Paul is taking a well earned break in the sun this week. Fortunately, with Paul’s help, we’ve managed to enlist Graham Neary, who is temporarily stepping in to take the reins. With Graham’s awesome analysis and the usual excellent community spirit here, it should be more or less business as usual! Thanks, Ben (at Stockopedia)
Plastics Capital (LON:PLA)
Share price: 117.5p (+0.43%)
No. shares: 35.6m
Market cap: £41.7m
Interim Results for six months ended 30 September 2016.
Plastics Capital is a collection of six subsidiaries, giving investors a challenge in terms of understanding each of the moving parts. But they are all related to plastic and/or packaging, so you might feel that if you understood one of them, you understood them all!
The company reports organic revenue growth of 6.7% at constant currency, and this would be my preferred measure of sales growth.
Within that, Industrial Division revenue is up 19.2%, "led by key accounts growth in bearings business". It's always worth checking for customer concentration risk when you read statements such as this! At first glance, Plastics looks to be reasonably well diversified: they sell to 80 countries and don't have any >10% customer at a group level, according to the 2016 accounts.
Those 2016 accounts remarked that the company's costs were denominated in a range of currencies, but the devaluation of Sterling still looks set to provide a healthy tailwind.
Net Debt: Increases to £15.1 million from £10.1 million during the six month period, driven by an acquisition, an internal investment program, and dividends.
Dividend: Interim dividend maintained at 1.46p. The company remarks as follows:
Because of the excellent organic growth opportunities we see, the Board now believes that our internally generated free cash flow should be allocated increasingly towards reinvestment in the business.
Outlook: Quite positive! A "healthy improvement" in the order books has been seen, and improved financial performance is anticipated for the second half. A five year plan is being executed.
My opinion: The accounts are very dirty since we have to contend with a lot of distractions from underlying performance: i) FX derivatives, ii) exceptional costs, iii) H1/H2 seasonality, iv) huge intangible assets and their associated amortisation costs, v) interest payments on the debt pile.
For the year ended March 2016, £3.8 million of net cash from operations was generated. In the latest 6-month…
