18 October 2018 – trading update
The group has issued a trading update following the end of its financial year on 30 September and this has revealed that whilst revenues will be much in line with expectations at around £22.3m, lower profit margins mean that pre-tax profits will be £4.5m before exceptional litigation costs. This is below expectations of around £5.6m. Earnings per share are likely to come out at around 24p and the dividend is likely to be raised to 18p as the company has considerable cash balances of £14.6m at the year end. These represent about a quarter of the company’s value following the fall in the share price. The lower margins are due to the introduction of new designs and production techniques although the group is addressing this issue to bring margins back to more normal levels. The fall in the share price has presented investors with a buying opportunity in our view. BUY.