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Ian Pollard: ABF – Primark Faces 2% Like For Like Decline

Associated British Foods ABF expects a small reduction in adjusted operating profit as it enters the close period for its interim results for the 24 weeks to 2 March 2019. Despite this, sales growth is expected from all the businesses with the exception of Sugar but this is obviously not the ABF of old. For the full year results are expected to be in line with last year, That would have been unheard of and completely unacceptable even in the comparatively recent past. To add to the woes AB Sugar revenue from continuing operations is expected to be lower than last year with the result that the division will now make a marginal loss for the first half. Primark faces a 2% decline in like-for-like sales although sales are expected to be 4% ahead of last year and profit is expected to be well ahead of the same period last year but only because of a higher margin. The Eurozone has helped to save the day with sales expected to be 5% ahead of last year.

Bunzl plc BNZL has acquired a further safety business in the US. Californian based Liberty Glove & Safety, is engaged in the sale of a full range of personal protection equipment. No it’s not what you thought and its not knuckledusters either, it’s gloves, with revenue in 2018 of US$93 million.

Finsbury Food Group FIF Revenue for the 26 weeks to the 29th December rose by 0.5% on a like for like basis  Total group revenue however fell by 3.5% reflecting the closure of businesses partially offset by acquisitions. Better news is that last years first half loss of £1.2m was turned into a Profit before tax of £7.5m and the interim dividend is being  increased by 5.5% to 1.16p per share.The CEO describes the results as robust, delivered in a challenging period. A warning note  is that wider market pressures will continue in the period ahead.

Dechra Pharma DPH Trading in the six months to the end of December was strong with group revenue rising by 19.1% and the interim dividend up by 29.6%. EBITDA increased by 27.7%, operating profit by 35.8% and diluted earnings per share by 47.4%

Dialight DIA found 2018 to be a challenging year but one in which the foundations were laid to drive growth and restore market share. The prospects of further progress in 2019 remain unchanged, but with a second half weighting. Three major products are to be launched which will significantly expand the Group’s market.and the company has two new facilities in Mexico and Malaysia, to provide sufficient capacity to meet growth aspirations.

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Ian Pollard: Dairy Crest Slightly Ahead At Half Time

Dairy Crest Group DCG expects profit for the half year to the 30th September to be slightly ahead of  last year, with revenue driven by strong performances from its two largest brands, Cathedral City and Clover. Cathedral City continues to go from strength to strength reports the company and several new products will be released by the brand, over the coming months.

Finsbury Food FIF claims that its performance over the year to the 30th June has  illustrated its resilience and ability to deliver against its strategic priorities.The dividend is to be increased by 10% after like for like revenue rose by 2.4% and on a statutory basis profit before tax, fell by 65.7% and basic earnings per share by 76.1%, whilst an adjusted basis they rose by 4% and 2.7%. respectively.

Christie Group CTG is raising its interim dividend by 25% for the six months to the 30th June after operating profit nearly doubled from £1.1m to £2. and basic earnings per share rose from 1.53p per share to 5.18p. Revenue for the half year rose by 10%.

Warpaint London W7L is increasing its interim dividend by 7% after sales for the half year to the 30th June shot up by 38.7%, or 7.3% on a like for like basis and gross profit rose by 30%. The order book as at the 30th June was significantly ahead compared to the same time last year

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Andrew Hore – Quoted Micro 10 September 2018

NEX EXCHANGE        

Ananda Developments (ANA) is acquiring 15% of UK-based Liberty Herbal Technologies Ltd, which is the owner and developer of hapac, a technology for vaping cannabis. The investment cost £460,000 and Ananda has the right of first refusal for any further fundraisings in the next two years. The technology can be used to provide a measured medicinal dose. A commercial launch is planned in Italy before the end of the year and in Canada next year. Ananda is holding a general meeting to extend its geographical focus to the UK and Italy.

Chapel Down Group (CDGP) is leasing 388 acres of land adjoining its existing vineyards on the North Downs. This site will be vined between 2019 and 2021 and with the rest of the land that has already been planted it will be the largest vineyard in England.

DagangHalal (DGHL) intends to leave NEX after less than three years on the market. Trading in the shares has been limited but this is not surprising given the problems the company has had. Shareholders owning 84.7% of the company are in favour of the withdrawal from NEX and this will happen on 1 October.

Trading in Etaireia (ETIP) shares was suspended because the annual report for the year to March 2018 was not published by the end of August. The results were released on 5 September and trading was restored. The loss was increased from £622,000 to £857,000, following a £434,000 write down on the value of land at Dalry. The NAV was £1.81m at the end of March 2018.

