Future PLC — Annual Report 2013

Sep 30, 2013

Future plc Annual Report and Accounts 2013

Reaching 58 million global unique users every month

Group

highlights Overview

Future plc is an international media group and leading digital publisher, listed on the London Stock Exchange (symbol: FUTR). These highlights refer to the Group's annual results for the year ended 30 September 2013.

A Year of Awards

Future has won more than 40 major industry awards in the last twelve months. Highlights include:

Future US's integrated Hyundai/Walking Dead digital and experiential campaign is named winner of the Excellence Award at the annual international Communicator Awards, recognising big ideas in marketing and communication.

04.13 05.13 05.13

Future is named Media Company of the Year at the British Media Awards in May. Future is the biggest winner on the night: Digital Camera also wins Print Product of the Year and the Marketing team behind Mollie Makes is named Media Marketing Team.

Future's Consumer Insight unit wins at the International FIPP Research Forum Awards 2013 for its research into 'Embracing the Opportunity of Apple's Newsstand'. Judges said: "This is an outstanding piece of research into ways of making the most of the potential for digital platforms."

Strategic Report

01	Group highlights
----	------------------	--

• 03 Chairman's statement
• 05 Chief Executive's review
• 07 Business model
• 09 Where we operate
• 11 What we do
• 13 Business review
• 19 Risks and uncertainties
• 21 Corporate responsibility

Financial Review

23 Financial review

Financial Review

+38%

year-on-year

Normalised Unique Users

Normalised Digital Revenues

57.7m

a month (+14% year-on-year)

Normalised results are presented to better reflect 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 relating to activities closed or divested between 1 October 2011 and 30 September 2013, but include any new activities launched or acquired in that period.

Future secures the Association of Online Publishers' Award as Consumer Digital Publisher of the Year for an unprecedented third year running. Judges praise Future's "outstanding achievement in the digital media environment".

06.13 09.13

Future picks up the Consumer Digital Publisher of the Year Award at the Professional Publishers Association for the second year running. Future is now unprecedented in winning all of the 'big three' industry awards in a single year.

Normalised Digital Advertising

of total advertising revenues (2012: 48%)

Normalised Digital Edition Revenues

59%

+44%

year-on-year

Corporate Governance

29	Board of Directors
31	Directors' report

• 35 Corporate Governance report
• 41 Directors' remuneration report
• 52 Independent auditors' report

Financial Statements

• 55 Financial statements
• 88 Normalised results
• 89 Notice of Annual General Meeting
• 94 Investor information

Chairman's statement

Gathering momentum

We are pleased with the results, which show the business gathering momentum in the second half and ending the year with every sector performing well. We believe the advances in digital revenues mark an important turning point for the business, with advertising revenues now two thirds digital.

Peter Allen Chairman

"The improvement in performance and the encouraging trends as we entered the 2013-14 financial year were seen by the Board as justifying a resumption of dividend payments."

The strategy agreed by the Board over the past two years to diversify revenues and reduce dependence on print is clearly delivering the anticipated results. Digital and Diversified revenues − including revenues from digital circulation, digital advertising, digital commerce, FutureFolio, Future Plus and events − are now one third of the business and we are on a trajectory to maintain this momentum.

It has been particularly encouraging to see an effective focus on increasing monetisation of our digital traffic and to follow the development of our digital agency activity in the US and the UK as a substantial new business.

We have placed great emphasis on managing our operating margins, and continue to re-engineer our cost base as part of that focus. We are pleased with progress in this area and the efforts undertaken to reduce costs in the UK and streamline the business organisation by removing some layers of management.

The improvement in performance and the encouraging trends as we entered the 2013-14 financial year were seen by the Board as justifying a resumption of dividend payments, which were suspended in 2011. We will therefore pay a dividend of 0.2p per share for all shareholders on the register as at 14 February 2014. This decision reflects confidence in the business and the prospects for the period ahead.

We are delighted to welcome Zillah Byng-Maddick as Chief Financial Officer. She brings with her invaluable experience of managing the printto-digital transition at Trader Media, publisher of Auto Trader. We thank her predecessor, Graham Harding, for his contribution as CFO and many years of distinguished service to Future and we wish him well.

Peter Allen Chairman

The Future Mission

To reach and grow high-value global audiences with world-class content produced by talented experts; and to be tireless innovators in the way we engage with those consumers and generate value for Future and our commercial partners.

Strategic Report

Chief Executive's review

Our strategy

The past 12 months have seen Future make good progress against its strategy as we maintain momentum towards digital transition and diversified revenues.

Significant progress

Future has achieved further significant progress in the transition to a diversified digital business and delivered revenue growth, despite challenging trading conditions over much of the year. Digital revenues rose 38% − the highest rate of growth in recent years − and we passed a significant inflection point, with more than half of all advertising revenues (59% across the Group) now digital. This demonstrates how far the business has developed in its digital transformation.

Mark Wood Chief Executive

Managing our print assets for 04. cash generation

Constantly controlling costs & targeting 05. investment to manage margin

Overview

Overall, Digital and Diversified revenues − including revenues from digital circulation, digital advertising, digital commerce, software business FutureFolio, custom publishing business Future Plus and events − made up 32% of the business.

As a result of disposals and restructuring we have strengthened the balance sheet, net debt has been halved to £6.9m (leverage 0.99 times) and a new four year £25m maturing credit facility agreed. Second half performance was significantly better than the first half and, after an encouraging fourth quarter, we entered the 2013-14 financial year with forward advertising bookings pacing ahead of last year.

For the year as a whole, revenues grew by 3% and profit before tax came in at £1.9m against

a loss in the prior year of £2.7m, with growth in digital revenues more than offsetting print declines. A cyclical decline in the Games market was a significant drag on the business in the first three quarters. But by the fourth quarter Games had substantially recovered and trading was stronger in Q4 across all other sectors.

During the second half a number of key elements of the transition programme were delivered: the US was operating profitably and restructuring activity in the UK was completed which will deliver margin benefits in 2014.

Digital growth across all key brands

We increased our digital reach by 14% to 58 million unique users (UUs) a month. Future now has 14 websites that each attract more than one million UUs a month. We achieved greater

Annual Report and Accounts 2013 06

PC Gamer is the world's most popular PC gaming website

BikeRadar is the world's most popular cycling reviews website

MusicRadar is the world's most popular website for musicians

audience engagement across the portfolio, with page views rising 19% to 328 million, increased dwell times and a 32% increase in average revenue per user across all sites.

We saw sustained digital growth across all key sectors of the portfolio – Technology, Games, Photography, Sport, Crafts, Music and Digital Creative.

TechRadar, the news and reviews site which is Future's top brand, reached 20 million UUs a month and continued to grow a global audience. TechRadar US more than doubled its audience to 8.3 million UUs and was one of the fastest growing US technology sites. In the UK we launched TechRadar Pro, focussed on the business technology sector, and saw rapid growth in visitor traffic and advertiser interest.

TechRadar is now unchallenged as the UK's number one technology website and is increasingly competing with CNet in global markets. Future's CyclingNews and BikeRadar are global leaders in their sectors, while CVG, PC Gamer and GamesRadar all had marketleading positions in the UK and US. Creative Bloq took the lead in the high-value UK Digital Design space within a year of launch and generated traffic of more than 2.2 million UUs a month.

Revenues from Future's digital editions on tablets such as the iPad increased by 44% on the prior year and Mac|Life, our US title, saw subscriptions increase to 80,000. We now have more than 340,000 digital subscriptions worldwide and renewal rates have been running at close to 70%.

Innovation and diversified revenues

Content Marketing was an area of substantial digital growth and is developing into a material new business area. Future has developed expertise in managing consumer engagement and marketing campaigns for major brands in both the US and the UK. Revenues from new business in this area doubled and are now generating more than 15% of total advertising revenues.

Future US created the blueprint, winning content production, audience engagement and experiential marketing campaigns for major partners including Hyundai, Bethesda and DTS. The UK built on that experience and secured content marketing campaigns for brands including Samsung, Carphone

Warehouse, Canon, Microsoft and Tesco. In the fast-growing Photography market, Future is the market-leading publisher in print and digital formats and our interactive Photography Week tops the sector on Apple's Newsstand. We also secured the licence to stage The Photography Show, set to be Europe's biggest annual event of its kind, at the Birmingham NEC. The Photography Show will debut in March 2014. Our Events division, launched in 2012, also launched successful B2B conferences and shows in Photography, Digital Creative and Music in the last year. This demonstrates the success of our model of creating the best brands and content in a sector and then leveraging this across other engagement vehicles.

In other areas, FutureFolio, our tablet edition software, extended its customer list. New clients include the Daily Telegraph and publishing group Redan, which has chosen FutureFolio to publish a highly interactive version of the magazine based on the hugely popular children's character Peppa Pig. In addition, we increased revenues from real-time programmatic data trading, which enables us to monetise unsold advertising inventory.

International growth

More than 40% of the Group's revenues were generated outside the UK in the last year. In the US, revenues increased by 6% and in Australia by 23%, boosted by the acquisition of two technology brands. These have made Future a leader in the technology sector and will provide leverage to build TechRadar Australia.

We continue to see Future's biggest opportunities internationally in the US and have an efficient model for repurposing UK-produced content for the American market. As well as significant growth in the US Technology and Games sectors, we see further potential in Photography, Crafts and Cycling.

In Europe, we launched a French-language version of MusicRadar and began producing Sport and Technology content for print and digital products in German and Italian.

Agile management of our magazine portfolio

We manage our print business for cash generation and have continued to innovate in creating new revenue streams. We launch new titles into areas where we identify opportunity for revenue and profit growth. Recent new launches have included Love Patchwork & Quilting and Science Uncovered, a mainstream science title aimed at the 16-25 demographic.

We have significantly mitigated the impact of declines in mainstream title sales by substantially expanding production of highvalue specials and bookazines. We print these in the UK, US and China and are targeting markets in the US, Asia, UK and Europe.

Summary & outlook

We have halved our debt during the year as a result of selling our portfolio of Rock titles, closing loss-making titles and successfully securing sub-letting deals in the US and UK, reducing our property liabilities by £1.4m. We maintain a rigorous focus on operating margins. We have reshaped the business to support our increasingly digital revenues, reducing headcount in the UK to its lowest level for more than 10 years.

Future has developed an entrepreneurial and innovative culture and is well positioned to seize opportunities as digital markets evolve.

Future won all three top UK awards for Digital Publisher of the Year in 2013, the first company ever to take every top industry honour. This is evidence that the Company is seen as undisputed digital leader by the rest of the UK media industry.

We will put that innovative flair to work as we continue to build Future's digital business at speed in the year ahead.

Looking forward, we see the encouraging Q4 trends continuing with forward advertising bookings up year-on-year, and revenue momentum across all sectors.

As we began the 2013-14 financial period, trading was in line with our expectations across all parts of the business.

Mark Wood Chief Executive

model

Creating value Business

Future is focussed on growing and engaging high-value global audiences. We create shareholder value by monetising these audiences and the meaningful engagement our reach delivers for our commercial partners.

02.

Consumers

The Future Advantage

We're proud of the entrepreneurial and innovation-led culture at Future. We have world-class content creators and digital innovators whose passion is to connect, inspire and entertain the millions of engaged consumers who make up our global audience.

Our borderless communities of interest continue to enable our global expansion, and we're trusted to help consumers make informed purchase decisions through content channels online, on mobile and in print. Our audience reach and our high levels of engagement allow us to create innovative and successful consumer engagement for our commercial partners.

01.

Content

Creating high quality and unique branded content for our engaged international communities of interest.

our consumers.

Focussing on sectors in growth, and entertaining and informing

Our brands are our most important channels – and they are powered by our passionate, world-class expert journalists, designers, developers and editors. In the last year our people have won more than 40 industry awards and their talent, experience, creativity and innovation is recognised internationally. Our people live our brands.

Our focus on specialist sectors that ignite the passions of consumers the world over allows Future to create branded content that travels in the new borderless digital media landscape.

From T3 to Total Film, Digital Camera to Computer Arts, Mollie Makes to Procycling, we create brands our consumers keep coming back to again and again.

Across the globe, our consumers are united by one thing – they love and trust our content. Whether they're following minute-by-minute coverage of the Giro D'Italia on Cyclingnews.com or they were one of over four million people to watch T3's exclusive un-boxing video review of the PS4 in July 2013.

Future creates trusted content, and in so doing we create loyal communities of interest.

Increasingly our content is used in real time to influence and inform purchase decisions. TechRadar – which now reaches over 20 million unique users a month globally – is a prime example of a Future brand selected by consumers already in the purchase funnel, actively looking for guidance they trust.

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Future in numbers

58m

Online

We have 58 million unique users from across the globe visiting our web properties monthly

6.5m

Social Media

Future has 6.5 million followers across all the main social networks

£0.75m

Digital Editions

Over £0.75m gross revenue a month via all digital editions. Over five million sales across all channels in 2013

132m

Video

Last year our video content had over 132 million views – that's 706 years' worth of content

19m

Print

Over 19 million printed copies sold in 2013 – that's 37 every minute of every day

03.

Engagement

Monetising consumers through innovative engagement models.

04.

Partnership

Monetising our audiences via access to these communities for our commercial partners.

We deliver revenues from print and digital product sales – we sold over 19 million magazines and over five million digital editions in the last year.

Future has focussed on developing multichannel engagement with its consumers. With 14 digital properties now attracting over a million unique users a month, we have extended page views and dwell times on our own sites and utilised social networks to reach new consumers. As we increase engagement we are evolving new ways to monetise our audiences, above all through affiliate partnerships with retailers.

Our new Events business is a vital part of our consumer engagement across photography, technology, design and music sectors.

Our brands are hubs for our communities of interest. They provide a range of touchpoints into their lives – online, on mobile, in print, and beyond.

And they provide valuable opportunities for our commercial partners to engage with passionate enthusiasts and active purchasers alike.

Future has rapidly developed a diversified revenue stream in its content marketing offering: providing integrated creative solutions and digital agency services to a growing roster of international brands, including Samsung, Hyundai, O2, and Carphone Warehouse. Future's Content Marketing revenues have doubled in the last 12 months – delivering tangible return on investment to clients as well as winning international awards.

Financial Review

operate

A global business Where we

Future's focus is on creating 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 58 million unique users globally each month and 75% of our digital edition sales are to non-UK consumers.

Future has become a global leader in publishing on the iPad through Apple's Newsstand, with over £16m in gross revenue since its launch in October 2011. In 2013 Future sold over five million digital editions across all platforms and three quarters of our market is outside the UK.

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 FutureFolio is now signed up to power 90 digital editions for partners.

We have strategic partnerships with 82 overseas media businesses, and 218 licences and licensed editions available in 92 countries worldwide – making us the largest UK-based publisher by licence. The enhancement of our product offerings makes 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.

At a glance

58m

Global unique users a month

218 Licensed editions available in 92 countries

No.1

UK licensor of monthly magazines by value

Top 10 Countries for Digital Editions

United States

• United Kingdom
• Australia Canada
• Germany
• Norway
• The Netherlands Denmark
• South Africa Singapore

Top 10 International Digital Brands

• Mac|Life
• T3 N-Photo
• Digital Camera World Maximum PC
• Photography Week
• PC Gamer Total Film
• MacFormat Edge

Top 10 Countries by Licensed product

Germany Brazil Spain Thailand Sweden Malaysia Italy Indonesia Lebanon South Africa Top 10 International Licensing Brands

T3

• Digital Camera
• Procycling Computer Arts
• Cycling Plus Total Film
• PC Format Xbox: The Official
• Magazine Mollie Makes
• Mountain Biking UK

Top Five Countries for Export

• United States Australia
• Canada New Zealand
• South Africa

Future magazines sold overseas each year

75% of digital edition sales outside the UK

Our portfolios What we do

Future plc is an international media group and leading digital business. We have operations in the UK, US and Australia, creating more than 200 publications, apps, websites and events across ten content portfolios.

• We hold market-leading positions in Technology, Photography, Games, Guitars, Creative & Design, Craft and Sport sectors.
• We attract 58 million monthly global unique users to our websites, which include TechRadar.com, GamesRadar.com, BikeRadar.com and MusicRadar.com.
• Future sold more than 19 million print magazines last year, that's 37 magazines sold every minute. Our most well-known brands include T3, Cycling Plus, Total Film, Mollie Makes and Xbox: The Official Magazine.
• Future has developed its own app-creation software, FutureFolio. We produce over 100 digital editions, and have sold over 5 million digital issues in the last year.
• Future has 218 licensed properties available in 92 countries, making us the UK's number one exporter and licensor of magazine content.

www.linkedin.com/company/future-publishing

Technology

Future's sector-leading Technology portfolio is constantly innovating, reflecting the fast-moving markets in which it operates. Today, we reach more technology enthusiasts than ever before through digital, print and events. More than 27 million unique users every month use our influential websites, including TechRadar.com, T3.com and Gizmodo.co.uk. TechRadar alone reaches more than 20 million unique users a month, and is the UK's biggest technology reviews website. T3, our flagship technology and lifestyle brand, is the world's leading multiplatform technology media brand and is the market leader on iPad in the UK.

Key brands: TechRadar.com T3 Gizmodo.co.uk

Games

Our Games portfolio 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, digital editions, online, social, video, mobile, on-console and events. The consumer engagement of Future's games brands – including GamesRadar.com, CVG.co.uk and PC Gamer – is at a record high, delivering a global monthly reach of over 15 million, up 14% year-on-year. The Games portfolio records more than four million views of its video content across its YouTube sites every month.

Key brands: GamesRadar.com CVG.co.uk PC Gamer

Computing

Mac|Life is the ultimate source of all things Apple in the US – it is our biggest-selling digital edition at over 80,000 copy sales monthly. Windows 7: Help & Advice magazine continues to serve the world's largest installed operating system. Elsewhere, MacFormat, the number one Apple title in the UK, celebrated its 20th anniversary in 2013. Its fully interactive iPad edition continues to grow sales since the new format launched in July 2013. And Linux Format, the world's number one technology magazine covering open source software and Linux operating systems, continues to thrive.

Key brands: Mac|Life MacFormat Windows 7

Film

Future is a leading film publisher, with a strong multiplatform portfolio across print, tablet, online, video, mobile, apps and events. Future's movie websites attract over 44 million page views each month. Total Film, an exemplar of a modern multiplatform brand, is the flagship title in a portfolio that includes SFX, SFX Presents and Comic Heroes. We have a unique position in the market, delivering cross-platform campaigns to influential movie fans throughout the full product lifecycle of a movie: from the early buzz to cinematic and DVD release.

Key brands: Total Film SFX Comic Heroes

Photography

Future is the world's market-leading Photography publisher, serving a wide variety of creative audiences through a best-in-class mix of digital content, print products and events. Recent iPad launch Photography Week is already the international number one weekly on the iPad, while Digital Camera is the UK's best-selling title in print and digital editions. We also publish the leading newsstand magazines for Nikon – N-Photo – and Canon – PhotoPlus. In March 2014 Future will debut The Photography Show at Birmingham's NEC, which will instantly become the biggest annual event of its kind in Europe.

Key brands: Digital Camera N-Photo Photography Week

Future Women

Future Women delivers award-winning content to creative and active women internationally. Future's craft brands, online, on mobile and in print reach over one million women per month. Mollie Makes is now the UK's number one contemporary craft brand and has a strong and growing international presence. The Simple Things, our mindful consumer brand, has a monthly brand reach of over 80,000. And in the last 12 months we have launched two new craft titles into emerging new sectors – Simply Crochet and Love Patchwork & Quilting – underlining our innovative approach to developing new opportunities.

Key brands: Mollie Makes The Simple Things Simply Knitting

Creative & Design

Future's Creative & Design group serves professional creatives involved in design, web development and animation. Our magazines such as Computer Arts, net, 3D World and ImagineFX have long been influential titles in their sectors. But our new umbrella website, CreativeBloq.com, has grown a much bigger international audience since its launch in 2012. With over two million unique users a month, it has already become the UK's most popular destination for digital creatives. And with its recently launched adaptive capabilities it is now reaching more international mobile users than ever.

