Good morning! It's another busy day, with 37 companies on the agenda.
The agenda is now complete.
Today's report is now complete (2.30pm) - see you tomorrow!
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
BT (LON:BT.A) (£16.9bn) | Rev -2%, adj EBITDA +1% to £8.2bn. Adj free cash flow +25% to £1.6bn. FY26 outlook broadly flat. | ||
Intertek (LON:ITRK) (£7.86bn) | YTD rev +4.6%, improved margins. 2025 results to be in line with expectations. | ||
ConvaTec (LON:CTEC) (£5.64bn) | YTD rev +5.1%, FY25 revenue guidance tightened to 5.5%-7.0%, with adj op margin 22.0-22.5%. | ||
Investec (LON:INVP) (£4.41bn) | Rev +5%, adj op profit +4% to £920m. FY25 ROE of 13.9%, in line with guidance. | ||
easyJet (LON:EZJ) (£4.3bn) | H1 adj PBT of £(394)m, in line with exps. Current bookings support meeting FY25 exps. | ||
British Land (LON:BLND) (£4.1bn) | EPRA NTAVps +1% to 567p, adj profit +4% to £279m. Outlook: FY26 adj EPS “broadly flat” | ||
Shaftesbury Capital (LON:SHC) (£2.81bn) | Strong demand in West End, new leases 8% above ERV. Ann. rent roll +3% to £210m, vacancy <2%. | ||
Tate & Lyle (LON:TATE) (£2.7bn) | Pro forma rev -3%, adj PBT +7% to £263m. FY26: rev growth at lower end or below target range. | ||
Qinetiq (LON:QQ.) (£2.4bn) | Rev +1%, adj PBT -13% to £147m. Order intake +12%. FY26: rev +3%, EPS growth exp 15-20% | AMBER (Roland) Today’s results appear to be in line with March’s reduced guidance and QinetiQ appears to have acted promptly to right-size its US business. Trading in the dominant UK and Europe markets appears much healthier, fortunately. Although my feeling is that today’s FY26 guidance is slightly weaker than provided in March, I don’t see enough here to take a negative view. With the stock trading on a 15 times forecast earnings, I’m going to revert to my previous neutral view. | |
Petershill Partners (LON:PHLL) (£2.34bn) | Aggregate AUM +1% to $339bn. Raised $7bn of fee-eligible AUM in Q1. FY25 guidance unchanged. | ||
Johnson Matthey (LON:JMAT) (£2.3bn) | Rev -9%, adj PBT +2% to £334m. FY25 results in line with exps. Sale of Catalysts Technologies unit for £1.8bn. | AMBER/GREEN (Roland) It’s disappointing to see JMAT selling a unit that’s arguably one of its crown jewels. The price seems compelling, however, and the remaining business could become a high-yielding cash cow. I can’t fault the strategy, except for its lack of ambition. However, perhaps it’s what UK investors want. I can see enough value here for me to be broadly positive. | |
Mitchells & Butlers (LON:MAB) (£1.7bn) | Full year profits expected at the top end of forecasts after market beating LFL sales growth (+4.3%) in the first half and LFL sales +6% in the last 10 weeks. Cost headwinds remain. | ||
Energean (LON:ENOG) (£1.6bn) | Gas volumes in line, hydrocarbons slightly lower. Operating and admin costs higher. PBT -13%. | ||
Hill & Smith (LON:HILS) (£1.6bn) | In line with expectations. Revenue +1%. Low exposure to tariffs, but rising cost from higher US price of raw materials. | ||
Glenveagh Properties (LON:GLV) (£806m) | Forward order book €1.23bn (+13%). FY25 guidance reiterated. | ||
Serica Energy (LON:SQZ) (£550m) | Production guidance reiterated at 33,000-37,000boepd. Maintenance work at damaged Triton hub has been completed. | AMBER/GREEN (Mark) | |
Bloomsbury Publishing (LON:BMY) (£531m) | Ahead of expectations. Revenue +5% thanks to acquisitions. Hired a ‘head of AI innovation’. FY26 trading "broadly in line" with expectations. | AMBER (Megan) Investors have had a very negative reaction to this morning’s annual results which are plagued with adjustments and a wobbly outlook statement. I like the company a lot, but I am nervous enough to downgrade our previous view. | |
Ashtead Technology Holdings (LON:AT.) (£368m) | All major milestones for two big projects are complete. Trading in line with expectations. | ||
Sabre Insurance (LON:SBRE) (£339m) | Gross premiums 8% higher than 5yr average. Difficult comparison with ‘exceptional period’ last year. Full year guidance reiterated. | ||
Big Technologies (LON:BIG) (£305m) | New executive management team wants to ‘draw a line’ under a difficult year, which has been dominated by legal proceedings surrounding the former CEO. Trading in new financial year in line with expectations. | ||
Henry Boot (LON:BOOT) (£302m) | Demand for high quality residential land is high, with 4,067 total plots completed, exchanged or under offer. Annual results expected to be H2 weighted. | ||
Idox (LON:IDOX) (£272m) | H1 rev +4.4%, adj EBITDA +6% to £13.9m, in line with exps. Order intake +9%, net debt eliminated. | AMBER/RED (Mark) [no section below] | |
