The acquisition and planned relaunch of Debenhams online business is a transformational deal for the Group, establishing an ecommerce marketplace of immediate scale and high brand awareness. The deal expands boohoo’s target addressable market and opens the Group up to new product categories including beauty, sport and homeware. It is a significant step forwards in realising the Group’s ambition to operate the UK’s largest ecommerce marketplace, combining boohoo’s online capability and multi-brand platform with Debenhams leading brand recognition and extensive established network of third-party brand partnerships.
Companies: boohoo group Plc
Boohoo has delivered strong results over the peak trading period for the four months ended 31 December 2020. Group revenue is +40% YOY, with robust growth seen across all brands and regions. The Agenda for Change programme is progressing at pace, demonstrating the Group’s commitment to setting a new standard for ethical supply chains in the fashion industry.
Boohoo has announced meaningful progress in its Agenda for Change Programme, to deliver long lasting change to its supply chain and business practices. Sir Brian Leveson PC has been appointed to provide independent oversight of the programme, with KPMG engaged to provide additional resource, expertise and independence, working alongside the Group’s internal responsible sourcing and compliance team, as well as with external supply chain audit specialists Bureau Veritas and Verisio. We believe the calibre of the appointments reflects the Group’s unwavering commitment to implementing in full, and with complete transparency, all recommendations of the Independent Review.
Today’s announcement confirms the strong trading momentum seen in Q1 has continued YTD. Group sales are +45% YOY with revenue growth across all geographies and brands, and profitability improving YOY.
Boohoo has released the now complete Independent Review into its UK supply chain in full this morning. Whilst a number of areas for improvement have been identified, there is no suggestion failings were deliberate or intentional and the chances required involve a relatively easily achieved realignment its of governance systems. We believe the Group remains well-positioned to lead the fashion e-commerce market in the future and can successfully implement an agenda for change in UK garment manufacturing.
Independent review launched: The Boohoo Group has announced the launch of an immediate independent review of its UK supply chain, intended to identify any areas of risk and non-compliance and to further strengthen the Group’s compliance procedures to ensure similar allegations will not recur in the future. The review is to be led by Alison Levitt QC, a highly experienced advocate who has previously reported on complex issues, including safeguarding enquiries. Boohoo has also announced an initial additional £10m investment in ensuring any supply chain malpractice is eradicated and is accelerating its independent third-party supply chain review with ethical audit and compliance specialists Verismo and Bureau Veritas.
Today’s statement reveals incredibly robust Q1 trading across the Group’s brands and regions, with a positive outlook and guidance reinstated for the remainder of the financial year and beyond. In addition, the Group has announced the acquisitions of Oasis & Warehouse, bringing two well-recognised and complementary brands onto its platform. We believe the unprecedented disruption resulting from the COVID-19 pandemic has accelerated the channel shift to online where we see BOO as the clear winner, with an established and leading model positioned to consolidate the market.
Boohoo Group has announced the acquisition of the remaining 34% of shares in prettylittlething.com (‘PLT’). - Terms of the deal: Boohoo Group has acquired the remaining 34% of shares in PLT for initial consideration of £269.8m, comprising cash consideration of £161.9m and share consideration of £108.0 including £54m of share consideration subject to an 18 month lock-up, £54m of share consideration subject to a 24 month lock-up payable on completion. A further £54.0m of contingent consideration is payable if the Group’s share price averages 491p (+46.7% on last night’s closing price) over a six-month period between completion and 14 March 2024. PLTs management team will remain in the Group, with the structure of the share consideration providing strong alignment of management interests with the wider Group shareholder base.
We note this morning’s announcement from Boohoo Group strongly refuting several allegations made in a short-selling note published yesterday afternoon. In our opinion arguments made in the short selling note are flawed and do not disclose any new or unexpected information about the Group. The unprecedented market backdrop resulting from the COVID-19 crisis has only acted to highlight the strengths of Boohoo’s agile, pure play, e-commerce model and we see current share price weakness as offering an attractive entry point.
Boohoo Group has raised £197.7m in new equity as is readies itself to take advantage of M&A opportunities expected to emerge in the global fashion industry over the coming months. Following the fundraise we estimate the Group to have c.£500m in cash, giving it significant firepower to rapidly execute attractive brand acquisitions as they arise.