Sport

net

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 unique users every month. Cyclingnews.com is the world's biggest news and results service for professional cycling, with bulletins from around the globe accessible online, on mobile and in app format. BikeRadar.com is the go-to site for road cyclists and mountain bikers of all levels, a source of product reviews, information and a database of cycle routes. A 24/7 global operation, it is the world's biggest digital cycling brand.

Key brands: Cycling Plus BikeRadar.com Cyclingnews.com

Music

With long-established, market-leading brands like Guitarist, Rhythm, MusicRadar.com and Future Music, Future has one of the most highlyrespected music portfolios in the world. We continue to lead the market through print and digital innovation as we look to target more musicians on a global scale. Guitarist is the magazine for guitar aficionados, offering the world's most authoritative guitar, amplifier and effects reviews. Total Guitar is the definitive one-stop shop for all things guitar. MusicRadar.com, our flagship music-making website, is the world's number one destination for professional musicians.

Key brands: Guitarist Total Guitar MusicRadar.com

Auto

Future's Automotive portfolio reaches a broad audience of passionate motoring enthusiasts, through its seven auto brands and six auto events. Through our specialist motoring magazines, websites and interactive events, we engage with nearly 900,000 people whose lives are driven by a love of modified cars, classic cars, individual marques and motorbikes. The Future Auto Events Series saw over 73,000 enthusiasts attend our series last year. Fast Bikes is the magazine for the sports bike fan and is the UK's topselling sports bike title.

Key brands: Fast Car Fast Bikes Classics Monthly

review

Driving digital transformation Business

Future is recognised as a leader in the transition from print to digital media, and 2013 saw good momentum in that progression. The period saw us develop new and diversified revenue streams as we seek to broaden the ways in which we engage with our growing international audiences.

Strategy in execution – examples of success.

CVG's adaptive design wins mobile users

Adaptive design opens the door to optimised mobile opportunities

CVG, Future's flagship games news website is thriving in what is set to be one of the most exciting times in the UK games market in years. Following a major re-launch in May we have seen record traffic, increased commercial opportunities and successful brand extensions.

The re-launched CVG was the first UK gaming site to feature adaptive design, enabling our users to access all of CVG's functionality regardless of the device being used. Prior to re-launch we knew over 30% of our traffic was coming via mobile or tablet devices. Now CVG is platform neutral, users are consuming content in greater numbers than ever before, resulting in a 50% year-on-year increase in traffic.

CVG's adaptive design also presents our partners with new advertising formats and increased commercial opportunities. We now provide games publishers with all the benefits of adaptive design but integrated within our most popular content, meaning that the commercial messaging sits perfectly within our engaging editorial.

No.1 destination for UK design professionals

No.1 photography weekly on iPad

Creative Bloq: Delivering a must-visit destination for international creatives

Our flagship online property for global design professionals, Creative Bloq has demonstrated rapid international growth since launching in 2012. The brand is now the UK's most popular design site, and boasts over two million monthly unique users. The audience profile truly reflects the site's global nature, with the top 10 countries by page views including the UK, US, India, Canada, Australia, the Philippines and Brazil.

In September the brand entered its second phase of development. To capitalise on its success, the extensive evolution responds to the changing ways international users interact with the site to provide a richer, bespoke experience tailored to their needs. Adaptive design enables users to access all of Creative Bloq's functionality regardless of the device being used. Whether on a phone, tablet or desktop – the content scales perfectly to users' devices. The new look site also offers truly global solutions to Creative Bloq's commercial partners.

Creating the world's number one iPad brand for photographers

Future is the world's leading photography publisher and has been leading the way in digital innovation and international growth over the last 12 months. Launched in October 2012, Photography Week has rapidly become the international number one photography weekly on the iPad.

Innovative, packed with interactivity, and with community at its heart, Photography Week gives readers a compelling, interactive, fun way of learning, regardless of their skill level. The most innovative title in its sector, Photography Week has already become the world's biggest consumer photography brand on Facebook, as well as establishing itself as one of Future's most profitable digital editions. Recently launched as an optimised edition for the iPhone as well as the iPad, Photography Week was named Digital Innovation of the Year by the Professional Publishers Association in June and named one of the 60 best tablet apps in the world at the international Tabby Awards in July.

Building brands across channels

The strength of our brands is at the centre of the Future Advantage. The last year has seen brand reach grow internationally across all our core content sectors. And as our reach grows, so we continue to focus on new ways to generate a deeper level of engagement with consumers across a range of new touchpoints.

Strategy in execution – examples of success.

Focussing on building brands across 02. channels – TechRadar is our no.1 priority

TechRadar has 20 million global unique users a month

Mollie Makes extends brand into tablet weekly

TechRadar: Building a 24/7 global consumer technology brand

TechRadar has grown to become a true 24/7 global brand over the last 12 months, and we have identified it as a priority target for continued growth in 2014. Globally, TechRadar is accessed by more than 20 million unique users a month and in the last year it launched operations with localised content in the US and Australia – allowing us to more effectively monetise those territories. The site has become a go-to destination internationally for opinions, exclusives and authoritative reviews of everything from mobile phones and tablets to the latest cameras and televisions.

Over 16 million TechRadar unique users are from outside the UK. Over the last year TechRadar US more than doubled its audience to 8.3 million unique users a month, and was one of the fastest-growing US technology sites. Already the US audience for TechRadar is twice as big as the UK's and continues to grow at speed. In the UK, the brand is overwhelmingly the market leader. And with offices in San Francisco, London and Sydney, the brand became a truly 24/7 global operation this year.

Multiplying the Mollie Makes brand power

The Future Women portfolio of craft brands now reaches over one million women per month. Mollie Makes is the UK's number one contemporary craft brand – with a range of print and digital touchpoints developed in the last year. Its unique approach curates the best online craft content into a beautiful, collectable magazine at the heart of the brand.

Mollie Makes also has a strong international presence. It is the number one craft title in Barnes & Noble US – in a category with over 400 titles listed.

In October 2012 we launched Gathered by Mollie Makes, a weekly tablet-only offering for contemporary craft fans. Gathered by Mollie Makes showcases Mollie Makes' favourite things, and gives users three simple weekly craft projects with easy step-by-step guides. Meanwhile a series of Mollie Makes bookazines introduced in the last year, including Mollie Makes Homes and Mollie Makes Handmade Wedding, have also proven popular and driven revenues for the brand.

Record voting at this year's Golden Joystick Awards

Creating face-to-face experiences

Future has identified events as a key platform for strategic brand development and diversified revenue growth, providing face-to-face opportunities for our communities of interest to meet and interact with our brands and each other. Our Events division delivered a number of new conferences and events over the last year.

Generate, a brand extension from web design brand net, delivered a very successful debut conference for web design professionals in London. Meanwhile PhotoLive provided a brand new two-day learning experience for over one thousand amateur photographers in October. And Future also secured the licence to produce The Photography Show – a live four-day event at Birmingham's NEC. The show will instantly become Europe's largest annual event of its kind for consumers and professionals when it debuts in March 2014.

Our existing branded awards events – including the T3 Gadget Awards and the Golden Joystick Awards – continue to go from strength-to-strength. The Joysticks delivered a record-breaking ten million votes this year.

Business review

Increasing engagement

Future has rapidly built a business delivering agency and content marketing solutions for partner brands as we create new and innovative ways to deepen the engagement between our loyal audiences and clients. These new diversified revenues are growing fast.

Strategy in execution – examples of success.

Innovating digitally to increase audience 03. engagement and diversify monetisation

Unique website takeover

partnership with Microsoft

Delivering impact for the Saints Row IV launch

Future turns green to support Microsoft's Xbox One

As Microsoft unveiled its major new console launch, it partnered with Future for a multiplatform campaign to reach our 10 million UK tech, games and film enthusiasts.

Microsoft chose Future UK's Technology, Games, Film and Auto portfolios to develop a two-month-long campaign to promote the launch of Microsoft's next-gen console: Xbox One. The major partnership saw the creation of a unique multi-platform, multi-brand campaign across flagship brands including T3, Total Film, CVG and Fast Car.

The unique partnership saw a complete homepage redesign of seven of Future's flagship sites – T3, TechRadar, Gizmodo UK, CVG, GamesRadar, OXM and Total Film – to replicate the Xbox One dashboard. Xbox One channels were created to provide authoritative insight on the specific areas of the Xbox One and were integrated with weekly video content taking a look at all aspects of the new system. The partnership also saw the redesign of the Future brands' logos to mirror the Xbox One logo.

Future brings Saints Row IV to life at San Diego Comic-Con

Future US developed an innovative integrated social, digital and experiential campaign for the launch of one of the major 'triple-A' video games of 2013: Saints Row IV.

In partnership with video game developer Deep Silver, Future hit the streets of San Diego to promote the release of the fourth edition in the Saints Row franchise, cruising the crowded San Diego streets in a custom Saints Row IVbranded Presidential limousine.

Harnessing the buzz and awareness generated from Comic-Con, Future secured major traffic with the launch of SaintsGov.com, a mock government website for Saints Row IV fans to vote on potential legislation, register their super-charged weapons, create SRIV driver's licenses and get the latest from the Steelport Police Department scanner.

Promotional integration for this programme included high-impact ad units, editorial coverage on Future's MaximumPC, social promotion via GamesRadar, and print spreads in PC Gamer and the Official Xbox Magazine.

Future is the 'Smart Choice' for Carphone Warehouse

Carphone Warehouse partnership reaches consumers ahead of purchase decision

Future's technology brands – including TechRadar, T3 and Gizmodo UK− deliver more than five million tech enthusiasts in the UK. Future's access to this tech-savvy audience and its ability to co-create bestin-class digital and video content enabled Carphone Warehouse to reach consumers in the crucial period of consideration prior to upgrading their smartphone.

Carphone Warehouse required a media partner and multi-platform content which would let them reach consumers early in this consideration phase and provide them with engaging and helpful information. The six month partnership involved the creation of a 'Smart Choice' content destination within TechRadar offering compelling and in-depth information, including rapid answers to questions from consumers researching their next handset. 'Smart Choice' also included integrated video content in partnership with Carphone Warehouse video agency Adjust Your Set. T3 and Gizmodo were also integrated into the partnership, with activity driving digital reach among Future's valuable technology audience.

Generating cash from print

www.simplycrocHetmag.com baTHRoomS, CUSHIoNS aND TRIaNglES We launch new regular titles where we identify market gaps in the sectors we serve. We have an established method of researching a market using social media tools and pre-launching new titles the same way, creating an audience, providing valuable real-time feedback and de-risking launch.

Strategy in execution – examples of success.

Managing our print assets for 04. cash generation

Delivering into a growing crochet sector

Unlocking the world of scientific discovery

Consumer insight underpins craft launch success

In January 2013, Simply Crochet hit the newsstands. Crochet is a craft in growth, both in the UK and internationally. In fact, 'How to Crochet' was the fourth most searched 'How to' term on Google in the UK in 2012, according to the Google Zeitgeist survey. And Simply Crochet has been created specifically to deliver to this large and growing audience.

There are currently an estimated 1.8 million quilters in the UK − an increase of 124% since 2011, showing incredible growth in interest and participation. According to the Quilting in America study, 14% of US households are home to at least one quilter.

Love Patchwork & Quilting launched in October 2013 and is also available internationally as a digital edition on Apple's Newsstand, Google Newsstand, Amazon Kindle Fire, Barnes & Noble's Nook and Zinio, as well as a print edition. The new brand fills a clear gap for a more modern product in a very traditional quilting sector, delivering trend-led projects through contemporary design. It delivered strong pre-launch subscriptions, has a growing social media audience and is already established in the sector's blogging community.

Science Uncovered: A brand new international magazine

Future's most recent regular frequency launch is a new title in the mainstream science sector. Science Uncovered – which launched in November 2013 – presents the world of scientific discovery in a highly impactful, exciting and accessible way for an audience in the 16-25 demographic.

Interest in popular science has never been greater – from what happens when the sun's magnetic poles flip, to the science of Doctor Who, and the dawn of holidaying in space with Virgin Galactic. Science Uncovered explains and unlocks all this and more in every issue.

The new print brand is 100% science and provides those interested in popular sciencerelated subjects with intelligent, topical and timely content delivered in an accessible format. In Science Uncovered, leading scientists from around the globe – and famous faces from popular science shows in the UK and beyond – explain how the world around us works.

It is packed with fascinating insights into space, nature, the human body, engineering and technology, all brought to life with stunning photography and illustrations.

Bookazine production increased significantly

Bookazines: Finding new revenue opportunities for print launches

In the last 12 months Future has significantly increased production of its regular series of premium-priced one-shot and brand extension bookazines. Printed in the UK, US and China, Future's bookazines have generated £6m in revenue during the year.

We distribute in the UK and internationally, and work with many of the world's best-known retailers. Future bookazines and specials are also licensed to more than 80 countries across the world.

A dedicated in-house team has been created in the last year to accelerate our bookazine activity.

Future's bookazine programme has been developed to increase our activity in new and exisiting content areas, working with international retailers to research core consumer demand and respond quickly to new consumer trends internationally. Designed to appeal both as a standalone read and to complement the regular magazines, they maximise profitability and leverage the reach of some of our best known titles.

Strategic Report

Business review

Focus on cost control

We halved our debt during the year as a result of selling our portfolio of UK Rock titles, closing loss-making titles and securing sub-letting deals in the US and UK.

Strategy in execution – examples of success.

Constantly controlling costs & targeting 05. investment to manage margin

We maintain a rigorous focus on operating margins, and have reshaped the business in the year, reducing headcount in the Group to its lowest level in five years.

Group Employee numbers Actual numbers at 30 September

US Employee numbers Actual numbers at 30 September

Key Performance Indicators

The key performance indicators are presented on a normalised basis.

	2013	2012
Corporate KPIs
EBITDAE (£m):	6.4	6.4
Year-on-year movement in EBITDAE	0%	+83%
EBITE (£m):	3.5	4.0
Year-on-year movement in EBITE	-13%	+208%
Digital KPIs
Year-on-year movement in digital revenues	+38%	+25%
Number of unique users logging onto our websites (monthly)	57.7	51.2
Number of digital magazines sold per month (thousands)	433	239
Digital subscriber base (thousands)	342	235
Print KPIs
Number of magazines sold per month	1.7m	1.7m
Print subscriber base (thousands)	639	727
Copies sold as a percentage of copies printed (including subscriptions)	52%	54%
Year-on-year movement in print revenues	-3%	-10%

An update on the key performance indicators on a normalised basis is given here. The KPI trends noted demonstrate the further progress made during the year in digital and in the management of the overall profitability of the Group.

Driving digital success

Revenues from Future's digital editions increased by 44% on the prior year. We now have more than 340,000 digital subscribers worldwide and renewal rates have been running at close to 70%.

Risks and uncertainties

Risks 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.

Risk management

Risks	Description
Operating environment	The macro-economic environment continues to be difficult. Despite a more positive outlook, in both the UK and the US, 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.
Intellectual property	Future uses, and grants licences to its licensees to use various types of third-party content including music, audiovisual material, photos, 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.
Financial	Forecasting remains difficult in all consumer markets but this is particularly the case in relation to sales through digital newsstands which are emerging. The long lag time for reporting on sales of printed copies and associated retail promotional spend in the US and bookazines continued to be a challenge in the year. As we diversify our revenue streams, new activities are inherently more difficult to accurately forecast. The Group is exposed to interest rate risk and foreign exchange risk. The significant issues considered in relation to the financial statements for the year ended 30 September 2013 are set out in the Audit Committee section of the Corporate Governance report on page 39.
IT	In the event of a total network or server failure or data loss there would be a major impact on the production of magazines, operation of websites and the operational effectiveness of the business.
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 with which Future is unable to compete.
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, as well as a significant financial penalty, if it is responsible for the breach.

Strategic Report

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 recent years and where we have significantly increased the production of bookazines, as well as in new digital media, including on the various digital newsstands where we have led the way.

Future produces guidance and in-house training to educate its staff on the importance of obtaining appropriate rights or licences and has a dedicated in-house rights management team. Future's legal team reviews all significant licences relating to third-party content and, where appropriate, seeks warranties and indemnities relating to the same. Future licenses 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.

Future's forecasting in respect of innovative products will become easier as those products develop a more consistent customer base and stable business models.

On printed product a more conservative initial view on sales estimates continues, and the exposure in the US has been reduced further.

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).

Review by Audit Committee with external auditor.

Future's network has at least two diverse routes for all key offices and business-critical data is held on two highly resilient storage devices in different locations. In addition, all core switches are duplicated in different buildings so there are no single points of failure. 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. Further investment in the IT infrastructure has been made in 2013 and more is planned for 2014.

Future employs people who are passionate about their subject and 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

During 2012 Future suffered one criminal attack of its TechRadar website which resulted in encrypted non-sensitive data being stolen. The ICO was notified and confirmed that Future had 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 of any future hack. No attacks were suffered in 2013.

There are a number of general business risks to which Future is naturally exposed in the UK and US. In addition, the range of industry-specific 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.

Our internal controls seek to minimise the impact of risks, as explained in our Corporate Governance report on page 37, and during the year we have continued to develop those controls in response to the wider range of risks.

01 Identification of risks

• 02 Evaluation of level of risks and controls in place to manage those risks
• 03 Action taken to manage risks
• 04 Risks reported and monitored

Corporate responsibility

Responsible business

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

The London Advertising Sales team have continued their support of the Apples and Pears playground in Hackney.

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.

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 2013, 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 2013, 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.

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. Future is a member of 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.

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, and the use of labour.

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 2013 the training focus was on social media and the digital space. Globally we continued our programme of excellence with core skill training across all disciplines.

We delivered cost effective, multi-platform training to our editorial, sales, central and technical teams with specific skills to reflect the evolving media landscape. Our sales teams were once again skills audited and specific high-end suppliers were used to deliver targeted skill-set training to assist in the growing portfolio of products we offer to our clients.

Training needs are also identified as part of each employee's annual performance appraisal. The 2013 annual appraisal process began in July and is in progress.

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 2013, there were no fatalities or reportable (RIDDOR) injuries and 13 minor injuries. There were no fatalities and two minor injuries 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

Employment data across the Group	2013
Split of female:male employees as at 30 September 2013	39%:61%
Split of female:male Directors of the Company as at 30 September 2013	1:5
Split of female:male members of the Group Management Board as at 30 September 2013	2:8
Earnings meet at least legal minimum or minimum set by industry	Yes
Cases of reported and proven discrimination or harassment	None
Consultation and communication procedures in place for all areas of the business	Yes
Code of conduct circulated to all existing and new employees	Yes
Employment of young people under the age of 15	None

Strategic Report

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 and whistle-blowing, and we have 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 on and play a part in strategiclevel decision-making. Future's lively culture is echoed in our company intranets 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

Future is fully engaged with the local communities in all of its locations. In the UK the Group has continued its partnership with Bath-based charitable foundation Quartet, who make donations to local charities on our behalf. Charities supported this year include Positive Action on Cancer, Bath Deaf Club and the Beechen Cliff Youth Project. The London Advertising Sales team have continued their support of the Apples and Pears playground in Hackney for another year. This year's Golden Joystick Awards raised money for GamesAid, a UK charity which supports disabled and disadvantaged children and young people in the UK. In the US, staff have supported the San Francisco Food Bank and also organised a goodwill clothing drive.

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.

Statement of Greenhouse Gas (GHG) Emissions for the Group

Global GHG emissions in tonnes of CO2 equivalent:

Emissions from		Current Year
The combustion of fuel: gas for heating and fuel for vehicles (Scope 1)	UK USA Total	470 tonnes 102 tonnes 572 tonnes
The purchase of electricity, heat, steam or cooling by the Group for its own use (Scope 2)	UK USA Total	1,285 tonnes 376 tonnes Australia 25 tonnes 1,686 tonnes
Total Emissions	2,258 tonnes CO2	e
Intensity Ratio
Tonnes per £1million revenue	20.1 tonnes/£1m

We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

The emissions sources fall within our financial statements. We do not have responsibility for any emission sources that are not included in our financial statements.

