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Imagesound
- BY: Andrew Hore |
- POSTED: 11/09/2007 |
In-store music supplier Imagesound’s interims show growth in underlying profits, but this has done little to boost the share price.
Imagesound isn’t helped by the fact that it reports losses because of its amortisation charge. At the interim stage it reported a loss of £556,000 but that was after a £963,000 amortisation charge and £65,000 of share option charges. The underlying profit was £472,000 and the strength of the business can be seen by looking at cash flow. The operations generated £505,000 of cash, up from £299,000 in the first half of 2006. Following the TSC purchase in July net debt is more than £7m.
Turnover fell from £3.9m to £3.5m but that is because customers are choosing to rent, rather than buy, equipment. Two-thirds of revenues are recurring so there is good visibility for the rest of the year and further ahead as contracts tend to last for three years.
Following the interim figures the finance director Ken Pratt bought 250,000 shares at 13.25p a share. That takes his stake to 1.93%.
Collins Stewart believes the company is set to make £1.4m profit this year. That excludes amortisation and doesn’t include the reorganisation costs for the TSC acquisition. The shares, at 13.25p, are trading on just over eight times forecast earnings for 2007. Profits are forecast to rise to £2.2m in 2008, which would put the shares on a prospective multiple of just over six.
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