Final Results

RNS Number : 9424I

Future PLC

26 November 2008

 



26 November 2008 

FUTURE PLC

Preliminary results for the year ended 30 September 2008

Future plc (LSE: FUTR), the international special-interest media group, today announces its preliminary results for the year ended 30 September 2008. An analyst presentation will be held today at 10.00am at the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP.

Financial Summary:	2008	2007	Change
Normalised* revenue	£162.9m	£159.2m	+ 2%
Normalised EBITAE**	£14.9m	£13.7m	+ 9%
Normalised EBITAE margin	9.1%	8.6%	Improved
Reported Pre-tax profit	£9.5m	£9.2m	+ 3%
Reported earnings per share (p)	2.1p	2.3p	- 9 %
Adjusted*** earnings per share (p)	2.8p	2.5p	+ 12%
Dividend relating to the year (pence per share)	1.1p	1.1p	Maintained
Net debt	£21.9m	£24.3m	Down 10%

Operating highlights

• Resilient performance in challenging market conditions

• Circulation revenue up 2%

• Advertising revenue up 3% 

• Online revenues up 36%

• EBITAE margin up despite 36% additional online investment

• 94% cash conversion - net debt down to £21.9m

• Cost control delivers savings of £2.7m (£9.3m over three years)

• Continued progress in digital strategy: 

  • on-console magazine launch for Sony 

  • acquisition of BallHype Inc delivers vertical search capability 

  • Pillar web Networks in every core sector with launch of techradar.com and musicradar.com

  • 18m unique website visitors per month, double 2007 

• Australian operating unit launched 

Stevie Spring, Future's Chief Executive said:

'Future bucked the trend in 2008. We made real progress.  Our special-interest focus, healthy balance sheet, lean operating structure and strong cash generation are all ingredients that have helped us to weather the storm to date.  And it is these strengths which give me confidence that Future will continue to make progress.

'During 2009 we will invest appropriately within the context of a cautious view of the economic backdrop.  Thanks to the measures we set in place over the last two years, the robustness of our strategy and our proven cost flexibility we are confident that the business is in the best shape it can be to deal with whatever challenges lie ahead.  

'And, with our first quarter advertising revenue bookings (for October to December) already running at 95% of 2007 actuals, we are pleased to report that our new financial year has begun satisfactorily.'

- ends -

Enquiries:

Future plc

Stevie Spring, Chief Executive	Tel: [phone]
John Bowman, Group Finance Director	Tel: [phone]
Vicky Bacon, Head of Group Communications	Tel: [phone]

Hogarth Partnership:

James Longfield / Ian Payne

Tel: [phone]

* For 2007, normalised results are presented to reflect better the size and structure of the business. The normalised results are restated to exclude revenues and costs of activities closed or divested prior to 30 September 2007.

** EBITAE represents operating profit before exceptional items and amortisation of intangible assets.

*** Adjusted earnings per share are based on normalised results, but exclude exceptional items and amortisation of intangibles and related tax effects.

  Strategy 

Future provides English-language content, by and for enthusiasts, based around communities: clusters of like-minded individuals whose interests range from computer games to film, and from cycling to strumming. We provide all of these communities of interest with editorial services that inform, entertain and unite in our magazines, websites, via an increasing number of business partnerships, events, and by exporting and licensing our English-language content to more than 90 countries.  In implementing our strategy, we have been careful to ensure focus on organic development, and have made only three small online acquisitions during the last two years.  

Group strategy remains on track, with operational focus on active portfolio management and continued progress in our digital strategy.  Each month we examine each product in our business portfolio in detail and we are well-positioned to respond swiftly to any change in market conditions. As it stands, our new financial year has begun satisfactorily.

Improved financial performance

Our statutory results show Group revenue of £162.9m (2007: £165.7m) and EBITAE of £14.9m (2007: £14.0m) representing an improved operating margin of 9.1% (2007: 8.4%).  

The 2008 income statement includes no exceptional items (2007: exceptional credit of £1.7m), a smaller charge for amortisation of intangible assets of £3.4m (2007: £3.6m) and reduced net financing costs of £2.0m (2007: £2.9m), leading to a pre-tax profit of £9.5m (2007: £9.2m) for the year. Excluding the impact of the exceptional credit in the prior year, our pre-tax profit of £9.5m was up 27%, despite an increase in our investment online.

Last year, following a significant period of restructuring in 2006/2007, we also published 'normalised' results to give shareholders a clearer picture of the business. These results were restated to exclude revenues and costs of activities closed or sold prior to 30 September 2007. Compared with these normalised 2007 figures, our 2008 results demonstrate revenue growth of 2% and EBITAE growth of 9%.

Adjusted earnings per share for the year were 2.8p (2007: 2.5p), an increase of 12%.

Dividend 

The Board is encouraged by the progress made during the last two years and, despite the uncertain economy, proposes a final dividend of 0.6p per share, making a total of 1.1p per share for the year, the same level as paid for 2007, but with increased dividend cover.  If approved at the Annual General Meeting to be held on 27 January 2009, the final dividend of 0.6p per share will be paid on 29 January 2009 to shareholders on the register on 9 January 2009. The ex-dividend date will be 7 January 2009.

Chief Executive's statement (Extract from Annual Report)

What a year. Unprecedented upheaval in the global financial system. The real economy in recession. And Future just completing our three year turnaround. Much has been written about the implications of market conditions for the media sector and, in particular, consumer facing media businesses. Most of it has been gloomy. And yet, in the face of all this turmoil, Future has continued to demonstrate resilience and delivered a good performance over the past year.

Our special-interest focus, healthy balance sheet, lean operating structure and strong cash generation are all ingredients that have helped us to weather the storm to date. It is these strengths that will stand us in good stead in the months ahead and which give me confidence that Future will continue to make progress.

On behalf of the Board and our shareholders I would like to thank all of Future's people for their continued efforts in delivering the strategy that has kept us on track in 2008. Their flexibility, creativity and passion have helped us, again, to deliver on our promises.  

Progress despite pressures

We have made excellent progress in the continued development of our strategy, with operating successes right across the business. Our EBITAE margin has improved further, despite accelerated levels of investment online, up 0.5% points to 9.1%. Strong cash generation has enabled us to continue to reduce Group debt, down 33% in two years to £21.9m, despite further investment in technology and online.  

Circulation revenue was up 2% on last year. The top 10 titles in the UK increased revenue by 13% and the top 10 US titles increased revenue by 12%, a very creditable performance in a tough magazine market, underlining the defensive qualities of special-interest content and the ongoing work we have done to ensure that every one of our magazines is positioned to maximise its potential. Despite us managing some titles through decline and transition, seven titles showed 20%+ audited circulation increases in the year, and a further 22 grew over this period. So the benefits of our focused strategy and hands-on micro-management are evident. This strategy has also led to a 14% increase in sales on subscription, which now represent 25% of circulation revenue and add further resilience, positive cash flows and greater visibility to the business.

Our advertising performance was even more impressive. Set against a falling global advertising market, advertising revenue was up 3%.  Within this, online advertising was up 35% and now represents 18% of total advertising revenue, demonstrating the continuing success of our digital strategy. 

During the year, we launched two new Radar websites, TechRadar and MusicRadar, ensuring we now have online networks in each of our specialist sectors. The third pillar of our web product strategy was realised with the £1.6m acquisition of BallHype Inc, a US internet business that owns proprietary web technology for advanced aggregation of online content. We are now in a strong position to expand our digital offer by exploiting this technology on a number of our web sites over the next two years. 

As a result of our focus on digital, we now reach more than 18 million unique users per month across our websites - nearly double this time last year. GamesRadar, our most developed network, increased its contribution by 60% and now reaches more than eight million unique users per month.  

In 2008 we made further operational changes in our UK and US businesses that have resulted in improved performances from both of these territories.

In the UK, we achieved a 5% increase in EBITAE to £15.1m on revenues of £115.6m (including the impact of three closures and a disposal). Through improved training, structural changes to our advertising sales teams and seven new senior hires, we delivered a particularly strong performance in advertising, achieving a 3% increase in advertising revenue. A considerable achievement in a declining market and evidence of our success in growing share.  

