Communisis Share Discussion Threads

[owenski] 08/8/2016 09:54

Have to admit to being a hypocrite after my recent negative post, I bought in on results day.

Not a fan of Blundells lack of market communication, but the figures did indicate limited downside at these levels. Subsequent price and volume action seems to confirm this.

Regards - an embarrassed poster :-)

[masurenguy] 08/8/2016 09:30

Liberum project eps of 6.0p this year and 6.3p next year with corresponding dividends of 2.42p and 2.61p respectively. Compared to this mornings Offer price of 41p, that represents a PER of 6.8 this year and 6.5 next year with a corresponding yield of 5.90% and 6.35% respectively. Furthermore,
their current price target of 71p would still only represent a PER of circa 12 based on current metrics.

[edmundshaw] 08/8/2016 09:03

5.2p this year, 6p next... PER dropping from 7.7 to 7... and a yield of silly. Solid long term contracts, good prospects and dropping debt. This is a growth company with a utility company yield and a rating for a declining business.

41p might be progress, and at least it doesn't begin with a 3 anymore, but still far from what we are worth. Biggest bargain in which I am personally very overweight.

[qs99] 08/8/2016 08:49

Looking good this morning again...

[rivaldo] 05/8/2016 15:50

Good to see an amount of AT buying this afternoon. Things could finally get interesting here.

[nick rubens] 05/8/2016 15:00

Decided to purchase another lot of CMS today. No point diversifying into companies that are not in as healthy state as this one.

This has to be one of the best buys out there at the moment. Any news on new big business wins will send it upwards quicker, but even at the current level of business I can't see the downside here and especially as it's dropped so much and seemingly for no good reason but fear, but the Interims should allay that and I expect a steady climb towards the full year results.

Had to take the plunge. :)

[cheshire man] 05/8/2016 07:32

Thanks for that Masurenguy, think a lot may be running their eye over CMS as a recovery play after yesterday's news which I was pleased with, nice increase in divi too which is always welcome in rocky times ! DYOR

[masurenguy] 05/8/2016 00:42

2016 Interims: Investor Presentation



Tempus: Communisis, the printing and marketing group, posted a 37% rise in first-half profits before tax to £4.4m and a 10% boost in the dividend to 0.81p. New client wins include Liverpool Victoria and a healthcare firm wanting marketing help in the Middle East. Overseas revenues climbed to 24% of sales from a standing start 5 years ago.Yesterday’s base rate change is good news. Communisis prints rate-change letters going to customers of HSBC and Lloyds. The shares pushed 9% higher to 37.75p.

[mcfly79] 04/8/2016 14:53

Very happy with the results and outlook given recent speculation and the share price decline. I don’t see how the recent decline from c.50p is justified. H2 2016 should be where we see the largest benefit from the post Brexit GBP weakening.

For me CMS is now all about demonstrating free cash flow and I think CMS have now turned the corner in this regard.

When I look at free cash flow I’m interested in the true bottom line change in net debt. The company has its own definition of free cash flow (which is before investments/acquisitions) and also separately splits out cash flow on exceptional items. From being a shareholder for several years I know that the company is always going to have exceptional items and is always going to have investment in new contracts/acquisitions and therefore the only thing that truly demonstrates progress is a reduction in net debt.

Over the last rolling 12 months (1 July 2015 – 30 June 2016) the company has reduced net debt by £8.5m from £43.4m to £34.9m (£4m reduction in H2 2015 and £4.5m reduction in H1 2016). The company paid dividends of £4.6m during the period (£1.5m H2 2015, £3.1m H1 2016) and therefore the company generated bottom line free cash of £13.1m in the last 12 months (£5.5m H2 2015, £7.6m H1 2016).

The only adjustment I would make to these figures is to exclude the positive impact of exchange gains arising on revaluation of the cash balances which was £2.5m for the 12 months (£0.4m H2 2015, £2.1m H1 2016). I assume the company has some non GBP cash and has benefited from the GBP weakening.

This leave bottom line free cash flow of £10.6m for the last 12 months (£5.1m H2 2015, £5.5m H1 2016). That’s equivalent to 5.1p per share. Very encouraging.

[isis] 04/8/2016 14:41

Communisis PLC CMS Liberum Capital Buy 37.63 34.50 74.00 71.00 Reiterates
Communisis PLC CMS finnCap Buy 37.63 34.50 65.00 65.00 Reiterates

[nick rubens] 04/8/2016 13:52

I expect institutional buying in the weeks ahead. Small company funds, recovery funds, special situations etc. Good High Yield and safe for now also.

[shroder] 04/8/2016 11:49

Overall look pretty robust, any ideas how the (possible) rate reduction will/may impact yields/pension deficit going forward?

