Daily Stock Market Report (Thur 31st July 2025) - SRB, RWA, EMR, APTA, NARF, NXT, VINO, BATS, SPEC, NICL, SDR, JUST

Good morning!

In macro, the Federal Reserve has left rates unchanged, as expected.

I've published a profile of some companies with "Bitcoin Treasury policies", and discussed the concept of companies having such a policy - here's the link.

Today's agenda is, at last, complete!

14.15pm: finished for today, thanks!

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Spreadsheet accompanying this report: link (last updated: 30th June).

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Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Shell (LON:SHEL) (£157bn)	2nd Quarter 2025 Half Year Unaudited Results	Adjusted earnings $4.3bn despite lower trading contribution in a weaker margin environment.
Unilever (LON:ULVR) (£109bn)	2025 First Half Results	Full year outlook: underlying sales growth within our range of 3% to 5%. Adj. op margin improvement.
British American Tobacco (LON:BATS) (£87.5bn)	Half-year Report	H1 slightly ahead of exps. Rev -2.2% due to FX headwinds, up 1.8% at constant FX. EPS +1.6%. Increased share buyback by £200m to £1.1 billion. Firmly on track to deliver FY25 guidance: revenue growth at top end of 1-2% range, 1.5-2.5% adjusted profit from operations growth (adjusted for Canada), even after an FX headwind of 1-1.5%. Deleveraging to a (heavily adjusted) 2.0-2.5x net debt/EBITDA multiple by 2026. Successful launch of Velo Plus (pouch with higher nicotine content).	AMBER/GREEN (Graham holds) [no section below] Following on from the H1 trading update, today’s results show BATS continuing to deliver. H1 revenue growth (at constant FX) is towards the top end of what was expected for the year as a whole (1-2%). There is slow but steady progress in growing smokeless products and “New Categories” as a percentage of the total business. I don’t think that FX headwinds to revenue change the fundamental picture, and of course there is always the possibility that they might reverse. I’ve been holding these shares for a long time, collecting dividends but sitting on a capital loss. As there hasn’t been a major negative regulatory surprise in a little while, the share price has finally discovered some momentum and is up by close to 50% over the past year. Deleveraging would be greatly welcome but the view from the ratings agencies is that it is already investment-grade (e.g. it’s BBB+ at both Fitch and S&P). At an earnings multiple of 11x, I think it offers medium risk with medium reward.
Rolls-Royce Holdings (LON:RR.) (£83.4bn)	Half Year Results	Strong first half performance: FY25 guidance raised, now expect £3.1-3.2bn adj. op profit.
London Stock Exchange (LON:LSEG) (£53.1bn)	Interim Results	Adj. EPS +20%. 2025 margin guidance improved to +75-100 basis pts from +50-100bps.
HALEON (LON:HLN) (£32.8bn)	Half Year Results	PW? H1 adjusted organic revenue 3.2%. New FY25 guidance around 3.5% (previously 4-6%).
Standard Chartered (LON:STAN) (£31.8bn)	Half Year Report 2025	2025 adj. income growth expected around bottom of 5-7% range (cc). RoTE approaching 13% in 2026.
Anglo American (LON:AAL) (£26.3bn)	Interim Results	Adj. EBITDA $3bn reflects challenging rough diamond trading conditions.
Next (LON:NXT) (£15.1bn)	Trading Statement	Full price sales +10.5% ahead of guidance of 6.5%.Increases guidance for H2 sales/profits.	AMBER/GREEN (Graham) I remain extremely happy with management and the business, but I akcnowedlge that it may be fully priced at a PER of 17x. Next themselves seem to agree that it's no bargain, as they won't buy back any more shares this year unless the share price falls or their PBT forecast increases further.
Rentokil Initial (LON:RTO) (£8.8bn)	Half-year Report	Performance and outlook in line.
SEGRO (LON:SGRO) (£8.7bn)	Results for six months ended June 2025	7.8% LfL net rental income growth. Positioned well for further growth.
Weir (LON:WEIR) (£6.84bn)	Half-year Report	Constant currency revenue guidance reiterated, operating profit margin upgraded.
Zegona Communications (LON:ZEG) (£6.65bn)	€725m debt refinancing	“Strong operating performance supports” refinancing. Further reduction in annual interest cost.
