Future PLC's (LSE:FUTR) pledge to return more cash to investors has helped lift the shares, which jumped 11% to 664.5p after the publisher posted full-year results that broadly matched expectations.
Peel Hunt said the numbers were “in line”, with revenue down 6% to £739 million and adjusted operating profit of £205 million, maintaining a 28% margin. Earnings per share slipped just 1%, cushioned by buybacks.
Net debt came in higher than the broker had forecast, £276 million versus an expected £205 million, but Peel Hunt noted this reflected one-off tax payments and a prior-year bonus.
Strip those out and leverage would have been closer to 1.2 times, with cash conversion moving from 86% to a more typical 96%.
The standout development, in the broker’s view, was Future’s decision to launch a further £30 million share buyback and hike the dividend fivefold to 17p. Peel Hunt said it would factor these into its cash flow and earnings models.
On trading, the analysts highlighted the mixed performance across divisions. Business-to-consumer revenue fell 2% organically, as a 4% drop in digital advertising offset steady magazine sales.
The UK ad market was notably weaker than the US, though both improved in the second half. Affiliate revenue, which had grown 9% in the first half, ended the year down 6%.
Go.Compare was 5% lower after a 10% slide in car insurance switching, partly balanced by 3% growth in non-car lines, now 39% of the total. Business-to-business operations remained soft, down 9%.
Future expects modest organic revenue growth and a stable 30% margin in the new financial year, which aligns with Peel Hunt’s forecasts.
With the shares trading on about four times next year’s earnings and offering what the broker calculates as a 25% free cash flow yield, Peel Hunt kept its Buy rating and 1,090p target price, saying Future is “holding up well in a challenging trading environment”.