Wyko pegs payout after late surge

WYKO, the maker and distributor of industrial machinery components, suffered a 9.8 per cent drop in pre-tax profits to pounds 1.38m, despite a second-half recovery.

In the six months to 30 April, profits were pounds 1.1m, against pounds 297,000 in the first half. The final dividend of 1.40p a share gave an unchanged total of 2.80p.

Earnings covered 78 per cent of the dividend payment, but Wyko will take the remaining pounds 278,000 from its reserves.

'We wouldn't recommend that dividend if the business was coming off the track and not going to do well this year, but we see it as an indicator of prospects to come,' Philip White, chairman and chief executive, said.

Wyko strengthened its balance sheet after selling its Power Plant Gears division for pounds 2.25m in February, withdrawing from the heavy gearing and gearbox market and releasing capital.

It also acquired EW Bearings from Unipart for pounds 3.6m last October, which contributed pounds 9m to the total turnover of pounds 55.5m ( pounds 48.4m) and helped reduce gearing from 59 to 24 per cent.

Wyko, whose distribution branches have been rationalised to 62 branches from 71, is looking for possible acquisitions. Small acquisitions could be funded via existing loan facilities, but the company will consider approaching the market for a larger purchase.

Earnings per share fell 43.6 per cent to 2.37p.

Yesterday the shares closed down 3p at 57p.