Interactive Investor

ii view: publisher Future rockets after record profit

30th November 2021 11:42

Keith Bowman from interactive investor

With its content reaching 1 in 2 adults online in the UK and 1 in 3 in the US, we assess prospects. 

Full-year results to 30 September

  • Revenue up 79% to £607 million
  • Pre-tax profit up 107% to £108 million
  • Net debt of £176.3m, up from last year’s £62.1 million
  • Dividend for the year up 75% to 2.8p per share

Chief executive Zillah Byng-Thorne said:

"I am pleased to announce another set of exceptional results, which builds on our long-term track record of growth. Our performance reflects the diversity of our revenue streams and our global reach and the operating leverage of our business model.”

ii round-up:

Magazine and website operator Future (LSE:FUTR) today reported record profit and cashflow as it bedded-in acquisitions and digital advertising grew. 

Pre-tax profit more than doubled over the year to £108 million, with the owner of publications including WhatHiFi and Country Life also now expecting adjusted full-year 2022 results to be materially above current expectations.

Shares in Future, which also owns comparison website GoCompare, rose by more than 15% in UK trading. That leaves them up by over 110% in the past year. Scientific publisher and event organiser RELX (LSE:REL) is up by around a third over that time, while the broad FTSE All-Share index has gain by just over 13%. 

Future, which offers more than 200 publications, including Cycling Weekly and PC Gamer, also continues to benefit from a consumer shift towards digital website content. 

Completed acquisitions over the year included GoCo Group, Marie Claire US and the post-year end purchase of Dennis, which offers publications such as MoneyWeek, Computer Active and Minecraft World. 

Full-year revenue to the end of September rose 79% to £607 million, with the gain, excluding acquisitions or organic growth, up from 21% in the first half to 26% during the second half. 

The annual dividend of 2.8p per share marked a gain of 75% from last year, reflecting the growth of the company and management’s confidence in the outlook.

ii view:

According to the company, its specialist content reaches 1 in 2 adults online in the UK and 1 in 3 in the US. The global specialist media platform operates through the two divisions of magazines and media. The magazine business has a combined global circulation of over 3 million, delivered via more than 130 magazines and 735 bookazines published once a year. The media business takes in its website offerings and its events business. 

Group sales are split roughly 70/30 between media and magazines and almost equally between the UK and the US. Revenues include a combination of advertising sales, eCommerce product affiliate sales and media event bookings. 

For investors, some Covid caution looks sensible given still hindered magazine sales at airports and trains stations, and reluctance towards face-to-face media trade events. A surge in wholesale gas costs and Ofgem's new price cap have combined to hinder energy switching at comparison sites such as GoCompare, while a price-to-net asset value ratio comfortably above the three-year average suggests the shares are not obviously cheap. 

On the upside, Future is strongly positioned to capture the consumer switch from paper publications to online sites. Growth via acquisitions is aiding performance, while its brand and revenue diversity are worth remembering. In all, and with the analyst consensus estimate of fair value stood at just over £44 per share, there likes to be room for further upside over the long term.  

Positives: 

  • Diversity of titles and business revenues
  • Growing online customer base

Negatives:

  • Events business hit by Covid-19
  • Advertising revenues can prove volatile

The average rating of stock market analysts:

Strong buy

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