Back in February it seemed strange that 4imprint was selling its highest margin business "Brand Addition" to a private equity firm for £24m cash. Six months later it makes more sense as Brand provides promotional merchandise to a concentrated customer base in the UK and Europe - where it may be having an increasingly tough time.
Around £11.4m of the cash raised from the sale was earmarked to cut the risk on an under-funded defined-benefit pension scheme and an ungeared balance sheet gives 4imprint the firepower to boost its dominant North American business, which accounts for over 90 per cent of revenues. Management claims this division to be the number one direct marketer of promotional products in a $22bn market, but still only holds a small share of a very fragmented industry. 4imprint reckons it can do much better and aims to double direct marketing sales (there's a bit in Britain too) over the next five years.
Although the US recovery is fragile to say the least, the company still reckons that it is "on track for a continued good performance" in the current half year. So house broker Peel Hunt is sticking with a full-year forecast of turnover rising from £159m to £181m and pre-tax profits up from £7.6m to £9.3m, giving adjusted EPS of 21.5p and a dividend of 15.3p (2011: 19.5p and 14.6p).
4IMPRINT (FOUR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 281p | MARKET VALUE: | £73.9m | |
| TOUCH: | 275-287p | 12-MONTH HIGH: | 312.5p | LOW: 202p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 72p | NET CASH: | £11.4m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 75.8 | 1.64 | 3.92 | 5.00 |
| 2012 | 88.4 | 2.46 | 5.82 | 5.25 |
| % change | +17 | +50 | +48 | +5 |
Ex-div:08 Aug Payment:14 Sep | ||||
