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Providing accountancy and financial services to small businesses has proved to be a lucrative buffer against the challenging climate for Vantis which released half-year results just shy of analysts' estimates.
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The provision of accountancy services remains a core focus for Vantis, contributing £23.5m of group revenue, with consultancy generating £14.1m and business recovery services £9.4m. Chief executive Paul Jackson says that this revenue mix will remain the same going forward, although the business recovery unit is expected to raise its contribution following a 10 per cent increase in fees over the period. Vantis plans on maintaining its current client base of Aim-traded small and mid-cap companies and some PLUS-quoted firms.
Cash flow remains an issue though with investment in working capital holding back cash inflow from operating activities to £2m, or just 30 per cent of operating profits. In addition, overhead costs jumped 25 per cent year-on-year, although management says that this is not a trend but merely reflects a rise in costs incurred alongside the growth of the company. Vantis is to concentrate on organic growth in the near term, through encouraging cross-selling and marketing initiatives, although further acquisitions have not been ruled out.
Charles Stanley expects full-year adjusted EPS of 17.3p (16.5p in 2007).
Click here for a guide to the terms used in IC results tables.
| VANTIS (VTS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 143p | MARKET VALUE: | £ 72.9m | |
| TOUCH: | 141-145p | 12-MONTH HIGH: | 261p | LOW: 119p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 95p* | NET DEBT: | 78% | |
| Half-year to 31 Oct | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2006 | 42.2 | 5.83 | 8.09 | 1.5 |
| 2007 | 46.9 | 6.02 | 7.52 | 1.5 |
| % change | +11 | +3 | -7 | - |
Ex-div:16 Jan Payment:10 Mar * includes intangible assets of £46.1m, or 90p a share |
||||
Vantis’ shares have been sharply derated over the past six months and now trade on just 8 times earnings estimates. The current environment is undoubtedly unfavourable, but Vantis has defensive qualities as its offerings are largely counter cyclical. Good value for the long term.
Last IC view: Fairly priced, 243p, 19 Jan 2007.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
