Results from Communisis, one of the UK's biggest providers of cheque books and printed and digital marketing materials, showed the clear benefit of new contracts wins, cost reductions and a move into higher-margin business. In fact, adjusted operating profits surged 19 per cent to £9.4m after stripping out £4.3m of exceptional reorganisation costs, underlying EPS was up almost a half to 4.4p and profit margins increased from 4.7 to 5.5 per cent.
The turnaround reflects a shift in the revenue mix and cost savings from the merger of several operations. Reliance on financial services during the boom years was the major reason why profits slumped after 2008, but now the proportion of business associated with finance has fallen from 63 per cent of sales to 51 per cent, with other industries better represented in the overall mix.
Winning new business has helped improve revenue visibility, and this year's results will benefit from several new contracts, including BBC TV licensing, Boots, Virgin Media and Nationwide. These will collectively generate about £24m of sales and provide a consistent revenue stream for the next three to five years. Chief executive Andy Blundell notes that shaky economic conditions are less likely to impact marketing communications that are a legal requirement.
Panmure Gordon forecasts adjusted EPS and dividends of 5.45p and 1.8p in 2012.
COMMUNISIS (CMS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 39.5p | MARKET VALUE: | £54.8m | |
| TOUCH: | 39-39.75p | 12-MONTH HIGH: | 41p | LOW: 18.75p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 93p* | NET DEBT: | 19% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 290 | 7.87 | 4.74 | 2.45 |
| 2008 | 257 | 12.73 | 6.24 | 2.50 |
| 2009 | 190 | 2.60 | 2.28 | 1.29 |
| 2010 | 193 | 4.92 | 3.20 | 1.29 |
| 2011 | 208 | 4.16 | 2.96 | 1.50 |
| % change | +8 | -15 | -8 | +16 |
Ex-div: 11 Apr Payment: 14 May *Includes intangible assets of £163m, or 118p a share | ||||
