details of the Group's results are set out in the consolidated income statement on page 46 and in the notes to the financial statements on pages 56 to 78.

Dividends

The Board's confirmation of no dividend for the year is set out on page 20 in the Financial review. The unchanged policy on dividend cover is also set out on page 20. The Company's Employee Benefit Trust (EBT) waives its entitlement to any dividends.

Share capital (all Ordinary shares)

The Company has a single class of share capital which is divided into Ordinary shares of one penny each. The rights and obligations attaching to the Company's Ordinary shares and provisions governing the appointment and replacement of, as well as the powers of, the Directors, are set out in the Company's articles of association, copies of which can be obtained from Companies House in the UK or by writing to the Company Secretary.

Save for restrictions that may from time to time be set out in the Company's articles of association or imposed by laws and regulations (including the Listing Rules of the Financial Services Authority), there are no restrictions on the voting rights attaching to the Ordinary shares or on the transfer of the Ordinary shares. The articles of association may be amended only by a special resolution of the Company's shareholders.

Details of all movements in share capital are given in note 24 on page 73. As at 30 September 2012, the number of shares in issue was 333.0 million. This represents a small increase of 1.27% compared with the number of shares in issue as at 30 September 2011. All of the new shares were issued in satisfaction of employee share option exercises or share awards vesting during the year.

The Company was granted authority, at the Annual General Meeting held on 8 February 2012, to purchase up to 32,880,000 of its own shares, representing just under 10% of the Company's issued share capital as at 15 December 2011, the date the notice was prepared. The Company has never purchased any of its shares and the authority will expire following the end of the Company's Annual General Meeting to be held on 4 February 2013, at which a resolution to renew such authority is proposed.

Significant shareholdings

At 14 December 2012, the Company had been notified of the following significant interests in its Ordinary shares:

Shareholder	Number of shares	Percentage of issued share capital
Schroders Plc	74,914,426	22.49%
Aberforth Partners LLP	64,322,364	19.31%
FIL Ltd	36,368,960	10.92%
Investec Asset Management Ltd	28,710,000	8.62%
Franklin Templeton Investments Corp	16,663,407	5.00%
Gartmore Investments Limited	16,446,486	4.93%
Artemis Investment Management Ltd	10,627,757	3.19%
	248,053,400	74.46%
Directors' holdings (see opposite)	1,637,999	0.49%
Total of significant holdings	249,691,399	74.95%
Total number of shares in issue	333,139,612	100%

Directors' shareholdings

	Balance as at	Purchases	Sales during	Balance as at
Directors in office at 30 September 20124, 5	30 September 2011	during the year	the year	30 September 2012
Executive
Mark Wood6	-	-	-	-
Graham Harding7, 8	281,891	118,269	(67,050)	333,110
Non-executive
Peter Allen	-	800,000	-	800,000
Seb Bishop	17,000	-	-	17,000
Mark Whiteling	400,000	-	-	400,000
Manjit Wolstenholme2	34,000	-	-	34,000
Total	732,891	918,269	(67,050)	1,584,110

Notes:

1. All holdings are beneficial. 2. Between 30 September 2012 and 14 December 2012 (being the latest practicable date prior to publication of this document) there were no changes to the holdings of serving Directors with the exception of Manjit Wolstenholme, who acquired

53,889 shares on 23 November 2012 at a price of 18.4p. 3. Details of the share options and awards for executive Directors are set out on page 42. There are no such options or awards for non-executive Directors.

Directors

Biographical details of the Directors holding office as at 14 December 2012 are set out on pages 24 and 25.

Directors' shareholdings in the Company's share capital are set out above. No Director has any interest in any other share capital of the Company or any other Group company, nor does any Director have a material interest in any contract of significance to the Group.

Significant agreements

The provisions of the European Directive on Takeover Bids (as implemented in the UK in the Companies Act 2006) require the Company to disclose any significant agreements which take effect, alter or terminate upon a change of control of the Company. In common with many other companies, the Group's bank facility (details of which are set out in note 19 on page 67) is terminable upon change of control of the Company. In common with market practice, awards under certain of the Group's longterm incentive plans (details of which are set out in the Directors' remuneration report on pages 38 and 39 and note 25 on page 74) will vest or potentially be exchangeable into awards over a purchaser's share capital upon change of control of the Company. There is also a change of control provision in the service agreements of the two executive Directors, exercisable within three months of a change of control by either the Company or the executive.

• 1. Stevie Spring ceased to be a Director on 27 October 2011 and at that time she held 1,398,162 shares.
• 1. John Bowman ceased to be a Director on 27 October 2011 and at that time he held 801,523 shares.
• 1. Mark Wood became a Director on 27 October 2011 and at that time he held no shares.
• 1. Graham Harding became a Director on 27 October 2011 and at that time he held 281,891 shares.

Financial instruments

Information in relation to the Group's use of financial instruments is set out in note 23 on pages 70 to 73.

Corporate governance

The Board supports best practice in corporate governance. The Board's report on this subject is set out on pages 30 to 35.

Conflicts of interest

The Board has a set of procedures to ensure that: (i) conflicts of interest are raised by Directors (and any potential Directors prior to appointment); (ii) appropriate guidelines are followed before any conflict is authorised (including ensuring that only Directors who have no interest in the matter being considered will be able to take the relevant decision and in taking the decision the Directors act in a way they consider, in good faith, will be most likely to promote the Company's success); and (iii) records are kept of conflicts of interest and authorisations. The Directors are satisfied that the Board's powers of authorisation of conflicts are operating effectively and that the procedures have been followed. The procedures and any authorisations will continue to be reviewed annually.

Directors' responsibility for accounts

The Directors are responsible for preparing the Annual Report, the Directors' remuneration report and the financial statements in accordance with applicable law and regulations. 8. As a result of the partial vesting on 19 December 2011 of DABS awards granted on 19 December 2008 Graham Harding's beneficial interest in shares increased by 51,219 (comprising vesting of 118,269 DABS shares less 66,130 sold on 16 January 2012 to meet the tax and national insurance liabilities arising on the vesting of the award and subsequently, to move those shares into a tax efficient ISA, 52,139 shares were sold and 51,219 shares were bought).

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

• :: select suitable accounting policies and then apply them consistently;
• :: make judgements and accounting estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Corporate responsibility

Directors' report

continued

The Board considers that issues of corporate responsibility are important. The Board's report on this subject (including information and policies on charitable donations, political donations, employee involvement, payment of creditors and disability) is set out on pages 22 to 23.

Annual General Meeting 2013

At the Company's fourteenth Annual General Meeting, which will be held on Monday 4 February 2013 at 12 noon at Future's London office at 2 Balcombe Street, London NW1 6NW, a number of resolutions will be proposed. The resolutions are set out in the Notice of Annual General Meeting on pages 80 to 84 and an explanation of all proposed resolutions is provided below.

Ordinary resolution 1 – Financial statements

Shareholders will be asked to approve the financial statements of the Company for the financial year ended 30 September 2012, together with the reports of the Directors and auditors. The audited financial statements appear on pages 45 to 78.

Ordinary resolution 2 – Directors' remuneration report

Shareholders will be asked to approve the Directors' remuneration report for the financial year ended 30 September 2012, which is set out on pages 36 to 43.

Ordinary resolutions 3 to 8 – Annual re-election of Directors

Consistent with our policy since 2004, all Directors are proposed for re-election. Biographical details of all Directors are set out on pages 24 and 25.

Following a rigorous evaluation and taking into account the need for progressive refreshing of the Board, the Board confirms that the performance of each executive and non-executive Director of the Company continues to be effective and demonstrates commitment to the role. The Nomination committee has carefully considered the time commitments required from and the contribution made by each Director and both the Nomination committee and the Board unanimously recommends that each Director standing for re-election be re-elected.

Ordinary resolutions 9 and 10 – Auditors

A resolution proposing the reappointment of PricewaterhouseCoopers LLP as auditors of the Company and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting. An explanation regarding the Board's proposal to reappoint PricewaterhouseCoopers LLP as auditors can be found on page 35 in the Corporate Governance report.

Ordinary resolution 11 – To authorise the Directors to issue and allot new Ordinary shares

Under the provisions of section 551 of the Companies Act 2006 (the 2006 Act), the Directors may allot and issue Ordinary shares only if authorised to do so by the Company's Articles of Association or by shareholders at a shareholders' meeting. Consistent with guidance issued by the Association of British Insurers (ABI) this resolution will, if passed, authorise the Directors to allot shares up to a maximum nominal value of £2,220,000 as follows:

• (a) in relation to a pre-emptive rights issue only, equity securities (as defined by section 560 of the 2006 Act) up to a maximum nominal amount of £2,220,000 which represents approximately two thirds of the Company's issued Ordinary shares (excluding treasury shares) as at 14 December 2012. This maximum is reduced by the nominal amount of any Relevant Securities allotted under paragraph 11.2 of the notice of AGM; and
• (b) in any other case, Relevant Securities up to a maximum nominal amount of £1,110,000 which represents just under one third of the Company's issued Ordinary shares as at 14 December 2012. This maximum is reduced by the nominal amount of any equity securities allotted under paragraph 11.1 of the notice of AGM in excess of £1,110,000.

If granted, this authority would replace all previous authorities granted in this connection. The authority granted by this resolution will expire on 31 March 2014 or, if earlier, following the conclusion of the next AGM of the Company. If the Directors exercise the authority granted under paragraph 11.1 of the Notice of AGM, they will all stand for re-election at the following AGM.

The Directors do not have any present intention of exercising this authority other than in connection with any exercises under share option and other share incentive schemes,

but intend to seek this authority each year. In addition, there may be circumstances where it would be appropriate for the Company to issue new Ordinary shares, such as an acquisition where it might be appropriate for the consideration to be settled in whole, or in part, by the issue of new Ordinary shares. The Company does not hold any shares in treasury.

Ordinary resolution 12 – Approval of political donations

It remains the policy of the Company not to make political donations or to incur political expenditure, as those expressions are normally understood. However, following broader definitions introduced by the 2006 Act, the Directors continue to propose a resolution designed to avoid inadvertent infringement of the new definitions.

The 2006 Act requires companies to obtain shareholders' authority for donations to registered political parties and other political organisations totalling more than £5,000 in any 12-month period, and for any political expenditure, subject to limited exceptions. The definition of donation in this context is very wide and extends to bodies such as those concerned with policy review, law reform and the representation of the business community. It could also include special interest groups, such as those involved with the environment, which the Company and its subsidiaries might wish to support, even though these activities are not designed to support or to influence support for any particular political party.

Special resolution 13 – Disapplication of statutory pre-emption rights

Resolution 13 will be proposed to renew the Directors' existing authority to allot new Ordinary shares for cash other than pro rata to existing shareholdings. Section 561 of the 2006 Act requires that equity securities issued for cash must first be offered to the Company's existing holders of securities in proportion to their existing rights.

Consistent with the previous practice of the Company, the authority now sought would permit the allotment of Ordinary shares up to the amount covered by resolution 11 in connection with a rights issue (or other pro rata Ordinary share issue) and otherwise up to an aggregate nominal amount not exceeding £166,500, equivalent to just under 5% of the Company's issued Ordinary share capital as at 14 December 2012, such authority to expire on 31 March 2014 or, if earlier, following the conclusion of the Company's next Annual General Meeting save that the Company would, before the expiry of the

power conferred, be able to make an offer or agreement which would or might require equity securities to be allotted after its expiry and the Directors would be able to allot equity securities pursuant to such an offer or agreement as if the power, if conferred, had not expired. If granted, this authority would replace all previous authorities existing in this connection. The Board intends to renew this authority each year.

The Board does not currently intend to issue more than 7.5% of the Ordinary issued share capital of the Company in any rolling threeyear period without prior consultation with the Investment Committees of the Association of British Insurers and the National Association of Pension Funds.

Special resolution 14 – Purchase of own shares

Resolution 14 is proposed to renew the Company's authority to make market purchases of its own Ordinary shares. The maximum number of Ordinary shares that may be purchased will be 33,300,000 representing just under 10% of the issued Ordinary share capital of the Company as at 14 December 2012.

The minimum price payable for shares will be the nominal value of one penny per Ordinary share and the maximum price will not be more than the higher of 5% above the average of the middle-market quotation of the Company's Ordinary shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary shares are purchased and that stipulated by Article 5(1) of the Buyback and Stabilisation Regulation 2003. This authority, if granted, would expire on 31 March 2014 or, if earlier, following the conclusion of the Company's next Annual General Meeting save that the Company would, before expiry of the power conferred, be able to make a contract to purchase shares which may be executed wholly or partly after its expiry, as if the power, if conferred, had not expired. The Board intends to seek this authority each year. If approved, the power would be used only where it was demonstrably in shareholders' interests, such as by improving adjusted EPS.

While the Board has no current intention to use the power proposed, it considers that it is desirable to have this authority each year, as there could be circumstances in which the purchase by the Company of its own shares would be in the best interests of the Company and its shareholders generally.

The 2006 Act permits certain listed companies to hold shares in treasury as an alternative to

cancelling them following a purchase of own shares by the Company. Shares held in treasury may subsequently be cancelled or sold for cash, or used to satisfy employee share option or other awards under the Company's share option or long-term incentive schemes. Once held in treasury, a company is not entitled to exercise any rights, including the right to attend and vote at company meetings in respect of the shares and no dividend or distribution of the Company's assets may be made to the Company in respect of shares held in treasury. If the Directors exercise the authority conferred by resolution 14, they will consider holding any shares purchased in treasury rather than cancelling them.

The total number of options to subscribe for or awards granted in respect of Ordinary shares that were outstanding at 14 December 2012 (being the latest practicable date prior to publication of this document) was 9,518,286. The proportion of issued share capital that they represented at that time was 2.86% and the proportion of issued share capital that they will represent if the full authority to purchase shares (existing and being sought) is used is 3.17%.

Special resolution 15 – General meetings on 14 days' notice

Notice periods for AGMs must give at least 21 days' clear notice. For other general meetings, the old minimum notice period of 14 days was increased to 21 days by the Companies (Shareholders' Rights) Regulations 2009, unless shareholders approve a shorter period of at least 14 clear days. In the interests of greater efficiency, Resolution 15 seeks to renew approval for notice periods of at least 14 clear days.

Action to be taken

A form of proxy is included with this Annual Report for use in connection with the Annual General Meeting. Please complete and return the form in accordance with the instructions printed on it to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible and, in any event, no later than 12 noon on Thursday 31 January 2013. The return of the form of proxy will not prevent you from attending the Annual General Meeting and voting in person if you wish to do so. Further information about the AGM, including about electronic appointment of proxies, is provided on pages 82 to 84.

Recommendations

The Board believes that each of the resolutions to be proposed at the Annual General Meeting is in the best interests of the Company and

its shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of all of the resolutions proposed, as they intend to do in respect of their own beneficial holdings.

Annual General Meeting procedures and result

As in previous years, the Company will: (a) indicate the level of proxies lodged on each resolution together with the balance for and against each resolution and the number of abstentions; (b) announce the results of voting to the London Stock Exchange; and (c) post the results of voting on our corporate website, www.futureplc.com.

Disclosure of information to the auditors

The Directors confirm that they have complied with the relevant provisions of the 2006 Act in preparing the financial statements.

In addition, each of the Directors confirms that, so far as they are aware, there is no relevant audit information of which the auditors are unaware. Each Director has taken all reasonable steps to ensure that they are aware of any relevant audit information and that the auditors are aware of any relevant audit information.

Responsibility statement

Each of the Directors, whose names and functions are listed in the Board of Directors section on pages 24 and 25, confirm that to the best of their knowledge:

• (a) the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• (b) the Financial review includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Approved by the Board of Directors and signed on its behalf by:

Mark Millar Company Secretary and General Counsel 14 December 2012

Corporate Governance report

Effective corporate governance requires not just compliance with legislative and regulatory requirements, but also applying the principle of good governance in the boardroom and throughout the business. At Future, we are committed to ensuring that good corporate governance is embedded at the heart of our business structure and processes.

Mark Millar Company Secretary and General Counsel

" The non-executives play a critical role on the Board in overseeing and scrutinising the running of the business and in ensuring that corporate governance remains at the top of the agenda."

Quick find contents

Page 30: Board of Directors
Page 34: Audit committee
Page 35: Nomination committee
Page 35: Remuneration committee

Our approach to corporate governance

In this report, we provide detail on the role of the Board of Directors, followed by a more detailed focus on the work of each of the three key committees: the Audit committee, the Nomination committee and the Remuneration committee. Together, these give a clear insight into how we manage corporate governance principles and processes within Future.

1. Board of Directors

Membership of the Board

The Board consists of two executive and four non-executive Directors. Biographies of Directors and details of their other time commitments are set out on pages 24 and 25.

There has been no change to the Board this year other than the changes to the executive team reported in the last annual report.

On the executive side, we appointed Mark Wood and Graham Harding on 27 October 2011 to replace Stevie Spring and John Bowman as Chief Executive and Chief Financial Officer respectively, when the Company eliminated a complete tier of corporate management. Mark Wood brings significant digital, media and public company experience having been a main board Director at Reuters plc from 1989 to 1996 and Chief Executive of ITN from 2003 to 2009, as well as ensuring continuity as he was promoted from his role as Chief Executive of the Group's UK business. Graham Harding, (BA, ACA, MBA), has significant media, public company and Group-specific knowledge, having been with Future since 2000 as Group Financial Controller and then UK Finance Director since 2004. That continuity is important to the Group at this stage of the development of the Group's digital business. All Board members have a diverse and relevant range of digital and general business experience.

Role of the non-executive Directors The non-executives play a critical role on the Board in overseeing and scrutinising

the running of the business and in ensuring that corporate governance remains at the top of the agenda. They all serve three-year terms, terminable by either party on three months' notice at any time and subject to their election and annual re-election or removal by shareholders. Although annual re-election is not a requirement for Future, we believe it is the best way to ensure non-executives are directly accountable to shareholders.

All of the non-executive Directors are considered to be independent by the Board. There is a genuine mix of views and insights, as well as experience.

Each non-executive Director is expected to commit 20 days a year to their role to allow for preparation for and attendance at Board and committee meetings and keeping in touch with the senior management team, shareholders and other stakeholders.

Roles of the Chairman and Chief Executive The duties and responsibilities of the Board are effectively divided so that the Chairman leads the Board and the Chief Executive leads the business.

Board meetings

The Board had six scheduled meetings during the financial year and attendance is summarised below. The Board had four unscheduled telephone meetings to deal with matters that arose during the year.

All Directors are aware of the need to be available and there is a clear contact process. Board meetings are sometimes preceded by an informal dinner where senior management can update the Board on business issues and challenges.

There is a regular and comprehensive exchange of information between meetings to ensure Board members are well informed to participate effectively in meetings. Directors receive a Board pack a week before the meeting with minutes of the previous meeting, all papers for agenda items, a report from the Company Secretary summarising any key legal issues and providing any regulatory/legislative updates, and a summary of share ownership

and recent share dealing. Similar packs are provided for all committee meetings. Between meetings, the Board receives a monthly Board report written by the executive Directors which summarises financial and operational performance and provides updates on key programmes within the business.

Director	Attendance (6 scheduled meetings)
Peter Allen	6 of 6
Stevie Spring (resigned 27 October 2011)	1 of 1
John Bowman (resigned 27 October 2011)	1 of 1
Seb Bishop	5 of 6
Mark Whiteling	5 of 6
Manjit Wolstenholme	6 of 6
Mark Wood (appointed 27 October 2011)	5 of 5
Graham Harding (appointed 27 October 2011)	5 of 5

Mark Wood and Graham Harding were appointed during the financial year to replace Stevie Spring and John Bowman. Seb Bishop and Mark Whiteling missed the February Board meeting due to diary clashes caused by a late rescheduling of that Board meeting. In each case the Directors read the pack in advance and fed their questions and comments to the Chairman in advance of the meeting.

There is a written schedule of matters reserved for the Board which sets out those matters that require Board approval including setting strategy, approving budgets and financial statements and setting up policies. This schedule was reviewed in July 2012 and it was noted that 40 matters had been considered by the Board. The schedule is available on the Company's website at www.futureplc.com. The Board delegates to management the day-to-day operational matters.

