Boomerang Plus

While continuing to expand organically, Welsh TV producer Boomerang remains on the hunt for acquisitions and expects to complete ‘one or two’ by the end of the calendar year.

Boosted mainly by growth in advertiser-funded programming (AFP), profits before tax and exceptionals climbed 15.2% to £1.1m in the six months to November, as sales increased 9.4% to £11.8m. Finance director Mark Fenwick says, ‘AFP grew by about 180%, admittedly from a small base, and we hope for similar good growth in the future’.

TV channels appreciate AFP's cost-effectiveness and Fenwick says that, because of this, AFP could provide resilient growth in the downturn. During the first half, Boomerang's significant AFP commissions included programmes such as the ‘Sony Ericsson B-boy Championships’ and ‘Sony Playstation GT Academy’.

Furthermore, with programming commissioners being ‘more risk-averse’ in the current climate, Fenwick says re-commission rates are higher than usual and he confirms that ‘about 70%’ of the company’s work continues to be given the green light. Work in progress includes numerous shows for Channel 4, including series seven and eight of ‘Freesports on 4’, and for its Welsh arm S4C, such as long-running doctor-drama ‘Teulu’.

With Boomerang's coffers still brimming with £4m cash – down from £6.3m at the beginning of the period as the company expanded its post-production facilities, paid off acquisitions and remaining debts – management remain keen on acquisitions. And although he must stay tight lipped over the details, Fenwick says, ‘We’re still in talks with a number of companies.’

On full forecast earnings of 17.3p, the shares, down 60p from our last recommendation, look cheap as chips. Hold on.

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