Outsourcing firm Connaught had another exceptional year in the 12 months to the end of August, with underlying profits before tax rocketing 39 per cent on a 19 per cent rise in revenue. Meanwhile new opportunities abound. The order book now stands at £2.8bn compared with £2.6bn a year ago and the pipeline of new work is a plump £4bn compared with £3.6bn. And the group’s social housing business, which accounts for 60 per cent of underlying profit and 80 per cent of revenue, has already secured 93 per cent of its targeted orders for 2010.
While acquisitions have supported growth during the year and cemented the group’s position in a third market - environmental services outsourcing - organic growth has been the key driver. The 18 per cent increase in social housing revenues was all organic and compliance division achieved 11 per cent organic growth - four acquisitions during the year meant overall revenues rose by a quarter to £132m
Connaught’s markets all offer significant growth prospects due to the minimal penetration by outsourcers and strong demand driven by clients’ needs to reduce costs and respond to regulation - especially in compliance.
Subject to revisions following these results, broker Investec Securities forecasts 2010 underlying pre-tax profits of £51m and EPS of 27.2p (2009: £42.5m/23.5p).
| CONNAUGHT (CNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 431p | MARKET VALUE: | £580m | |
| TOUCH: | 431-432p | 12-MONTH HIGH: | 433p | LOW: 293p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 124p | NET DEBT: | 53% | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 240 | 8.2 | 6.0 | 1.72 |
| 2006 | 300 | 13.0 | 9.1 | 1.91 |
| 2007 | 396 | 15.8 | 10.8 | 2.23 |
| 2008 | 553 | 21.7 | 12.8 | 2.68 |
| 2009 | 660 | 26.7 | 14.2 | 3.16 |
| % change | +19 | +23 | +11 | +18 |
Ex-div: 3 Feb Payment: 5 Mar *Includes intangibles of £215m, or 160p per share | ||||