Methodology:

We have used the UK Government's Environmental Reporting Guidance (2013 version). We have applied the 2013 DEFRA GHG Conversion Factor Repository to calculate the CO² e. As a Group with only office-based activities and no manufacturing activities, under the GHG Protocol Corporate Standard, our emissions fall under Scope 1 (the combustion of fuel) and Scope 2 (the purchase of electricity).

Notes:

• Scope 1 Time periods for combustion of gas for heating figures for the US office are for the financial year. Figures for UK offices are a mix of pro-rated calendar year consumption (London) and financial year consumption (Bath). All figures are estimates based on % share of office space within leased buildings except for UK Bath offices which are actual consumption where whole buildings or floors within buildings have their own meters.
• Scope 1 Time periods for combustion of fuel in vehicles only the UK operates leased vehicles and figures for the consumption of fuel are based on averaged annual mileage.
• Scope 2 Time periods for consumption of electricity figures for the US office are for the financial year. Figures for the Australian office are pro-rated from typical (August 2013) monthly consumption. Figures for UK offices are a mix of pro-rated calendar year consumption (London) and financial year consumption (Bath). All figures are estimates based on % share of office space within leased buildings except for UK Bath offices which are actual consumption where whole buildings or floors within buildings have their own meters.
• Scope 2 Electricity Sources No electricity was purchased from owned or controlled sources.
• Fugitive Emissions the Group benefits from air conditioning in some of its leasehold buildings. The scale of emissions from leaks is very small (estimated to be less than 0.5% of total emissions) and is deemed to be immaterial to overall reporting and trends.
• Base Year Financial year 2013 will be our baseline year for future comparisons.
• Intensity Ratio we are using 'Tonnes per £1million revenue' as the most appropriate measure in the context of our dual aims of growing revenues whilst restraining overheads.
• We have maintained our focus on other environmental impacts, particularly initiatives to reduce waste and to continue sourcing all our magazine paper from sustainable forestry.

Financial review

"Digital and Diversified

and increases in online

revenues generated from our UK- and US-based businesses continued to show strong growth and were up 20% overall, driven by further increases in digital circulation

Diversifying revenues

This financial review is based on a comparison of the Group's results for the year ended 30 September 2013 with those for the year ended 30 September 2012. In running the business operationally, management use a number of Key Performance Indicators (KPIs) which are set out on page 17.

Zillah Byng-Maddick Chief Financial Officer and Company Secretary

Statutory results for the year ended 30 September 2013

	2013	2012
Statutory results for the year	£m	£m
Revenue	112.3	123.5
EBITDAE	7.6	9.4
Depreciation charge	(0.9)	(1.1)
Amortisation of intangible assets	(2.0)	(1.5)
EBITE	4.7	6.8
Exceptional items	2.5	(3.6)
EBIT (Operating profit)	7.2	3.2
Net finance costs	(1.4)	(2.1)
Pre-tax profit	5.8	1.1
Earnings per share (p)	1.3	0.1
Adjusted earnings per share (p)	0.6	1.1
Dividends relating to the period (pence per share)	0.2	-

Normalised results for the year ended 30 September 2013

The normalised results for the Group, and a reconciliation to the statutory results above, are set out on page 88.

Normalised results are presented to better reflect 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 2011 and 30 September 2013, but include any new activities launched in that period.

Normalised results for the year	2013 £m	2012 £m
Revenue	106.9	103.6
EBITDAE	6.4	6.4
Depreciation charge	(0.9)	(1.1)
Amortisation of intangible assets	(2.0)	(1.3)
EBITE	3.5	4.0
Exceptional items	(0.2)	(4.6)
EBIT (Operating profit/(loss))	3.3	(0.6)
Net finance costs	(1.4)	(2.1)
Pre-tax profit/(loss)	1.9	(2.7)
Adjusted earnings per share (p)	0.3	0.4

advertising."

Digital & Diversified Defined:

• Digital circulation
• Digital advertising
• Digital commerce
• FutureFolio
• Future Plus
• Events

Review of operations

The review of operations is based primarily on a comparison of normalised results for the year ended 30 September 2013 with those for the year ended 30 September 2012. Unless otherwise stated, change percentages relate to a comparison of these two periods.

Analysis of revenue

	2013 £m	2012 £m	Change %
Digital and Diversified	34.7	29.0	+20%
Print	72.2	74.6	-3%
Total revenue	106.9	103.6	+3%

Group revenue overall rose by 3% to £106.9m and encouragingly we saw increases in both the UK and the US. In particular Digital and Diversified revenues generated from our UK- and US-based businesses continued to show strong growth and were up 20% overall, driven by further increases in digital circulation and increases in online advertising fuelled from the continuing growth in our audience. Digital and Diversified revenues now represent 32% of the Group revenues with digital advertising now representing 59% of our total advertising revenues.

Overall print based revenues continued to decline in the UK and the US although the level of that decline has been mitigated with a significant increase in the number of bookazines that have been published in the year – we have increased the number from 92 in 2012 to 203 in 2013.

	2013 £m	2012 £m	Change %
UK	87.6	85.4	+3%
US	20.1	18.9	+6%
Intra-group	(0.8)	(0.7)
Total revenue	106.9	103.6	+3%

Analysis of EBITDAE

	2013 £m	2012 £m	Change %
UK	7.5	8.3	-10%
US	(1.1)	(1.9)	+42%
Total EBITDAE	6.4	6.4	0%

Further analysis of the key drivers of the increase in EBITDAE is provided in the table overleaf which analyses the year-on-year variances across Digital and Diversified activities, print activities and overheads.

Normalised Group revenues (£m)

Group revenue by country

1: UK 81% 2: US 19%

Financial Review

Financial review

Group revenue 2013

1: Digital and Diversified 32%

2: US Print 8%

3: UK Print 60%

UK revenue 2013

1: Digital & Diversified 26%

2: Print 74%

Analysis of EBITDAE (continued)

	2013 £m	2012 £m	Change %
Digital and Diversified	7.4	4.8	+54%
Print	18.2	21.4	-15%
Overheads	(19.2)	(19.8)	-3%
EBITDAE	6.4	6.4	0%

The table above clearly illustrates the continuing progress being made in Digital and Diversified activities whilst at the same time demonstrating the relative impact of the print declines and overhead savings achieved during the year. The 3% reduction in overheads achieved during the year does not reflect the most recent restructuring activity.

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

UK-based performance

	2013 £m	2012 £m	Change %
Circulation revenue	54.4	53.2	+2%
Advertising revenue	23.6	23.4	+1%
Customer publishing	3.8	4.0	-5%
Licensing, events and other	5.8	4.8	+21%
Total revenue	87.6	85.4	+3%
EBITDAE	7.5	8.3	-10%
EBITDAE margin	9%	10%
Depreciation	(0.7)	(0.8)	-13%
Amortisation	(1.2)	(0.7)	+71%
EBITE	5.6	6.8	-18%
EBITE margin	6%	8%

UK-based activities saw revenue up by 3%. Within this we saw Digital and Diversified revenues increase by 16%, offsetting the declines in print-related revenues.

Circulation revenues increased by 2%. Print copy sales were flat whilst digital copy sales increased from 6% of total circulation revenue to 8% of total circulation revenue in the year.

Advertising revenues overall were up 1%. Digital advertising revenues increased by 17%, more than offsetting the print decline of 11%, and now represent 50% of total advertising revenue in the UK.

Headcount in the UK at the end of September 2013 was 831, a reduction of 4% from the end of September 2012. Further restructuring was undertaken in Q4, the full-year effect of which will be seen in the current year. Following this restructuring activity there is an on-going focus on the margin, to ensure that any further declines in revenue are offset by appropriate structuring of the cost base.

US-based performance

	2013 \$m	2012 \$m	Change %
Circulation revenue	10.5	10.9	-4%
Advertising revenue	15.0	13.0	+15%
Customer publishing	5.1	5.1	0%
Licensing, events and other	0.9	0.8	+13%
Total revenue	31.5	29.8	+6%
EBITDAE	(1.7)	(2.9)	+41%
EBITDAE margin	-5%	-10%
Depreciation	(0.3)	(0.5)	-40%
Amortisation	(1.3)	(1.0)	+30%
EBITE	(3.3)	(4.4)	+25%
EBITE margin	-10%	-15%

US revenue 2013

1: Digital & Diversified 60% 2: Print 40%

The US-based activities have shown revenue growth of 6% from 2012. Within this we saw Digital and Diversified revenues increase by 28%, offsetting the ongoing declines in print-related revenues.

Circulation revenue overall fell by 4% with the largest impact arising from print subscriptions which were down 20%. Advertising revenues were up 15%, with digital advertising up 49% and print advertising down 42%. Digital advertising in the US now represents 81% of total advertising revenues.

The improvement of \$1.2m in EBITDAE is driven by the digital revenue increases and the full year impact of the restructuring action undertaken through 2012 which has resulted in a \$0.8m saving year-on-year in overheads. In the second half the US business produced a positive EBITDAE of \$0.4m.

Exceptional items

Exceptional items on a statutory basis can be split into three elements as follows:

	£m
Profit on the sale of UK assets	2.7
Vacant property provision movements	1.2
Restructuring	(1.4)
Total exceptional items	2.5

The UK Rock titles were sold in April 2013 for gross consideration of £10.2m.

The restructuring cost relates to further action taken in the UK through the year, the benefits of which will be seen in 2014.

As a result of the restructuring activities in the US in 2012 we vacated one floor of the offices in San Francisco. During the year we have sublet that floor and therefore released an element of the vacant property provision established in 2012.

Financial review

Net finance costs

Net finance costs were £1.4m (2012: £2.1m) reflecting a decrease in the average net debt position over the year following the sale of the UK Rock titles in April 2013.

Taxation

The tax charge for the year amounted to £1.5m (2012: £0.9m), comprising a current tax charge of £1.2m (2012: £1.2m) and a deferred tax charge of £0.3m (2012: deferred tax credit of £0.3m). The current year charge arises in the UK where the standard rate of corporation tax is 23.5%. In the US the impact of the current year and brought forward tax losses means that there is no tax charge relating to the US.

Overall the effective rate for the Group when applied to the profit before tax was 26%. The Group continues to focus on compliance with tax authorities in all territories in which it operates. During the year the Group reached agreement with HMRC relating to the tax treatment of certain one-off transactions which took place in 2003. Part of that agreement will result in the Group paying tax of £6.2m plus interest (comprising instalments of £85,000 per month over five years from July 2013 and a final instalment of £2m). The tax payable was fully provided for in prior year accounts.

Earnings per share

		2013	2012
	Statutory	Normalised	Statutory	Normalised
Basic earnings/(loss) per share (p)	1.3	0.4	0.1	(0.9)
Adjusted earnings per share (p)	0.6	0.3	1.1	0.4

Adjusted earnings per share are based on the profit/(loss) after taxation which is then adjusted to exclude exceptional items and related tax effects. The normalised adjusted profit after tax amounted to £1.0m (2012: £1.3m) and the weighted average number of shares in issue was 332m (2012: 329m).

Dividend

The Board's policy is that dividends should be covered at least twice by adjusted earnings per share. As noted above for the year ended 30 September 2013 statutory adjusted earnings per share were 0.6p and on this basis the Board has recommended a final total dividend of 0.2p per share for the year.

If approved at the Annual General Meeting to be held on 3 February 2014, a final dividend of 0.2p per share will be paid on 14 March 2014 to all shareholders on the register on 14 February 2014. The ex dividend date will be 12 February 2014.

Cash flow and net debt

Net debt at 30 September 2012 was £14.1m. During the period there was a cash inflow from operations before cash exceptional items of £6.7m (2012: cash inflow of £6.5m). Cash inflow from the sale of non-core titles amounted to £9.2m (2012: £2.1m).

Net debt

Strategic Report

During the year cash outflows totalled £8.9m (2012: £11.4m) in respect of the following items:

• £2.4m (2012: £4.4m) in exceptional costs
• £2.9m (2012: £2.5m) in respect of capital expenditure
• £1.2m (2012: £1.4m) in net interest payments
• £1.8m (2012: £1.0m) in net taxation payments
• £0.6m (2012: £0.5m) in respect of bank arrangement fees
• £nil (2012: £1.6m) in respect of dividends

Foreign exchange and other movements accounted for the balance of cash flows.

As a result of the above, net debt at 30 September 2013 was £6.9m, a decrease of 51% from September 2012.

Credit facility and covenants

The Group signed a new four year Credit Facility in February 2013. Interest payable under the facility is calculated as the cost of three month LIBOR plus an interest margin of between 2.0% and 3.25%, dependent on covenant ratio performance. The key covenants are set out in the following table where net debt is exclusive of non-current tax and other payables and Bank EBITDA is not materially different to statutory EBITDA.

Bank Covenant
Net debt/Bank EBITDA	Less than 2.25 times for December 2013 and thereafter less than 2.0 times
Bank EBITDA/Interest	More than 4.0 times
Capital expenditure	125% of agreed annual budget

The Group was in compliance with all its covenants at 30 September 2013 as set out in the following table:

Covenant	30 September 2013	Limit
Net debt: Bank EBITDA	0.99	Less than 2.25 times
Bank EBITDA: Net interest	7.74	More than 4.0 times

The Group also met its covenant for capital expenditure at 30 September 2013.

Based on the calculation of 2013 EBITDA for bank purposes the Group had headroom of £9.4m over and above the level of bank debt at 30 September 2013.

Trading updates during the financial year

During the financial year the Group issued trading updates or made Interim Management Statements (IMSs) on 4 February 2013 (IMS), 22 May 2013 (Interim results), 18 July 2013 (IMS and trading update) and 15 October 2013 (trading update). The IMS and trading update on 18 July 2013 stated that the Board expected EBITDA to be £9.5m and EBITDAE to be £8.0m. The actual EBITDA result was £10.1m (ahead of the £9.5m forecast as a result of lower than anticipated restructuring costs effected through redeployment) and the actual EBITDAE result was £7.6m, broadly in line with the forecast £8.0m.

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

Zillah Byng-Maddick Chief Financial Officer and Company Secretary 13 December 2013

Strong leadership Board of

Peter Allen Independent non-executive Chairman

Mark Wood Chief Executive

Zillah Byng-Maddick Chief Financial Officer and Company Secretary

Manjit Wolstenholme Senior independent non-executive

Seb Bishop Independent non-executive

Mark Whiteling Independent non-executive

s Member of the Nomination Committee

l Member of the Remuneration Committee

n Member of the Audit Committee

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, Mecom Group plc, Scancell Holdings plc and Advanced Medical Solutions Group plc.

Mark Wood Chief Executive

Mark 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, Future has been named Consumer Digital Publisher of the Year in 2013 by the Professional Publishers Association, the Association of Online Publishers and the British Media Awards. Before joining Future, Mark was Chief Executive of ITN, the television news organisation, where he developed a range of digital ventures, including a worldleading 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.

Zillah Byng-Maddick

Chief Financial Officer and Company Secretary

Zillah joined the Board on 1 November 2013 and was appointed as Chief Financial Officer and Company Secretary of Future plc with effect from 18 November 2013. Zillah was CFO of Fitness First Group from 2006 to 2009 and, prior to her appointment to the Future plc Board, she was CFO of Trader Media Group – owner of Auto Trader – from 2009 to 2012, and interim CEO of Trader Media from 2012 to 2013. Zillah is currently a non-executive director of Mecom Group plc and Betfair plc. Zillah is a chartered management accountant and qualified treasurer.

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 PricewaterhouseCoopers, 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.

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 International CEO of PRODUCT (RED), 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, a member of the World Economic Forum's Young Global Leaders and an investor in digital start-ups such as Summly (sold to Yahoo), Adjug (sold to IgnitionOne) and Orlebar Brown.

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 electronics 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.

Strategic Report

Directors' report

For the year ended 30 September 2013

Directors' report

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, Film, Games, Future Women, Sport, Auto and Music.

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 and Strategic report explain 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 2013 Annual General Meeting

All resolutions put to the Annual General Meeting held on 4 February 2013 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 89% were cast in favour of all resolutions.

Reported financial results

The audited financial statements for the year ended 30 September 2013 are set out on pages 55 to 87. Details of the Group's results are set out in the consolidated income statement on page 56 and in the notes to the financial statements on pages 66 to 87.

Dividends

The Board's policy on dividends and its recommendation for a final dividend are set out on page 27 in the Financial review. The Company's Employee Benefit Trust (EBT) waives its entitlement to any dividends.

Share capital

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 Conduct 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 83. As at 30 September 2013, the number of shares in issue was 333.4 million. This represents a small increase of 0.1% compared with the number of shares in issue as at 30 September 2012. 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 4 February 2013, to purchase up to 33,300,000 of its own shares, representing just under 10% of the Company's issued share capital at a maximum price per share of 5% above 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 prior to the relevant purchase as at 14 December 2012, being the date the notice for the Annual General Meeting in 2013 was prepared. The Company has never purchased any of its shares and this authority will expire following the end of the Company's Annual General Meeting to be held on 3 February 2014, at which a resolution to renew such authority is proposed.

Directors

Biographical details of the Directors holding office as at 13 December 2013 are set out on page 30.

Directors' shareholdings in the Company's share capital are set out opposite. No Director

Significant shareholdings

At 13 December 2013, the Company had been notified of the following significant interests in its Ordinary shares:

Shareholder	Number of shares	Percentage of issued share capital
Aberforth Partners LLP	77,101,394	23.12%
Schroders Plc	72,790,854	21.83%
FIL Ltd	36,368,960	10.90%
Investec Asset Management Ltd	28,710,000	8.61%
Herald Investment	18,265,000	5.48%
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%
	276,973,858	83.06%
Directors' holdings (see opposite)	1,637,999	0.49%
Total of significant holdings	278,611,857	83.55%
Total number of shares in issue	333,476,541	100%

Strategic Report

Directors' shareholdings (audited)

Directors in office at 30 September 2013	Balance as at 30 September 2012	Purchases during the year	Balance as at 30 September 2013
Executive
Mark Wood	-	-	-
Graham Harding4	333,110	-	333,110
Non-executive
Peter Allen	800,000	-	800,000
Seb Bishop	17,000	-	17,000
Mark Whiteling	400,000	-	400,000
Manjit Wolstenholme	34,000	53,889	87,889
Total	1,584,110	53,889	1,637,999

Notes:

1. All holdings are beneficial.

2. Between 30 September 2013 and 13 December 2013 (being the latest practicable date prior to publication of this document) there were no changes to the holdings of serving Directors.

3. Details of the share options and awards for executive Directors are set out on page 45. There are no such options or awards for non-executive Directors. 4. Graham Harding left the Company on 30 November 2013. There were no changes to his holdings. Zillah Byng-Maddick was appointed to the Board on 1 November 2013. As at 13 December 2013, she

holds no shares in the Company.

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 pages 77 and 78) is terminable upon change of control of the Company. In common with market practice, awards under certain of the Group's long-term incentive plans (details of which are set out in the Directors' remuneration report on page 43 and note 25 on page 84) 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 the Company or on one month's notice by the executive to expire no later than three months from the date of the change of control.

Financial instruments

Information in relation to the Group's use of financial instruments is set out in note 23 on pages 80 to 83.

Corporate governance

The Board supports best practice in corporate governance. The Board's report on this subject is set out on pages 35 to 40.

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.

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 and that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business

model and strategy. 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

The Board considers that issues of corporate responsibility are important. The Board's report, including a statement on Greenhouse Gas Emissions for the Group, is set out on pages 21 and 22.

Annual General Meeting 2014

At the Company's fifteenth Annual General Meeting, which will be held on Monday 3 February 2014 at 12 noon at Future's

Directors' report

For the year ended 30 September 2013

Headquarters 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 89 to 90 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 2013, together with the reports of the Directors and auditors. The audited financial statements appear on pages 55 to 87.

Ordinary resolution 2 – Directors' remuneration implementation report

Shareholders will be asked to approve the Directors' remuneration implementation report for the financial year ended 30 September 2013, which is set out on pages 42 to 47.

