Bango (BGO): Corp Bango scales up Far East operations | discoverIE (DSCV): Corp Resilient H1, improving outlook, dividends returning | LPA Group (LPA): Corp Prestigious Siemens project award | Touchstone Exploration (TXP): Corp Chinook announced as another significant gas discovery
Companies: DSCV LPA TXP BGO
The Interims are as flagged in the July update; global lockdowns helped End User Spend (EUS) over the platform rise by 59% YoY to £743m. Encouragingly, the H1 revenue growth closely matched that rise; increasing 50% YoY, to a record £4.8m. With operational gearing in the platform, group profitability continues to rise rapidly as revenue grows; H1 adj. EBITDA of £1.1m, more than double the whole of FY 2019 earnings. The major deals delayed in FY 2019 also arrived in H1, for Platform and Bango Marketplace; notably, the purchase of a controlling stake in Audiens by Korean tech giant, NHN, assisting management focus while retaining a 40% stake in a business set to be boosted by funding and IP from its new parent. Operating activities were cash positive and capex was more than covered by an NHN investment, lifting net cash to £4.2m. This is an exciting year, with deals signed in H1 expected to help EUS reach £2bn in 2020 and leaving BGO on track to meet our FY forecasts of strong revenue growth and material profitability.
Companies: Bango plc
Avingtrans (AVG): Corp | Bango (BGO): Corp | Elixirr (ELIX): Corp | eve Sleep (EVE): Corp | Evgen Pharma (EVG): Corp | Maintel (MAI): Corp | President Energy (PPC): Corp
Companies: AVG MAI PPC EVG BGO EVE ELIX
Against a backdrop of global economic turbulence driven by COVID-19, Bango’s H1 20A results confirm robust growth in End User Spend (“EUS”) and revenues, alongside record EBITDA and a solid improvement in operating cash flow. Execution in the payments business remains strong, and growth in Bango Marketplace in our view demonstrates the group’s increasing traction in data monetisation. The outlook statement is positive, and we make no changes to underlying estimates following the announcement. Overall, we continue to believe that momentum remains strong, and that the group is well placed to deliver its FY 20E targets.
Argo Blockchain (ARB): | Bango (BGO): Corp | Somero Enterprises (SOM): Corp
Companies: SOM BGO ARB
Bango’s H1 20 trading update in our view delivers a number of confident messages. Growth in the key End User Spend (“EUS”) metric remainsrobust, and the group delivered record revenue growth and EBITDA during the period. The group’s financial position saw a solid improvement in the first half. A closing gross cash position of £4.2m represents a £1.5m increase on the FY 19A level and demonstrates the company is now generating cash from its operations. H1 20 was a busy period for Bango, with a number of new contracts signed in both the payments business and Bango Marketplace, establishing a good base for growth in the second half and into 2021. We make no changes to estimates following the update but believe that Bango continues to demonstrate strong momentum and that the group remains well placed to deliver its FY 20E targets.
Companies: Bango Plc
Bango (BGO): Corp | DX (DX): Corp | Elecosoft (ELCO): Corp | IQGeo Group (IQG): Corp | Netcall (NET): Corp | Omega Diagnostics (ODX): Corp | Somero Enterprises (SOM): Corp
Companies: ELCO ODX SOM IQG BGO DX/
This has been an impressive half for Bango. Mobile usage and transactions have risen during lockdown, driving End User Spend (EUS) over its platform up by nearly 60% to £740m. Moreover, Bango’s ongoing revenue also rose >50%, to a record level of £4.8m, with revenue growth more closely matching EUS growth than previously. With operational gearing in the payment platform, group profitability continues to rise rapidly as its revenue increases; group H1 2020 adj. EBITDA alone beating the whole of FY 2019. The major deals delayed from December also flowed through, both in Payments and the early-stage Bango Marketplace business. The period saw the purchase of a controlling stake in Audiens by a S. Korean tech conglomerate, allowing increased management focus while retaining a 40% stake in the business set to be boosted to a new level by considerable funding and IP injected by its new parent. Overall, Bango was cash generative and ended the half with £4.2m cash, suggesting c.£0.8m of cash from operations. This is a very reassuring performance, with the deals signed in H1 expected to boost H2 EUS to the £2bn targeted this year and leaving the company on track to meet our FY forecasts of strong revenue growth and material profitability.
Boku Inc has announced the intended acquisition of Fortumo Holdings. In our view the deal has strong industrial logic for Boku, but highlights the differences in strategy compared to DCB competitor Bango. Bango is more focussed on the data and marketing opportunities that arise from mobile payments, whereas Boku highlights broad coverage and low cost alongside its push into mobile identity.
Bango has announced that it has enabled Direct Carrier Billing (“DCB”) for Japanese Mobile Network Operator (“MNO”) SoftBank on Amazon.co.jp. The release contains no financial details as to the value for Bango and we make no changes to forecasts. Nevertheless, enabling DCB for SoftBank allows Bango to address 43m new subscriptions and with the group already supporting DCB in Amazon Japan for NTT DoCoMo and KDDI (#1 and #2 Japanese MNOs), gives access to over 90% of the Japanese market. Furthermore, we expect that gaining access to almost the entire Japanese mobile market via the leading e-commerce platform (Amazon) will generate increased levels of customer insight data, in addition to an anticipated uplift in payment volumes.
