Good morning! Let's see what's in store today.
Today's Agenda is complete - it seems that the City is on the beach this week! Wrapping it up there, thanks everyone.
Spreadsheet accompanying this report: link (last updated to: 1st August).
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
BHP (LON:BHP) (£102bn) | Met prod’n guidance. $26bn adj. EBITDA, $10.2bn adj. profit. FY26 copper prod’n to remain strong. | ||
International Workplace (LON:IWG) (£2.3bn) | SP -17% Reiterates FY25 guidance: adj. EBITDA $525-565m, but likely towards lower end of the range. H1 adj EBITDA +6% to $262m. H1 pre-tax profit -62.5% to $12m. | AMBER/RED (Roland) This serviced office group is making progress at developing its capital-light Managed & Franchised division. However, fee income from this side of the business remains low compared to its portfolio of owned and leased properties, where growth is more sluggish. I’m also a little concerned that net lease liabilities of >$1bn suggest some properties may currently be loss making. While today’s outlook statement was not technically a profit warning, I think a cautious view is justified given the relatively weak outlook for this year. Brokers are markedly more bullish for FY26, however, so this could be worth watching. | |
Cordiant Digital Infrastructure (LON:CORD) (£764m) | Investment managers are no longer required to reinvest 10% of their fee into CORD. | AMBER (Graham) [no section below] The requirement to reinvest 10% of the management fee back into CORD shares doesn’t strike me as particularly onerous. However, the Board says that there is “strong existing alignment”, given that the investment manager and its Chairman already own 2% of the company. Additionally, they note that the management fee reduces if market cap is less than NAV - this further strengthens alignment. These are good arguments, but I still find it a little strange to remove the 10% reinvestment requirement at this time. NAV per share was 129.6p as of March 2025, and a 2.25p dividend has been paid since then. Even after recent gains, the share price today is only 99.53p! Surely the investment manager and its Chairman should be only too happy to add more shares to their existing positions at this price? | |
Bluefield Solar Income Fund (LON:BSIF) (£571m) | NAV -4.26% for quarter, NAV total return -2.47%. Lower power demand expectations. | AMBER/GREEN (Roland) [no section below] Falling forward power prices for the years through to 2030 are putting pressure on NAV for many renewable generators at the moment. Together with the Q3 dividend payment, this headwind accounted for the majority of the fall in NAV during the three months to 30 June. More positively, solar generation was 8.4% above forecasts for the period – unsurprisingly. But despite the company’s name, Bluefield also has exposure to wind assets which have underperformed this year, meaning total generation was only 4.4% above forecast. Management have left full-year dividend guidance unchanged today and say the payout should be covered by earnings, after scheduled debt repayments. That seems broadly reassuring to me. Gearing of 45% of gross asset value is also fairly typical for this sector. This isn’t a renewable IT I follow closely and I would want to understand more about its debt and asset profile before forming a strong conviction. However, based on today’s update, my initial view is that the discount to NAV and 9% dividend yield represent reasonable value, with the potential for an attractive income. | |
Applied Nutrition (LON:APN) (£328m) | SP +9% FY25 ahead of exps, with rev +c.24%, adj EBITDA +c.19%. FY26 also to be ahead of exps. | AMBER (Graham) Pleased to see this following through after a strong H1 and beating its full-year guidance provided at IPO. As this is still a recent listing, I'm maintaining caution, but it is starting to look interesting. The CEO and CFO still have large stakes and while the StockRank doesn't yet perceive much value, I think an argument could be made that it's not overly expensive at this level. | |
