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Communisis: on a higher-margin mission - BUY (CMS)
skyhigh - 09 Apr 2009 08:29
skyhigh - 09 Apr 2009 08:33 - 2 of 20
Went in for a few this morning....should double from here in the next 12 months (imho, dyor)
Anyone else in ?
Bit of the write up from the recent Growth Company Investor below:
Strategy
Assuming a business in disarray, Vaughan better defined Communisiss mission, which is to help clients communicate in more effective ways, saving them money and creating more profitable relationships with their own customer base.
Services range from print and document management to statement and billing outsourcing, and from direct mail and business forms services (the company is the UKs biggest maker of business forms and base stationery) to marketing process consultancy. Significantly, Communisis is also Europes leading producer and supplier of cheques, credits, clearing vouchers and dividend mailings, entrusted by numerous blue-chip financial services institutions.
Our change programme started in 2007, recounts Vaughan, whose margin enhancement strategy has centred around the development of a portfolio of higher-value, as opposed to commoditised, services and the cross-selling of more of those services across the client base.
Stage one of the turnaround involved sticking to the basics and customer focus. From mid-2007 onwards followed stage two, where the focus moved on to cross-selling and migration towards higher-margin services. The third stage of the recovery, beginning in mid-2008, involved the integration of these high-value services in a way that meaningfully addressed clients needs.
Vaughan insists that the company shifted its centre of gravity higher up the value chain in 2008, through measures such as the sale of its commoditised Business Forms business based in Bath to management for 12.8 million. The sale of this operation, whose growth prospects were limited, resulted in a cash inflow of 8.2 million, bolstering the balance sheet and further improving the groups earnings quality, as did the exit from a print management deal with Sainsburys, which stripped out low-margin outsourced volume from the business mix.
Simultaneously, recent investment has been channelled into higher-margin areas such as digital print, with the clear example being Decembers acquisition of high-value data services business Ai (Absolute Intuistic) for up to 12.6 million in cash.
The profitable Ai boasts technology that enhances the direct marketing efforts of clients including BT and Lloyds TSB, helping them target the most attractive prospects and build ties with the most profitable, lowest credit risk customers. Having grown rapidly in recent years, this acquisition could prove an astute one, with Ai now beginning to clinch large long-term deals under which it provides all of a clients data analysis requirements.
We sold a commoditised business to management and we bought a business in data analysis, enthuses Vaughan, who says the various parts of the group are now working far more effectively together. He has made sure the company has an integrated sales offering and a stronger proposition for the market. The early fruits of this push were seen last year, with the number of clients buying more than one service rising from 24 to 32.
Given the current economic backdrop, cash is indeed king and much of the recent turnaround in the groups financial fortunes must go to aptly named finance director Peter King. His cash collection efforts, allied to disposal proceeds, helped the company halve net debt last year to 13.1 million. Moreover, lending facilities, now totalling 40 million, have been renewed, giving Communisis the financial firepower to act on acquisitive opportunities created by the current economic distress.
Management
Communisiss lively leader, the fast-talking business change specialist Steve Vaughan, was previously chief executive of IT services business Synstar between 2001 and 2005. Taking over the loss-making computer maintenance specialist, he turned it around, added higher-margin bits to the business and grew its share price before its takeover by US computer giant Hewlett-Packard. Before Synstar, Vaughan held a number of senior roles at EDS, latterly as managing director of the UK industry division.
Overseeing developments from the chair is the seasoned Peter Hickson, a trained accountant appointed to the board in December 2007. The 63-year-old, also chairman of Anglian Water and a senior independent director of London & Continental Railways, brings gravitas to the board, having served as finance director of Powergen between 1996 and 2002 and previously acted as a non-executive director at Scottish Power from 2006 to 2007.
Taking his share of the plaudits for the groups recent financial improvement in terms of cost control and cash collection is numbers man Peter King, appointed finance director in September 2006, having been financial controller. Previously, King was director of finance for Norwich Union Life, part of AVIVA, for four years, following an 11-year stint with KPMG.