Ordinary resolution 3 – Directors' remuneration policy

Shareholders will be asked to approve the Directors' remuneration policy for the three year period commencing on 1 October 2013 which is set out on pages 48 to 51.

Ordinary resolution 4 – Payment of final dividend

The Directors propose a final dividend of 0.2 pence per Ordinary share to be paid on 14 March 2014 to those Ordinary shareholders on the register at the close of business on 14 February 2014. Since no interim dividend was paid in respect of the period to 31 March 2013 the total dividend payable in respect of the year ended 30 September 2013 amounts to 0.2 pence per Ordinary share. The Board's policy on dividends and its recommendation for a final dividend are set out in the Chairman's statement and on page 27 of the Financial review.

Ordinary resolutions 5 to 10 – Election of Zillah Byng-Maddick and annual re-election of other Directors

Following Zillah Byng-Maddick's appointment to the Board on 1 November 2013, she stands for election to confirm her appointment. Under the terms of her appointment Zillah is committed to perform her services for the equivalent of seven days in every ten, notwithstanding the fact that as a Director she will work such hours as may be reasonably necessary to enable her to properly discharge her duties.

Consistent with our policy since 2004, all Directors are proposed for re-election.

Biographical details of all Directors are set out on page 30.

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 nonexecutive 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 Zillah Byng-Maddick be elected as a Director and each Director standing for re-election be re-elected.

Ordinary resolutions 11 and 12 – 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 40 in the Corporate Governance report.

Ordinary resolution 13 – 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 £2,222,000 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 £2,222,000 which represents approximately two thirds of the Company's issued Ordinary shares (excluding treasury shares) as at 13 December 2013. This maximum is reduced by the nominal amount of any Relevant Securities allotted under paragraph 13.2 of the Notice of AGM; and
• (b) in any other case, Relevant Securities up to a maximum nominal amount of £1,111,000 which represents just under one third of the Company's issued Ordinary shares as at 13 December 2013. This maximum is reduced by the nominal amount of any equity securities allotted under paragraph 13.1 of the Notice of AGM in excess of £1,111,000.

If granted, this authority would replace all previous authorities granted in this connection. The authority granted by this resolution will expire on 31 March 2015 or, if earlier, following the conclusion of the next AGM of the Company. If the Directors exercise the authority granted under paragraph 13.1 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 14 – 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 these 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 15 – Disapplication of statutory pre-emption rights

Resolution 15 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 13 in connection with a rights issue (or other pro rata Ordinary

Financial Review

share issue) and otherwise up to an aggregate nominal amount not exceeding £166,700, equivalent to just under 5% of the Company's issued Ordinary share capital as at 13 December 2013, such authority to expire on 31 March 2015 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 16 – Purchase of own shares

Resolution 16 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 33,340,000 representing just under 10% of the issued Ordinary share capital of the Company as at 13 December 2013.

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 2015 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 16, 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 13 December 2013 (being the latest practicable date prior to publication of this document) was 12,911,750. The proportion of issued share capital that they represented at that time was 3.87% 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 4.30%.

Special resolution 17 – 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 17 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 30 January 2014. 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 91 to 92.

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 29 and 30, 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 Strategic report and Financial review include 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; and
• (c) the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.

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

Zillah Byng-Maddick Chief Financial Officer and Company Secretary 13 December 2013

Governance report

"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

Board of Directors Page 35

Audit Committee Page 38

Nomination Committee Page 40

Remuneration Committee Page 40

Good Practice Corporate

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 enshrined at the heart of our business structure and processes.

Zillah Byng-Maddick Chief Financial Officer and Company Secretary

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 the Group.

For the financial year ended 30 September 2013, we have complied in full with the requirements of the UK Corporate Governance Code (2012) 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 31 to 34.

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 29 and 30.

Mark Millar resigned as Company Secretary and was replaced by Graham Harding, Chief Financial Officer, on 25 January 2013. There were no other changes during the year to 30 September 2013. On 1 November 2013, Zillah Byng-Maddick was appointed to the Board to replace Graham Harding who left the Company on 30 November 2013. Zillah Byng-Maddick took on the role of Chief Financial Officer and Company Secretary on 18 November 2013.

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.

The non-executive Directors all serve threeyear 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. Manjit Wolstenholme is the Senior independent non-executive Director. 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 during which all members were present.

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
Seb Bishop	6 of 6
Mark Whiteling	6 of 6
Manjit Wolstenholme	6 of 6
Mark Wood	6 of 6
Graham Harding	6 of 6

Strategic Report

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 2013 and it was noted that 36 matters had been considered by the Board during the year. The schedule is available on the Company's website at www.futureplc.com. The Board delegates day-to-day operational matters to the Group management board.

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 94). 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.

Advice and support

All Directors have access to the Company Secretary who 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 2013. The Company maintains appropriate insurance for its Directors.

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.

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 regular updates and refresher sessions are provided by the Company Secretary and the Company's legal advisers and auditors, to inform the Board or relevant Committees of important changes in legislation, regulation and best practice.

Non-executive Directors

As a smaller company we are only required to have two independent non-executive Directors, however we have chosen voluntarily 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.

Summary of performance evaluation
Objectives for 2013	Steps taken during 2013
Financing of the business through digital transition	Signed new four-year credit facility agreement in February 2013
Improve balance sheet	The sale of the UK Rock titles and the signing of the new credit facility agreement has significantly strengthened the balance sheet
Consolidation and development of US business	Good progress has been made in the year in significantly reducing the level of EBITDAE losses in the US business. Management believe the business is on track for EBITDAE

profitability in 2014.

Corporate Governance report

Re-election of Directors

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.

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 results were presented to the Board for discussion. The Chairman discussed the Board's performance during the year and any specific requirements for training and development with each Director. During the process the Board also compared its performance with the results and recommendations from prior year's performance evaluations and noted that the Board had made significant progress in dealing with the risks and challenges identified for the year. The Board considers this exercise to be of significant value in ensuring a functional and effective Board and Committees.

The Chairman also met with non-executive Directors during the year 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

The Group has continued to generate operating cash flows during the year. It has also generated additional cash flows from the disposal of certain assets (predominantly print based) in the UK. 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), subscribers (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.

Credit facility

The Company signed a new four year £31m credit facility with Barclays and Santander on 22 February 2013. This was made up of a term loan of £6m and a revolving credit facility of £25m. Following the disposal of the UK Rock titles in April 2013, the term loan was repaid in full.

Financial covenant compliance

Key covenants are tested quarterly, and are set out in the table at the bottom of this page.

At 30 September 2013 following a further year of tight working capital management and based on the calculation of EBITDA for bank purposes the Group had headroom of £9.4m over and above the level of net bank debt at 30 September 2013.

Risk management and internal controls

Details of the principal risks and the Group's approach to managing them are set out on pages 19 and 20. 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.

Bank Covenants Net debt/Bank EBITDA Less than 2.5 times at 31 March 2013 and 30 June 2013, less than 2.25 times at 30 September 2013 and 31 December 2013 and less than 2.0 times thereafter Bank EBITDA/Interest More than 4.0 times Capital expenditure 125% of agreed annual budget

Strategic Report

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 2013 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.

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.

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. 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 following the analyst presentations of the results.

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 (3 scheduled meetings)
Mark Whiteling1 (Chairman)	3 of 3
Peter Allen	3 of 3
Manjit Wolstenholme	3 of 3

1. The Chairman of the Committee, Mark Whiteling, has recent and relevant financial experience.

The Audit Committee's primary objective is to provide effective financial governance and monitor the integrity of the Group's financial statements and internal controls.

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 external auditors and undertaking a detailed review of the Group's internal controls and risk management systems. It considered whether the 2013 Annual Report was fair, balanced and understandable and advised the Board accordingly. The Audit Committee carries out the functions required by rule 7.1.3 of the Disclosure and Transparency Rules.

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

Peter Allen Chairman

Corporate Governance report

"The Audit Committee is responsible for providing effective financial governance and monitoring the integrity of the Group's financial statements and internal controls."

Mark Whiteling Chairman of Audit Committee

Significant financial reporting judgements The Audit Committee discussed the key risks and judgements with management and the auditors as part of the audit planning process in July. At the same time they discussed and agreed upon appropriate levels of materiality in the context of the anticipated results for the year. As a result of those discussions an audit plan was agreed and subsequently executed.

The significant issues considered in relation to the financial statements for the year ended 30 September 2013, which were originally identified and discussed as part of the planning process referred to above, are set out below and were addressed as follows:

1. Impairment

IAS 36 requires an impairment test to be performed for goodwill on an annual basis. Management prepared a detailed impairment assessment of the UK business and the US business as separate cash generating units.

The key assumptions made in that assessment were as follows:

Growth rate to perpetuity	2.0%
EBITAE growth rate in years 1-5	5.2%
Discount rate (post-tax)	9.5%

Management discussed the impairment assessment and responded to the challenges put forward by the auditors and the Audit Committee. Management concluded that as a result of this assessment no impairment is required at 30 September 2013. The Audit Committee agree with this conclusion.

2. Revenue recognition

The areas of revenue which carry the most judgement are newstrade revenue (both domestic and export) and revenue relating to the increasing number of larger advertising contracts. Management have carefully considered the estimates made in respect of newstrade revenues and have ensured that the recognition of revenues on the larger advertising contracts is appropriate. In all cases the estimates and judgements made have been discussed with the auditors and the Audit Committee. Particular attention has been given to bookazines in the context of the fact that returns information relating to export newstrade can take up to nine months from the on sale date to be finalised. Whilst it is recognised that there is an increased level of uncertainty in the area of

newstrade estimates due to the increased volume of products which went on sale in the second half of the year (in particular relating to bookazines) management believe the estimates made were appropriate.

1. Risk of management override of internal controls

The Audit Committee have discussed this with the auditors and noted the one-off testing carried out by the auditors on a sample basis. Based on those discussions, the fact that the one-off testing did not reveal any issues and the levels of review of the financial results of the business the Audit Committee are satisfied that this risk has been managed effectively and mitigated where possible.

1. Going concern

The Audit Committee have considered the going concern assumption as set out on page 37.

1. Tax position

The Audit Committee have reviewed the tax position of the Group with management and the auditors. During the year the Committee approved the settlement agreement with HMRC noted in the Financial review and have been actively involved in considering any areas of judgement relating to tax positions in the UK, US and Australia.

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 were at a level equivalent to 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 68.

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 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 2013, the Audit Committee has conducted its review of the auditors' independence and concluded that no conflict of interest exists between PricewaterhouseCoopers LLP audit and non-audit work and that their involvement in non-audit matters, which was mainly tax-related and performed by a separate team, 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 non-audit work.

The Group has recently had little non-audit 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 14 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 (1 scheduled meeting)
Peter Allen (Chairman)	1 of 1
Manjit Wolstenholme	1 of 1
Seb Bishop	1 of 1
Mark Whiteling	1 of 1

In addition to the scheduled meeting, there was one conference call during which all Committee members were present to discuss the departure of Graham Harding and the recruitment of his replacement.

The Committee agreed that the search for a new Chief Financial Officer should focus on finding a candidate with experience of the transition from a print to digital business and that a recruitment consultancy would be appointed to lead the search. Zillah Byng-Maddick was subsequently identified, outside of that process, as being an ideal candidate fulfilling key criteria. Zillah was interviewed by each non-executive Director before her

appointment was confirmed and attended a Board meeting as an observer prior to the date on which her appointment started.

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 2014 AGM and the election of Zillah Byng-Maddick to confirm her appointment to the Board. 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 (3 scheduled 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 conference calls during which all Committee members were present.

The Remuneration Committee determines the remuneration packages of executive Directors, including performance-related awards and share-based incentives, remuneration policy, which includes the individual bonus targets for executive Directors and performance criteria attached to sharebased incentives, the remuneration of the Chairman, recommendations of remuneration levels for non-executive Directors and senior management in line with industry remuneration packages and the implementation of any new share-based incentive scheme proposed to be implemented. The Directors' remuneration report is set out on pages 41 to 51.

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

Zillah Byng-Maddick Chief Financial Officer and Company Secretary 13 December 2013

Investor Relations

For copies of all of the Group's public announcements made via the RNS and copies of the Committees' terms of reference, visit

www.futureplc.com/investors

Strategic Report

Directors' remuneration report

For the year ended 30 September 2013

Annual statement

The remuneration philosophy is based on the need to motivate and incentivise the executive Directors, whilst aligning their interests with those of the shareholders.

Strategic Report

Financial Review

The following report provides details of Directors' remuneration for the year ended 30 September 2013. In setting remuneration for the year, the Committee applied the principles set out in the Remuneration policy report.

Remuneration Committee

Four independent non-executive Directors served on the Remuneration Committee during the year to 30 September 2013: Manjit Wolstenholme chairs the Committee and Peter Allen, Seb Bishop and Mark Whiteling served throughout the period. Graham Harding, Chief Financial Officer and Company Secretary, has been Secretary to the Committee since 25 January 2013 following the resignation of Mark Millar, who was Company Secretary and Secretary to the Committee from September 2002. On 1 October 2013, it was announced that Graham Harding would be leaving the Company on 30 November 2013 and would be replaced by Zillah Byng-Maddick, who would become the new Chief Financial Officer as well as 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 non-executive Directors' fees, 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.

It is the Board that is responsible for determining the remuneration of non-executive Directors following the recommendation of the Committee as set out on page 43.

No Director is involved in deciding his or her own remuneration. As explained on page 36, the terms of reference of the Remuneration Committee, reviewed annually, are available on the Company's website.

Performance-related bonus (Annual Bonus Scheme)

Operation of the scheme

The performance-related bonus is subject to both profit related and subjective individual performance criteria, with 20% of the potential maximum performance-related bonus payable being subject to individual performance criteria determined by the Committee.

The potential maximum performance-related bonus payable to the executive Directors under the Annual Bonus Scheme during 2013 was 100% of basic annual salary for the Chief Executive and 65% for the Chief Financial Officer.

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

Performance targets

The profit criteria for payment of the performance-related bonus for 2013 was in a range from 90% to 115% target EBITE, as follows:

:: If EBITE is 10% below target EBITE, no discretionary bonus will be payable.

Single Total Figure of Remuneration (audited)

The remuneration of the Directors is set out below:

Salary/fees Benefits¹ Annual bonus3 PSP3, 4, 5 Pension2 Total 2013 £'000 2012 £'000 2013 £'000 2012 £'000 2013 £'000 2012 £'000 2013 £'000 2012 £'000 2013 £'000 2012 £'000 2013 £'000 2012 £'000 Mark Wood 285 258 10 10 - 130 - - 36 32 331 430 Graham Harding 185 169 7 6 - 55 - - 23 19 215 249 Total for executive Directors 470 427 17 16 - 185 - - 59 51 546 679 Peter Allen 120 112 - - - - - - - - 120 112 Manjit Wolstenholme 45 44 - - - - - - - - 45 44 Mark Whiteling 45 44 - - - - - - - - 45 44 Seb Bishop 40 39 - - - - - - - - 40 39 Total for non-executive Directors 250 239 - - - - - - - - 250 239 Total 720 666 17 16 - 185 - - 59 51 796 918

Notes:

1. Benefits for executive Directors comprise principally car allowance, private health insurance and life assurance. 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 cash payment is not included in determining his entitlement to any bonus, share-based incentive or pension entitlement.

3. Details relating to the Annual Bonus Scheme and the Performance Share Plan ("PSP") are set out on pages 42 and 43.

4. The PSP award granted to Graham Harding in November 2009, when he occupied the role of Group Financial Controller, lapsed in November 2012 as a result of both EPS and TSR performance criteria not being satisfied. For more information, see explanation relating to PSP scheme on page 43. 5. The PSP award granted to Graham Harding in December 2010, when he occupied the role of Group Financial Controller, will lapse in December 2013 since performance criteria have not been

satisfied. For more information, see explanation relating to PSP scheme on page 43. 6. Zillah Byng-Maddick was appointed to the Board on 1 November 2013 and consequently no remuneration is included in the table above.

Directors' remuneration report

For the year ended 30 September 2013

• :: If EBITE is between EBITE target and 10% below EBITE 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 EBITE target is achieved, 40% of basic annual salary will be payable to the Chief Executive and 26% of basic annual salary will be payable to the Chief Financial Officer.
• :: If EBITE 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 EBITE target is exceeded by 15% or more, the maximum profit related element of the bonus equal to 80% of basic annual salary for the Chief Executive and 52% of basic annual salary for the Chief Financial Officer will be payable.

The EBITE target is not disclosed as this is believed to be a commercially sensitive number but it is set by the Committee to be challenging and is set by reference to the budget for the relevant financial year. In 2013, it was adjusted to take into account the impact on EBITE in the year of the sale of the UK Rock titles in April 2013.

The individual performance criteria set by the Committee were designed to reward the successful implementation of specific elements of the Group's financial and operational strategy.

Payment of any part of the individual performance-related bonus was subject to the 90% EBITE floor being achieved.

Actual performance against targets for the year

Since the actual EBITE achieved of £4.7m was below the 90% floor, no performance-related bonus is payable to either of the executive Directors in respect of the financial year to 30 September 2013.

2005 Performance Share Plan (PSP)

Operation of the scheme

The PSP has been in operation since 2005 and is designed to reward performance over a three-year period in the context of performance targets which are designed to align the interests of the executive Directors with those of the shareholders. Those targets are set out in the next two columns. The maximum amount of an award in any financial year is normally 100%

of basic annual salary. However, in exceptional circumstances, where it is felt necessary to provide further incentive to the executive Directors, awards of up to 200% of basic annual salary may be approved. Prior to January 2012 awards were granted to executive Directors and key senior executive management, including Graham Harding in his role as Group Financial Controller. Since this date, awards have been made only to the two executive Directors.

Performance targets

Subject to the executive Directors remaining in employment at the vesting date, awards shall vest subject to the following criteria having been met.

:: Earnings Per Share (50% of award)

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

:: Total Shareholder Return (50% of award)

The Company's TSR performance is compared against a basket of comparator companies comprising at all times a minimum of 15 companies.

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 in median ranking, 25% of this part of the award will vest through to 100% if the Company is ranked in the upper quintile, i.e. top 20%. Between median and upper quintile, this part of the award will vest on a pro rata straightline basis.

In respect of the TSR performance for awards granted up to 20 December 2010, the Company's TSR performance was measured against the following basket of comparator companies:

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

Trinity Mirror Wilmington Group WPP Group

The list of comparator companies in relation to all PSP awards granted from 21 December 2010 onwards is as follows:

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

Performance against targets in respect of the 27 November 2009 award

The movement in EPS for the relevant measurement period was -39%, and TSR performance placed the Company 15th within the group of 18 comparator companies. Consequently, the PSP award granted to Graham Harding in November 2009 lapsed in its entirety on 27 November 2012.

Performance against targets in respect of the 21 December 2010 award

The Committee exercised its discretion to waive the requirement for Graham Harding to remain employed within the Group at the vesting date and to allow the award to vest in December 2013, subject to the relevant performance criteria having been met. The movement in EPS for the relevant measurement period was -67% and TSR performance placed the Company 16th within the group of 19 comparator companies. Consequently, the PSP award granted to Graham Harding in December 2010 shall lapse in its entirety on 21 December 2013.

Non-executive Directors' remuneration

Non-executive Directors do not participate in any of the Company's share incentive arrangements, nor do they receive any benefits. Their fees are reviewed every three years. The Chairman's fees are set by the Committee, and those for the non-executive Directors are set by the Board as a whole.

Share incentives awarded during the year (audited)

PSP Grant: 17 December 2012

	% salary	Value (£)	% vesting at min performance	No. shares awarded	Performance period
Mark Wood	100%	£285,000	12.5%	1,583,333	1 Oct 2012 – 30 Sept 2015
Graham Harding	100%	£185,000	12.5%	1,027,778	1 Oct 2012 – 30 Sept 2015

Notes:

1. The value of the PSP award is calculated using the share price at the date of grant, which was 18p per share.

2. The PSP awards are exercisable at nil value.

3. The performance conditions attached to the grant of the above awards are the same as set out on page 43. 4. The percentage vesting at minimum performance represents the 25% vesting of the TSR element of the award.

