Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Norman Hay shows the way - confirmed yield of over 6% should be of interest

AIM quoted Norman Hay (AIM:HNN) came out with a reassuring set of results for the year ending 31st December 2008 with pre-tax profits up to £2.4m (2007: £2.3m). However, of greater relevance was final dividend of 2p making the total for the full year 4p.

I acknowledge that the dividend is down on the 4.4p from 2007 but with a share price of 62.50p (up 5% on the day) it still represents a confirmed yield of over 6%, comfortably covered.
The results were boosted by foreign exchange gains and the sale of a freehold site.

The Balance Sheet looks in reasonably good shape with net assets of £11.8m and net gearing of only approx 13% (2207:12%). Stripping out intangibles of £2.9m leaves net tangible assets of approx £8.9m and broadly the same as the current market cap of £9.2m.

Cash generation could have been better with higher inventory a notable drain on working capital. The current ratio was 1.95 (2007:1.8x) and quick ratio 1.45x (2207:1.46x)
Business can’t be easy at the moment and the results statement confirms that economic weakness in the group’s main markets has significantly affected trading in the first quarter of this year. However, they expect trading to improve in the second quarter as some of their customers will need to re-stock.

The Non Exec (or at least his wife!) clearly thought the shares represented reasonable value acquiring a further 5,000 at 63p to add to the 264,000 he had already.


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