FY19 results are in line with expectations and Directa is well positioned to continue to execute its strategy despite COVID-19 headwinds. We look forward to further commercial progress this year, with the Gipave opportunity showing particular promise alongside efforts to develop G+ PPE in response to the current crisis.
Companies: Directa Plus
Caribbean Investment Holdings. Incorporated in Belize . CIHL primarily operates financial services businesses through its subsidiaries The Belize Bank Limited and Belize Bank International Limited, both located in Belize and international corporate services through Belize Corporate Services Limited. CIHL shares are also traded on the Bermuda Stock Exchange. Lord Ashcroft holds 75%. No capital raise. Due 28 April. £36m . 2019 net profit US$ 10.7m
Companies: CCS SOLO YCA TPFG DCTA RBD 88E DEMG ANA
Directa Plus has announced an agreement with Iterchimica for the supply of its G+ ITC1 nanoplatelets for use in the asphalt and bitumen sector. Directa’s graphene is the differentiating component of the Gipave® supermodifier that has been the subject of recent trials in Italy and the UK. The agreement is for an initial duration of three years and Directa has received its first order from Iterchimica, as indicated in the 13th March trading update. We consider this a promising medium term opportunity, given Gipave’s potential significantly to increase the useful life of roads and runways. Results from the UK trials in November 2019 are expected shortly and interest is said to be growing from asphalt companies in the UK and also now the USA.
Directa Plus has released a robust trading update for the first quarter of FY20, at the same time confirming a loss before tax of €3.6m for FY19, in line with expectations. Expected Q1 revenue of €1.52m will be up significantly on the €0.52m reported in Q1’19, driven by Setcar, the H2’19 Environmental Services acquisition. The order book to date is said to be in line with expectations, orders are being fulfilled and Directa is working on new opportunities. There is good news on the graphene enhanced asphalt, Gipave ® as well as traction in other verticals, which should help to insulate the Group from wider uncertainty relating to the Coronavirus.
Directa Plus has announced the second major contract win for Setcar/ Directa Environmental Services since the acquisition of that business in November last year. The value is estimated to be €5m over seven years or €0.7m per annum. This is a contract to supply environmental services to GSP Offshore, part of the Romanian oil services group GSP under a larger framework agreement between GSP Offshore and OMV Petrom, which was awarded in July 2019. We make no changes to forecasts this morning, but it is highly encouraging to see ongoing momentum within the Setcar/Directa Environmental Services business under Directa’s ownership.
Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m. The Group's key producing assets, the Kagem emerald mine in Zambia (believed to be the world's single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the Faberge brand. Due Valentines Day 2020.
Companies: PEN DCTA SCLP STAR NTOG ADME NAH IRR KGH MRL
MJ Hudson Group PLC, the financial services support provider to Alternatives fund managers and asset owners, is planning an AIM IPO. Deal details TBC but expected admission date mid-December. Octopus Renewables - Raising £350m. Will seek to provide investors with an attractive and sustainable level of income returns, with an element of capital growth by investing in a geographically and technologically diversified spread of renewable energy assets—Due 10 Dec. SulNOx Group - The Group has developed a methodology and process capable of emulsifying hydrocarbon fuels such as diesel and heavy fuel
oil . By January 2014, following preliminary laboratory testing, SulNOx was in a position to suggest that its products resulted in up to a 50%
reduction of Nitrogen Oxide (NOx) and a 90% reduction in particulate matter Due 17 Dec, mkt cap £42.3m.
Companies: CRU ANG ORPH FEN CNIC DCTA LND IRR TERN DMTR
Directa Environmental Services (the recently acquired Setcar business) has been awarded a contract to provide a suite of environmental decontamination services to its partner GSP. The three month contract (to end February 2020) value is approximately $1m. This is Directa’s first offshore, deep water contract, and the first contract to be announced since the Setcar acquisition and fundraise in September. This was part of the pipeline of projects highlighted at the time of the fundraise and it has the potential to open up new and significant offshore opportunities for Directa’s environmental services offering.
Directa Plus has announced the acquisition of Setcar, a highly regarded environmental and remediation services company based in Romania, for €4.1m. The deal will be jointly funded by Directa and its partner GSP, a leading provider of offshore integrated services for the oil and gas industry. The acquisition, which is being funded by an €8m placing and open offer, materially strengthens Directa’s environmental offering, providing a platform for service delivery alongside the supply of Grafysorber.
Directa Plus has secured a supply and service contract with an international oil and gas customer to treat and recover crude oil using Grafysorber® technology. The value of the contract is €150k over the next six months, helping to support our full year forecasts. This is the first contract of its kind, which will see Directa providing a full decontamination and recovery service. Directa ultimately plans to expand the business regionally and then globally and we are confident that further contracts will follow.
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A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Successful businesses ‘never let a crisis go to waste’. Indeed since an otherwise strong Q1’20 was interrupted by COVID-19, Mpac has further streamlined operations, accelerated R&D and launched new remote equipment diagnostic/acceptance testing, virtual reality & other ‘Industry 4.0’ services.
RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.
Companies: Rosenblatt Group
The announcement that Avon Rubber is to sell milkrite | InterPuls, its dairy division, to DeLaval Holding for £180m gross proceeds is strategically logical and financially compelling. The fit of dairy and defence has always looked slightly anomalous and the terms of the deal show that the opportunity to augment dairy through value-accretive deals is difficult given the scale of the business and opportunities. Management must now recycle the cash balances that will be created into Avon Protection, where there are a greater number of potential investments.