Boohoo Group plc has released results for the 12 months ended 29 February, reporting a solid finish to the year with results at the top end of guidance and comfortably ahead of ZC’s expectation. This impressive end to FY20 is somewhat overshadowed by the unprecedented disruption the Group and the wider retail industry is facing as a result of the ongoing COVID-19 pandemic. Whilst YTD trading is described as mixed, we are encouraged by confirmation that the Group remains in positive growth YOY. We have long been of the opinion that boohoo represents a best in class ecommerce operator, with one of the most agile and flexible operating models in the industry. The Group entered this pandemic from a position of relative strength with a strong balance sheet backed by £240.7m of net cash. Whilst the near-term shock of COVID-19 is difficult to quantify, and our FY21 forecasts move lower to reflect this uncertainty, we believe current shifts in consumer behaviour will persist beyond this pandemic driving a return to growth in line with previous medium-term guidance from FY22 and beyond.
Boohoo Group has delivered a stellar performance over the key Christmas trading period resulting in a further upgrade to FY20 guidance, its third since 5 th September. Strong growth has been seen across all brands in all key geographical regions. We note the excellent performance seen at the Group’s most mature brand boohoo, where sales in the four months to December are up 42%, an acceleration on the 27% YOY growth posted in Q1 and a continuation of the exceptional 41% growth seen in Q2 of this year. Revised EBITDA margin guidance of 10.0% to 10.2% (previously c.10.0%) is after accounting for investment in three brands acquired in the year and implies strong underlying trading in the Group’s more established brands (boohoo.com PLT and Nasty Gal). The Group continues to deliver an impressive cash performance, with £245m net cash at 31 December.
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SCE is raising £20m through a placing and open offer as the future commercial pipeline now justifies building the next manufacturing cell (“Cell 2”). Cell 2 will essentially double production capacity and transform the potential of the business. When operating at full capacity, we estimate that SCE would be capable of £35m revenues, £15m EBIT and £12.5m Earnings. This would equate to EV/EBIT of 7.1x and P/E of 9.5x based on the enlarged capital base. Recent trading updates have highlighted that trading is strong and in line with expectations, while longer term ASP expectations have increased significantly.
Companies: Surface Transforms plc
Today's news & views, plus announcements from BRBY, BHB, DPLM, IWG,GFTU, CMCX, JDW, GFRD, BGO
Companies: Bango plc (BGO:LON)Galliford Try Holdings PLC (GFRD:LON)
Although 2020 will probably go down in history as one of the most challenging years experienced during our lifetime, it will also likely be chronicled as one of the best years for the recognition and appreciation of science. As we entered 2020, the COVID-19 pandemic was in its infancy. However, it rapidly evolved through the exponential rise in infections and mortality globally. Much has been achieved during the past 12 months in the fight against COVID-19, but, as we enter 2021, there are considerable concerns about the emergence of a mutant version of the virus and the second wave that we are now facing.
Companies: AVO ARBB ARIX BBGI CLIG DNL FLTA ICGT OCI PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
Trackwise has announced that it expects FY20 revenues to be c £6.1m, which is lower than our estimate, reflecting disruptions to supply chains caused by tighter coronavirus restrictions and uncertainty about the Brexit deal. However, careful cost control means that management expects adjusted operating losses to be c £0.2m, in line with our estimates. We have updated our FY20 forecasts but leave our FY21 estimates, which are underpinned by an order worth up to £38m over three years from a UK electric vehicle (EV) OEM, unchanged.
Companies: Trackwise Designs Plc
The group’s year-end trading update highlights that the group is on track with its growth and expansion strategy. At the end of the year, a couple of COVID and Brexit-related delays to customer ordering were seen, which have reduced revenue by £0.7m. Nevertheless, operating profits are in line with expectations due to continued cost control. Our forecasts have therefore been adjusted accordingly. The investment case remains sound and this doesn’t alter our view of the company’s prospects, where we forecast a robust scale up over the next few years, focused on significant growth opportunities in the EVs, Medical and Aerospace markets.
We introduce FY21 forecasts this morning, cautiously assuming a continuation of current activity levels. As indicated in last Friday’s trading update, revenue stabilised at £2m per quarter in Q4’20 and Q1’21, reflecting current lower levels of demand caused by the COVID pandemic. We assume that EBITDA remains positive for the balance of the year, benefitting from the reorganisation and cost reduction measures implemented by management last year. This has served to protect the balance sheet with the result that we expect only a negligible reduction in the strong net cash position in the current year (£13.5m net cash forecast for September 2021). The timing of the recovery remains difficult to predict but we believe Zytronic is well positioned to weather the downturn before returning to growth.
