Year to 30 April 2011
In a nut-shell, the Company held its own, which is more than a lot of retailers can claim. Turnover, margin and profits were all there or thereabouts compared to last year. The recently reinstated dividend was increased by 3% (v FY10), which is encouraging.
Cash generation remained strong, although there was a big adverse swing in working capital (stocks up, trade creditors down) and increased capex (IT system), but closing cash balances were over £10m. The full year results are here.
Based on a share price of 17.5p, the market cap is £34m. Adjusting for the net cash of £10m, the Enterprise Value is £24m. The PAT, which is the profit attributable to shareholders, was £5m. Put it another way, if you buy a share in the Company, it would take only five years for the Company to generate enough profits to pay back your initial investment. Of course, that assumes that profits do not grow (or fall, as the market may be implying). No doubt, FY12 trading will be tough with increased margin pressure, but given the customer base and the cash cushion, I do not anticipate that it will fall off a cliff. EV/EBITDA is around 3.5x, which is very, very reasonable.
The PER comes out at 6.9x (FY11 EPS of 2.55p), ROE 19.6% and ROCE 23.3%. The current yield is 3.8% (EPS 0.67p).
|Source: Digital Look|