Entain (LON:ENT) (£6.50bn)	Successful repricing and extension of Term Loans	Debt neutral, extending maturity of Group’s debt and reducing annual interest costs by approx £10m.
Schroders (LON:SDR) (£6.3bn)	Half-year Report	Adj. op profit +7%, actual PBT falls to £196.9m (H1 2024: £276m). Marginal net outflows in H1 (£1bn) which were principally driven by low-margin money market movements; period-end AUM was only marginally lower. Average AUM +3%, adjusted operating profit +7% (to £316m). Actual PBT -29% (to £197m) due to costs associated with the company’s transformation programme and portfolio restructuring.	AMBER/GREEN (Graham) [no section below] The FT reports today that according to the CEO, the Schroders family has no intention of selling their stake in the business - it’s helpful that he responded to this speculation. I understand that the family still owns nearly half of the business through various vehicles. Turning to today’s half-year report, the overall lack of growth is an understandable impetus for expensive change projects, but these are significantly hurting profits in the short-term. As I’m AMBER/GREEN on the smaller fund managers, I’m inclined to be AMBER/GREEN on this one too: while the lack of growth is palpable, it does enjoy the benefits of scale in an industry where scale is very helpful. Checking the archives, I see that I was GREEN on this in May - the share price is up by c. 20% since then, so I think it's pretty reasonable for me to downgrade it by one notch after this strong run.
St James's Place (LON:STJ) (£6.25bn)	Half-year Report	Net inflows £3.8bn, FUM £198.5bn (Dec 2024: £190.2bn). Underlying cash result +17% to £240m
Endeavour Mining (LON:EDV) (£5.63bn)	H1 2025 Results	On track to achieve FY2025 guidance following strong H1 production of 647koz.
Mondi (LON:MNDI) (£5.16bn)	Half-year Report	Adj. EBITDA €564m, similar to H1 2024. Political/macro uncertainties set to continue impacting trading.
Lion Finance (LON:BGEO) (£3.4bn)	Statement re Press Comment	In process re: sale by HSBC of its stake in HSBC Malta.
Drax (LON:DRX) (£2.4bn)	Half-year Report	Full year expectations for adj. EBITDA unchanged. Consensus £899m,range £889-910m.
Hammerson (LON:HMSO) (£1.42bn)	Half-year Report	EPRA earnings guidance raised to £102m (from £95m), on track to achieve medium-term framework.
JTC (LON:JTC) (£1.41bn)	Trading Update & Proposed Acquisition of Kleinwort Hambros Trust	Resilient and sector-leading performance”. 2025 results to be in line with expectations.
Just (LON:JUST) (£1.31bn)	Offer for Just Group	SP +68% (to 212p) Recommended offer of 220p in cash from Brookfield Wealth Solutions	PINK (Graham) [no section below] Relieved to see that I was tentatively positive on this in March (AMBER/GREEN), at the full-year results. It's a complex financial stock, providing various retirement-focused products, with specialist expertise in de-risking plans for defined benefit schemes. In March I noted that tangible net assets per share were 254p, according to the company, after accounting for profits that were due to be earned over time on the company's insurance products. This seemed to be a more important feature of the stock than some weakness in profit margins and other temporary issues affecting the share price on that day. If only I'd studied it in more detail! It's not an American firm with a takeover this time, but it's close - a Canadian firm! We have yet more proof (in my view) that the UK market is not valuing financial stocks properly, with buyers from overseas only too happy to take them off our hands. Until valuations pick up, I don't see anything that can stop the exodus of stocks from the LSE into private and foreign hands.
Helios Towers (LON:HTWS) (£1.25bn)	H1 2025 Results	“Strong first half underpinning our full-year guidance”. Adj. EBITDA +9% year-on-year.
Pets at Home (LON:PETS) (£1.11bn)	Q1 FY26 Trading Statement	Consumer revenue flat at £591m. Given the subdued retail market growth rates seen to date, we expect market growth to now be around 1% and adjust our guidance range to reflect this, now expecting underlying PBT in a range of £110-120m, down from £115-125m.	BLACK (AMBER/GREEN) (Mark) [no section below] The downgrade here is relatively minor, at around 5% taken out of the mid-point of the range and the share price has responded in kind. However, this comes on top of 18 months of almost continuous downgrades, suggesting we probably shouldn’t expect it to be the last. Following FY25 results in March, Roland took an extensive look at the business and came away AMBER/GREEN. Although the FY26 guidance range has moderated since then, so has the share price, so I see little reason to change that view on a long-term view.
