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Danka Business Systems - Spectacular gross margin recovery

September 2002

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • DNK
Danka Business Systems, the distributor of photocopier and other office imaging equipment, has announced an encouraging start to its financial year.  In line with its strategy to exit unprofitable areas, turnover reduced by 16% to £237.9m, but underlying operating profit increased 67% to £10.2m in the three months to June. The key ratio to watch was gross margin, which increased from 35.4% at the end of 2001 to 38.6%. In the fourth quarter of 2000 it was just 31.4% and this improving trend makes a huge difference for a company expected to make sales of over £1 billion this year.  Danka has also won two new contracts worth a combined $23m to supply Pitney Bowes Management Services and Cendant.    ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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