Low share price hindering Clyde's ambitions

The Doncaster-based AIM-listed group, which specialises in pneumatic processing systems for industries including food and mining, said its low share price makes issuing new shares for acquisitions very difficult.

The group is now considering its options, including a possible merger with a smaller rival.

Clyde yesterday said operating profits grew six per cent to a record 6.7m in the year to the end of February, despite revenues falling almost 12 per cent to 72.5m. On a pre-tax basis, profits fell more than 16 per cent to 4.6m, mainly due to higher finance costs.

Chairman Jim McColl said the results were "exceptionally strong" given the tough economic climate. Clyde reinstated its dividend at 0.8p a share.

Shares in the company yesterday rose 8.3 per cent to 45.5p. However, this only gives the group a market capitalisation of 18.4m.

"We think there are a number of other AIM companies that are struggling with valuations," said chief executive Alex Stewart.

"We are frustrated with the share price if you value it on any logical basis. We would, in a private equity type world, easily be looking at 85-90p a share.

"There are a number of acquisition opportunities, but how can we issue paper? It would be pretty dilutive to the current shareholders."

He said acquisitions will focus on Australasia, where he believes there is significant scope to grow in metals and minerals.

"We could go to the banks," said Mr Stewart.

"(But) one of the features of the listed market is they are in a different ball park in terms of debt (compared to private equity-backed firms).

"We are going to try and be creative. We might even consider a merger to try and move things forward."

Clyde is also a couple of months away from launching a joint venture in India, and believes this, along with other rapidly growing economies, provides significant growth potential.