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Marketing services business Communisis has completed the second stage of its three-point recovery plan and the operational improvements put in by management appear to be paying off.
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Chief executive Steve Vaughan has concentrated on improving efficiency, stripping out low-margin business and developing a wider range of services for its clients which add more value than plain vanilla direct mail, for example. The sale of the low margin Business Forms business in Bath at the end of the half year also helped to bolster Communisis' efforts to reduce debt - it has slashed borrowings from £39.1m to £15m in the past 12 months. The remaining direct mail business is performing well having introduced more digital capability, and Communisis has also improved its product offering for financial services clients.
The company's financial position is so improved that it is considering small acquisitions which could add to its data or online capabilities.
Communisis (CMS) |
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|---|---|---|---|---|
| ORD PRICE: | 61.5p | MARKET VALUE: | £85m | |
| TOUCH: | 59.75-61.5p | 12-MONTH HIGH: | 90.75p | LOW: 56p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 9 | |
| NET ASSET VALUE*: | 92p | NET DEBT: | 12% | |
| Half-year to 30 Jun |
Turnover (£m) | Pre-tax profit (£m) | Earnings per share (£) | Dividend per share (£) |
|---|---|---|---|---|
| 2007 | 146 | 2.63 | 1.58 | 0.82 |
| 2008 | 148 | 7.95 | 3.33 | 0.86 |
| % change | +1 | +202 | +111 | +5 |
Ex-div: 17 Sep Payment: 17 Oct *Includes intangible assets of £148.4m, or 107p a share. |
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Broker Panmure Gordon forecasts full-year profits of £12.7m and EPS of 6.5p (4.7p in 2007), rising to £13.9m and 7.1p, in 2009.
Mr Vaughan now wants Communisis to 'put its foot down' in terms of winning new business, although this could be tough in the current markets. Fairly priced.
Last IC view: Fairly priced, 70p, 6 May 2008
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