Prospects
Though trading conditions in the marketing and communications space are tough, actions taken mean that Communisis is well placed to weather the storms. Early signs of improvement in its prospects were revealed in the numbers for 2007, which showed a strong rise in profits from operations as well as improved cash flow and net debt reduction.
Announced in early March, the 2008 numbers were even more impressive, revealing a 61 per cent surge in pre-tax profits to 12.7 million (adjusted PBT rose from 7.9 million to 13.3 million) and 19.6 million of cash flowing into the business, allowing Vaughan to maintain the final dividend at 1.635p, thereby nudging up the total for the year from 2.453p to 2.495p.
Strong profits growth and a second successive year of bumper cash flow meant that net debt reduced from 26.3 million to 13.1 million, the lowest level in five years. Two years ago, our debt was around 45 million, Vaughan proudly points out.
Further encouragement lay in the fact that profits moved higher across the four key parts of the business in a tough 2008, with profits growing by 27 per cent to 5.1 million and margins expanding in the technology and services operations recently boosted by the Ai acquisition.
Within direct mail and business forms (the part of the business most exposed to recessionary pressures), profits sparked up by 55 per cent to 5.5 million, with margins doubling, thanks to stewardship of the business towards higher-value services and the Bath disposal. However, it would be unbalanced not to flag up the fact that trading within direct mail deteriorated from September onwards (mailings were cancelled in the fourth quarter by certain distressed clients in the financials sphere) and it was downturn here that caused analysts to pare back their forecasts. Elsewhere, profits grew by 20 per cent to 13.3 million in the transactional division and there was a record profit performance achieved in the cheques business.
Prospects are further underscored by the increasingly diverse nature of the client base, which spans many sectors. Customers emanate from the currently stricken financial services sector (Barclays, GE Capital, The Co-operative Group) through to retail (Boots, Marks & Spencer) and even government (DEFRA, DWP) and utilities through the likes of BT and Centrica. We have a very blue-chip client base, and though financial services is our biggest sector, were becoming increasingly diverse, says Vaughan, highlighting wins in areas such as charity and travel and adding that the long-term nature of many of the companys contracts lends further insulation from recessionary ravages.
Valuation
As previously mentioned, Communisis estimates for 2009 were downgraded in the wake of the results, due to short-term trading weakness within the direct mail market, with the original 13.3 million profit estimate reduced to 11 million and earnings from 6.7p to 5.5p.
However, for 2010 a return to growth is predicted, with profits of 11.7 million pencilled in, producing earnings of 5.9p. The expectation in the market is that the dividend will be maintained at 2.5p this year and 2.56p next year.
On those estimates, the shares, which have fallen to a 52-week low of 23.5p, are swapping hands for only 4.3 times this years earnings and 3.9 times next years, which suggests that the difficult short-term outlook has been more than priced in by the market already.
Furthermore, that price decline means investors can buy into shares yielding a very healthy 10.6 per cent, only adding to their attraction in the current low interest rate environment. With the house broker targeting a 45p share price, there is plenty of upside for investors buying in at current levels.
Anyone else in ?
Bit of the write up from the recent Growth Company Investor below:
Strategy
Assuming a business in disarray, Vaughan better defined Communisiss mission, which is to help clients communicate in more effective ways, saving them money and creating more profitable relationships with their own customer base.
Services range from print and document management to statement and billing outsourcing, and from direct mail and business forms services (the company is the UKs biggest maker of business forms and base stationery) to marketing process consultancy. Significantly, Communisis is also Europes leading producer and supplier of cheques, credits, clearing vouchers and dividend mailings, entrusted by numerous blue-chip financial services institutions.
Our change programme started in 2007, recounts Vaughan, whose margin enhancement strategy has centred around the development of a portfolio of higher-value, as opposed to commoditised, services and the cross-selling of more of those services across the client base.
Stage one of the turnaround involved sticking to the basics and customer focus. From mid-2007 onwards followed stage two, where the focus moved on to cross-selling and migration towards higher-margin services. The third stage of the recovery, beginning in mid-2008, involved the integration of these high-value services in a way that meaningfully addressed clients needs.
