Wellcom Group Limited (ASX: WLL) recently released its 2015 full year results. Here's what you need to know.
Wellcom is a provider of advertising and marketing content production and content management services in Australia, the United Kingdom, New Zealand, Asia, and the United States. The company's services include design, artwork, and retouching; content management; digital photography; television production; digital print, and computer to plate production. The company also offers software for content creation and digital asset management.
Wellcom's 2015 full-year highlights included:
- Group revenue up 28% to $115 million
- Operating margins fell slightly to 20% on a net revenue basis
- EBITDA from continuing operations up 24%
- EBIT from continuing operations up 22%
- NPAT from continuing operations up 14%
- Earnings per share up 14% to $0.25
- Final dividend $0.12 cents, 100% fully franked, payable on September 18, 2015, dividend payout ratio 82%
So what
The increase in net revenue was driven by a full year contribution from the Lab, following its acquisition in March 2014, together with organic growth in the Australasian and UK markets.
New business wins in Australia during the year included Stockland Corporation Ltd (ASX: SGP), Kmart, Target, Coles (operated by Wesfarmers Limited (ASX: WES)) and Super Cheap Auto and Freedom Furniture. New business wins in the UK included BASF, Canon and Leagas Delaney, with the US business adding Tempur Sealy and Chico's to its client roster.
In commenting on the result, Mr Wayne Sidwell, Executive Chairman of the Wellcom Group said, "We are extremely pleased to report a result reflecting a 14% increase in earnings per share.
The demand for high-quality visual content continues to grow, with the speed at which brands can produce this content playing a significant role in their success. Wellcom's expertise is in ensuring our clients' content is delivered in the right context, with speed, accuracy and consistency. The business is well positioned for future long-term growth, with the ability to service global customers in all leading consumer markets".
What now
Wellcom expects to continue the group's recent success, anticipating full year EPS growth in FY16 of around 10%. Contributory factors will be organic growth from existing customers, full year contributions from recent contractual wins, and the acquisition of Dippin' Sauce LLC announced on 2 July 2015.
Wellcom will continue to pursue complementary acquisitions that would augment both the geographic and production capabilities of the business. The company remains confident that it has built a strong base from which to deliver increased shareholder returns over the longer term.
Verdict
There's a lot to like about Wellcom:
- In the past 5 years its earnings per share (EPS) have been growing and forecast to grow
- In the past 5 years its dividends per share (DPS) have been growing and forecast to grow
- Its return on equity (ROE) has averaged around 15%, and it has little or no debt
- It is generating loads of free cash flow
For me, Wellcom ticks a lot of boxes and has a positive outlook. This is certainly one to add to your portfolio.