Impax Asset Management (LON:IPX) (£219m) | AUM £25.3bn (FY24:£37.2bn). Rev down 11% to £76.5m. EPS down 31% to 9.7p. Interim dividend down 15% to 4p. Cash £60.3m. £10m share buyback launched. | AMBER/GREEN (Mark) | |
Tullow Oil (LON:TLW) (£204m) | Q1 prod 52.9kboepd, within exps. FY25 prod guidance unch. Expect $380m cash from disposals in FY25. | ||
| Tharisa (LON:THS) (£178m) | Half-year Results | Rev -23.9%, profit after tax -79% to $8.2m. Cash: $194m. Equipment availability improved, bad weather disrupted Q2 ops. | AMBER (Mark) |
Anglo Asian Mining (LON:AAZ) (£148m) | Rev -13.7%, pre-tax loss $21.3m. Prod: 16,760GEO in line with guidance. FY25 outlook TBC. | ||
Capricorn Energy (LON:CNE) (£147m) | “Year to date, production from our Western Desert assets is tracking slightly above the mid-point of our annual guidance for 2025 of 17,000 - 21,000 boepd.” current net cash position of $34m. | ||
| Beeks Financial Cloud (LON:BKS) | Exchange Cloud Win (Wed 21/5) | Signed “significant” multi-year Exchange Cloud contract with ASX. No financial details provided. Mgt say will contribute to FY26 exps. | AMBER (Roland) [no section below] A major new contract win is good news, but once again no financial details are provided. Management commentary indicates that this win will contribute to FY26 expectations, implying that it’s already priced into forecasts. Today's updated note from Canaccord Genuity confirms no changes to its FY25 or FY26 forecasts. With the stock on a rolling P/E of 25, my neutral view is unchanged from April. |
Zotefoams (LON:ZTF) (£135m) | 4mo rev +8% to £50.7m. EMEA +11%, NA +5%. “While mindful of remaining macroeconomic volatility, the Board's full year expectations remain unchanged, and it remains confident about the long-term prospects of the business.” (revenue of £149.7m and adjusted profit before tax of £19.4m) | GREEN (Roland) [no section below] | |
Software Circle (LON:SFT) (£115m) | £426,770 inadvertently sent from a BU bank account. “the Group's financial position remains strong with a current Group cash balance of approximately £7.8 million and all business activities continue as normal.” | ||
Headlam (LON:HEAD) (£76m) | 4mo rev. - 4.7%, market taking longer than expected to improve. Accelerating and increasing the transformation plan. “underlying loss before tax for 2025 to be significantly weighted towards H1, with H2 supported by an improving market backdrop and the impact of the transformation plan. | ||
Water Intelligence (LON:WATR) (£62m) | Q1 Rev +4% to $21.3m, EBITDA +8.3% to $3.8m. Adj. PBT down 2% to $2.47m. April rev +20%.Total Net Debt to EBITDA ratio 30 Apr = 1.7. Exploring US listing. | AMBER/GREEN (Mark) [no section below] | |
| Logistics Development (LON:LDG) (£58m) | Final Results | U/L EBIT £18.4m. Trifast sold for £0.4m gain. Sold Mission Group. Tender offer return £21m to shareholders. Holds Finsbury Food, SQLI S.A. & Alliance Pharma (now private). | |
Petra Diamonds (LON:PDL) (£42m) | 25Q3 Ore processed reduced marginally to 1.7Mt (25Q2: 1.8Mt). Rev. $42m (24Q2: $106m) due to delayed tender. Consolidated Net debt $258m (31 Dec 24: $225m). “The Group remains on track to deliver production guidance for FY 2025 of 2.4 - 2.7 Mcts for the SA Operations.” | ||
Robinson (LON:RBN) (£23m) | Volumes +1% for 1st 4 months, Rev +3%, u/l op. profit flat. Net debt £7.3m (31 Dec 24: £5.9m). Surplus properties worth £7.4m. “...continues to expect underlying operating profit* for the 2025 financial year to be ahead of 2024 and in line with current market expectations.” | AMBER (Mark) | |
Works co uk (LON:WRKS) (£19.0m) | LFL sales growth +0.8%, total rev. -2%. Pre-IFRS 16 Adj. EBITDA is expected to be c£9.5m for FY25 (FY24: £6m), which is ahead of market expectations. Net cash £4m. Targeting profit growth in excess of current market expectations in FY26. | AMBER/GREEN (Mark) | |
Velocity Composites (LON:VEL) (£14.7m) | 25H1 Rev lower than originally expected, down 3% to £10.4m , Adj. EBITDA £0.3m (24H1 -£0.2m), Cash £1.2m (24H1 £1.8m). End customer demand strong but weaker than expected in the short term. “...similar level of sales revenue in FY25 to that achieved in FY24.. expects a better level of profitability, due to both efficiencies and the removal of the inflationary price pressures.” | RED/AMBER (Mark) [no section below] This looks like a warning on revenue with FY25 now guided to be similar to FY24. The Stockopedia consensus previously had this growing by 17% so this is a big miss. Blame is put on customer delays. However, cost-cutting has seen them improve “profitability”. Given that they were loss-making last year, they probably still will be this year. The cash burn isn’t that high, so there is no immediate need for funds and they are forecast to be profitable in FY26. However, they have not managed to break into profitability for all of the 8 years they have been listed, so I’d take that with a pinch of salt. As such it seems hard to justify even the now modest £15m market cap. |
