Currency in GBP
Last close As at 17/03/2023
GBP42.90
▲ −190.00 (−4.24%)
Market capitalisation
GBP1,258m
Research: TMT
4imprint’s FY22 results are impressive, with 45% organic revenue growth and an uplift in operating margin to 9.0% (FY21: 3.9%) despite some gross margin pressure from inflation. Much of this is due to the step-change in marketing efficiency via investment in the 4imprint brand, which has delivered large numbers of new customers and higher order counts. The group is inherently highly cash generative, and we already assumed that a special dividend was likely. This is now confirmed, at twice the level we anticipated, at $2/share. The pace of growth will likely moderate this year and there will need to be some investment to cater for the larger volumes, but momentum remains good, and our forecasts are edged ahead.
4imprint Group |
Brand investment turbocharges growth |
FY22 results |
Media |
15 March 2023 |
Share price performance
Business description
Next events
Analysts
4imprint Group is a research client of Edison Investment Research Limited |
4imprint’s FY22 results are impressive, with 45% organic revenue growth and an uplift in operating margin to 9.0% (FY21: 3.9%) despite some gross margin pressure from inflation. Much of this is due to the step-change in marketing efficiency via investment in the 4imprint brand, which has delivered large numbers of new customers and higher order counts. The group is inherently highly cash generative, and we already assumed that a special dividend was likely. This is now confirmed, at twice the level we anticipated, at $2/share. The pace of growth will likely moderate this year and there will need to be some investment to cater for the larger volumes, but momentum remains good, and our forecasts are edged ahead.
Year |
Revenue |
PBT* |
EPS* |
DPS** |
P/E |
Yield |
12/21 |
787 |
30.2 |
80.3 |
45.0 |
66.8 |
0.8 |
12/22 |
1,140 |
103.7 |
285.0 |
160.0 |
18.8 |
3.0 |
12/23e |
1,275 |
110.7 |
294.8 |
165.0 |
18.2 |
3.1 |
12/24e |
1,410 |
127.4 |
343.8 |
190.0 |
15.6 |
3.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items. **Excluding special dividends.
Major uplift in revenue per marketing dollar
It is now beyond question that the adoption of investment in promoting the 4imprint brand as a significant element of the marketing mix has delivered excellent results. Revenue generated per dollar of marketing spend was $8.86 in FY22, up from $6.17 in FY21. It is encouraging that the behaviour patterns of those customers recruited over the last couple of years has mimicked or exceeded that of more established customers. The substantial increase in order throughput has tested operational limits without compromising customer satisfaction levels, to our knowledge, and there will now need to be additional investment in people and capacity to equip the group for the next stage of growth. Our FY23 revenue forecast is edged up 2% and, as in our January update, we anticipate adjusted operating margin settling back a little to 8.5%, from the 9.0% achieved in FY22.
Special dividend of $2/share
Net cash balances at the year-end were $86.8m, more than is required for investment in the business to support growth and act as a buffer for unexpected working capital swings. In addition to the 256% uplift in the ordinary dividend for FY22, to $1.60, management is proposing the payment of a special dividend of $2.00 per share, to be paid in June alongside the FY22 final of $1.20. Our forecast for end-FY23 net cash is still a substantial positive balance of $49.3m.
Valuation: DCF suggests meaningful further upside
The share price responded very positively to the July and November 2022 and January 2023 trading updates, with the result that the share price effectively doubled from its June 2022 low. A DCF (WACC of 8.0%; terminal growth of 3%, as before) generates an implied value of £65.64, little changed on the £65.73 at the time of our January update and still well ahead of the current share price.