In the US, margins increased from 6.3% to 7.0%, resulting in a 20% improvement in EBITAE. We made a number of operational and management changes to streamline this business and tighten our focus on the music, technology and games sectors. Guitar World, already the world's no.1 guitar magazine, reached its highest ever paid circulation in 2008 with a 43% year on year increase in the first-half. Technology also had a strong year, with MacLife increasing its circulation by 5% for the same period. For the first time this year, we published Official titles for all three videogames console manufacturers, Sony, Nintendo and Microsoft. In year one of publishing, Official Nintendo magazine saw newsstand sales up 30% while Official PlayStation magazine achieved an increase in sales of 53%.

In April this year, we took direct control of our magazine licences in Australia, establishing a small office in Sydney.  We are already publishing four magazines here and next year we will launch our fifth title: Official Nintendo magazine - Australia and New Zealand. Importantly, this turned Future into a truly 24/7 English language media business, a significant advantage to our digital offer.  

Internationally, we have strengthened our position as both the UK's number one exporter and licensor of monthly magazines. We increased the number of licenses by 10. The BRIC nations - Brazil, Russia, India, China - have offered us further opportunities and we now license 19 titles in these territories, with Russia our second biggest license market. Future now has 168 licenses and licensed editions in 35 countries.  

Prosumers provide protection

A key reason for Future's continued resilience is the strength of the connection we have with the communities of enthusiasts who we serve. We call these enthusiasts 'prosumers', professional consumers, because they demonstrate behaviour more akin to a business-to-business relationship than a business-to-consumer one. Their commitment to their passion - be it computers, games, bikes, gadgets, film or photography - is unwavering.  

Our relationship with these prosumers - predominantly young or young-at-heart men - and our ability to connect them to advertisers looking to target what is a very valuable demographic, are real strengths for Future. As a result, we have to date withstood the twin pressures of a broader market decline in advertising spend and the proliferation of advertising inventory.

We are not complacent that this resilience will survive through uncertain times, but we are sufficiently flexible and fleet of foot to adapt to any changes as they arise.

Another important change for our business has been the evolution of the video games market from the highly cyclical sector it has been in the past to one that much more closely mirrors the film or music industries, whereby it is the gaming software, rather than the evolving hardware on which it is played, that is the key driver of the market.  

For Future, this changing dynamic reduces the big swings in revenue in our games segment - which represents 32% of our turnover - that have been a feature of our business historically. A welcome evolution and one which enables us to plan, invest and work more effectively with our gaming partners in a number of important ways: 

• All of the major games console manufacturers - Sony, Microsoft and Nintendo - have established strong market positions and are developing their consoles at different stages. This mitigates the impact on our business of changes to any one console. Moreover, we now have partnerships to publish the Official titles of all three manufacturers on both sides of the Atlantic, so we are even better insulated from the impact of changes in hardware.  

• It is the development of the games, and gaming content itself, rather than the hardware that now drives the market. Video game launches are continuous - like feature films. This creates regular newsflow for our gaming content: feeding news, reviews and games demos to our Official and independent games magazines and our GamesRadar Network, and through our expanding programme of events. This year we launched our first ever UK PC gaming event, building on the success of our US LAN events that attract thousands of enthusiasts. This trend also provides a more reliable and predictable endemic advertising base.  

• We are increasingly seeing the games manufacturers developing their relationships with gamers directly through their consoles via their online networks and we are making sure we are at the heart of this process. Building on our track record in developing multi-media content, this year we launched the industry's first on-console digital programme for Sony - entitled 'Qore' - in the US. We also announced plans with Sony to develop Europe's first on-console high-definition digital magazine early in 2009.

It is the strength and depth of these relationships with our commercial partners, as well as with our loyal prosumers, that provides the backbone of resilience we are seeing in our business.  

Strengthening commercial partnerships

We have powerful positions in each of our core sectors which enable us to deliver compelling content that brings potential buyers together around areas of special-interest: clustering these buyers for our commercial partners to access.  

Partnership publishing revenue accounted for 24% of group revenue over the past year and grew by 17%. Our partners include some of the world's largest and most successful companies: not just Sony, Microsoft and Nintendo but also BT, O2 and Sky. We are platform-neutral in this regard, delivering online, print and events or more usually a combination of the three.  

It is these powerful partnerships that help us to engage our audiences. In turn we help our commercial partners to target and engage with these enthusiasts: a virtuous circle that underpins our diverse revenue streams and ensures that we remain at the forefront of everything that is going on in the 'host' sectors.  For example, in games, we have 18 monthly newsstand magazines and regular special editions; one of the largest gaming information websites in the world; and we host four gaming events.

And in the summer, we launched with Sony a new monthly high definition programme for the PlayStation Network - Qore. A first for the videogames industry, this digital programme includes news, interviews, special features and downloads, all delivered directly to gamers' screens via their PlayStation console. Qore has already attracted huge interest from advertisers eager to target gamers directly. In September, the partnership was extended to Sony UK for a weekly version of the programme, now in final development, to be launched early next year.

Our customer publishing agency, FuturePlus also represents an increasingly important part of our business. Here we contract directly with commercial partners in our sectors of competence to apply our online and print expertise to adapt and create bespoke multi-platform content - magazines, websites, vodcasts, e-zines - to support their marketing programmes. Successful contract partnerships in the year have included Best Buy, Kmart, BT Vision, Sky and PC World. We are now among the UK's top ten customer publishing agencies and importantly have 22% of that business online - the highest proportion of any of our peers.

Profitability provides platform for growth

The ultimate measure of any business is its ability to deliver sustainable profitability and the extent to which this is reflected in the cash it is able to generate. Future is highly cash generative, with an operating cash conversion rate this year in excess of 94%. Profit before tax was £9.5m, up 3% on the prior year. Excluding an exceptional credit of £1.7m in 2007, profit before tax was up 27% year on year - despite an increase in technology and web investment.  

Cash and contribution are key metrics for our operational management. Every one of our magazines, specials, websites, contracts and events are managed and assessed on their individual contribution to the Group's performance.  

As a portfolio business, Future is in essence made up of hundreds of micro-businesses. There will always be an ebb and flow within this portfolio as products evolve or as the host sectors in which they operate grow, decline or migrate.  There is inherently less risk in a portfolio business like Future, as we do not need to bet the farm on any single launch, nor do we face disaster if one title, website or event fails. We can dare to be brave, learn faster and implement in a less expensive way than many others. Hence our 'do and learn' philosophy which allows us to be nimble.

We place small affordable bets, investing within our means in areas that we identify for growth. This has meant we have continued to focus on investment online during the year, by developing our existing web properties such as GamesRadar and BikeRadar; by launching new properties into key sectors, including TechRadar and MusicRadar; and by carefully targeting investment in external capabilities, such as the acquisition of web aggregator BallHype earlier in the year. 

And this year, we won the Association of Online Publishers' Digital Sales Team of the Year award - beating ITV, Channel 4 and FT.com from the shortlist. This is testament to the progress we've made in not only developing our digital offer, but also in selling it effectively to our commercial partners. With a 35% uplift in online advertising revenue across the Group, the results of these efforts are clear.  

Outlook 

Future bucked the trend in 2008. We made real progress. Our special-interest focus, healthy balance sheet, lean operating structure and strong cash generation are all ingredients that have helped us to weather the storm to date. And it is these strengths which give me confidence that Future will continue to make progress.

During 2009 we will invest appropriately within the context of a cautious view of the economic backdrop. Thanks to the measures we set in place over the last two years, the robustness of our strategy and our proven cost flexibility we are confident that the business is in the best shape it can be to deal with whatever challenges lie ahead.  

And, with our first quarter advertising revenue bookings (for October to December) already running at 95% of 2007 actuals, we are pleased to report that our new financial year has begun satisfactorily.

Stevie Spring

Chief Executive

26 November 2008

Financial Review

This financial review is based primarily on a comparison of our IFRS results for the year ended 30 September 2008 with those for the year ended 30 September 2007. Unless otherwise stated, growth percentages relate to a comparison of these two years.

