Impellam (IPEL) is a cash machine extraordinaire and it is that cash generation that catches the eye. Certainly its 2012 results were nothing to write home about as, before write-downs, operating profits were 8 per cent lower at £33.6m. Last year net cash balances jumped from £1.8m to £16.8m even after allowing for £2.8m of share buy-backs. Not only that but there’s a 12p dividend and £15.4m is being returned to shareholders in April via a special 35p a share dividend.
According to broker Cenkos, end-2013 net cash balances could top £25m. At the same time Impellam has renewed a receivables finance agreement with Barclays and extended it to £70m because it experiences huge cash swings each month when employing nearly 6,000 staff - many of whom are paid on a weekly or daily basis. One sign of this cash wave is that no net interest was received in 2012.
So how might Impellam make use of 2013’s cash pile? The answer may be more dividends but that will depend on what the company's, yet-to-be appointed, new chief executive wants to do. There’s room to beef up small operations in Australia and Europe while poor performer Carlisle (the only service business focusing on the hard-pressed UK retail market) looks set for the chop. A £9m goodwill impairment for that business and £5.7m of restructuring costs were booked in these latest figures.
Cenkos forecasts 2013 adjusted pre-tax profits up from £32.1m to £37.4m, giving EPS of 65.8p (2012: 58.8p).
IMPELLAM (IPEL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 403p | MARKET VALUE: | £177m | |
| TOUCH: | 395-410p | 12-MONTH HIGH: | 387.5p | LOW: 300p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 304p† | NET CASH: | £16.8m | |
| Year to end Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.07 | -8.0 | -25.5 | nil |
| 2009 | 1.04 | 5.9 | 23.9 | nil |
| 2010 | 1.11 | 26.8 | 46.7 | nil |
| 2011 | 1.13 | 32.9 | 54.0 | nil |
| 2012 | 1.21 | 15.8 | 22.2 | 12.00* |
| % change | +7 | -52 | -59 | - |
Ex-div: tba Payment: tba Aim: Support services *Excluding special dividend of 35p a share to be paid on 10 April 2013 (ex-div: 27 March 2013). †Including intangibles of £98.8m, or 225p a share | ||||
