Look back a year and IG Design (IGR) - then International Greetings - had two main goals; reduce debt and grow the US business. Delivery on both of these counts has sent the group's share price steaming up 55 per cent this year. Following a solid set of half-year results and given the positive outlook, we have reason to believe it could go higher.
The deleveraging effort was aided by a £5m financing round. The cash outflow from interest, tax and dividend payments rose 12 per cent to £2.9m, roughly in line with the organic growth in operating profit. IG Design also completed the £2.7m acquisition of the Lang Group of companies, which have had a considerable impact on the US business. Wisconsin-based Lang accounted for 7.1 per cent of overall revenue growth and is expected to be earnings-enhancing in the current financial year.
Merely looking at the top line suggests that the group's UK business could have done better as sales fell 4 per cent, although this was due to scheduling of certain deliveries into the second half. Profit in the segment was up 4 per cent, thanks to increased volumes from the manufacturing facility in China.
Broker Cenkos has upgraded expectations for the year to March 2017 and now expects pre-tax profits of £14.2m, giving EPS of 15.5p (from £10.8m and 13.2p in FY2016).
IG DESIGN (IGR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 285p | MARKET VALUE: | £178m | |
| TOUCH: | 283-287p | 12-MONTHHIGH: | 314p | LOW: 141p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 130p* | NET DEBT: | 89% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 120 | 4.9 | 6.2 | 0.75 |
| 2016 | 146 | 7.9 | 9.7 | 1.75 |
| % change | +21 | +61 | +56 | +133 |
*Includes intangible assets of £33.7m, or 54p a share Ex-div: 8 Dec Payment: 17 Jan | ||||
