Essensys plc—a provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry, plans to join AIM. £28m raised. Half primary, half shareholder sell down expected 29 May 2019. Mkt cap £72.6m. Issue price 151p.
Induction Healthcare Group plc—a healthcare technology company focused on streamlining the delivery of care by Healthcare Professionals looking to join AIM. Expected raise of £14.58m at 115p, market cap of £34.07m. Expected 22 May 2019.
SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m
Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019.
Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Companies: VTC EPWN APC MAB1 IMO RENX DODS BOKU AMYT
Parliamentary and Brexit developments continue to hold centre stage, although the precise path forward remains as unclear as ever. The uncertainty over Brexit, worries over a possible slowdown in the US and the outlook for global economic growth generally have all contributed to the recent falls in markets. While the rally seen since the start of the year has petered out, most indices have still made progress. In Share News & Views we comment on Bloomsbury Publishing, Bonhill Group*, Braemar Shipping Services*, Burford, Clarkson, LightwaveRF*, Marshall Motor Holdings and Synectics*.
Companies: RUA APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LWRF LSAI NKTN PCF SNX TCN VRE W7L
We have seen a continuation of the rally evident so far this year. The factors are familiar with greater optimism regarding US-China trade talks. At home, the path to Brexit remains unclear as D-day looms. The possibility of a delay has increased. The company reporting season continues to highlight winners and losers with the majority of results in line. We have also seen an uptick in corporate M&A. Results set the morning agenda and Brexit votes the evening one. In Share News & Views we comment on AorTech International*, APC Technology*, DeepMatter*, Golden Ocean Group and P&O Ferries/DP World.
Companies: RUA APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN VRE W7L
APC’s AGM statement highlights that “the Board are pleased with the start to the new financial year” and confirms that “the Company continues to trade in line with management expectations”. APC remains focused on its growth strategy. We maintain all of our forecasts at this stage. Our FY2019E forecast is for PBT of £1.63m and EPS at 0.74p putting the shares on a PER of 8.3x. Interims are expected in April. We reiterate our Buy recommendation and 12p target price.
Companies: APC Technology Group
United Oil & Gas (UOG.L) an oil and gas exploration and development company brought to the Official List (Standard Segment) in July 2017 by way of a reverse takeover of Senterra Energy plc. No capital to be raised, expected market cap of £17m and expected 1 March Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Polemos, to be renamed Digitalbox plc, has agreed to acquire Digitalbox Publishing Holdings Limited for c.£10m through a share for share exchange. The acquisition constitutes a RTO. Polemos has also agreed to acquire the entire issued share capital of Mashed Productions Limited, a digital media business which owns the online satirical news website "The Daily Mash", for a maximum total consideration of up to £1.2m. Market cap on admission £12.4m, expected 28 February
Companies: AAU IHC MDZ GMR R4E APC WEB HAYD 88E BPC
Roses are red – markets are blue! The rally since the start of the year resumed this week, after a pull-back last week. The FTSE 100 has risen due to the weakness of sterling and the impact on its dollar-earning constituents. More domestically-oriented indices have also risen but lagged more recently. The latest Brexit twist is due later with a statement to Parliament on the negotiations. Company news continue to dominate the morning headlines and amendment votes the evening ones. In Share News & Views we comment on DCC, EU Supply* FireAngel*, Location Sciences*, Northbridge* and NWF.
We have seen a continuation of the rally seen since the start of the year, although some earlier momentum has been lost. The factors that influenced the market previously continue to dominate – US-China trade talks and the outlook for the global economy. The latest hurdles in the Brexit Withdrawal Bill are due later. Company updates dominate the morning headlines, late night votes dominate the evening ones. In Share News & Views we comment APC Technology*, Bonhill Group*, Braemar Shipping*, Escape Hunt*, FDM*, Haynes Publishing, Nucleus Financial, Porvair, VR*, Warpaint* and Wynnstay.
Companies: RUA APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN SNX TCN VRE W7L PCF
It may only be a fortnight into the new year but many of the factors that unnerved the market last month have continued to impact sentiment. The outcome of trade talks between the US and China, concerns about global economic growth and some poor trading statements, especially in the retail sector, have all featured. Above all, Brexit and the progress of the Withdrawal Bill have dominated with the latest “high noon” due later. Despite this, we have seen a good rally in the junior markets year to date. In Share News & Views we comment on Bloomsbury, DeepMatter*, James Fisher and Helios*.