Bango (BGO.L): Corp | BOTB (BOTB.L): Corp | Evgen Pharma (EVG.L): Corp | Lok'nStore (LOK): Corp | Open Orphan (ORPH.L): Corp | President Energy (PPC): Corp
Companies: BOTB LOK PPC EVG BGO ORPH
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Bioventix reported a strong set of full-year results, that were 8% above expectations, assisted in part by a c.£0.2m (+3%) FX benefit, which helped offset the obvious drag on performance in Q4 due to the impact of COVID-19 on routine testing in hospitals. A 53p special dividend was proposed, resulting in a full-year dividend of 141p, up 18%. Due to the COVID-19-related disruption to testing, which only exacerbates the poor visibility to customer royalty streams, we are withdrawing forecasts until normality returns. That said, the business remains in very good shape, with evidence that: (i) high sensitivity troponin is gaining momentum; (ii) physical antibody sales growth remains robust (+34%); and (iii) progress in its development pipeline (particularly pollution monitoring programme) is being made. The business is expected to remain cash generative, and with c.£8.1m of cash at 30 June, the company is a strong position to weather this period of disruption before returning to growth.
Companies: Bioventix Plc
Driver Group’s year end update highlights an expected full year PBT outturn of £2.5m (£1.3m/£1.2m H1/H2) after adjusting for costs relating to the departure of Gordon Wilkinson. Whilst this represents a slight decrease on the prior year, given the impact of COVID-19, this is an impressive result. Geographic diversity continues to benefit the Group, with a strong performance in the UK and Europe offsetting a weaker result in the Middle East and APAC regions in FY20. Forecast guidance remains suspended given the uncertain near term outlook, but the Group continues to generate profit and cash. Strategic progress is also being made, with the Group taking opportunities to both hire new staff and further expand its geographic presence, not least opening a new office in New York and forming a strategic partnership in Africa. Management has also delivered a restructuring of the Middle East and APAC regions, in order to drive a more profitable business and provide a platform for younger talent to progress. The balance sheet remains robust, with net cash of £8.2m at the year end.
Companies: Driver Group Plc
Positive update today, reporting that trading in FYJun21 has begun well. As a result – and also thanks to DOTD’s strong revenue visibility – revenue guidance is already being upgraded. Consequently, we lift FY21E sales by 6% to £53.0m, so now expecting +12% y/y growth. To put this into context, growth fell to +9% in 2H20. We find this rapid recovery to more typical growth levels highly encouraging. Guidance for profit and cash is reiterated, meaning we leave both profit and cash forecasts unchanged. Somewhat obviously, this requires us increasing our cost assumptions….and if these don’t fully materialise, provides upside risk. Cash continues to build, now £27.7m as at Q1 – we might expect this to be strategically deployed, to enhance what is impressively consistent organic growth.
Companies: dotDigital Group plc
Franchise Brands has provided a Q3 trading update with a strong rebound in trading across the Group. The B2B division has recovered from the lockdown impacted Q2 and system sales have grown by an average of +8% per month since June. In September, B2B system sales for the month were +9% higher than the same month in the prior year. The B2C brands have recovered at different speeds, driven by new franchisee recruitment. ChipsAway and Ovenclean (89% of B2C income in 2019) are trading at pre-CV19 levels. Franchise Brands remains in a strong position with a solid balance sheet and liquidity position. The Group is confident of meeting market expectations for FY2020.
Companies: Franchise Brands plc
Water Intelligence ("WI") has announced a new national contract with a leading insurance company in the United States. The new win is the third in H2 and confirms the growing recognition among major US insurance companies that WI is a trusted national partner to minimise water-related claims. The Group's two October wins will further accelerate growth from the B2B channel. The latest win is the sixth nationwide contract for American Leak Detection ("ALD") with a top US insurance company, reflecting ALD's position as the only nationwide pinpoint, minimally invasive leak detection specialist. Despite the disruptions posed by CV-19, WI has performed well in 2020E and this new win reinforces the Group's impressive growth trajectory. We maintain our Buy recommendation and believe shares could continue to rerate closer to 600p.
Companies: Water Intelligence plc
This morning's announcement of another insurance client win caps a week of excellent newsflow from WATR. Since the company entered this colossal ($US13bn-plus) sector, strong insurance-derived growth has been achieved in this area, helped by WATR's status as the only national player to provide pinpoint services identifying water leaks while minimizing damage claims. Beyond this morning's announcement, this has been a week to remember for WATR, with a strong Q3 update on Oct. 14th generating c.8% '20 /'21 profit upgrades followed by the news at the start of the week of a successful fundraise delivering just shy of $US5m which can be put to work generating growth for the company and its shareholders. As the fifth such win, this morning's announcement is a reminder of the very good traction the company has achieved with the US insurance majors. Our 550p fair value estimate includes the annuity-style earnings stream from the franchise businesses in a Sum of the Parts structure. We note the company's conclusion that demand is high for its solutions and also the fact that WATR is an “essential service provider” in the Covid context. Beyond this morning's encouraging news, we also note the recent award of the Green Economy Mark from LSE and the company's consistent track record of 30%+ CAGR in recent years.