Roland's Section:
Johnson Matthey (LON:JMAT)
Up 30% to 1,800p (£3.0bn) - Full Year Results & Sale of Catalyst Technologies - Roland - AMBER/GREEN
Agreed sale of Catalyst Technologies to Honeywell International Inc. (Honeywell) at an attractive valuation - enterprise value of £1.8 billion on a cash and debt-free basis, 13.3x 2024/25 EBITDA
Today’s results from chemicals group Johnson Matthey are somewhat overshadowed by the surprise sale of its Catalyst Technologies unit to US giant Honeywell International Inc (LON:HON) on what appear to be favourable terms:
Sale price: £1.8bn
Equivalent to 13.3x 2024/25 EBITDA
Expect net proceeds of £1.6bn
Intend to return £1.4bn of proceeds to shareholders, probably in 2026
The planned return is equivalent to 60% of JMAT’s opening market cap this morning, hence today’s market reaction.
Incidentally, I think it’s worth clarifying that the unit being sold is not the automotive catalyst converter business (called Clean Air), but instead specialises in “licensing process technology and supplying catalysts”:
It has leading positions in syngas - methanol, ammonia, hydrogen and formaldehyde - and a strong sustainable technologies portfolio. Catalyst Technologies is targeting high growth, high return opportunities in the decarbonisation of fuels and chemical value chains.
In other words, it’s a good quality, innovative business with apparently strong growth potential. Arguably this is the kind of business Johnson Matthey might want to invest more heavily in, to secure its long-term growth potential.
Instead, CEO Liam Condon appears to be pivoting to the group’s two largest, most mature and most market-leading units, Clean Air and PGM Services. The only growth venture left is the loss-making Hydrogen Technologies unit, which is expecting to reach operating profit breakeven in 2025/26.
FY25 results summary: let’s take a quick look at today’s results before considering what kind of business investors might be left holding when the Catalyst Technologies (CT) disposal is complete.
Here are the headline figures for the year ending 31 March 2025, including CT:
Sales (excluding precious metals) down 11% to £3,470m
Adjusted pre-tax profit up 2% to £334m
Adjusted EPS up 6% to 149.2p
Net debt down 16% to £799m
Free cash flow of £36m (FY24: £189m) excluding a disposal profit of £482m from the sale of the Medical business
Ordinary dividend unchanged at 77p per share
These are not very clean results. Extensive adjustments include £217m of impairment charges and a £112m restructuring charge. These impairments are informative, reminding us that today’s impairment represent the consolidation of its core business and perhaps some poor historic capital allocation decisions:
£134m impairment to Hydrogen Technologies “reflecting the further slowdown in the transition to hydrogen fuel cell and electrolyser technologies”. JM has exited the China fuel cell market and ceased building a new plant that was under construction in the US “due to lower demand forecasts”
£27m impairment in PGM Services due to a strategic review of its China refining plant and the exit from the China fuel cell market
£27m impairment of Clean Air assets as the business consolidates its existing capacity
£29m impairment to IT assets
Segmental results - what’s left? Looking at today’s segmental results suggests that after the CT disposal, the company will be left with a core business that’s highly profitable, but is in danger of shrinking:
Clean Air: revenue down 10% to £2,319m, op profit flat at £273m (11.8% margin)
PGM Services: revenue flat at £464m, op profit down 9% to £149m (32.1% margin)
Catalyst Technologies: revenue up 16% to £669m, op profit up 23% to £92m (13.8% margin)
Hydrogen Technologies: revenue down 15%, op loss of £39m
In fairness, the slowdown in Clean Air sales represented the wider global vehicle market:
Light duty diesel: -2%
Light duty gasoline: -8%
Heavy duty diesel: -16%
It’s possible that some of this volume will come back when heavy duty diesel sales improve. But I suspect much of the light duty volume (cars and vans) will be lost forever as the market gradually switches to electric vehicles.
Transforming into a cash cow
CEO Liam Condon makes clear in today’s results that his focus will be on running the group’s core businesses to maximise cash generation (and increase shareholder returns):
We are pivoting towards a cash-focused business model which will deliver materially enhanced shareholder returns.