In running the business, Future management focuses on earnings before interest, tax, amortisation and exceptional items. Profit on disposal of subsidiaries is also excluded. For convenience we refer to this as EBITAE.  

Last year, following a significant period of restructuring in 2006/2007, we also published 'normalised' results which were restated to exclude revenues and costs of activities closed or divested prior to 30 September 2007.  A reconciliation of 2007 normalised to statutory results is provided at the end of this announcement.  Normalised results were designed to be more helpful to those looking forward to the outlook for the business in 2008, on which we now report.

Statutory results for year ended 30 September

Revenue was £162.9m (2007: £165.7m) and the business generated EBITAE of £14.9m (2007: £14.0m) representing a strengthened EBITAE margin of 9.1% (2007: 8.4%).

The income statement includes no exceptional items (2007: exceptional credit of £1.7m), a smaller charge for amortisation of intangible assets of £3.4m (2007: £3.6m) and reduced net financing costs of £2.0m (2007: £2.9m), leading to a pre-tax profit of £9.5m (2007: £9.2m) for the year.  

Year ended 30 September	2008 £m	2007 £m
Revenue	162.9	165.7
EBITAE	14.9	14.0
EBITAE margin	9.1%	8.4%
Exceptional credit	-	1.7
Amortisation of intangible assets	(3.4)	(3.6)
Operating profit	11.5	12.1
Net finance costs	(2.0)	(2.9)
Pre-tax profit	9.5	9.2
Earnings per share - Continuing (p)	2.1p	2.3p
Earnings per share - Total (p)	2.1p	4.4p
Dividends relating to the year (p)	1.1p	1.1p

2007 revenue of £165.7m includes £6.5m generated from activities which were closed or divested prior to 30 September 2007 and excluding these, normalised revenue in the prior year was £159.2m.

  Normalised results for year ended 30 September 

For 2007, normalised results are presented to reflect better the current size and structure of the business.  The normalised results are restated to exclude revenues and costs of activities closed or divested prior to 30 September 2007.

Normalised results 

Year ended 30 September	2008 £m	2007 £m
Revenue	162.9	159.2
EBITAE	14.9	13.7
EBITAE margin	9.1%	8.6%
Adjusted earnings per share (p)	2.8p	2.5p

Half-yearly performance

The table below analyses the normalised business results during the last two years into first-half and second-half performance.

		First  Half-year to March		Second Half-year to September	Total
		£m		£m	£m
Revenue
Year to 30 September 2007		79.2		80.0	159.2
Year to 30 September 2008		78.3		84.6	162.9
EBITAE
Year to 30 September 2007		6.9		6.8	13.7
Year to 30 September 2008		7.0		7.9	14.9

Dividend

The Board's policy is that dividends relating to the year should be covered at least twice by adjusted annual earnings per share. In respect of the year ended 30 September 2008, adjusted earnings per share were 2.8p per share and the Board has recommended total dividends of 1.1p per share for the year. This represents dividend cover of 2.5 times.  

Review of operations

The review of operations is based on a comparison of the results for 2008 with the normalised results for 2007. 

Group revenue increased by 2% to £162.9m. Revenues in the UK grew by 0.4% and in the US by 7% and both UK and US operating margins improved, despite additional online investment. Online advertising revenue grew by 35%, contributing to overall growth in advertising of 3% for the year.  

By segment, Games revenue grew 7% and contribution grew by 16%. Performance in Music & Movies was held back by online investment, while Technology overall delivered modest growth in both revenue and contribution. Following the closure of our snowboarding magazine, the Active segment delivered an improved performance. Overheads and other costs remained under tight control.  

Analysis of revenue for year ended 30 September (normalised)

Group revenues (normalised)

The tables below analyse Group revenues in sterling.

Revenue by country	% of	2008	2007	Change
	Group	£m	£m	%
UK	71%	115.6	115.1	-
US	29%	47.7	44.4	+ 7%
Intra-group	-	(0.4)	(0.3)	-
Group revenue	100%	162.9	159.2	+ 2%

Revenue by type	% of	2008	2007	Change
	Group	£m	£m	%
Circulation	60%	97.8	96.1	+ 2%
Advertising	31%	50.7	49.3	+ 3%
Customer publishing	5%	7.4	7.4	-
Licensing, events & other	4%	7.0	6.4	+ 9%
Group revenue	100%	162.9	159.2	+ 2%

Advertising revenue	% of	2008	2007	Change
	Group	£m	£m	%
Magazines	82%	41.4	42.4	- 2%
Online	18%	9.3	6.9	+ 35%
Advertising revenue	100%	50.7	49.3	+ 3%

Proportion of Group	UK	US	Group
Games	17%	15%	32%
Music & Movies	14%	7%	21%
Technology	22%	5%	27%
Active	18%	2%	20%
Total	71%	29%	100%

Currency effect of US Dollar

The most significant foreign currency affecting the Group is the US Dollar. The average exchange rate for the year was $1.97 = £1, compared with $1.97 for the previous year.  

Analysis of EBITAE for year ended 30 September (normalised)

		2008	2007	Change
		£m	£m	%
UK		15.1	14.4	+ 5%
US		3.4	2.8	+ 21%
Central costs		(3.6)	(3.5)	+ 3%
Total EBITAE		14.9	13.7	+ 9%

Group performance for year ended 30 September 2008 (normalised) 

	2008 Revenue £m	2008 Contribution  £m	2008 Margin  %	2008  % of revenue	2007 Revenue £m	2007 Contribution  £m	2007 Margin  %
Games	52.4	15.1	29%	32%	49.0	13.0	27%
Music & Movies	34.8	8.0	23%	21%	34.3	8.5	25%
Technology	44.1	13.1	30%	27%	43.3	12.7	29%
Active	32.0	6.7	21%	20%	32.9	6.1	19%
	163.3	42.9	26%	100%	159.5	40.3	25%
Less: intra-group	(0.4)	-			(0.3)	-
Overheads	162.9	42.9 (28.0)			159.2	40.3 (26.6)
EBITAE		14.9	9.1%			13.7	8.6%
Exceptional items		-				1.7
Amortisation		(3.4)				(3.6)
Operating profit		11.5				11.8

  UK performance for year ended 30 September (normalised)

		2008	2007	Change
		£m	£m	%
Circulation revenue		74.8	75.6	- 1%
Advertising revenue		29.2	28.4	+ 3%
Customer publishing		5.2	5.4	- 4%
Licensing, events & other		6.4	5.7	+ 12%
Total revenue		115.6	115.1	-
EBITAE		15.1	14.4	+ 5%
EBITAE margin		13.1%	12.5%

	2008 Revenue £m	2008 Contribution  £m	2008 Margin  %	2008  % of revenue	2007 Revenue £m	2007 Contribution  £m	2007 Margin  %
Games	27.7	10.5	38%	24%	26.8	8.8	33%
Music & Movies	23.7	5.6	24%	21%	24.5	6.5	27%
Technology	35.0	10.7	31%	30%	34.4	10.4	30%
Active	29.2	6.9	24%	25%	29.4	6.7	23%
Overheads	115.6	33.7 (18.6)	29%	100%	115.1	32.4 (18.0)	28%
EBITAE		15.1	13.1%			14.4	12.5%
Exceptional items		-				2.2
Amortisation		(2.4)				(2.7)
Operating profit		12.7				13.9

Normalised revenue increased by 0.4% in a tough trading environment. Despite this, EBITAE grew by 5% to £15.1m, representing an improvement in EBITAE margin from 12.5% to 13.1%.

Circulation revenue fell by 1% reflecting predominantly the closure of our Disney titles and the sale of Health and Fitness. A decline of 7% in UK newsstand revenue was largely substituted by 12% growth in subscription revenue and we achieved 6% growth in export revenue.

Advertising revenue grew by 3%, while the smaller area of customer publishing revenue declined by 4% although at an improved contribution as we refocused the business. Licensing, events and other revenue grew by 12%.

