Electronic diagnostics specialist Regenersis (RGS) has finally completed a major restructuring of its UK business and profits are growing fast. There's a first dividend since 2007, too, so no wonder the shares jumped over 10 per cent.
A promise of double-digit revenue growth and steadily improving margins came good, driving underlying operating profit up 24 per cent to £7.8m. Cost-cutting in the UK and some big contract wins in Germany powered profits in western Europe up 38 per cent to £2.1m. And the company's set-top-box advanced solutions division made £2.9m of profits compared with just £700,000 in the first half. That business will get a shot in the arm from a new higher-margin pay-per-click deal with Virgin Media. Income from a similar deal with one of the big US cable TV companies could be "very considerable" next year.
Admittedly, the performance of the emerging markets operations was disappointing. The 10 per cent fall in profits was mainly due to problems at one large customer, but HDM, bought in July, brings access to customers such as Telefónica, Nokia and Samsung in Spain, Mexico and Argentina. More acquisitions are likely, too, especially in Asia.
Arden Partners expects current year adjusted EPS of 15.6p (13.9p in 2012).
REGENERSIS (RGS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 106.5p | MARKET VALUE: | £46.1m | |
| TOUCH: | 105-108p | 12-MONTH HIGH: | 106.5p | LOW: 64.5p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 71p* | NET DEBT: | 10% | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 105 | 3.89 | 12.5 | nil |
| 2009 | 98 | 3.40 | 9.47 | nil |
| 2010 | 116 | 3.56 | 6.89 | nil |
| 2011 | 124 | 0.26 | -1.85 | nil |
| 2012 | 140 | 1.68 | 3.33 | 1.1 |
| % change | +13 | – | – | – |
Ex-div: 7 Nov Payment: 5 Dec *Includes intangible assets of £28.5m, or 66p a share | ||||
