Frenkel Topping has acquired 6% of the share capital of NAHL and NAHL has confirmed that it has received an approach from Frenkel Topping proposing an all share combination. The Board of NAHL is considering the proposal. We move our recommendation from sell to neutral.
Companies: NAHL Group Plc
Cambridge Cognition (COG): Corp | Frenkel Topping (FEN): Corp | Ideagen (IDEA): Corp | Iofina (IOF): Corp | K3 Capital (K3C): Corp | NAHL (NAH): Corp | President Energy (PPC): Corp | Tremor (TRMR): Corp | Trifast (TRI): Corp
Companies: COG FEN IDEA IOF K3C TRMR TRI PPC NAH
H1 was very challenging for NAHL due to COVID-19 but, demonstrating its resilience, the group remained profitable and free cash flow increased strongly. As a result, net debt reduced from £21.0m at December 2019 to £18.5m at June 2020. New banking covenants have been agreed and the £25m facility term extended by a year to 31 December 2022. Since the end of June the group has observed an increased demand for its services and, in August, personal injury enquiry volumes recovered to c.70% of prior year. While the potential for further lockdowns makes the short-term outlook uncertain, we continue to believe that with prudent management of short-term cash flow, NAHL can trade through the current challenges with its long-term potential undiminished.
NAHL Group has announced that CEO Russell Atkinson has resigned from the Group with immediate effect and will leave the company at the end of September 2020. The Board has started a process to find a replacement and Chair of the Board, Caroline Brown will perform the role of interim CEO in the meantime while the operating divisions of the Group are headed up by their own management teams. Given the financial and strategic challenges the Group has faced, we do not see this news as particularly surprising and expect the strategic issues facing the next CEO will continue to be a challenge for the share price.
Alumasc (ALU): Corp FY trading statement | City of London Group (CIN): Corp Recognition of a resilient potential operating model | dotDigital (DOTD): Corp FY20 trading update | Frenkel Topping (FEN): Corp A creative, niche acquisition strategy to secure growth | NAHL (NAH): Corp Net debt reducing and cost savings identified
Companies: ALU DOTD FEN NAH CIN
ANGLE (AGLE.L): Corp Prelims – back in the saddle post-COVID disruption | NAHL (NAH): Corp Battling through the short-term challenges | Transense Technologies (TRT): Corp Licence and transfer of iTrack to Bridgestone
Companies: TRT AGL NAH
ANGLE (AGL): Corp Progress report since COVID-19 lockdown | NAHL (NAH): Corp Navigating change in difficult markets | Omega Diagnostics (ODX): Corp VISITECT CD4 supply agreement with CHAI | Proactis (PHD): Corp Reset of banking facility | STM (STM): Corp Transitioning into new markets from a robust base | Universe Group (UNG): Corp Strong FY19 trading update, strong FY20 order book
Companies: ODX PHD STM UNG AGL NAH
NAHL’s FY 2019 results are in line with our revised expectations. The immediate focus has now switched to tackling the challenges posed by COVID-19: working from home and remote access have been enabled; existing PI claims can be progressed relatively normally, supported by technology; and the group’s Critical Care business, which generated 50% of 2019 profits, is defensive. The Residential Property market will be very quiet in the short term. PI enquiries are likely to reduce significantly in the short term but marketing costs (£14m in 2019) will reduce in line with this and other significant cost savings are being made. Further cash flow will be maximised by increasing the mix of enquiries placed with the law firm panel and there are significant cash inflows to come from existing or previous cases. Management has stated it is too early to assess the full impact of COVID-19 with any certainty, and we leave our forecasts under review. Overall, we believe that with prudent management of short-term cash flow, NAHL can trade through the current challenges with its long-term potential undiminished.
COVID-19 Trading Update – Challenged
NAHL (NAH): Corp | Omega Diagnostics (ODX): Corp | Proactis (PHD): Corp | Wameja (WJA): Corp
Companies: WJA ODX PHD NAH
Personal Injury faced increasing competitive pressures in 2019 and a higher cost of generating new claims affected the volume of enquiries. The implementation of the Government’s small claims legal reforms looks likely to be delayed from April 2020 (we suspect until late 2020 at the earliest) and this is likely to prolong the current market conditions. Once the changes are implemented, the group is very well placed to make strong progress, but we need to reflect the current uncertainty and market conditions in more cautious forecasts. We have downgraded FY 2019E EPS by 8% and FY 2020E by 25%. Our net debt forecasts improve due to the suspension of the dividend and receipts from the NLP settlement. We reduce our target price to 87p based on a 50% discount to the market free cash flow yield in 2021.
