News blog

AIM 50 Digest 13 September 2024

BY: Andrew Hore |
POSTED: 15/09/2024 |

Marketing services provider Next Fifteen Group (NFG) says subsidiary Mach49’s largest customer has not renewed its three-year contract. This was expected to contribute more than £80m to 2025-26 revenues to the marketing services group, That is one-eighth of the previously forecast revenues for that year. The contract loss will also hit the second half of the year to January 2025. There is general weakness in spending by technology customers. Full year pre-tax profit will be well below expectations. The interim figures will be published on 17 September.
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Motor distributor Vertu Motors (VTU) has published a trading statement for the first five months of the financial year showing a weak new vehicle market. However, the used car market is more stable. The forecast for the current year has been trimmed. Pricing of used vehicles has returned to normal trends and Vertu Motors has grown volumes and margins. There should be an improved performance in the second half. Vertu Motors believes that it is increasing its share of the new car market on the back of fleet growth. The electric vehicle segment of the market is particularly weak. Aftersales business continues to grow. It contributed more than two-fifths of gross profit in the previous financial year. The full year pre-tax profit forecast has been cut from £42.2m to £40.2m, up from £37.1m last year. Net debt is likely to be more than £120m and net tangible assets more than 75p/share at the end of February 2025.
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Ashtead Technology (AT.) increased interim revenues by 61% to £80.5m and underlying pre-tax profit by 39% to £19.6m. Organic growth was 16%, which was better than the market figure. The subsea equipment rental company has increased net debt to £72m as it invests in its rental fleet and makes acquisitions. Expectations for the full year are unchanged with pre-tax profit of £39.5m forecast.
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Canaccord Genuity has upgraded its forecasts for airline and tour operator Jet2 (JET2) following its trading update. There was strong late booking activity in the summer and the prices of holidays increased. Repeat package holidays customers account for more than three-fifths of numbers. Canaccord Genuity raised its 2024-25 pre-tax profit forecast from £523m to £535.5m. That is based on a 6% improvement in holiday pricing. The dividend is expected to increase from 14.7p/share to 15.5p/share. The net debt forecast has been raised to £2.02bn. Debt is on a rising trend because of investment in new aeroplanes. Next year, pre-tax profit could rise to £549.4m. The dividend could reach 17p/share. Founder Philip Meeson sold five million shares. Non-exec Rachel Kentleton bought 1,801 shares at 1403p each.
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Serica Energy (SQZ) reported interim revenues falling from £545m to £462m and generated £98m of free cash flow of £98,000, down from £134m. Net cash was £131m at the end of June 2024. Serica Energy can still be cash generative even with the uncertainty over North Sea taxation. Finance director Martin Copeland bought 13,500 shares at 111.9015p each.
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Hotel, catering and workwear linen hire services provider Johnson Service Group (JSG) increased its interim dividend by 44% to 1.3p/share on the back of a rise in pre-tax profit from £13.5m to £18.7m as margins continue to improve. Workwear was flat, but the other division continues to recover. The Crawley facility will open before the end of the year and newly acquired Empire Linen Services will make an initial contribution. Empire is focused on four and five star hotel clients and cost £20.6m. A 2024 pre-tax profit of £54m, up from £37.6m, and a total dividend of 3.76p/share is forecast. Year-end net debt is set to be £105m.
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Wealth management firm Brooks Macdonald (BRK) reported full year figures slightly better than expected. Pre-tax profit was one-eighth higher at £34.1m. The total dividend is 4% higher at 78p/share. Andrea Montague is becoming chief executive in October. The strategic review has led to the international business being sold to Canaccord Genuity for £28m plus £22.85m on the first anniversary depending on revenues. The division had funds under management of £2.3bn.
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Central Asia Metals (CAML) increased revenues from $99.3m to $103.8m. Production of copper, zinc and lead were slightly lower, but sales of copper and lead were higher. The interim dividend was maintained at 9p/share. Cash was $56.3m at the end of June and this provides finance to invest in existing operations and invest in other projects.
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Semiconductor wafers manufacturer IQE (IQE) reduced its loss on a 27% increase in revenues to £66m thanks to a recovery in wireless demand. The adjusted operating loss is still £7.2m. Net debt is £17m. Growth in revenues is expected to be slower in the second half and the outcome is likely to be at the lower end of expectations. The bottom of the range is £130m and the consensus was £139m, which would result in a £17m loss.
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Groceries and catering distributor Kitwave Group (KITW) trading has been strong in the four months to August 2024, which is an important trading period. Ice cream is an important component of sales during the summer. The new south west England distribution facility should be completed by the year-end. This will improve efficiency and reduce costs in the region. There is plenty of scope for further acquisitions and management has a broad knowledge of the potential targets. Canaccord Genuity still expects pre-tax profit to improve from £27.5m to £29m in the year to October 2024. It estimates an improvement in 2023-24 pre-tax profit from £27.5m to £29m. A total dividend of 11.3p/share is expected.
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Wet weather hit sales at Fevertree Drinks (FEVR) in the UK and Europe. That was offset by growth in other regions, but group revenues fell from £175.6m to £172.9m. Even so, underlying pre-tax profit rebounded from £4.7m to £13.2m. Cash is £65.9m. Second half revenues are expected to grow by between 7% and 10% following more positive trading in July and August.
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Building materials supplier SigmaRoc (SRC) has been boosted by the initial CRH lime assets that were acquired. There was organic growth as well. Interim EBITDA has soared from £55m to £100m, but more importantly earnings are improving despite the share issues to fund the CRH purchases. All the CRH lime assets have been acquired and the latest purchases will make contributions in the second half. Despite the tough construction markets there is strong demand in some sectors.
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Midwich (MIDW) increased interim revenues by 6% to £646.1m, while pre-tax profit fell by one-fifth to £17.2m. The interim dividend is unchanged at 5.5p/share. There was a return to growth in July. Annualised cost savings of more than £5m will be achieved by next year.
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Gamma Communications (GAMA) grew revenues 10% to £282.5m, although European revenues were flat. This puts it on course to improve full year pre-tax profit from £97.9m to £111.6m. The board is considering a move to the Main Market.
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Berenberg cut its target price for Pan African Resources (PAF) from 38p to 33p. a 30% increase in full year profit to $78.8m. This followed Investment in construction of the MTR project led to net debt rising to $106.4m. A dividend of 1.21 cents/share has been announced.
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Alaska-focused oil and gas explorer Pantheon Resources (PANR) expects to drill the Megrez-1 well in the next quarter. There is a 69% chance of success. Approvals have been granted for the construction of a gravel pad.
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Victorian Plumbing (VIC) chair Philip Bowcock sold 185,000 shares at 91.2p each to satisfy tax liabilities.

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