Vaughan insists that the company shifted its centre of gravity higher up the value chain in 2008, through measures such as the sale of its commoditised Business Forms business based in Bath to management for 12.8 million. The sale of this operation, whose growth prospects were limited, resulted in a cash inflow of 8.2 million, bolstering the balance sheet and further improving the groups earnings quality, as did the exit from a print management deal with Sainsburys, which stripped out low-margin outsourced volume from the business mix.
Simultaneously, recent investment has been channelled into higher-margin areas such as digital print, with the clear example being Decembers acquisition of high-value data services business Ai (Absolute Intuistic) for up to 12.6 million in cash.
The profitable Ai boasts technology that enhances the direct marketing efforts of clients including BT and Lloyds TSB, helping them target the most attractive prospects and build ties with the most profitable, lowest credit risk customers. Having grown rapidly in recent years, this acquisition could prove an astute one, with Ai now beginning to clinch large long-term deals under which it provides all of a clients data analysis requirements.
We sold a commoditised business to management and we bought a business in data analysis, enthuses Vaughan, who says the various parts of the group are now working far more effectively together. He has made sure the company has an integrated sales offering and a stronger proposition for the market. The early fruits of this push were seen last year, with the number of clients buying more than one service rising from 24 to 32.
Given the current economic backdrop, cash is indeed king and much of the recent turnaround in the groups financial fortunes must go to aptly named finance director Peter King. His cash collection efforts, allied to disposal proceeds, helped the company halve net debt last year to 13.1 million. Moreover, lending facilities, now totalling 40 million, have been renewed, giving Communisis the financial firepower to act on acquisitive opportunities created by the current economic distress.
Management
Communisiss lively leader, the fast-talking business change specialist Steve Vaughan, was previously chief executive of IT services business Synstar between 2001 and 2005. Taking over the loss-making computer maintenance specialist, he turned it around, added higher-margin bits to the business and grew its share price before its takeover by US computer giant Hewlett-Packard. Before Synstar, Vaughan held a number of senior roles at EDS, latterly as managing director of the UK industry division.
Overseeing developments from the chair is the seasoned Peter Hickson, a trained accountant appointed to the board in December 2007. The 63-year-old, also chairman of Anglian Water and a senior independent director of London & Continental Railways, brings gravitas to the board, having served as finance director of Powergen between 1996 and 2002 and previously acted as a non-executive director at Scottish Power from 2006 to 2007.
Taking his share of the plaudits for the groups recent financial improvement in terms of cost control and cash collection is numbers man Peter King, appointed finance director in September 2006, having been financial controller. Previously, King was director of finance for Norwich Union Life, part of AVIVA, for four years, following an 11-year stint with KPMG.
Prospects
Though trading conditions in the marketing and communications space are tough, actions taken mean that Communisis is well placed to weather the storms. Early signs of improvement in its prospects were revealed in the numbers for 2007, which showed a strong rise in profits from operations as well as improved cash flow and net debt reduction.
Announced in early March, the 2008 numbers were even more impressive, revealing a 61 per cent surge in pre-tax profits to 12.7 million (adjusted PBT rose from 7.9 million to 13.3 million) and 19.6 million of cash flowing into the business, allowing Vaughan to maintain the final dividend at 1.635p, thereby nudging up the total for the year from 2.453p to 2.495p.
Strong profits growth and a second successive year of bumper cash flow meant that net debt reduced from 26.3 million to 13.1 million, the lowest level in five years. Two years ago, our debt was around 45 million, Vaughan proudly points out.
Further encouragement lay in the fact that profits moved higher across the four key parts of the business in a tough 2008, with profits growing by 27 per cent to 5.1 million and margins expanding in the technology and services operations recently boosted by the Ai acquisition.