Companies: RUA APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ LSAI NKTN PCF SNX TCN W7L
The instruction to “Deck the halls with boughs of holly” may represent a grateful relief, given the prickly time we have seen in markets over the last month or so. An unhelpful combination of the deadlock surrounding the Brexit process, concerns over the outlook for the global economy and some poor company results have resulted in all markets falling further. The impact on our universe is clear from the table below with AIM taking the significant pain. In Share News & Views we comment on APC*, Clipper, Cohort, Goodwin*, Helios*, PCF Group*and Tricorn*. Merry Christmas to our readers!
Companies: RUA APC BONH BMS CTG CRPR DMTR ESC EUSP FDM FA/ NKTN PCF SNX TCN W7L LSAI
FY2018 results are in line with expectations. Revenues rose 10% to £17.1m, EBITDA was +43% to £1.15m and PBT rose by 63% to £0.68m. The performance has been helped by a concentration on its core strengths, a reorganisation of its sales team and the addition of new technologies. APC made 2 acquisitions First Byte Micro and Aspen Electronics in the period. APC remains focused on its growth strategy. We have kept our FY2019E PBT of £1.63m, up 139% and EPS at 0.74p putting the shares on a PER of 9.5x. We retain our Buy and 12p TP.
Today’s update highlights that the group continues to trade in line with management expectations. APC continues to make progress in its three-five year strategy to grow through increased bookings from existing technologies, especially those in high growth markets, from signing new complementary product lines and through targeted bolt-on acquisitions. We are forecasting FY2018E revenues of £17.51m, EBITDA of £1.18m, PBT of £0.68m and EPS of 0.42p. The group is due to announce finals on 17 December. Buy TP 12p.
Litigation Capital Management—provider of litigation financing and ancillary services, moving from ASX (ASX:LCA) to AIM. Offer TBC. Due 18 Dec. Mkt Cap A$64m.
Crossword Cybersecurity PLC* (NEX:CCS)—the technology commercialisation company focusing exclusively on the cyber security sector is due to start trading on AIM 14 December. Raising £2m at 290p. Mkt cap at issue price £13.6m.
Manolete Partners—leading UK insolvency litigation financing business looking to join AIM raising £16.3m as a placing and £13.1 realised by the selling shareholder at 175p. Market cap £76.3m, expected 14 December
Titon holdings—international manufacturer and supplier of ventilation systems and window and door hardware. No capital raise. Due 10 Dec. Mkt cap c.£22m.
Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected early December.
Companies: INSE QFI SOU ZIN IME MVR APC TM17 IHC CIP
Market volatility persists with an agreement between the US & China to defer further tariff increases lifting major indices. However, the uncertainty surrounding the Brexit process continues to dominate in the UK. The impact on our universe is clear from the table below with AIM notably weaker. The reporting season runs on, though it should lighten, ahead of the festive season next week just as the progress of the Brexit deal reaches a crescendo. In Share News & Views we comment on AorTech*, Begbies, Bonhill*, FireAngel*, Golden Ocean, IG Design, Location Sciences*, Menzies, Nucleus & Synectics*.
Following the gyrationsin October, we have continued to see further volatility this month. While some of the factors that unnerved investors have receded, Brexit concerns dominate, with the eventual outcome still unclear. At home, the reporting season has proved variable with both notable ‘risers and fallers’. The flow of announcements continues, although things may quieten down, ahead of the festive season. Undoubtedly the progress of the Brexit deal is key. In Share News & Views we comment upon AdEPT, Burford Capital, Carrs, Codemasters, Cropper*, DCC, Marshall Motor, Norcros and Wincanton.
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Strix has announced the strategic acquisition of LAICA a family owned business in Vicenza, Italy for €19.6m in a mixture of cash and shares. It will be earnings accretive in FY21 and is scheduled to complete by the end of FY20, with just Italian government approval outstanding. ZC operating profit estimates are unchanged in FY20 but increase by c. 8% in FY21 to reflect the contribution from the deal, the impact on earnings is smaller due to the issue of shares and higher tax in Italy. Management believe significant synergies, both cost and revenue, will be derived from the deal over the next 2-5 years. The interim results had been well flagged in the comprehensive trading update in late July and today’s statement confirms that profitability remains in line with the guidance of achieving a flat performance yoy in FY20. The interim dividend of 2.6p is in line with last year and in keeping with the commitment to at least meet the 7.7p paid in FY19. Unlike most peers, Strix has maintained guidance as well as its commitment to pay a dividend and today’s acquisition unpins the continuing strategy of diversifying the business into areas offering greater growth.
