Companies: GLI   

Cash-generative snack food manufacturer Glisten’s annual results show modest growth in all areas, with an acquisition post year-end adding the icing.

Pre-tax profits jumped 18% to £8.4m during the year to June and £7.4m of cash was thrown off as Glisten made good progress in the ‘healthier snacking’ market. Sales growth was a more modest 5% to £58.6m as £5m of low-margin business was resigned to maintain operating margins at a premium level of 11.3% (12.2% in the second half) – way ahead of Glisten's peers.

Soon after the financial year, Glisten bought long-time target Dormen Foods for up to £10.2m. ‘It’s a high-quality young brand with an excellent position in the fast-expanding savoury snacks area,’ informs finance director Rob Davies, ‘and we see it as a platform to build a healthy snacking division.’

Dormen is expected to turn over around £5.7m in the year to this August and Davies says there are ‘significant opportunities’ to sell its products to Glisten’s 500 existing customers. He adds that further purchases are definitely on the horizon – ‘we’re currently looking at two’ – and confirms gearing, which had fallen below 60% by year-end, is now 88%.

Glisten, which increased the total dividend to 2.1p, is a quality operator that generates plenty of cash. Its acquisitive ambitions in a fast-expanding market should see its stock continue to rise and the shares, recommended by GCI at 343.5p in May last year, remain good value. Hold/buy.

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Glisten	AIM	£17.93m	128.50p	-1.00p
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