Within direct mail and business forms (the part of the business most exposed to recessionary pressures), profits sparked up by 55 per cent to 5.5 million, with margins doubling, thanks to stewardship of the business towards higher-value services and the Bath disposal. However, it would be unbalanced not to flag up the fact that trading within direct mail deteriorated from September onwards (mailings were cancelled in the fourth quarter by certain distressed clients in the financials sphere) and it was downturn here that caused analysts to pare back their forecasts. Elsewhere, profits grew by 20 per cent to 13.3 million in the transactional division and there was a record profit performance achieved in the cheques business.
Prospects are further underscored by the increasingly diverse nature of the client base, which spans many sectors. Customers emanate from the currently stricken financial services sector (Barclays, GE Capital, The Co-operative Group) through to retail (Boots, Marks & Spencer) and even government (DEFRA, DWP) and utilities through the likes of BT and Centrica. We have a very blue-chip client base, and though financial services is our biggest sector, were becoming increasingly diverse, says Vaughan, highlighting wins in areas such as charity and travel and adding that the long-term nature of many of the companys contracts lends further insulation from recessionary ravages.
Valuation
As previously mentioned, Communisis estimates for 2009 were downgraded in the wake of the results, due to short-term trading weakness within the direct mail market, with the original 13.3 million profit estimate reduced to 11 million and earnings from 6.7p to 5.5p.
However, for 2010 a return to growth is predicted, with profits of 11.7 million pencilled in, producing earnings of 5.9p. The expectation in the market is that the dividend will be maintained at 2.5p this year and 2.56p next year.
On those estimates, the shares, which have fallen to a 52-week low of 23.5p, are swapping hands for only 4.3 times this years earnings and 3.9 times next years, which suggests that the difficult short-term outlook has been more than priced in by the market already.
Furthermore, that price decline means investors can buy into shares yielding a very healthy 10.6 per cent, only adding to their attraction in the current low interest rate environment. With the house broker targeting a 45p share price, there is plenty of upside for investors buying in at current levels.
skyhigh - 15 Apr 2009 09:47 - 3 of 20
SP moving up nice and steady...long may it continue ! :)
Master RSI
- 06 Jan 2010 12:20
- 4 of 20
After yesterday high volume and share price movement Up
THERE IS GOOD SIZE BUYING AT THE - PLUS MARKET
What is strange is the "AT" have not been activated yet, there are 50K at offer 14.50p on the order book
LINK ..... plus markets trades
Trade Date Trade Time Price Volume Type Considerations
06/01/2010 12:06:02 14.49 10,000 O 1,449.00
06/01/2010 11:42:47 14.49 15,038 O 2,179.01
06/01/2010 11:38:21 14.49 20,000 O 2,898.00
06/01/2010 11:30:24 14.50 15,000 O 2,175.00
06/01/2010 11:23:00 14.50 10,000 O 1,450.00
06/01/2010 10:21:35 14.49 100,000 O 14,490.00
06/01/2010 10:17:44 14.49 100,000 O 14,490.00
06/01/2010 09:41:45 14.49 100,000 O 14,490.00
06/01/2010 09:23:14 13.76 3,000 O 412.80
06/01/2010 09:20:37 14.24 25,000 O 3,560.00
06/01/2010 09:09:11 14.24 30,000 O 4,272.00
06/01/2010 08:11:45 14.49 8,453 O 1,224.84
06/01/2010 08:04:07 14.49 961 O 139.25
THERE IS GOOD SIZE BUYING AT THE - PLUS MARKET
What is strange is the "AT" have not been activated yet, there are 50K at offer 14.50p on the order book
LINK ..... plus markets trades
Trade Date Trade Time Price Volume Type Considerations
06/01/2010 12:06:02 14.49 10,000 O 1,449.00
06/01/2010 11:42:47 14.49 15,038 O 2,179.01
06/01/2010 11:38:21 14.49 20,000 O 2,898.00
06/01/2010 11:30:24 14.50 15,000 O 2,175.00
06/01/2010 11:23:00 14.50 10,000 O 1,450.00
06/01/2010 10:21:35 14.49 100,000 O 14,490.00
06/01/2010 10:17:44 14.49 100,000 O 14,490.00
06/01/2010 09:41:45 14.49 100,000 O 14,490.00
06/01/2010 09:23:14 13.76 3,000 O 412.80
06/01/2010 09:20:37 14.24 25,000 O 3,560.00
06/01/2010 09:09:11 14.24 30,000 O 4,272.00
06/01/2010 08:11:45 14.49 8,453 O 1,224.84
06/01/2010 08:04:07 14.49 961 O 139.25
Master RSI
- 06 Jan 2010 12:28
- 5 of 20
From the "UPS" thread ...............
