Quarto Group describes itself as 'the world's leading international illustrated non-fiction book publisher and distribution group'. A brief look at the financials suggests that the shares at 163p represent good value. The market cap. is £32m and they pay a dividend of 5%. The historic p/e ratio is 6.3.
Revenue at the half-year was a tad down, but the interim dividend has been maintained and a recent trading statement suggests that the group is on track to meet market expectations for the full year.
The business is highly cash generative, and boasts a NAV of 260p per share, although if you strip out the goodwill and intangibles this falls to -265p and the group carries significant debt.
Whilst I like the cash generative nature of the business, the high levels of debt may be a deterrent for me. However, it should be noted that the business has implemented a progressive dividend policy since 1998, and the debt clearly hasn't caused any issues to date. In the interims they also state their intention to bring down their levels of debt, "importantly we are clearly bringing down our debt levels and shall continue to do so.", and recent asset sales would provide further confirmation that they are making steady progress in this area.
On the face of it Quarto looks like a pretty secure income play. We shall see.
Next up is Tandem, a company that I have looked at several times, but have never invested in. Rightly or wrongly I associate this company with middle aged men trying to regain their youth and vitality by donning ludicrous lycra outfits and buying expensive biking gear, and then cluttering up country roads on Sunday mornings and generally getting in the way (Just joking - I don't want to alienate half my audience!!).
Anyway back to the statistics. Tandem is valued at just over £3.5m, and currently boasts a yield of about 4%. It has a single digit p/e ratio of 5.4 and, the shares at 79p, are just above net tangible asset value.
The recent trading statement was a bit of a mixed bag. Revenues were slightly behind last year's, but operating profit for the full year has improved and they are confident that operating profit can be improved again in 2014 whilst they reduce debt levels. Against this are competitive pressures that are squeezing margins.
It doesn't necessarily appeal to me, but then again it could prove to be good value in the longer term.
Finally, Walker Crips, the investment and wealth management services group. At first sight this appears to have made the value portfolio based on the disposal of Walker Crips Asset Managers Ltd ("WCAM") fund management
subsidiary in April 2012 which realised a one-off gain of in excess of GBP11.7m and which helped the group deliver record pre-tax profits of GBP9.1 and pay a special dividend of 7.5p.In fact they actually made an operating loss of £2.3m without the exceptional gain and the dividend payment was 1.37p. Based on a current share price of 44p, the dividend yield is actually around 3%.
At this year's half-year the company have made a small operating profit of £263,000. There was also a further exceptional gain from the disposal mentioned above. The interim dividend has been increased by 8.5% and the recent interim management statement is encouraging. It indicates further improvements in trading with like for like revenues increasing by 16.3%. The Group remains in a strong financial position with more than GBP10 million of net cash on its balance sheet.
They sound cautiously optimistic about the medium term.
Anyway, that concludes my summary of all of the shares included in the value portfolio and I'll review it's performance against the FTSE-all share index every six months or so.
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