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Last close As at 26/05/2023
GBP44.95
▲ −410.00 (−8.36%)
Market capitalisation
GBP1,264m
Research: TMT
4imprint’s FY21 results show a good recovery in orders and revenues, with momentum building over H221. Revenues and profits were as flagged in January’s trading update and were in line with our recent Outlook note. Our FY22 and FY23 forecasts are broadly unchanged, with FY22 revenues set to outstrip those of FY19 as the US economy rebuilds. A note of caution remains on the speed of margin recovery, reflecting lingering supply chain issues and inflationary cost pressures, but this is built into the numbers. 4imprint is a high-quality business in a large and growing market, underpinned by marketing expertise and a strong balance sheet.
4imprint Group |
Strong trading recovery |
FY21 results |
Media |
16 March 2022 |
Share price performance
Business description
Next events
Analyst
4imprint Group is a research client of Edison Investment Research Limited |
4imprint’s FY21 results show a good recovery in orders and revenues, with momentum building over H221. Revenues and profits were as flagged in January’s trading update and were in line with our recent Outlook note. Our FY22 and FY23 forecasts are broadly unchanged, with FY22 revenues set to outstrip those of FY19 as the US economy rebuilds. A note of caution remains on the speed of margin recovery, reflecting lingering supply chain issues and inflationary cost pressures, but this is built into the numbers. 4imprint is a high-quality business in a large and growing market, underpinned by marketing expertise and a strong balance sheet.
Year end |
Revenue ($m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
560.0 |
3.8 |
11.0 |
0.0 |
N/A |
N/A |
12/21 |
787.3 |
30.2 |
80.3 |
45.0 |
46.9 |
1.2 |
12/22e |
900.0 |
40.2 |
108.7 |
60.0 |
34.7 |
1.6 |
12/23e |
1,000.0 |
51.1 |
138.1 |
80.0 |
27.7 |
2.1 |
Note: *PBT and EPS (fully diluted) are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Marketing mix driving growth
Our recent Outlook note described the operational and financial dynamics of the business in detail and the messaging with these results is consistent; the market opportunities are substantial (industry body ASI estimates an FY21 market value of $23.2bn); management of the marketing mix is key to driving new and repeat custom; and careful management of cash gives resilience and flexibility. Customer orders at 1.429m were back to 90% of FY19 levels and new customers acquired at 89%, with retention rates in line with historical levels. Revenue per marketing dollar of $6.17 was up from $6.03 in FY20 (average FY12–21: $5.81), implying that the increased proportion of spend allocated to brand awareness has been accretive.
Cash resource rebuilding
Cash at the year-end was $41.6m (the group has no bank debt). Operating cash conversion was lower than historically at 63% (10-year average of 131%), after working capital absorption of $13.8m. This reflects the global and local supply chain issues in Q421 that required greater levels of inventory and higher accrued revenue for orders in process at the year-end. Management anticipates this reversing in FY22 and based on this confidence, we now expect a cash balance of $56.0m at the year-end (was $44.3m), despite higher forecast capex of $6.5m (including $2.0m for a solar energy project) and a step up in the dividend payment.
Valuation: Premium reflects high-quality growth
4imprint benefits from its scale, low fixed-cost base and limited capital requirements, attractive cash flow characteristics and cash positive balance sheet, all of which justify its premium rating. A DCF suggests a price of £34.01/share, while it trades on an FY22e EV/EBITDA of 22.1x, versus marketing services stocks on 12.0x. We expect continuing good growth will narrow this valuation gap.
Exhibit 1: Financial summary
$000s |
2019 |
2020 |
2021 |
2022e |
2023e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
860,844 |
560,040 |
787,322 |
900,000 |
1,000,000 |
Cost of Sales |
(585,543) |
(402,100) |
(561,306) |
(639,000) |
(710,000) |
||
Gross Profit |
275,301 |
157,940 |
226,016 |
261,000 |
290,000 |
||
EBITDA |
|
|
57,904 |
8,905 |
35,660 |
45,900 |
56,860 |
Operating profit (before amort. and excepts.) |
|
|
53,620 |
3,972 |
30,646 |
40,500 |
51,460 |
Intangible Amortisation |
0 |
0 |
0 |
0 |
0 |
||
Operating profit (before amort. and excepts.) |
