18 October 2010 – acquisition/trading update

The group has announced the acquisition of the Hydratron group of companies for £3.3m, with £2.5m paid on completion and £400,000 to be paid in October 2011 and 2012.   Hydratron produces high pressure hydraulic pumps, gas boosters, power packs and other equipment which are mainly supplied to the oil and gas industries from manufacturing facilities in the UK and USA.  It also has a distribution company in Australia and third party distributors elsewhere.  The group has also announced a trading update confirming that results for the year to September 2010 should be in line with expectations, although a slowdown has been seen in orders for deep water projects.  Receipt of firm orders by December 2010 will be key if the group is to meet market expectations for the full year.  We reduce our recommendation to HOLD.