Friday, 31 October 2008

Communisis benefits from financial crisis

(By Richard Holway) As I wrote in my 28th Feb 08 post – Garden starts to bloom for Steve Vaughan at Communisis - I share a passion for gardening with Steve Vaughan. Indeed we have both opened our Surrey gardens for the National Gardens Scheme. But my friendship with Steve started when he took on Synstar (the old Granada Computer Services). He turned a “bit of a basket case” into a highly valued IT services company and tripled the share price in the process when it was bought by HP in early 2005.

Continuing the ‘basket case’ theme, in Mar 06, Vaughan was headhunted by Kevin Lomax to head up Misys’ Banking operations. It all went spectacularly wrong with Vaughan leaving after just three weeks quoting “material differences”. Not that difficult with Lomax, I have found! It was Vaughan, not Lomax, who came out of this episode with his credibility intact.Vaughan then, in late 2006, joined print/direct mail company Communisis – which if not another ‘basket case’ had “overpromised and underdelivered” for many years. Being the good gardener that Vaughan is, he didn’t promise an instant makeover. Instead he pruned and replanted – I’m sure he spread some manure at various points too!

Yesterday Communisis issued its IMS which said “The Board is pleased to report that the Company continues to trade comfortably in line with the market's profit expectations for the full year. We have noted some change in our revenue mix this quarter. We are experiencing notable growth in our Transactional Print and Cheques businesses, driven by increased account activity at our banking clients and the implementation of the Consumer Credit Act 2006”.

Indeed, Communisis seems to be firmly in the category of companies that are actually benefiting from the current financial turmoil. Investors are changing banks to seek security; even opening multiple accounts to keep under the £50,000 guarantee limit. This all requires lots of extra printing, new cheque books etc. The Consumer Credit Act 2006 requires bank statements to carry more information. Every extra page printed is more money in Communisis’ pockets.

All this sent Communisis’ shares up 11% to 45p yesterday; albeit still 50% off a year back.

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