Companies: Avon Rubber
Resilient Trading Update
Companies: Macfarlane Group
The Norcros operating companies largely performed relatively well in challenging market conditions (in both the UK and South Africa) in FY20 though year end trading was affected by COVID-19 lockdowns, as flagged previously. The group’s financial position appears robust following management actions (including foregoing an FY20 final dividend) and well-placed to both contend with weaker near-term markets and the pursuit of market share gains from a position of relative competitive strength. Our estimates remain suspended at this time.
Revenue for FY 2020 is ahead of expectation and we adjust our forecast accordingly. Sales are growing at an impressive rate; >50% pa despite COVID-19 and the virus had no effect on the company’s ability to deliver projects with 23 new customers live in Q4. We note COVID concerns are causing some delay on contract decisions, and sales would have been even stronger but for that. These delays do lead to caution on FY 2021, and we ease back our forecasts on more prudent management guidance. However, with the recent £5m equity placing, PCIP has plenty of cash to continue to invest in rolling out its exciting secure payments proposition. This cloud-based solution can be deployed remotely and assists call centres in moving agents to WFH and still collect payments securely. The outlook remains very bright with continued rapid growth expected.
Companies: PCI Pal
The year-end trading update was encouraging, with expected results showing good YoY growth, modestly below but close to our earlier expectations. Trading has been resilient, particularly in safety critical areas such as its nuclear exposure, with some weakness being seen in oil & gas, where there is limited exposure. Two new contract wins in the nuclear sector have also been announced today. FY 2021 forecasts remain under review. With strong finances, the company is well positioned to maximise M&A opportunities, through its PIE strategy.
The group has issued a trading update for the year ended 31 May 2020 highlighting an adjusted EBITDA of at least £11.5m which is close to the group’s original expectation, despite widespread disruption to operations in the second half. The statement notes ample liquidity headroom in excess of £10m with net debt (excluding IFRS 16 lease liabilities) reducing in H2 to £7.5m as planned. The Group’s order book and prospect pipeline remains strong overall and the update is accompanied by the announcement of two meaningful contract wins in the nuclear sector. A further significant positive development is the grant of outline planning permission for the conversion of the group’s 7 acre Hayward Tyler site in Luton into residential housing for up to 1000 dwellings. Whilst financial guidance for FY2021E remains withdrawn at this point due to on-going uncertainties around the impact of COVID-19, we see the group continuing to demonstrate good resilience, operating at close to normal levels, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
Marlowe delivered a strong performance during FY20A, with +7% organic revenue growth, and improved Adj EBITDA margins. Integration of acquisitions is progressing well, and with receipt of c£40m gross proceeds, Marlowe is well placed to accelerate the consolidation of its markets. We leave our forecasts unchanged and reaffirm our Buy rating.
Caledonia's Q2 2020 production from its 64% owned Blanket mine in Zimbabwe was 13.5koz gold. This was an increase over the same period last year of 6.2%, leaving Caledonia with a first half production of 27.7koz – well ahead of this time last year (24.7koz) and on track to meet its 2020 full year guidance of 53-56koz (WHI etc. 55.5koz).
Spectra Systems Corporation is a provider of machine-readable high-speed banknote authentication, brand protection technologies and gaming security software. The company has announced that it has executed a new contract with a major world central bank to ‘enhance existing authentication sensors to detect a unique type of counterfeit notes'.
Companies: Spectra Systems Caledonia Mining Corporation Plc Com Shs Npv
Scotland’s only quoted housebuilder recorded its highest ever weekly number of reservations following the reopening of its sales offices after the prolonged construction lockdown north of the border. As a result, Q1 2021 sales are expected to be “significantly higher” Y/Y, after the inevitable disruption caused by Covid. In this morning’s FY 2020 trading update, the Group also highlighted the widely reported trend across the housing market to larger homes with gardens, Springfield’s ‘sweet spot’ in our view.
Companies: Springfield Properties
Strong H1 results, prospects good, investing in the future WEY's H1 results this morning reflect both the positive effect of proactive actions taken by the company last year and strong demand from the market at large. Sales up 43% YoY and PBTA of
£0.3m (2019: £0.1m) reflect increases across both sides of WEY's business and are accompanied by margin uplift (62% gross margin as against 56% last year). The company is a well-established leading supplier of online education, having built a 15-year track record of excellence in its sphere. Covering the half year ending on February 29th, the period of the results precedes the lockdown; however this morning's statement lays out the heightened demand for WEY's product which is an inevitable result of the new focus on remote working and online learning. WEY is plainly extremely well-placed to grow in the current environment, and it has made significant investments in educational quality and in marketing – in both cases including senior and wellrespected hires. The Covid-19 crisis has generated a new appreciation of online education from parents, pupils and educational authorities, who increasingly see this as a real, practical and highly effective substitute for traditional education, adding to the already strong demand across
WEY's brands. Our 30p-plus fair value assessment rests on the inherent opportunities and is also supported by the strong balance sheet (£6.6m of net cash, +£1.6m in the period).
Companies: Wey Education
Brick and concrete products manufacturer Forterra has raised c. £55m gross in an equity placing in order to maintain its strong balance sheet and support the Group's continued investment programme. It was accompanied by, in our view, a reassuring trading statement which we believe is backed by yesterday’s brick industry data and comments from housebuilders, which suggest that demand has been recovering from its lockdown lows, before the PM’s promises to “build, build, build” housing and infrastructure.
ECSC Group plc* (ECSC.L, 71.5p/£7.2m) | Trackwise Designs plc (TWD.L, 90.5p/£20.0m) | Transense Technologies plc (TRT.L, 59.5p/£9.7m)
Companies: ECSC Group Trackwise Designs