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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 GKP from the Main Market.
Avangardco (LSE:AVGR)
Half-Year Report: Revenue $64.8 million, down 47%. Negative EBITDA $12.6 million. Net loss $32.6 (from $152 million).
GN view: Facing an impossible situation in the Ukraine where domestic demand has weakened while an inability to export makes competition more intense, the company has at least succeeded in reducing its output and controlling costs, thus minimising overall losses. Is significantly indebted and so I doubt whether the equity is investable.
Brave Bison Group (LSE:BBSN)
Half-year Report: Changed its name from Rightster to Brave Bison in May. Revenue for the six-month period up 38% to £9.7 million. Adjusted EBITDA loss £0.8 million. Loss before tax £3.6 million. Ended the period with £8.4 million of cash. Says it is changing changing “from 3rd party technology provider to social video broadcaster.”
GN View: The new Chief Creative Officer sounds like an important and critical hire for the future direction of the business. I’m not familiar with their online football channel but hopefully they have enough cash now to see them through to the execution of their plans.
Churchill China (LSE:CCH)
Interim Results: Revenue up 12% to £24 million. Operating profit up 30% to £2 million.
GN view: Excellent results from a simple and well-established ceramics manufacturer. The strategy of targeting exports and improving the product mix has clearly worked and shareholders can reap the rewards of an increased dividend payout. Top-quality business.
Exova Group (LSE:EXO)
Half-year Report: Revenue up 9.5% (const. currency), 13% (actual). Most growth coming from M&A activity. Interim dividend increased. Profit up 10%.
GN view: Seems to be doing well, despite the drag from Oil/Gas and Industrials exposure. Outlook for more of the same, “modest organic revenue growth” plus new acquisitions.
Gulf Keystone Petroleum (LSE:GKP)
Open Offer Launch: Today launches the open offer in connection with its Balance Sheet Restructuring Transaction. Up to 2.3 billion new shares to be issued at .83p to raise up to $25 million.
GN view: I’m not sure why the share price has fallen so heavily today, as it was already known that this open offer was to be part of the restructuring. It appears that some shareholders may have believed that they would be bought out by a 3rd party at a premium to the previous share price.
Glenwick (LSE:GWIK)
Update on Investment Policy and Suspension: Reviewing projects and opportunities in the natural resources sector. “Although no decisions have been made as of yet, the Company is hopeful of concluding a transaction.” But the transaction won’t be completed in time before its shares are automatically suspended. Has £1.2 million cash balance.
GN view: Trusting small investment companies can often lead to disappointment. Hopefully this does not turn out be the case here. The cash balance is large enough to do something with, although the drag of listing fees will make it difficult to earn an economic return.
The Gym Group (LSE:GYM)
Interim Results: Revenues up 25% to £36 million. Adjusted profit before tax of £4.6 million, statutory profit before tax £3.4 million (versus loss-making in H1 2015). Cash generation reduces net debt to £2.5 million from £7.1 million. Maiden dividend announced.
GN view: I think this is an exciting organic growth story as a new business model for gyms takes market share while also growing the size of the market itself. Market cap still looks too large compared to the size of the company, but the growth runway is potentially very big.
HSS Hire (LSE:HSS)
Interim Report: Revenues +13.5% to £166 million. Adjusted EBITA up 64% to £7.4 million. Reported loss £9.8 million, an improvement from the H1 2015 loss of £14.1 million.
GN view: Company pleased to have grown market share. Reported loss before tax “mainly due to exception costs associated with the strategy execution.” Looks like a high-risk play to me in light of the company’s debt situation. The new national headquarters must enable and generate sufficient overall business growth to make the interest payments more affordable and thus create some more obvious value in the equity.
Surgical Innovations (LSE:SUN)
Half-Year Report: Export-led revenue growth, up 17% to £3 million. Margins up to 26.6% from 19.1%. £1.8 million cash generated from operations.
GN view: I don’t see any mention of the constant currencies result, but it presumably would be lower given the USD exposure. The highlights don’t mention the fact that the company generated a loss over the period, though it’s also true that EBIT was positive and the company generated excellent cash flow over the period, leading to the elimination of net debt. Could be very interesting if positive trends are sustainable.
TekCapital (LSE:TEK)
Half-year Report: Revenues $250k (2015: $290k). Net loss up to $1 million (2015: $660k) due to expenses launching a new medical devices company. Cash falls nearly $2 million to $1.9 million.
GN view: Interesting strategy to buy the rights to medical devices and attempt to manufacture them in a more affordable way. The subsidiary raising money from 3rd party investors takes some of the pressure off TekCapital to raise new funds, so perhaps cash burn at a Group level can be reduced.
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