2 August 2016 – trading update and acquisition
The group has announced that it is expanding its product offering through the purchase of Triple Six Limited, a specialist designer and distributor of several ranges of hydraulic cylinders and semi rotary actuators to a wide variety of industries. The purchase is costing £1.1m in total although £0.35m relates to cash balances held by Triple Six. The group has also announced a trading update for the six months to 30 June and this has revealed an increase in revenues to £27.4m (2015: £21.4m) reflecting growth across the group. Acquisitions have been integrated as expected and margins remain resilient. Net debt at the period end was £14.1m, in line with expectations. The group remains confident about its future prospects although the weakness in sterling following Brexit has caused some uncertainty and as a result the profits for the year are now expected to be a little less than previously expected at £7.6m (as opposed to £8.0m) for earnings per share of 14.2p (14.9p). With a dividend of 5.5p expected for a yield of 5.1% we believe recent share price weakness means the shares are a BUY.