Within our four core portfolios, Games produced the strongest growth as shown in the table above. In other parts of the portfolio, weaknesses in personal computing, consumer electronics and automotive were offset by stronger performances in our Mac segment, digital creative and cycling.  

We have maintained our focus on operating and other costs generating £1.7m of annualised cost savings while continuing to invest in the business.

  US performance for year ended 30 September (normalised)

		2008	2007	Change
		$m	$m	%
Circulation revenue		45.4	40.4	+ 12%
Advertising revenue		42.3	41.2	+ 3%
Customer publishing		4.4	4.0	+ 10%
Licensing, events & other		2.0	1.9	+ 5%
Total revenue		94.1	87.5	+ 7%
EBITAE		6.6	5.5	+ 20%
EBITAE margin		7.0%	6.3%

	2008 Revenue $m	2008 Contribution  $m	2008 Margin  %	2008  % of revenue	2007 Revenue $m	2007 Contribution  $m	2007 Margin  %
Games	48.7	9.1	19%	52%	43.6	8.3	19%
Music & Movies	21.9	4.7	21%	23%	19.5	3.9	20%
Technology	17.9	4.7	26%	19%	17.6	4.6	26%
Active	5.6	(0.4)	(7%)	6%	6.8	(1.2)	(18%)
Overheads	94.1	18.1 (11.5)	19%	100%	87.5	15.6 (10.1)	18%
EBITAE		6.6	7%			5.5	6%
Exceptional items		-				(1.0)
Amortisation		(2.0)				(1.7)
Operating profit		4.6				2.8

Normalised revenues increased by 7%. EBITAE grew by 20% to $6.6m, representing an improvement in EBITAE margin from 6.3% to 7.0%.

Circulation revenue grew by 12% reflecting an increase of 11% in newsstand and 16% in subscriptions revenue. Having changed our magazine distributor in the UK last year, we changed our US magazine distributor to Time Warner Retail in January 2008. 

In the US the majority of revenue is gained from advertising, which grew by 3%. In the smaller area of customer publishing, revenue increased by 10%; licensing, events and other revenue grew by 5%.

Within our four portfolios, the strongest performance was from our Games group. Revenue grew by 12%, supported by revenues from all three Official console magazines, our online activity, and most recently the contribution from Qore, our digital programme for Sony.

As with the UK, we have kept costs under strict control, generating a further $1.9m of cost savings during the year while continuing to invest in the business.

Online

The UK and US segmental figures above include online revenue and operating costs. Online remains a key priority for the business and we have made good progress here. Group online advertising revenue increased by 35% from £6.9m to £9.3m. Total Group digital revenue increased by 36% from £8.0m to £10.9m.

Exceptional items

There were no exceptional items in the year. Exceptional credits in the prior year totalling £1.7m related to property and other provisions and disposals.

Leasehold property and related balance sheet provisions 

All of the Group's property is either occupied or assigned, sub-let or the lease surrendered. Property provisions carried at 30 September 2008 totalled £0.3m (2007: £0.3m).  

Intangible assets

The annual charge for amortisation of intangible assets was £3.4m (2007: £3.6m). The reduction reflects a number of intangible assets having been fully written down during the previous year. No impairment charge has been required since 2006.

Taxation

The Group's tax strategy is to minimise its liabilities to taxation, having regard to commercial circumstances, tax history, the risk of changing legislation, and delays in agreeing matters in certain territories.

The tax charge for the year amounted to £2.7m (2007: £1.8m), comprising a current tax charge of £0.7m and a deferred tax charge of £2.0m. The £2.7m represents an effective tax rate of 28% as applied to profit before tax.  This is a lower tax charge than estimated six months ago and reflects a number of factors, including adjustments arising following finalisation of 2007 tax returns.

The standard rates of corporation tax are 28% (UK, with effect from April 2008) and 41% (US). The Group benefits from the structuring of certain acquisitions and other planning steps. 

Earnings per share

Basic earnings per share for the total group were 2.1p (2007: 4.4p).  Adjusted earnings per share were 2.8p (2007: 2.5p) and these are based on the audited results (2007: normalised results) which are adjusted to exclude exceptional items and amortisation of intangibles and related tax effects. Adjusted profit after tax amounted to £9.1m (2007: £8.1m).  The weighted average number of shares in issue was 325.7m (2007: 324.6m).  Full details are set out in note 10 and note 3 in the normalised notes.

Balance sheet

As is common in media companies, Future has a low capital base and its value is better measured from its strong cash flows rather than by returns on capital employed.

The Group's net assets at 30 September 2008 amounted to £79.6m (2007: £74.5m) of which £113.0m (2007: £109.1m) related to intangible fixed assets. While the Group's net assets increased from £74.5m to £79.6m, the Group's net debt decreased by 10% from £24.3m to £21.9m. The Group's balance sheet is therefore stronger than a year ago. 

The Company's distributable profits at 30 September 2008 were £65.1m.

Cash flow and net debt

Net debt at 30 September 2008 was £21.9m, a reduction of 33% during the last two years.  Future continues to be cash-generative and the major cash inflow during the year was cash generated from operations of £14.0m.

During the year the Group paid out £3.5m in dividends, £3.7m in respect of capital expenditure, £1.7m on acquisitions and £2.1m in net interest payments.  

Bank facility

Future funds its operations through a mixture of operating cash flow generated by the business and bank debt. The position at the year-end is well within the bank covenants as set out in the following table.  The banking facility runs to April 2010.

Bank covenants

		Year-end	Bank covenant
Net debt/ EBITDA	1.27 times	Less than 2.5 times
EBITDA / interest	8.46 times	More than 3.5 times

Key performance indicators

An updated set of key performance indicators is presented at the end of this statement.

Risks

The principal risks affecting the activities of the Group are detailed in the section entitled 'Risks' on pages 22 and 23 of the Future plc 2007 Annual Report, a copy of which is available on our website: www.futureplc.com. An updated version will be available in the 2008 Annual Report.

Business Outlook for 2009

EBITAE in 2009 will reflect trading conditions and our ability to mitigate any specific revenue volatility, to the extent that they affect our business. Our largest expenditure is on people costs, and most salaries have been reviewed at 1 October 2008 to reflect, on average, a below-inflationary increase. The majority of our direct costs (paper, print and discs) are underpinned by contracted rates.

We continue to seek to improve the overall proportion of magazines sold compared with the number printed, although this cannot be taken for granted. We have changed our principal magazine distributor in the US (from January 2008), having changed our UK distributor in May 2007.  

The most significant foreign currency affecting the Group is the US Dollar. The average exchange rate for the year was $1.97 = £1, compared with $1.97 for the previous year. Since the year-end the value of the US Dollar has strengthened to approximately $1.50 = £1 and if this rate were to apply throughout the new financial year then it would increase the value of US revenues and profits when reported in sterling.

The majority of our EBITAE is expected to be converted to cash inflows. Cash outflows in 2009 are expected to include capital expenditure, net interest (likely to be readily affordable from profits before interest), business taxation and dividend payments. We do not anticipate any exceptional costs in 2009.