Pension entitlements (audited)

The only element of remuneration that is pensionable is basic annual salary, excluding performance related bonuses and benefits in kind. Employer's pension contributions are payable for the executive Directors at a rate of 12.5%. 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 performance-related bonus, share based incentive or pension.

The liability of the Company in respect of the executive Directors' pensions amounts to £1,927 as at 30 September 2013. Normal retirement age under the scheme rules is 75.

Payments to past Directors (audited)

No payments were made to any past Directors during the financial year ended 30 September 2013.

Payments for loss of office (audited)

During the financial year to 30 September 2013, no payments were made to any Director who served during the year ended 30 September 2013 or any previous financial year in respect of loss of office.

Graham Harding left the Company on 30 November 2013 having served two months of his contractual notice period. In lieu of the remaining ten months' notice, he will receive a lump sum payment of £123,933 in December 2013 and a further £30,983 on 31 July 2014 save that, where he has found alternative employment by 31 July 2014, any amount that he is due to earn in August and September 2014 shall be deducted from the amount payable on 31 July 2014. In addition, the

Company shall pay a pension contribution in the amount of £15,417 into the Company's group personal pension plan on his behalf in December 2013, and a further contribution of £3,854 on 31 July 2014, save that such amount will be reduced by any amount due to be paid into any future employer's pension plan during August and September 2014. In addition to the above, he will receive a further ex gratia amount of £34,838 in December 2013 as compensation for employment claims arising on termination and certain benefits including private health insurance up until 30 September 2014.

Statement of Directors' shareholding and share interests (audited)

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. In respect of Mark Wood and Graham Harding, no shares were purchased between 27 October 2011 and 30 September 2013, however Graham Harding has a holding of 330,110 shares which was accumulated prior to his appointment. The relevant five year period ends on 26 November 2016. In respect of Zillah Byng-Maddick, the period commenced on 1 November 2013 and will end on 31 October 2018.

Details of Directors' shareholdings are set out on page 32 of the Directors' report.

Directors' remuneration report

For the year ended 30 September 2013

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, including details of the awards made during the year.

Directors in office at 30 September 2013	Date of grant	Price paid for grant	Earliest exercise date	Expiry date	Exercise price per share (p)	Balance at 1 Oct 2012	Granted during the year4	Lapsed unexercised during the year	Balance at 30 Sept 2013
PSP1
Mark Wood	18 Jan 2012	Nil	18 Jan 2015	N/A	Nil	3,500,000	-	-	3,500,000
	17 Dec 20124	Nil	17 Dec 2015	N/A	Nil	-	1,583,333	-	1,583,333
Graham Harding5	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	-	(555,556)	1,444,444
	17 Dec 20124	Nil	17 Dec 2015	N/A	Nil	-	1,027,778	(1,027,778)	-
Sharesave2
Mark Wood	20 Dec 2010	Nil	1 Feb 2014	1 Aug 2014	16.5	54,545	-	-	54,545
Graham Harding	20 Dec 2012	Nil	1 Feb 2016	1 Aug 2016	14.0	-	64,285	-	64,285
DABS3
Graham Harding5	21 Dec 2010	Nil	21 Dec 2013	N/A	Nil	62,500	-	-	62,500

As noted on page 32, Graham Harding's beneficial interests in the shares of the Company were 333,110 at 30 September 2013 (333,110 at 30 September 2012). Mark Wood held no beneficial interest in the shares of the Company on these dates.

Notes:

1. The performance criteria which apply to awards under the PSP scheme are set out on page 43.

2. Details of the Sharesave scheme, which has no performance conditions, are set out in note 25 on page 85.

3. Graham Harding is not eligible to receive awards under the DABS 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. The DABS has been in operation since January 2005 and applies to Group senior managers below executive Director level. The maximum value of any award granted under the DABS to any participant is an amount which is equal to a fixed percentage of the participant's annual cash bonus received or receivable in respect of the previous financial year. The number of shares awarded is calculated by reference to the market value of a share in the Company on the date of the award. Shares awarded will vest three years from the date of grant of the award, subject only to the participant remaining employed within the Group at the vesting date.

4. The market price at the time of grant of the PSP awards on 17 December 2012 was 18p.

5. Graham Harding left the Company on 30 November 2013. The PSP Award granted on 17 December 2012 over 1,027,778 shares lapsed in full on 30 September 2013. The Committee exercised its discretion to waive the requirement for Graham Harding to be in employment on the vesting date of the DABS Award, and allow the DABS Award granted over 62,500 shares to vest as normal on 21 December 2013. The Committee further exercised its discretion to allow a portion of the PSP Award granted on 18 January 2012 to vest as normal on 18 January 2015 on a pro rata basis (subject to the relevant performance criteria being met), therefore 555,556 options lapsed on 30 September 2013 and 1,444,444 options will vest as normal on 18 January 2015 subject to performance criteria having been met.

Company performance

The performance graph opposite shows the TSR on a holding of shares in the Company compared with the FTSE All Share Media Index (UK companies).

The following is a list of the companies currently included in the FTSE All Share Media Index (UK companies):

British Sky BCast Group Centaur Media Chime Comms Entertainment One (DI) Euromoney Instl. Investor Huntsworth Informa ITE Group ITV Johnston Press Moneysupermarket.com GP Pearson Perform Group Reed Elsevier Rightmove Tarsus Group Trinity Mirror UBM UTV Media Wilmington Group WPP 4Imprint Group

Graph: Past five financial years ended 30 September 2013

Total Shareholder Return: Rebased to Future plc as of 1 October 2008

Chief Executive pay during last five years

Year	Chief Executive single figure £'000	Bonus paid as % of maximum	Share based incentives vesting as % of maximum
2009 (Stevie Spring)	£423	0%	100%1
2010 (Stevie Spring)	£746	40%	48%2
2011 (Stevie Spring)	£546	0%	100%3
2012 (Mark Wood)	£430	50%	0%4
2013 (Mark Wood)	£331	0%	0%4

Notes:

1. This represents shares which were granted as part of an exceptional one-off award intended to aid recruitment and retention. The award was not subject to performance criteria.

2. This represents the first tranche of a deferred bonus share award which was not subject to performance criteria and the PSP award granted in December 2006 which partially vested in December 2009 following the partial satisfaction of TSR performance criteria.

3. This represents the second tranche of a deferred bonus share award which was not subject to performance criteria. The PSP award granted in December 2007 lapsed in December 2010.

4. The first awards granted to Mark Wood under the PSP were granted in January 2012 and will not vest until January 2015, subject to performance criteria being met.

Percentage change in remuneration of Chief Executive

	Salary			Benefits (inc pension)			Bonus
	2013	2012	% change	2013	2012	% change	2013	2012	% change
Mark Wood	£285,000	£260,000	+9.6%	£46,000	£42,000	+9.5%	£0	£130,000	-100.0%
All employees	£35,418	£34,896	+1.5%	£3,454	£3,501	-1.3%	£144	£545	-73.6%

Directors' remuneration report

For the year ended 30 September 2013

Relative importance of spend on pay

The relative importance of the spend on pay for the business is shown in the table below.

	2013 £m	2012 £m
Group pay	45.5	47.4
Group operating costs excluding Group pay & exceptional costs	62.1	69.3
Capital expenditure	2.9	2.5
Dividends	0.0	1.6

The table shows the actual expenditure of the Group, and change between the current and previous years, on remuneration paid to all employees compared to the total operating costs for the Group excluding exceptional costs and remuneration, and investment in capital expenditure and dividends.

Shareholder voting

At the last Annual General Meeting, votes on the Directors' remuneration report for the year ended 30 September 2012 were cast as follows:

	For	%	Discretionary	%	Against	%	Abstain	%
Approval of Directors' remuneration report for 2012	277,694,590	99.89	273,367	0.10	21,018	0.01	500	0.00

Implementation of remuneration policy in the year to 30 September 2014

The Remuneration Committee proposes the following changes to the remuneration policy for 2014, as outlined in the Remuneration policy report on pages 48 to 51, subject to shareholder approval at the Company's AGM on 3 February 2014.

Element	Operation of element	Max. potential value	Performance, weighting & time
Base salary	No change	No change1,2	No change
Benefits	No change	No change	No change
Annual Bonus	No change	No change3	The Committee approved an increase in the stretch of the range of profit related targets, from 90% to 115% of EBITE to a range of 85% to 115% of EBITE. The weighting of profit-related targets to individual subjective performance targets remains unchanged.
PSP	No change	No change	No change
Pension	No change	No change	No change

Notes:

1. Pay reviews take place annually and any increase takes effect from 1 October. The Company has postponed pay reviews across the Group, including for executive Directors. To the extent that the Company implements a pay rise during the year for all employees, the executive Directors' salaries shall be increased with effect from the same date as any increase for all employees and such increase shall be limited to the average percentage increase awarded to all employees.

2. A new Chief Financial Officer has been appointed with effect from 18 November 2013. While the basic annual salary and potential maximum bonus of Zillah Byng-Maddick on a full-time equivalent basis are higher than that of Graham Harding, they remain in line with the remuneration policy.

3. Performance targets for the Annual Bonus for 2014 are not disclosed due to their commercial sensitivity. In the event that there is an increase in the executive Directors' base salaries during the year, the potential maximum value of the Annual Bonus and pension shall increase accordingly.

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 35 to 40.

Remuneration policy report

The policy set out below is intended to apply for all financial years beginning on or after 1 October 2013 to 30 September 2016, subject to shareholder approval at the Company's Annual General Meeting to be held on 3 February 2014 and shall take effect following conclusion of the 2014 AGM.

To aid understanding of this policy, we have included detailed explanations of how our forward-looking policy differs from the policy in operation in the financial year to 30 September 2013.

The policy, if adopted, will be displayed on the Company's website, in the area reserved for investors, immediately after the 2014 AGM.

The Committee considers the remuneration policy annually to ensure that it remains aligned with the Group's business needs and is appropriately positioned relative to the market. However, there is no intention to put the policy forward to shareholders for approval more frequently than every three years unless an amendment is proposed.

Approach to recruitment remuneration for executive and non-executive Directors

The Committee's objective at the time of an appointment to a new role is to weight executive Directors' remuneration packages towards performance-related pay, with performance-related targets linked to financial performance of the Group against budget and the Group's performance against business objectives and its stated strategy.

Any new executive Director's remuneration package would include the same elements as those of the existing executive Directors, as shown in next column.

Element of remuneration	Maximum % of salary
Salary	Not higher than market value
Benefits	Dependent on circumstances
Pension	12.5% of basic annual salary
Performance related bonus2	100%
Share incentive schemes1	100%

Notes:

• 1. PSP scheme rules provide for awards of up to 100% of basic annual salary, save in exceptional circumstances where the Committee is allowed discretion to award up to 200% of basic annual salary.
• 1. The Committee retains discretion to make one-off sign on payments or to grant awards under the share-based incentive scheme of up to 200% of basic annual salary to the extent that it is necessary to recruit a high calibre individual, or to compensate the individual for loss of bonus or other incentive awards granted by the previous employer.
• 1. In the event of an internal promotion, any commitments made by the Company to an internal candidate shall be honoured even if it would otherwise be inconsistent with the policy.

In determining the level and make-up of executive Directors' remuneration, the Committee 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.

• (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 that are capped at a percentage of salary are restricted if salaries are low.
• (e) Subjective criteria are applied to an element of the performance-related bonus of the Chief Executive and Chief Financial Officer (with a financial underpin) in order to ensure that the Committee retains discretion and to ensure no performancerelated bonus is unjustly received.

When determining the level of non-executive Directors' fees, the Board considers that the fees offered should be competitive with those available for non-executive Directors operating in similar markets on a similar scale, and should be sufficiently desirable to attract and retain high calibre individuals.

Service contracts and payments for loss of office

Executive Directors

Contract provision	Policy	Details
Notice periods	Director or Company shall be entitled to serve 6 months' notice (in Zillah Byng-Maddick's case) or 12 months' notice (in Mark Wood's case).	A Director may be required to work during their notice period or be put on garden leave.
Compensation for loss of office	Director shall be entitled to receive 6 months' (in Zillah Byng-Maddick's case) or 12 months' (in Mark Wood's case) salary and benefits during any unexpired notice period.	While service agreements allow for monthly payments during notice period which are subject to mitigation, the Committee retains discretion to make payments in such manner as is deemed appropriate particularly by reference to the circumstances of the loss of office.
Treatment of share incentives on termination	Incentives will lapse or vest at the Committee's discretion, subject to performance criteria being met and the rules of the scheme.	The Committee has discretion to allow awards to vest partially or in full on termination, or to preserve awards until normal vesting date.
Change of control	In the event of a change of control, a Director may terminate their appointment on serving no less than 1 month's notice.	In the event of termination by either the Director or the Company, the Director will be entitled to receive 6 or 12 months' salary, in line with the contractual notice period.
Non-executive Directors
Notice periods	3 months' notice from either Company or Director.	Appointed for a 3 year term, subject to annual re-election by shareholders at AGM.

Copies of Directors' service agreements and letters of appointment are available for inspection on request at the Company's registered office.

Financial Review

Directors' remuneration report

For the year ended 30 September 2013

Remuneration table

Executive Directors

Element	Operation	Objective & link to strategy
Basic annual salary	Basic annual salary is paid in 12 equal monthly instalments during the year and is reviewed annually, with any change taking effect from 1 October. When assessing the level of basic annual salary, the Committee takes into account performance, market conditions, remuneration of equivalent roles within comparable companies, the size and scale of the business and pay in the Group as a whole.	To recruit, retain and motivate individuals of high calibre, and reflect the skills, experience and contribution of the relevant Director.
Benefits	Current benefits available to executive Directors are car allowance, permanent health insurance, healthcare and life assurance. Additional benefits may be offered if applicable and subject to the maximum value of all benefits not exceeding the maximum potential value set by the Committee.	To ensure broad competitiveness with market practice.
Pension	The Company shall make a contribution up to a maximum percentage of basic annual salary (currently 12.5%).	To ensure broad competitiveness with market practice.
Performance related bonus1	Targets are set annually by the Committee, based on (i) financial performance against budget and (ii) individual subjective performance targets which are determined for each executive Director. The Committee retains discretion to set the financial targets based on the performance during the previous financial year and the budget for the forthcoming year, and performance of the individual against their specific subjective performance targets.	Designed to reward delivery of shareholder value and implementation of the Group's strategy.
Long term share-based incentive	Annual awards to executive Directors of up to a maximum of 1x basic annual salary, with discretion to award up to a maximum of 2x basic annual salary in exceptional circumstances, e.g. recruitment of a Director to "buy out" awards granted by prior employer. The scheme rules allow the Committee discretion to change the performance targets and the Committee shall be entitled to exercise its discretion to change performance criteria to the extent that it reflects market practice and/or the Committee considers alternative performance targets to be more appropriate to the business.	Designed to reward delivery of shareholder value in the medium-to-long term.

Notes to the table

1. Performance-related bonus targets: The performance targets are determined annually by the Committee and are designed to align executive Directors' interests with those of the Company's shareholders and to reward good performance by the Company. Financial targets are set by reference to the Company's budget for the relevant financial year, and individual performance targets are set by reference to the Company's strategy and goals for the relevant financial year. The targets for the financial year to 30 September 2014 are not disclosed here due to their commercial sensitivity. 2. PSP performance targets: additional details of the performance criteria attaching to PSP grants are set out on page 43.

Non-executive Directors

Element	Operation	Objective & link to strategy
Fees1	Non-executive Directors' fees are reviewed every three years and paid in 12 monthly instalments. Current fees were set in 2011.	Reflects the time commitment and responsibilities of the roles.

Notes to the table

1. 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. Separately, the Board sets the fee payable to the Chairman of the Board. Additional fees apply only once, regardless of the number of Committees of which a non-executive Director is a member or a Chairman. Non-executive Directors are not included in any performance-related bonus, share incentive schemes or pension arrangements.

Current basic annual salary of Chief Executive is £285,000 and Chief Financial Officer is £160,000 (£228,600 on a full-time equivalent basis). Salary increases shall generally reflect market conditions,

Element Operation Objective & link to strategy Max. potential value Performance measures Changes for 2014

Strategic Report

performance of the individual, new challenges or a new strategic direction for the business. Similarly, the Committee may approve a higher basic annual salary for a newly appointed Director than the outgoing Director received where it considers it necessary in order to recruit an individual of sufficient calibre for the role.		18 November 2013. Her basic annual salary of £160,000 and maximum bonus potential are higher than that of the previous Chief Financial Officer on a full-time equivalent basis. The annual pay review due to take place on 1 October 2013 was postponed. In the event that a pay increase is awarded during the year, the maximum increase will be in line with the average staff increase and will take effect at the same time as any such staff salary increase.
The Company shall continue to provide benefits to executive Directors at similar levels; where insurance cover is provided by the Company, that cover shall be maintained at a similar level and the Company shall pay the then current market rates for such cover.	Not applicable.	No change.
Total cost annually shall not exceed 15% of basic annual salary.	Not applicable.	No change.
Chief Executive: 100% of basic annual salary (of which 80% is linked to profit targets and 20% is linked to individual subjective criteria). Chief Financial Officer: 80% of basic annual salary (of which 80% is linked to profit targets and 20% is linked to individual subjective criteria). The Committee retains discretion to vary the potential total maximum bonus, the weighting of the variable elements and the stretch of the targets in order to incentivise or recruit executive Directors, provided that the total maximum potential bonus for any one year shall not exceed 150% of basic annual salary and that maximum bonus shall only be payable for over performance.	Profit element: If EBITE is more than 15% below target EBITE, no profit-related bonus will be payable. If EBITE is 15% below target EBITE, 10% of the potential maximum of the profit-related bonus will be payable in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. If EBITE is 10% below target EBITE, 20% of the potential maximum of the profit-related bonus will be payable in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. If EBITE is 5% below target EBITE, 30% of the potential maximum of the profit-related bonus will be payable in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. If EBITE target is achieved, 50% of the potential maximum of the profit-related bonus will be payable. If EBITE target is exceeded by 5%, 65% of the potential maximum of the profit-related bonus will be payable in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. If EBITE target is exceeded by 10%, 85% of the potential maximum of the profit-related bonus will be payable in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. If EBITE target is exceeded by 15% or more, 100% of the potential maximum of the profit-related bonus will be payable. If EBITE falls in between any of the above levels, a percentage of the potential maximum profit-related bonus will be payable, on a pro rata basis to the levels expressed above, in the event that the Committee determines, in its absolute discretion, that such payment is merited by the individual. Subjective element: Chief Executive: bonus of up to 20% of basic annual salary (i.e. 20% of maximum potential bonus) is determined by subjective criteria.	The stretch of the range of the profit-related targets has been changed from 90% to 115% of target EBITE to 85% to 115% of target EBITE and the levels at which a certain fixed percentage of the potential maximum of the profit-related bonus may be payable at the discretion of the Committee have been clearly defined.

Not applicable. On 1 November 2013, Zillah Byng-Maddick

Value of grant as a maximum percentage of salary is 100% of basic annual salary, however in exceptional circumstances the Committee retains discretion to grant awards of a value up to 200% of basic annual salary. Awards vest at the end of three-year performance period. 50% of award vests based on EPS performance and 50% vests based on TSR performance. EPS: Growth in EPS over three years must exceed annual RPI + 3% for the award to vest, with full vesting at RPI + 8% and on a straight-line basis between these levels. TSR: Against comparator group comprising a minimum of 15 companies at all times, if TSR performance places it above median ranking 25% will vest through to 100% if placed in the upper quintile. Between median and upper quintile, the award vests on a pro rata straight-line basis. The Committee retains the discretion to set such performance criteria as are deemed No change.

Chief Financial Officer: bonus of up to 16% of basic annual salary (i.e. 20% of

maximum potential bonus) is determined by subjective criteria.

