AIM's Essential Top Ten News Stories for Tuesday, July 12th 2016

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Good morning and welcome to this edition of “AIM’s Essential Top Ten”, a brief and early roundup of the main news announcements on London’s junior market. This morning’s update includes Premier Oil (LSE:PMO) as a bonus!

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Begbies Traynor (LSE:BEG)

Share price: 54p. Market cap: £57 million.

Final Results: Revenues up to £50.1 million (from £45.4 million). Profit before tax of £0.6 million (from a loss of £0.7 million).

GN view: Difficult to mitigate the macro backdrop of very little insolvency activity. Until higher interest rates, will be difficult to achieve good financial performance. Execution of acquisition strategy is key in the meanwhile.

Fletcher King (LSE:FLK)

Share price: 45p. Market cap: £4.2 million.

Final Results: Revenue of £4.6 million, up from £3.4 million. Pre-tax profit of £1.355 million, up from £0.46 million.

GN view: This has occasionally proven to be a very successful value investment. It must be borne in mind that it benefits from participating in occasional investment deals, so that profits are lumpy. Core operations much smaller than this profit figure suggests.

Jaywing (LSE:JWNG)

Share price: 31p. Market cap: £23 million.

Preliminary Results: Revenues up to £36 million, and the bottom line swings into profit of £700k (last year: loss of £1.5 million). Outlook “encouraging”.

GN view: An interesting business involved in marketing, digital products, data science. Emphasis on EBITDA in the results is unfortunate but this is worthy of further research.

Hotel Chocolat (LSE:HOTC)

Share price: 180p. Market cap: £200 million.

Trading Update: Revenue for FY 2016 increased 12%, slightly ahead of market expectations. New store opening programme progressing well.

GN view: No problems here, continues to be one of the highest-quality AIM shares with growth potential.

NewRiver Retail (LSE:NRR)

Share price: 291.5p. Market cap: £668 million.

First Quarter Company Update: “Highly active” first quarter. Retail occupancy 97%. Dividend up 11% year-on-year to 5p. New £85 million debt/refinancing facility.

GN view: Well-run REIT founded in 2009. The premium to NAV has disappeared in recent weeks, making this potentially interesting. Making the correct move to the main market, which will increase interest.

Orchard Funding Group (LSE:ORCH)

Share price: 88.5p. Market cap: £23 million.

Trading Statement: Revenues to the end of July level with the prior year. Since failed to achieve an increase, performance expected to be below market expectations. Delayed approval of new lender applications by potential customers.

GN view: Sounds like a mixture of delays, some of them beyond the company’s control. Long-term value unchanged.

Premier Oil (LSE:PMO)

Share price: 68.75p. Market cap: £351 million.

Trading & Operations Update: Production of 61,000 bopd for the half-year. Solan Field currently at 11,000 bopd, second producer well to be tied in shortly. Negotiation with lenders progressing well.

GN view: Execution looks top-class. I remain concerned that the effect of lower oil prices on the revenue trajectory has left the company in need of a significant fundraising.

RhythmOne (LSE:RTHM)

Share price: 28.75p. Market cap: £116 million.

First Quarter Trading Update: Q1 2017 expected to exceed management expectations. Over one trillion requests processed per month. Reminder that the company is USD-denominated (revenues, costs, balance sheet).

GN view: This will always be thought of by some people as the former Blinkx. The metrics are impressive, though I don’t know to what extent they translate into profitability in the traditional sense.

Science Group (LSE:SAG)

Share price: 129p. Market cap: £53 million.

Interim Results: Performance in line with Board’s expectations. Statutory operating profit of £1.4 million, reflecting non-recurring adjustments. Operating cash inflow of £5.3 million.

GN view: Shares don’t look cheap for a business in this sector and of this scale but are well-anchored by the balance sheet.

Somero Enterprises (LSE:SOM)

Share price: 162p. Market cap: £89 million.

Trading Update: Trading in June, the last month of the half-year was “significantly stronger” vs the previous month and prior year. Strong activity in North America. Margin improvement and solid operating cash flow.

GN view: One month’s trading is of minor importance to the overall value.

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