|
|
53,620 |
3,972 |
30,646 |
40,500 |
51,460 |
Exceptionals |
0 |
0 |
0 |
0 |
0 |
||
Impairment |
0 |
0 |
0 |
0 |
0 |
||
Operating Profit |
53,620 |
3,972 |
30,646 |
40,500 |
51,460 |
||
Net Interest |
373 |
(129) |
(417) |
(350) |
(350) |
||
Profit Before Tax (norm) |
|
|
53,993 |
3,843 |
30,229 |
40,150 |
51,110 |
Profit Before Tax (IFRS) |
|
|
53,993 |
3,843 |
30,229 |
40,150 |
51,110 |
Tax |
(11,276) |
(753) |
(7,643) |
(10,037) |
(12,778) |
||
Profit After Tax (norm) |
42,717 |
3,090 |
22,586 |
30,112 |
38,333 |
||
Profit After Tax (IFRS) |
42,717 |
3,090 |
22,586 |
30,112 |
38,333 |
||
Discontinued businesses |
0 |
0 |
0 |
0 |
0 |
||
Net income (norm) |
|
|
42,717 |
3,090 |
22,586 |
30,514 |
38,333 |
Net income (IFRS) |
|
|
42,717 |
3,090 |
22,586 |
30,112 |
38,333 |
Average Number of Shares Outstanding (m) |
28.0 |
28.0 |
28.1 |
28.1 |
28.1 |
||
EPS - normalised and fully diluted (c) |
|
|
152.4 |
11.0 |
80.3 |
108.7 |
138.1 |
EPS - (IFRS) (c) |
|
|
152.4 |
11.0 |
80.2 |
107.3 |
136.3 |
Dividend per share (c) |
84.0 |
0.0 |
45.0 |
60.0 |
80.0 |
||
Gross Margin (%) |
32.0 |
28.2 |
28.7 |
29.0 |
29.0 |
||
EBITDA Margin (%) |
6.7 |
1.6 |
4.5 |
5.1 |
5.7 |
||
Operating Margin (before GW and except.) (%) |
6.2 |
0.7 |
3.9 |
4.5 |
5.1 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
31,844 |
43,269 |
38,037 |
37,797 |
35,557 |
Intangible Assets |
0 |
0 |
0 |
0 |
0 |
||
Other intangible assets |
1,152 |
1,100 |
1,045 |
1,045 |
1,045 |
||
Tangible Assets |
24,369 |
24,832 |
24,667 |
25,767 |
24,867 |
||
Right of use assets |
1,985 |
13,065 |
11,725 |
10,385 |
9,045 |
||
Deferred tax assets |
4,338 |
4,272 |
600 |
600 |
600 |
||
Current Assets |
|
|
105,631 |
89,812 |
127,771 |
147,038 |
171,934 |
Stocks |
11,456 |
11,271 |
20,559 |
21,739 |
24,396 |
||
Debtors |
53,039 |
38,775 |
63,589 |
67,238 |
75,456 |
||
Cash |
41,136 |
39,766 |
41,589 |
56,027 |
70,048 |
||
Other |
0 |
0 |
2,034 |
2,034 |
2,034 |
||
Current Liabilities |
|
|
(60,839) |
(51,118) |
(73,027) |
(85,368) |
(94,725) |
Creditors |
(59,209) |
(50,001) |
(71,877) |
(84,218) |
(93,575) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(1,630) |
(1,117) |
(1,150) |
(1,150) |
(1,150) |
||
Long Term Liabilities |
|
|
(13,688) |
(16,592) |
(11,789) |
(10,589) |
(9,506) |
Long term borrowings |
0 |
0 |
0 |
0 |
0 |
||
Lease liabilities |
(415) |
(12,089) |
(10,939) |
(9,739) |
(8,539) |
||
Other long term liabilities |
(13,273) |
(4,503) |
(850) |
(850) |
(967) |
||
Net Assets |
|
|
62,948 |
65,371 |
80,992 |
88,878 |
103,259 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
59,841 |
16,462 |
22,846 |
47,250 |
53,750 |
Net Interest |
751 |
(13) |
(417) |
(350) |
(350) |
||
Tax |
(10,318) |
(507) |
(6,414) |
(6,036) |
(10,278) |
||
Capex |
(8,178) |
(3,724) |
(3,465) |
(6,500) |
(4,500) |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
||
Pension contributions |
(3,593) |
(13,278) |
(4,589) |
(4,000) |
(4,000) |
||
Financing |
(2,567) |
941 |
(843) |
(800) |
(800) |
||
Dividends |
(20,659) |
0 |
(4,134) |
(14,026) |
(18,701) |
||
Other |
(1,687) |
(1,418) |
(1,109) |
(1,100) |
(1,100) |
||
Net Cash Flow |
13,590 |
(1,537) |
1,875 |
14,438 |
14,021 |
||
Opening net debt/(cash) |
|
|
(27,484) |
(41,136) |
(39,766) |
(41,590) |
(56,027) |
Net impact of disposals etc |
0 |
0 |
0 |
0 |
0 |
||
Other |
62 |
167 |
(52) |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(41,136) |
(39,766) |
(41,590) |
(56,027) |
(70,048) |
Source: company accounts, Edison Investment Research. Note: Historical figures restated to reflect expensing of share option and defined benefit administration charges.
|
|
Research: Investment Companies
Utilico Emerging Markets Trust (UEM) is managed by Charles Jillings at specialist investment firm ICM Group. He strongly believes the trust’s portfolio is undervalued and is encouraged by the recent earnings reports from the majority of UEM’s investee companies. The trust has generated robust absolute and relative performance compared with the MSCI Emerging Markets Index over the last 12 months. Jillings continues to invest for the medium to long term in companies with attractive business models and avoids short-term ‘noise’ in global stock markets. UEM’s dividend is more than fully covered by portfolio income and the manager says his confidence in the trust’s prospects is reinforced by the board’s regular repurchases of UEM’s shares.
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