Board decisions are made unanimously whenever possible but can be made by majority. If Directors have concerns that cannot be resolved about the running of the Company or a proposed action, their concerns are recorded in the minutes. No such concerns arose in the year.

The Board regularly appoints a sub-committee consisting of at least two Directors in order to finalise and approve those matters that have been approved in principle by the Board, subject to final amendments only. A permanent sub-committee consisting of at least two Directors exists to approve the issue and allotment of new shares in satisfaction of employee share schemes.

The Board has a number of nominated advisers (as listed on page 85). During the last financial year meetings were regularly held with key advisers to keep them aware of issues, and PricewaterhouseCoopers LLP attended audit committee meetings and briefings with members of the executive and senior finance teams.

Effective Development

Training and induction

The Board's training and development policy requires that all new Directors should receive appropriate induction on joining the Board, both in respect of the Group's activities as a whole and of each operating company individually.

Ongoing training for Directors is available as appropriate whether by presentations to the Board by senior management or more formally where individual Directors request training on specific issues. The training and development needs of each individual Director are assessed and discussed during individual performance evaluation meetings with the Chairman and Company Secretary as part of the annual Board performance evaluation. The Board encourages appropriate training and provides regular updates and refresher sessions by the Company Secretary, the Company's legal advisers and auditors, to inform the Board or relevant committees of important changes in legislation, regulation and best practice. During the past 12 months, the Directors have in particular received training on the new 'cookie' rules and digital piracy.

Non-executive Directors

As a smaller company we are only required to have two independent non-executive Directors. We decided to comply with the full requirement and have at least half the Board as non-executive Directors. This brings broader experience with the diversity of our business and our desire to ensure that our non-executives have the time to devote to corporate governance as well as monitoring and challenging the executive team on operational and strategic matters.

Paul Grogan

Editor,

Photography Week

" I love the challenge of working on a weekly, iPad-only title – it's very exciting to be involved in a magazine that's at the cutting edge of what's possible in terms of content, interactivity and reader experience and enjoyment."

UK Corporate Governance Code

30 September 2012, we have complied in full with the requirements of the UK Corporate Governance Code (2010) which is available on the Financial Reporting Council website www.frc. org.uk/corporate/ukcgcode.cfm. The disclosures on share ownership, appointing and replacing Directors and other similar disclosures required by rule 7.2.6 of the Disclosure and Transparency Rules are set out in the Directors' Report on pages 26 to 29.

For the financial year ended

Summary of performance evaluation

Last year's outcomes	Steps taken this year
Succession planning for NEDs	Board significantly refreshed in FY11
No annual measurement of performance against set objectives	Objectives set at a Board meeting
Ongoing training	Individual training and presentations on key changes

Performance evaluation The Directors completed a detailed Board performance evaluation questionnaire as part of the annual performance evaluation process. Each questionnaire was analysed and the Chairman and Company Secretary led a discussion individually with each Director on the Board's performance during the year and any specific requirements for training and development. The results were presented to the Board for discussion. During the process the Board also compared its performance with the results and recommendations from prior year's performance evaluations. The Board considers this exercise to be of significant value in ensuring a functional and effective Board and committees.

The Chairman also met several times with non-executive Directors without the presence of executive Directors, in order to assess the performance of the executive Directors.

Accountability and going concern

The Directors are required to make an assessment of the Group's ability to continue to trade as a going concern.

The Directors have given this matter due consideration and have concluded that it is appropriate to prepare the Group financial statements on a going concern basis. The two main considerations were as follows:

a) Strength of the Group's cash flow

As a result of the restructuring actions taken during the year the Group has had a significantly better year in terms of profitability (pre exceptional items) and has therefore seen a corresponding increase in the cash flow from operations (pre exceptional cash flows). The Group has also generated additional cash flows from the disposal of

certain assets (predominantly print based) in the UK and the US. Most of the Group's operating expenditure is cash expenditure, and the majority of the Group's revenue is collected from distributors (print and digital), subscriptions (print and digital) and advertising agencies and clients.

b) Continued support of the Group's banks The Board maintains a regular and

constructive dialogue with the banking syndicate to keep them informed of the Group's performance on a monthly basis. The two most important issues to consider in relation to the Group's banks are the agreement of a new credit facility and financial covenant compliance.

Credit facility – The current credit facility matures on 31 December 2013. The amendment and restatement that took place in November 2011 was designed to provide the necessary flexibility to complete the execution of the restructuring plans through the year ended 30 September 2012. The Board is very pleased that the Group has been able to execute the restructuring plans within the parameters of this credit facility but also now recognises the importance of the need to extend or refinance the Group in advance of the announcement of our Interim Results in May 2013. Following the positive financial results achieved in the year to 30 September 2012 and initial discussions with our existing banks the Board are confident of being able to achieve this.

Financial covenant compliance – The current credit facility has the following key financial covenants:

(i) net debt is not to exceed bank EBITDA by more than 2 times;

Operating review

" Good corporate governance is essential for the long-term success of the Company."

Peter Allen Chairman

• (ii) net interest payable is to be covered at least 4 times by bank EBITDA;
• (iii) cash flow is to cover the cost of debt service costs by certain agreed ratios over the next year; and
• (iv) capital expenditure must not exceed 115% of agreed forecast positions for each financial year.

The covenants noted above in (i) and (ii) are tested quarterly on the basis of rolling figures for the preceding 12 months. The covenant noted above in (iii) is not tested in December 2012 or March 2013 but is tested quarterly thereafter to the extent that no new credit facility is in place. The covenant noted above in (iv) is tested annually by reference to an agreed forecast position. The covenant position at 30 September 2012 is set out in note 19 on page 68.

At 30 September 2012 following a year of tight working capital management and based on the calculation of EBITDA for bank purposes the Group had headroom of £4.7m over and above the level of bank debt at 30 September 2012. Based on the cash flow cover covenant the Group had headroom of £4.5m over and above the level of cash flow in the 12 months ended 30 September 2012.

The agreement of the new credit facility will be a key priority for the Group in FY13.

Risk management and internal controls

Details of the principal risks and the Group's approach to managing them are set out on pages 20 and 21. The Board conducted an annual review of financial, operational, legal and compliance risks with the assistance of members of the Group legal and finance teams to ensure that there is a sound system of internal controls in place and that these are sufficient to manage (rather than eliminate) those risks effectively. No significant failings or weaknesses were identified as part of this review.

The internal controls that are in place to ensure effective risk management are structured to ensure a timely flow of information within the Group and a clear structure of delegated authority and responsibility. The main features of the Group's internal control and risk management systems are explained further in the following paragraphs.

The Board approves a set of control documents which specify:

• (i) various financial and treasury policies to be followed across the Group; and
• (ii) the powers of delegated authority across the Group.

The Group finance team manages the financial reporting processes ensuring that there is appropriate control and review of the financial information including the production of the consolidated financial statements. Group finance is supported by operational finance managers throughout the Group who have the responsibility and accountability to provide information in accordance with our policies and procedures.

The UK and US operating companies each have a board (whose members include the two executive Directors) responsible, inter alia, for ensuring that the control documents are applied in practice. The Board of the UK operating company also takes responsibility for the Australian business.

The executive Directors hold monthly management board meetings by video conference with senior UK and US management in order to provide a proper opportunity for financial results and other business and operational issues to be explored and addressed.

Internal audit

The Audit committee and the Board have again during 2012 reconsidered whether there is a need for an internal audit function. It was concluded that while an independent internal audit department with the necessary technical skills is not currently justified, the committee should continue to review this subject each year.

Terms of reference for the Audit, Remuneration and Nomination committees

The terms of reference for all committees are available on the Company's website, www.futureplc.com and will be available at the Company's registered office in Bath and at the London office in the run up to the AGM in 2013.

Nicola Mayers

Art Editor, Simply Knitting

" I'm so lucky to work in an area which I also consider my hobby – Design!"

Advice and support

All Directors have access to the Company Secretary who, as a qualified solicitor and share schemes adviser, can advise them on issues of governance, best practice and any other legislative or regulatory matters. The appointment and removal of the Company Secretary is a Board decision. The Directors may also take independent professional advice at the Company's expense provided that they give notice to the Chairman. No such advice was sought during 2012 except by the executive Directors in respect of the changes to their service agreements. The Company maintains appropriate insurance for its Directors.

Magazines

24m+

Whistle-blowing policy

As part of its internal controls, the Group has a whistle-blowing policy which is updated regularly and published on the Group's intranet to encourage employees to report, in good faith, any genuine suspicions of fraud, bribery or malpractice in order to identify any problems within the Group at an early stage. The policy is also designed to ensure that any employee who raises a genuine concern is protected. During the year the policy was revised to reflect the change in responsible individuals following Mark Wood's and Graham Harding's appointment to the Board.

Relations with shareholders/ communication

We aim to have an open relationship with our shareholders and shareholders can find up-to-date information on Group activities on the Company's website, www.futureplc.com. There is a specific investor relations section on that site which includes copies of all of the Group's public announcements made via the Regulatory News Service of the London Stock Exchange, as well as full copies of the Company's annual and interim results and presentations provided to analysts.

All Directors are available to meet shareholders at the AGM or on request by contacting the Chairman or Company Secretary. The executive Directors and the Chairman are also available at the analyst presentations of the interim and annual results. Because more than 80% of the Company's shares are held by major institutions, the executive Directors hold a series of meetings presenting the interim and annual results to these institutions in order to update them on the progress of the business and gauge their views.

In order that all Directors are aware of the views of shareholders, Board packs include a note of views as expressed by shareholders during meetings held with Directors or as reported to Directors through the Company's brokers, together with copies of analysts' notes, press articles and other relevant information.

2. Audit committee

Member	Attendance at meetings (4 meetings)
Mark Whiteling (Chairman)	4 of 4
Peter Allen	4 of 4
Manjit Wolstenholme	4 of 4
Seb Bishop (stepped down from Committee 6 October 2011)	1 of 1

Seb Bishop served on the committee from 14 July 2011 until 6 October 2011. Peter Allen was appointed to the committee on 6 October 2011. The chairman of the committee, Mark Whiteling, has recent and relevant financial experience.

The Audit committee meets before the interim and annual results announcements and reviews the relevant financial results with the executive management team and the external auditors. The Audit committee also meets separately for the purposes of planning the audit process, monitoring its effectiveness, reviewing the Group's relationship with the auditor and undertaking a detailed review of the Group's internal controls. The Audit committee carries out the functions required by rule 7.1.3 of the Disclosure and Transparency Rules.

Audit fees

The Audit committee has reviewed the remuneration received by PricewaterhouseCoopers LLP for non-audit work conducted during the financial year. The fees for non-audit work equalled the audit fee, and related mainly to advising in relation to taxation. For further details regarding fees paid, see note 4 to the financial statements on page 58.

Auditor independence

The Audit committee monitors the Company's safeguards against compromising the objectivity and independence of the external auditors by performing an annual review of non-audit services provided to the Group and their cost, reviewing whether the auditors

" As senior independent Director, I meet with the nonexecutives alone regularly and my contact details are available from the Company Secretary in the event that any shareholder wants to meet me."

Manjit Wolstenholme Senior independent Director

believe there are any relationships that may affect their independence and obtaining written confirmation from the auditors that they are independent.

For the financial year ended 30 September 2012, the Audit committee has conducted its review of the auditors' independence and concluded that no conflict of interest exists between PricewaterhouseCoopers LLP audit and nonaudit work and that their involvement in non-audit matters, which was mainly tax-related, was the most effective way of conducting the Group's business during the year.

Auditor appointment policy

The Audit committee has reviewed its policy for appointing auditors and awarding nonaudit work.

The Group has recently had little nonaudit work outside of tax work but has an open mind about instructing firms other than PricewaterhouseCoopers LLP where appropriate.

On the recommendation of the Audit committee, the Board has decided that it is in the best interests of the Company to put a resolution to shareholders that PricewaterhouseCoopers LLP, who have been the Company's external auditor for a number of years, be reappointed as auditors for the forthcoming year. The resolution to appoint PricewaterhouseCoopers LLP will propose that they hold office until the conclusion of the next Annual General Meeting at which accounts are laid before the Company, at a level of remuneration to be determined by the Directors.

3. Nomination committee

Member	Attendance at meetings (2 meetings)
Peter Allen (Chairman)	2 of 2
Manjit Wolstenholme	2 of 2
Seb Bishop	2 of 2
Mark Whiteling	2 of 2

The Nomination committee's work this year has focused on the changes to the executive Directors and ensuring that the Board has an appropriate mix of skills and experience.

Following discussion of the skills and contribution of each Director, the Nomination committee supports the proposed re-election of all Directors standing for re-election at the 2013 AGM. In line with best practice, each committee member seeking re-election was excluded from approving the proposal for their re-election.

4. Remuneration committee

Member	Attendance at meetings (3 meetings)
Manjit Wolstenholme (Chairman)	3 of 3
Peter Allen	3 of 3
Mark Whiteling	3 of 3
Seb Bishop	3 of 3

In addition to the three scheduled meetings there were two unscheduled meetings at which all committee members were present.

The Remuneration committee determines the remuneration packages of executive Directors, including performance-related awards and share-based incentives, and sets individual bonus targets for executive Directors and performance criteria attached to share-based incentives. The committee also determines the remuneration of the Chairman, manages and recommends remuneration levels for senior management in line with both industry remuneration packages and the Company's remuneration policy, and considers and approves any new share-based incentive scheme proposed to be implemented. The Directors' remuneration report is set out on pages 36 to 43.

Approved by the Board of Directors and signed on its behalf by:

Mark Millar Company Secretary and General Counsel 14 December 2012

Re-election of Directors

As a smaller company we are not required to offer all our Directors up for annual election. However, all our Directors take individual and collective responsibility for the decisions that the Board makes and are happy to let shareholders judge their performance by standing for annual re-election. We have followed this practice since the AGM in 2005.

Will O'Neal

Editor-in-Chief, TechRadar US

" Working closely with my buddies in the UK, my day starts off early with morning video calls before taking the ferry to the office where I mix it up with my awesome team."

Directors' remuneration report For the year ended 30 September 2012

Compliance with best practice

As with all aspects of Corporate Governance, the Board applies best practice to its remuneration policy, in line with the provisions of Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules and the UK Code on Corporate Governance. This report is submitted to shareholders for approval at the forthcoming Annual General Meeting to be held on 4 February 2013.

Remuneration committee

Four independent non-executive Directors served on the Remuneration committee during the year: Manjit Wolstenholme chairs the committee and Peter Allen, Seb Bishop and Mark Whiteling served throughout the period. Mark Millar, Company Secretary, who holds the ICSA share schemes qualification, is secretary to the committee.

The committee is responsible for determining the basic annual salaries, incentive arrangements and terms of employment of executive Directors, for making recommendations regarding the level and make-up of the remuneration packages of senior managers, including bonus schemes and share-based incentives, and ensuring that remuneration policies and practices do not encourage excessive risk-taking. The committee is also responsible for fixing the Chairman's remuneration and approving the terms of any new share-based incentive scheme for any employees of the Group, subject, where appropriate, to shareholder approval. No Director is involved in deciding his or her own remuneration. As explained on page 33, the terms of reference of the Remuneration Committee, reviewed annually, are available on the Company's website.

During the year, the committee has considered the level and make-up of executive Directors' remuneration packages, the grant of share-based incentive awards and the level and basis of performance-related bonuses.

Advisers to the Remuneration committee

New Bridge Street Consultants have been independent advisers to the committee since the committee appointed it in 2002. They provide no other services to the Company or its Directors. No formal advice was sought during the year.

Compliance with the UK Corporate Governance Code

The Board has complied fully with the provisions of Section D of the UK Corporate Governance Code in relation to Directors' remuneration policy and practice, and has followed Schedule A to the Code in relation to performance-related remuneration policy. Further information regarding the Company's compliance with the provisions of the Code is set out in the Corporate Governance report on pages 30 to 35.

Policy on remuneration of executive Directors

During the year the business was significantly restructured including consolidating the previous three Group chief executive and finance director roles into single Group positions occupied by Mark Wood and Graham Harding respectively. The committee's objective at the time of their appointment to the new roles was to weigh executive Directors' remuneration packages more towards performance-related pay, with performance-related targets linked to financial performance of the Group against the budget they assumed and the Group's performance against business objectives and their new stated strategy. The committee has given further consideration since the year-end to the remuneration of this new executive team for the following financial year and for financial years subsequent to that. After carefully considering the rates for the new executive Directors, the committee has rebased executive pay to reflect the current size and scale of the business.

In determining the level and make-up of executive Directors' remuneration, the committee also carefully considers the following issues:

(a) Remuneration packages offered to executive Directors should be competitive with those available for comparable roles in companies operating in similar markets and on a similar scale. They should be sufficiently desirable so as to attract, retain and motivate high calibre Directors to perform at the highest levels, whilst at the same time ensuring that recruitment and remuneration expenditure is not excessive and does not encourage excessive risk-taking.

279m

Mark Wood

1: Basic salary

• (non-performance related) 32.00% 2: Annual bonus (max.)
• (performance related) 32.00% 3: Potential PSP grant
• (performance related) 32.00%
• 4: Pension supplement (non-performance related) 4.00%

Graham Harding

1: Basic salary

• (non-performance related) 36.04%
• 2: Annual bonus (max.) (performance related) 23.42%
• 3: Potential PSP grant
• (performance related) 36.04% 4: Pension contribution

• (non-performance related) 4.50%

• (b) The interests of executive Directors should be aligned with those of shareholders by ensuring that a significant proportion of remuneration is linked to Group performance.

• (c) Remuneration packages and employment conditions of executive Directors are considered in conjunction with both those of key senior managers (keeping succession planning in mind) and all employees in the Group in order to achieve a consistent remuneration policy across the Group.
• (d) Bonus potential and share scheme awards capped at a percentage of salary are restricted where salaries are low.
• (e) Subjective criteria applied to an element of the annual cash bonus of the Chief Executive, Chief Financial Officer and certain other senior managers during the period (with a financial underpin) in order to ensure that the committee retains discretion and to ensure no bonus is unjustly received.

Details of the key elements of executive Directors' remuneration packages are set out on pages 37 to 39. Details of Directors' interests in share schemes are set out on page 42 of this report and Directors' shareholdings are set out on page 27, in the Directors' report.

The split of potential maximum remuneration for 2013 between basic and performance-related pay is shown in the graphs above, which set out each of the elements making up the total ongoing potential maximum remuneration.

(a) Basic annual salary (reviewed on 1 October each year)

In assessing the level of basic annual salary for each executive Director, the committee takes into consideration in particular the remuneration of equivalent roles within such comparable companies as the committee and its remuneration advisers consider appropriate (including both media companies and companies with similar market capitalisations), as well as the level of remuneration of senior managers and pay and employment conditions across the Group. In addition, the responsibilities of each executive Director are taken into consideration when determining the level of basic annual salary which, with other elements of remuneration, is reviewed annually by the committee to ensure that executive Directors' remuneration packages are appropriate and are in line with median remuneration packages for the relevant comparator group.

Salaries are reviewed annually, with effect from 1 October, taking into account annual performance review data, the rate of inflation and salary increases across the Group. Mark Wood and Graham Harding received c.10% pay rises from 27 October 2011 when they took on the combined roles and, following a further review by the Committee, noting the strategic successes since appointment and to reflect their additional workload, their annual basic salaries were further increased by 9.6% and 8.8% respectively with respect from 1 October 2012. Whilst this is higher than the average increase of 1.5% across the Group, it is in line with other pay rises given to certain Group staff upon promotion. The annual basic salaries for current executive Directors are set out below:

(b) Performance-related annual bonuses

All annual bonuses are at the discretion of the committee and are performance-linked. The overriding principle is that the performance targets should be stretching and should reflect good progress in the underlying business and an exceptional performance would be required to achieve maximum bonus.

In 2006, the committee designed and implemented a new annual performancerelated bonus scheme (Annual Bonus Scheme) to apply to the Chief Executive, the Chief Financial Officer and other senior managers which was varied in 2010 and again in 2012, as noted below.

The profit-based element of such bonus was, for accounting periods up to and including 30 September 2012, calculated by reference to the adjusted earnings before interest, tax and amortisation (EBITA) profits of the Group in respect of each financial year or, where there are planned exceptional items, the measure used was adjusted earnings before interest, tax, amortisation and exceptionals (EBITAE). Adjusted EBITA or EBITAE was used to ensure alignment within the Group and to focus executive Directors on the operating profitability of the Group to the benefit of shareholders. There were no exceptional items in 2008, 2009, 2010 but there were for 2011 and 2012.