1. All employees of the Group receive a basic annual salary, benefits, pension and annual bonus (subject to financial performance). The maximum value of remuneration packages is based on the seniority and responsibilities of the relevant role. Discretionary share incentives are not awarded to employees other than executive Directors (PSP) and senior managers (DABS), however an approved Sharesave scheme operates for all permanent UK employees.

appropriate to the Company at the time an award is made.

was appointed to the Board of Future plc and took over the role of Chief Financial Officer on

Directors' remuneration report

For the year ended 30 September 2013

Total remuneration scenarios

Mark Wood

Zillah Byng-Maddick

Notes:

• 1. Zillah Byng-Maddick was appointed with effect from 1 November 2013.
• 1. Annual salary is based on basic salary for the financial year ending 30 September 2014. Salary increases take effect from 1 October each year, however, for the financial year to 30 September 2014, the pay review has been postponed. To the extent that pay rises are implemented during the year for all staff, the salaries of executive Directors will be increased by the same
• percentage of basic annual salary. 3. The value of pension is determined as a percentage of salary, based on salary for 2014. The value of benefits in kind is calculated on the basis of the value for 2013.
• 1. On-target performance would deliver 60% of the maximum annual bonus for the Chief Executive and the Chief Financial Officer, assuming that individual performance targets are met and the maximum individual performance-related element of the bonus is awarded by the Committee. Maximum performance would result in the maximum annual bonus payment of 100% of basic annual salary for the Chief Executive and 80% of basic annual salary for the Chief Financial Officer.
• 1. No share options or other share incentives are due to vest in the financial year ending 30 September 2014.

Consideration of employee conditions within the Group

The Committee takes into consideration the pay and conditions of employees across the Group when determining remuneration for executive Directors.

All employees receive a basic annual salary, benefits and an entitlement to receive a bonus, subject to financial performance, under the Group's profit improvement scheme.

Discretionary share incentive awards are granted to senior managers in all territories under the DABS scheme, the details of which are set out at note 25 on page 86. And all permanent UK employees are entitled to participate in the Company's Sharesave scheme.

Consideration of shareholder views

The remuneration policy remains largely unchanged from previous years and the Company has therefore not needed to consult with shareholders with regard to the remuneration policy. In the event of any significant change to remuneration policy, in particular the performance related bonus scheme and any long term incentive schemes, the Board will consult with major institutional shareholders in advance, and any changes to the remuneration policy will require shareholder approval.

The 2005 Performance Share Plan ("2005 PSP") which was adopted in January 2005, following extensive consultation with major shareholders relating to the scheme itself and the performance criteria, will expire in January 2015. The Remuneration Committee considered during the year whether to replace the PSP with an alternative long term incentive scheme, but intends to renew the current scheme when it expires in January 2015. It is the Committee's intention to review the performance criteria attaching to the 2005 PSP during the year as they have been unchanged since the 2005 PSP was adopted. In the event that the Committee wishes to exercise its discretion to make any significant changes to the performance criteria, the Board will consult with major institutional shareholders prior to proposing a resolution to shareholders at the Company's AGM in February 2015 to adopt a new PSP scheme with effect from the same date.

The 2005 Deferred Annual Bonus Scheme ("2005 DABS") which applies to Group senior managers below executive Director level and local country senior managers, was adopted in January 2005 and will also expire in January 2015. The Committee considered during the year whether to replace the 2005 DABS with an alternative incentive scheme, but intends to renew the current scheme when it expires in January 2015. The Board therefore expects to propose a resolution to shareholders at the Company's AGM in February 2015 to adopt a new DABS scheme, the provisions of which will remain unchanged from the 2005 DABS.

Independent auditors' report to the members of Future plc

Report on the financial statements

Our opinion

In our opinion:

• • The financial statements, defined below, give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 30 September 2013 and of the Group's profit and of the Group's and Parent Company's cash flows for the year then ended;
• The Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (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 IAS Regulation.

This opinion is to be read in the context of what we say below.

What we have audited

The Group financial statements and parent company financial statements (the "financial statements"), which are prepared by Future plc, comprise:

• the Consolidated and Company balance sheets as at 30 September 2013;
• the Consolidated income statement and statement of comprehensive income for the year then ended;
• the Consolidated and Company statements of changes in equity and statements of cash flows for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in their preparation comprises applicable law and IFRSs as adopted by the European Union and, as regards the Parent Company, as applied in accordance with the provisions of the Companies Act 2006.

Certain disclosures required by the financial reporting framework have been presented elsewhere in the Annual Report and Accounts (the "Annual Report"), rather than in the notes to the financial statements. These are crossreferenced from the financial statements and are identified as audited.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK & Ireland) (ISAs (UK & Ireland)). 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 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Overview of our audit approach

Materiality

We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the Group financial statements as a whole to be £0.6m.

Materiality is based on 0.5% of revenue, because, in our view, this is the most relevant measure of underlying performance given the nature of the Group's operations and its results.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £28,000 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Overview of the scope of our audit

The Group reports its results for its two geographical segments, being the UK (incorporating the Australian results) and the US. The Group financial statements are a consolidation of these three business operations and the Group's centralised functions.

In establishing the overall approach to the Group audit, we determined the amount and type of work that needed to be performed at each of the individual reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.

Accordingly, of the Group's three business operations, we identified two that, in our view, required an audit of their complete financial information due to their size, together with the Group centralised functions. This, together with additional procedures performed at the Group level, gave us the evidence we needed for our opinion on the Group financial statements as a whole.

Areas of particular audit focus

In preparing the financial statements, the Directors made a number of subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We primarily focussed our work in these areas by assessing the Directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We obtained audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

We considered the areas on page 53 to be those that required particular focus in the current year. This is not a complete list of all risks or areas of focus identified by our audit. We discussed these areas of focus with the Audit Committee. Their report on those matters that they considered to be significant issues in relation to the financial statements is set out on page 39.

Independent auditors' report

Area of focus	How the scope of our audit addressed the area of focus
Goodwill impairment assessment We focussed on this area because the determination of whether or not an impairment charge for goodwill was necessary involved significant judgements by the directors about the future results of the UK business. We needed to obtain evidence for the goodwill of £82.8m in this part of the business. (Refer also to note 12 to the financial statements.)	We evaluated the Directors' future cash flow forecasts, including comparing them to the latest Board approved budgets, testing the underlying calculations and testing the accuracy of historic forecasts. We challenged: • The Directors' key assumptions for long-term growth rates by comparing them to historical results and checking that they do not exceed the current IMF inflation forecast. • The discount rate used by assessing the cost of capital for the Company and comparable organisations. We also performed sensitivity analysis around both the growth forecasts and discount rates. Having ascertained the extent of change in the growth and discount rates that would be required for the goodwill to be impaired, we considered the likelihood of such movement in those key assumptions arising.
Revenue recognition ISAs (UK & Ireland) presume there is a risk of fraud in revenue recognition. In addition, we focussed on this area because, as noted in the critical accounting judgements section on page 65, of the significant level of management judgement in the calculation of the returns provision, which directly affects the recognition of newsstand sales.	We tested revenue transactions by tracing to contract, sales orders and cash receipts (where applicable). We identified and challenged the key assumptions and judgements made by management in their calculation of returns provisions on newsstand sales by considering initial sales returns from distributors and stores. We also compared the equivalent judgements made by management when preparing the prior year financial statements to actual post year-end outcomes to test the historic effectiveness of the process of making judgements. For significant contracts, we tested the timing of revenue recognition, taking into account contractual obligations and the Group's accounting policies.
Risk of management override of internal controls ISAs (UK & Ireland) require that we consider this.	We assessed the overall control environment of the Group, including the arrangements for staff to "whistle-blow" inappropriate actions. We tested the significant accounting estimates and judgements relevant to the financial statements for evidence of bias by the Directors that may represent a risk of material misstatement due to fraud. In addition, we carried out unpredictable audit procedures in areas that may be susceptible to fraud including contributors' payments, free adverts and barter transactions. We also tested key year-end reconciliations and journal entries.
Going concern We considered the Directors' decision to apply the going concern basis of accounting in preparing the financial statements in the context of the covenants attached to the Group's financing facility.	We obtained the Directors' forecast of the Group's funding requirements for the next 12 months from the date the financial statements were signed and: • Tested whether appropriate account had been taken of the seasonal cash flows inherent in the Group's business. • Challenged the expected rate of adoption of digital versus print distribution. • Challenged the assumptions underlying the Directors' forecasts prepared to demonstrate compliance with covenant requirements, in particular the sales and cash collection forecasts. • Challenged the mitigating actions that management can take to reduce unnecessary cash spend in the event that forecast cash flows are lower than expected. Our conclusion on going concern is shown opposite.
Provision for tax liabilities As noted in the critical accounting judgements section on page 65, estimates are made with respect to the tax position for prior fiscal years not yet agreed with tax authorities. We focussed on this area because there are historical open tax positions that are both	We requested and read the latest correspondence between the Group and the relevant tax authorities. We discussed the potential tax exposure with senior Group management, including the Group's in-house tax specialists.

We focussed on this area because there are historical open tax positions that are both material to the financial statements and require judgement in assessing the appropriate accounting treatment for this year.

We utilised our experience of similar challenges elsewhere to independently assess the evidence described above.

Strategic Report

Going Concern

Under the Listing Rules we are required to review the Directors' statement, set out on page 37, in relation to going concern. We have nothing to report having performed our review.

As noted in the Directors' statement, the Directors have concluded that it is appropriate to prepare the Group's and Parent Company's financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and Parent Company have adequate resources to remain in operation, and that the Directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the Directors' use of the going concern basis is appropriate.

However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group's and the Parent Company's ability to continue as a going concern.

Opinions on matters prescribed by the Companies Act 2006

In our opinion:

• the information given in the Strategic Report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements;
• the part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and
• the information given in the Corporate Governance report set out on pages 35 to 40 in the Annual Report with respect to internal control and risk management systems and about share capital structures is consistent with the financial statements.

Other matters on which we are required to report by exception

Adequacy of accounting records and information and explanations received

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

• we have not received all the information and explanations we require for our audit; or
• 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.

We have no exceptions to report arising from this responsibility.

Directors' remuneration

Under the Companies Act 2006 we are required to report if, in our opinion, certain disclosures of Directors' remuneration specified by law have not been made, and under the Listing Rules we are required to review certain elements of the report to shareholders by the Board on Directors' remuneration. We have no exceptions to report arising from these responsibilities.

Corporate Governance Statement

Under the Companies Act 2006, we are required to report to you if, in our opinion, a corporate governance statement has not been prepared by the parent company. We have no exceptions to report arising from this responsibility.

Under the Listing Rules we are required to review the part of the Corporate Governance statement relating to the Company's compliance with nine provisions of the UK Corporate Governance Code ("the Code"). We have nothing to report having performed our review.

On page 34 of the Annual Report, as required by the Code Provision C.1.1, the Directors state that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group's performance, business model and strategy. On page 39, as required by C3.8 of the Code, the Audit Committee has set out the significant issues that it considered in relation to the financial statements, and how they were addressed. Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:

• the statement given by the Directors is materially inconsistent with our knowledge of the Group acquired in the course of performing our audit; or
• the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.

We have no exceptions to report arising from this responsibility.

Other information in the Annual Report

Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:

• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and Parent Company acquired in the course of performing our audit; or
• is otherwise misleading.

We have no exceptions to report arising from this responsibility.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the Directors

As explained more fully in the Directors' responsibilities statements set out on pages 32 and 34, the Directors are responsible for the preparation of the Group and Parent Company 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 Group and Parent Company financial statements in accordance with applicable law and ISAs (UK & 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.

Colin Bates (Senior Statutory Auditor)

for and on behalf of

PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Bristol 13 December 2013

Financial statements

Contents

Consolidated income statement	56
Consolidated statement of comprehensive income	56
Consolidated statement of changes in equity	57
Company statement of changes in equity	57
Consolidated balance sheet	58
Company balance sheet	59
Consolidated and Company cash flow statements	60
Notes to the Consolidated and Company cash flow statements	61
Accounting policies	62
Notes to the financial statements	66

Financial Review

56

Consolidated income statement

for the year ended 30 September 2013

	Note	2013 £m	2012 £m
Revenue	1,2	112.3	123.5
Operating profit before exceptional items	1	4.7	6.8
Exceptional items	5	2.5	(3.6)
Operating profit	3	7.2	3.2
Finance income	7	0.8	0.2
Finance costs	7	(2.2)	(2.3)
Net finance costs	7	(1.4)	(2.1)
Profit before tax	1	5.8	1.1
Tax on profit	8	(1.5)	(0.9)
Profit for the year attributable to owners of the parent		4.3	0.2

Earnings per 1p Ordinary share

		2013	2012
	Note	pence	pence
Basic earnings per share	10	1.3	0.1
Diluted earnings per share	10	1.3	0.1

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 2013

	Note	2013 £m	2012 £m
Profit for the year		4.3	0.2
Items that may be reclassified to the consolidated income statement
Currency translation differences		-	0.1
Cash flow hedges	26	0.2	0.1
Other comprehensive income for the year		0.2	0.2
Total comprehensive income for the year attributable to owners of the parent		4.5	0.4

Items in the statement above are disclosed net of tax.

Financial statements

Consolidated statement of changes in equity

for the year ended 30 September 2013

		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 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
Profit for the year		-	-	-	-	-	4.3	4.3
Cash flow hedges	26	-	-	-	-	0.2	-	0.2
Other comprehensive income for the year		-	-	-	-	0.2	-	0.2
Total comprehensive income for the year		-	-	-	-	0.2	4.3	4.5
Share schemes
- Value of employees' services	6	-	-	-	-	-	0.3	0.3
Balance at 30 September 2013		3.3	24.8	109.0	(0.3)	0.2	(69.6)	67.4

Company statement of changes in equity

for the year ended 30 September 2013

		Issued share	Share premium	Retained	Total
Company	Note	capital £m	account £m	earnings £m	equity £m
Balance at 1 October 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
Profit for the year		-	-	-	-
Other comprehensive income for the year		-	-	-	-
Total comprehensive income for the year		-	-	-	-
Share schemes
- Value of employees' services		-	-	0.3	0.3
Balance at 30 September 2013		3.3	24.8	40.2	68.3

Consolidated balance sheet

as at 30 September 2013

		2013	2012
	Note	£m	£m
Assets
Non-current assets
Property, plant and equipment	11	2.5	2.8
Intangible assets - goodwill	12	86.3	92.3
Intangible assets - other	12	3.5	3.0
Deferred tax	14	0.4	0.8
Total non-current assets		92.7	98.9
Current assets
Inventories	15	1.9	1.9
Financial assets - derivatives	20	0.4	-
Trade and other receivables	16	21.4	20.3
Cash and cash equivalents	17	4.6	8.5
Total current assets Total assets		28.3 121.0	30.7 129.6
Equity and liabilities
Equity
Issued share capital	24	3.3	3.3
Share premium account		24.8	24.8
Merger reserve	26	109.0	109.0
Treasury reserve	26	(0.3)	(0.3)
Cash flow hedge reserve	26	0.2	-
Accumulated losses		(69.6)	(74.2)
Total equity		67.4	62.6
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	-	1.7
Financial liabilities - derivatives	20	-	0.2
Corporation tax payable	8	5.2	-
Deferred tax	14	1.2	1.3
Provisions	21	1.5	4.1
Other non-current liabilities	22	1.5	1.3
Total non-current liabilities		9.4	8.6
Current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	11.5	20.9
Financial liabilities - derivatives	20	0.2	0.2
Trade and other payables	18	31.6	31.0
Corporation tax payable	8	0.9	6.3
Total current liabilities		44.2	58.4
Total liabilities		53.6	67.0
Total equity and liabilities		121.0	129.6

The financial statements on pages 55 to 87 were approved by the Board of Directors on 13 December 2013 and signed on its behalf by:

Peter Allen Zillah Byng-Maddick Chairman Chief Financial Officer

Financial statements

Company balance sheet

as at 30 September 2013

	Note	2013 £m	2012 £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	43.3	35.7
Cash and cash equivalents	17	-	-
Total current assets		43.3	35.7
Total assets		202.5	194.9
Equity and liabilities
Equity
Issued share capital	24	3.3	3.3
Share premium account		24.8	24.8
Retained earnings		40.2	39.9
Total equity		68.3	68.0
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	-	1.7
Financial liabilities - derivatives	20	-	0.2
Corporation tax payable	8	5.2	-
Provisions	21	-	0.3
Total non-current liabilities		5.2	2.2
Current liabilities
Financial liabilities - interest-bearing loans and borrowings	19	6.6	18.9
Financial liabilities - non-interest-bearing overdraft	19	7.5	11.9
Financial liabilities - derivatives	20	0.2	0.2
Trade and other payables	18	113.8	93.7
Corporation tax payable	8	0.9	-
Total current liabilities		129.0	124.7
Total liabilities		134.2	126.9
Total equity and liabilities		202.5	194.9

The financial statements on pages 55 to 87 were approved by the Board of Directors on 13 December 2013 and signed on its behalf by:

Peter Allen Zillah Byng-Maddick Chairman Chief Financial Officer

Financial Review

Consolidated and Company cash flow statements

for the year ended 30 September 2013

		Group 2013	Company 2013	Group 2012	Company 2012
	Note	£m	£m	£m	£m
Cash flows from operating activities
Cash generated from/(used in) operations	A	4.3	(1.7)	2.1	(3.1)
Interest paid		(1.2)	(1.0)	(1.4)	(1.1)
Tax paid		(1.8)	(0.1)	(1.0)	-
Net cash generated from/(used in) operating activities		1.3	(2.8)	(0.3)	(4.2)
Cash flows from investing activities
Purchase of property, plant and equipment		(0.6)	-	(0.5)	-
Purchase of magazine titles, websites and trademarks		-	-	(0.1)	-
Purchase of computer software and website development		(2.3)	-	(1.9)	-
Disposal of magazine titles and trademarks		10.3	-	2.7	-
Costs of business disposals		(1.1)	-	(0.6)	-
Net movement in amounts owed to/by subsidiaries		-	21.7	-	(8.7)
Net cash generated from/(used in) investing activities		6.3	21.7	(0.4)	(8.7)
Cash flows from financing activities
Proceeds from issue of Ordinary share capital		-	-	0.3	0.3
Draw down of bank loans		26.0	19.0	17.9	16.0
Repayment of bank loans		(36.7)	(32.9)	(19.3)	(7.2)
Bank arrangement fees		(0.6)	(0.6)	(0.5)	(0.5)
Repayment of finance leases		(0.1)	-	(0.1)	-
Equity dividends paid		-	-	(1.6)	(1.6)
Net cash (used in)/generated from financing activities		(11.4)	(14.5)	(3.3)	7.0
Net (decrease)/increase in cash and cash equivalents		(3.8)	4.4	(4.0)	(5.9)
Cash and cash equivalents at beginning of year		8.5	(11.9)	12.5	(6.0)
Exchange adjustments		(0.1)	-	-	-
Cash and cash equivalents at end of year		4.6	(7.5)	8.5	(11.9)

Financial statements

Notes to the Consolidated and Company cash flow statements

for the year ended 30 September 2013

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 2013	Company 2013	Group 2012	Company 2012
	£m	£m	£m	£m
Profit/(loss) for the year	4.3	-	0.2	(2.5)
Adjustments for:
Depreciation charge	0.9	-	1.1	-
Amortisation of intangible assets	2.0	-	1.5	-
Profit on disposal of magazine titles and trademarks	(2.7)	-	(1.2)	-
Share schemes
- Value of employees' services	0.3	-	0.2	-
Impairment of investment in Group undertakings	-	0.3	-	0.2
Dividend receivable from Group undertakings	-	(1.5)	-	-
Net finance costs	1.4	1.1	2.1	0.9
Tax charge/(credit)	1.5	(1.3)	0.9	(1.5)
Profit/(loss) before changes in working capital and provisions	7.7	(1.4)	4.8	(2.9)
Movement in provisions	(2.7)	(0.3)	1.8	(0.3)
Decrease in inventories	0.1	-	1.6	-
(Increase)/decrease in trade and other receivables	(1.6)	-	2.3	-
Increase/(decrease) in trade and other payables	0.8	-	(8.4)	0.1
Cash generated from/(used in) operations	4.3	(1.7)	2.1	(3.1)

B. Analysis of net debt

Group	1 October 2012 £m	Cash flows £m	Other non-cash changes £m	Exchange movements £m	30 September 2013 £m
Cash and cash equivalents	8.5	(3.8)	-	(0.1)	4.6
Debt due within one year	(20.9)	9.1	0.1	0.2	(11.5)
Debt due after more than one year	(1.7)	1.7	-	-	-
Net debt	(14.1)	7.0	0.1	0.1	(6.9)

Company	1 October 2012 £m	Cash flows £m	Other non-cash changes £m	30 September 2013 £m
Cash and cash equivalents	(11.9)	4.4	-	(7.5)
Debt due within one year	(18.9)	12.2	0.1	(6.6)
Debt due after more than one year	(1.7)	1.7	-	-
Net debt	(32.5)	18.3	0.1	(14.1)

C. Reconciliation of movement in net debt

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Net debt at start of year	(14.1)	(32.5)	(11.8)	(17.8)
(Decrease)/increase in cash and cash equivalents	(3.8)	4.4	(4.0)	(5.9)
Movement in borrowings	10.8	13.9	1.5	(8.8)
Other non-cash changes	0.1	0.1	-	-
Exchange movements	0.1	-	0.2	-
Net debt at end of year	(6.9)	(14.1)	(14.1)	(32.5)

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 2013 Annual Report are set out on pages 62 to 65. 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 2013, 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 37.

