Good morning! Interim results from Plastics Capital (LON:PLA) look OK. Turnover is up 4.1% to £16.4m for the six months to 30 Sep 2013, and adjusted profit before tax is down 4.9% to £1.7m. That strips out £559k goodwill amortisation (which is fine, goodwill & the related amortisation should be completely ignored in my opinion). So in this case I can go along with their adjusted EPS figure, which is 5.4p (versus 5.5p prior year H1). There are various other costs which are adjusted out, including foreign exchange translation, derivative gains/losses, and exceptional items. These are non-trading items, so I accept that the adjusted profit figure gives an accurate view of the underlying performance of the business.

Net debt is a little higher than ideal, but it has reduced a little to £8.1m (down from £8.6m a year previously). The company comments that a decision was made to make £1m in capex to increase capacity, which seems a sensible move at this stage in the economic cycle - i.e. to gear up for recovery.

A recent acquisition in China was funded through a small Placing, and this has not yet impacted results, but the narrative sounds positive about their Chinese operations, where surprisingly they state that this now makes them the no.1 maker of creasing matrix, and gives them a management infrastructure in China.

The all important comment about the whole year's outlook says;

 

The Board expects the Group to trade in line with expectations for the rest of the year.

 

Stockopedia is showing 11.4p normalised EPS as broker consensus for the current year, so that puts them on a fairly modest PER of 10 times (with the share price at 113p). That's a reasonable price, but remember that net debt is nearly 27p per share, so on a crude basis (i.e. without adjusting earnings for interest cost) that would take the PER up to about 12.3 on a cash/debt neutral basis - still actually quite reasonable, so I could see some further upside on the current share price - it's not difficult to imagine that these shares might rise to say 130-150p in the next year, if progress continues. That's probably not exciting enough upside to entice me in, but in a generally expensive market these shares look reasonable value.

Note that the…

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