Serious Director Buying

Hi CR.

Yes the debt reduction is key though I was comparing it half on half. In H1, interest costs were 367k on average net debt of 11mm (average rate of 6.6% which seems ok). They talk about significant trading cash generation in H2 but that will be offset to a certain extent against the 700k additional pension contribution (will be a cash cost through not a profits charge). Assume (and it's a guess) net debt drops to 7mm at year end (unless there any more property disposals in the pipeline?), means interest expense will reduce 100k half on half,but that still leaves a big increase in trading profit required.

I agree the statement in September was pretty upbeat but it did say a lot of the improvement in the manufacturing operations was down to lower raw material costs - energy prices have gone up significantly since then. I admit I don't know what % of their input costs is oil/gas related but it must be pretty significant, particular for the plastics side of things. I agree the US side will be helped by the $ but do you know what the turnover of their UK packaging manufacturing side is?

The director buys are definitely a plus but I don't tend to use them to drive investment decisions. In my experience, directors trades are often premature. Here you have a new management who are convinced they can turn things round. They believe in themselves and demonstrate that by significant share purchases. In many cases however, that turnaround takes a lot longer than they expect (often through no fault of their own) when you're in a tough market.

Looking at the brokers forecasts on their website, I see the two more recent ones have PBT (06) of 5.2mm and 4.5mm vs the earlier KBC one of 5.8mm. Gives a consensus of around 4p and PE of 8 for next year. What do you consider their peer group to be?

Thanks for the help. With value plays, I find you need to look at the fineprint :-)