Annual basic salaries for current executive Directors

	From 1 October 2012	From 27 October 2011	Change (%)
Mark Wood	£285,000	£260,000	9.6
Graham Harding	£185,000	£170,000	8.8

Directors' remuneration report continued

In order to ensure that targets are stretching, the range for payment for 2012 was as follows:

• :: If EBITAE is 10% below target EBITAE, no discretionary bonus will be payable.
• :: If EBITAE is between EBITAE target and 10% below EBITAE target, such amount as the committee determines in its discretion will be payable. The committee retained discretion to ensure that the level of bonus was merited by the individual.
• :: If EBITAE target is achieved, 40% of basic annual salary will be payable to the CEO and 26% of basic annual salary will be payable to the Chief Financial Officer.
• :: If EBITAE target is exceeded by up to 15%, such amount as the Remuneration committee determines in its discretion in excess of 40% and 26% of basic annual salary respectively will be payable.
• :: If EBITAE target is exceeded by 15% or more, the maximum bonus of 80% of basic annual salary for the CEO and 52% of basic annual salary for the Chief Financial Officer will be payable.

The adjusted EBITAE target is set by the committee to be challenging and is set by reference to the budget for the relevant financial year. As the profit line used to measure profitability by the Board has changed this year to earnings before interest, tax and exceptional items (EBITE), the bonus for 2013 will be calculated using the above range of 90% to 115% of target EBITE. Target EBITE for 2013 is not published here as that would be profit forecast guidance ahead of the relevant period.

In 2010 the committee introduced an element of subjectivity by making up to 20% of the Chief Executive's salary (making a total bonus of 100% of salary for the Chief Executive) determined by subjective criteria. For 2012 the principle of subjective criteria was extended to the Chief Financial Officer (20% of maximum bonus (13% of salary)), and individual targets were set by the committee to align that part of the bonus to the Group's new strategy.

Payment of any annual bonus under the Annual Bonus Scheme is made in December, following announcement of preliminary results and the conclusion of the audit in respect of the preceding financial year. Payment of any annual bonus is subject to the executive being in the Company's employment at the time of payment of such bonus and not having given or received notice of termination of employment and certain other events not having occurred.

The potential maximum annual bonus payable to the executive Directors under the Annual Bonus Scheme during 2012 was 100% of basic annual salary for the Chief Executive and 65% for the Chief Financial Officer.

Based on EBITAE performance achieved for 2012, and on individual performance measures, the committee awarded total Annual Bonus payments of £130,000 to the Chief Executive and £55,250 to the Chief Financial Officer.

(c) Long-term incentive plans (general policy)

The Board and the committee consider that it is right to align the interests of executive Directors and senior managers with those of shareholders by encouraging Directors and senior managers to hold shares in the Company, and by the grant of appropriate long-term share incentives to both executive Directors and senior managers.

Performance measures are considered by the committee to reflect Company specifics and business objectives, taking into account Company strategy.

2005 Performance Share Plan (PSP)

The 2005 PSP replaced both the 2003 LTIP and the discretionary share options for executive Directors and other senior management. Other than in exceptional circumstances, the maximum value of PSP awards that may be granted to any individual in any one-year period is 100% of basic annual salary. On 18 January 2012 awards were granted to, amongst others, Mark Wood and Graham Harding. These awards will vest on 18 January 2015, subject to performance targets measured over the three-year period from 1 October 2011 to 30 September 2014 having been met, and provided that the participants are still employed by the Company on the vesting date. Vesting of the awards was subject to both Total Shareholder Return (TSR) and Earnings Per Share performance as described below. These performance conditions were set following extensive consultation with major institutional shareholders. Details of the awards made to executive Directors under the PSP are set out on page 42.

Annual awards under the PSP will usually be granted within the 42-day period following announcement of preliminary results.

All awards granted in November 2009 lapsed in November 2012 due to the performance criteria not having been met.

Earnings Per Share Performance Criterion – 50% of PSP Award

Growth in EPS over the three years is to exceed annual Retail Price Index (RPI) + 3% for the award to vest, with full vesting at annual RPI + 8% and on a straight-line basis between these levels.

Total Shareholder Return Performance Criterion – 50% of PSP Award

If the Company's TSR performance places it below median ranking, none of the part of the award dependent on TSR performance will vest. If the TSR performance places it above median ranking, 25% will vest through to 100% if the Company is ranked in the upper quintile, i.e. top 20%. Between median and upper quintile, the award will vest on a pro rata straight-line basis.

In respect of the TSR performance, the Company's performance is measured against a basket of comparator companies comprising at all times a minimum of 15 companies. The list for all grants made up to 20 December 2010 comprises:

Bloomsbury Publishing Centaur Media Chime Communications Euromoney Institutional Investor Haynes Publishing HIBU Informa ITE Group ITV Johnston Press Mecom Group Pearson Reed Elsevier STV Group Trinity Mirror Wilmington Group WPP Group

The list for all grants made from 21 December 2010 comprises:

Bloomsbury Publishing Centaur Media Chime Communications Ebiquity Haynes Publishing HIBU Huntsworth Johnston Press M&C Saatchi Mecom Group Motivcom Progressive Digital Media Quarto Group STV Group Ten Alps Trinity Mirror Wilmington Group YouGov

Directors' service contracts

Name of Director	Date of contract	Unexpired period of contract	Notice period under contract	Compensation payable on early termination
Mark Wood	November 2012	Until normal retirement age	12 months	Salary and benefits during unexpired notice period
Graham Harding	November 2012	Until normal retirement age	12 months	Salary and benefits during unexpired notice period

To alleviate short-term volatility, the return index will be averaged in the TSR calculations for each company over the three months prior to the start and end of the performance period.

The Company considered it appropriate to measure performance in respect of both EPS and TSR and the specific criteria are considered to be stretching. The performance criteria were set following consultation with both the Association of British Insurers (ABI) and major shareholders. Consideration will be given to alternative performance conditions potentially better linked to business objectives for future years. The Company will also consult with major shareholders if any substantial changes to such measures are proposed to be implemented.

(d) Share option schemes (no options have been issued since 2004)

No executive share options were granted to executive Directors or other employees during the year and it is intended that no further options will be granted. All share option schemes introduced by the Company have a ten-year life. Details of share options of executive Directors, which lapsed upon the departure of John Bowman, are set out on page 42, and information regarding executive share option schemes and all options grants (including the performance conditions) are set out in note 25 to the financial statements on pages 74 to 76.

Executive Directors may hold options under the HMRC approved all-employee sharesave plan which, in common with plans of this type, are not subject to performance conditions.

(e) Pensions (money-purchase benefits only)

The only element of remuneration that is pensionable is basic annual salary, excluding bonuses and benefits in kind. Employer's pension contributions for the period up to 27 October 2011 for the former executive Directors were payable at 20% for the Chief Executive and 12.5% for the Group Finance

Director. Those rates are now 12.5% for Mark Wood and Graham Harding. As a result of changes in tax legislation, Mark Wood receives his entitlement to employer's pension contributions in cash as a salary supplement. This additional cash payment is not included in determining his entitlement to any bonus, share-based incentive or pension entitlement.

Policy on share ownership

The Company has a policy on share ownership by executive Directors which requires that any such Director should accumulate a holding in shares over a five-year period from appointment where the acquisition cost of those shares represents at least one times salary.

Policy on remuneration of non-executive Directors

The remuneration of non-executive Directors is determined by the Board and reviewed every three years. Fees are paid at a standard annual rate to reflect the time, commitment and responsibilities of the roles, with additional fees paid to those who chair Board committees to reflect their additional responsibilities. The time commitment required increased significantly during 2011, and during the review in January 2012 fees were increased. Separately, the committee sets the fee payable to the Chairman of the Board. The standard fees from 2012 are set out in the table at the foot of this page.

Non-executive Directors are not included in any performance-related bonus, share incentive schemes or pension arrangements.

Policy on Directors' service contracts and termination payments

(a) Service contracts of executive Directors and compensation

Stevie Spring and John Bowman each had twelve month notice periods and termination payments (set out on page 41) were restricted to twelve months' salary and benefits. No bonuses were accrued or payable in respect of the prior year served.

During the year the current executive Directors' contracts were reviewed and amended to reflect their new roles and market practice. Compensation for early termination is limited to twelve months' basic annual salary and benefits and each Director would be required to mitigate their loss. Any entitlements under share incentive plans will vest or lapse, as applicable, at the discretion of the committee, in accordance with the terms of such plans. The details are shown in the table above.

The Chief Financial Officer is included in an enhanced redundancy scheme of three weeks per full year served due to his length of service with the Group.

(b) Letters of appointment of non-executive Directors

Non-executive Directors have three-year appointments with the Company, which are terminable on three months' notice by either party or if the Director is not reappointed at the Company's Annual General Meeting.

Retirement and re-election

It is the Company's policy that every Director stands for re-election every year.

Policy on external appointments

The Company believes that exposure of its executive Directors to other Boards can be beneficial and can help to broaden their experience and knowledge. Executive Directors are therefore permitted to join other boards as non-executive Directors, subject to the prior approval of the Board. Currently, neither of the executive Directors holds an external appointment on the board of any other publicly-listed company so no fees are due to them or the Company.

Standard fees of non-executive Directors

Basic annual fees	2012 £	2011 £
Chairman	120,000	90,000
Other non-executive Directors	40,000	35,000
Additional fees¹
Chairman of committee	5,000	5,000
Senior independent Director	5,000	5,000
Member of committee	Nil	Nil

Note:

1. Additional fees apply only once, regardless of the number of committees of which a non-executive Director is a member or a chairman.

Performance graph: Total Shareholder Return against FTSE Media (UK companies)

The committee has chosen this year to publish a graph for the fi ve year period ended 30 September 2012, which shows the TSR on a holding of shares in the Company compared with a hypothetical holding of shares made up of shares of the same kinds and number as those by reference to which the FTSE Media Sector Index (UK companies) is calculated.

FTSE Media Sector Index

The following is a list of companies currently included in the FTSE Media Sector Index (UK companies).

4imprint Group Aegis Group Bloomsbury Publishing British Sky Broadcasting Centaur Media Chime Communications Creston Daily Mail 'A' Euromoney Institutional Investor HIBU Huntsworth Informa ITE Group ITV Mecom Group moneysupermarket.com Group Pearson Perform Group Reed Elsevier

Rightmove Tarsus Group Trinity Mirror UBM UTV Media Wilmington Group WPP Group

The FTSE Media Sector Index (UK companies) is chosen by the Company because it is the index which contains the companies which currently make up the comparator companies for the purposes of the TSRbased performance criteria set in respect of share-based awards granted by the Company since November 2001. The sector currently comprises the companies listed above.

Graph: Past fi ve fi nancial years ended 30 September 2012

Total Shareholder Return: Rebased to Future plc as of 1 October 2007

Directors' remuneration (audited)

The emoluments of the Directors of the Company (including any entitlement to fees or emoluments from subsidiary companies and interests in any long-term cash incentive schemes) are set out below:

A. Aggregate emoluments

	Year ended 30 September 2012 £'000	Year ended 30 September 2011 £'000
Salaries and fees	726	758
Benefits	19	19
Performance-related bonuses	185	-
Pension contributions	39	111
Payment in lieu of pension	32	-
Compensation for loss of office	829	-
Total	1,830	888

B. Individual emoluments of Directors

		Salary and fees		Performance related bonuses	non-cash benefits1	Value of any other		Pension contributions		Payment in lieu of pension2	Compensation for	loss of office		Year ended 30 September
Directors in office at 30 September 2012	2012 £'000	2011 £'000	2012 £'000	2011 £'000	2012 £'000	2011 £'000	2012 £'000	2011 £'000	2012 £'000	2011 £'000	2012 £'000	2011 £'000	2012 Total £'000	2011 Total £'000
Executive
Mark Wood3	258	-	130	-	10	-	-	-	32	-	-	-	430	-
Graham Harding3	169	-	55	-	6	-	19	-	-	-	-	-	249	-
Non-executive
Peter Allen	112	14	-	-	-	-	-	-	-	-	-	-	112	14
Seb Bishop	39	35	-	-	-	-	-	-	-	-	-	-	39	35
Mark Whiteling	44	38	-	-	-	-	-	-	-	-	-	-	44	38
Manjit Wolstenholme	44	25	-	-	-	-	-	-	-	-	-	-	44	25
Former Directors
Stevie Spring5	39	400	-	-	2	10	17	80	-	-	480	-	538	490
John Bowman6	21	246	-	-	1	9	3	31	-	-	349	-	374	286

Notes:

1. Benefits for executive Directors comprise principally car allowance and private health insurance. There were no taxable expenses paid to any Director in the year.

2. Mark Wood received a cash supplement in lieu of pension contribution. This additional payment is not included in determining his entitlement to any bonus, share based incentive or pension entitlement.

3. Mark Wood and Graham Harding were appointed to the Board on 27 October 2011.

4. In respect of the above emoluments, the total employer's National Insurance contributions for the year ended 30 September 2012 were £234,000 (2011: £105,000).

5. Stevie Spring ceased to be a Director on 27 October 2011.

6. John Bowman ceased to be a Director on 27 October 2011.

Directors' interests in share schemes (audited)

Details of options and other share incentives held by executive Directors and movements during the year are set out below along with details of the awards made during the year.

Directors in office at 30 September 2012	Date of grant	Price paid for grant	Earliest exercise date	Expiry date	Exercise price per share (p)	Balance at 1 Oct 2011	Vested/ exercised during the year4	Granted during the year5	Lapsed unexercised during the year	Balance at 30 Sept 2012
PSP1
Mark Wood	18 Jan 2012	Nil	18 Jan 2015	N/A	Nil	-	-	3,500,000	-	3,500,000
Graham Harding	19 Dec 2008	Nil	19 Dec 2011	N/A	Nil	331,157	-	-	(331,157)	-
	27 Nov 2009	Nil	27 Nov 2012	N/A	Nil	269,065	-	-	-	269,065
	21 Dec 2010	Nil	21 Dec 2013	N/A	Nil	224,221	-	-	-	224,221
	18 Jan 2012	Nil	18 Jan 2015	N/A	Nil	-	-	2,000,000	-	2,000,000
Sharesave2
Mark Wood	20 Dec 2010	Nil	1 Feb 2014	1 Aug 2014	16.5	54,545	-	-	-	54,545
Graham Harding	22 Dec 2008	Nil	1 Feb 2012	1 Aug 2012	10	96,000	-	-	(96,000)	-
DABS3
Graham Harding	19 Dec 2008	Nil	19 Dec 2011	N/A	Nil	118,269	(118,269)	-	-	-
	21 Dec 2010	Nil	21 Dec 2013	N/A	Nil	62,500	-	-	-	62,500
Former Directors Executive discretionary share option schemes
John Bowman	19 Nov 2001	Nil	19 Nov 2004	19 Nov 2011	47	200,000	-	-	(200,000)	-
PSP6
Stevie Spring	19 Dec 2008	Nil	19 Dec 2011	N/A	Nil	1,876,923	-	-	(1,876,923)	-
	27 Nov 2009	Nil	27 Nov 2012	N/A	Nil	2,000,000	-	-	(2,000,000)	-
	21 Dec 2010	Nil	21 Dec 2013	N/A	Nil	1,666,667	-	-	(1,666,667)	-
John Bowman	19 Dec 2008	Nil	19 Dec 2011	N/A	Nil	1,513,846	-	-	(1,513,846)	-
	27 Nov 2009	Nil	27 Nov 2012	N/A	Nil	1,230,000	-	-	(1,230,000)	-
	21 Dec 2010	Nil	21 Dec 2013	N/A	Nil	1,025,000	-	-	(1,025,000)	-

Notes:

Sharesave²

1. The performance criteria which apply to the PSP scheme are set out on pages 38 and 39. All awards granted in December 2008 lapsed due to performance criteria not having been met.

2. Details of the Sharesave scheme, which has no performance conditions, are set out in note 25 on page 76.

3. Graham Harding is no longer eligible to receive awards under the DABS scheme as an executive Director of the Company, but retains the benefit of awards made prior to his appointment as an executive Director on 27 October 2011. A description of how the scheme operates is included opposite.

4. The market price at the time of vesting of the DABS was 8.5p.

5. The market price at the time of grant of the PSP award was 8.8p and at the time of grant of the DABS award was 8.8p.

6. All PSP awards held by Stevie Spring and John Bowman lapsed following their resignations on 27 October 2011 due to the failure by the Company to satisfy performance criteria for the pro rata period from the dates of grant until 27 October 2011.

Stevie Spring 12 Apr 2010 Nil 1 Jun 2013 1 Dec 2013 15.5 58,548 - - (58,548) -

Share-based incentive awards granted to other employees

Executive discretionary share options have been granted over the Company's shares under the share option schemes described in note 25 on pages 74 to 76. Options granted since the 2001 rights issue are subject to performance criteria linked to growth in TSR or EPS, and are summarised in note 25.

Deferred Annual Bonus Scheme (DABS)

The DABS is a share-based incentive scheme, intended for senior managers, with levels of participation dependent on the relevant Group company's financial performance during the most recent financial year and, for certain individuals, on Group financial performance. The maximum value of any award of shares granted under the DABS to any one participant is an amount which is equal to a fixed percentage of that eligible participant's annual cash bonus actually received or payable for the previous financial year. The number of shares to be awarded to each eligible participant will be calculated by reference to the market value of a share in the Company on the date of the award.

The shares awarded under the DABS will be transferred to the eligible participant three years after the date of award, subject only to the employee remaining in the employment of the Group throughout those three years.

In January 2012, DABS awards were granted over 996,009 shares to senior managers, the values of which were calculated in respect of each individual by reference to the cash bonus payable to them in respect of the financial year to 30 September 2011. Certain limited DABS awards will be made in the 42-day period following announcement of preliminary results on 23 November 2012.

Sharesave plan

The Board wishes to continue to encourage employee share ownership. The Company's Sharesave plan is open to all eligible UK employees at the date an invitation is made. Full details of the Sharesave Plan are set out in note 25 on page 76. In total, under the Company's Sharesave Plan there were, as at 30 September 2012, share options outstanding over 1,609,080 shares. Included in this total are the options granted to executive Directors in the table shown opposite.

It is the Board's intention to continue to consider the issue of invitations to eligible employees each year normally within the period of 42 days following the publication of the Company's interim and/or annual results. The Board has approved the issue of an invitation to all eligible UK employees following announcement of the preliminary results on 23 November 2012.

Interests in shares

The Directors' interests in the issued shares of the Company, and movements since 1 October 2011, are set out on page 27 of the Directors' report. The Directors' interests in discretionary/executive share options and sharesave options are set out on page 42.

Dilution

The Remuneration committee has regard to ABI limits on dilution and regularly reviews the number of shares committed under share incentive schemes in any rolling 10-year period and the headroom available for granting share-based incentives in accordance with ABI guidelines on dilution limits.

As at 1 October 2011, the number of shares committed under share-based incentive schemes since 1 October 2001 was 26,694,317.

During the year, a further 7,096,009 shares were committed under share-based incentive schemes, 14,912,352 awards and options lapsed and 1,987,332 committed shares ceased to be counted because they fell outside the rolling ten-year period.

The total number of shares committed under share-based incentive schemes as at 30 September 2012 was 16,890,642.

As at 30 September 2012, in respect of the 5% dilution limit, the 11,881,560 shares committed minus the 1,426,848 shares held by the EBT represented 3.1%, and in respect of the 10% dilution limit, the 16,890,642 shares committed minus the 1,426,848 shares held by the EBT represented 4.6%.

Holding of shares by Employee Benefit Trust

Due to the restriction of such thresholds the Company would not have been able to issue grants under the PSP or DABS schemes in full from December 2010. As these schemes are

an important part of remuneration packages of its senior managers, the committee decided to start to purchase shares into the EBT to allow continued grants. As at the date of last year's annual report, the EBT held 1,426,848 shares. The EBT has not purchased any further shares since that date.