CMS 14.25p ( 14 / 14.50p )
Reason : Moving higher with volume yesterday and good size buying today as the order book is improving. Undervalued on the Profits forecast and paying a high yield dividend. There was a seller recently.
CMS 14.25p ( 14 / 14.50p )
Reason : Moving higher with volume yesterday and good size buying today as the order book is improving. Undervalued on the Profits forecast and paying a high yield dividend. There was a seller recently.
Intraday
2 month Candlestick with volume
3 month Bollinger Bands,RSI, S Stochastic and 50 days MA
Charts - 2 days
Master RSI
- 06 Jan 2010 13:37
- 6 of 20
14.50 / 15p +0.50p
Finally the "AT" have been activated and the price has moved higher
Finally the "AT" have been activated and the price has moved higher
Master RSI
- 06 Jan 2010 16:47
- 7 of 20
news just out
Aberforth Partners
down to 10,766,344 shares 7.77 % on the 5th January
about 7M sold since the last time
the one before was 17.8M and 12.88%
Aberforth Partners
down to 10,766,344 shares 7.77 % on the 5th January
about 7M sold since the last time
the one before was 17.8M and 12.88%
Master RSI
- 11 Jan 2010 15:20
- 8 of 20
Moving further ahead today as some good trades have managed to get the order book "AT" activated now 15p +0.75p
Master RSI
- 11 Jan 2010 23:16
- 9 of 20
Another day of good volume and rising though as usual not finishing at best of the day
cielo - 22 Jan 2010 22:07 - 10 of 20
Cheers - Master RSI
CMS looks interesting now and after much consideration during the week, have bought in today.
Chart seems to be turning up
EPS for this year is 3p. Forecast for 2011 is 4.5p
Historically CMS has traded on a multiple of 13 to 15
That gives a target of say 40p this Year and 60p for 2011.
CMS looks interesting now and after much consideration during the week, have bought in today.
Chart seems to be turning up
EPS for this year is 3p. Forecast for 2011 is 4.5p
Historically CMS has traded on a multiple of 13 to 15
That gives a target of say 40p this Year and 60p for 2011.
Master RSI - 04 Feb 2010 23:06 - 11 of 20
Dil
- 05 Feb 2010 00:09
- 12 of 20
Another VOG ?
Master RSI - 19 Feb 2010 11:29 - 13 of 20
Have I seen this name before "Dil"
Was shagging Sheep on WALES countryside TV
Some poster hate the shagger and its antics..................
ramperdil - 07 Dec 2005 22:03 - 13 of 1314
I would bring back hanging and start off with Dil.
ramperdil - 07 Dec 2005 22:41 - 16 of 1314
yes lets invade Wales and execute people like Dil.
Was shagging Sheep on WALES countryside TV
Some poster hate the shagger and its antics..................
ramperdil - 07 Dec 2005 22:03 - 13 of 1314
I would bring back hanging and start off with Dil.
ramperdil - 07 Dec 2005 22:41 - 16 of 1314
yes lets invade Wales and execute people like Dil.
Master RSI - 19 Feb 2010 11:46 - 14 of 20
Second day of Moving higher with volume ahead of results next week
A BREAKOUT from 15 the previous high would get thing going, a very narrow spread at the moment 14.75 / 15p
;RSI(14);SlowSTO(8,3,3);VOLMA(60);&Layout=2Line;Default;Price;HisDate&XCycle=&XFormat=)
A BREAKOUT from 15 the previous high would get thing going, a very narrow spread at the moment 14.75 / 15p
Master RSI - 22 Feb 2010 23:04 - 15 of 20
Results on Thursday
What to expect for the finals on Thursda...
