News blog

Tangent Communications

  • BY: Andrew Hore |
  • POSTED: 01/11/2011 |

Tangent Communications is improving its underlying operating margins, which means that profit is growing even though revenues are lower in the six months to August 2011.

The digital printing and direct marketing company reported a fall in revenues from £11.8m to £11.1m. Pre-tax profit improved from £702,000 to £938,000, although that is flattered by a £154,000 restructuring charge in the corresponding period. Stripping out restructuring charges in the first half of last year, the profit is still 10% higher.

There has been a growing demand for printed products online and for web development services but there was no repeat of the revenues generated from General Election work which accounted for more than £1m. Operating margins have improved from 7.3% to 8.6% because prices rose and costs were pared back.

Tangent has launched printed.com and this will be its ongoing online operation. Advertising for the site is running at a rate of £300,000 a year.

The digital operations have been merged under the name Tangent Snowball. Investment in an e-commerce platform is running at £250,000 a year and this has not been capitalised.

Design and print revenues edged higher even though the estate agency market was flat.

House broker Collins Stewart forecasts a rise in full year profit from £1.35m to £1.55m on flat sales of £22.4m. A further improvement in profit to £1.9m is expected in the year to February 2013. The broker also believes that the cash generative nature of the business means that it will have net cash of £2.2m at the end of February 2012 and £3.3m at the end of February 2013.

At 5.62p a share, Tangent is valued at £9.93m. The shares are trading on nine times 2011-12 prospective earnings.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFOctober2011_25.pdf

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