Companies: Strix Group Plc
Augean has reported interims to 30 June 2020. With the first half bearing the full impact of Covid-19, adjusted PBT decreased by 11% to £8.5m, which is in line with our expectation. With radioactive wastes, biomass for EfW and construction impacted by lockdown and depressed activity levels in its North Sea services, due to the low oil price, the results demonstrate the resilience of the Group and also the benefit of its key position in its markets with strategically located hazardous waste treatment and disposal facilities in the UK. Whilst the statement highlights that full year results are expected to be broadly in-line with market expectations, we have conservatively reduced forecasts. Nevertheless, with strong cash generation and sustained growth EV/EBITDA falls to 5.3x and 4.1x for FY21E and FY22E, a level that is substantially below sector constituents and transaction valuations.
Companies: Augean Plc
Strix has published reassuring interims and announced the acquisition of LAICA, conditional upon approval from the Council of Ministers in Italy. Against a backdrop of global disruption caused by COVID 19, Strix’s H1 performance is in line with expectations. Net sales down 21% YoY, with a much smaller impact on net profits on the back of strong cost management. Encouragingly, FY 20 profit expectations are now underpinned, at around £28.9m PAT. Taking into account the LAICA deal, we provisionally upgrade FY 21 PAT/EPS by 6%. The shares are already up materially YTD, but the Strix growth story remains compelling.
Judges Scientific is focused on acquiring and developing companies in the scientific instrument sector. Given the backdrop of H1, and the global nature of Judges' customer base, we see this morning's results as a significant achievement when set against the backdrop of significant COVID related headwinds. Revenue decreased by 6.8% (organic -12%) to £37.4m (H1-19: £40.2m) which, after the sensible management of the cost base, yielded an adjusted pre-tax profit of £6.4m (H1-19 £8.4m), a 22% reduction, and adjusted fully diluted EPS of 82.5p (H1-19: 107.0p). However, reflecting a commitment to its progressive dividend policy, and confidence in the business, the interim DPS is increased by 10% to 16.5p. With respect to H2, COVID related business risks remain, none of which are unique to Judges. However, given the relative strength of H1 (albeit at some expense to the order book), management flag ‘cautious confidence' in achieving full year market expectations. As such, our FY 2020E adjusted PBT and EPS estimates are unchanged this morning.
Companies: Judges Scientific Plc
Byotrol’s FY 2020 full-year results are inconsequential, given the dramatic and positive impact that the COVID-19 pandemic has had to product sales since the year-end. However, year-end cash was £0.1m above forecast at £1.7m and when combined with positive cashflow since year-end, Byotrol is well-resourced to finance its ongoing operations and steady growth. With the order-book remaining strong (c.£1.1m at 31 August), despite summer lull, and demand likely to persist for some time, given the emerging second wave of coronavirus, we upgrade EBITDA to reflect lower costs and higher licensing income. If, as we suspect, the demand curve has shifted sustainably to the right, this leaves room for further upgrades. Consequently, we raise our target price to 11p, at which level the stock would trade on EV/Sales and EV/EBITDA of 4.1x and 26.9x, respectively. Future revenues and milestones from licensing deals will be largely additive.
Companies: Byotrol Plc
Billington is a leading structural steel and construction safety solutions specialist. The Group has this morning announced that its structural steel division, Billington Structures, has been awarded three contracts with a combined value of £21 million, the largest of which is for a UK power based project (Midlands) that will add significant visibility (at good margin) to FY 2021E. The other two contracts, in the manufacturing and commercial office sectors, are for delivery in Q4 2020 and through 2021 respectively.
Companies: Billington Holdings Plc
Directa Plus is a commercially proven graphene supplier with a unique production process that creates high quality materials that are already used in a wide array of products internationally across multiple verticals. We expect the company to reach EBITDA positive in FY22 with existing cash reserves, leaving material upside in our expectations from some of its recently developed products such as the Co-Mask and Gipave.
We see Directa Plus as an underappreciated, undervalued and more mature and lower risk play in the UK listed graphene and speciality nanomaterials space and initiate with a Buy recommendation and 122p target price.
Companies: Directa Plus Plc
Today’s AGM Statement highlights further progress during H1. As anticipated at the final results on 6th August, trading has now returned to pre-COVID levels, with a particularly strong recovery in housing market activity. As at 31st August, the order book has increased by 5% to £69.4m from £66.2m at 31st, with contracts secured across the Group’s end markets. The Company has invested in its sales team and back office functions in order to support the recovery, though management continues to monitor costs given the near term uncertainty presented by COVID-19. In the absence of more restrictive lockdown measures, we would expect activity to continue to improve in the near term and the medium term prospects of the Group remain encouraging, supported by the UK’s net-zero target, which will require substantial investment in the UK’s utility networks. Fulcrum has also announced the appointment of Jennifer Cutler as CFO from 19th October, whose most recent role was Direct of Finance at Harworth Group Plc. The shares have justifiably outperformed since the full year results and today’s statement is supportive of this increase. Forecast guidance continues to be withdrawn given near term COVID uncertainties, but we anticipate reintroducing forecasts at the interim results.