Milamber Ventures (MLVP) remains suspended with full year results due to be published by the middle of September. The audit of Essential Learning still needs to be completed.

Hot Rocks Investments (HRIP) had nearly £17,000 in the bank at the end of March 2018. The NAV was £722,000. The majority of the loss of £219,000 in the year was due to share-based payments. Hot Rocks has a stake in Minergy Ltd, which has floated on the Botswana Stock Exchange and has been granted a mining licence for the Masama coal project. Production could start by next February. Another investee company, Block Energy (BLOK) has floated on AIM and more than two million shares have been acquired in standard list flotation Predator Oil and Gas.

Ecovista (EVTP) has raised £550,000 from a convertible loan note issue, which has to be repaid or converted (at 0.0005p a share) by the end of August 2019.

AIM  

Bilby (BILB) founder Phil Copolo and his son Leigh have left the board of the building and gas maintenance services provider and sold more than 31% of the company to institutional investors at a discount of around 6% to the then market price. Janet Copolo still owns 7.2% of Bilby and cannot sell until 3 September 2019, according to an agreement with Stanford Capital Partners, which was sole book runner of the placing. Miton has increased its stake from 15.1% to 19.8%, while MI Discretionary Fund has bought 8.19% and Ruffer has acquired 8%.

TLA Worldwide (TLA) published its latest profit warning at 10.35am on 4 September. At least it was while the markets were still trading rather than after they had closed for Christmas. Numis has had enough and resigned as nominated adviser. Trading is weak and TLA is set to breach banking covenants. TLA needs to raise cash.

Microsaic Systems (MSYS) is still building he base from which it can grow over the next few years. The interim figures do not reflect the progress that is being made. Revenues doubled from a low base, but higher costs meant that there was a flat loss of £1.5m. There is £6.96m in the bank at the end of June 2018 so the mass spectrometry technology developer has plenty of time to build up its revenues. The venture with a global bioprocessing partner is progressing and is in an integration phase. Commercialisation should be completed by early 2020. New agreements with two manufacturers and four distributors augur well for growth over the next 18 months. The target is revenues of more than £17m in 2022.

A full first half contribution from the Carlton acquisition helped Michelmersh Brick (MBH) to increase interim revenues by 43% to £23.1m and underlying pre-tax profit by 57% to £3.8m. The interim dividend has been raised by 51% to 1.06p a share. Demand for bricks remains strong and there is limited production capacity.

Tax Systems (TAX) continues to reduce its net debt, putting it in a good position to make further acquisitions. Net debt was reduced by 15% to £17.5m over a six month period. Interim revenues grew by 14% to £8m and order intake is 22% higher. The corporation tax software provider is broadening its range of software in order to make the most of the move to a digital tax system in the UK.

Filtration systems supplier Amiad Water Systems (AFS) grew its interim profit even though growth in revenues was modest. Stifel Nicolaus expects a stronger second half with full year revenues improving from $112.3m to $116.8m and then a further acceleration in growth to $123.4m. Although underlying pre-tax profit is expected to be flat at $5.1m, it is forecast to jump to $6.8m in 2019. A jump in 2018 dividend to 6.5p a share is forecast, despite relatively flat earnings per share. The dividend would still be more than twice covered.

Performance-based mobile marketing services provider Taptica International Ltd (TAP) continues to grow internationally and, via a combination of acquisitions and organic growth, interim revenues were 119% higher at $144m. Underlying pre-tax profit improved from $12.3m to $18m. An interim dividend of 3.98 cents a share is being paid.  Net cash was $42.1m at the end of June 2018.

Mobile location data services provider Location Sciences (LSAI) increased revenues from £49,000 to £234,000 in the first half of 2018 but there is a lot more to come. New products have been launched and it will take time for them to make a significant contribution. Even so, 2018 revenues of £702,000 are forecast, rising to £2.2m in 2019. The loss will reduce but a profit is not forecast until 2020. There was £720,000 in the bank at the end of June 2018 and more funding will be required to achieve the expected growth in sales.

Finsbury Food (FIF) is acquiring Free From bakery manufacturer Ultrapharm for an initial £17m with more dependent on performance. The business made a pre-tax profit of £800,000 in 2017. The acquisition is earnings enhancing.

Safestyle UK (SFE) has settled litigation with former employees who set up in competition. They will change their brand name from SafeGlaze and promise not to use confidential information.

IFA Lighthouse (LGT) continues to prosper. Interim revenues were 5% ahead at £26.9m and pre-tax profit 12% higher at £1.26m. Net cash was £9.6m.  and the interim dividend is two-thirds higher at 0.2p a share. Growth has been coming from the affinity business.