  Consolidated income statement 

for the year ended 30 September 2008

		2008	2007
Continuing operations	Note	£m	£m
Revenue	1,2	162.9	165.7
Operating profit before exceptional items and amortisation of intangible assets		14.9	14.0
Exceptional items	5	-	1.7
Amortisation of intangible assets	4,12	(3.4)	(3.6)
Operating profit	1,3	11.5	12.1
Finance income	7	0.3	0.6
Finance costs	7	(2.3)	(3.5)
Net finance costs	7	(2.0)	(2.9)
Profit before tax	4	9.5	9.2
Tax on profit	8	(2.7)	(1.8)
Profit for the year from continuing operations		6.8	7.4
Discontinued operations
Profit for the year from discontinued operations		-	6.8
Profit for the year		6.8	14.2

Earnings per 1p Ordinary share

	Note	2008	2007
	Note	pence	pence
Basic earnings per share - Total Group	10	2.1	4.4
Diluted earnings per share - Total Group	10	2.1	4.3
Basic earnings per share - Continuing operations	10	2.1	2.3
Diluted earnings per share - Continuing operations	10	2.1	2.2

  Consolidated statement of changes in equity 

for the year ended 30 September 2008

		Share capital	Share premium	Merger reserve	Treasury reserve	Retained earnings	Total equity
	Note	£m	£m	£m	£m	£m	£m
Balance at 1 October 2006		3.3	24.5	109.0	(1.1)	(72.1)	63.6
Profit for the year		-	-	-	-	14.2	14.2
Currency translation differences		-	-	-	-	(1.0)	(1.0)
Total recognised loss for the year		-	-	-	-	13.2	13.2
Final dividend relating to 2006	9	-	-	-	-	(1.6)	(1.6)
Interim dividend relating to 2007	9	-	-	-	-	(1.6)	(1.6)
Share option schemes  - Value of employees' services Transfer between reserves	6 20	- -	- -	- -	- 0.4	0.9 (0.4)	0.9 -
Balance at 30 September 2007		3.3	24.5	109.0	(0.7)	(61.6)	74.5
Profit for the year		-	-	-	-	6.8	6.8
Currency translation differences		-	-	-	-	1.2	1.2
Total recognised profit for the year		-	-	-	-	8.0	8.0
Final dividend relating to 2007	9	-	-	-	-	(1.9)	(1.9)
Interim dividend relating to 2008	9	-	-	-	-	(1.6)	(1.6)
Share option schemes  - Value of employees' services	6	-	-	-	-	0.6	0.6
Transfer between reserves	20	-	-	-	0.4	(0.4)	-
Balance at 30 September 2008		3.3	24.5	109.0	(0.3)	(56.9)	79.6

  Consolidated balance sheet

as at 30 September 2008

		2008	2007
	Note	£m	£m
Assets
Non-current assets
Property, plant and equipment	11	4.9	4.9
Intangible assets - goodwill	12	108.3	104.8
Intangible assets - other	12	4.7	4.3
Deferred tax	13	1.3	2.9
Total non-current assets		119.2	116.9
Current assets
Inventories	14	3.9	3.1
Corporation tax recoverable		1.3	0.4
Trade and other receivables	15	28.4	30.2
Cash and cash equivalents	16	8.4	14.2
Total current assets		42.0	47.9
Total assets		161.2	164.8
Equity and liabilities
Equity
Issued share capital		3.3	3.3
Share premium account		24.5	24.5
Merger reserve	20	109.0	109.0
Treasury reserve	20	(0.3)	(0.7)
Retained earnings		(56.9)	(61.6)
Total equity		79.6	74.5
Non-current liabilities
Financial liabilities - interest-bearing loans and borrowings	18	14.8	21.8
Deferred tax	13	2.1	1.9
Provisions	19	1.3	1.4
Other non-current liabilities		2.6	2.4
Total non-current liabilities		20.8	27.5
Current liabilities
Financial liabilities - interest-bearing loans and borrowings	18	15.5	16.7
Trade and other payables	17	43.0	44.9
Corporation tax payable		2.3	1.2
Total current liabilities		60.8	62.8
Total liabilities		81.6	90.3
Total equity and liabilities		161.2	164.8

  Consolidated cash flow statement

for the year ended 30 September 2008

		2008	2007
		£m	£m
Cash flows from operating activities
Cash generated from operations		14.0	14.0
Interest received		0.3	0.6
Tax received		0.5	2.5
Interest paid		(2.4)	(3.0)
Tax paid		(1.0)	(1.9)
Net cash generated from operating activities		11.4	12.2
Cash flows from investing activities
Purchase of property, plant and equipment		(1.4)	(1.3)
Purchase of magazine titles, websites and trademarks		(0.3)	(2.5)
Purchase of computer software and website development		(2.0)	(1.0)
Purchase of subsidiary undertaking		(1.7)	-
Disposal of magazine titles and trademarks		-	0.5
Disposal of software		-	0.2
Disposal of subsidiary undertakings		-	6.0
Cost of business disposals		-	(0.3)
Net cash disposed with subsidiary undertakings		-	(2.7)
Net cash used in from investing activities		(5.4)	(1.1)
Cash flows from financing activities
Draw down of bank loans		8.5	9.0
Repayment of bank loans		(18.1)	(22.5)
Rearrangement fees for bank loans		-	(0.2)
Equity dividends paid		(3.5)	(3.2)
Net cash used in financing activities		(13.1)	(16.9)
Net decrease in cash and cash equivalents		(7.1)	(5.8)
Cash and cash equivalents at beginning of year		14.2	20.0
Exchange adjustments		1.3	-
Cash and cash equivalents at end of year		8.4	14.2
Amount attributable to - Continuing operations		8.4	14.2

  Notes to the cash flow statement

for the year ended 30 September 2008

A. Cash generated from operations

The reconciliation of operating profit to cash flows generated from operations is set out below:

		2008 £m		2007 £m
Operating profit for the year - Continuing operations		11.5		12.1
- Discontinued operations		-		2.2
Operating profit for the year - Total Group		11.5		14.3
Adjustments for:
Depreciation charge		1.9		2.2
Profit on disposal of magazine titles and trademarks		-		(1.0)
Amortisation of intangible assets		3.4		3.6
Share option schemes - value of employees' services		0.6		0.9
Operating profit before changes in working capital and provisions		17.4		20.0
Movement in provisions		(0.1)		(4.8)
(Increase)/decrease in inventories		(0.6)		0.5
(Increase)/decrease in trade and other receivables		(1.3)		2.3
Decrease in trade and other payables		(1.4)		(4.0)
Cash generated from operations		14.0		14.0

B. Analysis of net debt

	1 October 2007 £m	Cash flows £m	Non-cash changes £m	Exchange movements £m	30 September  2008 £m
Cash and cash equivalents	14.2	(7.1)	-	1.3	8.4
Debt due within one year	(16.7)	6.6	(4.0)	(1.4)	(15.5)
Debt due after more than one year	(21.8)	3.0	4.0	-	(14.8)
Net debt	(24.3)	2.5	-	(0.1)	(21.9)

C. Reconciliation of movement in net debt

		2008 £m		2007 £m
Net debt at start of year		(24.3)		(32.8)
Decrease in cash and cash equivalents		(7.1)		(3.1)
Cash disposed with subsidiaries		-		(2.7)
Movement in borrowings		9.6		13.5
Exchange movements		(0.1)		0.8
Net debt at end of year		(21.9)		(24.3)

Accounting Policies

Basis of preparation

This preliminary statement of annual results for the year ended 30 September 2008 is unaudited and does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985. The information contained in this statement is based on the statutory accounts for the year ended 30 September 2008. The statutory accounts have not yet been delivered to the Registrar of Companies nor have the auditors yet reported on these.

The statutory accounts are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and International Financial Reporting Interpretations Committee's (IFRIC) interpretations as adopted by the European Union (EU) applicable at 30 September 2008, and those parts of the Companies Act applicable to companies reporting under IFRS.

The accounting policies adopted are consistent with those set out in the Group's statutory accounts for the year ended 30 September 2007, with the exception of that noted below.

The Group has adopted IFRS 7 (Financial Instruments: Disclosures) which is mandatory for this accounting period. The adoption of these interpretations did not have a material impact on the Group's results.

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 de-consolidated 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, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. 

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but 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.

  Notes to the financial statements

1.       Segmental reporting

A geographical segment is based on the economic environment in which an entity operates. The Group's continuing operations are split geographically between the UK and the US. Future Media Italy and Future France, previously managed as part of the mainland Europe segment were sold on 1 December 2006 and 28 September 2007 respectively. These are disclosed as discontinued operations. The geographical analysis is stated on the basis of origin of operations.

(a) Primary reporting format – Geographical segment

Analysis by primary segment is shown below:    

(i)            Revenue by segment

	2008 £m	2007 £m
UK	115.6	118.4
US	47.7	47.6
Revenue between segments	(0.4)	(0.3)
Total continuing operations	162.9	165.7

Inter segment pricing is determined on an arm's length basis.

