11 January 2011 – trading update

An update on the year ended 31 December 2010 has been provided. Results for the full year will be slightly behing management expectations due to pressure on public sector volumes and the extreme weather towards the end of the year. However, net debt remains in line with expectations and earnings per share had been predicted to be at least 24p by analysts, which means that the shares still trade on a remarkably low multiple. The dividend of 11.4p looks likely to be maintained, translating into a yield of 9.7% at the current share price, which should offer support. The company is fully listed and with a market capitalisation of under £50m the pool of potential institutional investors is fairly limited, which may well depress the share price. Selling in the immediate future may force the price even lower but over the medium to long term the business should deliver strong returns. BUY.