Good morning!

Today we have in line with expectations updates from Hotel Chocolat (LON:HOTC), Premier Foods (LON:PFD), DX (Group) (LON:DX.), Strix (LON:KETL), Bloomsbury Publishing (LON:BMY) and Team17 (LON:TM17).

So I intend to focus on MPAC (LON:MPAC), which issued a profit warning, and on Headlam (LON:HEAD). Paul has also written a section on Cloudcall (LON:CALL).


  • Share price: 145p (-34%)
  • No. of shares: 20 million
  • Market cap: £29 million

Half-Year Trading Update

I have previously described this as "a pension fund with a small operating business attached".

It traded under the name "Molins" and was traditionally associated with the tobacco industry, but sold its tobacco division in August last year.

What is left is a packaging machinery business focused on the pharma, healthcare and food & beverage markets.

Today's news

"...the business climate has softened considerably as the year progressed, attributable in part to general economic as well as Brexit related uncertainty, leading to customers deferring machinery investment decisions. The Board believes these contracts will be delivered in future financial years."

Many small-cap investors will be familiar with this type of profit warning. Decisions on contracts get delayed sometimes, it goes with the territory.

It's still a disappointment of course. A longer sales cycle ultimately means lower earnings for MPAC and makes it a less valuable company.

Blaming economic and Brexit-related uncertainty is a bit harder to stomach. Given how many companies have reported that H1 was in line with expectations, it suggests that most companies are not finding conditions as difficult as MPAC is.

The UK manufacturing PMI has been softer than it was last year, but it remains north of 50. This means that most manufacturing companies are continuing to report an improvement in conditions.



The final point I would make is that only 14% of MPAC's sales are to UK-based customers (according to the 2017 annual report), while 24%…

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