News blog

AIM 50 Digest 22 November 2024

BY: Andrew Hore |
POSTED: 25/11/2024 |

Defence equipment and services provider Cohort (CHRT) is paying £75m for EM Solutions, which provides increased exposure to the naval satellite communications sector. The Australia-based company manufactures SATCOM terminals for global naval and defence clients. Cohort has raised £40m via placing and £1m through a retail offer at 875p/share to help finance the acquisition. The deal will be earnings enhancing in the first full year of ownership. EM Solutions has an order book worth £91m and the pro forma order book is worth more than £650m.
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Airline and tour operator Jet2 (JET2) had a successful summer with first half operating profit improving from £617m to £701.5m. This was better than expected. The interim dividend is 10% higher at 4.4p/share. More than 80% of revenues come from holidays and consumers continue to spend on them. Winter sales are 14% ahead, which suggests market share gains. Canaccord Genuity has raised its full year pre-tax profit forecast from £535.5m to £563.9m. Jet2 has repurchased £50m of convertible bonds. Non-UK nationals can own up to 49% of the company.
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Electrical accessories Volex (VLX) has approached TT Electronics (TTG) about a cash and shares bid. It has made two offers. The second offer was 62.9p/share and 0.233 of a Volex share, implies an offer of 139.6p/share at yesterday’s closing share price. TT Electronics does not want to enter discussions and has rejected the approach. Volex is critical of recent acquisition by TT Electronics. Volex reported interim revenues 30% higher at $518.2m – organic growth was 10% - and underlying pre-tax profit 12% ahead at $37.5m. The interim dividend is 7% higher at 1.5p/share. The strongest organic growth was in the electric vehicles division, although all divisions grew.
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Semiconductor wafers supplier IQE (IQE) is discussing a potential £15m convertible loan note financing from Lombard Odier, its largest shareholder. The conversion price is 15p. There should be no current need for a share issue. There has been a slower than expected recovery in the main sectors because of weak consumer demand. A strategic review will b undertaken. The business in Taiwan was going to float on the local stockmarket, but IQE may consider an outright sale.
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GB Group (GBG) interim revenues grew 3% to £136.9m and there was a move back into pre-tax profit. The underlying pre-tax profit was £5.6m. Net debt was reduced to £71.9m. Mid-single digit growth in revenues and high single digit growth in profit is expected for the full year.
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Managed services provider Redcentric (RCN) improved interim revenues by 6% and pre-tax profit more than doubled from £2.9m to £6m. The dividend is maintained 1.2p/share. There should be further rapid growth in profit in the second half. Cash generation is improving and debt reduction should accelerate next year.
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Growth is slowing at Team Internet Group (TIG) as online ad pricing declines. There has also been a reduction in demand for Shinez online marketing services. Shinez was acquired in April and changes in ad network partners has reduced traffic. Third quarter revenues declined 5%. Full year revenues are still forecast to grow from $837m to $843m, which is an 11% reduction on the previous forecast. The lower margins are being offset by reduced expenses, so pre-tax profit is forecast to improve from $77.2m to $79.2m. Net debt should be $95m at the end of the year and this could nearly halve next year.
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Investment manager Tatton Asset Management (TAM) increased assets under management and influence by 13% to £19.9bn. It will be difficult to continue this momentum. Pre-tax profit was 29% ahead at £11.4m. This was held back by additional investment in mortgage business Paradigm. The interim dividend was raised by 19% to 9.5p/share.
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Floorcoverings supplier Victoria (VCP) is selling its B3 Ceramics business to Hasan Akgun for £30.9m in cash and the assumption of debt. A long-term supply agreement for ceramic tiles should have a positive impact on earnings.
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Young and Co Brewery (YNGA) increased pre-tax profit from £28m to £28.3m on a 27% rise in revenues to £250m. The City Pubs acquisition is being integrated and that is also behind the rise in net debt to £255.8m and the higher interest charge. The interim dividend has been raised by 6% to 11.53p/share.
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Polar Capital (POLR) improved interim pre-tax profit by 9% to £23.1m. The interim dividend is maintained at 14p/share. There were net inflows of £472m in the latest six-month period.
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MP Evans (MPE) says that while the palm oil crop is in line with expectations the price of crude palm oil has increased and the average for the year so far is $800/tonne. Some recent sales have been at higher prices. This means that 2024 profit will be higher than previously forecast.
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In the four months to October 2024, CVS Group (CVSG) sales rose 7.6%, but like-for-like sales were flat. Higher tax related costs, hitting in the fourth quarter, should be offset by growth and efficiencies. The annualised cost increase is £8m. Further acquisitions have been made in Australia.
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FD Technologies (FDP) expects to complete the sale of the First Derivative business in early December. Interim figures will be published on 26 November.
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At its AGM, FW Thorpe (TFW) revealed revenues are modestly ahead this year. The Netherlands operations are finding it difficult to replicate the business levels of the previous year.
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Dublin-based motor dealer Nivag Holdings increased its stake in Vertu Motors (VTU) from 4.1% to 5%.
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Mortgage Advice Bureau (MAB1) has appointed Keefe, Bruyette & Woods as nominated adviser and joint broker.

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