Elementis (LON:ELM) (£938m)	Half-year Report	Revenue -1% to $308m, CCY Adj. Operating Profit +7% to $65m. Net debt down 36% since year end to $125m. Full year profit performance to be in line with market expectations.
Spire Healthcare (LON:SPI) (£906m)	Half-year Report	H1 Revenue +5% to £797m, Adjusted operating profit flat at £76m. Adj. EPS -13% to 41.1p. “FY25 guidance is unchanged and we are currently trading in line with market expectations.”
SDCL Efficiency Income Trust (LON:SEIT) (£601m)	Update and Disposal	“...the Investment Manager has successfully negotiated the sale of its convertible loan in ON Energy to the issuer for $7.6 million, representing an 18.75% premium to the current holding value of $6.4 million and a money on invested capital ("MOIC") including actual cash receipts to date of 1.63x.”
Chrysalis Investments (LON:CHRY) (£582m)	Interim Results	NAV per share +8% to 152.6p. Realisations totalling £80 million, including £79 million from the sale of Featurespace. A further £49 million was realised from the sale of InfoSum just after the period end. Follow-on investments into wefox (£17 million) and InfoSum (£2 million), and an increase in the position size of Klarna (£8 million). “...continues to execute its commitment to return up to £100 million to shareholders through the share buyback programme.”
Nichols (LON:NICL) (£510m)	Interim Results	H1 Revenue +2% to £85.5m, Adj PBT flat at £14.6m. Interim dividend +1% to 15.0p. “Full year adjusted profit before tax is expected to be in line with current market expectations.”	AMBER (Mark) The valuation here simply looks too high for a company where any top-line growth has proven elusive over the years, and there is little sign in today’s results that this is about to change. (The high ROCE here only matters if companies can re-invest capital at similar high rates.) There is plenty of cash on the balance sheet making it secure, but with the share price up around 40% since we last looked at it on the DSMR and the Momentum Rank dropping quickly over the last couple of months, it looks time to reconsider whether this High Flyer will actually soar from the current valuation in the long-term.
Sabre Insurance (LON:SBRE) (£369m)	Half-year Report 2025	Profit before tax +26% to £25.5m. Interim dividend increased by 100% and £5m share buyback launched. “We remain confident of delivering a strong profit in 2025, in-line with 2024, and an attractive dividend.”
Newriver Reit (LON:NRR) (£332.8m)	First Quarter Company Update	Completed the successful sale of the Abbey Centre in Belfast for £58.8 million, in-line with March 2024 and 2025 book values. LTV as at 30 June 2025 (using March 2025 portfolio valuation) reduced to 38%. Cash increased to c.£120 million.
Fintel (LON:FNTL) (£239m)	Half Year Trading Update	Revenue +18.6% to £42.4m, organic growth 4.2%, Adjusted EBITDA +17% to £11.2m. Net debt position of £32.0m Outlook - trading in line with expectations.
Sovereign Metals (LON:SVML) (£203m)	June 2025 Quarterly Report	Continuing to advance the Kasiya Definitive Feasibility Study (DFS), including finalising mining fleet design, process plant configuration, and mine gate-to-vessel logistics solutions.
Microlise (LON:SAAS) (£159.4m)	HY2025 Trading Update	Revenue +13% to $44.1m, Adj. EBITDA +19% to £6.2m.
