Quarto's (QRT) share price has been flatlining since the company ousted former chairman and major shareholder Laurence Orbach in November 2012. So can the revamped board of directors improve results? Not on the basis of the latest interim results to end-June 2013. That's because almost all of the increase in profits and earnings was due to a sharp fall in net interest costs from $2.55m to $2.29m (£1.48m). This decline was largely due to closing out an expensive $16m interest rate swap last December. The interest rate on it was 6 per cent; now it’s just over 3 per cent. Another $25m swap matures this December.
Ending expensive interest rate swaps will boost returns, but the putsch party led by Harwood Capital clearly expects more. So new management is hard at work cutting costs. And not only that, but new chairman Tim Chadwick expects there to be a "healthy dent in debt" this calendar year. At the end of June, net borrowings stood at $83m. A traditional 40:60 revenue split favouring the second half will help, but there's not a lot of time left for divestments. In March, broker Peel Hunt anticipated that non-core print services and lithographic operations were ripe for the chop.
Peel Hunt forecasts full-year revenues of $185m ($181m in 2012) and almost unchanged pre-tax profits of $11.5m. On this basis, expect underlying EPS of 42c (43.6c), or 27p a share. For 2014, the broker expects profits of $13m and EPS of 47c on revenues of $191m.
| QUARTO (QRT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 148p | MARKET VALUE: | £29.2m | |
| TOUCH: | 146-152p | 12-MONTH HIGH: | 161p | LOW: 133p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 9 | |
| NET ASSET VALUE*: | 218c | NET DEBT: | 166% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($000) | Earnings per share (c) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 73.2 | 341 | 0.50 | 3.35 |
| 2013 | 72.2 | 715 | 1.40 | 3.35 |
| % change | -1 | +110 | +180 | - |
Ex-div: 25 Sep Payment: 28 Oct *Includes intangible assets of $97.3m, or 494c a share £1:$1.55 | ||||
