18 July 2018
Mpac Group plc
Half- Year Trading Update
Mpac Group plc ("Mpac" or the "Company"), the global packaging solutions group, provides an update on current trading ahead of its unaudited interim results for the six months ended 30 June 2018 due to be announced in September 2018.
Mpac continues to make good progress towards achieving the Board's strategic objectives to build the foundations for future revenue growth.
As outlined at the time of the Company's final results, Mpac started the 2018 year with a higher order book and order intake than at the start of 2017. The Board believes the order book is also of higher quality and lower project complexity than previously as a result of the strategic objectives being put in place.
Despite this positive start to the year and whilst we continue to grow revenues, it has become apparent to the Board 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.
Mpac's financial performance during the first half has also been impacted by two significant, technically challenging legacy projects which will now not be completed until the end of the 2018 financial year. Management are working closely with customers to resolve these issues and to conclude these projects. However, the resulting cost overruns will have a material impact on the Company's profits for the current financial year.
Notwithstanding these developments, the implementation of the stated strategic objectives has allowed the Company to achieve some significant efficiency gains in the first six months of the financial year. The benefits have been reduced by the time taken to change the location and management in our Mississauga facility in Canada, which has now been completed. In response to these factors, management has also taken further cost saving measures.
As a consequence of the above developments, the Board anticipates that whilst revenue for the full year is expected to be in line with market expectations, the closing order book will be lower as a result of market softening and profits are currently expected to be around £1.2m below current market expectations.
Tony Steels, Chief Executive, commented:
"I am disappointed that the momentum built in the previous year has been slowed due to the current business environment and investment decisions taking longer to conclude. We continue to put in place the strategic objectives to deliver long term revenue growth. The fundamentals of our business remain strong, we are well capitalised and are fully focused on resolving the current issues and continuing with our strategic plan"
For further information, please contact:
Mpac Group plc Tel: +44 (0) 2476 421100
Tony Steels, Chief Executive
Will Wilkins, Group Finance Director
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886 2500
(Nominated Advisor & Broker)
Andrew Potts, Peter Steel - Corporate Finance
James Stearns - Corporate Broking
Hudson Sandler Tel: +44 (0) 20 7796 4133
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