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Chairmans Message:
As we indicated at the time of our AGM in May, and also in our pre-close statement in July, trading over the first six months of the year has been challenging. We have experienced steep increases in raw material input costs and reduced demand from customers in the industrial and construction sectors, although there has been sound demand from the agricultural and consumer related sectors. Commenting on the results and prospects, Cameron McLatchie, BPI Chairman said: "Despite these difficulties, we have produced results which, although somewhat below the outcome for the comparative period last year, are in line with previous expectations. The outcome has been helped by sound demand from the agricultural and consumer related sectors. These results, yet again, demonstrate that our business is fundamentally resilient in challenging conditions and that, given time, input cost increases will be passed through to customers. On turnover of £265.9 million (2007: £226.0 million), our profit before tax was £7.2 million (2007: £8.8 million), resulting in fully diluted earnings per share of 19.83p (2007: 24.30p). The increase in turnover was achieved on overall flat volumes, and reflects increased input costs – both raw material and energy - which we experienced during the period, and which were, in the main, passed on to our customers, albeit with something of an inevitable time lag. The Board has declared a maintained interim dividend of 7p per share which will be payable on 19 November 2008 to shareholders on the register at the close of business on 24 October 2008. Our raw material suppliers have imposed further price increases for July and August, and prices are now at an unprecedented level in the EC. Our view remains that these levels will drop, particularly as oil prices seem to have fallen back in the short term. However, the main raw material for ethylene in the EC is naptha, and prices for that oil-based feedstock have been fixed for the third quarter. While we cannot forecast the price of raw materials going forward, these results, yet again, have clearly demonstrated our ability to cope with substantial input cost increases in the medium term. It is clear that certain of our UK operations are not producing acceptable returns. Most of this relates to changes in demand patterns and the downturn of the industrial and construction base in the UK. We are actively taking steps to bring our production capacity into line with current customer demand. We have already closed one small site this year and we are examining all options to improve the return from certain operations. Any action taken will ensure that we preserve our skills and retain and service our customer base. Despite all of the above challenges, and the trading difficulties we continue to face in the short term, your Board remains confident in the future of our business, its resilience and medium to long term prospects."  Cameron McLatchie, Chairman |
