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HB Markets Daily Smallcap Newsflash featuring British Polythene, Clarity Commerce Solutions, Radicle Projects and UTV Media
British Polythene (BPI, 229p, £60.68m) Interims to June 2010 has seen sales increase to £260.8m (£231.4m) reflecting higher volumes and passing on increased raw material and other costs, no gross profit or margin information was released by the group. However operating profits fell to £12.2m (£13.7m) due to rising raw materials but a significantly lower interest charge of £1m (£1.8m) left underlying PBT at £11.2m (£11.9m) with adjusted EPS of 27p (28.05p). The group also reported a net £3.5m gain on the sale of the Stockton site post costs associated with the closure of the Brampton site. Net debt fell to £49.5m (£52.2m at the year end) with 2 further properties (potentially worth £2.5m) already for sale while the pension fund deficit increased to £68.9m against £56.9m at the Dec year end). The group reported an increase in interim DPS to 3.65p (3.5p). Raw material processes have eased somewhat in August. The group has continued its investment strategy with a 25% increase planned in cap exp for the year as it invests in high quality printing line for food industry packaging. We still have some concerns on future sales of silage wrap (farmers are buying in stock in anticipation of a shortage of hay due to the weather) and the debt but this is a healthy performance. The group appears well on line for profits in excess of £16m or EPS of 40p – potentially more and thus we return the group to a BUY with a 250p price target. (Julian Tolley)
Clarity Commerce Solutions (CCS, 37.5p, £15.54m) has appointed 2 MDs, one for GB and one for France, as well as a trading update that includes a contract for ClarityLive with Debenhams for use as a centralised appointment diary in their personal shopping and health and beauty services, the rollout of ClarityLive to other Merlin Entertainment locations following a successful implementation at it Gardaland amusement park, the on-going roll-out at 225 Pret-A-Manger sites with 75 completed, a contract for the use of ClarityLive at 16 sites within the Lee Valley Regional Park and the successful roll-out at 180 Focus DIY stores. We maintain the BUY with a 47p price target. (Julian Tolley)
Radicle Projects (RDP, 2.375p, £1.23m) Last Friday RDP announced the hoped for conversion of ‘A’ series convertibles would not go ahead. This failure to restructure the debt will force the board to examine other funding routes – but there is a distinct danger of the group entering administration – thus we can only recommend shareholders to SELL until or if a refinancing is agreed. Tuesday morning the shares have been suspended. (Julian Tolley)
UTV Media (UTV, 106p, £101.66m) Interims to June saw revenues of £59.2m (£54.4m) with an underlying PBT of £7.23m (£5.81m), EPS of 7.41p (6.32p) with a 1p (nil) DPS proposed. The ended the period with £77.27m net debt (£88.47m at the year end) reflecting the cash generated from operations and a positive working capital movement. In the UK both radio and TV benefitted from the football world cup, though local radio revenues were flat, with talkSPORT revenues expected to be boosted in the second half by 2 significant rights packages acquired for the Premier League. In Ireland revenue decline was arrested and is expected to show a 3% growth in the third quarter. The group expects the recovery to continue in the second half, with even Irish TV advertising showing some signs of recovery. The rating does seem slightly low compared with the media sector so we return the shares to a BUY with a 120p price target. (Julian Tolley)
