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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. This morning’s edition includes VOD from the Main Market.
Accrol Group Holdings (LSE:ACRL)
Full year results: Revenues up 17% to £118 million. Adjusted EBITDA £15.0 million. Strong cash generation and net debt reduced by £1.1 million.
GN view: A very recent IPO, so extra caution advised. Looks to have run into a surge in performance over 2015-2016, and floated at a price which does not look too expensive on 2016 results. I would wonder about their level of pricing power when negotiating deals with the discount chains and other large customers.
CSF (LSE:CSFG)
Final results: Group revenue RM 84.0 million, up from RM 81.8 million. EPS loss of 22.7 sen (that’s RM 0.227) per share. Closing cash position RM 43.6 million (approx. £7.8 million). Restructured lease rental payments on data centres. Finalising debt settlement agreement.
GN view: This company’s high cash balance is offset by payables and lease provisions. As a provider of data centre facilities in Malaysia and with a tiny market cap, I had presumed that it would eventually delist from AIM. I’m surprised that it’s still here but would still not be tempted to gamble on it.
Escher Group Holdings (LSE:ESCH)
Half year trading update: Revenue $12.3 million for H1 (up from $11.8 million). Adjusted EBITDA up by 4%. Net debt unchanged, $2.7 million.
GN view: Making progress and highly ambitious for a small company. I would need a better understanding of their products to comment on the prospects here.
Inland Homes (LSE:INL)
Trading Update: Planning applications submitted on 1,268 plots. Further 1,225 plots with planning permission or a resolution to grant permission in place. Forward order book of £23.4 million. Market fundamentals remain strong. Delay of legal completions and tough comparatives result in expected profit to be marginally lower than market consensus forecast of £15.9 million.
GN view: Slightly disappointing news but the statement is very clear on the reasons for the profit warning. In terms of overall execution, the company is fine.
Infrastructure India (LSE:IIP)
Final Results: Investments increased in value marginally, from £331.6 million to £334.5 million. Net Asset Value stable. Strengthening of the rupee against sterling and lower risk-free-rate in the valuations offset by softening market conditions for the logistics business and revaluation of Infrastructure & Toll Roads company.
GN view: Looks to be well-diversified, but I’d note that cash flows from operating activities were negative even after adding back the movement in fair value of investments. The movement in the pound sterling should have been a big help too, so trading cannot be very good currently.
Miton Group (LSE:MGR)
Half year trading update: Assets under management £2.5 billion (down from £2.8 billion). Average AuM was higher over the period as first quarter inflow were followed by second quarter outflows from the UK Value Opportunities Fund, which is undergoing a change in management.
GN view: Remuneration policy has been changed to protect the company from losing future managers. The recent news here highlights the difficulty when it comes to investing in people businesses.
Record (LSE:REC)
Trading Update: AUM $53.0 billion at end of June (down from $53.7 billion at the end of March) In Sterling: £39.7 million, up from £37.4 million. The loss in USD arose from a decline in Dynamic Hedging funds under management, despite marginally positive client flows in that segment.
GN view: Client flows were almost stable at negative $0.1billion. But the strong dollar made an improvement in dollar terms very difficult to achieve. Performance was mixed. The shares have a tendency to look cheap but the cash on the balance sheet is a core operational asset. Difficult times at present, I do expect that it will eventually bounce back.
Sprue Aegis (LSE:SPRP)
Trading Update: H1 sales expected of £25.9 million, with an operating loss of £0.9 million (down from £9.0 million operating profit). Total sales down by £30.6 million as sales in France down £33.7 million.
GN view: Interesting that the company is maintaining its dividend despite the horrific sales meltdown. I think there is likely to be core value here.
United Carpets Group (LSE:UCG) (I own shares in UCG)
Final Results: Network ales £56.1 million, up from £54.2 million. Like-for-like sales up 5.8%, profit before tax £1.49 million (up from £1.21 million). Store numbers maintained.
GN view: I would have preferred to see another special dividend rather than the purchase of freehold property but am satisfied that the store estate is at a manageable level and being fine-tuned for good long-term performance and for growth, when appropriate.
Vodafone (LSE:VOD)
Trading Update: Organic service revenue up 2.2%. Europe 0.3%, AMAP 7.7%. 4G customers doubled to 52.5 million and data volumes +63%. Outlook confirmed for 2017 financial year.
GN view: Total revenue down 4.5%, but this includes a 5.3% impact from foreign exchange movements (Vodafone reports in Euros). Excluding that impact, performance was ok. Average data usage per smartphone customer in Europe up 57% per year as people switch to 4G. The industry is of course deflationary in nature but it’s still very positive for Vodafone to position itself at the heart of the 4G transition.
