6 September 2016 – interim results
The group has announced its interim results covering the six months to 30 June and these have revealed a slight decline in revenues to £24.3m (2015: £25.1m) reflecting the ongoing transition into higher margin design led activities and lower activity in the traditional electrical assembly business. This has resulted in an increase in gross margin to 24.1% from 21.6%. Adjusted pre-tax profits rose 14.3% to £1.6m (2015: £1.4m) with earnings per share on the same basis declining to 3.7p from 4.2p due to an increase in the number of shares in issue following the equity issue in August 2015. The interim dividend was increased to 0.95p (2015: 0.90p). Net debt at the end of the period reduced to £3.5m from £5.9m a year earlier and from £4.7m at the end of December. These were solid results with the technology business now accounting for 57% of revenues compared to 49% a year earlier and Stontronics, which was acquired last August has now been fully integrated and is performing well. Although the loss of a large customer is clearly not good news the group has managed to increase its order intake and with the higher margin technology business continuing to increase its share of the business the outlook is promising. The fall in the share price takes into account the reduced expectations, which will still see growth but at a lower level than expected, and we re-iterate our recommendation of BUY.