Ferret's Stock to Watch: CORPORATE EXPRESS AUSTRALIA LTD 08:09, Friday, 9 February 2007
A YEAR OF CONSOLIDATION AND BETTER RETURNS TO SHAREHOLDERS
Sydney - Friday - February 9: (RWE Aust Business News) ******************************************************
OVERVIEW ********
Shareholders of Corporate Express Australia (ASX:CXP) have been rewarded for more than a decade as directors guided the company into expansion and a string of profits and increased dividends.
Yesterday the company reported a modest rise in net profit and increased dividend while at the same time announced a $50 million buyback of ordinary shares.
The buyback is expected to result in higher earnings per share and return on equity.
The company, Australia's leading single-source distributor of office and business supplies, has long been a Ferret favourite, especially in the dividend department.
Dividend for the year goes up to 21.5c a share, showing a 19.4 per cent rise on the previous distribution.
Net profit for the year to December 31 was $67.6 million against $66 million for the comparable period in 2005.
The latest earnings was achieved on revenue of $1.24 billion, up 7.8 per cent on the previous year.
EBITDA rose 5.8 per cent to $112.9 million while earnings per share rose to 36.6 cents per share.
The company bought five new businesses during the year while organic growth increased 3.1 per cent.
Corporate Express managing director Grant Harrod said that 2006 was a year of consolidation with the focus on strengthening the business to create a stronger platform - realigning internal operations to improve efficiencies and enhance customer satisfaction levels.
"In 2006 we recorded another year of steady top-line growth notwithstanding it was the period in which we transformed our business," Mr Harrod said.
"Corporate Express successfully implemented a number of significant strategic initiatives during 2006.
"In particular, during the past 12 months we implemented Project OneSource - a major business efficiency restructure program - and undertook significant capital management initiatives.
"Corporate Express was reorganised from a decentralised geographic operating structure to a centralised one which is now aligned by operational functions to improve the operating efficiency and growth leverage of the business," said Mr Harrod.
SHARE PRICE MOVEMENTS *********************
Shares of Corporate Express yesterday jumped 50c to $6.30. Rolling high for the year is $6.58 and low $4.75. All-time high is $6.75. Dividend is 21.5c. EPS is 36.6c while the previous p/e ratio is 17.6. The company has 184.4 million shares on issue with a market cap of $1.16 billion.
Meanwhile the other major development for the company is the $50 million buyback, representing approximately 5 per cent of its issued share capital, through an off-market buyback tender.
It has been considering further capital management initiatives following the increase in the dividend payout ratio to 65 per cent.
Corporate Express has minimal debt and strong cash flows which support this buyback.
The off-market buyback is expected to benefit all shareholders in Corporate Express whether they choose to participate or not.
For participating shareholders the after-tax return from the buyback may be greater than the after-tax return from selling their ordinary shares on ASX and, for shareholders who do not participate, the buyback is expected to result in higher earnings per share and return on equity.
Under the buyback tender process, eligible shareholders may offer to sell some or all of their ordinary shares at discounts of between 5pc and 14pc inclusive (at 1pc intervals) to the market price, or as a final price tender.
The market price will be calculated as the volume weighted average price of Corporate Express ordinary shares traded on ASX during the five trading days up to and including the closing date of March 30.
In new strategy developments, Leading Edge is an electronic commerce (ECR) interface software which communicates directly with the ASIC database.
Leading Edge utilises the internet for information transmission and retrieval which allows for instant document lodgement to ASIC.
Corporate Express was the first company to conceive, design, test and implement a software package that integrated with ASIC's new ECR software for company incorporation.
The company claims it still leads the field in this fast-growing field of software development.
Meanwhile Cedric is a new initiative Corporate Express has put together to try and make incorporating companies as quick and as easy as possible.
Cedric is a desktop company incorporation application which can be installed on office computers.
Cedric can also keep track of documents with its powerful built-in document handling system.
These are just some of Cedric's many skills.
Then there is Alex, the company's revolutionary secretarial software.
Alex can handle everything from incorporating companies, trusts and superannuation funds with a correct and elegant register to more complicated tasks such as capital restructures and voluntary liquidations.
BACKGROUND **********
Corporate Express joined the stock exchange list in January 11, 1995.
The company was established in 1988 and has developed into a high-tech company with a broad client base providing registry compliance for private and non-listed public companies.
Corporate Express specialises in company incorporations, trusts and company secretarial services.
The company pursues the value of customer service and works on accuracy and efficiency of work.
At Corporate Express the company has an indispensable resource to accountants, solicitors and business seeking excellence in corporate secretarial services.
The company believes it is expert in the introduction of new products in the corporate secretarial industry.
Corporate Express specialise in providing corporate secretarial services to accountants, solicitors and both small and large businesses either by the direct supply of incorporations and company secretarial services or by administering clients' companies.