For the forthcoming year the committee may decide to grant PSP awards to the executive team in the 42-day period following announcement of the preliminary or interim results. In addition, a decision has been made to make Sharesave grants during the 42-day period following announcement of the preliminary results on 23 November 2012.

Share price during the financial year

The middle-market price of a share in the Company during the financial year was in the range from 8.25 pence to 13.37 pence. The average price for the financial year was 10.93 pence and at the end of the financial year the share price was 11.13 pence.

Approved by the Board of Directors and signed on its behalf by:

Manjit Wolstenholme Chairman of the Remuneration committee 14 December 2012

Financial review

We have audited the financial statements of Future plc for the year ended 30 September 2012 which comprise the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated statement of changes in equity, the Company statement of changes in equity, the Consolidated balance sheet, the Company balance sheet, the Consolidated and Company cash flow statements and notes to the Consolidated and Company cash flow statements, the accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Respective responsibilities of Directors and auditors

As explained more fully in the Directors' responsibilities statements set out on pages 27 and 29, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent company's circumstances and have been

consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion:

• :: the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 30 September 2012 and of the Group's profit and Group's and parent company's cash flows for the year then ended;
• :: the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• :: the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
• :: the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the lAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• :: the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;
• :: the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• :: the information given in the Corporate Governance report with respect to internal control and risk management systems and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• :: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• :: the parent company financial statements and the part of the Directors' remuneration report to be audited are not in agreement with the accounting records and returns; or
• :: certain disclosures of Directors' remuneration specified by law are not made; or
• :: we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review:

• :: the Directors' statement, set out on pages 32 and 33, in relation to going concern;
• :: the parts of the Corporate Governance report relating to the Company's compliance with the nine provisions of the UK Corporate Governance Code specified for our review; and
• :: certain elements of the report to shareholders by the Board on Directors' remuneration.

Philip Stokes (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London

14 December 2012

Contents

Consolidated income statement	46
Consolidated statement of comprehensive income	46
Consolidated statement of changes in equity	47
Company statement of changes in equity	47
Consolidated balance sheet	48
Company balance sheet	49
Consolidated and Company cash flow statements	50
Notes to the Consolidated and Company cash flow statements	51
Accounting policies	52
Notes to the financial statements	56

Consolidated income statement

for the year ended 30 September 2012

	Note	2012 £m	2011 £m
Revenue	1,2	123.5	141.7
Operating profit before exceptional items and impairment of intangible assets	1	6.8	5.4
Exceptional items	5	(3.6)	(4.8)
Impairment of intangible assets	12	-	(17.1)
Operating profit/(loss)	3	3.2	(16.5)
Finance income	7	0.2	-
Finance costs	7	(2.3)	(1.5)
Net finance costs	7	(2.1)	(1.5)
Profit/(loss) before tax	1	1.1	(18.0)
Tax on profit/(loss)	8	(0.9)	(1.3)
Profit/(loss) for the year attributable to owners of the parent		0.2	(19.3)

Earnings per 1p Ordinary share

	Note	2012 pence	2011 pence
Basic earnings/(loss) per share	10	0.1	(5.9)
Diluted earnings/(loss) per share	10	0.1	(5.9)

As permitted by the exemption under Section 408 of the Companies Act 2006 no Company income statement or statement of comprehensive income is presented.

Consolidated statement of comprehensive income

for the year ended 30 September 2012

	Note	2012 £m	2011 £m
Profit/(loss) for the year		0.2	(19.3)
Currency translation differences		0.1	-
Cash flow hedges	26	0.1	-
Other comprehensive income for the year		0.2	-
Total comprehensive income/(loss) for the year attributable to owners of the parent		0.4	(19.3)

Items in the statement above are disclosed net of tax.

Consolidated statement of changes in equity

for the year ended 30 September 2012

		Issued share capital	Share premium account	Merger reserve	Treasury reserve	Cash flow hedge reserve	Accumulated losses	Total equity
Group	Note	£m	£m	£m	£m	£m	£m	£m
Balance at 1 October 2010		3.3	24.5	109.0	-	(0.1)	(50.5)	86.2
Loss for the year		-	-	-	-	-	(19.3)	(19.3)
Other comprehensive income for the year		-	-	-	-	-	-	-
Total comprehensive loss for the year		-	-	-	-	-	(19.3)	(19.3)
Interim dividend relating to 2010	9	-	-	-	-	-	(1.6)	(1.6)
Final dividend relating to 2010	9	-	-	-	-	-	(2.0)	(2.0)
Share schemes
- Value of employees' services	6	-	-	-	-	-	0.4	0.4
- Deferred tax on share schemes	14	-	-	-	-	-	(0.1)	(0.1)
Treasury shares acquired	26	-	-	-	(0.3)	-	-	(0.3)
Balance at 30 September 2011		3.3	24.5	109.0	(0.3)	(0.1)	(73.1)	63.3
Profit for the year		-	-	-	-	-	0.2	0.2
Currency translation differences		-	-	-	-	-	0.1	0.1
Cash flow hedges	26	-	-	-	-	0.1	-	0.1
Other comprehensive income for the year		-	-	-	-	0.1	0.1	0.2
Total comprehensive income for the year		-	-	-	-	0.1	0.3	0.4
Interim dividend relating to 2011	9	-	-	-	-	-	(1.6)	(1.6)
Share schemes
- Value of employees' services	6	-	-	-	-	-	0.2	0.2
New share capital subscribed	24	-	0.3	-	-	-	-	0.3
Balance at 30 September 2012		3.3	24.8	109.0	(0.3)	-	(74.2)	62.6

Company statement of changes in equity

for the year ended 30 September 2012

		Issued share	Share premium	Cash flow hedge	Retained	Total
Company	Note	capital £m	account £m	reserve £m	earnings £m	equity £m
Balance at 1 October 2010		3.3	24.5	(0.1)	50.3	78.0
Loss for the year		-	-	-	(3.2)	(3.2)
Cash flow hedges	26	-	-	0.1	-	0.1
Other comprehensive income for the year		-	-	0.1	-	0.1
Total comprehensive income/(loss) for the year		-	-	0.1	(3.2)	(3.1)
Interim dividend relating to 2010	9	-	-	-	(1.6)	(1.6)
Final dividend relating to 2010	9	-	-	-	(2.0)	(2.0)
Share schemes
- Value of employees' services		-	-	-	0.4	0.4
- Deferred tax on share schemes		-	-	-	(0.1)	(0.1)
Balance at 30 September 2011		3.3	24.5	-	43.8	71.6
Loss for the year		-	-	-	(2.5)	(2.5)
Other comprehensive income for the year		-	-	-	-	-
Total comprehensive loss for the year		-	-	-	(2.5)	(2.5)
Interim dividend relating to 2011	9	-	-	-	(1.6)	(1.6)
Share schemes
- Value of employees' services		-	-	-	0.2	0.2
New share capital subscribed	24	-	0.3	-	-	0.3
Balance at 30 September 2012		3.3	24.8	-	39.9	68.0

Financial statements

continued

Consolidated balance sheet as at 30 September 2012

	Note	2012 £m	2011 £m
Assets
Non-current assets
Property, plant and equipment	11	2.8	3.4
Intangible assets - goodwill	12	92.3	94.1
Intangible assets - other	12	3.0	2.6
Deferred tax	14	0.8	1.0
Total non-current assets		98.9	101.1
Current assets
Inventories	15	1.9	3.5
Trade and other receivables	16	20.3	22.7
Cash and cash equivalents	17	8.5	12.5
Total current assets		30.7	38.7
Total assets		129.6	139.8
Equity and liabilities
Equity
Issued share capital	24	3.3	3.3
Share premium account		24.8	24.5
Merger reserve	26	109.0	109.0
Treasury reserve	26	(0.3)	(0.3)
Cash fl ow hedge reserve	26	-	(0.1)
Accumulated losses		(74.2)	(73.1)
Total equity		62.6	63.3
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	1.7	5.1
Financial liabilities - derivatives	20	0.2	0.4
Deferred tax	14	1.3	1.8
Provisions	21	4.1	2.1
Other non-current liabilities	22	1.3	1.9
Total non-current liabilities		8.6	11.3
Current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	20.9	19.2
Financial liabilities - derivatives	20	0.2	0.3
Trade and other payables	18	31.0	39.6
Corporation tax payable		6.3	6.1
Total current liabilities		58.4	65.2
Total liabilities		67.0	76.5
Total equity and liabilities		129.6	139.8

The fi nancial statements on pages 45 to 78 were approved by the Board of Directors on 14 December 2012 and signed on its behalf by:

Peter Allen Graham Harding Chairman Chief Financial Offi cer

Company balance sheet

as at 30 September 2012

	Note	2012 £m	2011 £m
Assets
Non-current assets
Investment in Group undertakings	13	159.1	159.1
Deferred tax	14	0.1	0.1
Total non-current assets		159.2	159.2
Current assets
Trade and other receivables	16	35.7	27.8
Cash and cash equivalents	17	-	-
Total current assets		35.7	27.8
Total assets		194.9	187.0
Equity and liabilities
Equity
Issued share capital	24	3.3	3.3
Share premium account		24.8	24.5
Retained earnings		39.9	43.8
Total equity		68.0	71.6
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	1.7	4.9
Financial liabilities - derivatives	20	0.2	0.4
Provisions	21	0.3	0.6
Total non-current liabilities		2.2	5.9
Current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	18.9	6.9
Financial liabilities - non-interest-bearing overdraft	19	11.9	6.0
Financial liabilities - derivatives	20	0.2	0.2
Trade and other payables	18	93.7	96.4
Total current liabilities		124.7	109.5
Total liabilities		126.9	115.4
Total equity and liabilities		194.9	187.0

The fi nancial statements on pages 45 to 78 were approved by the Board of Directors on 14 December 2012 and signed on its behalf by:

Peter Allen Graham Harding Chairman Chief Financial Offi cer

Consolidated and Company cash flow statements

for the year ended 30 September 2012

Financial statements

continued

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Cash flows from operating activities
Cash generated from/(used in) operations	2.1	(3.1)	3.8	(3.4)
Tax received	-	-	1.4	-
Interest paid	(1.4)	(1.1)	(1.2)	(0.9)
Tax paid	(1.0)	-	(0.1)	-
Net cash (used in)/generated from operating activities	(0.3)	(4.2)	3.9	(4.3)
Cash flows from investing activities
Purchase of property, plant and equipment	(0.5)	-	(1.2)	-
Purchase of magazine titles, websites and trademarks	(0.1)	-	-	-
Purchase of computer software and website development	(1.9)	-	(2.4)	-
Disposal of magazine titles and trademarks	2.7	-	-	-
Costs of business disposals	(0.6)	-	-	-
Net movement in amounts owed to/by subsidiaries	-	(8.7)	-	3.4
Net cash (used in)/generated from investing activities	(0.4)	(8.7)	(3.6)	3.4
Cash flows from financing activities
Proceeds from issue of Ordinary share capital	0.3	0.3	-	-
Purchase of own shares by Employee Benefit Trust	-	-	(0.3)	-
Draw down of bank loans	17.9	16.0	10.0	5.0
Repayment of bank loans	(19.3)	(7.2)	(7.2)	(7.2)
Fees for restatement of bank facility	(0.5)	(0.5)	-	-
Repayment of finance leases	(0.1)	-	-	-
Equity dividends paid	(1.6)	(1.6)	(3.6)	(3.6)
Net cash (used in)/generated from financing activities	(3.3)	7.0	(1.1)	(5.8)
Net decrease in cash and cash equivalents	(4.0)	(5.9)	(0.8)	(6.7)
Cash and cash equivalents at beginning of year	12.5	(6.0)	13.3	0.7
Cash and cash equivalents at end of year	8.5	(11.9)	12.5	(6.0)

Notes to the Consolidated and Company cash flow statements

for the year ended 30 September 2012

A. Cash generated from/(used in) operations

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

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Profit/(loss) for the year	0.2	(2.5)	(19.3)	(3.2)
Adjustments for:
Depreciation charge	1.1	-	1.2	-
Amortisation of intangible assets	1.5	-	1.2	-
Impairment of intangible assets	-	-	17.1	-
Profit on disposal of magazine titles and trademarks	(1.2)	-	-	-
Share schemes
- Value of employees' services	0.2	-	0.4	0.1
Impairment of investment in Group undertakings	-	0.2	-	0.3
Net finance costs	2.1	0.9	1.5	1.3
Tax charge/(credit)	0.9	(1.5)	1.3	(1.8)
Profit/(loss) before changes in working capital and provisions	4.8	(2.9)	3.4	(3.3)
Movement in provisions	1.8	(0.3)	1.3	(0.1)
Decrease/(increase) in inventories	1.6	-	(0.1)	-
Decrease in trade and other receivables	2.3	-	1.2	-
(Decrease)/increase in trade and other payables	(8.4)	0.1	(2.0)	-
Cash generated from/(used in) operations	2.1	(3.1)	3.8	(3.4)

B. Analysis of net debt

Group	1 October 2011 £m	Cash flows £m	Other non-cash changes £m	Exchange movements £m	30 September 2012 £m
Cash and cash equivalents	12.5	(4.0)	-	-	8.5
Debt due within one year	(19.2)	1.5	(3.4)	0.2	(20.9)
Debt due after more than one year	(5.1)	-	3.4	-	(1.7)
Net debt	(11.8)	(2.5)	-	0.2	(14.1)

Company	1 October 2011 £m	Cash flows £m	Non-cash changes £m	30 September 2012 £m
Cash and cash equivalents	(6.0)	(5.9)	-	(11.9)
Debt due within one year	(6.9)	(8.8)	(3.2)	(18.9)
Debt due after more than one year	(4.9)	-	3.2	(1.7)
Net debt	(17.8)	(14.7)	-	(32.5)

C. Reconciliation of movement in net debt

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Net debt at start of year	(11.8)	(17.8)	(7.4)	(13.0)
Decrease in cash and cash equivalents	(4.0)	(5.9)	(0.8)	(6.7)
Movement in borrowings	1.5	(8.8)	(2.8)	2.2
Finance leases entered into	-	-	(0.3)	-
Other non-cash changes	-	-	(0.3)	(0.3)
Exchange movements	0.2	-	(0.2)	-
Net debt at end of year	(14.1)	(32.5)	(11.8)	(17.8)

Accounting policies

Basis of preparation

The financial statements have been prepared under the historical cost convention, except for derivative financial instruments and share awards which are stated at fair value.

The principal accounting policies applied in the preparation of the consolidated financial statements published in this 2012 Annual Report are set out on pages 52 to 55. These policies have been applied consistently to all years presented, unless otherwise stated.

The financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee's (IFRIC) interpretations as adopted by the European Union, applicable as at 30 September 2012, and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The going concern basis has been adopted in preparing these financial statements as stated by the Directors on page 32.

The Directors have decided to focus on EBITDAE and EBITE (as defined previously) rather than EBITAE from a profit perspective in recognition of the nature of amortisation and depreciation under IFRS.

Basis of consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.

The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, and includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but are considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Segment reporting

The Group is organised and arranged primarily by geographical segment. 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 executive Directors of Future plc.

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 once the service has been completed.

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, estimated returns, rebates and discounts and after eliminating sales within the Group.

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.
• Revenue from the sale of digital magazine subscriptions is recognised uniformly over the term of the subscription.
• Event income is recognised when the event has taken place.
• Licensing revenue is recognised on the supply of the licensed content.
• Other revenue is recognised at the time of sale or provision of service.

Foreign currency translation

(a) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in sterling, which is the Group's presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at balance sheet exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

(c) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (i) Assets and liabilities for each balance sheet are translated at the closing rate at the date of that balance sheet.
• (ii) Income and expenses for each income statement are translated at average exchange rates.
• (iii) All resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders' equity. When a foreign operation is sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments existing at the transition date have been treated as assets and liabilities of the acquiring company. Goodwill and fair value adjustments arising on the acquisition of a foreign entity post transition are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Employee benefits

(a) Pension obligations

The Group has a number of defined contribution plans. For defined contribution plans the Group pays contributions into a privately administered pension plan on a contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. Contributions are charged to the income statement as they are incurred.

(b) Share-based compensation

The Group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services received in exchange for the grant of the awards is recognised as an expense. The total amount to be expensed over the appropriate service period is determined by reference to the fair value of the awards. The calculation of fair value includes assumptions regarding the number of cancellations and excludes the impact of any non-market vesting conditions (for example, earnings per share). Non-market vesting conditions are included in assumptions about the number of awards that are expected to vest. At each balance sheet date, the Group revises its estimates of the number of awards that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the income statement, with a corresponding adjustment to equity.

The grant by the Company of share awards to the employees of subsidiary undertakings is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity in the Company's financial statements.

Shares in the Company are held in trust to satisfy the exercise of awards under certain of the Group's share-based compensation plans and exceptional awards. The trust is consolidated within the Group financial statements. These shares are presented in the consolidated balance sheet as a deduction from equity at the market value on the date of acquisition.

(c) Bonus plans

The Group recognises a liability and an expense for bonuses taking into consideration the profit attributable to the Company's shareholders after certain adjustments. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Leases

Leases in which the Group assumes 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.

Assets held under finance leases are included either as property, plant and equipment or intangible assets at the lower of their fair value at inception or the present value of the minimum lease payments and are depreciated over their estimated economic lives or the finance lease period, whichever is the shorter. The corresponding liability is recorded within borrowings. The interest element of the rental costs is charged against profits over the period of the lease using the actuarial method.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline 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 consolidated financial statements. 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.

Financial review

Governance & Financial Statements

Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

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.

Dividends

Interim dividend distributions to the Company's shareholders are recognised as a liability in the financial statements in the period in which they are paid. Final dividend distributions are recognised in the period in which they are approved.

Property, plant and equipment

Property, plant and equipment is stated at cost (or deemed cost) less accumulated depreciation and impairment losses. Certain items of property, plant and equipment that had been revalued to fair value prior to 1 October 2004, the date of transition to IFRS, are measured on the basis of deemed cost, being the revalued amount at the date of that valuation. Cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation

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

• Land and buildings 50 years or period of the lease if shorter.
• Plant and machinery between one and five 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) Goodwill

In respect of business combinations that have occurred since 1 October 2004, goodwill represents the difference between the cost

of the acquisition and the fair value of net identifiable assets acquired. In respect of business combinations prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP. The classification and accounting treatment of business combinations that occurred prior to 1 October 2004 has not been reconsidered in preparing the Group's opening IFRS balance sheet.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to appropriate cash generating units (those expected to benefit from the business combination) and it is not subject to amortisation but is tested annually for impairment.

(b) Titles, trademarks, customer lists, advertising relationships and other

'magazine and website related' intangibles Magazine-related intangible assets have a finite useful life and are stated at cost less accumulated amortisation. Assets acquired as part of a business combination are initially stated at fair value. Amortisation is calculated using the straight-line method to allocate the cost of these intangibles over their estimated useful lives (between one and five years).

Expenditure incurred on the launch of new magazine titles is recognised as an expense in the income statement as incurred.

(c) Computer software and website development

Non-integral computer software purchases are stated at cost less accumulated amortisation. Costs incurred in the development of new websites are capitalised only where the cost can be directly attributed to developing the website 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 programmes or websites are recognised as an expense as incurred.

During the year, the estimated useful life of website development costs has been increased to two years, rather than one year, which had been used in prior years. This change reflects a more realistic period over which benefits are expected to accrue and is more consistent with market practice.

If an estimated useful life of one year had been used, this would have increased the total amortisation charge from £1.5m to £2.3m in the current year.

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 the Group, 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.

Recoverable amount

To determine whether an impairment loss should be recognised, the carrying value of the assets and liabilities of the CGUs or groups of CGUs is compared to their recoverable amount.

Carrying values of CGUs and groups of CGUs tested include goodwill, intangible assets with indefinite useful lives arising from business combinations and assets with finite useful lives (property, plant and equipment, intangible assets and net working capital).

The recoverable amount of a CGU is the higher of its fair value less costs to sell and its value in use. Fair value less costs to sell is the best estimate of the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal. This estimate is determined, on 30 September, on the basis of the discounted present value of expected future cash flows plus a terminal value and reflects general market sentiment and conditions.

