23 October 2019 – trading update

A trading update has been provided for the nine months ended 30 September 2019.  Since reporting interim results in September the business has proved resilient in difficult market conditions.  Organic growth for the year to date has been 1.8%.  Overall revenue growth in the first nine months was 4.3%, with the balance coming from the full period impact of the Balu businesses which were acquired in March 2018.  Gross margins and costs also remain consistent with previous reports.  Net debt at 30 September 2019 was £19.1m with net cash generated from operating activities (after accounting for tax paid) in the third quarter being £3.9m.  The company is expected to be cash generative in the fourth quarter.  The short-term focus is on the delivery of sustained operational improvements, procurement benefits and wider synergies.  Detailed plans to achieve these savings are currently being finalised, with the main phase of implementation beginning in early 2020.  Improved profit and cash performance should follow.  We rate the shares as a LONG TERM BUY.