THE MARKET did not expect Pittards to pay a dividend and was pleasantly surprised by the payout and by director Aidan Creedon, who yesterday echoed the company's confidence by buying 4,250 shares at 53p.

That will deflect attention from the fact that payment of the ordinary and preference dividends will leave a deficit on consolidated distributable reserves of pounds 2.1m.

Lack of dividend-paying capacity at subsidiary level may lead to a capital restructuring, but the company expects profits this year and next to eliminate the problem.

Accounting niceties aside, management attention is focused on the profitable parts of the business and demand for high-margin products is improving.

Assuming 6.8p of earnings this year, the prospective p/e ratio is a modest 8. While that is not expensive, it does reflect the extreme volatility of Pittards' raw material prices, over which it has very little control and which have a habit of springing nasty surprises. High enough.