The Investment Column: Filofax's planning under question

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Faint praise was the best Filofax could muster from analysts for its full-year results yesterday. The market was understandably wary, given the personal organiser group's profits warning last July, just five weeks after an upbeat trading statement.

True, the reported figures to March were pretty awful. Pre-tax profits dropped 10 per cent to pounds 5.9m on underlying sales down 3 per cent to pounds 36m - this in a market growing at some 8-10 per cent a year. However, most of the damage was in the first half - when profits fell from pounds 2.9m to pounds 2.0m. To blame were French strikes, a cut in orders from WH Smith and failure to tempt discerning Swedes to buy Filofax's cheapie organiser, Microfile. The second half was better, with profits bouncing back to pounds 3.9m. That, plus strong cashflow and the promise of a pounds 2m share buy-back, cheered the market and Filofax's share price ended 4 per cent up at 141.5p.

But concerns remain. One is that management has been slower moving than its markets. Filofax is only now revamping its binders - in this season's citrus shades - to attract key 16 to 24 year-old customers. A year ago its emphasis was on housewives.

Chief executive Robin Field has a point when he says there is still a market for paper organisers, even in the electronic age, but whether customers remain willing to pay a premium for what looks like a commodity item is uncertain.

Meanwhile, far-flung Filofax is vulnerable to the vagaries of world markets. Hoare Govett is sticking to its profits forecast of pounds 6.5m for this year. Ten-times forward earnings sounds cheap and the management reorganisation is welcome, but investors should wait until the prospects are clearer.