ALF8 Sep 2011 13:11
Financials
APIS reported a pre-tax profit for the full-year ended 31st December 2010 of £0.72 million, up slightly from £0.69 million a year earlier, on revenue 16% ahead at £1.51 million. On the balance sheet there was no debt, current assets exceeded current liabilities by £0.94 million and net assets came in at £1.01 million.
For the year ended 31st December 2010, ICP delivered turnover of £1.52 million (2009: £1.54 million) – of which clients representing in excess of 75% of this have committed their cover for a three year period - and pre-tax profits of £1.32 million (2009: £1.33 million). On the balance sheet, there was no debt, with net assets at £4.88 million.
While revenue and profits for the current year are expected to be lower than the comparable period a year earlier at APIS - due to investment in personnel and infrastructure - they are in-line with expectations. It is expected that the profile of admission will lead to the opportunity to win new clients.
Assessment
Both businesses in the group are highly efficient, only taking a few members of staff to run them. As such they are also highly profitable, delivering excellent margins. On a historical basis the two firms made combined net profits of around £1.83 million in 2010, thus, at the current market cap the earnings multiple is just 6.25 times. For a business with a solid balance sheet, extra funding from the IPO and a clear growth strategy that looks like a good price to us. Buy.