Densitron released their final results this week, a couple of weeks later than normal. Following my last blog, I was pleasantly surprised to read that there were no further nasty surprises given their trading update back in February. In fact the results were pretty much as expected following that particular update.
The headline figures give profit down to £0.6m, EPS at 0.36p, dividends down to 0.3p for the year (50% reduction from last year) but booked orders up by 9% to £23.1m.
Densitron's current market cap. is £4.3m which is supported by £3.2m of net tangible assets and a dividend yield of 4.8%. The company has little debt and £1.6m cash on it's balance sheet. Gross margin decreased from 29.6% to 28.6%.
So what are the pros and cons going forward?
On the negative side there is still a claim against the company in respect of unpaid rents on a property occupied by a former Group Company. It appears that they are trying to negotiate an out of court settlement but are unable to say at what level the settlement will be made.
On this year's earnings the company stands on a p/e of 16 and the dividend has been cut in half. They will pay a final dividend of 0.1p.
The share price has remained around current levels for some time now because, as I said in last week's blog, most of the bad news is already priced in.
Going forward, what are the bull points.
It's always easy to lose perspective. Firstly, Densitron is still profitable and, although current trading is mixed, the business should return to growth with a more favourable global economy and their introduction of internally developed products and additional services.
Their balance sheet is strong and certainly more than supports the current share price, and whilst the dividend has been reduced this year, they have clearly shown a willingnes in the past to return plenty of cash to shareholders when it is prudent.
Finally, they have a 1.25 acre strip of land in Blackheath, South East London which they wish to develop and are making slow but hopefully steady progress in their objective to do so. However, this is unlikely to be concluded this year.
Overall, the outlook statement is cautious (sensibly so following disappointments this year) but hints at optimism, "The pipeline of new business remains strong and we expect to see this being converted into new orders over the next few months."
I shall continue to hold , and would possibly add with any reasonable outcome to the rent claim made against them.
As ever, no advice is intended or given, and the blog remains an individual account of my personal experiences investing in the stock market.
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