CSS' stellar performance
Article Date: Sep 19 2002CSS Stellar's shares may have taken a battering over the past six months or so, but sales are booming and profits are likely to soar as the group's 'earnings-enhancing' acquisitions begin to pay off. Leslie Copeland reports.
At the interim stage CSS, which is carving out a niche in the sports/entertainment management and marketing sector, improved sales to £17.8 million (£6.7 million) and pre-tax profits (before amortisation) to £1 million (£770,000). Profits would have been significantly higher but for various one-off exceptional charges. Most of the rise in sales is due to the contribution of PFD and GEM, two recently acquired ventures.
Since the turn of the year the group has been busy on the corporate front. It has completed a £9.5 million fundraising and expanded its operational base by splashing out £3.45 million for Craigie Taylor International, acquiring Vertical Mix Marketing for £278,550, and Backporch, which cost £100,000.
After the year-end, it acquired Toronto-based Echo Group – a 'full-service provider of marketing and advertising services' – for an initial £4.13 million. In July it picked up JR Financial Services for an initial £10,000 in cash and the provision of financing facilities of up to £975,000.
According to chief executive Julian Jakobi, all of these acquisitions will prove to be earnings enhancing. He is confident of leading the business to full-year sales of around £40 million and pre-tax profits (before amortisation of goodwill and exceptionals) of about £5.3 million.
This confidence does not seem misplaced because this once-tiny company now boasts a global management and marketing business that represents over 1,000 sports and entertainment talents and more than 40 blue-chip clients.
Even more alluring, perhaps, is the fact that, despite all this activity, CSS still has cash balances of around £3.4 million and is trading on a p/e of just over 5 for this year.
The shares today moved up 2p to 108.5p, valuing the group at £27.4 million. Many consider this to be cheap.
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