Serabi Gold (LON:SRB) (£139m)	Updated Mineral Resource and Reserves	2P reserves 162koz vs 206koz in July 2023, equivalent to six year production. M&I Resources 388koz, 3% higher than December 2023.	AMBER/RED AMBER/GREEN (Mark) [no section below] With resources companies, it isn’t just the current production that matters but the ability of the company to keep producing. Investors want to see a long life of mine in order to be able to use ongoing valuation metrics, such as P/E or EV/EBITDA measures. To estimate the future potential, companies commission independent reports into reserves and resources based on drilling results and probabilistic models. Reserves are where there is a high certainty that ore exists in those quantities and that extraction will be economic. Production will decrease this figure over time. Resources are booked where there is a reasonable certainty of ore quantity but economics are not known. Usually it is drilling results that increase certainty and hence shift resources into reserves, but changes in commodity price may also help shift the economics. In Serabi’s case, production has depleted their reserves but drilling results have not yet increased these. They say the current model includes surface drilling but not the underground drilling started in March, hence the resources have increased slightly but not reserves. This makes sense, and although they state only six years LOM in reserves, I don’t see why this won’t be increased as further drilling results become available. Especially at current gold price levels.
Kore Potash (LON:KP2) (£120m)	March Quarter Ops Update	Kola DFS optimised to give IRR 18% (real) on ungeared post-tax basis. As of 31 March 2025, the Company held c.US$10.2 million in cash following $10.6m fundraise.
Robert Walters (LON:RWA) (£115m)	Half-Year Results	SP -5% Net Fee Income -16% to £140m, Operating Loss £7.8m (24H1: £0.2m Operating Profit). Net cash excl leases £30.1m. Interim dividend cancelled.	AMBER/RED (Mark) [no section below] The key figures were largely known following the recent trading update two weeks ago, when I said “with the company now loss-making and net cash declining precipitously, this looks ripe for a dividend cut.” I didn’t expect the complete cancellation of the interim dividend. They say that they will consider a final dividend following the FY results. However, even if they do declare one, I expect it to be at a much-reduced level. Management are looking through to an eventual recovery in their end-markets, as are presumably shareholders, give that the share price is only down 5% today. However, there is little sign of better conditions on the horizon so I maintain the negative stance here.
Berkeley Energia (LON:BKY) (£114m)	Quarterly Report June 2025	“Thick zones of lithium and rubidium mineralisation, hosted within a muscovitic leucogranite, have been intersected at shallow depths in drilling.”
Residential Secure Income (LON:RESI) (£106.5m)	Q3 Net Asset value and corporate update	Total EPRA return for the quarter of +2.1% (+1.4p) leading to 66.4p EPRA NTA (£122.9mn) as at 30 June 2025. 1.03p dividend declared.
Avation (LON:AVAP) (£105m)	CREDIT RATING	Fitch Ratings has assigned the Company a B long-term issuer default rating.
Chapel Down (LON:CDGP) (£76.3m)	H1 2025 Trading Update	H1 net sales revenue +11% to £7.9m. Net debt £11.3m (24H1: £5.8m). confident in achieving market expectations for 2025 FY.
Celebrus Technologies (LON:CLBS) (£66m)	Contract win and further ARR growth	Total contract value of $2.9 million with ARR of $0.8m+ pa with major UK retail financial services institution.
Palace Capital (LON:PCA) (£63m)	Proposed Tender Offer	Tender Offer for a maximum aggregate cash consideration of up to approximately £20.8 million. Up to 30% of the Ordinary Shares at a price of 240p, a 9.6% premium to previous close, 4.4% discount to NAV.
Gemfields (LON:GEM) (£60.8m)	Operational update to 30 June 2025, Fabergé update	H1 Revenue $60m, Net debt $59.6m after $30m rights issue in the period.
Atlantic Lithium (LON:ALL) (£58.6m)	Quarterly Activities and Cash Flow Report	Cash down A$2.7m in the quarter to A$5.4m. Seeking to secure fiscal terms for the Mining Lease of its flagship Ewoyaa Lithium Project