He pays lip service to the growth opportunities remaining in the Clean Air and PGM Services business…
we are applying our leading technology and strong market positions to win business in Clean Air Solutions - our emissions control growth business which manufactures products for emerging applications such as hydrogen ICE, backup generators for data centres and CO2 capture.
… but I think the company’s guidance on future capital expenditure makes it clear that innovation and growth will be low on the list of priorities when existing investment plans are completed (my emphasis):
Following the divestment of Catalyst Technologies and the completion of our new PGM refinery, capital expenditure will reduce to c.£120 million in 2027/28 which is mainly focused on maintenance and operational improvement. We expect capex to depreciation in the range of 0.8 to 1.0x in 2027/28
If capex is lower than depreciation, it generally signals that a business is not investing in growth and may be shrinking in real terms.
I’d associate a strategy like this with the big tobacco groups, for example, but it’s a little disappointing to see this from one of the UK’s oldest and most respected industrial companies – Johnson Matthey’s history in precious metal refining stretches back over 200 years.
Shareholder returns: however, perhaps this approach is just what the UK’s dividend hungry and somewhat risk-averse investors demand. The company has a clear plan to increase cash returns to shareholders:
“We expect to generate annualised sustainable free cash flow of at least £250 million in 2027/28 and beyond.”
Most of this cash will be returned to shareholders:
25/26 cash returns expected to total £130m (equivalent to 24/25 total dividend) - this is expected to be a cash dividend
From 26/27 onwards, cash returns are expected to total at least £200m/year, “broadly equally weighted between dividends and share buybacks”
Outlook: I don’t have access to any updated forecasts today and the company has not yet confirmed how it plans to return the £1.4bn from the CT sale. It’s possible that this will include a reduction in the share count.
However, the company’s guidance on an as-is basis is for a year of modest progress:
For 2025/26 we expect mid single digit percentage growth in group underlying operating profit at constant precious metal prices and constant currency, supported by self-help measures.⁹ This assumes a full year of contribution from Catalyst Technologies. Whilst we expect good growth in the first half, overall performance will continue to be weighted towards the second half.
Prior to today, consensus forecasts suggested adjusted earnings growth of 17% in FY26. My feeling from the statement above is that this guidance is slightly weaker than prior consensus.
Assuming no major change to consensus, the shares are trading on a FY26E P/E of 11 and a dividend yield of 4.3% after this morning’s gains.
Roland’s view
On the one hand, today’s news shows Johnson Matthey focusing on its core businesses where it has clear market leadership and strong profitability. That’s not necessarily a bad strategy, especially given the group’s poor record in recent years of allocating capital to growth projects.
However, Johnson Matthey wasn’t in financial distress and I cannot help feeling a little disappointed that one of its highest-quality business units is now being sold for a one-off cash gain. While the price being paid by Honeywell may be strong, even compelling, the lack of ambition here seems a little disappointing.
In terms of numbers, this morning’s 30% share price rise has left the business with a market cap of about £3bn. Stripping out the planned £1.4bn cash return values the remaining core business at £1.6bn.
Clean Air and PGM Services generated £422m of adjusted operating profit last year. I reckon that could translate into a valuation of c.6x post-tax earnings – arguably not expensive, even for a business in mild decline.
Given the apparent value on offer here, I’m going to take a moderately positive view. Indeed, this is a situation I might research further from an income perspective. (AMBER/GREEN)
Qinetiq (LON:QQ.)
Up 8% to 478p (£2.6bn) - Full Year Results & LTPA Extension - Roland - AMBER
Shares in this FTSE 250 defence group have been volatile this year as the market has veered between optimism about structural growth in defence spending and caution relating to the group’s US performance. Today’s update is the first since March’s profit warning, giving us a chance to learn more about the outlook for the year ahead.
FY25 results summary: today’s figures cover the year ended 31 March 2025. They appear to be in line with revised consensus earnings estimates, which were cut by 18% following March’s profit warning:
Here’s a summary of the main numbers:
Revenue up 1% to £1,931.6m
Adjusted pre-tax profit down 13% to £147m
Adjusted operating margin: 9.6%
Adjusted EPS 11% to 26.1p
Dividend up 7% to 8.85p per share
Net debt down 12% to £133.2m
Operational performance was mixed, with a slight decline in funded orders but an improvement in order intake:
Order intake up 12% to £1,954.8m (a new record)
Funded order backlog down 1% to £2,845.1m
EMEA Services: the company says its EMEA business (including the UK) benefited from 21% increase in order intake during the year and delivered 5% organic revenue growth. Highlights included a €284m 10-year order for training services in Germany and “good growth in our UK Defence Sector” (50% of group revenue).
The company has also announced today the extension of a long-term partnership agreement with the UK Ministry of Defence. This is expected to be worth £1.54bn over five years and has initially resulted in the recognition of a “£166m incremental order relating to current investments in test and evaluation”.
