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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 BLT and BNZL from the Main Market.
Beowulf Mining (LSE:BEM)
Interim Statement for Period to June 2016: New, experienced NED appointed. Corresponding with Swedish government on environmental matters as it applies for a concession. Received an exploration license for an area in Southern Sweden. Loss of £0.3 million over six-month period.
GN view: Diversified set of assets though no revenues currently. Cash balance is higher after raising £1.5 million by issuing new shares. Highly uncertain due to the government/environmental discussions and the nature of exploration activities.
BHP Billiton (LSE:BLT)
Samarco Update: Findings published in relation to November 2015 Bento Rodrigues dam disaster in Brazil, which resulted in 19 deaths. BHP’s entire dam portfolio has been reviewed and found that all are stable.New centralised dam management function.
GN view: BHP has set aside $3 billion in provisions in relation to this disaster, which the report says was due to construction and design flaws. If lessons are learned, which it appears that they have been, the basic investment thesis for BHP is intact.
Braemar Shipping Services (LSE:BMS)
Trading Update: Results for year ending February 2017 will be “materially lower” than 2016. But performance after that will improve from management changes and cost-reduction measures. Lower activity levels/freight rates in shipbroking. Overcapacity in dry cargo markets. Slowdown in oil and gas exploration affecting the surveying and engineering side to the business.
GN view: Difficult to criticise management as they operate in an inherently cyclical sector. Could be an interesting buy at the right point in the cycle.
Bunzl (LSE:BNZL)
Half-Yearly Report: Revenue up 10% to £3.5 billion. Adjusted operating profit up 13% to £235 million. Statutory operating profit up 7% to £180 million. Growth rates slightly lower at constant exchange rates. Cash flow conversion rate of 97%.
GN view: Nice tailwind from international exposure – 58% of revenues generated in North America. An excellent diversified support services company. Interim dividend up 11%. A stock to hold for long-term.
Challenger Acquisitions (LSE:CHAL)
Interim Results: “Active, yet challenging, period”. Pipeline for 25 new “Giant Observation Wheels”, with London Eye as a template. Raised £2.5 million through new convertible notes. Loss of £1.5 million due to central corporate costs and losses at the Engineering segment.
GN view: Observation wheels are a difficult niche and the balance sheet here looks rather thin to me for a loss-making operation. Speculative.
Dewhurst (LSE:DWHT)
Trading Update: Recovery has continued through to third quarter and into fourth quarter. More seasonality than usual with a stronger second half. Benefiting from a weaker pound due to exporting focus. Full-year profits anticipated to be “significantly higher than current market expectations”.
GN view: Excellent news from an interesting, niche company.
Mortice Limited (LSE:MORT)
Final Results: Revenues strongly up to $133.5, after impact of new subsidiaries. Adjusted profit before tax up to $2.4 million from $2.2 million. Statutory profit before tax $1.6 million (from $2.2 million).
GN view: Sounds as though acquisitions have been successful. 85% of income being repeat business undoubtedly a positive for a security company. Statutory profit fall unfortunate but reflects acquisition-related costs.
Range Resources (LSE:RRL)
Trinidad Drilling Update: QUN159 well spudded earlier this month “has reached target depth of 2,500 feet”. Third Trinidad well drilled this year. All three expected to be brought into production during Q3 2016.
Science in Sport (LSE:SIS)
Official Sports Nutrition Partner to Liverpool FC: New deal for the 2016/2017 season. Will work with Liverpool to create “bespoke nutrition plans” for LFC squads.
GN view: This is an impressive small company with ambitions to become a leading global sports brand. Sold in more than 100 countries last year, it has a lot of potential to continue to grow its reputation. The deal with Liverpool looks promising.
Total Produce (LSE:TOT)
Half-Year Report: Revenue up 10% to €1.9 billion. Adjusted pre-tax profit up 15% to €35 million. Interim dividend up 10%. Targeting full-year earnings at top end of previously announced range.
GN view: Statutory profit rose at a smaller rate of 6% but confidence in the performance in reflected in the dividend increase. Excellent cash flow conversion to operational cash flow though working capital movements and acquisitions see net debt increase temporarily.
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