Communisis Share Discussion Threads

[leading] 02/8/2018 10:31

Bit of a strange pattern going on with bank debt here.

Half year end bank debt £21.7m (2017 £25.9m) Average £37.5m (2017 £45.2m)

Year end bank debt 2017 £52.4 (2016 57.8).

Whatever the explanation, the Balance Sheet needs strengthening, so would management kindly stick to their knitting and get the debt down to less scary levels asap.

[zipstuck] 02/8/2018 09:49

They could have represented the 2017 provision release in a better light imo.

· Adjusted operating profit is 7% lower than in the first half of 2017 at £7.7m (H1 2017 £8.3m). The reported H1 2017 operating profit benefited from a £1.1m one-off reassessment of a historical provision, unrelated to the underlying trading in 2017.

[masurenguy] 02/8/2018 08:53

Agree zho - presumably the exceptionals would include some of the financial consequences of the Psona closure but of course there is still no transparency or public reference to this.

[masurenguy] 02/8/2018 08:34

The two contract wins are obviously a positive but I would have liked some further detail to be able to evaluate their potential impact going forward.

[joe say] 02/8/2018 08:30

Agreed Masurenguy - but the bit I like is the two contract "wins" (if an extension can be described as such)

[zipstuck] 02/8/2018 08:29

Not surprised by the results I expect some more contract wins in H2 with the new hires. Good yield. Reduced debt and pension. Reduced finance cost going forward. Sound investment at these levels imho

[masurenguy] 02/8/2018 08:27

Fairly neutral interim's, with sales up 9% and eps up 4%. Free cash flow up 14% - before additional capital expenditure - and the pension deficit reduced by 16%. Proposed dividend up by 5%. Some positive progress but nothing much to shout about !

RNS Number : 5550W
Communisis PLC
02 August 2018

Interim Results for the six months ended 30 June 2018

Commenting on the results Communisis Chief Executive, Andy Blundell, said: "Communisis traded positively in the first half of 2018 and total sales were up 9%. Outbound statement volume grew with an increasing digital proportion but the volume of marketing communication has seen an initial reduction as an effect of the introduction of the General Data Protection Regulation (GDPR) in May. The Group won two significant contracts; the first with Zurich, a new insurance client, and the second with an existing client in Fast Moving Consumer Goods (FMCG) for a major expansion of services. Trading saw good free cash flow and net debt materially lowered. There was also a marked reduction in the pension deficit. Overall expectations for FY 2018 are unchanged."

FINANCIAL HIGHLIGHTS

Positive trading

-- Total revenue of £188.6m (H1 2017 £173.5m).
-- Overseas revenue at 34% of total (H1 2017 33%).
-- Adjusted profit before tax of £6.5m (H1 2017 £6.4m).
-- Profit before tax of £4.0m (H1 2017 £4.8m).
-- Adjusted earnings per share of 2.5p (H1 2017 2.4p).

Good free cash flow and net debt materially lowered

-- Net operating cash flow at £8.4m (H1 2017 £7.5m).
-- Free cash flow £5.5m (H1 2017 £6.5m) after increased capex of £2.9m (H1 2017 £1.0m).

-- Net debt reduced to GBP23.7m (H1 2017 GBP28.3m).
-- 5% proposed increase in interim dividend to 0.93p (H1 2017 0.89p).

Marked reduction in the pension deficit

-- Pension deficit reduced to £32.4m from G£2.0m at 30 June 2017.

All financial comparatives have been restated to reflect the changes as a result of the transition to IFRS 15 Revenue from Contracts with Customers (IFRS 15).

[salchow] 01/8/2018 15:08

Well if there are any surprises to come tomorrow either good or bad they have certainly not been leaked! Hardly any activity at all.

[danieldanj] 01/8/2018 00:41

Communisis (CMS) Earnings-Reaction to Keep an Eye

[dogrunner11] 30/7/2018 14:08

Just starting.

[salchow] 27/7/2018 16:17

Masurenguy - that is precisely how I split my funds. I wouldn't say I do "trading" but I certainly always have a few speculative (or gambling) positions. Like you, in my case because of my age, I mainly look for income from ISA's.

[masurenguy] 27/7/2018 12:45

Salchow - we all have different investment strategies. I have 3 portfolios:
1. TRADING: Speculative - primarily small caps where I'm seeking outstanding capital growth potential while accepting that this will invariable include some duds.
2. ISA EQUITY: Pure income - here I'm looking for yield while trying to avoid any decline in the overall capital value of the portfolio. Consequently the yield reflects the return on the total amount invested not the yield on any current shareprice.
3. SIPP: A mix of capital growth and yield with a bias toward the former.