(ii)           Revenue by destination

The Group's primary segments are based on the geographical location of segment assets, which can differ from the geographical market in which the customer is located. An analysis by destination is shown below:

	2008 £m	2007 £m
UK	91.4	95.3
US	52.7	51.8
Mainland Europe	10.2	10.5
Rest of the World	9.0	8.4
Revenue between segments	(0.4)	(0.3)
Total continuing operations	162.9	165.7

(iii)         Operating profit by segment

	2008 £m	2007 £m
UK	12.7	13.7
US	2.4	1.9
Central costs	(3.6)	(3.5)
Operating profit on continuing operations	11.5	12.1

(iv)          Assets and liabilities by segment

	Segment Assets		Segment Liabilities		Segment Net Assets
	2008	2007	2008	2007	2008	2007
	£m	£m	£m	£m	£m	£m
UK	120.2	133.4	(55.6)	(70.1)	64.6	63.3
US	41.0	31.4	(26.0)	(20.2)	15.0	11.2
Total	161.2	164.8	(81.6)	(90.3)	79.6	74.5

(v)            Other segment information

	Capital expenditure		Depreciation and Amortisation		Exceptional  items
	2008	2007	2008	2007	2008	2007
	£m	£m	£m	£m	£m	£m
UK	2.8	3.9	3.6	4.0	-	(2.2)
US	4.4	0.9	1.7	1.7	-	0.5
Continuing operations	7.2	4.8	5.3	5.7	-	(1.7)
Discontinued operations	-	0.1	-	0.1	-	(5.9)
Total	7.2	4.9	5.3	5.8	-	(7.6)

Other than the items disclosed above and a share based payments charge of £0.6m (2007: £0.9m) there were no other significant non-cash expenses during the year.

(b) Secondary reporting format – Business segment

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

(i)            Revenue by segment

	2008 £m	2007 £m
Games	52.4	49.0
Music & Movies	34.8	37.5
Technology	44.1	43.6
Active	32.0	35.9
Revenue between segments	(0.4)	(0.3)
Total continuing operations	162.9	165.7

(ii)           Gross profit by segment

	2008 £m	2007 £m
Games	15.1	13.0
Music & Movies	8.0	8.9
Technology	13.1	12.7
Active	6.7	6.0
Add back: distribution expenses	11.8	11.2
Total continuing operations	54.7	51.8

Information regarding operating profit, total costs incurred during the year to acquire, and total carrying amount of, segment assets would require arbitrary allocation and is therefore not provided.

2.       Revenue

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

	2008 £m	2007 £m
Circulation	97.8	99.3
Advertising	58.1	59.8
Licensing, events and other	7.0	6.6
Total continuing operations	162.9	165.7

3.       Operating profit on continuing operations

	2008 £m	2007 £m
Revenue	162.9	165.7
Cost of sales	(108.2)	(113.9)
Gross profit	54.7	51.8
Distribution expenses	(11.8)	(11.2)
Administration expenses (including exceptional items)	(28.0)	(24.9)
Amortisation of intangible assets	(3.4)	(3.6)
Operating profit on continuing operations	11.5	12.1

4.       Profit before tax

		2008 £m	2007 £m	2007 £m
		Total	Continuing	Total
Profit before tax is stated after charging/(crediting):
Employee costs (note 6)		51.2	49.2	55.8
Depreciation of owned assets (note 11)		1.9	2.1	2.2
Amortisation of intangible assets (note 12)		3.4	3.6	3.6
Hire of machinery and equipment		0.2	0.2	0.3
Other operating lease rentals		3.2	3.5	4.0
Exceptional items credit (note 5)		-	(1.7)	(7.6)
Net exchange differences on foreign currency balances		0.1	0.1	0.1

The difference between continuing and total in 2007 relates to items associated with discontinued operations.

5.        Exceptional items on continuing operations

	2008 £m	2007 £m
Property credit	-	(1.7)
Restructuring and redundancy costs	-	0.9
Other costs	-	0.1
Profit on disposal of magazine titles and trademarks	-	(1.0)
Total	-	(1.7)

The property credit in the prior year consisted mainly of the reversal of provisions made in respect of leases on office space in London and Bath vacated in 2006. These leases were surrendered, sub-let or assigned during 2007.

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

The profit on disposal was in respect of the magazine titles and trademarks sold in the UK and US.

 6.       Employees 

		2008 £m	2007 £m	2007 £m
		Total	Continuing	Total
Wages and salaries		44.3	42.1	46.8
Social security costs		5.2	5.1	6.9
Other pension costs		1.1	1.1	1.2
Share option schemes - Value of employees' services		0.6	0.9	0.9
Total staff costs on continuing operations		51.2	49.2	55.8
Average monthly number of people for the total Group (including executive Directors)		2008 No. Total	2007 No. Continuing	2007 No. Total
Production		1,015	991	1,125
Administration		247	264	313
Total		1,262	1,255	1,438

At 30 September 2008, the actual number of people employed by the Group was 1,253 (2007: 1,222).  In respect of our primary segments 1,044 (2007: 1,029) were employed in the UK and 209 (2007: 193) in the US.

IFRS 2 'Share-based Payment' requires an expense for equity instruments granted to be recognised over the appropriate vesting period, measured at their fair value at the date of grant.

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 expense for the year of £0.6m (2007: £0.9m) has been credited to reserves.

7.         Finance income and costs

	2008 £m	2007 £m
Interest receivable	0.3	0.6
Total finance income	0.3	0.6
Interest payable on interest-bearing loans and borrowings	(2.4)	(3.2)
Exchange gains/(losses)	0.1	(0.1)
Rearrangement fees for bank loans	-	(0.2)
Total finance costs	(2.3)	(3.5)
Net finance costs on continuing operations	(2.0)	(2.9)

8.       Tax on profit on ordinary activities

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

	2008 £m	2007 £m
UK corporation tax
Current tax at 28% (2007: 30%) on the profit for the year	2.2	2.0
Adjustments in respect of previous years	(1.4)	0.1
	0.8	2.1
Foreign tax
Current tax on the profit for the year	-	0.2
Adjustments in respect of previous years	(0.1)	(0.5)
	0.7	1.8
Deferred tax origination and reversal of timing differences
Current year charge	1.0	0.3
Adjustments in respect of previous years	1.0	(0.3)
Deferred tax	2.0	-
Total tax charge on continuing operations	2.7	1.8

The Group is awaiting the outcome of a claim in respect of losses incurred in EU-based subsidiaries which, if successful, would give rise to a tax credit and repayment of an amount in the region of £2.0m. Due to the legal complexity and uncertainty of success the claim has not been reflected in these financial statements.

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

	2008 £m	2007 £m
Profit before tax	9.5	9.2
Profit before tax at the standard UK tax rate of 28 %(2007: 30%)	2.7	2.8
Different tax rates applicable overseas	0.2	0.2
Intangibles: differences relating to amortisation	(0.1)	0.1
Tangibles: differences relating to depreciation	0.1	(0.2)
Other allowable/disallowable items	0.3	(0.2)
Profits relieved by capital losses	-	(0.2)
Impact of prior year adjustments	(0.5)	(0.7)
Total tax charge on continuing operations	2.7	1.8

9.         Dividends

Equity dividends	2008	2007
Number of shares in issue at end of year (million)	326.9	326.6
Dividends paid in year (pence per share)	1.1	1.0
Dividends paid in year (£m)	3.5	3.2

In accordance with IFRS interim dividends are recognised in the period in which they are paid and final dividends are recognised in the period in which they are approved.

A dividend in respect of the year ended 30 September 2008 of 0.6 pence per share, amounting to a total dividend of £2.0m, is to be proposed at the Annual General Meeting on 27 January 2009. These financial statements do not reflect this dividend.

The dividends totalling £3.5m paid during the year ended 30 September 2008 relate to the interim dividend for the six month period to 31 March 2008 of 0.5 pence per share (£1.6m) and the final dividend declared for the year ended 30 September 2007 of 0.6 pence per share (£1.9m).