EPS of 2.55p so at 15p means the shares are on a P.E. of 5.9
Dividend on the final of 0.40 to 0.80p, already 0.86 from the Interim
What to expect for the finals on Thursda...
EPS of 2.55p so at 15p means the shares are on a P.E. of 5.9
Dividend on the final of 0.40 to 0.80p, already 0.86 from the Interim
Master RSI - 28 Feb 2010 19:18 - 16 of 20
Year results - 25 February 2010
Results close to expectations, debt well down from 1st Half, positive second half cashflow and dividend yield of 9.2%..........
Preliminary Results for the year ended 31 December 2009
Communisis plc (LSE: CMS.L), the expert in customer communications, announces preliminary results for the year ended 31 December 2009.
Financial Highlights
Operating profit before exceptional items of 7.2m (2008: 15.0m)
Positive second half operating cashflow of 7.5m (H1: outflow of 6.3m)
Year end net debt of 16.8m (H1 2009: 24.8m, Year end 2008: 13.1m)
Improvement made to the profile of Group pension liabilities
Earnings per share 2.3p (2008: 6.2p)
Final dividend of 0.43p making full year 2009 dividend of 1.29p (2008: 2.495p)
Operational Highlights
A year characterised by very challenging conditions:
o Communisis has not escaped the impact of recession
o Consolidation and retrenchment in financial services has had a particular impact
o Operational improvements effected in Direct Mail and Transactional businesses
Value-added services have continued to grow, despite recession:
o Strong market demand for our technology and services offering
o 40 of the top 100 customers now taking more than one service from Communisis
o Integration of Ai complete and making a positive contribution to the business
Continued investment in key areas of the business:
o 6.1m capital investment in new technology
o Significant investment in colour digital output
Results close to expectations, debt well down from 1st Half, positive second half cashflow and dividend yield of 9.2%..........
Preliminary Results for the year ended 31 December 2009
Communisis plc (LSE: CMS.L), the expert in customer communications, announces preliminary results for the year ended 31 December 2009.
Financial Highlights
Operating profit before exceptional items of 7.2m (2008: 15.0m)
Positive second half operating cashflow of 7.5m (H1: outflow of 6.3m)
Year end net debt of 16.8m (H1 2009: 24.8m, Year end 2008: 13.1m)
Improvement made to the profile of Group pension liabilities
Earnings per share 2.3p (2008: 6.2p)
Final dividend of 0.43p making full year 2009 dividend of 1.29p (2008: 2.495p)
Operational Highlights
A year characterised by very challenging conditions:
o Communisis has not escaped the impact of recession
o Consolidation and retrenchment in financial services has had a particular impact
o Operational improvements effected in Direct Mail and Transactional businesses
Value-added services have continued to grow, despite recession:
o Strong market demand for our technology and services offering
o 40 of the top 100 customers now taking more than one service from Communisis
o Integration of Ai complete and making a positive contribution to the business
Continued investment in key areas of the business:
o 6.1m capital investment in new technology
o Significant investment in colour digital output
Master RSI - 28 Feb 2010 19:24 - 17 of 20
Late last Friday there was a released of news directors Buying large chunks,
Thursday 25th
20K
350K
Friday 26th
15K
100K
Thursday 25th
20K
350K
Friday 26th
15K
100K
Master RSI - 10 Mar 2010 14:33 - 18 of 20
Was "Shares magazine" commenting on a negative way after the results?
from another place.........
COCO - 10 Mar'10 - 13:49 - 903 of 904
Looks like I was correct then, I think we have seen the bottom -
I would strongly suggest that everyone cancels their subscrition to " shares magazine " - also advisable to close your shorts.
from another place.........
COCO - 10 Mar'10 - 13:49 - 903 of 904
Looks like I was correct then, I think we have seen the bottom -
I would strongly suggest that everyone cancels their subscrition to " shares magazine " - also advisable to close your shorts.
js8106455 - 11 Nov 2014 13:56 - 19 of 20
js8106455 - 17 Nov 2014 11:42 - 20 of 20
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