News blog

AIM 50 Digest 5 March 2021

  • BY: Andrew Hore |
  • POSTED: 08/03/2021 |

Soft drinks maker Nichols (NICL) did relatively well in 2020 considering all the problems it had to deal with. Out of Home sales slumped as pubs and restaurants were closed for much of the year, while the new sugar tax came into effect in the Middle East. Revenues fell by one-fifth to £118.7m, while underlying pre-tax profit dropped from £32.4m to £11.6m. Lower levels of trading helped to reduce working capital and net cash improved to £47.3m. A final dividend of 8.8p a share, takes the total for the year to 36.8p a share, although that includes the dividend that would have been paid as the final for 2019. The performance of the business remains uncertain and there are no forecasts for 2021. This should change by the time of the interims, but 2021 will still be a relatively weak year. The cash pile means that Nichols is in a good position to buy drink brands to enhance its portfolio of products.
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Digital marketing services provider Dotdigital (DOTD) is growing in all its international markets. In the six months to December 2020, revenues grew from £23.1m to £28.2m, while underlying pre-tax profit improved from £6.9m to £7.6m. Gross margins slipped due to greater levels of SMS messaging. Non-UK revenues are one-third of the total. Monthly average revenue per user is one-fifth higher at £1,196. Growth is coming from adding new customers and existing ones spending more as additional services are made available. Management is open to potential acquisitions if they can add to the customer base and/or technology and services. Net cash is £27.6m and could be more than £30m by the end of June 2021. Dotdigital is already well on its way to achieving the full year pre-tax profit forecast of £12.6m and there could be scope for an upgrade.
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Pharma products and services provider Clinigen (CLIN) generated organic revenue growth of 4% to £231.9m, but earnings per share fell from 30.8p to 26.2p. There was more than £60m of cash generated from operations. Net debt was £351.5m at the end of December 2020. The interim dividend is maintained at 2.15p a share. Services revenues grew, but the profit contribution was lower due to weak hospital and clinical trial demand, as well as investment in the business. Products reported lower revenues and profit due to delayed shipments. Overall trading should improve in the second half.
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Draper Esprit (GROW) is set to benefit from the proposed flotation of investee company Trustpilot.
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GB Group (GBG) says that trading has been stronger than expected. The identity division got a boost from increased bitcoin and share trading activity. Full year pre-tax profit is forecast to be £51m.
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Smart Metering Systems (SMS) is acquiring a portfolio of 1,500 industrial and commercial large power electricity meters for £8.25m. This will add £1.1m of annual recurring meter revenues. There are also data services contracts with over 20,000 meters that will generate a further £2m a year. SMS has also won contracts with two independent energy suppliers to install smart meters. This takes the order pipeline to 2.5 million meters.
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Gamma Communications (GAMA) is boosting its cloud services revenues by acquiring Mission Labs for £40.2m. That is five times current revenues of £8m. Even so, the deal is expected to be earnings enhancing.
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Industrial laser demand is recovering and defence continues to gain orders at Gooch and Housego (GHH) and it is streamlining two more sites. The Glenrothes site has been closed, while fibre optic hubs are at Boston and Torquay. Lifesciences is benefiting from good demand for diagnostics and a recovery in demand for medical lasers. The overall order book is £95m.
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Translation services provider RWS Holdings (RWS) grew first quarter profit by a double-digit percentage before the initial contribution from SDL. The strength of the pound against the US dollar is hampering process. At the RWS AGM, there were 37.2% of the votes cast against accepting the remuneration report.
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First Derivatives (FDP) has sold the majority of its stake in Quantile Technologies for £11m, which is £7m above book value. It will retain a minority stake.
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Warehouse REIT (WHR) has paid £5.3m on a warehouse estate near Glasgow Airport. Net rental income is £357,000 a year.

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