The dividends totalling £3.2m paid during the year ended 30 September 2007 relate to the interim dividend for the six month period to 31 March 2007 of 0.5 pence per share (£1.6m) and the final dividend declared for the year ended 30 September 2006 of 0.5 pence per share (£1.6m).

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 options held under employee share schemes.

Total Group	2008	2007
Profit after tax (£m)	6.8	14.2
Weighted average number of shares in issue during the year:
- basic	325,711,398	324,645,517
- dilutive effect of share options	4,638,434	5,168,274
- diluted	330,349,832	329,813,791
Basic earnings per share (in pence)	2.1	4.4
Diluted earnings per share (in pence)	2.1	4.3

Continuing operations	2008	2007
Profit after tax (£m)	6.8	7.4
Weighted average number of shares in issue during the year:
- basic	325,711,398	324,645,517
- dilutive effect of share options	4,638,434	5,168,274
- diluted	330,349,832	329,813,791
Basic earnings per share (in pence)	2.1	2.3
Diluted earnings per share (in pence)	2.1	2.2

Discontinued operations	2008	2007
Profit after tax (£m)	-	6.8
Weighted average number of shares in issue during the year:
- basic	-	324,645,517
- dilutive effect of share options	-	5,168,274
- diluted	-	329,813,791
Basic earnings per share (in pence)	-	2.1
Diluted earnings per share (in pence)	-	2.1

11.         Property, plant and equipment 

	Land and buildings £m	Plant and machinery £m	Equipment, fixtures and fittings £m	Total £m
Cost
At 1 October 2006	3.9	4.4	2.2	10.5
Additions	0.1	1.1	0.1	1.3
Disposals	(0.4)	(0.9)	(0.2)	(1.5)
Exchange adjustments	(0.1)	(0.1)	(0.1)	(0.3)
At 30 September 2007	3.5	4.5	2.0	10.0
Additions	0.1	1.5	0.2	1.8
Exchange adjustments	0.1	0.2	0.1	0.4
At 30 September 2008	3.7	6.2	2.3	12.2

Depreciation
At 1 October 2006	(1.1)	(2.2)	(1.0)	(4.3)
Charge for the year	(0.3)	(1.6)	(0.3)	(2.2)
Disposals	0.3	0.8	0.1	1.2
Exchange adjustments	-	0.1	0.1	0.2
At 30 September 2007	(1.1)	(2.9)	(1.1)	(5.1)
Charge for the year	(0.3)	(1.3)	(0.3)	(1.9)
Exchange adjustments	(0.1)	(0.1)	(0.1)	(0.3)
At 30 September 2008	(1.5)	(4.3)	(1.5)	(7.3)
Net book value at 30 September 2008	2.2	1.9	0.8	4.9
Net book value at 30 September 2007	2.4	1.6	0.9	4.9

Asset lives and residual values are reviewed annually.

Land and buildings at net book value comprise:

	2008 £m	2007 £m
Leasehold:
Over 50 years unexpired	1.0	1.0
Under 50 years unexpired	1.2	1.4
Total	2.2	2.4

12.       Intangible assets 

	Goodwill £m	Magazine & Website £m	Other £m	Total £m
Cost
At 1 October 2006	363.6	15.1	2.5	381.2
Additions through business combinations	2.3	0.3	-	2.6
Other additions	-	-	1.0	1.0
Disposals	(58.4)	(2.7)	(0.4)	(61.5)
Exchange adjustments	(1.9)	(0.2)	(0.1)	(2.2)
At 30 September 2007	305.6	12.5	3.0	321.1
Additions through business combinations	1.7	-	-	1.7
Other additions	-	1.4	2.3	3.7
Exchange adjustments	2.5	0.3	0.1	2.9
At 30 September 2008	309.8	14.2	5.4	329.4

Amortisation
At 1 October 2006	(258.9)	(9.0)	(1.7)	(269.6)
Charge for the year	-	(3.0)	(0.6)	(3.6)
Disposals	57.5	2.7	0.2	60.4
Exchange adjustments	0.6	0.1	0.1	0.8
At 30 September 2007	(200.8)	(9.2)	(2.0)	(212.0)
Charge for the year	-	(2.2)	(1.2)	(3.4)
Exchange adjustments	(0.7)	(0.2)	(0.1)	(1.0)
At 30 September 2008	(201.5)	(11.6)	(3.3)	(216.4)
Net book value at 30 September 2008	108.3	2.6	2.1	113.0
Net book value at 30 September 2007	104.8	3.3	1.0	109.1

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

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

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

Impairment tests for goodwill and other intangibles

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill may be impaired.

Other intangible assets with a finite life are tested for impairment only where there is an indication that an impairment may have occurred. The Group does not have any other intangible assets with infinite lives.

For the purpose of impairment testing, goodwill is allocated to the Group's cash generating units (CGUs) on a geographical basis:

	2008 £m	2007 £m
UK	89.1	89.1
US	19.2	15.7
Total	108.3	104.8

The recoverable amount of a CGU is based on value-in-use calculations. These calculations use cash flow projections based on financial forecasts approved by management covering a five year period. Cash flows beyond five years are assumed to be constant. An appropriate discount rate of 13.6% (2007: 13.4%), representing the Group's current pre-tax cost of capital, has been applied to these projections.

At 30 September 2008 the Group performed its annual impairment test on goodwill using the above discount rate for value-in-use calculations. These tests concluded that no impairment is required (2007: nil).

The value-in-use calculations are sensitive to changes in the discount rate. If the assumed discount rate had been 2.0% and 9.3% higher for the UK and US respectively, the goodwill allocated to our operations in the UK and the US would have been impaired by £0.2m and £0.4m respectively.

13.         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	Provisions and other timing differences £m	Total £m
At 1 October 2006	(0.9)	0.1	0.8	0.4	1.2	1.6
(Charged)/credited to income statement - continuing	(0.3)	0.2	0.3	-	(0.2)	-
Disposals	-	-	-	(0.4)	-	(0.4)
Exchange adjustments	(0.1)	-	-	-	(0.1)	(0.2)
At 30 September 2007	(1.3)	0.3	1.1	-	0.9	1.0
(Charged)/credited to income statement - continuing	(0.8)	(0.1)	(0.2)	-	(0.9)	(2.0)
Transfers	(0.3)	-	0.3	-	-	-
Exchange adjustments	0.2	-	-	-	-	0.2
At 30 September 2008	(2.2)	0.2	1.2	-	-	(0.8)

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:

	2008 £m	2007 £m
Deferred tax assets	1.3	2.9
Deferred tax liabilities	(2.1)	(1.9)
Net deferred tax (liability)/ asset	(0.8)	1.0

The deferred tax asset of £1.3m (2007: £2.9m) is disclosed as a non-current asset of which the assets due within one year total £0.4m (2007: £0.4m). The deferred tax liability of £2.1m (2007:£1.9m) is disclosed as a non-current liability of which the liabilities due within one year total £0.2m (2007: £0.2m).

The Group has unprovided deferred tax assets on tax losses totalling £1.5m (2007: £1.5m).

The Group has no unprovided deferred tax assets on other temporary differences (2007: £0.6m).

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 un-remitted earnings of overseas subsidiaries as any remitted earnings would not give rise to a tax liability in the foreseeable future.

During the prior year as a result of the change in the UK Corporation Tax rates which were effective from 1 April 2007, deferred tax balances were remeasured. Deferred tax relating to temporary differences which were expected to reverse prior to 1 April 2007 were measured at 30% and deferred tax relating to temporary differences expected to reverse after 1 April 2007 were measured at the rate of 28% as these are the tax rates that were applicable at the date of reversal.

14.         Inventories 

	2008 £m	2007 £m
Raw materials	1.5	0.7
Work in progress	2.2	1.9
Finished Goods	0.2	0.5
Total	3.9	3.1

Inventory is stated after impairment of £nil (2007: £nil).

The cost of raw material inventories recognised as an expense and included within cost of sales amounted to £14.1m (2007: £15.2m).