MAIN MARKET  

Commercial aircraft lessor Avation (AVAP) reported a 16% increase in revenues to $109.1m in the year to June 2018.  However, pre-tax profit dipped by 6% due to a gain on aircraft sales in the corresponding period. The dividend was increased by one-fifth to 7.25 cents a share. The NAV was equivalent to 283p a share. Cannacord Genuity forecasts a rise in pre-tax profit from $18.9m to $23.8m this year.

Dukemount Capital (DKE) has entered into a 50/50 joint venture with Rascasse Developments in order to expand into the Midlands.

Kavango Resources (KAV) has received a permit for an airborne electromagnetic geophysical survey of the Kalahari Suture Zone area, which covers 12 prospecting licences.

Haynes Publishing (HYNS) increased full year revenues by 13% to £33.8m and underlying pre-tax profit by a similar percentage to £2.9m. The total dividend is unchanged at 7.5p a share. Net cash was £2.5m at the end of May 2018. Growth in the sales of digital products is faster than the decline in other revenues.

Andrew Hore

Ian Pollard – Footasylum #FOOT impacted

Finsbury Food Group FIF has acquired 100% of the share capital of Ultrapharm Limited a specialist Free From bakery manufacturer with site in the UK & Poland. Finsbury claims that the acquisition  supports the Group’s ongoing strategy to further diversify its product capability into high growth areas.

Tax Systems plc TAX enjoyed a strong first half with revenue growth of 14% for the six months to the 30th June.EBITDA for the half year grew by 9% and order intake by 22%.

Footasylum FOOT expects growth for the full year to be significantly lower than previous guidance with adjusted EBITDA down to less than half  that for full year 2018. Revenue for the six months  to the 25th August  is expected to show a rise of 18.5% with online revenue in particular up by 28.5%. Trading has however, been impacted by weak consumer sentiment and more challenging conditions in July and August. Delays in store openings and upgrades.have also exacerbated the situation.

Biome Technologies BIOM delivered an exceptional start to the year and an outstanding first half enabled it to deliver a small operating profit of £0.2m. in the six months to the 30th June compared to last years loss of £0.2m. Group revenue for the half increased by 47% to £4.4m.

Safestyle UK plc SFE announces a comprehensive settlement of its claims against NIAMAC Developments Ltd (trading as SafeGlaze UK) for alleged trade mark infringement, passing off, misuse of confidential information, malicious falsehood and various other matters. NIAMAC has agreed that the existing court injunctions against it will be replaced by formal undertakings to the court. Steps have also been agreed to prevent the possibility of any acts of intimidation or harassment of Safestyle UK representatives and in addition, SafeGlaze UK will also change its trading name. A fairly comprehensive victory, if ever there was one.

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Ian Pollard – Finsbury Foods #FIF accelerates reshaping of Asset footprint !!

Finsbury Food FIF Once you read that the group has done well in accelerating the  reshaping of its asset footprint during the year to the 30th June, you know that it has had problems. Meaningless jargon is always a sign of a management lost for words even if it does manage to claim that its performance has been resilient. In fact so resilient that sales, taking into account closed businesses, declined by 3.4% and even the 50% owned European business saw a drop of 0.7%. On a like for like basis group sales rose by 2.4% and FIF is confident that it will deliver profits in line with expectation. The trading environment was very challenging with unprecedented commodity and labour inflation.

Inland Homes INL updates that growth in both revenues and homes delivered and under construction was strong during the year to the 30th June. Good quality also helped customer demand to remain strong, as did an average affordable selling price of 293,000 per unit. Open market completions rose by 46.3% and revenue by 66.7% but as for the future there seems to be a cloud on the horizon, with forward sales as at the trading update down by 23.1%

Plant Health Care PHC Is on track to achieve full year revenue expectations, which would represent 30% growth over 2017. In Brazil, Harpin αβ was launched in February 2018 for use on sugarcane  and demonstration field trials showed an average yield increase of over 20% whilst n the USA, an agreement has been reached which will give Harpin αβ access to the large corn seed treatment market.  First sales will be in the second half of 2018. The planted area of corn has now reached 90 million acres and significant growth is expected thereafter.

TP Group TPG claims it has made a strong start to 2018 with the completion of a number of major contracts during the half yer to the 30th June. A new manufacturing facility in Manchester has also been completed and it continues to be active in the acquisition field.

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Ian Pollard – Will bullying Melrose #MRO shareholders win the day?

Melrose MRO Today the gloves are off as Melrose goes to war in its attempts to persuade GKN shareholders to abandon its company. If ever an example was needed as to how the City is no longer a place for gentlemen, Melrose provides it with a hectoring, bullying diatribe threatening GKN shareholders with the terrible financial consequences of their own folly if they are stupid enough to reject Melrose’s offer.There is only one problem and it is a problem which Melrose has created for itself. Its attitude and language is so extreme that it makes it appear that this is its last desperate throw of the dice after which its ammunition is exhausted.

