News blog

AIM 50 Digest 18 March 2022

  • BY: Andrew Hore |
  • POSTED: 19/03/2022 |

Smart meters manager and installer Smart Metering Systems (SMS) will generate the first revenues from its battery storage assets this year. Revenues grew 5% to £108.3m in 2021 without any contribution. Index-linked annualised recurring revenues are £85.9m. Pre-tax profit improved from £15.2m to £18.3m and the total dividend was raised by 10% to 27.5p a share and should continue to increase at that rate. This year revenues are set to improve to £118.1m, including £3.8m from battery storage assets. Pre-tax profit of £20.2m is forecast for 2022. Investment in assets will reduce the cash pile and move SMS into net debt during 2023. The benefits of this investment will show through in the longer-term.
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Johnson Service Group (JSG) has started to recover even though hotel and catering linen hire was still hampered by restrictions holding back the business – most recently the Omnicron-related restrictions in December and January. The hotel and catering operations are back to around 85% of pre-Covid levels Workwear business has held up well. Automation and other capital investment will help to offset the cost pressures from staff wages and energy. Electricity prices are fixed until the autumn and 80% of expected 2022 gas costs are fixed, which will delay some of the pain. Johnson Service Group returned to profit in 2021. The underlying pre-tax profit was £9.4m and Investec expects a jump to £38m this year. Johnson Service Group has net debt of £22.3m and Investec expects that to fall to £8.1m by the end of 2022 even after additional capital investment. There could be a return to dividend payments.
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Wound management products Advanced Medical Solutions (AMS) generated higher revenues in 2021 than in 2019. The 2020 figures were hit by the lack of elective surgery. However, underlying pre-tax profit of £25.6m was slightly lower than the 2019 figure of £26.6m. AMS has acquired Austria-based surgical devices distributor AFS Medical, and this will be earnings enhancing. There could be pressure on margins.
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Life sciences products supplier Abcam (ABC) improved gross margins by more than expected in 2021 and 2022 revenues guidance has been raised by £25m to a range of £450m-£525m, up from £311.3m in 2021. More revenues will be coming from in-house products. Last year, pre-tax profit rose from £33.9m to £38.1m. Acquisitions mean that Abcam moved into net debt but should move back into a net cash position in 2022. Pre-tax profit is set to nearly double to £75.3m. 
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EMIS (EMIS) reported slightly better than expected 2021 figures. Revenues were 6% ahead at £168.2m and four-fifths of that is recurring. Pre-tax profit was flat but underlying earnings grew by 10% to 56.1p a share. The dividend has been raised for the eleventh year in a row to 35.2p a share, which is a 10% increase. Last year’s figures benefited from the Covid vaccine roll out but the rest of the operations are set to grow and EMIS has been spending some of its cash pile on data analytics acquisitions that will boost earnings.
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Brooks Macdonald (BRKS) reported a 26% increase in interim pre-tax profit by 26% to £17.6m, but trading has been tougher since the turn of the year and full year forecasts have been reduced. Assets under management are likely to fall. Peel Hunt expects a full year pre-tax profit of £32m, with a small improvement next year. Net cash was £45.7m at the end of 2021. The interim dividend is 26p a share.
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Fevertree Drinks (FEVR) improved revenues by 23% in 2021, with US sales one-third higher. A special dividend of 42.9p a share will be paid along with the 15.99p a share full year dividend. However, increasing costs will hamper profit growth this year. Peel Hunt expects pre-tax profit to decline from £55.6m to £53.5m in 2022 with operating margins falling from 17.9% to 14.9%. 
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Management of CareTech (CTH) is making plans for a potential buy out. The board says that it is yet to be approached.
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Secure Income REIT (SIR) intends to increase its total dividend from 15.2p a share to 18.2p a share. Adjusted NAV improved from 379.3p a share to 420.1p a share in 2022 and it could increase further to 446.3p a share by the end of 2022.
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Electrical power accessories supplier Volex (VLX) has acquired a 51% majority stake in printed circuit boards manufacturer inYantra Technologies, along with property in Pune, for $13m. The deal provides Volex with an Indian presence and inYantra revenues are expected to be $22m in the year to March 2022. Spare land is included in the purchase and additional capacity can be constructed.
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In the year to October 2021, AFC Energy (AFC) reported revenues of £600,000 and a doubled underlying loss of £9.3m. A jump in staff costs mean that the loss is likely to increase this year even though revenues should be much higher due to an order by ABB. A collaboration with construction and engineering contractor Keltbray involving the leasing of an AFC fuel cell system for use on one of its construction sites. There could be further systems, using hydrogen or methanol, installed to replace diesel generators. The 48.61p/litre red diesel subsidy for the construction sector ends from April.
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Ceres Power (CWR) increased 2021 revenues by 44% to £31.7m. The main growth was in licence fees. The overall loss increased from £14.5m to £23.3m, with the electrolyser side of the business losing more last year. There was £250m in cash and investments at the end of 2021.
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FW Thorpe (TFW) is paying a special dividend of 2.27p a share on top of the interim of 1.54p a share. The light fittings supplier improved revenues by 13% to £63.5m with pre-tax profit 15% ahead at £8.5m. Excluding the acquisition of Electrozemper in Spain the revenues would have been 4% higher and pre-tax profit 14% ahead. There is £39.2m in cash and investments.
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Audio visual products distributor Midwich Group (MIDW) improved 2021 revenues by one-fifth to £856m and returned to profit. This enabled a total dividend of 14.1p a share, which is covered 1.8 times by earnings. Two acquisitions have been made since the year end.
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Dotidigital (DOTD) directors have been buying shares following the recent interims. Five directors acquired shares including chief executive Milan Patel.
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ITM Power (ITM) says supply chain problems have delayed the testing of the 24MW Leuna contract modules. The testing of the modules will not be finished until after the April year end.
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Oil and gas producer Serica Energy (SQZ) says that production has restarted at the Rhum field.
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Young and Co’s Brewery (YNGA) says chief operating officer Simon Dodd is replacing Patrick Dardis as chief executive after the AGM on 5 July.

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