Allergy Therapeutics (AGY): Corp Read-across from Aimmune’s peanut FDA approval | Avacta (AVCT): Corp Cell therapy JV update | NAHL (NAH): Corp Industry-wide uncertainty | President Energy (PPC): Corp 2019 highlights and trading update
Companies: AGY AVCT PPC NAH
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
Kingswood Holdings (KWG): Corp Rapid growth strategy well underway | Minds + Machines (MMX): Corp Legacy onerous contract settled as expected | NAHL (NAH): Corp PI marginally ahead, Property behind
Companies: MMX NAH KWG
At a time where UK public market valuations remain subdued, especially given GBP weakness, it seems reasonable to assume the potential for opportunistic private bids may increase. We have long argued the merits of certain business services companies with exposure to the legal sector, and we believe recent private interest in the space supports this. In our view, the demonstrable private intrigue may provide a floor to valuations, leaving significant upside risk; if the public market does not correct this mispricing, private equity or M&A may do.
Companies: ANX GTLY INCE NAH REDD
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Interim results to 30 June reflected a step-up in research activity post-June fundraise as it seeks to take its first pre|CISION targeted chemotherapy into clinical trials in early 2021. With period-end cash of £54.5m, Avacta has a cash runway into 2023, providing the necessary working capital to deliver a rapid SARS-CoV2 antigen test, take AVA6000 into the clinic, as well as its first Affimer immunotherapy and the next pre|CISION pro-drug into the clinic. Avacta is aiming to have validated its rapid SARS-CoV-2 antigen test in Q4 2020, the exact timing of which is dependent on pilot batch product from BBI Solutions. However, it is increasingly clear that there is a need for mass screening tests to isolate and remove infectious people, with Avacta’s test at the forefront. We have made changes to FY 2020 forecasts, introduce FY 2021 forecasts and a target price of 310p with a range of 211-796p.
Companies: Avacta Group Plc
Full-year results to 31 May 2020 deliver revenue of £15.0m (+10.3%) and EBITDA of £6.8m (+36.0%) as noted at the acquisition of Quantuma Advisory. We continue to believe a key value driver of owning K3 shares is an investor’s exposure to the positive disruption being wrought by the company’s model, which now has the ability to be applied to synergistic markets across the addressable professional services SME sector as a result of the two recent acquisitions. The already proven restructuring and insolvency practice specifically has the potential to deliver significant upside in the current environment. We reiterate our estimates, noting EPS growth of 63% between 2020A and 2023E. Target price remains 300p, offering 100% upside from the placing price of 150p.
Companies: K3 Capital Group Plc
FY20 results reflect a year of trading in-line with earlier expectations, until being significantly interrupted in Q4/20 by the impact of Covid-19. Despite this, 1pm remained profitable throughout, despite accepting forbearance requests and prudently lifting bad debt provisions for the future. Post-period, there has been a noticeable pick-up in trading as the UK economy recovers, which 1pm is currently positioning itself for. A P/TNAV of 0.55x materially undervalues 1pm, hence we remain at “Buy”.
Companies: 1pm Plc
H120 adjusted EBITDA of £9.1m was the main positive surprise for us in Ergomed’s full interim report released today. We have increased our adjusted EBITDA forecasts to £18.3m (up 8.6%) in 2020 and £20.1m (up 6.8%) in 2021. A strong order book (£151.4m, up 22.0% from the end of 2019) with high visibility into 2021, continued overall business growth and a strong balance sheet should allow Ergomed to successfully navigate the COVID-19 pandemic, invest in organic growth and look for potential strategic acquisitions. Our valuation is upgraded to £409m or 845p/share.
Companies: Ergomed Plc
Open Orphan has announced a new £4.3m contract to conduct a Respiratory Syncytial Virus (RSV) human viral challenge study. The customer is a top 10 global vaccine company which continues to demonstrate the attractiveness of the hVIVO assets and the Group's increasing ability to attract business from the largest vaccine and pharmaceutical players in the world. Buy.