The extension of this agreement is clearly positive for QinetiQ. However, without investigating too deeply my feeling is that this was already in the forecasts – the problem would have been if the company had failed to extend this agreement.
Global Solutions: this division includes the USA and suffered “a challenging external market environment” last year. We already know this – one of the main reasons for March’s profit warning was a shortfall in short-cycle work in North America.
Today’s results provide a little more detail on the problems QinetiQ has faced:
we experienced both market challenges, following the change in administration including export restrictions, and operational issues. Orders decreased by 4%, driven by a reduction in US order flow against a strong prior year comparator and a challenging trading backdrop in the second half of the year.
Today’s results include adjusting a £144m impairment charge relating to the group’s US operations:
Our US operations performed below expectations for orders, revenue, profit and cash flow in the year with some key contract losses.
The company has also taken a £45m charge relating to “a number of one-off, largely non-cash charges and provisions primarily relating to inventory and cost recovery in our legacy US operations”.
QinetiQ’s US division has a new CEO who has apparently taken a more cautious view on the outlook for this business under the current US administration:
During the second half of the financial year the change in administration, together with the new US Sector Chief Executive’s perspective on the US business performance and outlook led to a material impact on the future projections of the business and an associated restructuring plan. These factors, together with the impact of the discount rate which increased significantly in H2, has a knock-on impact for future years’ profitability and cash flow and hence an impairment.
QinetiQ appears to be scaling back its US ambitions to reflect the realpolitik of the current world order. I will be interested to see if there will be any read-across from this to other UK defence groups, notably BAE Systems, which generates nearly half its revenue in the US. Watch this space.
In the meantime, QinetiQ says it’s now aiming to shift its focus to using its UK base to “better serve NATO and its allies”. Presumably this means an increased focus on European defence markets.
Outlook & Estimates: today’s results provide fairly clear guidance for FY26 which I’ve been able to compare with the equivalent figures from March. My feeling is today’s numbers are broadly in line with the March guidance, but slightly weaker:
Organic revenue growth c.3% for FY26 (March ‘25: “c.3-5%”)
Adjusted operating margin expected to be c.11% due to restructuring (March ‘25: “at margins of 11-12%”)
In today’s outlook statement, management guide for adjusted EPS growth of 15%-20% in FY26.
That sounds impressive, but of course the comparator is the downgraded FY25 earnings.
Current FY26 consensus of 31.2p is effectively flat on the original FY25 EPS forecast of 31.2p that was in place prior to March’s profit warning.
Using today’s adjusted earnings of 26.1p, FY26E EPS of 31.2p is equivalent to an increase of 19.5%. Given this, I would argue that the company’s guidance of 15%-20% EPS growth this year is arguably at the lower end of consensus.
I don’t have any access to broker notes for this business, but it may be worth keeping an eye on the consensus figures on the StockReport in the coming days to see if they edge lower.
Roland’s view
I went RED on QinetiQ in March as I feared its profit warning might herald the start of a longer period of weakness.
Guidance for the current year in today’s results suggests this view might be too harsh. The company’s order backlog and intake appear to be stable, on the whole, with measures being taken to right-size the US business. As a result, performance this year looks likely to be more robust.
Today’s share price gain has left QinetiQ trading on 15x forecast earnings, with a 1.9% dividend yield.
Although quality metrics here are slightly above average, this valuation doesn’t seem all that compelling to me. If QinetiQ hits forecasts this year, earnings will only be marginally above FY24 levels.
My view is also that today’s guidance is weaker than was provided in March (only two months ago), so I’m inclined to remain a little cautious.
The StockRanks were neutral prior to today and I think that’s fair. I’m going to return to the neutral view I took in January. (AMBER)
Megan's Section:
Bloomsbury Publishing (LON:BMY)
Down 17.5% to 537p (£437m) - Full year results - Megan - AMBER
Investors don’t like heavy adjustments, that much is clear from this morning’s mega share price fall in response to annual results from Bloomsbury Publishing.
They like those adjustments even less when they come just two months after a trading update which reassured that annual results would be ‘ahead of expectations’.
To be fair to Bloomsbury, the last set of forecasts from the company were for adjusted pre-tax profits of £39.6m. In its last research note published in March, house broker h2Radnor was expecting adjusted pre-tax profits of £41.5m. So these numbers (adjusted PBT of £42.1m) are indeed ahead of what they deemed “previous consensus expectations.”
But adjustments (or, what the company calls ‘highlighted items’) were bulky, coming in at £9.7m. This was largely due to amortisation of acquired intangibles which were £3.5m higher than last year at £8.4m. I have a lot of good things to say about the way Nigel Newton and his team manage Bloomsbury, but I am never a fan of companies which strip amortisation out of their chosen profit figures, especially when those companies are routinely acquisitive.
At the bottom line, net profits were more than 20% lower than last year at £25.4m. Company earnings were also down 21% at 31.14p.