Inspecs (LON:SPEC) (£43.2m)	Half Year Trading Update	SP -4% H1 revenue down 2.9% to £100m, LFL U/L EBITDA down 18% to £8.2m. Sale of Norville manufacturing subsidiary announced. Thanks to additional cost savings, full year revenue and underlying EBITDA will be “in line with 2024 on a like-for-like basis”.	BLACK (RED) (Graham) [no section below] We’ve been sceptical on this one and the scepticism appears to be justified for now with H1 revenues falling (due to tariff uncertainty) against forecasts in the market suggesting growth this year. The focus on adjusted EBITDA is inappropriate for a manufacturer with heavy depreciation (and amortisation) charges: last year, “underlying EBITDA” of £17.6m converted to an actual pre-tax loss of £1m. I therefore would suggest that there is little value in the company’s underlying EBITDA figures. On top of all that, the company’s statement today that 2025 figures will be “in line with 2024” strikes me as poor phrasing. This looks like a downgrade to me and the use of the words “in line” could mislead investors who aren’t paying close enough attention. Either way, the statement could be clearer and I’m inclined to downgrade this stock to RED due to what I perceive as poor underlying business quality, poor trading and poor communications. The balance sheet is not very supportive given net debt of £23m (Dec 2024).
Virgin Wines UK (LON:VINO) (£30m)	FY25 Trading Update	EBITDA and PBT ahead of expectations. Customer acquisition +28%. Commercial sales +24%. Revenue flat. PBT down 16% to £1.6m.	AMBER/RED (Mark) Although trading is said to be ahead of expectations, this is a revenue miss, and PBT is still falling year-on-year. With forecasts for further falls into losses in FY26, having been significantly downgraded when the company switched broker earlier in the year, and just 0.4p of EPS pencilled in for 2027, this looks overvalued. The share buyback may support the price in the short term but looks to be shareholder-value-destroying overall. With the share price 30%+ higher than when it was last reviewed on the DSMR and similarly poor outlook, I am downgrading this a notch.
London BTC (LON:BTC) (£24m)	Bitcoin Mining Operations Surpass 1,000 Miners	The Company has an operational fleet of 1,005 Bitcoin miners operating at a 94% uptime, 100% efficiency and hashing a total of 100 petahash per second.
GSTechnologies (LON:GST) (£23.8m)	Corporate Update	Integration of the Bake Cryptocurrency Platform into the Group's digital asset arm, GS Fintech, has been successfully completed.
Clean Power Hydrogen (LON:CPH2) (£18m)	Corporate Update and Proposed Fundraising	£6.5m raised at a proposed price of 5 pence, 3% discount to 20-day VWAP.
Empresaria (LON:EMR) (£12.5m)	No Offer from the Consortium & Possible Offer from Legacy UK Holdings (last night)	Consortium does not intend to make an offer. Possible offer from Legacy UK at 62p/share in cash.	PINK (Mark) [no section below] I am assuming that the consortium refusing to bid is related to them being outbid by Legacy UK. Given that they already included managers of a subsidiary business, and were only paying a paltry amount upfront, it seems unlikely they found anything untoward in due diligence. Larger shareholders seemed desperate for something to happen here, so were willing to support even a badly-structured (for them) deal featuring loan notes. Management always said they had other options and have done well to procure this potential offer which is 62p in cash. However, the bidder is a bit of a mystery. Legacy UK Holdings appears to be controlled by the Khanna family, who are Indian hoteliers. Given the lack of obvious existing recruitment experience of the bidders, I don’t think this possible offer becoming a firm one is a given.
Abingdon Health (LON:ABDX) (£12m)	c. US$2.5m diagnostic test contract win	New contract win with an expected value of $2.5m over 2 years for the development of point of care test for a leading global pharmaceutical company.
Mast Energy Developments (LON:MAST) (£10m)	Revenues Update	6mo Revenue +30% to £746k.
Aptamer (LON:APTA) (£9m)	Trading Update	Revenue +41% to £1.2m, Cash £1.06m + £1.83m raised post-period end. No P&L guidance.	RED (Mark) [no section below] There appears to be no P&L with this TU, suggesting that either management are embarrassed by the figures or they are not aiming to make money.
Narf Industries (LON:NARF) (£9m)	Audited Financial Results	Revenue down 60% to $3.0m, Operating loss $3.45m (FY24:$1.37m loss). Cash $136k.	RED (Mark) [no section below] These look truly terrible, and despite appearing to have factored all the receivables they can, they only have $136k of cash, large payables and are totally reliant on director loans. Why on earth the directors would bother keeping this going is a complete mystery.

