22 August 2018 – interim results
The packaging group has announced its interim results for the six months to 30 June and these have revealed a 15% increase in revenues to £15.6m (2017: £13.6m) whilst adjusted pre-tax profits rose to £478,000 (2017: £364,000). Adjusted earnings per share rose to 2.0p (2017: 1.1p) helped by a lower tax charge. It is pleasing to see an increase in revenues and profits with higher sales due to improved trading with existing customers and new business in both Poland and the UK. Net borrowings at the end of the period were £6.5m (31 December 2017: £6.5m) after spending £2.1m on capital investments on plant and machinery. The interim dividend is maintained at 2.5p. The second half will see borrowings increase as further capex of £3.3m is undertaken but this should result in further revenue gains although these may not be seen until next year. The group is looking to sell surplus property in Chesterfield although current market conditions are not particularly attractive and so it now seems that any sale will not be concluded for at least 12 months. Long term prospects at the group remain encouraging but there is little in the short term to entice investors – we therefore move our recommendation to HOLD.