Value in use is the present value of the future cash flows expected to be derived from the CGUs or group of CGUs. Cash flow projections are based on economic assumptions and forecast trading conditions drawn up by the Group's management, as follows:

• cash flow projections are based on five-year business plans;
• cash flow projections beyond that time frame are extrapolated by applying a zero growth rate to perpetuity; and
• the cash flows obtained are discounted using appropriate rates for the business and the territories concerned.

If goodwill has been allocated to a CGU and an operation within that CGU is disposed, the goodwill associated with that operation is included in the carrying amount of the operation in determining the profit or loss on disposal. The goodwill allocated to the disposal is measured on the basis of the relative profitability of the operation disposed and the operations retained.

Inventories

Inventories are stated at the lower of cost and net realisable value. For raw materials, cost is taken to be the purchase price on a first in, first out basis. For work in progress and finished goods, cost is calculated as the direct cost of production. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

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 made when there is objective evidence that the Group will not be able to collect all amounts due in accordance with the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts for the purpose of the cash flow statement. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.

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.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between the proceeds (net of transaction costs) and the redemption value recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is more likely than not that an outflow of resources will be required to settle the obligation.

Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

Derivative financial instruments and hedging activities

The Group uses derivative financial instruments to reduce exposure to foreign exchange and interest rate risks and recognises these at fair value in its balance sheet. The Group applies cash flow hedge accounting under IAS 39 in respect of certain instruments held. For instruments for which hedge accounting is applied, gains and losses are taken to equity. Any changes to the fair value of derivatives not hedge accounted for are recognised in the income statement. Any new instruments entered into by the Group will be reviewed on a 'case by case' basis at inception to determine whether they should qualify as hedges and be accounted for accordingly under IAS 39. In accordance with its treasury policy, the Group does not hold or issue any derivative financial instruments for trading purposes.

Investments

The Company's investments in subsidiary undertakings are stated at the fair value of consideration payable, including related acquisition costs, less any provisions for impairment.

Exceptional items

The Group classifies transactions as exceptional where they relate to an event that falls outside the ordinary activities of the business and where individually or in aggregate they have a material impact on the financial statements. This classification excludes impairment charges made on the carrying value of CGUs or groups of CGUs.

Critical accounting assumptions and judgements

The preparation of the financial statements 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 Group's accounting policies. The areas requiring a higher degree of judgement or areas where assumptions and estimates are significant to the financial statements are discussed below:

(a) Intangible assets

The Group uses forecast cash flow information and estimates of future growth to assess whether goodwill and other intangible assets are impaired. If the results of an operation in future years are adverse to the estimates used for impairment testing, an impairment may be triggered at that point, or a reduction in useful economic life may be required.

(b) Taxation

The Group is subject to tax in all territories, and judgement and estimates of future profitability are required to determine the Group's deferred tax position. If the final tax outcome is different to that assumed, resulting changes will be reflected in the income statement or statement of changes in equity as appropriate. The Group corporation tax provision reflects management's estimation of the amount of tax payable for fiscal years with open tax computations where liabilities remain to be agreed with Her Majesty's Revenue and Customs and other tax authorities.

(c) Returns provision

The Group makes a provision for sales returns at the end of each month. The UK estimate is calculated by looking at the forecast sales projections for the following month of the titles that were on sale at the year-end and providing for any shortfall. The US estimate is made based on a study of the historic levels of returns.

New or revised accounting standards and interpretations

There has been no material impact from the adoption of the following new or revised standards or interpretations which are relevant to the Group:

• Improvements to IFRSs (2010).
• IAS 24 (revised) 'Related Party Disclosures'.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 October 2012 or later periods but which the Group has chosen not to adopt early. The Group does not expect that these standards and interpretations issued but not yet effective will have a material impact on results or net assets.

Notes to the financial statements

1. Segmental reporting

The Group is organised and arranged primarily by reportable segment. The executive Directors consider the performance of the business from a geographical perspective, namely the UK and the US. The Australian business is considered to be part of the UK segment and is not separately reported due to its size.

(a) Reportable segment (i) Segment revenue

	2012 £m	2011 £m
UK	99.1	103.4
US	25.1	38.8
Revenue between segments	(0.7)	(0.5)
Total	123.5	141.7

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

(ii) Segment EBITE

	2012 £m	2011 £m
UK	9.7	9.7
US	(2.9)	(4.3)
Total segment EBITE	6.8	5.4

EBITE is used by the executive Directors to assess the performance of each segment.

A reconciliation of total segment EBITE to profit/(loss) before tax is provided as follows:

	2012 £m	2011 £m
Total segment EBITE	6.8	5.4
Exceptional items	(3.6)	(4.8)
Impairment of intangible assets	-	(17.1)
Net finance costs	(2.1)	(1.5)
Profit/(loss) before tax	1.1	(18.0)

(iii) Segment assets and liabilities

		Segment assets		Segment liabilities		Segment net assets/(liabilities)
	2012 £m	2011 £m	2012 £m	2011 £m	2012 £m	2011 £m
UK	119.7	123.0	(56.2)	(52.3)	63.5	70.7
US	9.9	16.8	(10.8)	(24.2)	(0.9)	(7.4)
Total	129.6	139.8	(67.0)	(76.5)	62.6	63.3

(iv) Other segment information

		Capital expenditure		Depreciation and amortisation	Impairment charges			Exceptional items
	2012 £m	2011 £m	2012 £m	2011 £m	2012 £m	2011 £m	2012 £m	2011 £m
UK	1.8	2.2	1.5	1.2	-	-	0.6	4.4
US	0.7	1.8	1.1	1.2	-	17.1	3.0	0.4
Total	2.5	4.0	2.6	2.4	-	17.1	3.6	4.8

Other than the items disclosed above and a share-based payments charge of £0.2m (2011: £0.4m) there were no other significant non-cash expenses during the year.

1. Segmental reporting (continued)

(b) Business segment

After geographical location, the Group is managed into five key business segments. Each business segment comprises groups of individual magazines, websites and events, combined according to the market sector in which they operate. The Group considers that the assets within each segment are exposed to the same risks.

(i) Revenue by segment

	2012 £m	2011 £m
Entertainment	36.5	45.3
Technology	26.8	31.8
Music	20.3	26.1
Creative	21.0	19.2
Sport & Auto	19.6	19.8
Revenue between segments	(0.7)	(0.5)
Total	123.5	141.7

(ii) Gross profit by segment

	2012 £m	2011 £m
Entertainment	8.2	9.3
Technology	6.4	7.5
Music	4.1	4.2
Creative	5.5	4.8
Sport & Auto	5.2	4.8
Add back: distribution expenses	9.6	11.2
Total	39.0	41.8

2. Revenue

An additional analysis of the Group's revenue is shown below:

	2012 £m	2011 £m
Circulation	72.5	80.7
Advertising	37.1	43.4
Customer publishing	8.6	12.1
Licensing, events and other	5.3	5.5
Total	123.5	141.7

3. Operating profit/(loss)

	2012 £m	2011 £m
Revenue	123.5	141.7
Cost of sales	(84.5)	(99.9)
Gross profit	39.0	41.8
Distribution expenses	(9.6)	(11.2)
Administration expenses	(22.6)	(25.2)
Exceptional items	(3.6)	(4.8)
Impairment of intangible assets	-	(17.1)
Operating profit/(loss)	3.2	(16.5)

4. Fees paid to auditors

Financial statements

continued

	2012 £m	2011 £m
Audit fees in respect of the audit of the financial statements of the Company and consolidated financial statements	0.1	0.1
Fees payable for other services:
- The audit of the financial statements of the Company's subsidiaries	0.1	0.1
- Tax compliance services	0.1	0.1
- Tax advisory services	0.1	0.1
- Other services	-	0.1
Total fees	0.4	0.5

5. Exceptional items

	2012 £m	2011 £m
Property costs	2.7	1.5
Restructuring and redundancy costs	2.1	2.4
Profit on disposal of magazine titles and trademarks	(1.2)	-
Other costs	-	0.9
Total	3.6	4.8

The property costs relate to vacant property provisions made against surplus office space in the UK and US.

The restructuring and redundancy costs relate mainly to staff termination payments following the restructuring of the UK and US businesses in line with the Group's strategy.

The profit on disposal relates to the sale of the New York Music titles on 12 January 2012 and the sale of two UK based titles, Trucking and Truckstop News, on 18 May 2012.

Other costs in FY11 related to ongoing commercial dispute resolution.

6. Employees

	2012 £m	2011 £m
Wages and salaries	41.1	46.8
Social security costs	5.4	5.9
Other pension costs	0.9	1.1
Share schemes
- Value of employees' services	0.2	0.4
Total staff costs	47.6	54.2

Average monthly number of people (including Directors)	2012 No.	2011 No.
Production	834	954
Administration	202	228
Total	1,036	1,182

At 30 September 2012, the actual number of people employed by the Group was 1,013 (2011: 1,172). In respect of our reportable segments 869 (2011: 950) were employed in the UK and 144 (2011: 222) were employed in the US.

6. Employees (continued)

Key management personnel compensation

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Salaries and other short-term employee benefits	1.0	0.3	0.9	0.9
Post-employment benefits	-	-	0.1	0.1
Termination benefits	0.8	0.8	-	-
Share schemes
- Value of employees' services	0.1	-	0.1	0.1
Total	1.9	1.1	1.1	1.1

Key management personnel are deemed to be the members of the Board of Future plc. It is this Board which has responsibility for planning, directing and controlling the activities of the Group.

Mark Wood and Graham Harding are paid by Future Publishing Limited, a subsidiary company, for their services. In 2012 £0.2m (2011: £nil) was recharged to Future plc by Future Publishing Limited in respect of Mark Wood and £0.1m (2011: £nil) was recharged in respect of Graham Harding.

Further details on the Directors' remuneration and interests are given in the Directors' remuneration report on pages 36 to 43. The highest paid Director during the year was Stevie Spring (2011: Stevie Spring) and details of her remuneration are shown on page 41.

7. Finance income and costs

	2012 £m	2011 £m
Fair value gain on interest rate derivative	0.2	-
Total finance income	0.2	-
Interest payable on interest-bearing loans and borrowings	(1.5)	(1.1)
Amortisation of bank loan arrangement fees	(0.5)	(0.3)
Other finance costs	(0.3)	(0.1)
Total finance costs	(2.3)	(1.5)
Net finance costs	(2.1)	(1.5)

8. Tax on profit/(loss)

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

	2012 £m	2011 £m
UK corporation tax
Current tax at 25% (2011: 27%) on the profit for the year	1.6	0.9
Adjustments in respect of previous years	(0.4)	0.7
Current tax	1.2	1.6
Deferred tax origination and reversal of temporary differences
Current year charge	0.2	0.4
Adjustments in respect of previous years	(0.5)	(0.7)
Deferred tax	(0.3)	(0.3)
Total tax charge	0.9	1.3

8. Tax on profit/(loss) (continued)

Financial statements

continued

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

	2012 £m	2011 £m
Profit/(loss) before tax	1.1	(18.0)
Profit/(loss) before tax at the standard UK tax rate of 25% (2011: 27%)	0.3	(4.9)
Different tax rates applicable overseas	(0.7)	(2.7)
Effect of change in deferred tax rate	-	(0.1)
Intangibles: differences relating to impairment	-	6.7
Losses and other timing differences not recognised in respect of tax in the US	1.9	2.0
Profits relieved against brought forward losses	(0.3)	-
Other net disallowable items	0.6	0.3
Impact of prior year adjustments	(0.9)	-
Total tax charge	0.9	1.3

9. Dividends

Equity dividends	2012	2011
Number of shares in issue at end of year (million)	333.0	328.8
Dividends paid in year (pence per share)	0.5	1.1
Dividends paid in year (£m)	1.6	3.6

No final dividend in respect of the year ended 30 September 2012 is to be proposed at the Annual General Meeting on 6 February 2013.

The dividends totalling £1.6m paid during the year ended 30 September 2012 relate to the interim dividend for the six-month period to 31 March 2011 of 0.5 pence per share.

The dividends totalling £3.6m paid during the year ended 30 September 2011 relate to the interim dividend for the six-month period to 31 March 2010 of 0.5 pence per share (£1.6m) and the final dividend declared for the year ended 30 September 2010 of 0.6 pence per share (£2.0m).

10. Earnings per share

Basic earnings per share are calculated using the weighted average number of Ordinary shares in issue during the year. Diluted earnings per share have been calculated by taking into account the dilutive effect of shares that would be issued on conversion into Ordinary shares of awards held under employee share schemes.

Adjusted earnings per share removes the effect of exceptional items, impairment of intangible assets and any related tax effects from the calculation as follows:

Adjustments to profit/(loss) after tax

	2012 £m	2011 £m
Profit/(loss) after tax	0.2	(19.3)
Add: Exceptional items	3.6	4.8
Add: Impairment of intangible assets	-	17.1
Tax effect of the above adjustments	(0.3)	(1.4)
Adjusted profit after tax	3.5	1.2

	2012	2011
Weighted average number of shares in issue during the year:
- Basic	329,101,739	327,526,863
- Dilutive effect of share options	3,751,837	6,070,662
- Diluted	332,853,576	333,597,525
Basic earnings/(loss) per share (in pence)	0.1	(5.9)
Adjusted basic earnings per share (in pence)	1.1	0.4
Diluted earnings/(loss) per share (in pence)	0.1	(5.9)
Adjusted diluted earnings per share (in pence)	1.1	0.4

The share options do not have a dilutive effect where there is a loss.

10. Earnings per share (continued)

The adjustments to profit/(loss) have the following effect:

	2012 pence	2011 pence
Basic earnings/(loss) per share	0.1	(5.9)
Exceptional items	1.1	1.5
Impairment of intangible assets	-	5.2
Tax effect of the above adjustments	(0.1)	(0.4)
Adjusted basic earnings per share	1.1	0.4
Diluted earnings/(loss) per share	0.1	(5.9)
Exceptional items	1.1	1.5
Impairment of intangible assets	-	5.2
Tax effect of the above adjustments	(0.1)	(0.4)
Adjusted diluted earnings per share	1.1	0.4

11. Property, plant and equipment

	Land and	Plant and	Equipment, fixtures and
Group	buildings £m	machinery £m	fittings £m	Total £m
Cost
At 1 October 2010	3.9	6.1	2.7	12.7
Additions	0.4	0.8	0.1	1.3
Disposals	-	(1.2)	-	(1.2)
Exchange adjustments	0.1	-	-	0.1
At 30 September 2011	4.4	5.7	2.8	12.9
Transfer	(0.1)	0.1	-	-
Additions	0.2	0.2	0.1	0.5
Disposals	(0.4)	(0.2)	(0.5)	(1.1)
Exchange adjustments	-	(0.1)	-	(0.1)
At 30 September 2012	4.1	5.7	2.4	12.2
Accumulated depreciation
At 1 October 2010	(2.2)	(5.1)	(2.2)	(9.5)
Charge for the year	(0.3)	(0.7)	(0.2)	(1.2)
Disposals	-	1.2	-	1.2
At 30 September 2011	(2.5)	(4.6)	(2.4)	(9.5)
Charge for the year	(0.4)	(0.6)	(0.1)	(1.1)
Disposals	0.4	0.2	0.5	1.1
Exchange adjustments	-	0.1	-	0.1
At 30 September 2012	(2.5)	(4.9)	(2.0)	(9.4)
Net book value at 30 September 2012	1.6	0.8	0.4	2.8
Net book value at 30 September 2011	1.9	1.1	0.4	3.4
Net book value at 1 October 2010	1.7	1.0	0.5	3.2

At 30 September 2012 the net book value of assets held under finance leases included above in plant and machinery amounted to £0.1m (2011: £0.1m).

12. Intangible assets

continued

Financial statements

		Magazine and
Group	Goodwill £m	website £m	Other £m	Total £m
Cost
At 1 October 2010	313.4	15.2	8.0	336.6
Additions	-	0.1	2.6	2.7
Disposals	-	-	(0.1)	(0.1)
Exchange adjustments	0.3	-	0.1	0.4
At 30 September 2011	313.7	15.3	10.6	339.6
Additions	-	0.1	1.9	2.0
Disposals	(1.7)	-	(0.2)	(1.9)
Exchange adjustments	(0.9)	(0.2)	(0.2)	(1.3)
At 30 September 2012	311.1	15.2	12.1	338.4
Accumulated amortisation
At 1 October 2010	(202.5)	(14.9)	(7.1)	(224.5)
Charge for the year	-	(0.2)	(1.0)	(1.2)
Impairment charge	(17.1)	-	-	(17.1)
Disposals	-	-	0.1	0.1
Exchange adjustments	-	(0.1)	(0.1)	(0.2)
At 30 September 2011	(219.6)	(15.2)	(8.1)	(242.9)
Charge for the year	-	(0.1)	(1.4)	(1.5)
Disposals	-	-	0.1	0.1
Exchange adjustments	0.8	0.2	0.2	1.2
At 30 September 2012	(218.8)	(15.1)	(9.2)	(243.1)
Net book value at 30 September 2012	92.3	0.1	2.9	95.3
Net book value at 30 September 2011	94.1	0.1	2.5	96.7
Net book value at 1 October 2010	110.9	0.3	0.9	112.1

At 30 September 2012 the net book value of assets held under finance leases included above in 'other' amounted to £0.1m (2011: £0.2m).

Magazine and website related assets relate mainly to trademarks, advertising relationships and customer lists. These assets are amortised over their estimated economic lives, typically ranging between one and five years.

Any residual amount arising as a result of the purchase consideration being in excess of the value of identified magazine related assets is recorded as goodwill. Goodwill is not amortised under IFRS, but is subject to impairment testing either annually or on the occurrence of some triggering event. Goodwill is recorded and tested for impairment on a territory by territory basis.

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

Impairment tests for goodwill and other intangibles

The breakdown of the goodwill balance at 30 September 2012 comprises:

	2012 £m	2011 £m
UK	88.9	89.1
US	3.4	5.0
Total	92.3	94.1

The basis for calculating recoverable amounts is described in the accounting policies.

Trends in the economic and financial environment, competition and regulatory authorities' decisions, or changes in competitor behaviour in response to the economic environment may affect the estimate of recoverable amounts, as will unforeseen changes in the political, economic or legal systems of some countries.

12. Intangible assets (continued)

Other assumptions that influence estimated recoverable amounts are set out below:

At 30 September 2012

	UK	US
Basis of recoverable amount Source used	Value in use Five year plans Discounted cash flow	Value in use Five year plans Discounted cash flow
Growth rate to perpetuity	Nil	Nil
EBITDA margins assumed	11.7% to 14.0%	0.1% to 7.4%
Post-tax discount rate	8.5%	8.5%
Pre-tax discount rate	11.5%	11.5%

At 30 September 2011

	UK	US
Basis of recoverable amount Source used	Value in use Five year plans Discounted cash flow	Value in use Five year plans Discounted cash flow
Growth rate to perpetuity	Nil	Nil
EBITDA margins assumed	11.1% to 12.8%	-10.3% to 9.2%
Post-tax discount rate	8.5%	8.5%
Pre-tax discount rate	11.4%	11.4%

In accordance with IAS 36 the basis used for impairment testing (value in use or fair value less costs to sell) may vary from one period to another; the recoverable amount is the higher of estimated value in use and fair value less costs to sell. In the year ended 30 September 2011, as a result of the restructuring actions relating to the US business, certain assets were valued on the basis of fair value less costs to sell based on indicative market prices rather than a value in use calculation.

Sensitivity of recoverable amounts

At 30 September 2012 the analysis of the recoverable amounts gave rise to the following assessments of sensitivity:

(i) UK

The value in use of the UK business exceeded the carrying value by £42.1m. An impairment would be required if the discount rate was more than 5.9% higher or if forecast cash flows were more than 35.5% lower.

(ii) US

The value in use of the US business exceeded the carrying value by £2.5m. An impairment would be required if the discount rate was more than 8.1% higher or if forecast cash flows were more than 33.7% lower.

Impairment

At 30 September 2011 an impairment charge of £17.1m was taken against the carrying value of goodwill related to the US business. This reflected the trading patterns over the previous three years and the challenging economic and trading environment in which the business had been operating. No impairment was required in respect of the UK segment.

13. Investments in Group undertakings

Company	2012 £m	2011 £m
Shares in Group undertakings
At beginning and end of year	159.1	159.1

The recoverability of this investment has been considered by taking into account the amounts owed by the Company to Group undertakings (see note 18).

