Bottom Line: IBC faith rewarded

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The Independent Online
INTERNATIONAL Business Communications could do worse than use its own shares, up 15p yesterday to 201p, to advertise one of its best-known publications, the Penny Share Guide.

At one point, following an ill- conceived plan to buy in 40 per cent of the company's shares and gear up massively just before interest rates soared in 1989, the shares did actually fall to 1p.

Even accounting for a share consolidation last year (part of a third, and hopefully final, financial reconstruction of the conference organiser and publisher) the shares have risen tenfold.

Shareholders who stumped up for a rights issue at 90p have been amply rewarded for their faith in the underlying strength of a cash- generative business unable to cope with a self-inflicted debt burden.

Yesterday's rise reflected the market's relief that last summer's reduction in IBC's debt from pounds 76m to pounds 14m has put it back on an even keel. A return to the dividend list after three years was a welcome show of confidence.

A valiant attempt by IBC to create some order out of the confusion Professor Tweedie's new reporting standard has generated was appreciated but in practice the only important figure to emerge from the 1993 results was a 23 per cent advance in operating profits to pounds 7.5m.

That showed that, the Netherlands apart, trading conditions are easing. Conferences and publishing are performing well and the introduction of new products from a newsletter covering the oil and gas industry in Vietnam to a screen-based service on US mutual funds will proceed.

Williams de Broe, the house broker, expects profits this year of pounds 7.25m and earnings per share of 15p. That puts the shares, despite their recent strength, on an undemanding prospective price/earnings ratio of 13. Good value.