Yesterday's well-subscribed placing at 8p provides VDTK with £3.5m of extra funding to enable the company to grow by financing working capital during the ramp up of production at its Lainate plant on the back of orders – to date, orders amounting to €2.6m in value to have come through the door since the appointment of new CEO Rob Richards in May 2020. Key orders included contract wins in diverse areas, ranging from the Australian mining sector to oil & gas, agriculture and marine applications; with a focus in the first instance on off-grid applications where the rationale is extremely visible, given the contrast between VDTK's lightweight product and the heavier and relatively fragile conventional product, with VDTK's product offering its clients a meaningful cost-advantage.
Companies: Verditek Plc
Another insurance win, announced by WATR this morning, underlines the national presence of its subsidiary American Leak Detection, which has helped to make it the go-to player for providing pinpoint services at once identifying water leaks and minimizing damage claims across the whole of the United States. The new client is a major insurance company, the second in two weeks, third in H2-20 and the sixth in the three years since the company effectively entered the space as part of management's long-term growth strategy. WATR has been growing fast, generating 30% CAGR in recent years, and the insurance channel has been a notable component of this growth, at over 30% in each of the past five years. These wins, combined with the Company's recent fund-raise, reinforce this trajectory, even from a larger base.
ORPH has signed a contract with the UK Government for the development of a COVID-19 human challenge model. This will involve manufacture of the challenge virus and a first-in-human characterisation study. The contract begins immediately and is likely to be worth c.£10m. The government has also reserved the first three slots to test vaccines using the challenge study at a total cost of £7.5m. We revise our forecasts and increase our SOTP target price to 28p (range 25-31p), reflecting ORPH’s world-leading position in traditional challenge models, and now COVID-19 challenge models, with additional upside from the potential development of new challenge models, the monetisation of valuable challenge model data and the potential sale of its non-core pharmaceutical assets.
Companies: Open Orphan Plc
Avacta (AVCT.L): Adeptrix COVID-19 Diagnostic Test update | Diaceutics (DXRX.L): New contract win
Companies: Avacta Group plc (AVCT:LON)Diaceutics Plc (DXRX:LON)
Open Orphan has announced a contract with the UK Government to develop and perform the UK's first COVID-19 (COVID) human challenge studies. The multi-faceted agreement provides strong endorsement and validation of hVIVO's capabilities, with material revenues driving forecast upgrades and further upside risk to earnings as pipeline conversion continues and industry awareness and penetration of challenge studies accelerates.
Companies: OPORF ORPH CRO VENN
ANGLE plc (AGL.L): Acceptance of FDA submission | Feedback plc (FDBK.L*): Partnership agreement | Open Orphan (ORPH.L): Human Challenge Study Model contract with UK Government
Companies: AGL FDBK ORPH
Elixirr has acquired Coast Digital, a UK-based digital marketing firm, for a maximum consideration of £3.8m. The initial consideration of £3.4m represents a multiple of only 3.9x historic EBITDA compared to Elixirr’s current 11.1x. Coast will extend Elixirr’s existing digital capability and provide significant cross-selling opportunities, exactly in line with the group’s strategy as detailed at the IPO. We have upgraded FY 2020 EPS by 1% and FY 2021 by 7% and our target price from 336p to 356p. We reiterate our view that Elixirr’s entrepreneurial culture and focus on helping clients build businesses, new products and client experiences are key differentiators and very much in tune with client needs.
Companies: Elixirr International Plc
The Westminster Foundation has delivered on its promise to provide a sanitisation tunnel to Freetown International Airport in Sierra Leone. The sanitisation tunnel is a proven method to deliver a 360-degree sanitisation of people and objects in five seconds, killing up to 90% of pathogen microbes. It is just one of the protective mechanisms installed at the Freetown Airport to boost passenger confidence in travel to and from the region. Recall that WSG operates a complete airport security management contract for the Freetown Airport. The renewable contract is for an initial 15 years (start date 2012), valued at over US$4m/year.
Companies: Westminster Group plc
The H1 results were well flagged in the 15th April update. H1 PBT is significantly ahead of last year at £1.3m (H1’19: £0.8m). Driver traded profitably through April to June. Whilst guidance is suspended, with the pipeline maintained, we believe the Group will continue to trade profitably through H2. As flagged in the H1 update, there is no interim dividend, with management seeking to preserve cash. The balance sheet is strong, with net cash of £3.3m at 31st March (improved to c.£5.5m post period end). We believe the medium term outlook is positive, with new CEO Mark Wheeler focused on improving profitability and growing the business. Delays in construction projects as a result of COVID-19 should support near term levels of dispute work, whilst an expected increase in infrastructure spending supports the medium term outlook.