Slower growth
Perhaps investors had been hoping the company would pull some magic out of the hat to rescue a year of slower growth. Sales were up 5%, which compares to the company’s five year CAGR of 16%. Worse, on a like-for-like basis, sales were flat year-on-year after stripping out the £19.8m contribution of academic publisher Rowman and Littlefield.
In what seems to be a slightly desperate attempt to remind shareholders that Bloomsbury can deliver growth, management has also chosen to present FY25 numbers compared to FY23 as part of the ‘financial highlights’. Organic revenues were 29% higher than those reported in FY23 and pre-tax profits (the unadjusted ones) were 35% higher.
There are legitimate concerns surrounding the company’s ongoing growth prospects. In the consumer division (71% of the top line), I am always astounded by the contribution made by Harry Potter - a book that was first published 28 years ago. But with growth in the division at just 3%, it seems like the magic growth may finally be drying up. The company’s other super successful author is Sarah J. Maas, but she hasn’t published a new novel since January 2024. The company could probably do with a few more lucrative authors on its books.
In the far smaller non-consumer division (which includes academic, professional and online reading resources), like-for-like sales fell 10% to £63m. This comes amid budgetary pressures on academic reading material. After closely following the struggles of academic publisher Pearson, I am concerned about Bloomsbury’s potential expansion in this market. The newly acquired business Rowman and Littlefield is expecting further headwinds in FY26, which won’t make the remainder of the integration particularly enjoyable.
Outlook uncertain?
These challenges are reflected in the outlook at Bloomsbury. Management has said that trading so far this year has been “broadly in line” with consensus expectations, which feels a little hesitant. Consensus expectations (according to the company) are for revenue down 3% to £349.2m and adjusted PBT up 7% £45.1m (although house broker h2Radnor is more conservative with its forecasts).
Megan’s view:
Bloomsbury’s share price has been on a downward trajectory for much of the last year as concerns over the ongoing growth prospects mount. I think that is justified. But the share price movement this morning feels like an over-reaction.
That said, I am not feeling entirely comfortable with the outlook. Management at Bloomsbury tends to be quite conservative with forecasts, but “broadly in line” doesn’t feel massively confident, which means a price to forecast earnings ratio of 16x is perhaps a bit stretched.
I like Bloomsbury, it’s a well managed, high quality business which generates a lot of cash. But deploying that cash into acquiring academic publishing companies is not a strategy that I am optimistic about.
It’s with regret that I’m going to downgrade Graham’s last view to AMBER.
Mark's Section:
Works co uk (LON:WRKS)
Up 13% to 34.5p - Full Year Trading Update - Mark - AMBER/GREEN
The share price had been perky here over the last month on some increasing volume:
This may have simply been a recovery in general markets, although given today’s good news, this seems a little fishy to me. And it is good news, although LFL sales were flat for the year ending 4th May, it is a multi-year upgrade to Adj. EBITDA. Firstly:
Pre-IFRS 16 Adjusted EBITDA (2) is now expected to be approximately £9.5m for FY25 (FY24: £6m), which is ahead of market expectations (3).
Helpfully, they give us an update on what that means:
Group compiled market forecasts for FY25 and FY26 are currently pre-IFRS16 Adjusted EBITDA of £8.5m and £10m respectively.
That’s an 11.7% beat at the Adj. EBITDA level. However, there are some significant adjustments in there:
Pre-IFRS 16 Adjusted EBITDA excludes Adjusting items in relation to exceptional fulfilment costs (£1.2m) and exceptional restructuring costs (£0.6m).
They had issues fulfilling online orders at Christmas leading to a 12.1% decline in sales through this channel. They have taken action and appointed a new provider:
Following the online fulfilment issues experienced during Christmas 2024 we have appointed a new third-party provider. The transition is due to complete by the autumn and is expected to deliver cost savings in FY26 and beyond as well as providing a higher standard of service to customers.
It seems to me that they are saying that FY25 beats expectations if you ignore all the things that went wrong. If you include these, this is actually a miss versus expectations! However, assuming that they have chosen the right third-party logistics provider, these issues shouldn’t repeat. Which means that they should see improving sales through the online channel in FY26, giving them the confidence to say this so early into the new FY:
The Board expects that the positive momentum seen since Christmas will continue. This, combined with ongoing focus on product margin growth, cost management and execution of our new strategy, means we expect to offset significant cost headwinds and deliver profit growth in the year ahead. As a result, we are targeting profit growth in excess of current market expectations in FY26.
Their broker, Singer, upgrade their FY26 EPS by 30% to 6.7p. This is a forward P/E of 5 despite today’s rise, meaning that the already great VM rank is going to get even stronger:
Net cash has also increased and stands at £4m at the year end. However, they have significant working capital swings during the year, so this isn’t representative of the typical cash position. For example, they had £8.5m net bank debt at the half-year.
