When he returns to London, Paul will be meeting MySale (LON:MYSL), and I am also planning to cover their trading update from last Friday, later today.
Flowtech Fluidpower (LON:FLO)
Share price: 124,6p (-7%)
No. shares: 43m
Market cap: £54m
There's a disconnect between the tone of this announcement (positive) and the share price reaction (negative), because I think the profit guidance is actually a miss against market expectations.
Somewhat strangely, the company says that it is planning a 5% dividend increase, which is "in line with current market expectations" - but it doesn't say that the profit guidance is below market expectations!
Against difficult trading conditions the Group has delivered a solid performance.
Group revenue was c.19.9% up on 2015 at approximately c.£53.7 million (c.19.3% in constant currency)
The GBP devaluation looks to be culpable:
"...some margin contraction was experienced in H2 while prices were managed upwards on products sourced in Euro and USD and sold in GBP markets.
Checking last year's annual report, I see that Benelux revenue was c. €5 million, versus £30 million in UK revenues. And the underlying operating result from Benelux was less than 10% of the UK result. I'm not sure how this has changed since then, but there is a lot of GBP exposure here.
Significant investment in central and sales resources aimed at optimising cross channel opportunities, and future acquisition integration programme underpinning long term growth.
As a result of these investments and the gross margin contraction in H2, the Board expects underlying* PBT will be in the range £7.0m to £7.2m.
According to the forecasts available to me, £7.6 million was the consensus forecast here. So it's a miss.
The company also announces the acquisition of a Shropshire-based hydraulic equipment distributor for total consideration (including debt assumed) of £2.65 million. There are said to be "several acquisition and product opportunities being actively pursued".
My opinion: More important than the valuation here, for me, is…
Disclaimer:All my own views. I am not regulated by the FSA. No advice.