Good Growth Potential, High Yield

Office2Office   Good Growth Potential, High Yield office2office, the leading supplier of office supplies and business services in the UK, announced a 1H2013 trading update on 2nd July 2013 Management reiterated that although the office products market is in decline, other divisions are performing well and new initiatives should improve margins. While 2013 underlying profit will be below expectations, net debt has reduced since year-end. · Despite lowering our 2013 numbers, we believe o2o will return to growth in 2014 as contract wins and efficiencies come through. We therefore feel the shares remain undervalued, trading on a 2013E adj. P/E of 3.6x and offering a 2013E yield of 13.0%. Buy. Click to Download Full Report Table: Financial overview Year to 31st Dec. 2011A 2012A 2013E 2014E Revenue (£m) 193.5 227.3 242.1 251.0 EBITDA1 (£m) 10.8 9.7 8.7 10.7 PBT 1 (£m) 8.4 6.5 5.7 8.0 Basic EPS 1 (p) 20.7 13.4 12.5 17.5 Dividend (p) 11.4 7.2 5.8 6.2 Source: GECR and company Notes: 1 Adjusted for exceptional items and non-cash charges. Buy Target price 104p Key data Share Price 44.5p 52 week high/low 156p / 44.5p Primary exchange LSE EPIC OFF Shares in issue 36.31 m Market Cap £16.16m Sector Support Services Valuation Dividend Yield 13% 2013 P/E 53.6 2014 P/E 2.5 NAV £19.5m Important: All disclaimer information can be found on the last page of the document

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