Companies: Fulcrum Utility Services Ltd.
We initiate coverage on AFC Energy and see this as a significant long-term growth opportunity. We have only focused on the UK potential in EV Charging and Distributed Power in this note but believe the application will be far wider both in geography and application. Following a transformational 2019, we can see a clear near-term intrinsic value of 68p based on UK EV Charging and Distributed Power alone.
Companies: AFC Energy Plc
Billington provides structural steel and safety solutions to the construction industry. After record results in FY 2019, Billington's interim results to June 2020 reflect the anticipated disruption of Covid-19. However, the Group remained profitable in the period (revenue £32.8m, adjusted PBT £0.6m) and the balance sheet retained its significant cash backed strength. Further, although pricing pressure is still a significant feature in the market, as the announcement of £21m of orders yesterday demonstrated, there is still plenty of business to be won in less competitive segments. Our FY 2020E estimates remain suspended, but all other things being equal, it is not beyond the bounds of possibility that Billington could deliver a similar performance in H2 as reported in H1. The present order book is supportive of such a scenario. The outturn for FY 2021E is harder to determine, but there again, Billington is exposed to a number of verticals where investment continues and where competition is less pronounced. With its strong balance sheet likely a significant comfort to clients, the medium-term prospects for Billington, in our view, continue to be strong.
Today's news & views, plus announcements from VOD, POLY, SMDS, BLND, BYG, WEIR, DC, SNR, SHI, INTU, IHR, CNC, ARE, INCE
Companies: INTU SHI INCE
SIMEC Atlantis has materially de-risked the Uskmouth conversion project with a framework agreement to fund 100% of phase 1 with a secured loan. Together with the recently announced investment in the fuel supply company, SIMEC Atlantis is now well placed to move towards financial close on the Uskmouth project in line with our expected timetable. We have updated our forecasts for the new investment and the recent results. Our central case valuation now reflects these and an assumed 100% debt financing for Uskmouth and rises to 68p from 55p.
Companies: SIMEC Atlantis Energy Ltd.
Spectra Systems, a leading provider of advanced technology solutions for banknote and product authentication markets, has announced a solid set of interim results. Moreover, significant H2 visibility, notably from central banking customers, yields upgrades to our FY 2020 and FY 2021 estimates with adjusted PTP increasing 17% and 16% to $5.8m and $6.1m respectively. In terms of H1 numbers, revenues increased marginally to $6.5m (H1-19: $6.4m), and adjusted pre-tax profit came in flat at $2.3m. The balance sheet retains its robust state which, even after the $4.1m FY 2019 dividend, distributed June 2020, still holds $10.9m (H1-19: $11.1m) of net cash (excluding restricted cash of $1.3m, H1-19 $1.1m). Our Sum-of-the-Parts valuation indicates a risked fair value more than 200p.
Companies: Spectra Systems Corp.
Who would have thought when reporting pre-tax losses of £10m after the first half to end June that Breedon would emerge so strongly from lockdown to trade through July-August (and into September) with LFL revenues ahead of comparative 2019 and expected H2 EBIT broadly in line with the equivalent 2019, resulting in a reinstatement of guidance ahead of current FY20 consensus. That is a mark of confidence as much in the group's operating capabilities as market recovery itself – a feature of Breedon's management quality over a consistent period of time. Investors will be impressed by the short-term recovery but also encouraged that the longer-term outlook remains positive with an emphasis to infrastructure markets in GB and Ireland plus, of course, its unrivalled ability to utilise its asset base very efficiently and to add to that platform with accretive acquisitions. The shares hit a COVID ‘low' of 63p but were trading as high as 100p in February. We would see that upper level as the more likely direction of travel for the shares with 90p justified by a forward 2022E rating of 7.5x EV/EBITDA, c14x PE, commencement of dividends and significant deleveraging through high net cash flow generation.
Companies: Breedon Group Plc
2G Energy’s product portfolio of CHP systems positions it to benefit from the transition from coal and nuclear-powered electricity generation to increasing use of wind and solar sources augmented by natural gas to balance supply and demand. In the longer term, 2G has proven technology to address the potential switch from natural gas to hydrogen. However, there still will be significant demand for 2G’s bio-gas and natural gas powered systems if adoption of hydrogen as an energy storage medium is delayed or derailed.
Companies: 2G Energy AG