14. Deferred tax assets and liabilities

Financial statements

continued

The following are the major deferred tax assets and liabilities recognised by the Group, and the movements thereon, during the current and prior years.

	Intangible assets £m	Share-based payments £m	Depreciation vs tax allowances £m	Tax losses £m	Provisions and other timing differences £m	Total £m
At 1 October 2010	(2.0)	0.2	0.6	0.6	(0.5)	(1.1)
Credited/(charged) to income statement	0.2	-	(0.2)	(0.1)	0.5	0.4
Charged to equity	-	(0.1)	-	-	-	(0.1)
At 30 September 2011	(1.8)	0.1	0.4	0.5	-	(0.8)
Credited/(charged) to income statement	0.5	-	-	(0.2)	-	0.3
At 30 September 2012	(1.3)	0.1	0.4	0.3	-	(0.5)

The Finance Act 2011 included legislation to reduce the main rate of corporation tax from 26% to 25% with effect from 1 April 2012. A number of changes to the UK corporation tax system were announced in the March 2012 UK Budget Statement. A resolution passed by Parliament on 26 March 2012 reduced the main rate of tax to 24% from 1 April 2012. The Chancellor announced further reductions in the rate of corporation tax to 23% with effect from 1 April 2013 in the Finance Bill 2012 which received Royal Assent on 17 July 2012.

The change in rate had no material impact on the Group's deferred tax assets and liabilities.

A further reduction to the main rate of 1% to 22% by 1 April 2014 is expected to be enacted in the Finance Bill 2013. The change had not been substantively enacted at the balance sheet date and therefore any impact arising has not been included in these financial statements. There would be no overall effect to the deferred tax balances of this further change from 23% to 22%, if it were applied to the deferred tax balances at 30 September 2012.

Certain deferred tax assets and liabilities have been offset against each other where they relate to the same jurisdiction. The following is the analysis of deferred tax balances after offset for balance sheet purposes:

	2012 £m	2011 £m
Deferred tax assets	0.8	1.0
Deferred tax liabilities	(1.3)	(1.8)
Net deferred tax liability	(0.5)	(0.8)

The deferred tax asset of £0.8m (2011: £1.0m) is disclosed as a non-current asset of which the assets due within one year total £0.3m (2011: £0.2m). The deferred tax liability of £1.3m (2011: £1.8m) is disclosed as a non-current liability of which the liabilities due within one year total £nil (2011: £nil).

As at 30 September 2012 the Group has:

• unprovided deferred tax assets on tax losses totalling £7.6m (2011: £13.7m) of which £7.3m (2011: £5.7m) arises in the US; and
• unprovided deferred tax assets on other temporary differences totalling £3.3m (2011: £3.7m) of which £3.3m (2011: £3.7m) arises in the US.

Deferred tax assets have been recognised in respect of tax losses and other temporary differences where it is probable that these assets will be recovered.

No deferred tax is recognised on the unremitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax liability in the foreseeable future.

The deferred tax asset of £0.1m (2011: £0.1m) recognised on the Company's balance sheet is in respect of share-based payments. The Company has no unprovided deferred tax assets or liabilities at 30 September 2012 (2011: £nil).

15. Inventories

	2012 £m	2011 £m
Raw materials	0.3	1.0
Work in progress	1.2	1.9
Finished goods	0.4	0.6
Total	1.9	3.5

The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £10.8m (2011: £12.9m).

16. Trade and other receivables

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Current assets:
Trade receivables	14.8	-	18.1	-
Provisions for impairment of trade receivables	(0.4)	-	(0.6)	-
Trade receivables net	14.4	-	17.5	-
Amounts owed by Group undertakings	-	35.7	-	27.8
Other receivables	0.3	-	0.5	-
Prepayments and accrued income	5.4	-	4.6	-
	20.1	35.7	22.6	27.8
Non-current assets:
Other receivables	0.2	-	0.1	-
Total	20.3	35.7	22.7	27.8

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

Receivable balances from the two main magazine distributors, one in the UK segment and one in the US segment, represented 18% (2011: 24%) of the Group's trade receivables balance at 30 September 2012.

The average credit period taken on sales is 43 days (2011: 45 days). The Group has provided for estimated irrecoverable amounts in accordance with its accounting policy described on page 55 of these financial statements.

Credit checks are obtained and, if applicable, guarantees put in place before a new customer is accepted and terms and credit limits are agreed. Bookings are not taken before these factors have been fulfilled. In addition, annual credit checks are carried out and fully documented. Final decisions on credit terms are made by an appropriate senior manager within advertising or finance. In the event of a request to increase a customer's credit limit the following factors will be considered: trading history to date, review of credit status and review of the reason for the increase.

Included within the Group's trade receivables balance are receivables with a carrying amount of £2.3m (2011: £3.7m) which are past due at the reporting date but for which the Group has not provided as there has not been a significant change in credit quality and the Group believes that the amounts are still recoverable. These relate to advertising and licensing debtors in the UK and US. The Group does not hold any security over these balances. A breakdown of the ageing is set out below:

Past due	Group 2012 £m	Group 2011 £m
0-30 days	1.0	2.3
31-60 days	0.9	0.7
61-90 days	0.4	0.5
91+ days	-	0.2
Total	2.3	3.7

As at 30 September 2012, trade receivables of £0.4m (2011: £0.6m) were impaired and provided for. The individually impaired receivables mainly relate to advertising and licensing customers. It is assessed that a portion of the receivables is expected to be recovered. These receivables are all more than 60 days old.

16. Trade and other receivables (continued)

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

	Group 2012 £m	Group 2011 £m
At 1 October	0.6	0.5
Provision for receivables impaired	0.1	0.3
Receivables written off during the year	(0.3)	(0.2)
At 30 September	0.4	0.6

The creation and release of provision for impaired receivables have been included in administration expenses in the income statement. Amounts charged to the allowance account are written off when there is no realistic expectation of recovering additional cash.

The other asset classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does not hold any collateral as security for trade receivables.

All the Company's receivables are with Group undertakings and no additional disclosure in relation to credit risk is required. Interest on £0.3m of the amounts owed by Group undertakings has been charged at three-month LIBOR + 2.8%. The balance of amounts owed by Group undertakings is interest-free without any terms for repayment.

17. Cash and cash equivalents

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Cash at bank and in hand	8.5	-	12.5	-
Cash and cash equivalents (excluding bank overdraft)	8.5	-	12.5	-

Cash and cash equivalents include the following for the purposes of the cash flow statements:

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Cash at bank and in hand	8.5	-	12.5	-
Bank overdraft (note 19)	-	(11.9)	-	(6.0)
Cash and cash equivalents	8.5	(11.9)	12.5	(6.0)

The Group has a number of authorised counterparties with whom cash balances are held in the countries in which the Group operates. Credit risk is minimised by considering the credit standing of all potential bankers before selecting them by the use of external credit ratings.

The Company has a non-interest-bearing overdraft of £11.9m (2011: £6.0m) which forms part of the Group cash pooling account and can be offset against cash balances in other Group companies.

18. Trade and other payables

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Trade payables	10.6	-	15.0	-
Amounts owed to Group undertakings	-	93.5	-	96.3
Other taxation and social security	1.1	-	1.2	-
Other payables	0.5	-	0.6	-
Accruals and deferred income	18.8	0.2	22.8	0.1
Total	31.0	93.7	39.6	96.4

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period for trade purchases is 35 days (2011: 41 days). The Group has financial risk management policies in place to ensure all payables are paid within the agreed credit terms.

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Amounts owed to Group undertakings are unsecured and interest-free without any terms for repayment.

19. Financial liabilities – loans, borrowings and overdrafts

Non-current liabilities

	Interest rate at 30 September 2012	Interest rate at 30 September 2011	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Sterling term loan	5.1%	3.7%	1.7	1.7	4.9	4.9
Obligations under finance leases	-	3.0% - 15.0%	-	-	0.2	-
Total			1.7	1.7	5.1	4.9

Current liabilities

	Interest rate at 30 September 2012	Interest rate at 30 September 2011	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Sterling term loan	5.1%	3.7%	3.2	3.2	2.9	2.9
Sterling revolving loan	4.1%	3.7%	15.7	15.7	4.0	4.0
US Dollar revolving loan	3.8%	3.2%	1.9	-	12.2	-
			20.8	18.9	19.1	6.9
Obligations under finance leases	3.0% - 15.0%	3.0% - 15.0%	0.1	-	0.1	-
Total			20.9	18.9	19.2	6.9

The interest-bearing loans and borrowings are repayable as follows:

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Within one year	20.9	18.9	19.2	6.9
Between one and two years	1.7	1.7	5.1	4.9
Total	22.6	20.6	24.3	11.8

The Group's credit facility was amended and restated in November 2011 to provide the necessary flexibility for the Group to complete the execution of the restructuring plans through the year ended 30 September 2012. It is due to mature in December 2013. As part of the amendment and restatement the Group granted security to the banks and gave additional covenants. Fees relating to the amendment and restatement amounted to £0.5m and these are being amortised over the remaining term of the credit facility.

The bank borrowings and interest continue to be guaranteed by Future plc, Future Holdings 2002 Limited, Future Publishing Limited and Future US, Inc. The total facility available to the Group amounts to £26.9m and this can be drawn in sterling, US Dollars or Euros.

Interest payable under the current credit facility is calculated as the cost of three-month LIBOR (currently approximately 0.5%) plus an interest margin of between 2.5% and 3.75%, dependent on the net debt/EBITDA covenant ratio.

The key covenants are as set out in the following table:

Bank covenant
Net debt/EBITDA	Periods from 31 December 2011 to 30 June 2012 – between less than 2.55 and 2.8 times Periods from 30 September 2012 onwards – less than 2.0 times
EBITDA/Interest	More than 4.0 times
Cash flow cover	Ratios to be met on a quarterly basis measured against an agreed budget (not tested at 31 December 2012 and 31 March 2013)
Capital expenditure	115% of agreed annual budget

In addition to the above there was a limit of £1.9m on exceptional cash costs which could be excluded from the calculation of Bank EBITDA in the year ended 30 September 2012.

19. Financial liabilities – loans, borrowings and overdrafts (continued)

The covenants are tested quarterly on the basis of rolling figures for the preceding 12 months and the covenant position at the year-end is set out in the following table:

	30 September 2012	Covenant
Net debt/EBITDA	1.51	< 2.0 times
EBITDA/Interest	6.58	> 4.0 times
Cash flow cover	(0.09)	> (1.06) times

The Group met its covenant for capital expenditure at 30 September 2012.

Based on the above calculations the Group had headroom of £4.7m over and above the level of bank debt at 30 September 2012. Based on the cash flow cover covenant the Group had headroom of £4.5m over and above the level of cash flow in the 12 months ended 30 September 2012.

The minimum lease payments due under finance leases are set out below:

Group	2012 £m	2011 £m
Within one year	0.1	0.1
Between one and five years	-	0.2
Total	0.1	0.3

The present value of minimum lease payments due under finance leases is set out below:

Group	2012 £m	2011 £m
Within one year	0.1	0.1
Between one and five years	-	0.2
Total	0.1	0.3

The Company has a non-interest-bearing overdraft of £11.9m (2011: £6.0m) which forms part of the Group cash pooling account and can be offset against cash balances in other Group companies.

20. Financial liabilities – derivatives

The fair value of hedging derivatives is split between current and non-current assets or liabilities based on the maturity of the cash flows.

Non-current liabilities	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Interest rate derivatives	0.2	0.2	0.4	0.4
Total	0.2	0.2	0.4	0.4

In line with the Board's policy of hedging interest rate risk as disclosed in note 23, the Group has entered into interest rate derivatives to reduce its exposure on a proportion of the outstanding debt under its committed facility.

In October 2007, the Group entered into a UK interest rate collar over £5.0m which has a seven-year period. The collar has a cap at 6.00% and a floor of 4.65%. In September 2009, the Group entered into a UK interest rate swap for £5.0m which had a fixed rate of 1.91% and expired on 12 October 2011.

A fair value gain for the year of £0.2m (2011: £nil) on interest rate derivatives has been included within finance income in the income statement.

Current liabilities	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Forward foreign exchange contracts	-	-	0.1	-
Interest rate derivatives	0.2	0.2	0.2	0.2
Total	0.2	0.2	0.3	0.2

The Group hedges its exposure to transactional foreign currency risk and enters into forward foreign exchange contracts to sell US Dollars and Australian Dollars. These contracts have monthly maturity dates and the outstanding contracts at 30 September 2012 end in July 2013.

20. Financial liabilities – derivatives (continued)

A fair value gain for the year of £0.1m (2011: £nil) on forward foreign exchange contracts has been recognised directly in equity as hedge accounting is applied to these contracts.

The amounts in the tables opposite are the fair value of financial liabilities using Level 2 – inputs that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

The maturity analysis of the Group's derivative financial liabilities is set out below:

	2012		2011
Group	Interest rate derivatives £m	Forward foreign exchange contracts £m	Interest rate derivatives £m	Forward foreign exchange contracts £m
Within one year	0.2	-	0.2	0.1
Between one and two years	0.2	-	0.2	-
Between two and five years	-	-	0.2	-
Total	0.4	-	0.6	0.1

The maturity analysis of the Company's derivative financial liabilities is set out below:

Company	2012 Interest rate derivatives £m	2011 Interest rate derivatives £m
Within one year	0.2	0.2
Between one and two years	0.2	0.2
Between two and five years	-	0.2
Total	0.4	0.6

21. Provisions

Group	Property £m	Other £m	Total £m
At 1 October 2011	1.5	0.6	2.1
Reclassification of accrual	0.2	-	0.2
Charged in the year	2.7	-	2.7
Utilised in the year	(0.5)	(0.3)	(0.8)
Exchange adjustments	(0.1)	-	(0.1)
At 30 September 2012	3.8	0.3	4.1

The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property. The increase in the provision in the current year is principally related to surplus office space in the US. The vacant property provision is expected to be utilised over the next six years. The dilapidations provision is expected to be utilised on the expiry of property leases.

Provisions for the Company were £0.3m (2011: £0.6m). These are shown as 'other' provisions in the table above and relate to disposals made during 2007 and ongoing commercial dispute resolution. These are expected to be fully utilised or reversed over the next two years.

22. Other non-current liabilities

Group	2012 £m	2011 £m
Other payables	1.3	1.9

Other payables consist mainly of deferred subscription revenue and a deferred property lease liability.

23. Financial instruments

Financial statements

continued

Financial instruments by category

The Group's financial assets and financial liabilities are set out below:

		Fair value	Amortised cost		2012
Group	Note	Derivatives £m	Loans and receivables £m	Other liabilities £m	Total carrying value £m	Total fair value £m
Trade receivables net	16	-	14.4	-	14.4	14.4
Other receivables		-	1.6	-	1.6	1.6
Cash and cash equivalents	17	-	8.5	-	8.5	8.5
Total financial assets		-	24.5	-	24.5	24.5
Trade payables	18	-	-	(10.6)	(10.6)	(10.6)
Other liabilities		-	-	(10.8)	(10.8)	(10.8)
Current borrowings	19	-	-	(20.9)	(20.9)	(20.9)
Non-current borrowings	19	-	-	(1.7)	(1.7)	(1.7)
Derivatives	20	(0.4)	-	-	(0.4)	(0.4)
Total financial liabilities		(0.4)	-	(44.0)	(44.4)	(44.4)

		Fair value	Amortised cost		2011
Group	Note	Derivatives £m	Loans and receivables £m	Other liabilities £m	Total carrying value £m	Total fair value £m
Trade receivables net	16	-	17.5	-	17.5	17.5
Other receivables		-	1.5	-	1.5	1.5
Cash and cash equivalents	17	-	12.5	-	12.5	12.5
Total financial assets		-	31.5	-	31.5	31.5
Trade payables	18	-	-	(15.0)	(15.0)	(15.0)
Other liabilities		-	-	(10.4)	(10.4)	(10.4)
Current borrowings	19	-	-	(19.2)	(19.2)
Non-current borrowings	19	-	-	(5.1)	(5.1)	(5.1)
Derivatives	20	(0.7)	-	-	(0.7)	(0.7)
Total financial liabilities		(0.7)	-	(49.7)	(50.4)	(50.4)

Total financial liabilities are shown net of unamortised costs which amounted to £0.3m (2011: £0.3m).

The Company's financial assets and liabilities are set out below:

		Fair value	Amortised cost			2012
Company	Note	Derivatives £m	Loans and receivables £m	Other liabilities £m	Total carrying value £m	Total fair value £m
Other receivables	16	-	35.7	-		35.7
Total financial assets		-	35.7	-	35.7	35.7
Other liabilities	18	-	-	(93.7)	(93.7)	(93.7)
Overdrafts	19	-	-	(11.9)	(11.9)	(11.9)
Current borrowings	19	-	-	(18.9)	(18.9)	(18.9)
Non-current borrowings	19	-	-	(1.7)		(1.7)
Derivatives	20	(0.4)	-	-	(0.4)	(0.4)
Total financial liabilities		(0.4)	-	(126.2)	(126.6)	(126.6)

23. Financial instruments (continued)

		Fair value	Amortised cost		2011
Company	Note	Derivatives £m	Loans and receivables £m	Other liabilities £m	Total carrying value £m	Total fair value £m
Other receivables	16	-	27.8	-	27.8	27.8
Total financial assets		-	27.8	-	27.8	27.8
Other liabilities	18	-	-	(96.4)	(96.4)	(96.4)
Overdrafts	19	-	-	(6.0)	(6.0)	(6.0)
Current borrowings	19	-	-	(6.9) (6.9)		(6.9)
Non-current borrowings	19	-	-	(4.9)		(4.9)
Derivatives	20	(0.6)	-	-	(0.6)	(0.6)
Total financial liabilities		(0.6)	-	(114.2)	(114.8)	(114.8)

Total financial liabilities are shown net of unamortised costs which amounted to £0.3m (2011: £0.3m).

The fair value is the amount for which a financial instrument could be exchanged between knowledgeable, willing parties. If an active market exists, the market price is applied. If an active market does not exist a discounted cash flow or generally accepted estimation and valuation technique based on market conditions at the balance sheet date is used to calculate an estimated value.

The market value of financial instruments is determined by the use of valuation techniques including estimated discounted cash flows.

Treasury overview

The Group uses financial instruments to raise funding for its operations and to manage the financial risks arising from those operations. The agreements governing the principal instruments entered into were approved by the Board.

The principal financing and treasury exposures faced by the Group arise from foreign currencies, working capital management, the financing of capital expenditure and acquisitions, the management of interest rates on the Group's debt, the investment of surplus cash and the management of the Group's debt facilities. The Group manages all of these exposures with an objective of remaining within covenant ratios agreed with the Group's banks and the Group has been in compliance with its covenants during the year. These ratios are disclosed in note 19.

The capital structure of the Group is reviewed regularly by the Board to ensure that the debt/equity ratio of funding remains appropriate for the Group.

In order to maintain or adjust the capital structure, the Group may return capital to shareholders, issue new shares or sell assets to reduce debt.

Currency and interest rate profile

The currency and interest rate profile of the Group's financial assets and liabilities is shown below:

	Financial assets				Financial liabilities
	Floating rate £m	Non interest bearing £m	Total £m	Floating rate £m	Fixed rate £m	Non interest bearing £m	Total £m	Net financial (liabilities)/ assets £m
At 30 September 2012
Currency:
Sterling	-	15.8	15.8	(15.7)	(5.0)	(15.4)	(36.1)	(20.3)
US Dollar	0.2	5.2	5.4	(1.9)	-	(5.9)	(7.8)	(2.4)
Euro	-	0.6	0.6	-	-	(0.4)	(0.4)	0.2
Other	0.1	2.6	2.7	-	-	(0.1)	(0.1)	2.6
Total	0.3	24.2	24.5	(17.6)	(5.0)	(21.8)	(44.4)	(19.9)
At 30 September 2011
Currency:
Sterling	-	19.4	19.4	(7.1)	(5.0)	(18.7)	(30.8)	(11.4)
US Dollar	1.6	6.6	8.2	(12.2)	-	(6.6)	(18.8)	(10.6)
Euro	-	0.6	0.6	-	-	(0.6)	(0.6)	-
Other	0.2	3.1	3.3	-	-	(0.2)	(0.2)	3.1
Total	1.8	29.7	31.5	(19.3)	(5.0)	(26.1)	(50.4)	(18.9)

Financial statements continued

23. Financial instruments (continued)

Interest rate risk

Details of the interest rates on borrowings as at 30 September 2012 are set out in note 19.