Triennial due march next year, again, likely thoughts on this.
________________________________

Pensions

The Pension Scheme accounting deficit has increased to GBP44.3m (H1 2015 GBP39.2m). This is primarily due to a fall in discount rates and reduction in gilt rates, which fell significantly towards the end of the reporting period. Cash contributions to the Pension Scheme are determined by reference to the triennial actuarial valuation, the latest of which was performed as at 31 March 2014, where the deficit reduced to GBP19.5m (2011 GBP38m). Deficit reduction contributions to the Scheme are GBP1.5m per annum, increasing in line with dividend increases, in addition to the previously agreed rental payments through the Central Asset Reserve arrangement. The next triennial actuarial valuation is due as at 31 March 2017.

[sidam] 04/8/2016 11:29

To salpara

You must look at the revenue breakdown. You will see that pass through sales fell substantially. These are passed through at virtually no margin. So the profitable part of the business increased sales significantly.

It is therefore showing good adjusted revenue growth.

Hope this helps.

[salpara111] 04/8/2016 11:03

My main concern is the flat top line revenue. They have improved profitability by squeezing costs but that can't go on for ever. Reading the results I find it difficult to work out if they are suggesting decent top line growth going forward

[joe say] 04/8/2016 10:45

Love the link between lower interest rates and Brexit

Wonder what he attributes low rates in China, Germany etc etc to

[masurenguy] 04/8/2016 10:02

Strong financial progress and Brexit opportunities, says Communisis CEO
07:01 04 Aug 2016

Integrated market services company Communisis PLC tells Proactive Investors that it has seen “a good sales story in the 2nd half, driven by reducing the cost base. Overall we’ve made good progress and we’re proud of these numbers,” says chief executive Andy Blundell. “We’ve had a good start to 2016,” he adds. With growth and profitability, continued cash generation and the dividend up by 10% the group are making strong financial progress. The group has also slashed £4.5m off its net debt. “The key objective is to reduce the debt level,” says Blundell, aiming to reduce it even further over the next four years.

With the recent Brexit vote the group says a change in interest rates could give it a short term volume advantage. “I don’t think anyone yet knows what the EU referendum vote means and there’s a lot of unhelpful speculation.” He says the group is resilient and could be a beneficiary of the increasing trend of outsourcing from banks. “We see a lot of opportunities in that scenario. Overall we remain confident of delivering on our full year expectations for 2016”

AB also very bullish on the new contract with the unidentified 'global healthcare company' !

[salchow] 04/8/2016 09:41

If Richard Griffiths is happy to hold more than 29M shares then I am happy to continue to hold mine without worrying about pension deficits which will go up and down as the years go by and which appear to my eyes at least to be easily manageable. Then again so long as the dividend continues to be paid that is what I hold for, the share price I can forget about long into the future.

[masurenguy] 04/8/2016 09:10

A positive interim statement with most of the salient points already covered in other posts above. Even after the initial rise to 38p this morning, the PER remains on a modest 6.5 for the current year with the yield rising to 6.3% on the basis of the 10% interim dividend increase being replicated at the year end.

[joe say] 04/8/2016 08:22

Pleased overall with these results but a few comments/observations

Good - re-organisation benefits of some £3m pa for a £4m cost - a significant step change

Bad - March 2017 pension deficit reassessment - inevitable (imo) that the £1.5m pa payments will increase

also Bad (imo) - the narrative surrounding their strategy (many will think a ridiculous comment but I ascribe to the theory that if you can't describe what you do succinctly then there is something fundamentally wrong)

Have you ever read such tripe as "an end-to-end service starting with the brand activation piece (LIFE/Twelve) and "the brief" through to project execution meaning the control of the international supply chain for point-of-sale and associated marketing collateral and "in this division we provide mission-critical, personalised communication to known individuals, on behalf of our clients."

KISS

[zho] 04/8/2016 08:14

>>Wow, zho, you are hard to please>>

Hi Edmund,

Apologies if you think those points were harsh: I thought they were reasonable.

Yes, I'm pleased to see progress on debt, of course, but the combination of debt and pension deficit is a worry to me, and I imagine to other investors too.

Yes, I read the explanation on reduction of operating margin, but I had hoped they would have made greater (underlying) progress towards their target of 10%.

I am pleased - relieved - to see the share price bounce but reckon that much of the recent (post SIV profits warning) fall could have been avoided if the Company had updated on progress at the time of the AGM.

[qs99] 04/8/2016 08:13

First time in this for a while, but Imo, the net debt figure reducing materially is a v positive sign and with further reductions should enable the equity story to become clearer Imo/dyor etc....nice yield and market looks like it was pricing in something horrible, so Imo why should it not be at the pre Brexit levels? Looking at 50p Imo as win was similar but people began buying into debt reduction and equity flip argument and price has risen steadily since....gla

[sharw] 04/8/2016 08:12

Agree zho - mixed bag. The headline figures are good, partly because we were all expecting them to be worse following this communications company's inability to communicate with its shareholders.

The healthy increase in OP is due to slashing central overheads by £1m offset by a lower profit on operations mainly due to a collapse in the profit of the old design division from £2m to £0.3m. That figure includes the disastrous LIFE acquisition where there is a further write-down.