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. 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.

Financial statements

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, with exchange differences arising on trading transactions being reported in operating profit and with those arising on financing transactions reported in net finance costs unless as a result of cash flow hedging they are reported in other comprehensive income.

(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. 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 or websites are recognised as an expense as incurred.

Impairment tests and Cash-Generating Units (CGUs)

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

Goodwill is not amortised but tested for impairment at least once a year or more frequently when there is an indication that it may be impaired. Therefore, the evolution of general economic and financial trends as well as actual economic performance compared to market expectations represent external indicators that are analysed by 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 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 2.0% 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:

• Amendment to IAS 1 Presentation of Financial Statements on Other Comprehensive Income.

Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for accounting periods beginning on or after 1 October 2013 or later periods but which the Group has chosen not to adopt early. These include the following standards which are relevant to the Group:

• IFRS 10 Consolidated Financial Statements.
• IFRS 12 Disclosure of Interests in other entities.
• IFRS 13 Fair Value Measurement. • IAS 27 (revised) Separate financial
• statements.
• IAS 28 (revised) Associates and joint ventures.

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

	2013 £m	2012 £m
UK	92.2	99.1
US	20.9	25.1
Revenue between segments	(0.8)	(0.7)
Total	112.3	123.5

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

(ii) Segment EBITE

	2013 £m	2012 £m
UK	6.5	9.7
US	(1.8)	(2.9)
Total segment EBITE	4.7	6.8

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

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

	2013 £m	2012 £m
Total segment EBITE	4.7	6.8
Exceptional items	2.5	(3.6)
Net finance costs	(1.4)	(2.1)
Profit before tax	5.8	1.1

(iii) Segment assets and liabilities

		Segment assets		Segment liabilities		Segment net assets/(liabilities)
	2013 £m	2012 £m	2013 £m	2012 £m	2013 £m	2012 £m
UK	110.7	119.7	(42.3)	(56.2)	68.4	63.5
US	10.3	9.9	(11.3)	(10.8)	(1.0)	(0.9)
Total	121.0	129.6	(53.6)	(67.0)	67.4	62.6

(iv) Other segment information

	Depreciation Capital expenditure and amortisation			Exceptional items
	2013 £m	2012 £m	2013 £m	2012 £m	2013 £m	2012 £m
UK	2.6	1.8	1.9	1.5	(1.3)	0.6
US	0.9	0.7	1.0	1.1	(1.2)	3.0
Total	3.5	2.5	2.9	2.6	(2.5)	3.6

Other than the items disclosed above and a share-based payments charge of £0.3m (2012: £0.2m) there were no other significant non-cash expenses during the year.

Financial statements

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 business segment

	2013 £m	2012 £m
Entertainment	29.6	36.5
Technology	27.4	26.8
Music	13.0	20.3
Creative	23.4	21.0
Sport & Auto	19.7	19.6
Revenue between segments	(0.8)	(0.7)
Total	112.3	123.5

(ii) Gross profit by business segment

	2013 £m	2012 £m
Entertainment	6.3	8.2
Technology	6.7	6.4
Music	2.7	4.1
Creative	5.9	5.5
Sport & Auto	5.2	5.2
Add back: distribution expenses	7.7	9.6
Total	34.5	39.0

2. Revenue

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

	2013 £m	2012 £m
Circulation	64.8	72.5
Advertising	34.4	37.1
Customer publishing	7.3	8.6
Licensing, events and other	5.8	5.3
Total	112.3	123.5

3. Operating profit

	2013 £m	2012 £m
Revenue	112.3	123.5
Cost of sales	(77.8)	(84.5)
Gross profit	34.5	39.0
Distribution expenses	(7.7)	(9.6)
Administration expenses	(22.1)	(22.6)
Exceptional items	2.5	(3.6)
Operating profit	7.2	3.2

4. Fees paid to auditors

	2013 £m	2012 £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
Total fees	0.4	0.4

5. Exceptional items

	2013 £m	2012 £m
Vacant property provision movements	(1.2)	2.7
Restructuring and redundancy costs	1.4	2.1
Profit on disposal of magazine titles and trademarks	(2.7)	(1.2)
Total	(2.5)	3.6

In 2013, the vacant property provision movement relates to the release of a provision following the sublease of a vacant floor of a property in the US. The vacant property provisions made in 2012 related to 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 in 2013 relates to the sale of the UK Rock titles and in 2012 it relates to the sale of the New York Music titles and the sale of two UK based titles, Trucking and Truckstop News.

6. Employees

	2013 £m	2012 £m
Wages and salaries	39.2	41.1
Social security costs	5.1	5.4
Other pension costs	1.2	0.9
Share schemes
- Value of employees' services	0.3	0.2
Total staff costs	45.8	47.6

Average monthly number of people (including Directors)	2013 No.	2012 No.
Production	822	834
Administration	214	202
Total	1,036	1,036

At 30 September 2013, the actual number of people employed by the Group was 980 (2012: 1,013). In respect of our reportable segments 831 (2012: 869) were employed in the UK and 149 (2012: 144) were employed in the US.

Financial statements

6. Employees (continued)

Key management personnel compensation

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Salaries and other short-term employee benefits	0.8	0.3	1.0	0.3
Termination benefits	-	-	0.8	0.8
Share schemes
- Value of employees' services	0.2	-	0.1	-
Total	1.0	0.3	1.9	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 2013 £0.2m (2012: £0.2m) was recharged to Future plc by Future Publishing Limited in respect of Mark Wood and £0.1m (2012: £0.1m) was recharged in respect of Graham Harding.

Further details on the Directors' remuneration and interests are given in the Directors' remuneration report on pages 41 to 51. The highest paid Director during the year was Mark Wood (2012: Stevie Spring) and details of his remuneration are shown on page 42.

7. Finance income and costs

2013 £m	2012 £m
Interest receivable 0.6	-
Fair value gain on interest rate derivative not in a hedge relationship 0.2	0.2
Total finance income 0.8	0.2
Interest payable on interest-bearing loans and borrowings (1.0)	(1.5)
Amortisation of bank loan arrangement fees (0.4)	(0.5)
Other finance costs (0.7)	(0.3)
(0.1) Exchange losses	-
Total finance costs (2.2)	(2.3)
Net finance costs (1.4)	(2.1)

8. Tax on profit

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

	2013 £m	2012 £m
UK corporation tax
Current tax at 23.5% (2012: 25%) on the profit for the year	1.4	1.6
Adjustments in respect of previous years	(0.2)	(0.4)
Current tax	1.2	1.2
Deferred tax origination and reversal of temporary differences
Current year charge	-	0.2
Adjustments in respect of previous years	0.3	(0.5)
Deferred tax	0.3	(0.3)
Total tax charge	1.5	0.9

Strategic Report

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:

	2013 £m	2012 £m
Profit before tax	5.8	1.1
Profit before tax at the standard UK tax rate of 23.5% (2012: 25%)	1.4	0.3
Different tax rates applicable overseas	(0.1)	(0.7)
Effect of change in deferred tax rate	(0.1)	-
Losses and other temporary differences not recognised in respect of tax in the US	0.3	1.9
Profits relieved against brought forward losses	(1.7)	(0.3)
Other net disallowable items	1.6	0.6
Adjustments in respect of prior years	0.1	(0.9)
Total tax charge	1.5	0.9

During the year the Group reached agreement with HMRC relating to the tax treatment of certain one-off transactions which took place in 2003. Part of that agreement will result in the Group paying tax of £6.2m plus interest (comprising instalments of £85,000 per month over five years from July 2013 and a final instalment of £2.0m). The tax payable was fully provided for in prior year accounts.

The liability in the balance sheet has been split based on this agreement between current liabilities and non-current liabilities.

9. Dividends

Equity dividends	2013	2012
Number of shares in issue at end of year (million)	333.4	333.0
Dividends paid in year (pence per share)	-	0.5
Dividends paid in year (£m)	-	1.6

A final dividend in respect of the year ended 30 September 2013 of 0.2 pence per share, amounting to a total dividend of £0.7m, is to be proposed at the Annual General Meeting on 3 February 2014. The financial statements do not reflect this dividend.

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.

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 and any related tax effects from the calculation as follows:

Adjustments to profit after tax

	2013 £m	2012 £m
Profit after tax	4.3	0.2
Exceptional items	(2.5)	3.6
Tax effect of the above adjustment	0.2	(0.3)
Adjusted profit after tax	2.0	3.5

	2013	2012
Weighted average number of shares in issue during the year:
- Basic	331,812,054	329,101,739
- Dilutive effect of share options	6,298,779	3,751,837
- Diluted	338,110,833	332,853,576
Basic earnings per share (in pence)	1.3	0.1
Adjusted basic earnings per share (in pence)	0.6	1.1
Diluted earnings per share (in pence)	1.3	0.1
Adjusted diluted earnings per share (in pence)	0.6	1.1

Financial statements

10. Earnings per share (continued)

The adjustments to profit have the following effect:

	2013 pence	2012 pence
Basic earnings per share	1.3	0.1
Exceptional items	(0.8)	1.1
Tax effect of the above adjustment	0.1	(0.1)
Adjusted basic earnings per share	0.6	1.1
Diluted earnings per share	1.3	0.1
Exceptional items	(0.8)	1.1
Tax effect of the above adjustment	0.1	(0.1)
Adjusted diluted earnings per share	0.6	1.1

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 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
Additions	-	0.5	0.1	0.6
Disposals	-	(0.2)	-	(0.2)
At 30 September 2013	4.1	6.0	2.5	12.6
Accumulated depreciation
At 1 October 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)
Charge for the year	(0.2)	(0.6)	(0.1)	(0.9)
Disposals	-	0.2	-	0.2
At 30 September 2013	(2.7)	(5.3)	(2.1)	(10.1)
Net book value at 30 September 2013	1.4	0.7	0.4	2.5
Net book value at 30 September 2012	1.6	0.8	0.4	2.8
Net book value at 1 October 2011	1.9	1.1	0.4	3.4

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

12. Intangible assets

Group	Goodwill £m	Magazine and website £m	Other £m	Total £m
Cost
At 1 October 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
Additions	0.2	0.5	2.2	2.9
Disposals	(6.2)	-	(0.1)	(6.3)
Exchange adjustments	-	(0.1)	-	(0.1)
At 30 September 2013	305.1	15.6	14.2	334.9
Accumulated amortisation
At 1 October 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)
Charge for the year	-	(0.1)	(1.9)	(2.0)
At 30 September 2013	(218.8)	(15.2)	(11.1)	(245.1)
Net book value at 30 September 2013	86.3	0.4	3.1	89.8
Net book value at 30 September 2012	92.3	0.1	2.9	95.3
Net book value at 1 October 2011	94.1	0.1	2.5	96.7

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.

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

Impairment tests for goodwill and other intangibles

The breakdown of the goodwill balance at 30 September 2013 comprises:

	2013 £m	2012 £m
UK	82.8	88.9
US	3.5	3.4
Total	86.3	92.3

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.

Financial statements

12. Intangible assets (continued)

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

At 30 September 2013

	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	2.0%	2.0%
EBITDA margins assumed	12.1% to 13.7%	1.0% to 7.5%
Post-tax discount rate	9.5%	9.5%
Pre-tax discount rate	13.3%	12.5%

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%

Sensitivity of recoverable amounts

At 30 September 2013 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 £6.1m. An impairment would be required if the discount rate was more than 1.0% higher or if forecast cash flows were more than 7.8% lower.

(ii) US

The value in use of the US business exceeded the carrying value by £1.6m. An impairment would be required if the discount rate was more than 3.1% higher or if forecast cash flows were more than 41.1% lower.

Goodwill is not considered to be impaired at 30 September 2013 however a reasonably possible change in the discount rate or forecast cash flows could give rise to an impairment.

13. Investments in Group undertakings

Company	2013 £m	2012 £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).

Financial Review

14. Deferred tax assets and liabilities

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	Total £m
At 1 October 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)
Credited/(charged) to income statement	0.1	-	(0.1)	(0.3)	(0.3)
At 30 September 2013	(1.2)	0.1	0.3	-	(0.8)

The changes to the main rate of corporation tax for the UK announced in the March 2013 Budget were substantively enacted on 2 July 2013. The changes reduced the main rate of corporation tax from 23% to 21% from 1 April 2014 and to 20% from 1 April 2015. As these changes had been substantively enacted before the year-end, any impact has been included in these financial statements. As a result, the Group has booked a credit of £0.1m in respect of this.

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:

	2013 £m	2012 £m
Deferred tax assets	0.4	0.8
Deferred tax liabilities	(1.2)	(1.3)
Net deferred tax liability	(0.8)	(0.5)

The deferred tax asset of £0.4m (2012: £0.8m) is disclosed as a non-current asset of which the assets due within one year total £0.1m (2012: £0.3m). The deferred tax liability of £1.2m (2012: £1.3m) is disclosed as a non-current liability of which the liabilities due within one year total £nil (2012: £nil).

As at 30 September 2013 the Group has:

• unprovided deferred tax assets on tax losses totalling £11.0m (2012: £7.6m) of which £10.8m (2012: £7.3m) arises in the US; and

• unprovided deferred tax assets on other temporary differences totalling £2.2m (2012: £3.3m) of which £2.2m (2012: £3.3m) 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 (2012: £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 2013 (2012: £nil).

15. Inventories

	2013 £m	2012 £m
Raw materials	0.4	0.3
Work in progress	1.2	1.2
Finished goods	0.3	0.4
Total	1.9	1.9

The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £8.2m (2012: £10.8m).

Financial statements

16. Trade and other receivables

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Current assets:
Trade receivables	15.1	-	14.8	-
Provisions for impairment of trade receivables	(0.2)	-	(0.4)	-
Trade receivables net	14.9	-	14.4	-
Amounts owed by Group undertakings	-	43.3	-	35.7
Other receivables	0.6	-	0.3	-
Prepayments and accrued income	5.7	-	5.4	-
	21.2	43.3	20.1	35.7
Non-current assets:
Other receivables	0.2	-	0.2	-
Total	21.4	43.3	20.3	35.7

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 14% (2012: 18%) of the Group's trade receivables balance at 30 September 2013.

The Group has provided for estimated irrecoverable amounts in accordance with its accounting policy described on page 64 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 £3.0m (2012: £2.3m) 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:

Group 2013 Past due	Group 2012 £m £m
0-30 days	1.6 1.0
31-60 days	0.5 0.9
61-90 days	0.7 0.4
91+ days	0.2 -
Total	3.0 2.3

As at 30 September 2013, trade receivables of £0.2m (2012: £0.4m) 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 2013 £m	Group 2012 £m
At 1 October	0.4	0.6
Provision for receivables impaired	0.1	0.1
Receivables written off during the year	(0.3)	(0.3)
At 30 September	0.2	0.4

The creation and release of provision for impaired receivables have been included in administration expenses in the income statement. Amounts charged to the provision 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 + 3.1%. The balance of amounts owed by Group undertakings is interest-free without any terms for repayment.

17. Cash and cash equivalents

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Cash at bank and in hand	4.6	-	8.5	-
Cash and cash equivalents (excluding bank overdraft)	4.6	-	8.5	-

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

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Cash at bank and in hand	4.6	-	8.5	-
Bank overdraft (note 19)	-	(7.5)	-	(11.9)
Cash and cash equivalents	4.6	(7.5)	8.5	(11.9)

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. 80% of the Group's cash is held at counterparties with an S&P credit rating of A.

18. Trade and other payables

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Trade payables	11.1	-	10.6	-
Amounts owed to Group undertakings	-	113.7	-	93.5
Other taxation and social security	1.2	-	1.1	-
Other payables	1.6	-	0.5	-
Accruals and deferred income	17.7	0.1	18.8	0.2
Total	31.6	113.8	31.0	93.7

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. 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.

Financial statements

19. Financial liabilities – loans, borrowings and overdrafts

Non-current liabilities

	Interest rate at 30 September 2013	Interest rate at 30 September 2012	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Sterling term loan	-	5.1%	-	-	1.7	1.7
Total			-	-	1.7	1.7

Current liabilities

	Interest rate at 30 September 2013	Interest rate at 30 September 2012	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Sterling term loan	-	5.1%	-	-	3.2	3.2
Sterling revolving loan	2.9%	4.1%	6.6	6.6	15.7	15.7
US Dollar revolving loan	2.6%	3.8%	4.9	-	1.9	-
			11.5	6.6	20.8	18.9
Obligations under finance leases	-	3.0% - 15.0%	-	-	0.1	-
Total			11.5	6.6	20.9	18.9

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

	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Within one year	11.5	6.6	20.9	18.9
Between one and two years	-	-	1.7	1.7
Total	11.5	6.6	22.6	20.6

In February 2013, the Group negotiated a new bank facility with a syndicate of banks (comprising Barclays and Santander) to replace its existing facility which was due to expire in December 2013. The total facility available to the Group at 30 September 2013 amounts to £25m and this can be drawn in sterling, US Dollars or Euros. The Group has granted security to the banks and the availability of the facility, which expires in February 2017, is subject to certain covenants.

Fees relating to the new facility amounted to £0.6m and these are being amortised over the term of the facility. The bank borrowings and interest are guaranteed by Future plc, Future Holdings 2002 Limited, Future Publishing Limited and Future US, Inc.

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 2.0% and 3.25%, dependent on the net debt/Bank EBITDA covenant ratio.

The key covenants are set out in the following table where net debt is exclusive of non-current tax and other payables and Bank EBITDA is not materially different to statutory EBITDA.

Bank covenant
Net debt/Bank EBITDA	Periods from 31 March 2013 to 30 June 2013 – less than 2.50 times Periods from 30 September 2013 to 31 December 2013 – less than 2.25 times Periods from 31 March 2014 onwards – less than 2.00 times
Bank EBITDA/Interest	More than 4.0 times
Capital expenditure	125% of agreed annual budget

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 2013	Covenant
Net debt/Bank EBITDA	0.99	< 2.25 times
Bank EBITDA/Interest	7.74	> 4.0 times

The Group met its covenant for capital expenditure at 30 September 2013.

Based on the above calculations the Group had headroom of £9.4m over and above the level of bank debt at 30 September 2013.

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

Group	2013 £m	2012 £m
Within one year	-	0.1
Total	-	0.1

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

Group	2013 £m	2012 £m
Within one year	-	0.1
Total	-	0.1

The Company has a non-interest-bearing overdraft of £7.5m (2012: £11.9m) which forms part of the Group cash pooling account and can be offset against cash balances in other Group companies.