15.        Trade and other receivables

		2008 £m		2007 £m
Current assets:
Trade receivables		25.3		23.3
Provisions for impairment of trade receivables		(1.0)		(1.4)
Trade receivables net		24.3		21.9
Other receivables		0.3		4.5
Prepayments and accrued income		3.7		3.7
		28.3		30.1
Non-current assets:
Other receivables		0.1		0.1
Total		28.4		30.2

Trade receivables are shown net of a provision for impairment amounting to £1.0m (2007: £1.4m).  

16.        Cash and cash equivalents

		2008 £m		2007 £m
Cash at bank and in hand		8.4		14.2
Cash and cash equivalents		8.4		14.2

The effective interest rate on short-term deposits was 4.4% (2007: 5.1%). These deposits have an average maturity period of one day (2007: one day). The carrying amount of these assets approximates their fair value.

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. At 30 September 2008 all short term deposits were rated A-1+ (2007: A-1+).

.

17.        Trade and other payables

		2008 £m		2007 £m
Trade payables		16.3		14.9
Other taxation and social security		1.1		1.2
Other payables		2.1		6.0
Accruals and deferred income		23.5		22.8
Total		43.0		44.9

Trade creditors and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period for trade purchases is 43 days (2007: 38 days). The Group has financial risk management policies in place to ensure all payables are paid within the agreed credit terms.

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

18.        Financial liabilities - interest-bearing loans and borrowings

Non-current liabilities

	Interest rate  at 30 Sept 2008		2008 £m		2007 £m
Sterling term loan - unsecured	6.8%		14.8		21.8
Total			14.8		21.8

Current liabilities

	Interest rate  at 30 Sept 2008		2008 £m		2007 £m
Sterling term loan - unsecured	6.8%		4.0		4.0
Sterling revolving loan - unsecured			-		3.9
US Dollar revolving loan - unsecured	4.4%		11.5		8.8
Total			15.5		16.7

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

		2008 £m		2007 £m
Within one year		15.5		16.7
Between one and two years		14.8		4.0
Between two and five years		-		17.8
Total		30.3		38.5

The borrowings and interest are guaranteed by Future plc, Future Publishing Limited and Future US, Inc.

19.        Provisions

	Property and dilapidations £m	Other  £m	Total £m
At 1 October 2007	0.3	1.1	1.4
Released in the year	-	(0.1)	(0.1)
At 30 September 2008	0.3	1.0	1.3

The provision for property and dilapidations relates to an obligation under a short leasehold agreement on vacant property. The provision has been discounted at a rate in line with the Group's post tax cost of capital which is 9.5%.

Other provisions relate to liabilities arising associated with disposals made during 2007.

All of the above provisions will potentially be utilised or will reverse during the next five years.

20.        Other reserves

Treasury reserve

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

	2008	2007
	£m	£m
Balance at 1 October	(0.7)	(1.1)
Utilised in the year	0.4	0.4
At 30 September	(0.3)	(0.7)

During the year, the Group transferred £0.4m (2007:£0.4m) of shares to employees under Restricted Stock Awards.

Merger reserve

The merger reserve of £109.0m (2007: £109.0m) arose following the 1999 Group re-organisation and is non-distributable.

  Normalised results (unaudited)

		2008	2007
	Note	£m	£m
Revenue	1,4	162.9	159.2
Operating profit before exceptional items, impairment and amortisation of intangible assets (EBITAE)	2,4	14.9	13.7
Adjusted earnings per share	3	2.8 pence	2.5 pence

Normalised results are presented to reflect better the current size and structure of the business. The normalised results exclude revenues and costs of activities closed or divested between 1 October 2005 and 30 September 2007.

Adjusted earnings per share are based on normalised results, and exclude exceptional items and amortisation of intangibles and related tax effects.

Notes to the normalised results 

1.     Reconciliation of statutory revenue to normalised revenue

		2008 £m	2007 £m
Statutory revenue - Continuing operations		162.9	165.7
Adjustment: UK closed and divested activities		-	(3.3)
Adjustment: US closed and divested activities		-	(3.2)
Normalised revenue		162.9	159.2

2.     Reconciliation of statutory operating profit before exceptional items and amortisation of
        intangible assets (EBITAE) to normalised EBITAE

		2008 £m	2007 £m
EBITAE - Continuing operations		14.9	14.0
Adjustment: UK closed and divested activities		-	0.3
Adjustment: US closed and divested activities		-	(0.6)
Normalised EBITAE		14.9	13.7

3.     Reconciliation of basic earnings per share to adjusted earnings per share

		2008	2007
		pence	pence
Basic earnings per share - Continuing operations		2.1	2.3
UK closed and divested activities		-	0.1
US closed and divested activities		-	(0.1)
Basic earnings per share - Normalised		2.1	2.3
Amortisation of intangible assets		1.0	1.1
Exceptional items		-	(0.5)
Tax effect of the above adjustments		(0.3)	(0.4)
Adjusted earnings per share		2.8	2.5

4.     Normalised segmental reporting

        a) Revenue by segment

		2008 £m	2007 £m
UK		115.6	115.1
US		47.7	44.4
Revenue between segments		(0.4)	(0.3)
Total normalised revenue		162.9	159.2

b)    EBITAE by segment

		2008 £m	2007 £m
UK		15.1	14.4
US		3.4	2.8
Central costs		(3.6)	(3.5)
Total normalised EBITAE		14.9	13.7

c)    Revenue by type

		2008 £m	2007 £m
Circulation		97.8	96.1
Advertising		50.7	49.3
Customer Publishing		7.4	7.4
Licensing, Events and Other		7.0	6.4
Total normalised revenue		162.9	159.2

  Key Performance Indicators

Key performance indicators for the year ended 30 September 2008:

Key performance indicators	Year  Ended 30 September 2008	Year Ended 30 September 2007
Growth in revenue (normalised at constant currency)	+ 2%	Flat
EBITAE operating margin (as a %)	9.1%	8.4%
Absolute EBITAE (in Sterling)	£14.9m	£14.0m
Change in adjusted earnings per share (as a %)	+ 12%	+ 14%
Number of magazines sold per month	4.3m	4.0m
Proportion of magazines sold from total number printed	See notes 1-3	See notes 1-3
Proportion of Group's business derived from our brands              compared with partnership publishing	76:24 (note 4)	79:21 (note 4)
Number of unique users logging on to our websites per month	18m (note 5)	10m (note 5)
Growth in total advertising revenue (as a % normalised at constant currency)	+ 3%	+ 3%
Proportion of advertising revenue that is online (as a %)	18%	14%
Human Capital	See note 6	See note 6
Net bank debt	£21.9m	£24.3m

Notes

• The majority of magazines printed by the Group are sold, and those unsold are mainly recycled and used for newspaper production. The precise proportion sold at newsstand is a detailed KPI each month for every title. However, the Group believes that it is commercially sensitive to disclose these percentages, since competitors typically do not release this information. Magazines printed for subscription have no wastage.

• In the UK 80% of magazines (by volume) are sold at newsstand. Our overall UK average newsstand efficiency has decreased by 1% compared with 2007. Future has increased the proportion of magazine volume sales derived from subscription rather than newsstand, from 18% to 20%. The majority of UK revenues for magazines are derived from cover price.

• In the US 29% of magazines (by volume) are sold at newsstand.  Our overall US average newsstand efficiency has increased by 2% compared with 2007.  The majority are sold by subscription at heavily discounted prices. The majority of magazine revenues are from advertising.

• Partnership publishing represented 24% of 2008 Group revenue. This category includes business from our Official magazines and programmes published for Microsoft (Xbox 360 and Vista), Sony (PlayStation and Qore), Nintendo and Jetix, plus customer publishing activities. The majority of the Group's revenue is generated from our own brands.

• For each of our websites we know the number of page impressions and the number of unique visitors to that website. We do not know how many unique visitors visit more than one of our websites. The number presented here is the simple total of each website's average monthly number of unique visitors.

• Human Capital is the Group's most important resource, with 1,253 employees (at 30 September 2008). In the running of our business, we focus on retention of key employees and in refreshment of the team with new people and new ideas.

 

END

 

 

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