21-06-2004 - Printing.com - Full year results showed - Hardman & Co
Full year results showed sales of £9.3m and profits of £940,000, compared to the forecast in our February research note of £9.47m sales, £938,000 profit. The split between wholly owned and franchised operations was very much as we expected, and the only significant point of difference was the tax charge, 37% against the 30% we expected, leaving fully diluted eps at 1.43p compared to our 1.6p forecast.The results were good. The company pushed through some huge structural changes last year, shifting from a wholly owned store chain to being a franchised system at the same time as it moved its central printing hub and doubled its printing capacity. This involved some risks, but Printing.com has come through these with a balance sheet well under control, because gearing at 50% is lower than at the halfway stage, and there was no noticeable disruption to output caused by the hub move.
For the current year, the Territory Franchise chain will be operating at least four times as many trading days as in the year just finished. Bolt-On Franchise days will also be up. Wholly owned store trading days will be about 20% fewer than last year (we think), and the end result will be a group that in 2004/5 is far more of a franchise store group than a conventional managed one.
The company thinks that cash flow is likely to track profits more closely from now on, and our analysis has come to the same conclusion. We look for a profits increase of about 70% this year, eps that could double if the tax charge reverts to 30%, and a much lower debt figure.