Ticker: FUTR Current share price: 8.5p

MKT CAP: £28m Share issue: 333m

52-week high: 20.25p 52-week low: 5.84p

Company overview

This company specialises in publishing magazines in areas such as Technology, Entertainment, Music, Creative and Sport and Auto like T 3, Company Arts and Digital Camera. The company make their money from the following areas: Circulation, Advertising, Customer Publishing, Licensing, Events and others. This company belongs to Media sector.

Investment Thesis

BULLISH POINTS

Most of the company’s debt is being paid off and debt is down from £30.2m (2009) to £11.5m (2013).
The company seems to be making a turnaround from the lows in 2011 (made a loss of £19.3m) to net a comprehensive income of £4.5m in 2013.
Management seems very upbeat about the future of business pointing to high digital revenue growth.
Some of the ratios such as profitability shows improving margins from the lows of 2011 and the solvency ratios show the company is becoming more financial stable based on their abilities to pay down their debts.
BEARISH POINTS

The company’s revenue is still falling, £153m (2009) to £112.3m (2013), a CAGR decline of 6%, questioning the company earnings quality.
(Free Cash Flow to Equity) has declined from a positive £11.96m in 2009 to a negative £11.96m in 2013.
The business seems to be getting smaller year-on-year, just look at the balance sheet over the five year period.
Cash and cash equivalent has declined faster than debt registering a CAGR of (20.6%).
The company has agreed with HMRC over a tax dispute in 2003 to pay back £6.2m plus interest. The company will pay £1m/year over five year and a balloon payment of £2m at the end of the five year period.
KEY RISKS

There are a lot of problems with the business at the moment and no one can deny the performance of the company’s share price has been negative over the long term. These are my concerns:

In the company’s segment reporting footnote and WITHOUT explanation the company has ‘added back: Distribution Expenses’ to arrive at the total gross profit but when working out the operating profit this same distribution expenses get deducted. Consequence would be that the company did not account for distribution expenses as they’re cancelled out and could possibly be overstating their gross profits and net earnings, this has…

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