It seems the financial position isn’t strong enough yet to consider shareholder returns. Singer don’t forecast any dividends this year or next. It is also worth noting that at the half year, lease liabilities exceeded right of use assets by £19.2m. This means that a significant number of stores must be loss-making. The good news is that this situation should improve with better store trading, and they have relatively short leases. However, onerous lease costs remain significant compared to their market cap.
Mark’s view
The very high Momentum and Value ranks make this a compelling Turnaround stock. The large upgrades to what should be a cleaner FY26 are enough to assuage my concerns as to whether FY25 should be considered a beat or a miss, with more realistic adjustments. This is an AMBER/GREEN for me, with the lack of dividends and large onerous lease liabilities taking the shine off an excellent operating performance in difficult market conditions.
Impax Asset Management (LON:IPX)
Up 3% to 171p - Interim Results - Mark - AMBER/GREEN
The woes of the asset management industry are well known, as was the loss of the St. James Place mandate, meaning the large fall in AUM was expected:
AUM at £25.3 billion (H1 2024: £39.6 billion; FY 2024: £37.2 billion)
So was the impact on EPS:
· Adjusted diluted earnings per share of 12.6 pence (H1 2024: 16.0 pence; H2 2024: 16.2 pence)
· IFRS diluted earnings per share of 9.7 pence (H1 2024: 14.0 pence; H2 2024: 14.2 pence)
In terms of adjustments, there is £1.3m of non-cash intangible amortisation in there, which is normal to exclude. However, there is also £1.7m of redundancy costs for this half year, which will be cash, but should be a one-off. They said they had removed 30 roles during the period, so this works out to be around £57k per person. However, they say they are saving £11m, which means the average role had a total package of £366k. In light of this, the redundancy costs seem reasonable. Their total headcount only went down by 19, though. Which means they also added 11 roles during the period. Overall, this seems a little strange.
What wasn’t expected was the cut in dividends. Many asset managers have held their dividend payments, expecting a medium-term market recovery. Until today, brokers were expecting Impax to do the same. The cut today is a 15% reduction in the interim dividend to 4p. However, the real sting in the tail is this:
We are also rebalancing the split between the interim and final dividend, so that distributions to shareholders are less heavily weighted towards the final dividend, in line with common market practice.
Market norms are for a 1/3rd, 2/3rds split between interim & final payments. Research provider Equity Development are now forecasting a 13p full year dividend, around half the previous forecast. This is still a reasonable yield at 7.6%. However, this is now below the rest of the sector, and won’t please those who held this expecting the very high yield of the previous forecasts. Especially as previous management comments in presentations suggested that maintaining the dividend was a priority.
In a rather strange move considering that they have cut their dividend to conserve cash, they also announce a large share buyback:
As part of the Board's capital management approach, we will also consider returning to shareholders surplus capital through share buybacks, while also ensuring there is sufficient capital available to fund future growth opportunities when they arise. In line with this, we intend to return up to £10 million of capital to shareholders before the end of the calendar year through a share buyback programme, which, combined with our commitment to funding the Company's expansion and our dividend policy, demonstrates our confidence in the Company's future success.
The sceptic in me always thinks this may be due to how directors are remunerated. However, a quick look at the 2024AR shows that the number of options outstanding is relatively limited and although there is a share price component to bonus payments, it is relatively minor. Instead, the risk here is that this represents a lack of consistent strategy, or that the outlook has materially worsened for future years. This is the outlook:
At the time of writing, markets remain fragile as investors continue to digest geopolitical tensions and the implications of U.S. tariff policy. Our focus on managing portfolios of high-quality securities provides our clients with diversification and access to specific areas of the market, and we are encouraged by the improvement in our relative investment performance since the start of the calendar year.
So perhaps the current uncertainty has changed their view on how much regulatory capital buffer they need. Equity Development say that 71% of AUM has outperformed their benchmarks this year and that the fixed income strategy performance has been mostly ahead of benchmarks for a number of years. However, the recent falls in AUM take time to work their way through the financial results and Equity Development’s adjusted EPS is forecast to fall to 19.7p in FY26 versus 21.7p in FY25. This is upgraded from a previous 17.6p estimate for FY26, though.
Mark’s view
The results are in line, and Equity Development have upgraded FY26 EPS by 12%. However, the large cut to a previously flagged as likely to be maintained dividend, combined with a share buyback suggests that there is quite a lot of uncertainty as to what their future strategy should be. This is reinforced by them making 30 roles redundant in the period but hiring 11 people. Still, most of its funds are outperforming benchmarks, and the rating is modest at around 9 times earnings, even if the timing of any recovery is perhaps more uncertain. So it stays as AMBER/GREEN for me.