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Graham's Section

Next (LON:NXT)

Down 1% to £121.80 (£14.9bn) - Trading Statement - Graham - AMBER/GREEN

(At the time of publication, Graham has a long position in NXT.)

The markets have grown accustomed to Next under-promising and over-delivering. So I guess I should not be too shocked to find that the share price is down slightly after yet another “ahead of guidance” update.

Let’s point out some of the highlights:

• Full prices sales +10.5%, ahead of +6.5% guidance.

• UK: better than expected weather and trading disruption at a major competitor (not named, but it’s M&S).

• International: digital marketing proved more effective than anticipated, enabling Next to increase profitable market expenditure.

New H2 guidance: full price sales +4.5% (previous guidance: +3.5%).

With a strong H1 and increased H2 sales guidance, the new adjusted PBT guidance for the year is £1,105m (an increase of £25m compared to previous guidance). PBT is therefore expected to grow year-on-year by 9.3%, versus previous guidance of 6.8% growth.

Sales breakdown: growth is led by “Online International” (+28% in H1), while the slowest growth is from interest income (+0.5%) and UK retail stores (+5.4%).

Surplus stock is up 5% versus last year, which I have absolutely no problem with as full price sales were up over 10%.

Outlook

It seems very conservative of them to say that full price sales in H2 will only increase by 4.5%, after a 10.5% increase in H1. But as shown by today’s share price reaction, investors will form their own view based on the track record here.

Next do acknowledge that their guidance is cautious. Everything is seen slowing down in H2.

As before, they remain very bearish on the economic effects of higher NICs, with fewer employment opportunities feeding through to weak consumer spending. I don’t have a strong opinion on this matter myself, but I am inclined to trust Next’s judgement, due to their practical understanding of how this tax change will impact employment.

And when it comes to the weather and the disruption at M&S, they don’t see those tailwinds being relevant for H2. That’s fair.

They have upgraded their International Online guidance (from 13.1% to 19.4% growth), thanks to their positive experience with digital marketing in that channel.

Buyback/dividends: Next is one of the vanishingly few companies that provides objective guidance as to when it will or won’t buy back its own shares. The rule it uses is that it must achieve at least an 8% return, when dividing forecast PBT by its market cap.

It therefore tells us in today’s RNS that its buyback limit is currently around £118.

The current share price is £121, so it doesn’t anticipate buying back shares and will instead return surplus cash via special dividends (assuming it doesn’t need the cash for acquisitions).

This is the type of rational capital allocation that makes me a happy shareholder!

Graham’s view

I don’t see any reason to change my AMBER/GREEN stance.

To clarify: I am extremely happy with management and with the business. I’ve held these shares for many years and have no current intention to sell (but of course I reserve the right to change my mind!)

The reason I’m not fully GREEN on it is the same as before: valuation.

By refusing to do buybacks at this level, Next themselves are making it pretty clear that they don’t consider their shares to be priced at bargain levels here.

The P/E multiple is still about 17x, which is not a level that I’m used to seeing for Next:

At this level, I have to acknowledge that the company might be fully priced, given the risks involved in retailing.

I do view Next as best-in-class in the retail space, and as a sort of “last man standing” on the high street. But it is still vulnerable to fickle consumer tastes, to economic headwinds, to the weather, and to competitive disruption.

As such, I think AMBER/GREEN continues to make a lot of sense here.

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Mark's Section

Virgin Wines UK (LON:VINO)

Up 9% to 64p - FY25 Trading Update - Mark - AMBER/RED

The market has liked this trading update, presumably focussing on the RNS headline:

Key growth drivers performing strongly with EBITDA and PBT ahead of expectations

However, looking into the details this isn’t as good as it sounds. Their broker, Cavendish reveal that this is a miss on their revenue estimates, saying:

FY25 revenue came in £2.3m below our forecasts and we have therefore trimmed our revenue forecasts in the outer years.

And while they may have beaten PBT expectations, these were for a big fall and instead we got a reasonable fall:

EBITDA of £2.3m (FY24: £2.8m) and PBT of £1.6m (FY24: £1.9m) ahead of market expectations by over 4.5% and 23.1% respectively. As expected, EBITDA and PBT were marginally lower than last year due to investment in the Group's growth strategy, which we announced alongside our interim results in March 2025.