Exhibit 1: Financial summary
$000s |
2020 |
2021 |
2022 |
2023e |
2024e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
560,040 |
787,322 |
1,140,286 |
1,275,000 |
1,410,000 |
Cost of Sales |
(402,100) |
(561,306) |
(818,670) |
(915,450) |
(1,012,380) |
||
Gross Profit |
157,940 |
226,016 |
321,616 |
359,550 |
397,620 |
||
EBITDA |
|
|
8,905 |
35,660 |
108,428 |
115,232 |
132,187 |
Operating profit (before amort. and excepts.) |
|
|
3,972 |
30,646 |
102,902 |
108,700 |
125,655 |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
3,972 |
30,646 |
102,902 |
108,700 |
125,655 |
||
Net Interest |
(129) |
(417) |
804 |
2,000 |
1,750 |
||
Profit Before Tax (norm) |
|
|
3,843 |
30,229 |
103,706 |
110,700 |
127,405 |
Profit Before Tax (IFRS) |
|
|
3,843 |
30,229 |
103,706 |
110,700 |
127,405 |
Tax |
(753) |
(7,643) |
(23,563) |
(27,675) |
(30,577) |
||
Profit After Tax (norm) |
3,090 |
22,586 |
80,143 |
83,025 |
96,828 |
||
Profit After Tax (IFRS) |
3,090 |
22,586 |
80,143 |
83,025 |
96,828 |
||
Discontinued businesses |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
|
|
3,090 |
22,586 |
80,143 |
83,025 |
96,828 |
Net income (IFRS) |
|
|
3,090 |
22,586 |
80,143 |
83,025 |
96,828 |
Average Number of Shares Outstanding (m) |
28.0 |
28.1 |
28.1 |
28.1 |
28.1 |
||
EPS - normalised fully diluted (c) |
|
|
11.0 |
80.3 |
285.0 |
294.8 |
343.8 |
EPS - (IFRS) (c) |
|
|
11.0 |
80.5 |
285.6 |
295.5 |
344.6 |
Dividend per share (c) |
0.0 |
45.0 |
160.0 |
165.0 |
190.0 |
||
Special dividend per share (c) |
0.0 |
0.0 |
200.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
28.2 |
28.7 |
28.2 |
28.2 |
28.2 |
||
EBITDA Margin (%) |
1.6 |
4.5 |
9.5 |
9.0 |
9.4 |
||
Operating Margin (before GW and except.) (%) |
0.7 |
3.9 |
9.0 |
8.5 |
8.9 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
43,269 |
40,011 |
47,940 |
52,005 |
55,133 |
Intangible Assets |
0 |
0 |
1,010 |
1,010 |
1,010 |
||
Other intangible assets |
1,100 |
1,045 |
957 |
957 |
957 |
||
Tangible Assets |
24,832 |
24,667 |
29,255 |
31,023 |
31,491 |
||
Right of use assets |
13,065 |
11,725 |
13,103 |
11,400 |
10,060 |
||
Deferred tax assets |
4,272 |
600 |
2,381 |
2,381 |
2,381 |
||
Retirement benefit asset |
|
|
0 |
1,974 |
1,234 |
5,234 |
9,234 |
Current Assets |
|
|
89,812 |
127,771 |
192,353 |
170,354 |
206,849 |
Stocks |
11,271 |
20,559 |
18,090 |
20,733 |
21,209 |
||
Debtors |
38,775 |
63,589 |
87,511 |
100,296 |
110,915 |
||
Cash and short-term deposits |
39,766 |
41,589 |
86,752 |
49,325 |
74,725 |
||
Other |
0 |
2,034 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(51,118) |
(73,027) |
(87,401) |
(93,841) |
(103,340) |
Creditors |
(50,001) |
(71,877) |
(85,966) |
(92,406) |
(102,190) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(1,117) |
(1,150) |
(1,435) |
(1,435) |
(1,150) |
||
Long Term Liabilities |
|
|
(16,592) |
(11,789) |
(12,672) |
(11,722) |
(10,522) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(12,089) |
(10,939) |
(12,315) |
(11,365) |
(10,165) |
||
Other long term liabilities |
(4,503) |
(850) |
(357) |
(357) |
(357) |
||
Net Assets |
|
|
65,371 |
82,966 |
140,220 |
116,796 |
148,120 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
16,462 |
22,846 |
101,317 |
101,700 |
113,500 |
Net Interest |
(13) |
(409) |
699 |
2,000 |
1,750 |
||
Tax |
(507) |
(6,414) |
(20,755) |
(25,175) |
(28,077) |
||
Capex |
(3,724) |
(3,465) |
(8,011) |
(8,300) |
(7,000) |
||
Acquisitions/disposals |
0 |
0 |
(1,700) |
0 |
0 |
||
Pension contributions |
(13,278) |
(4,589) |
(4,367) |
(4,000) |
(4,000) |
||
Financing |
941 |
(843) |
(866) |
(900) |
(900) |
||
Dividends |
0 |
(4,134) |
(18,722) |
(101,551) |
(48,649) |
||
Other/ Capital portion of lease repayments |
(1,418) |
(1,117) |
(2,432) |
(1,200) |
(1,200) |
||
Net Cash Flow |
(1,537) |
1,875 |
45,163 |
(37,426) |
25,424 |
||
Opening net debt/(cash) |
|
|
(41,136) |
(39,766) |
(41,589) |
(86,752) |
(49,325) |
Net impact of disposals etc |
0 |
0 |
0 |
0 |
0 |
||
Other |
167 |
(53) |
0 |
(1) |
(25) |
||
Closing net debt/(cash) |
|
|
(39,766) |
(41,589) |
(86,752) |
(49,325) |
(74,725) |
Source: Company accounts, Edison Investment Research
|
|
Research: Financials
The much-reduced level of capital markets activity in 2022 meant sharply lower profitability for Cenkos, although control over fixed costs and reduced variable compensation provided some mitigation. The group continued to focus on client service, gained share in AIM fund-raising (to 15%), has made net additions to its client base and, supported by a strong balance sheet, has made selective staff hires to strengthen its capabilities.
Get access to the very latest content matched to your personal investment style.