Thus Melrose’s final offensive, attacks GKN’s “hastily assembled and ill considered proposals”, threatens GKN shareholders that “unless they accept our offer” there will be dire consequences and compares GKN rebuttal with what they laughingly call their own “measured approach”. In fact there is nothing measured about today’s response.  Its warnings read like the last gambit of a contestant which is running scared and knows it has already lost the battle. Rarely in the world of takeovers has a company made such a disastrous tactical error. It deliberately chose to turn itself into the beast to be feared, a wolf without any sheeps clothing. People who are threatened and treated as stupid, tend to rebel. Melrose has only itself to blame if it is rebuffed.

Finsbury Foods FIF claims that half year results to the 30th December were robust and is increasing its interim dividend by 10% to 1.1p per share. Like for like revenue rose by 2.5% and profit before tax by 6.3% as the group showed resilience in the face of a sustained period of “market wide headwinds” which it says, will persist into the future.

Weatherly International WTI announces that it may have come to the end of a long and difficult road. It renegotiated its loans from Orion on the 31st August, 30th October and 31st December and it is now faced with repayments of $20m. by the 31st March. It admits that it is unlikely to generate sufficient surplus cash to be able to meet the repayment and its continued existence as a going concern will not be possible without Orion’s continued support, of which there is no certainty.

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Ian Pollard – Countryside Properties -A Lesson in Clarity and Profitability

United Utilities UU must have decided to make its half year report as obscure and meaningless as possible. Thus it is full of PR19S, ODIs, RCV Gearing and the latest craze, System Thinking. What it wont do because presumably it would make the figures for the 6 months to the end of September too easy to understand, is tell you the percentages by which mundane things like revenue and profit in all its various guises have risen. That is a fairly easy task for even the most junior office boy in most head offices – but perhaps I should not run the risk of being regarded  as sexist when of course I should have said “junior person”. So you can have your profits four ways – underlying, reported, underlying after tax and  reported after tax   but what you are definately not allowed to see are the figures on a statutory basis. The figure all show reasonable increases and the interim dividend is going up from 12.95p to13.24p per share. What that rise means in percentage terms is however a closely gaurded secret, known only to that junior person at head office who is the only member of senior management with the System Thinking skills able to work it out.

Thomas Cook Group TCG has woken up to the fact that it is a “good thing” to claim to have a customer focused strategy. Not before time, some may say, after the traumas of recent years. How serious they are about it remain to be seen but having discovered that it can lead to profitable growth,  there may be a fair chance that they will give it a go.

Their table of figures is not all that easy to understand but I think I have got it after the third reading. Profit after tax for the year to the 30th Spetember has risen from 1 to 12 which is clearly shown as a difference of  11 which in the last colomn becomes a like for like rise of 7 on a constant currency basis. If you would like to know what the 7 means you are invited to proceed to page 12 – clearly this must be part of the new customer focused strategy. Underlying earnings per share is understandable with a rise from 8.1p to 9.3p and there is an explanation that like for like group revenue on a constant currency basis has risen by 9%. The recommended dividend is  0.6p per share but we are not enlightened as to whether that is a rise or a fall on last year. Perhaps I should go back to page 12 to find out. And before I forget, cutting complexity is one way in which they intend to produce further growth. Some chance.

Countryside Properties CSP shows how it should be done. Simple. On an adjusted basis earnings per share rose by 71% in the year to the end of September, revenue was up by 32%, completion by 28% and operating profit by 34%. It was an excellent and record year and perhaps one of the most significant statistics (which will be very unwelcome to the competition) is that they reduced the average selling price by 8% which most housebuilders would regard as a criminal offence.

Finsbury Foods FIF announces that the UK retail food market hass moved from a deflatioary to an inflationary environment and thus helped to take the load off managements shoulders which is now finding it easier to run a bakery profitably. UK sales have risen by 5% whilst European sales are down by 3% despite all those fancy baguettes, brioches and black unsliced.

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Finsbury Food Faces Up to A Deflationary Market

Finsbury Food Group FIF claims it produced a strongly resilient performance in the year to 1st July, as it faced the challenges of a deflationary market which saw group like for like revenue remain flat. A final dividend of 2p per share is to be paid making a total of 3p for the year, a rise of 7.1%.. Sales and profit margins both increased and on a like for like basis adjusted profit before tax rose by 5.6%. The competitive success of the company is illustrated by a 15% rise in sales to continental Europe.