20. Financial assets and 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.

Current assets	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Forward foreign exchange contracts	0.4	-	-	-
Total	0.4	-	-	-

Non-current liabilities	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Interest rate derivatives	-	-	(0.2)	(0.2)
Total	-	-	(0.2)	(0.2)

Current liabilities	Group 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
Interest rate derivatives	(0.2)	(0.2)	(0.2)	(0.2)
Total	(0.2)	(0.2)	(0.2)	(0.2)

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%.

A fair value gain for the year of £0.2m (2012: £0.2m) on interest rate derivatives has been included within finance income in the income statement as hedge accounting is not applied to these contracts.

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 2013 end in August 2014.

Financial statements

20. Financial assets and liabilities – derivatives (continued)

A fair value gain for the year of £0.2m (2012: £0.1m) on forward foreign exchange contracts has been recognised directly in equity as hedge accounting is applied to these contracts.

The amounts in the tables on page 78 are the fair value of financial assets and 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 assets and liabilities is set out below:

	2013		2012
Group	Interest rate derivatives £m	Interest rate derivatives £m	Forward foreign exchange contracts £m
Within one year	(0.2)	0.4	(0.2)	-
Between one and two years	-	-	(0.2)	-
Total (liabilities)/assets	(0.2)	0.4	(0.4)	-

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

Company	2013 Interest rate derivatives £m	2012 Interest rate derivatives £m
Within one year	(0.2)	(0.2)
Between one and two years	-	(0.2)
Total liabilities	(0.2)	(0.4)

21. Provisions

Group	Property £m	Other £m	Total £m
At 1 October 2012	3.8	0.3	4.1
Charged in the year	0.1	-	0.1
Released in the year	(1.4)	-	(1.4)
Utilised in the year	(1.1)	(0.3)	(1.4)
Exchange adjustments	0.1	-	0.1
At 30 September 2013	1.5	-	1.5

The provision for property relates to dilapidations and obligations under short leasehold agreements on vacant property. The release in the provision during the year relates to an element of surplus office space in the US which was sublet during the year. The vacant property provision is expected to be utilised over the next five years. The dilapidations provision is expected to be utilised on the expiry of property leases.

Provisions for the Company were £nil (2012: £0.3m). These are shown as 'other' provisions in the table above and relate to disposals made during 2007 and ongoing commercial dispute resolution.

22. Other non-current liabilities

Group	2013 £m	2012 £m
Other payables	1.5	1.3

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

23. Financial instruments

Financial instruments by category

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

		Fair value		Amortised cost 2013
		Derivatives	Loans and receivables	Other liabilities	Total carrying value	Total fair value
Group	Note	£m	£m	£m	£m	£m
Trade receivables net	16	-	14.9	-	14.9	14.9
Other receivables		-	2.9	-	2.9	2.9
Derivatives	20	0.4	-	-	0.4	0.4
Cash and cash equivalents	17	-	4.6	-	4.6	4.6
Total financial assets		0.4	22.4	-	22.8	22.8
Trade payables	18	-	-	(11.1)	(11.1)	(11.1)
Other liabilities		-	-	(9.6)	(9.6)	(9.6)
Current borrowings	19	-	-	(11.5)	(11.5)	(11.5)
Non-current borrowings	19	-	-	-	-	-
Derivatives	20	(0.2)	-	-	(0.2)	(0.2)
Total financial liabilities		(0.2)	-	(32.2)	(32.4)	(32.4)

		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)

Total financial liabilities are shown net of unamortised costs which amounted to £0.4m (2012: £0.3m).

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

		Fair value		Amortised cost 2013
Company	Note	Derivatives £m	Loans and receivables £m	Other liabilities £m	Total carrying value £m	Total fair value £m
Other receivables	16	-	43.3	-	43.3	43.3
Total financial assets		-	43.3	-	43.3	43.3
Other liabilities	18	-	-	(113.8)	(113.8)	(113.8)
Overdrafts	19	-	-	(7.5)	(7.5)	(7.5)
Current borrowings	19	-	-	(6.6)	(6.6)	(6.6)
Non-current borrowings	19	-	-	-	-	-
Derivatives	20	(0.2)	-	-	(0.2)	(0.2)
Total financial liabilities		(0.2)	-	(127.9)	(128.1)	(128.1)

23. Financial instruments (continued)

		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	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)	(1.7)
Derivatives	20	(0.4)	-	-	(0.4)	(0.4)
Total financial liabilities		(0.4)	-	(126.2)	(126.6)	(126.6)

Total financial liabilities are shown net of unamortised costs which amounted to £0.4m (2012: £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 2013
Currency:
Sterling	-	13.6	13.6	(1.6)	(5.0)	(15.8)	(22.4)	(8.8)
US Dollar	0.1	6.2	6.3	(4.9)	-	(4.6)	(9.5)	(3.2)
Euro	-	0.5	0.5	-	-	(0.2)	(0.2)	0.3
Other	-	2.4	2.4	-	-	(0.3)	(0.3)	2.1
Total	0.1	22.7	22.8	(6.5)	(5.0)	(20.9)	(32.4)	(9.6)
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)

Financial Review

23. Financial instruments (continued)

Interest rate risk

Details of the interest rates on borrowings as at 30 September 2013 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 2013 are set out in note 20.

For 2013, 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 £nil (2012: £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 2013 are set out in note 20.
• Translation exposure the Group matches currency assets with currency liabilities wherever possible as evidenced by the fact that £4.9m of gross debt is denominated in US dollars.

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

2013 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	(0.3)	(0.1)	-
Impact on profit after tax if Currency 1 weakens against Currency 2	0.3	0.1	-
Impact on equity excluding retained earnings if Currency 1 strengthens against Currency 2	0.3	0.1	-
Impact on equity excluding retained earnings if Currency 1 weakens against Currency 2	(0.3)	(0.1)	-

2012 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	(0.2)	(0.1)	-
Impact on loss 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)	-

Financial statements

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 2013	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	(11.1)	-	-	-	(11.1)
Other liabilities	(8.4)	(0.4)	(0.6)	(0.1)	(9.5)
Borrowings	(12.0)	-	-	-	(12.0)
Derivatives	0.2	-	-	-	0.2
Total financial liabilities	(31.3)	(0.4)	(0.6)	(0.1)	(32.4)

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)

24. Issued share capital

	2013 £m	2012 £m
Authorised share capital 600,000,000 Ordinary shares of 1p each	6.0	6.0

		2013		2012
	Number of shares	£m	Number of shares	£m
Allotted, issued and fully paid Ordinary shares of 1p each
At beginning of year	332,982,172	3.3	328,804,760	3.3
Share scheme exercises	416,655	-	4,177,412	-
At end of year	333,398,827	3.3	332,982,172	3.3

During the year 416,655 Ordinary shares with a nominal value of £4,167 were issued by the Company for a total cash commitment of £30,170 pursuant to share scheme exercises as detailed in note 25.

In 2012 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.

25. Share-based payments

The income statement charge for the year for share-based payments was £0.3m (2012: £0.2m). 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:

	2013 Number of options/awards	2013 Weighted average exercise price	2012 Number of options/awards	2012 Weighted average exercise price
Outstanding at the beginning of the year	10,185,502	£0.025	22,313,657	£0.058
Granted	7,538,279	£0.080	7,096,009	£0.000
Share awards exercised – new share issues	(282,255)	£0.059	(4,177,412)	£0.071
Share awards exercised – shares awaiting issue	-	-	(134,400)	£0.100
Lapsed	(3,660,572)	£0.023	(14,912,352)	£0.049
Outstanding at 30 September	13,780,954	£0.055	10,185,502	£0.025
Exercisable at 30 September	482,297	£0.155	34,560	£0.100

The weighted average share price at the date of exercise of share options and other share incentive awards during the year was £0.157 (2012: £0.114).

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 options/awards		Weighted average exercise price		Weighted average remaining contractual life in years
	2013	2012	2013	2012	2013	2012
Sharesave Plan
December 2008	-	34,560	-	£0.100	-	-
April 2010	481,254	675,628	£0.155	£0.155	-	1
December 2010	834,530	898,892	£0.165	£0.165	1	2
December 2012	3,906,197	-	£0.140	-	3	-
PSP
November 2009	-	522,815	-	-	-	-
December 2010	224,221	435,679	-	-	-	1
January 2012	4,944,444	6,100,000	-	-	1	2
December 2012	1,583,333	-	-	-	2	-
DABS
November 2009	1,043	180,448	-	-	-	-
December 2010	326,462	420,650	-	-	-	1
January 2012	876,726	916,830	-	-	1	2
December 2012	602,744	-	-	-	2	-
Total outstanding at 30 September	13,780,954	10,185,502	£0.055	£0.025	2	2

Financial statements

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:

		2013			2012
	DABS	PSP	Sharesave	DABS	PSP
Grant date	17/12/12	17/12/12	20/12/12	18/01/12	18/01/12
Share price at grant date	£0.180	£0.180	£0.183	£0.088	£0.088
Exercise price	-	-	£0.140	-	-
Vesting period (years)	3	3	3	3	3
Expected volatility	55%	55%	55%	57%	57%
Option life (years)	3	3	3	3	3
Expected life (years)	3	3	3	3	3
Risk-free rate	0%	0%	1%	1%	1%
Dividend yield	0%	0%	0%	13%	13%
TSR correlation	-	6%	-	-	5%
Fair value	£0.180	£0.159	£0.083	£0.060	£0.048
Fair value – EPS element	-	£0.180	-	-	£0.060
Fair value – TSR element	-	£0.138	-	-	£0.037

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 two share option schemes being:

• 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 2013, options or awards had been granted under both of the above schemes but were only outstanding under the 2010 Sharesave Plan.

The 2000 Sharesave Plan and the 2010 Sharesave Plan (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. 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 2012 to issue invitations to participate in the Company's 2010 Sharesave Plan to eligible employees in the UK. 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, 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 within 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 43 of this Annual Report.

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

25. Share-based payments (continued)

Deferred Annual Bonus Scheme (DABS)

The DABS is a share-based incentive scheme, open to senior management across the Group. 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 January 2012 and December 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	Group
2013	2012
£m	£m
At beginning and end of year (0.3)	(0.3)

The 1,426,848 (2012: 1,426,848) shares held by the EBT represent 0.4% (2012: 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 2013 £m	Company 2013 £m	Group 2012 £m	Company 2012 £m
At 1 October	-	-	(0.1)	-
Net fair value gains	0.2	-	0.1	-
At 30 September	0.2	-	-	-

Merger reserve

The merger reserve of £109.0m (2012: £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 29 funds run by T. Rowe Price, but the employees, not the employer, have complete control over which funds they invest in, although they have no control over the stocks owned by the funds.

During the year, £1.2m (2012: £0.9m) contributions were made to these plans.

Financial Review

28. Commitments and contingent liabilities

(a) Operating lease commitments

At 30 September 2013, the Group had the following total future lease payments under non-cancellable operating leases:

	Land and buildings £m	Other £m	Total 2013 £m	Land and buildings £m	Other £m	Total 2012 £m
Within one year	4.3	0.2	4.5	4.0	0.2	4.2
Between one and five years	9.9	0.1	10.0	12.0	0.2	12.2
After five years	8.1	-	8.1	9.3	-	9.3
Total	22.3	0.3	22.6	25.3	0.4	25.7

Future minimum sub-lease receipts expected under non-cancellable subleases at 30 September 2013 total £3.9m (2012: £3.0m).

During the year, £3.2m (2012: £4.1m) was recognised in the income statement in respect of operating lease rental payments and £0.7m (2012: £0.6m) 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 2013 (2012: £nil).

29. Related party transactions

The Group had no material transactions with related parties in 2013 or 2012 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 £0.1m (2012: £nil) from subsidiary undertakings. The outstanding balance at 30 September 2013 was £0.1m (2012: £nil).

30. Principal subsidiary undertakings

The principal subsidiary undertakings at 30 September 2013 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	2013 £m	2012 £m
Revenue	1,2	106.9	103.6
Operating profit before exceptional items (EBITE)	1,2	3.5	4.0

Adjusted earnings per 1p Ordinary share (normalised)

	Note	2013 pence	2012 pence
Adjusted basic earnings per share	2	0.3	0.4

Normalised results are presented to better reflect 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 2011 and 30 September 2013, but include any new activities launched or acquired in that period.

Adjusted earnings per share are based on normalised results but exclude exceptional items and related tax effects.

Notes to the normalised results

1. Normalised segmental reporting

a) Revenue by segment

	2013 £m	2012 £m
UK	87.6	85.4
US	20.1	18.9
Revenue between segments	(0.8)	(0.7)
Total normalised revenue	106.9	103.6

2. Reconciliation of statutory results to normalised results

a) Reconciliation of statutory revenue to normalised revenue

	2013 £m	2012 £m
Statutory revenue	112.3	123.5
Adjustment: UK closed and divested activities	(4.6)	(13.7)
Adjustment: US closed and divested activities	(0.8)	(6.2)
Normalised revenue	106.9	103.6

b) EBITE by segment

	2013 £m	2012 £m
UK	5.6	6.8
US	(2.1)	(2.8)
Total normalised EBITE	3.5	4.0

Additional analysis of the Group's normalised revenue by type is set out below:

c) Revenue by type

	2013 £m	2012 £m
Circulation	61.1	60.1
Advertising	33.2	31.6
Customer publishing	7.0	7.2
Licensing, events and other	5.6	4.7
Total normalised revenue	106.9	103.6

b) Reconciliation of statutory operating profit before exceptional items (EBITE) to normalised EBITE

	2013 £m	2012 £m
EBITE	4.7	6.8
Adjustment: UK closed and divested activities	(0.9)	(2.9)
Adjustment: US closed and divested activities	(0.3)	0.1
Normalised EBITE	3.5	4.0

c) Reconciliation of statutory basic earnings per share to normalised adjusted basic earnings per share

	2013 pence	2012 pence
Basic earnings per share	1.3	0.1
UK closed and divested activities	(0.8)	(1.0)
US closed and divested activities	(0.1)	-
Exceptional items	-	1.4
Tax effect of the above adjustments	(0.1)	(0.1)
Normalised adjusted basic earnings per share	0.3	0.4

Notice of Annual General Meeting

Notice of Annual General Meeting

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 fifteenth Annual General Meeting of Future plc will be held on Monday 3 February 2014 at Future's Headquarters, 2 Balcombe Street, London NW1 6NW at 12 noon at which the following resolutions numbered 1 to 14 will be proposed as ordinary resolutions, and resolutions numbered 15 to 17 will be proposed as special resolutions.

Ordinary resolutions

• 1. To receive and adopt the audited financial statements of the Company for the financial year ended 30 September 2013 and the reports of the Directors and the auditors.
• 1. To approve the Remuneration implementation report as set out in pages 42 to 47 of the Annual Report of the Company for the financial year ended 30 September 2013.
• 1. To approve the Remuneration policy report as set out in pages 48 to 51 of the Annual Report of the Company for the three year period commencing on 1 October 2013.
• 1. To declare a final dividend of 0.2 pence per Ordinary share.
• 1. To elect as a Director Zillah Byng-Maddick.
• 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 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 office 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 shares in the Company and to grant rights to subscribe for, or to convert any security into, shares in the Company:
• 13.1 in connection with an offer by way of a rights issue (comprising equity securities as defined by section 560 of the Act), up to an aggregate nominal amount of £2,222,000 (such amount to be reduced by the nominal amount of any relevant securities allotted under paragraph 13.2 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

• 13.2 in any other case, up to an aggregate nominal amount of £1,111,000 (such amount to be reduced by the nominal amount of any equity securities allotted under paragraph 13.1 above in excess of £1,111,000), 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 2015 (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 2015.

Special resolutions

1. That, subject to the passing of resolution 13, the Directors be and are hereby authorised pursuant to Article 3.2 and 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 13 provided that such authority shall be limited to:

2. (a) the allotment of equity securities in connection with an offer by way of a rights issue, open offer or pre-emptive offer to holders of Ordinary shares on the register of members of the Company on a date fixed by the Directors where the equity securities to be allotted to existing shareholders shall be 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

3. (b) the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to an aggregate nominal amount of £166,700 (representing just under 5% of the issued share capital of the Company as at 13 December 2013)

and such authority shall expire at the conclusion of the Company's next Annual General Meeting or, if earlier, on 31 March 2015 (save that the Company may before the expiry of such authority 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).

• 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 33,340,000 (representing just under 10% of the issued share capital of the Company as at 13 December 2013);

• (b) the minimum price (exclusive of expenses) payable per Ordinary share be one penny;

• (c) the maximum price (exclusive of expenses) 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 middle market quotations for such Ordinary shares 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 2015;
• (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; and
• (f) pursuant to the Articles to hold as treasury shares any Ordinary shares purchased under this resolution 16.
• 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

Zillah Byng-Maddick Chief Financial Officer and Company Secretary 13 December 2013

Notice of Annual General Meeting

Further information about the AGM

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 Headquarters 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 30 January 2014 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.investorcentre.co.uk/eproxy

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 30 January 2014.

Number of shares in issue

1. As at the close of business on 13 December 2013 (being the last business day prior to the publication of this notice) the Company's issued share capital consisted of 333,476,541 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 333,476,541.

Documents available for inspection

1. Printed copies of the service contracts of the Company's Directors and the letters of appointment for the non-executive Directors will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded) at the headquarters of the Company at

2 Balcombe Street, London NW1 6NW,

and at the Company's registered office at

30 Monmouth Street, Bath BA1 2BW,

including on the day of the meeting from 11.45am until its completion.

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 30 January 2014 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 30 January 2014, 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.

Notes

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 30 January 2014, 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.

Notice of Annual General 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 auditors' 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:
• (a) any resolution must not, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise);
• (b) the resolution or matter of business must not be defamatory of any person, frivolous or vexatious;
• (c) the request:
• (i) may be in hard copy form or in electronic form;
• (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;
• (iii) in the case of a resolution, must be accompanied by a statement setting out the grounds for the request;
• (iv) must be authenticated by the person or persons making it; and
• (v) must be received by the Company not later than six weeks before the date of the AGM;
• (d) in the case of a request made in hard copy form, such request must be:
• (i) signed by you and state your full name and address; and

(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 732266 marked for the attention of the Company Secretary; and

• (e) in the case of a request made in electronic form, such request must:
• (i) state your full name and address; and
• (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.

Investor information

For enquiries of a general nature regarding the Company and for investor relations enquiries please contact Zillah Byng-Maddick at the Company's Headquarters, 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 FCA before getting involved by visiting www.fca.org.uk/register
• Report the matter to the FCA either by calling 0800 111 6768 or by completing the fraud reporting form on the FCA website at: www.fca.org.uk/consumers/scams/ investment-scams/share-fraud-andboiler-room-scams/reporting-form
• 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.

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

Zillah Byng-Maddick Chief Financial Officer and Company Secretary

Manjit Wolstenholme Senior independent non-executive Director

Seb Bishop Non-executive Director

Mark Whiteling Non-executive Director

Offices

Headquarters 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 auditors 31 Great George Street Bristol BS1 5QD

Broker Numis Securities Ltd 10 Paternoster Square London EC4M 7LT

Principal bankers Barclays Bank plc 1 Churchill Place London E14 5HP

Solicitors Norton Rose Fulbright 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 22 November 2013

Annual General Meeting 3 February 2014

Half-year end 31 March 2014

Announcement of interim results May 2014

Financial year-end 30 September 2014

Contacts

Future plc Headquarters 2 Balcombe Street London NW1 6NW United Kingdom

Registered office

Tel +44 (0)20 7042 4000

Beauford Court 30 Monmouth Street Bath BA1 2BW United Kingdom Tel +44 (0)1225 442244

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

www.futureplc.com

Future Publishing Ltd

Headquarters 2 Balcombe Street London NW1 6NW United Kingdom Tel +44 (0)20 7042 4000

Registered office

Beauford Court 30 Monmouth Street Bath BA1 2BW United Kingdom Tel +44 (0)1225 442244