The Group's overall policy on hedging interest rate risk is as follows:

• To the extent that net debt is below £10m there is no requirement to hedge against interest rate fluctuations on the balance of the gross debt.
• To the extent that net debt is above £10m a minimum of 25% of the balance of the gross debt greater than £10m should be hedged.

In applying the above policy, management takes full consideration of cash flow projections to fix the period for which any hedging arrangements are entered into.

Details of the Group's interest rate derivatives at 30 September 2012 are set out in note 20.

For 2012, if interest rates on net borrowings had been on average 0.5% higher/lower with all other variables held constant, the post-tax profit for the year would have decreased/increased by £0.1m (2011: post-tax loss would have increased/decreased by £0.1m).

There would be no impact on equity excluding retained earnings.

Foreign exchange risk

Some of the Group's activities are carried out in countries outside the United Kingdom where transactions are carried out in that country's own functional currency. Movements in exchange rates can therefore have a significant impact on the Group's total cash flows, whilst the translation of the results, assets and liabilities of foreign operations into sterling can have a significant effect on the Group's reported profits and balance sheet. The main exposures are to movements in the US Dollar and Australian Dollar against sterling, and Canadian Dollar against US Dollar.

The Group's policy for managing exchange rate risk is summarised as follows:

• Transaction exposure the Group manages this by ensuring that transactions are denominated in the local functional currency of the operating units wherever possible. Where this is not possible the use of forward contracts to hedge exposure is considered. The use of forward contracts (or any other derivative financial instrument) is subject to authorisation by the Chief Financial Officer. Details of the Group's forward foreign exchange contracts at 30 September 2012 are set out in note 20.
• Translation exposure the Group matches currency assets with currency liabilities wherever possible as evidenced by the fact that £1.9m of gross debt is denominated in US dollars.

The following table summarises the Group's sensitivity to translational currency exposures at 30 September:

2012 currency risks expressed in Currency 1/ Currency 2
£m	GBP/USD	GBP/AUD	USD/CAD
Reasonable shift	10%	10%	10%
Impact on profit after tax if Currency 1 strengthens against Currency 2	(0.2)	(0.1)	-
Impact on profit after tax if Currency 1 weakens against Currency 2	0.2	0.1	-
Impact on equity excluding retained earnings if Currency 1 strengthens against Currency 2	0.2	0.1	-
Impact on equity excluding retained earnings if Currency 1 weakens against Currency 2	(0.2)	(0.1)	-

2011 currency risks expressed in Currency 1/ Currency 2
£m	GBP/USD	GBP/AUD	USD/CAD
Reasonable shift	10%	10%	10%
Impact on loss after tax if Currency 1 strengthens against Currency 2	(0.1)	(0.1)	(0.1)
Impact on loss after tax if Currency 1 weakens against Currency 2	0.1	0.1	0.1
Impact on equity excluding retained earnings if Currency 1 strengthens against Currency 2	0.2	0.1	-
Impact on equity excluding retained earnings if Currency 1 weakens against Currency 2	(0.2)	(0.1)	-

23. Financial instruments (continued)

Liquidity risk

For the past three years the Group has funded the business largely from cash flows generated from operations and long-term debt. Details of the Group's borrowings are disclosed in note 19.

The Group monitors and manages the cash for the Group and has maintained committed banking facilities as noted above to mitigate any liquidity risk it may face. If necessary, inter-company loans within the Group meet short-term cash needs. The following table shows the Group's remaining contractual maturity for financial liabilities and derivative financial instruments. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group is obliged to pay:

30 September 2012	Less than one year £m	Between one and two years £m	Between two and five years £m	Over five years £m	Total £m
Trade payables	10.6	-	-	-	10.6
Other liabilities	8.3	0.7	1.7	0.1	10.8
Borrowings	21.2	1.7	-	-	22.9
Derivatives	0.2	0.2	-	-	0.4
Total financial liabilities	40.3	2.6	1.7	0.1	44.7

30 September 2011	Less than one year £m	Between one and two years £m	Between two and five years £m	Total £m
Trade payables	15.0	-	-	15.0
Other liabilities	8.9	0.8	0.7	10.4
Borrowings	19.6	5.1	-	24.7
Derivatives	0.3	0.2	0.2	0.7
Total financial liabilities	43.8	6.1	0.9	50.8

24. Issued share capital

	2012 £m	2011 £m
Authorised share capital 600,000,000 Ordinary shares of 1p each	6.0	6.0

	2012		2011
	Number of shares	£m	Number of shares	£m
Allotted, issued and fully paid Ordinary shares of 1p each
At beginning of year	328,804,760	3.3	327,979,803	3.3
Share scheme exercises	4,177,412	-	824,957	-
At end of year	332,982,172	3.3	328,804,760	3.3

During the year 4,177,412 Ordinary shares with a nominal value of £41,774 were issued by the Company for a total cash commitment of £298,368 pursuant to share scheme exercises as detailed in note 25.

In 2011 824,957 Ordinary shares with a nominal value of £8,250 were issued by the Company for a total cash commitment of £6,375 pursuant to share scheme exercises as detailed in note 25.

25. Share-based payments

The income statement charge for the year for share-based payments was £0.2m (2011: £0.4m). This charge has been included within administration expenses.

These charges arise when employees are granted awards under the Group's share option schemes, performance share plan (PSP), or deferred annual bonus scheme (DABS), and when employees are granted awards by the trustees of The Future Network plc 1999 Employee Benefit Trust (EBT). The charge equates to the fair value of the award and has been calculated using the Monte Carlo and Black-Scholes models, using the most appropriate model for each scheme. Assumptions have been made in these models for expected volatility, risk-free rates and dividend yields.

The Company has not applied IFRS 2, 'Share-based Payment', retrospectively and therefore it has only been applied to options granted after 7 November 2002 which had not vested before 1 January 2005.

A reconciliation of movements in share options and other share incentive schemes is shown below:

2012 Number of shares	2012 Weighted average exercise price	2011 Number of shares	2011 Weighted average exercise price
22,313,657	£0.058	21,756,029	£0.062
7,096,009	£0.000	4,980,723	£0.036
(4,177,412)	£0.071	(824,957)	£0.008
(134,400)	£0.100	-	-
-	-	(347,339)	£0.000
(14,912,352)	£0.049	(3,250,799)	£0.067
10,185,502	£0.025	22,313,657	£0.058
34,560	£0.100	658,780	£0.469

The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £0.114 (2011: £0.209).

For options and other share incentive schemes outstanding at 30 September the weighted average exercise prices and remaining contractual lives are as follows:

		Number of shares		Weighted average exercise price		Weighted average remaining contractual life in years
	2012	2011	2012	2011	2012	2011
International Scheme (excluding US)
November 2001	-	3,085	-	£0.470	-	-
September 2002	-	43,086	-	£0.470	-	1
Senior Scheme
November 2001	-	168,085	-	£0.470	-	-
Approved Scheme
November 2001	-	328,495	-	£0.470	-	-
September 2002	-	31,915	-	£0.470	-	1
2000 US Plan
November 2001	-	80,000	-	£0.470	-	-
Sharesave Plan
December 2007	-	4,114	-	£0.280	-	-
December 2008	34,560	6,548,352	£0.100	£0.100	-	1
April 2010	675,628	1,053,841	£0.155	£0.155	1	2
December 2010	898,892	1,061,434	£0.165	£0.165	2	3
PSP
December 2008	-	4,034,234	-	-	-	-
November 2009	522,815	3,752,815	-	-	-	1
December 2010	435,679	3,127,346	-	-	1	2
January 2012	6,100,000	-	-	-	2	-
DABS
December 2008	-	1,118,706	-	-	-	-
November 2009	180,448	246,211	-	-	-	1
December 2010	420,650	711,938	-	-	1	2
January 2012	916,830	-	-	-	2	-
Total outstanding at 30 September	10,185,502	22,313,657	£0.025	£0.058	2	1

25. Share-based payments (continued)

The fair value per share for grants made during the year and the assumptions used in the calculation are as follows:

	2012 2011
	DABS	PSP	DABS	PSP	Sharesave
Grant date	18/01/12	18/01/12	21/12/10	21/12/10	20/12/10
Share price at grant date	£0.088	£0.088	£0.240	£0.240	£0.233
Exercise price	-	-	-	-	£0.165
Vesting period (years)	3	3	3	3	3
Expected volatility	57%	57%	67%	67%	67%
Option life (years)	3	3	3	3	3
Expected life (years)	3	3	3	3	3
Risk-free rate	1%	1%	2%	2%	2%
Dividend yield	13%	13%	5%	5%	5%
TSR correlation	-	5%	-	6%	-
Fair value	£0.060	£0.048	£0.208	£0.185	£0.102
Fair value – EPS element	-	£0.060	-	£0.208	-
Fair value – TSR element	-	£0.037	-	£0.162	-

Notes:

1. The expected volatility is based on Future's historical volatility, averaged over a period equal to the expected life, where possible.

2. The Group has used the Black-Scholes model to value instruments with non-market-based performance criteria such as earnings per share. For instruments with market-based performance criteria, notably total shareholder return, the Group has used a Monte Carlo model to determine the fair value. The Black-Scholes model has been used to value all options with the exception of 50% of the PSP grants which have market-based performance criteria; the Monte Carlo model has been used to value these awards.

Future plc operates eight share option schemes being:

• The Future Network plc 1999 International Share Option Scheme (International Scheme)
• The Future Network plc 1999 Senior Management Scheme (Senior Scheme)
• The Future Network plc 1999 Approved International Share Option Scheme (Approved Scheme)
• The Future Network plc 2000 US Stock Option Plan (2000 US Plan)
• The Future Network plc International Sharesave Scheme (International Sharesave Scheme)
• Addendum to The Future Network plc International Sharesave Scheme (Addendum)
• The Future Network plc UK Inland Revenue Approved Sharesave Plan 2000 (2000 Sharesave Plan)
• The Future plc 2010 Approved Sharesave Plan (2010 Sharesave Plan)

As at 30 September 2012, options or awards had been granted under all of the above schemes but were only outstanding under the 2000 Sharesave Plan and the 2010 Sharesave Plan.

The International Scheme

The International Scheme was used for the grant of options to all employees, save for those persons entitled to participate in the Senior Scheme.

Options granted in November 2001 and September 2002 under the International Scheme vested three years after the date of grant, subject to satisfaction of performance criteria that required that the total shareholder return of the Company, for the three-year period following date of grant, must rank in the top quartile of UK companies whose shares are listed in the Media and Entertainment Sector of the London Share Service of the Financial Times newspaper. If the Company ranked in the second quartile of this comparator group, then only one-half of the options vested; if the Company ranked below the 50th percentile of this comparator group, then none of the options vested.

The options granted in November 2001 and September 2002 each vested 50%.

There were no options outstanding at 30 September 2012 and no further options will be granted under this scheme.

The Senior Scheme

The Senior Scheme was used historically for the grant of options to the Board and the performance criteria relating to these options are as set out below for 'The Approved Scheme'.

There were no options outstanding at 30 September 2012 and no further options will be granted under this scheme.

The Approved Scheme

The Approved Scheme was used for the grant of options to all UK employees up to a value of £30,000.

Options granted in May 2001 vested in eight equal tranches, one tranche every six months following publication of the annual and interim results of the Group, depending on the satisfaction of performance criteria that required the normalised earnings per share of the Group to grow by at least 3% per annum above the increase in the RPI over the relevant period.

25. Share-based payments (continued)

Options granted in November 2001 and September 2002 vested three years after the date of grant, subject to satisfaction of performance criteria that required that the total shareholder return of the Company, for the three-year period following date of grant, must rank in the top quartile of UK companies whose shares are listed in the Media and Entertainment Sector of the London Share Service of the Financial Times newspaper. If the Company ranked in the second quartile of this comparator group, then only one-half of the options vested; if the Company ranked below the 50th percentile of this comparator group, then none of the options vested.

The options granted in November 2001 and September 2002 each vested 50%.

There were no options outstanding at 30 September 2012 and no further options will be granted under this scheme.

The 2000 US Plan

The 2000 US Plan was used for the grant of options to employees of the Company's US business.

For options granted under the 2000 US Plan until May 2001, 25% of the shares under option typically vested on the first anniversary of an employee joining (or, where options were granted under the US Plan to an existing employee, on the anniversary of the grant of such options). The balance of 75% vested in equal monthly tranches over the three-year period commencing on the first vesting date. Whilst the Company had the right to impose performance conditions, up until November 2001 none were imposed as it was the Board's view that it was unusual for options granted by US competitors to their US employees to contain such criteria.

Options granted in November 2001 under the 2000 US Plan vested three years after the date of grant, subject to satisfaction of performance criteria that required that the total shareholder return of the Company, for the three-year period following date of grant, must rank in the top quartile of UK companies whose shares are listed in the Media and Entertainment sector of the London Share Service of the Financial Times newspaper. If the Company ranked in the second quartile of this comparator group, then only one-half of the options vested; if the Company ranked below the 50th percentile of this comparator group, then none of the options vested.

The options granted in November 2001 vested 50%.

There were no options outstanding at 30 September 2012 and no further options will be granted under this scheme.

The 2000 Sharesave Plan, 2010 Sharesave Plan, International Sharesave Scheme and the Addendum (the Sharesave Plans)

Under the Sharesave Plans the option entitlement granted to participating employees is linked to the monthly contributions which such employees have agreed to pay into the Sharesave Plans (up to a maximum amount of £250 per month). The options granted under the Sharesave Plans vest on the third anniversary of the grant of such options (or in the case of the Addendum applicable in the US, due to legal constraints, two years after the date of grant of such options). Where legal and regulatory constraints permit, the Company uses its discretion to offer options granted under the Sharesave Plans at a discount to the market price in force at the date of the invitation being made.

The Board exercised its discretion in November 2010 to issue invitations to participate in the Company's 2010 Sharesave Plan to eligible employees in the UK only. The option price represented a 20% discount to the market price at the time of the invitation.

Other share-based payments

No further share options are to be granted. Instead, the Group has put into place a number of alternative share incentive schemes.

Performance Share Plan (PSP)

The PSP is a share-based incentive scheme open to the executive Directors and senior management, based on a percentage of the participant's salary. Awards under this scheme are subject to stretching performance criteria measured against both earnings per share (EPS) and total shareholder return (TSR). Subject to the participant's continued employment with the Group, awards will vest three years after the date of grant assuming that the following performance criteria are achieved:

• A maximum of 50% of an award will vest if the Group's growth in adjusted EPS is equal to RPI plus 8%, 0% will vest if the Group's growth in adjusted EPS is equal to RPI plus 3%, and vesting will be on a pro rata straight-line basis between the two. If growth in the Group's adjusted EPS is less than RPI plus 3%, none of that 50% of the award will vest.
• The remaining 50% of the award will vest if the Company's TSR performance, compared to a group of similar companies, places it in the top quintile as against the comparator companies. If the Company's TSR performance is median, 12.5% of the award will vest, and vesting will be on a pro rata straight-line basis between the two points. If the Company's performance is below median, none of that 50% of the award will vest. The comparator groups of companies are as disclosed on page 38 of this Annual Report.

Grants were made under the PSP in December 2010 and January 2012.

Deferred Annual Bonus Scheme (DABS)

The DABS is a share-based incentive scheme, with the levels of participation dependent on the relevant operating subsidiary's financial performance during the previous financial year. The maximum value of any shares granted under the DABS to any one participant will be an additional amount which is equal to a fixed percentage of that eligible participant's annual cash bonus actually received or payable for the previous financial year. The number of shares over which an award is to be granted to each participant will be calculated by reference to the market value of an Ordinary share in the Company on the date of the award. The shares awarded under the DABS will be issued or transferred to the participant three years after the date of the award, subject only to the employee remaining in the employment of the Group throughout the three-year period.

Grants were made under the DABS in December 2010 and January 2012.

26. Other reserves

Treasury reserve

The treasury reserve represents the cost of shares in Future plc purchased in the market and held by the EBT to satisfy awards made by the trustees.

	Group 2012 £m	Group 2011 £m
Balance at 1 October	(0.3)	-
Acquired in the year	-	(0.3)
At 30 September	(0.3)	(0.3)

During 2011 Future plc paid £0.2m to Abacus Corporate Trustees Limited as trustees of the EBT, which was used to purchase Future plc shares in the market. The shares purchased represent 0.4% (2011: 0.4%) of the Company's issued share capital.

The treasury reserve is non-distributable.

Cash flow hedge reserve

The cash flow hedge reserve represents the net gains or losses on effective cash flow hedging instruments.

	Group 2012 £m	Company 2012 £m	Group 2011 £m	Company 2011 £m
Balance at 1 October	(0.1)	-	(0.1)	(0.1)
Net fair value gains	0.1	-	-	0.1
At 30 September	-	-	(0.1)	-

Merger reserve

The merger reserve of £109.0m (2011: £109.0m) arose following the 1999 Group reorganisation and is non-distributable.

27. Pensions

The Group operates a defined contribution scheme for employees resident in the United Kingdom.

In the US, the Group operates a section 401(K) profit sharing defined contribution plan in respect of pensions, which covers substantially all Future US employees. The section 401(K) plan allows employees to invest in eight funds run by T. Rowe Price, but the employees, not the employer, have complete control over what they invest in, although they have no control over the stocks owned by the funds.

During the year, £0.9m (2011: £1.1m) contributions were made to these plans.

28. Commitments and contingent liabilities

(a) Operating lease commitments

At 30 September 2012, the Group had the following total future lease payments under non-cancellable operating leases:

	Land and buildings £m	Other £m	Total 2012 £m	Land and buildings £m	Other £m	Total 2011 £m
Within one year	4.0	0.2	4.2	3.7	0.2	3.9
Between one and five years	12.0	0.2	12.2	14.1	0.4	14.5
After five years	9.3	-	9.3	11.4	-	11.4
Total	25.3	0.4	25.7	29.2	0.6	29.8

Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2012 total £3.0m (2011: £1.9m).

During the year, £4.1m (2011: £4.3m) was recognised in the income statement in respect of operating lease rental payments and £0.6m (2011: £0.8m) was recognised in respect of sub-lease receipts.

The Group leases various offices under non-cancellable operating lease agreements. The leases have various terms, escalation clauses and renewal rights. The Group also leases other equipment under non-cancellable operating lease agreements.

(b) Contingent liabilities

There are no contingent liabilities expected to result in a material loss for the Group.

(c) Capital commitments

There were no material capital commitments as at 30 September 2012 (2011: £nil).

Operating review

29. Related party transactions

The Group had no material transactions with related parties in 2012 or 2011 which might reasonably be expected to influence decisions made by users of these financial statements.

During the year, the Company had management charges receivable of £nil (2011: £0.5m) from subsidiary undertakings. The outstanding balance at 30 September 2012 was £nil (2011: £0.5m).

30. Principal subsidiary undertakings

The principal subsidiary undertakings at 30 September 2012 are shown below. A full list of subsidiaries is available at the Company's registered office. All subsidiaries are included in the consolidation. Shares of those companies marked with an * are indirectly owned by Future plc through an intermediate holding company.

Company name	Country of incorporation	Nature of business	Holding %	Class of shares
Subsidiaries
Future Publishing Limited*	England and Wales	Publishing	100	£1 Ordinary shares
Future US, Inc*	USA (State of California)	Publishing	100	Not applicable

Normalised results (unaudited)

	Note	2012 £m	2011 £m
Revenue	1,2	117.7	121.9
Operating profit before exceptional items (EBITE)		6.9	4.1

Adjusted earnings per 1p Ordinary share (normalised)

		2012	2011
	Note	pence	pence
Adjusted basic earnings per share	2	1.1	0.1

Normalised results are presented to reflect better the current size and structure of the business, and give a better indication of the performance of the ongoing business. The normalised results exclude revenues and costs of activities closed or divested between 1 October 2010 and 30 September 2012, but include any new activities launched in that period.

Adjusted earnings per share are based on normalised results but exclude exceptional items, impairment of intangible assets and related tax effects.