Serica Energy (LON:SQZ)
Up 3% to 145p - Trading and operations update - Mark - AMBER/GREEN
This is an inline update with production guidance maintained at 33,000-37,000 boepd. This is despite only 26,500boepd produced in the first four months of the year due to the Triton shutdown. This remains on target to be restarted at the end of June, including some new production wells:
The Triton Hub was producing at a rate of approximately 25,000 boepd net to Serica immediately prior to the shutdown. Following restart, both the W7z well on the Guillemot North West field (Serica: 10%) and the EV02 well on the Evelyn field (Serica: 100%), which were delivered on schedule and under budget during the Triton downtime, will be brought onto production for the first time
There is further production growth to come next year, too, from a successful well:
The BE01 well on the Belinda field (Serica 100%) was also drilled and completed ahead of schedule and under budget. The well has now been flow tested through the COSL Innovator rig this week, delivering rates of 7,500 boepd, constrained by the surface well test equipment design specifications. Work is underway on the installation of subsea infrastructure, and Belinda is expected to be tied in to Triton and to enter production in early 2026
Net debt is now $102m but this will improve with higher H2 production and tax receipts.
Mark’s view
Given the recent changes in production, investors need to be careful about relying on the FY25 consensus here. The lack of movement in consensus suggest some stale forecasts:
The only updated research available on Research Tree is from Auctus which has just US8c for FY25 EPS. However, this rises to US75c for FY26. This is close to the consensus for FY26 and is for a P/E of 3. The 21c forecast dividend is still an 11% yield despite recent cuts. Given the scope for further production growth in the medium term, this still seems too cheap. AMBER/GREEN
Robinson (LON:RBN)
Down 7% to 125p - AGM Trading Update - Mark - AMBER
Everything is pretty much flat here with minimal changes in volumes and underlying operating profit in the first four months of the year. They say:
The Company continues to expect underlying operating profit* for the 2025 financial year to be ahead of 2024 and in line with current market expectations.
Their broker, Cavendish, are forecasting a 12.5% increase in EBIT, so they have more to do in the remaining 8 months of the year to hit that figure. The outlook suggests some reasons for optimism:
Our close partnerships with major FMCG customers have generated an improved sales pipeline, and our strategy of widening this blue-chip customer base is generating further substantial opportunities, including important projects that are now close to fruition in new market sectors.
However, without specifics, I can see why the market hasn’t liked the uncertainty around the amount of work they need to do in the rest of the year to make those forecasts.
There is better news on the property front:
We are continuing to pursue the sale of surplus properties in Chesterfield. Subject to the necessary approvals, we would expect further sales of surplus property to be achieved in 2025.
When all of these are made, this will likely eliminate the current £7.3m net debt.
Mark’s view
The forward P/ E of 11 isn’t crazy. However, with work to do to get to the forecast numbers and relatively modest future growth, it doesn’t look particularly cheap either. I can’t get over the feeling that plastic packaging isn’t a great place to be, with a focus from retailers on removing single-use plastics wherever possible. While a completely plastic-packaging-free future is probably not possible, it will constrain the growth of this sort of company, no matter how well they execute. AMBER still seems about right.
Tharisa (LON:THS)
Flat at 62p - Half-year results - Mark - AMBER
The combination of lower production, which was already known, and lower chrome prices mean that the headline EPS is down to 2.9c, from 13.2c the year before. They say they maintain their guidance for FY25 but don’t say what this is, but the Q2 production report says:
Production guidance for FY2025 is set at between 140 koz and 160 koz PGMs (6E basis) and 1.65 Mt to 1.8 Mt of chrome concentrates
They also make no comment on market conditions, with the volatility in the Chrome price a key factor in determining the financial outlook for the year. I can’t see any updated broker coverage to shed light on this either.
They have net cash of $87.6m, which is around £65m and around a third of the market cap. This has given them the financial security to maintain the 1.5c interim dividend and announce a $5m buyback. However, without details of the current commodity outlook, it is hard to judge if they are getting a good deal or not. So far, the market appears to like the signal (or perhaps the price support!)
One of the issues recently is that all their cash flow has been committed to developing Karo, and even at a reduced rate, this is a significant outflow. Here they say:
While we have slowed development at the Karo Platinum Project in line with capital availability, we have nevertheless continued work on infrastructure, water dams and further optimisations including commencing with studies for the future underground mine development, while presenting the opportunity to non-traditional financiers, who like us, see the long-term benefits of the uniqueness not only of this Tier 1 project but of the applications PGMs will play for decades to come.
I assume they are talking about off-take agreements or similar arrangements, which may reduce their capital commitment. Here is the diagram from their presentation:
The good news is that there are multiple sources of additional finance. The bad news is that we don’t know what terms these will be advanced on and whether Tharisa will need to cede equity as part of any of these deals. Until these are signed, Tharisa will be on the hook to keep providing equity finance if they want to advance the project.
Mark’s view
The H1 results themselves look very weak. However, the market has liked the signal from the retained dividend and renewed buyback. There simply doesn’t seem to be enough information to judge which is the right call. There are signs that the cash outflow to fund Karo may be close to ending. However, until alternative financing is signed, this remains a risk. I maintain my AMBER view.
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