Tarsus made a smart move last year selling off a part of its French exhibition business, which materially reduced its exposure to the lower-growth European market. In fact, less than 10 per cent of profits are now generated from France. The company also has a clear and publicly stated '50/13' strategy to generate more than half of turnover from emerging markets in 2013.
But the number one rule for investors is to remember is that Tarsus is a lop-sided business as it makes much more money in odd calendar years because they include two big exhibitions - the Dubai air show and Labelexpo, a European printed labels exhibition. Also, profits are skewed as the majority of its annual shows fall in the second half, so don't be concerned by the half-year reported loss. In the period, emerging markets accounted for 38 per cent of revenues and contributed adjusted profits of £1.48m (£511,000). The US made a healthy £2.37m (£1.97m) contribution thanks to successful medical and bargain buy shows while dull Europe receded from breakeven to a £470,000 loss.
The '50/13' target is definitely in sight as Tarsus bought 70 per cent of Life Media, a Turkish house and home exhibition company, in a £15m deal in March. So, although broker Investec forecasts 2012 normalised pre-tax profits to fall from £16.7m to £12.9m, reflecting 25 per cent lower revenues, expect profits to ramp ahead to £20.8m in 2013 to produce EPS of 17.3p.
TARSUS (TRS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 165.75p | MARKET VALUE: | £157m | |
| TOUCH: | 165-166.5p | 12-MONTH HIGH: | 170p | LOW: 119.5p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 44p* | NET DEBT: | 44% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 19.2 | -1.54 | -2.30 | 2.10 |
| 2012 | 19.2 | -0.16 | -1.00 | 2.20 |
| % change | - | - | - | +5 |
Ex-div: 5 Dec Payment: 18 Jan *Includes intangible assets of £98.9m, or 104p a share | ||||
