Background and Preamble

MPAC (LON:MPAC) was previously known as Molins plc, but changed its name when it divested its cigarette packaging business. It used some of proceeds for an acquisition thereby strengthening its position in the provision of high-speed packaging solutions focused on the non-cyclical Pharmaceutical, Healthcare, Food and Beverage markets. Historical contract issues have been resolved, trading has recently been very strong, and they continue to hold cash ready to deploy on further acquisitions.

With so many serious investors now subscribing to Stockopedia, a company's StockReport™ can be considered a form of "outside view". Therefore, however well I think I know a company, I still regularly check it on Stockopedia both as a sanity check and to see how it is likely to be perceived by other investors. This article explores what is behind MPAC's StockReport, with a focus on quantitative rather than qualitative aspects, and considers how its StockReport is likely to evolve in future. It is aimed at readers with a moderate level of experience of Stockopedia.

At the time of writing I hold a small-medium sized long position in MPAC.


Balance Sheet

Market Cap: £70.0m, Enterprise Value £65.5m. This suggests the company has net cash of £4.5m which sounds good, but I see that it has a mediocre Health Trend (score: 4) and in particular a high Bankruptcy Risk (score: 1.62).

Looking at the H1 2019 balance sheet I see cash of £10.5m, debt of £0.9m and a deferred acquisition consideration of £2.6m due in 2022. They have a £29.3m accounting surplus in the UK pension scheme balanced with £11.9m of associated tax liabilities. In the US pension scheme there is a deficit of £6.2m. Liquidity is good as measured by the ratio of current assets to liabilities. Operating cashflow in the six months was negative at -£5.7m due mostly to a large increase in working capital and there was £1.2m of capital expenditure. They have a £10m undrawn borrowing facility in place. I can't see anything about cash seasonality.

On this basis I would put net cash at £7m (10.5 - 0.9 - 2.6), with the caveats that this may have declined since the year end due to working capital requirements and that they continue to pay into both pension schemes (about which more later).

Health Trend

I see the company fails…

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