Companies: Zytronic plc
InnovaDerma raised £4.0m to (i) strengthen the balance sheet following the impact of COVID-19 on current trading and (ii) grow its global Direct-to-Consumer (DTC) and E-Commerce capacity in the UK and new geographic markets, thereby enabling the company to accelerate sales and take advantage of the opportunities expected to exist post COVID restrictions being eased. With a clear plan for growth, to be executed by its new CEO, we introduce new forecasts for FY 2021 and 2022 that assume some gradual easing of restrictions in the UK in the spring, with an adjusted pre-tax loss of c.£0.9m in 2021 (positive EBITDA in H2) returning to c.£0.3m profit in FY 2022 on the back of revenues returning to pre-pandemic levels, including higher international contributions. We introduce a target price of 90p, with scope for this to be raised as the new CEO executes on the growth plan, which is based on a peer group EV/Sales multiple of 1.6x.
Companies: InnovaDerma PLC
Today’s Q1 trading update indicates that sales have levelled out at c.£2m per quarter, reflecting current lower levels of demand in light of ongoing restrictions related to the COVID pandemic. The reorganisation and cost reduction measures undertaken by management last year have enabled the Group to maintain a positive EBITDA and there has been a slight increase in orders in the new financial year. Zytronic entered the new year in a strong financial position with £14m net cash. The stable sales pattern should enable us to reintroduce forecasts in due course and the current rating remains very modest indeed based on preCOVID levels of profitability
The Character Group’s (Character) AGM statement confirms the strong start to the year noted in its preliminary results. Revenues in the first four months were ahead by more than 30% and management expects that profitability for the first half to February 2021 will be significantly higher than in the same period last year. While there are more challenges facing the Company in the second half, assuming these do not worsen the Board believes the Group will achieve current market expectations. Our forecasts for FY2021 were raised significantly in December and we are encouraged that despite the temporarily deteriorating macros, current market expectations are still valid. When some normality returns to the market Character will be exceptionally well positioned with a strong balance sheet and a product range in strong demand.
Companies: Character Group plc
Residential for rent developer and manager Watkin Jones today posted FY 2020 results, in which profits, cash and dividend beat our estimates by c. 4 - 5%. We have maintained our FY 2021E forecasts and introduced estimates for FY 2022E. Our growth assumptions are supported by further evidence in the statement of a revival in forward funding by institutional investors for both the Group’s build-to-rent and student accommodation developments. A new strategy is aimed to trial the private residential sales division more to affordable housing, in line with WJ’s low-risk, capital-light model.
Companies: Watkin Jones Plc
This brief but important update has underlined that Galliford Try is coping admirably with the seemingly constantly changing COVID restrictions, with all sites open (as they have been since the start of the financial year in July 2020) and trading at “normal” levels – in line with management expectations. Crucially, a return of profitability and dividends (as previously flagged) is expected with the half year results, due to be released on 4th March. Consensus is for a 2.5p dividend for the year ending in June 2021, growing rapidly to 4.0p for 2022 and 5.4p for 2023.
Companies: Galliford Try Holdings PLC
The YE trading update confirms the improved H2, flagged last month. The global casino industry has been reopening and a backlog of orders boosted YE sales, while Densitron’s trading has been robust throughout the pandemic. Overall, group sales are down 31% and we expect Gaming revenue to be almost halved. However, the swiftly imposed cost reductions took effect in H2 and the group has been profitable and cash generative across FY20 – adj. PBT >$1m and net cash up $1.3m – an excellent result from the original scenarios. There are concerns ahead: a potential for further COVID restrictions and a global component squeeze, but management is working to mitigate them. The orderbook is healthy and in the long term, the pandemic will surely be a catalyst for increased outsourcing across the gaming industry. With cash in hand and retaining its excellent industry reputation and position, QXT will be a beneficiary. We reintroduce conservative forecasts for a much improved FY21. Note that given the global scenario, management feels unable to give guidance at this stage so these are solely finnCap’s own estimates without input from the company.
Companies: Quixant Plc
Accrol Group Holdings plc (ACRL LN) Bango plc (BGO LN) Brickability Group plc (BRCK LN) Norcros plc (NXR LN) OnTheMarket (OTMP LN) Ricardo (RCDO LN) UP Global Sourcing Holdings (UPGS LN) Watkin Jones (WJG LN) Xpediator (XPD LN) ZOO Digital (ZOO LN)
Companies: ACRL BGO BRCK NXR OTMP RCDO UPGS WJG XPD ZOO NUZE
The group has issued another positive trading update confirming full-year revenue 25% ahead of our original projection made in March and a LBITDA 39% lower than originally forecast and 81% lower than the previous year. We anticipate further revenue growth in 2021 but also an increase in LBITDA as management invests further in a number of growth initiatives. We expect the 2022 financial year to reflect the benefit of the strategic investment programme as the business progresses towards breakeven.
Companies: Eve Sleep PLC
Outlook remains in line with market expectations
Companies: IG Design Group plc
