17p
Environmental consulting
Following a tough start to life as a quoted company, Conder Environmental has managed to move into the black. Having demerged from transport group Southern Vectis in December 2000, it had a number of problems to deal with, including contract delays, pressure on profit margins and restructuring. Now, though, the group has plenty to offer and is likely to strengthen its position further via acquisition.
As a result of the demerger, investors received one Conder share worth 20p for each Southern Vectis share held. However, the tough conditions and heavy losses at Conder Products hindered the group and its share price suffered accordingly. But it has managed to improve considerably - in the main thanks to impressive contract wins at its oil-spill business, Vikoma, which helped drive the group into profits during 2002-03.
The turnaround into profit, which beat forecasts last year, has enabled the group to build a good base from which to grow. Vikoma had a particularly strong year, thanks to the delivery of some major orders to Brazil, which helped to boost turnover significantly. A similar performance is unlikely this year, though. It's worth noting that oil prices remain an important factor for the division as they directly affect the capital budgets of oil companies and resultant income - and hence the money they will spend on oil-spill operations.
During the period, the group benefited from improvements at Conder Products, which manufactures sewage-treatment tanks, oil and grease separators and storage vessels. Losses at the sewage-treatment tanks business have steadily diminished - it made a small profit in the final quarter and has continued to perform well in the current year. Meanwhile, Conder's smaller packaged sewage-treatment plants sold particularly well.
Conder has begun paying dividends and, trading on 10 times forecast earnings for the current year - falling to seven times in 2005 - the shares are worth a closer look. Buy.
| Ord price: 16p | Market value: £6m |
|---|---|
| Touch: 15-17p | 12-month High: 16p Low: 8p |
| Dividend yield: 4.0% | PE ratio: 10 |
| Net asset value: 17p | Net debt: 4% |
| Year to | Turnover | Pre-tax | Stated earnings | Net div per |
|---|---|---|---|---|
| 30 Apr | (£m) | profit (£m) | per share (p) | share (p) |
| 2000 | 11.1 | -0.37 | -1.40 | - |
| 2001 | 13.9 | -0.77 | -2.30 | - |
| 2002 | 14.6 | -1.28 | -3.20 | - |
| 2003 | 21.8 | 0.56 | 1.10 | 0.5 |
| 2004* | 17.5 | 0.73 | 1.59 | 0.6 |
| % change | % change | +30 | +45 | +20 |
*Teather & Greenwood's estimates
Market makers: 3Normal market size: 500Beta: 0.6
Last IC view: 23 Nov 2001, page 73
Improved trading at all divisions
Broader product range will enhance competitiveness
Oil prices will affect oil-spill operation
Patchy trading record
