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James Emanuel's avatar

>> Trading Update 17th January 2025<<

The Group expects to report first half adjusted operating profit approximately 8% ahead of the same period last year (on a constant currency basis). Full year adjusted operating profit is expected to be in line with internal expectations.

Group revenue was 2.9% higher than the prior year period on a constant currency basis, with volumes up 5.9%. Private label volumes grew by 2.4% and contract manufacturing volumes increased by 69.0%, driven mostly by the successful launch of two new multi-year contracts with large FMCG clients over the past six months.

Customer service levels have continued to improve, delivering the increased volumes and supporting further opportunities for strategic partnerships with key customers.

The Group also continues to make good progress on debt management. Net debt at the period end was £117.6m (30 June 2024: £131.5m). On a 12-month trailing EBITDA basis, net debt cover was circa 1.3x (30 June 2024: 1.5x).

The recent, new, long-term financing facilities have allowed the normalization of the Group's capital allocation options. As a result of this and the ongoing strong trading performance, the Board intends to re-instate annual dividends in relation to the current financial year. The details will be announced at the time of the final results in September 2025.

The Group's interim results will be announced on 25 February 2025.

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Hugo Navarro's avatar

I really like the company, this looks like an interesting opportunity. And the fact that their only way of returning value to shareholders is through share buybacks makes it even more intersting.

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James Emanuel's avatar

I have discovered that a provision of the RCF states that, "no dividends will be paid to shareholders until there is an exit event, being a change of control, refinancing of the RCF in full, prepayment and cancellation of the RCF in full or upon the termination date of the RCF, being May 2026."

I don't view this as a problem, as dividends are not an efficient way to allocate capital. Next week, I will publish a special post discussing the issues with dividend policies that every shareholder should be aware of.

Importantly, there appears to be no restriction on share buy-backs, which would be far more accretive to shareholder returns given the current share prices.

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