A little bit of a mixed bag with one or two negatives from the six months ending 31 March 2016, namely gross margins have reduced slightly (2%) due to pricing pressures and overall the trading profit is down from last year to £4.6m (from £5.5m in 2015). Mclcreate has had a disappointing half-year.
However, any negatives should be taken in the context of a group that has still produced an excellent trading profit with the main contribution coming from their CTUS operations. Revenues have increased by 11% to £77m (£66m in 2015) and the group remains highly cash generative.
Net assets now stand at 230p per share, and the sale of Fountain Studios has reduced net debt to just £3.5m. With the current share price at 217p this represents a 6% discount to net assets.
Importantly, as a show of confidence in the full year outcome, the interim dividend has once again been increased by 25% to 2.5p.
The sale of Fountain Studios means that reported profit is £10.3m or 54p per share. The underlying profit is flat on last year at 13p per share.
Avesco's current market cap. is £41m and cash on the balance sheet stood at £23m.
As a permanent Bull on this company, Avesco still looks ridiculously cheap to me.
The outlook statement for the full year looks good with Richard Murray stating:-
"With net debt now at historically low levels and the Rio 2016 Olympic Games to come over the summer, the outlook for the Group remains very positive."
I shall look forward to my interim dividend and the full year results.
The margin of safety remains high here, and as mentioned before, the group is always vulnerable to a opportunistic bid.
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