Adare Printing Group is to adopt a more cautious approach to acquisitions and concentrate on core growth. Announcing a 39 per cent rise in pre-tax profit from £5,225,000 to £7,240,000 in the six months to October 31st, 1997, the group noted the change in the financial environment.

After a period when acquisitions were the focus, it said it "can now provide considerable resources and management time to organic growth".

Adare now intends to "develop with some vigour" some "key attractive brands and niche areas of business". Also, it is determined, over time, to increasingly discriminate in favour of higher margin business.

Adare recorded a 38 per cent rise in turnover from £54.95 million to £75.63 million with a small rise in margins. However, part of the sales and the profits was attributed to acquisitions (three months from Kalamazoo Security Print) and contributions from discontinued activities.

Excluding these shows an underlying 13.6 per cent growth in pre-tax profit and underlying margins fell from 11.4 per cent to 10.3 per cent. Finance director, Mr Peter Lynch, attributed the margin decline to contracting out and the use of overtime to fill orders. It is now "getting to work on the margins".

Adare has noted there are some constraints caused by productive capacity in the manufacturing companies, but has made significant progress in addressing them through the capital expenditure programme of last year. A rationalisation programme at Kalamazoo will lead to redundancies. However, some £1.5 million may be spent streamlining that company over the next two years.

The Mount Salus business was sold to a management buyout team which Adare said would lead to 2p to 3p extra in earnings per share (EPS) this year. No forecasts have been made but overall EPS could rise from 62.2p to around 70p this year. Adare said "more importantly . . . over £3 million will be freed up for investment in the growing business lines of the group". Reflecting real growth, earnings per share have grown by 18 per cent from 30.01p to 35.36p. Shareholders are getting a 50 per cent increase to 4.68p in the interim dividend.

Adare has improved its balance sheet. Gearing amounts to 120 per cent but, with the proceeds from the sale of the Mount Salus premises, this should be brought down to around 100 per cent. With a free cash flow of more than £5 million generated in the first half, gearing should come down rapidly.