3 December 2013 – interim results
Although the results for the year to 30 September were disappointing the share price reaction looks a little harsh, falling 4p today. Revenue for the period was 15% higher at £13.3m (2012: £11.6m) although adjusted pre-tax profits fell to £204k (2012: £855k). Earnings per share on the same basis were 0.61p (2012: 2.07p) although as a sign of confidence in the future, the interim dividend was raised by 30% to 0.13p (2012: 0.1p). The group has invested heavily in its future, with operations now established in the US and China and requests for quotations from customers are at record levels. The sale of Redman Fittings since the period end will allow the group to focus on core activities and, although the UK market remains weak, the group is well positioned to benefit strongly as economies improve. Although the house broker has reduced this year’s profit forecast to just £0.4m at the pre-tax level from earlier expectations of £1.3m, the next year to March 2015 could see profits recover to £1.6m for earnings per share of 4.1p. These forecasts could easily prove conservative if some of the quotations result in decent levels of business and/or the economy picks up. We therefore maintain our recommendation of BUY.