The reason given is increased investment in growth. However, FY25 hasn’t grown on FY24, and sales growth into FY26 is forecast to remain single-digits. In addition, EPS forecasts for FY26 were significantly downgraded in March when Cavendish released their initiation note on the company following interim results. (They switched broker from Panmure Liberum to Cavendish in January.)

So the cynic in me wonders if they may have guided the new broker conservatively on initiation to allow them to release this “beat” today.

Despite the big March downgrade, the shares have been strong:

Part of this is due to the company announcing that they wanted to buy back 15% of their share count. However, when Graham last looked at this on the DSMR, he didn’t see the attraction, saying:

Forecasts out to FY27 suggest that the company will be barely profitable in the years ahead and even if it might be able to earn £7m of EBITDA in five or six years, I'm not sure that's worth significantly more than the current market cap today. So I'm not convinced that these shares are cheap and therefore I'm not convinced that the buyback is the best use of cash.

The valuation here looks better on a EV-basis, as the company highlights their significant cash balances:

The Group's balance sheet remains strong, ending the Period with net cash of £9.3m (FY24: £10.3m), and the business remains highly cash generative. The current cash position is stated after £2.0m of shares were repurchased during the year, as well as there being £1.6m of outstanding duty pre-payment carried into FY26.

However, that positive cash-generation appears to be abandoning them if forecasts are to be believed, with £1.1m outflow in 2026 (excluding buybacks) and £0.6m in 2027 estimated by Cavendish.

Mark’s view

I agree with Graham on valuation. 2027 estimates are for just 0.4p EPS and an adjusted EBITDA that is below 2023 levels, when the shares were trading at 30p. With the price having risen over 30% since Graham rated this AMBER, and forecasts looking similarly poor, I am downgrading this to AMBER/RED. Their commitment to the buyback may support the price in the short-term, but ultimately it looks like it will destroy shareholder value if they buy back shares anywhere near the current price.

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Nichols (LON:NICL)

Down 2% to - Interim Results - Mark - AMBER

This is a high-quality business, with a significant moat due to its brands, and this is reflected in its high Quality Rank:

And excellent ROCE metrics:

It is good to see management focus on this key metric in these results, and that these are improving even further (at least on an adjusted basis):

However, a high historical ROCE has very little value to shareholders unless there are opportunities to deploy incremental capital at similar rates to drive revenue growth. It is here that the company has failed. The revenue CAGR is just 3%, broadly in line with inflation:

These results give little indication that anything is about to change on this front:

They say:

Full year adjusted profit before tax is expected to be in line with current market expectations

And helpfully quantify these:

Current market expectations refers to Group compiled market consensus for FY 2025 Adjusted PBT of £33.1m at 30 July 2025

Given the H1 figures above, this leaves a lot to do in H2 to hit forecasts. They may be relying on adjustments to hit these figures, but none of their exceptional items look exceptional or non-recurring:

There is decent cash flow and a reasonable amount of net cash:

· Strong net cash and cash equivalents at £61.6m (H1 2024: £70.3m, 31 December 2024: £53.7m)

- Free cash flow of £14.2m (H1 2024: £9.0m) driven by lower working capital requirements

However, the cash balance isn’t big enough to move the needle on valuation for a £500m market cap company, and the cash flow seems unable to be re-invested at reasonable rates, leaving it building up and returned as the occasional special dividend.

All of this makes the current valuation look distinctly unattractive:

Mark’s view

The valuation here simply looks too high for a company where any top-line growth has proven elusive over the years, and there is little sign in today’s results that this is about to change. The algorithms rate this as a High Flyer, but there has been little flying in the results. Graham rated this GREEN in March but the share price has risen 40% since then. With the Momentum rank having fallen from 91 at the start of June to 83 today, this is starting to look worrying, and our research at Stockopedia suggests investors are better off getting out sooner rather than later when the Momentum Rank starts dropping. I’m sure the Quality Rank will remain high, but with a H2-weighting, questionable adjustments and a share price looking toppy, the Momentum Rank could easily head further southwards. If it does, it could be a long way down before valuation metrics would provide any real support. However, the strength of the financials mean this is unlikely to ever be in financial trouble, and there is always the chance that management can generate some limited growth over time. AMBER