Companies: Open Orphan Plc
Positive EBITDA in FY20A was a major milestone. Investment across the business is up and there is a clear strategy in place to deliver value for shareholders. The balance sheet is strong post the placing and the business is now self-sustaining. In light of this Rosslyn trades on an unwarranted discount to the software sector.
Companies: Rosslyn Data Technologies Plc
Despite the challenges of the past few months, XLMedia remains profitable on a run-rate basis. The interim results have delivered a much more robust performance than expected, in our view. With work progressing on recovering its position in its Casino vertical expected to yield results from Q4 onwards, there is a visible recovery profile ahead. With the >50% of the market cap in cash we are Buyers.
Companies: XLMedia Plc
Gateley grew FY 2020 sales by +6% and maintained profits despite the impact of COVID-19 and has remained profitable and cash-generative since. Swift action was taken to reduce costs and successfully move to home working. While there is no immediate financial guidance, the group is ideally placed to help clients with the legal implications of the sudden and very significant changes all businesses have seen and is supported by strong finances with net debt of only £0.9m at April 2020 down from £3.2m in 2019.
Companies: Gateley (Holdings) Plc
Timing is everything when it comes to innovation. Too early, and even ground-breaking technology can struggle to gain traction. Too late, and the opportunity might be lost. A tricky balance. However for Rosslyn Data Tech, we think this ‘battle-hardened’, cash-rich (Est Apr’21 net funds of £6.1m) & now profitable SaaS firm is ideally placed to benefit from strong secular demand for its cutting-edge & fully integrated Big Data, AI, spend analytics, SMDM (Supplier Master Data Management) & customs/duty handling applications.
Following a number of recent contracts wins GYG’s order book now stands at record levels, which we believe should give investors confidence in current forecasts. We leave our published numbers unchanged at this juncture but believe our assumptions to be well underpinned by increasing trading momentum backed by the record order book, coupled with efficiencies and cost savings evident in the H1 margin trends.
Companies: GYG Plc
Keywords Studios has again showed the resilience of its model in H120, delivering 8% l-f-l revenue growth, 19% adjusted EBITDA growth and 17% adjusted EPS growth despite the impact of COVID-19. Adjusted EBITDA margins of 17.8% have held up better than we expected. Looking ahead, we see sustained industry growth, led by the console transition in Q420, with publishers increasingly recognising the resilience Keywords adds to their development processes. Following its third acquisition of the year, we see management once more focusing on M&A with net cash of €101m. Keywords’ strategy, which has delivered a five-year EPS CAGR of 42%, appears sustainable, with dividend payments to be resumed in FY21. As such, we believe that the shares remain set for continued appreciation.
Companies: Keywords Studios Plc
Open Orphan has announced that hVIVO has signed a new contract for an RSV human challenge study clinical trial with a top 3 global pharmaceutical company. The contract shows the Group's ability to convert the existing hVIVO pipeline and engage with the top customers in the industry providing great encouragement for investors in the medium term. Reiterate Buy
RBG Holdings had H1 revenues of £12.0m, up 17% against H1’19, of which £11.7m came from the Group’s law firm, RBL. On a LfL basis (excl. £2m of discretionary gains from litigation assets in H1’19), Group revenues were up c.46% YoY. EBITDA of £2.6m offers still-compelling margins of 22%. Transaction delays in Convex and a period of investment in LionFish held back ST performance for these higher margin divisions, yet pipelines remain healthy for Convex. Management is bullish on its ability in H2 to divest litigation assets in order to fund new investment, and in line with strategy. Continued uncertainty over timings around Convex transactions completing, and COVID headwinds, means we keep forecasts withdrawn, however suggest an intrinsic value of 90p is comfortably achievable for the shares.
Companies: RBG Holdings Plc
Dillistone is a supplier of software for the international recruitment industry. Interim results to 30 June 2020 demonstrate a profitable performance, which is highly creditable given the company's global customer base, and exposure to recruitment markets, both of which have been significantly impacted and influenced by COVID-19.
Companies: Dillistone Group Plc
WSG announced that its Technology Division has been awarded a contract to replace and maintain the security screening equipment at the Palace of Westminster, more commonly known as the Houses of Parliament, UK.
Companies: Westminster Group Plc