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Shares in AIM-listed specialist remediation, decommissioning and consulting services group Silverdell (LSE:SID) were recommended on t1ps at 12.75p in August, the month before I departed after more than 12 years editing that website to set up the Nifty Fifty offering. I subsequently updated you all in November, with the shares at 13.25p, concluding that they remained worth buying ahead of the announcement of results for the company’s year ended 30th September 2012. With these announced earlier this month, the share price is now 14.625p – capitalising the company at £45.8 million, and the following reviews the results and what they mean for the investment case…
Click here to read my November piece on Silverdell
The company reported an adjusted pre-tax profit of £4.3 million on revenue of £82.5 million, generating earnings per share of 1.46p – up from the previous years’ 1.37p. It noted that earnings were “impacted in part by the deferral of certain shutdown and refurbishment works and by some lower margin work undertaken in our Consulting division”. Following an acquisition in June of decommissioning and dismantling provider EDS Group, net debt at the year end totalled £11.23 million. Total non-current liabilities were £16.70 million, though there was a £7.47 million net current asset position. This and the company’s proven operations in markets significantly protected by stringent regulation reassure on the balance sheet position.
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The company is already a trusted and long-standing supplier to multinational blue chip customers and notes that as an enlarged group it is now able to provide a fully comprehensive suite of decommissioning, dismantling and remediation services to customers around the world. This has seen it having “already secured significant international contract wins” and boosted the order book to £219 million as at the end of October. The company added “we see further opportunities to expand our presence organically further into Canada and Australia, and to develop new services such as a discrete consulting business in Canada. In the UK, in addition to our asbestos remediation services, we are growing our capability as a supplier of high hazard industrial maintenance and support services to our existing client base within a number of framework contracts. We also see exciting opportunities in Continental Europe as various governments outline plans to decommission first and second generation nuclear power stations and replace them with conventional energy generation facilities”.
Current trading is noted to be “encouraging and in line with management’s expectations”, with the company in the process of tendering for several large contracts in Australia, Canada, the UK and mainland Europe. Its confidence was reflected in the results seeing the recommendation of a maiden, 0.175p per share, dividend – this scheduled to be paid on 22nd March to shareholders on the register at the close on 13th March 2013.
With a full-year contribution from EDS, earnings per share in excess of 2p (pre-tax profit of more than £9 million) and a dividend per share of 0.40p (leaving the shares offering a 2.7% yield) remain forecast for the current year and a positive growth and dividend outlook look to remain thereafter. Given the regulatory requirement for much remediation, decommissioning and environmental survey and monitoring work, I continue to consider a price-earnings multiple of 10 undemanding for what should prove a resilient, growth company. I see house broker, finnCap, retains a 23p target price and this continues to look a reasonable initial target to me.
Tom Winnifrith writes for a number of leading US and UK financial websites. He also owns a quirky Celtic Italian restaurant in Clerkenwell, The Real Man Pizza Company and is today reviewing the new music play lists for 2013 as you can read here.
If you fancy punk and pizza in Clerkenwell any Monday from January 8th check out The Real Man Pizza Company