Notes to the normalised results

1. Normalised segmental reporting

a) Revenue by segment

	2012 £m	2011 £m
UK	96.4	96.0
US	22.0	26.4
Revenue between segments	(0.7)	(0.5)
Total normalised revenue	117.7	121.9

2. Reconciliation of statutory results to normalised results

a) Reconciliation of statutory revenue to normalised revenue

	2012 £m	2011 £m
Statutory revenue	123.5	141.7
Adjustment: UK closed and divested activities	(2.7)	(7.4)
Adjustment: US closed and divested activities	(3.1)	(12.4)
Normalised revenue	117.7	121.9

b) EBITE by segment

	2012 £m	2011 £m
UK	9.3	8.2
US	(2.4)	(4.1)
Total normalised EBITE	6.9	4.1

Additional analysis of the Group's normalised revenue by type is set out below:

c) Revenue by type

	2012 £m	2011 £m
Circulation	69.9	72.4
Advertising	34.7	35.8
Customer publishing	8.1	8.8
Licensing, events and other	5.0	4.9
Total normalised revenue	117.7	121.9

b) Reconciliation of statutory operating profit before exceptional items (EBITE) to normalised EBITE

	2012 £m	2011 £m
EBITE	6.8	5.4
Adjustment: UK closed and divested activities	(0.4)	(1.5)
Adjustment: US closed and divested activities	0.5	0.2
Normalised EBITE	6.9	4.1

c) Reconciliation of statutory basic earnings/(loss) per share to normalised adjusted basic earnings per share

	2012 pence	2011 pence
Basic earnings/(loss) per share	0.1	(5.9)
UK closed and divested activities	(0.4)	(0.3)
US closed and divested activities	0.1	1.1
Exceptional items	1.4	1.4
Impairment of intangible assets	-	4.2
Tax effect of the above adjustments	(0.1)	(0.4)
Normalised adjusted basic earnings per share	1.1	0.1

This Notice of Meeting is important and requires your immediate attention.

If you are in any doubt as to what action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent adviser authorised under the Financial Services and Markets Act 2000.

If you have sold or otherwise transferred all your shares in Future plc, please forward this notice, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so that they can pass these documents to the purchaser or transferee.

Notice of Annual General Meeting

Notice is hereby given that the fourteenth Annual General Meeting of Future plc will be held on Monday 4 February 2013 at Future's London offi ce, 2 Balcombe Street, London NW1 6NW at 12 noon at which the following resolutions numbered 1 to 12 will be proposed as ordinary resolutions, and resolutions numbered 13 to 15 will be proposed as special resolutions.

Ordinary resolutions

• 1. To receive and adopt the audited fi nancial statements of the Company for the fi nancial year ended 30 September 2012 and the reports of the Directors and the Auditors.
• 1. To approve the Remuneration report as set out in the Annual Report of the Company for the fi nancial year ended 30 September 2012.
• 1. To re-elect as a Director Peter Allen.
• 1. To re-elect as a Director Mark Wood.
• 1. To re-elect as a Director Graham Harding.
• 1. To re-elect as a Director Seb Bishop.
• 1. To re-elect as a Director Mark Whiteling.
• 1. To re-elect as a Director Manjit Wolstenholme.
• 1. To reappoint PricewaterhouseCoopers LLP, Chartered Accountants and Registered Auditors, as auditors of the Company to hold offi ce until the conclusion of the next General Meeting at which accounts are laid before the Company.
• 1. To authorise the Directors to determine the remuneration of the auditors of the Company.
• 1. That, in substitution for any existing authority, the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the 'Act') to exercise all the powers of the Company to allot relevant securities (as defi ned in note 20 on page 84):
• 11.1 in connection with an offer by way of a rights issue (comprising equity securities as defi ned by section 560 of the Act), up to an aggregate nominal amount of £2,220,000 (such amount to be reduced by the nominal amount of any relevant securities allotted under paragraph 11.2 below):

• (a) to holders of Ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and

• (b) to holders of any other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Board may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and

• 11.2 in any other case, up to an aggregate nominal amount of £1,110,000 (such amount to be reduced by the nominal amount of any equity securities allotted under paragraph 11.1 above in excess of £1,110,000), at any time or times during the period beginning on the date of the passing of this resolution and ending following the conclusion of the Company's next Annual General Meeting or, if earlier, on 31 March 2014 (unless previously revoked or varied by the Company in General Meeting) save that the Company may before expiry of this authority make an offer or agreement which would or might require relevant securities to be allotted after its expiry and the Directors may allot relevant securities pursuant to such an offer or agreement as if the authority hereby conferred had not expired.
• 1. That, following the broader definitions introduced by sections 363 to 365 of the Act of the terms used in (i), (ii) and (iii) below (which for the purposes of this resolution have the meanings given by the Act), the Company and its subsidiaries at any time during the period for which the resolution is effective be authorised together to:
• (i) make political donations to political parties and/or independent election candidates not exceeding £50,000 in total;
• (ii) make political donations to political organisations other than political parties not exceeding £50,000 in total; and
• (iii) incur political expenditure not exceeding £50,000 in total, during the period beginning with the date of the passing of this resolution and ending following the conclusion of the Company's next Annual General Meeting or, if earlier, on 31 March 2014.

Special resolutions

• 1. That the Directors be and are hereby empowered:
• (i) subject to the passing of resolution 11, pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to the authority conferred upon it for the purposes of section 551 of the Act by resolution 11; and
• (ii) to allot treasury shares, in either case as if section 561(1) of the Act did not apply to any such allotment at any time or times during the period beginning on the date of the passing of this resolution and ending following the conclusion of the Company's next Annual General Meeting or, if earlier, on 31 March 2014 (save that the Company may before the expiry of the power hereby conferred make an offer or agreement which would or might require equity securities to be allotted after its expiry and the Directors may allot equity securities pursuant to such an offer or agreement as if the power hereby conferred had not expired), such power being limited to:
• (a) the allotment of equity securities in connection with an offer by way of a rights issue in favour of the holders of Ordinary shares in proportion (as nearly as may be) to their respective holdings and, if the rights attaching to any other equity securities so provide, in favour of the holders of those equity securities in accordance with such rights, but subject to such exclusions or other arrangements as the Directors consider necessary or expedient in connection with Ordinary shares representing fractional entitlements or on account of either legal or practical problems arising in connection with the laws of any territory, or of the requirements of any generally recognised regulatory body or stock exchange in any territory; and

• (b) the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount of £166,500 (representing just under 5% of the issued share capital of the Company as at 14 December 2012).

• 1. That the Company be generally and unconditionally permitted to make market purchases (within the meaning of section 693(4) of the Act) of Ordinary shares of one penny each in the capital of the Company on such terms and in such manner as the Directors may think fit provided that:
• (a) the maximum aggregate number of Ordinary shares which may be purchased be limited to 33,300,000 (representing just under 10% of the issued share capital of the Company as at 14 December 2012);
• (b) the minimum price payable per Ordinary share be one penny;
• (c) the maximum price which may be paid for such Ordinary shares shall not be more than the higher of:
• (i) an amount equal to 5% above the average of the market values for an Ordinary share as derived from the London Stock Exchange's Daily Official List for the five business days immediately preceding the date on which the Ordinary shares are purchased; and
• (ii) the amount stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation 2003;
• (d) unless previously renewed, varied or revoked, this authority shall expire at the conclusion of the next Annual General Meeting following the date of this resolution or, if earlier, on 31 March 2014; and
• (e) the Company may make a contract to purchase shares under the authority conferred by this resolution prior to expiry of such authority, which may be executed wholly or partly after expiry of this authority.
• 1. That a general meeting, other than an Annual General Meeting, may be called on not less than 14 clear days' notice.

On behalf of the Board

Mark Millar Company Secretary and General Counsel 14 December 2012

Notes:

continued

Further information about the AGM

Notice of Annual General Meeting

1. Information regarding the meeting, including the information required by section 311A of the Act, is available from: www.futureplc.com/investors.

Attendance at the AGM

1. If you wish to attend the meeting in person, please bring the attendance card attached to your form of proxy and arrive at Future's London office in sufficient time for registration. Directions will be provided at reception and the venue is accessible for the disabled. Appointment of a proxy does not preclude a member from attending the meeting and voting in person. If a member has appointed a proxy and attends the meeting in person, the proxy appointment will automatically be terminated.

Appointment of proxies

1. Any member entitled to attend and vote at the meeting may appoint one or more proxies to attend, speak and vote in their place. A member may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. If you appoint multiple proxies for a number of shares in excess of your holding, the proxy appointments may be treated as invalid. A proxy need not be a member of the Company. A proxy card is enclosed. To be effective, proxy cards should be completed in accordance with these notes and the notes to the proxy form, signed and returned so as to be received by the Company's Registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY not later than 12 noon on Thursday 31 January 2013 being two business days before the time appointed for the holding of the meeting. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.

Electronic appointment of proxies

1. As an alternative to completing the printed proxy form, you may appoint a proxy electronically by visiting the following website: www.eproxyappointment.com. You will be asked to enter the Control Number, the Shareholder Reference Number (SRN) and PIN as printed on your proxy form and to agree to certain terms and conditions. To be effective, electronic appointments must have been received by the Company's Registrars not later than 12 noon on Thursday 31 January 2013.

Number of shares in issue

1. As at the close of business on 14 December 2012 (being the last business day prior to the publication of this notice) the Company's issued share capital consisted of 333,139,612 Ordinary shares of one penny each. Each Ordinary share carries one vote. There are no shares held in treasury. The total number of voting rights in the Company is therefore 333,139,612.

Documents available for inspection

• 1. Printed copies of the following documents will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the registered office of the Company at 30 Monmouth Street, Bath BA1 2BW and at the Company's London office at 2 Balcombe Street, London NW1 6NW, including on the day of the meeting from 11.45am until its completion:
• (a) the service contracts of the Company's Directors and the letters of appointment for the non-executive Directors;
• (b) the Terms of Reference of the Remuneration committee;
• (c) the Terms of Reference of the Audit committee; and
• (d) the Terms of Reference of the Nomination committee.

Eligible shareholders

1. The Company, pursuant to Regulation 41 of The Uncertificated Securities Regulations 2001, specifies that only those members on the register of the Company as at 6pm on Thursday 31 January 2013 or, if this meeting is adjourned, in the register of members 48 hours before the time of any adjourned meeting, shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. Changes to entries on the Register after 6pm on Thursday 31 January 2013, or, if this meeting is adjourned, in the register of members 48 hours before the time of any adjourned meeting, shall be disregarded in determining the rights of any person to attend or vote at the meeting.

Indirect investors

1. Any person to whom this notice is sent who is a person that has been nominated under section 146 of the Act to enjoy information rights (a 'Nominated Person') does not have a right to appoint a proxy. However, a Nominated Person may, under an agreement with the registered shareholder by whom they were nominated (a 'Relevant Member'), have a right to be appointed (or to have someone else appointed) as a proxy for the meeting. Alternatively, if a Nominated Person does not have such a right, or does not wish to exercise it, they may have a right under any such agreement to give instructions to the Relevant Member as to the exercise of voting rights. A Nominated Person's main point of contact in terms of their investment in the Company remains the Relevant Member (or, perhaps, the Nominated Person's custodian or broker) and the Nominated Person should continue to contact them (and not the Company) regarding any changes or queries relating to the Nominated Person's personal details and their interest in the Company (including any administrative matters). The only exception to this is where the Company expressly requests a response from the Nominated Person.

Appointment of proxies through CREST

1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID 3RA50) by 12 noon on Thursday 31 January 2013, or, if the meeting is adjourned, not less than 48 hours before the time fixed for the adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the

CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

Amending a proxy

1. To change a proxy instruction, a member needs to submit a new proxy appointment using the methods set out above. Note that the deadlines for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant deadline will be disregarded. Where a member has appointed a proxy using the paper proxy form and would like to change the instructions using another such form, that member should contact the Registrars on +44 (0)870 707 1443. If more than one valid proxy appointment is submitted, the appointment received last before the deadline for the receipt of proxies will take precedence.

Revoking a proxy

1. In order to revoke a proxy instruction, a signed letter clearly stating a member's intention to revoke a proxy appointment must be sent by post or by hand to the Company's Registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. Note that the deadlines for receipt of proxy appointments (see above) also apply in relation to revocations; any revocation received after the relevant deadline will be disregarded.

Corporate members

1. In the case of a member which is a company, any proxy form, amendment or revocation must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the documents are signed (or a duly certified copy of such power of authority) must be included. A corporate member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as a member provided that no more than one corporate representative exercises powers over the same share.

Joint holders

1. Where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the member whose name appears first on the register will be accepted.

Questions at the AGM

• 1. Under section 319A of the Act, the Company must answer any question you ask relating to the business being dealt with at the meeting unless:
• (a) answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information;
• (b) the answer has already been given on a website in the form of an answer to a question; or
• (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

Members' right to require circulation of a resolution to be proposed at the AGM

1. Under section 338 of the Act, a member or members meeting the qualification criteria set out at note 18 below, may, subject to conditions set out at note 19, require the Company to give to members notice of a resolution which may properly be moved and is intended to be moved at that meeting.

Members' right to have a matter of business dealt with at the AGM

1. Under section 338A of the Act, a member or members meeting the qualification criteria set out at note 18 below, may, subject to the conditions set out at note 19, require the Company to include in the business to be dealt with at the AGM a matter (other than a proposed resolution) which may properly be included in the business (a matter of business).

Website publication of any audit concerns

1. Pursuant to Chapter 5 of Part 16 of the Act, where requested by a member or members meeting the qualification criteria set out at note 18 below, the Company must publish on its website a statement setting out any matter that such members propose to raise at the AGM relating to the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the AGM.

Where the Company is required to publish such a statement on its website:

• (a) it may not require the members making the request to pay any expenses incurred by the Company in complying with the request;
• (b) it must forward the statement to the Company's auditors no later than the time the statement is made available on the Company's website; and
• (c) the statement may be dealt with as part of the business of the AGM.

The request:

• (d) may be in hard copy form or in electronic form and must be authenticated by the person or persons making it (see note 19(d) and (e) below);
• (e) should either set out the statement in full or, if supporting a statement sent by another member, clearly identify the statement which is being supported; and
• (f) must be received by the Company at least one week before the AGM.

Members' qualification criteria

• 1. In order to be able to exercise the members' rights set out in notes 15 to 17 above the relevant request must be made by:
• (a) a member or members having a right to vote at the AGM and holding at least 5% of total voting rights of the Company; or
• (b) at least 100 members having a right to vote at the AGM and holding, on average, at least £100 of paid up share capital.

Conditions

1. The conditions are that:

2. (a) any resolution must not, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise);

3. (b) the resolution or matter of business must not be defamatory of any person, frivolous or vexatious;
4. (c) the request:
5. (i) may be in hard copy form or in electronic form;
6. (ii) must identify the resolution or the matter of business of which notice is to be given by either setting it out in full or, if supporting a resolution/matter of business sent by another member, clearly identifying the resolution/matter of business which is being supported;
7. (iii) in the case of a resolution, must be accompanied by a statement setting out the grounds for the request;
8. (iv) must be authenticated by the person or persons making it; and
9. (v) must be received by the Company not later than six weeks before the date of the AGM;
10. (d) in the case of a request made in hard copy form, such request must be:

11. (i) signed by you and state your full name and address; and

12. (ii) sent either: by post to Company Secretary, Future plc, Beauford Court, 30 Monmouth Street, Bath BA1 2BW; or by fax to +44(0)1225 822836 marked for the attention of the Company Secretary; and

13. (e) in the case of a request made in electronic form, such request must:
14. (i) state your full name and address; and
15. (ii) be sent to cosec@futurenet.com. Please state 'AGM' in the subject line of the email. You may not use this electronic address to communicate with the Company for any other purpose.

Relevant Securities

1. Relevant Securities are:

2. (a) Ordinary shares in the Company other than shares allotted pursuant to:

3. (i) an employee share scheme (as defined by section 1166 of the Act);
4. (ii) a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or
5. (iii) a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security.
6. (b) Any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined by section 1166 of the Act). References to the allotment of Relevant Securities in the resolution include the grant of such rights.

Financial review

Operating review

Investor information

For enquiries of a general nature regarding the Company and for investor relations enquiries please contact Graham Harding at the Company's Bath office, or visit www.futureplc.com and select the investor relations section.

Registrar and transfer office

The Company's share register is maintained by:

Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE Tel: +44 (0)870 707 1443

Shareholders should contact the Registrar, Computershare, in connection with changes of address, lost share certificates, transfers of shares and bank mandate forms to enable automated payment of dividends.

Online information – www.investorcentre.co.uk

Our Registrar, Computershare, has a service to provide shareholders with online internet access to details of their shareholdings. The service is free, secure and easy to use. To register for the service, go to www.investorcentre.co.uk.

Unsolicited mail

The share register is by law a public document. To limit the receipt of mail from other organisations, please register with the Mailing Preference Service, by visiting www.mpsonline.org.uk/mpsr/.

Warning to shareholders – 'boiler room' scams

In recent years, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas-based 'brokers' who target UK shareholders, offering to sell them what often turn out to be worthless or highrisk shares in US or UK investments. These operations are commonly known as 'boiler rooms'. These 'brokers' can be very persistent and extremely persuasive, and a 2006 survey by the Financial Services Authority (FSA) reported that the average amount lost by investors is around £20,000.

It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years. Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you receive any unsolicited investment advice:

• Make sure you get the correct name of the person and organisation

• Check that they are properly authorised by the FSA before getting involved by visiting www.fsa.gov.uk/register/
• Report the matter to the FSA either by calling 0845 606 1234 or visiting www.moneyadviceservice.org.uk
• If the calls persist, hang up.

If you deal with an unauthorised firm, you will not be eligible to receive payment under the Financial Services Compensation Scheme. The FSA can be contacted by completing an online form at www.fsa.gov.uk.

Details of any share dealing facilities that the Company endorses will be included in company mailings.

More detailed information on this or similar activity can be found at www.moneyadviceservice.org.uk.

Directors

Peter Allen Chairman

Mark Wood Chief Executive

Graham Harding Chief Financial Officer

Manjit Wolstenholme Senior independent non-executive Director

Seb Bishop Non-executive Director

Mark Whiteling Non-executive Director

Company Secretary and General Counsel Mark Millar

London office

2 Balcombe Street London NW1 6NW Tel +44 (0)20 7042 4000 www.futureplc.com

Registered office

Future plc Beauford Court 30 Monmouth Street Bath BA1 2BW Tel +44 (0)1225 442244

Company registration number 3757874 Registered in England and Wales

Advisers

Independent auditors

PricewaterhouseCoopers LLP Chartered accountants and registered auditors 1 Embankment Place London WC2N 6RH

Broker

Numis Securities Ltd 10 Paternoster Square London EC4M 7LT

Principal bankers

Barclays Bank plc 1 Churchill Place London E14 5HP

Solicitors Norton Rose LLP 3 More London Riverside London SE1 2AQ

Registrars

Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AE

Financial calendar

Announcement of annual results 23 November 2012

Annual General Meeting 4 February 2013

Half-year end 31 March 2013

Announcement of interim results May 2013

Financial year-end 30 September 2013

Contacts

Future plc

Beauford Court 30 Monmouth Street Bath BA1 2BW United Kingdom Tel +44 (0)1225 442244

2 Balcombe Street London NW1 6NW United Kingdom Tel +44 (0)20 7042 4000

www.futureplc.com

Future Publishing Ltd

Beauford Court 30 Monmouth Street Bath BA1 2BW United Kingdom Tel +44 (0)1225 442244

2 Balcombe Street London NW1 6NW United Kingdom Tel +44 (0)20 7042 4000

Jamie Wilkins

Deputy Editor, Procycling

" It's an extremely busy, caffeinefuelled, varied and challenging mix of planning, subbing, writing and figuring out how to keep raising the bar with Procycling."

This Annual Report has been photographed, designed and produced entirely by Future. All the people who feature within its pages work at Future.

www.myfavouritemagazines.co.uk www.shop.futureus.com

Future US, Inc. 4000 Shoreline Court Suite 400 South San Francisco CA 94080 USA Tel +1 650 872 1642

Future Publishing

(Overseas) Ltd Suite 3, Level 10 100 Walker Street North Sydney NSW 2060 Australia Tel +61 2 9955 2677