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AIM 50 Digest 5 November 2021

  • BY: Andrew Hore |
  • POSTED: 06/11/2021 |

Residential rental and student accommodation properties developer Watkin Jones (WJG) is on course to achieve forecast 2020-21 pre-tax profit of £50m, but net cash will be much higher than expected. Institutional demand for developments remains strong. The forecast profit is being achieved on lower than expected revenues because of the timing of land sales. Net cash was £125m at the end of September 2021.
Building costs are in line with budget even though there are inflationary pressures. There are 4,012 build to rent apartments and 7,142 student beds with planning permission. This is a total future revenue value of £1.75bn.
Knights Group Holdings (KGH) has broadened its geographic footprint by acquiring Stockton-on-Tees-based Archers Law. The group has also agreed a new £60m revolving credit facility with three banks. This lasts until October 2024.
Knights is paying the four existing partners £5.2m. The initial payment is £3.7m - £2.1m in cash and £1.6m in the form of 395,060 shares. The other £1.5m will be paid in equal instalments over three years. In the year to March 2021, Archers generated revenues of £4m and the underlying pre-tax profit margin should be around 20% when it is run as a company rather than a partnership. Knights believes that it can increase that margin to 30%, which would make the deal earnings enhancing.
Smart Metering Systems (SMS) has reassured investors that the volatile energy supply market will not stop it from meeting expectations and the smart metre installation order pipeline remains 2.75 million. The pipeline is with the larger energy companies, although bad debts may still be a danger if a client stops trading. A 50MW grid scale battery project has started construction. Taking capacity under construction to 290MW.
Soft drinks maker Nichols (NICL) did better than expected in the year to September 2021. Pre-tax profit will be between £21m and £22m. Revenues increased by 17% to £107m. International revenues were 36% ahead, while the out of home business recovered by 29%. There was £55.6m at the end of September 2021. Cost increases mean that forecast for this year remain unchanged despite the positive sales momentum. People and sustainability director Christine Shillington has bought 497 shares at 1255p each.
FD Technologies (FDP) has been investing in technology development and in the interim period the number of KX subscription deals trebled, but this is yet to show through in profit. Revenues increased by 7% to £128m, but FD Technologies slipped into loss. Even adjusted earnings fell by 63% to 11.7p a share. Net debt was £11.7m.
RWS (RWS) says that it will beat consensus profit expectations of £111.6m for the year to September 2021. Revenues will be in line with expectations with margins improving, helped by the integration of SDL – the acquisition was completed at the beginning of November 2020.
Matthew Coulson has been appointed chief executive of MP Evans (MPE) and a new finance director will be recruited. Philip Hadsley-Chaplin will be executive chairman.
Kayne Anderson Rudnick Investment Management has reduced its stake in Mortgage Advice Bureau (MAB1) from 12.6% to 10.9%. Nathlan Imlach bought 119 shares at 1335p a share, Lucy Tilley 49 shares at 1338p each and Ben Thompson nine shares at 1338p each. Grandeur Peak Global Advisers has taken a 3% stake in CVS (CVSG), while the wife of finance director Robin Alfonso has bought 2,000 shares at 2490p. Light Street Capital Management has nearly doubled its stake in Naked Wines (WINE) from 5.02% to 10.01%. Frontier Developments (FDEV) non-exec Charles Cotton bought 3,750 shares at 2667p each.

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