Wealth warning: beware the smoke and mirrors of adjustments!
Public companies delight in focusing on ‘adjusted’ numbers, which often hide a multitude of sins. The actual reported figures are far less flattering and amongst other things, like to exclude things like amortisation, exceptional costs (which generally occur with regularity!) and share-based incentive scheme charges. One AIM company we have followed over the years seems a master of the adjustments and positive spin and it’s not surprising the shares have gone nowhere since listing 9 years ago. What lessons can be learned from all this smoke and mirrors?
Plastics Capital (AIM:PLA) is a plastics products manufacturer focused on proprietary products for niche markets. The Group has six factories in the UK, one in Thailand, two in China and sales offices in the USA, Japan, China and India. Applications for the Group’s products span numerous sectors and industries and include packaging for the food sector, steering columns and instrument control knobs in the automotive industry, hydraulic and industrial rubber hoses and plastic creasing matrices for cardboard box manufacture. Plastics Capital listed in December 2007 at a share price of 100p and even the listing process was a drawn-out affair…