"After all if you buy something for income and it doubles in price with a significant reduction in current yield it may be the time for you to sell and buy another share with a better yield."

That's one way of looking at it but of course you still take the same risk that alternative yield stocks may cut the dividend and the shareprice may also fall in value. I tend to top slice and take some profits on shares where I am invested for capital gain but am happy to hold good yielders providing the dividend continues to increase. My yield does not go down in P2 when the shareprice goes up except in cases where the dividend is cut and then I may react accordingly, subject to the circumstances.

[salchow] 27/7/2018 12:09

Masurenguy - I get what you are saying but apart from historic personal interest it is surely only the current yield that counts. After all if you buy something for income and it doubles in price with a significant reduction in current yield it may be the time for you to sell and buy another share with a better yield.

Anyway, we both have an interest in Communisis so fingers crossed that the price really is understating current value. It was 70p not long ago so at that point it was seemingly being over-valued!

[gleach23] 27/7/2018 11:55

OK I see, it's your own yield. Thanks for clarifying.

[masurenguy] 27/7/2018 11:43

Hi gleach23 - I've been invested in PHTM for several years. I first bought into them @59.93p on 2 April 2012. I have added several times since then and my current average cost is now 90.8p. The annual dividend is currently 8.44p so my yield there at the moment is 9.3%

[edmundshaw] 27/7/2018 11:40

I must admit my holding is now also half what it was (though I added some back recently) as my faith in Blundell as the apparent dictator of CMS is not what it was; I no longer wish to be overweight in this stock, but it still has a place as a decent value investment. Looking forward to what the company has to say next week...

[gleach23] 27/7/2018 11:08

Mas... I also own PHTM and have the current yield at around 7.6%

Not sure where you get 9.3% from?

[johnrxx99] 27/7/2018 11:01

Hi Chaps, sorry to interrupt. I used to used T D Waterhouse but the transfer to Interactive is a nightmare. Can you suggest alternatives other than Hargreaves.

Many thanks

[masurenguy] 27/7/2018 10:47

Hi MT - you make some very valid points and that is why I sold half my stake here (recouping the whole of my actual investment) last December after they closed down Psona, and made no public reference to this at all, and also dumped Mark Stoner (#1542 & 1565).

However a yield of nearly 7.5% is worth having as an income stock but I'm also in PHTM where I get 9.3%, CLIG at 9.1%, RDSB at 8.1%, and TW at 7.8% which are even better. Nevertheless, it is still worth holding CMS at this current yield and there is always the distinct possibility of them being taken out at a premium by a predator in due course.

CM #1672 - LOL, looks like you did because todays upswing happened just after on a small volume of less than 100K traded so far :-) .

[mount teide] 27/7/2018 10:12

Mas - the share price performance of CMS since March 2013 is much worse than slightly less than half the FTSE 250.

While CMS did make a huge placing at 40p in March 2013, at no point during the whole of March 2013 did the share price fall below 51p - it in fact went on to stay above that level until Sept 2015, when it became apparent that the lloyds contract was not performing anywhere near expected, likewise most of the acquisitions.

So it could be argued that compared to the FTSE 250 CMS has under-perfromed by more than 50% since 2013, since it has made NO progress whatsoever!

Over the last half decade or so CMS has spent circa £50m buying digital businesses which in all the cases seem have done well ONLY for the original owners of those businesses as a result of the inflated prices paid - LIFE being an obvious example.

During this period every senior CMS executive has either left or paid for the very poor performance of CMS since the huge Lloyd's placing by being pushed out by Blundell - including the excellent executive who built up the international expansion of the business over the last 5 years.

Yet, THE ONE INDIVIDUAL WHO HAS OVERALL RESPONSIBILITY FOR MAKING THE ACQUISITIONS AND THE OPERATIONAL AND FINANCIAL PERFORMANCE OF THE COMPANY REMAINS IN OFFICE.


The new MD at SIV over the last 2 years has completely turned around its fortunes from what looked like a near hopeless position and delivered a 150%+ improvement in valuation from the lows. Blundell refusing to take personal responsibility for the many mistakes made over the last 5 years was the principal reason i sold out completely at circa 60p last year. I've seen nothing since from CMS to review that decision.

When it comes to dividend income there has been much better places to invest over the last 2-3 years - Shell's share price bottomed out with the oil price in Q1/2016 and since has paid 7%+ dividends while generating capital growth of over 100% as the oil price recovered.

AIMHO/DYOR