Tribal (LON:TRB) (£101m) | Rev +2.3%, adj EBITDA +18.4% to £8.3m. Recent wins mean FY25 results to be ahead of exps. Update 15.45 (RH): Singer updated forecasts: FY25E EPS: 4.2p (prev. 3.7p) FY26E EPS: 4.4p (prev. 4.0p) | AMBER/GREEN (Roland) Today’s results look positive to me, with organic growth and improved profitability. A combination of £4m in recent contract wins and the continuation of some legacy contracts into H2 appear to have prompted an upgraded FY25 outlook statement today. Update 15.45 (RH): Tribal's PR people have kindly sent me a new Singer note with updated forecasts. See opposite for details. This FY25 estimate leaves the stock on a FY25 P/E of 13 at 56p. Given current momentum, I’m happy to maintain our moderately positive view at this level. | |
Nanoco (LON:NANO) (£26m) | FY rev £7.6m, ahead of exps. Adj EBITDA also “moderately ahead”. Year-end cash £14m. | AMBER/RED (Graham) Staying cautious on this despite the company beating expectations for the year. There are no forecasts for the year ahead, and meanwhile a live process is ongoing with the company seeking acquirers and new investors. The investment thesis here is unclear to me, and so I think a healthy dose of caution remains sensible. The founder is sailing into retirement - at least his 4% holding will not create a major overhang, if he decides to exit the shareholder register | |
Conygar Investment Co (LON:CIC) (£18m) | Sale price of £6.75m is below Mar ‘25 valuation of £7.5m. Cash will be used to partly repay £12m loan. | ||
Cambridge Nutritional Sciences (LON:CNSL) (£8.3m) | Rev -15%, PBT +310% to £1.6m. Cash £4.9m. Improved production yields have cut scrap by 41%. |
Graham's Section
Applied Nutrition (LON:APN)
Up 9% to 142.9p (£357m) - FY25 Trading Update - Graham - AMBER
Applied Nutrition plc, a leading sports nutrition, health and wellness brand, today announces an update on trading for the financial year ending 31 July 20251 and outlook for the financial year ending 31 July 20264.
This is a recent IPO (October 2024).
I was AMBER/RED on an initial glance, due to the £370m market cap which seemed excessive.
When nearly £100m was taken off the market cap, I turned neutral.
We have now had an ahead of expectations update, so perhaps I might need to upgrade my stance further?
Driven by strong second-half trading (approximately £60m of revenue), Group revenue is expected to be ahead of market expectations, with revenue up 24% year-on-year to approximately £107 million (FY24: £86 million) and adjusted EBITDA up approximately 19% year-on-year (FY24: £26m).
The company helpfully confirms that prior expectations were for revenues of £100m, so if my maths is holding up we have a beat of 7% against that figure.
Today’s announcement doesn’t explicitly say that the EBITDA result is ahead of expectations. But I think it is ahead: adj. EBITDA will be around £31m. It’s a less than 10% beat, so today’s rise in the APN share price of about 9% makes sense.
How did they do it: “continued delivery of the Group’s multi-pillar, global growth strategy”.
Cash: consistent with better-than-expected profitability, year-end net cash is £18.5m, vs. expectations of £16.6m.
Outlook: revenue for FY26 is now expected to be ahead of expectations (these expectations being £112.4m).
CEO comment:
"We are proud to report that we have exceeded the guidance we gave at our IPO, with our first full-year results expected to come in ahead of market expectations. Our focus and ambition remain as strong as ever - in delivering for our shareholders, customers and team - and we are excited about the opportunities we have in the pipeline for the year ahead."
Graham’s view
I’ve been a little sceptical of this Coleen Rooney-backed brand, seeing as it’s a recent IPO. This means we don’t yet have a sense of how it sets market expectations - will it habitually under-promise and over-deliver? Too soon to say.
It is clear now that the expectations set at IPO were too low.
There was already a hint that this was going to happen, when H1 revenues came in higher than expected, but the company chose not to raise full-year guidance at that time.
In future reporting periods, we can check to see if management remains cautious when it comes to setting expectations (a good thing, in my book!).
In Value terms, Stockopedia’s view hasn’t changed much. The ValueRank was only 16 last time I checked, and it’s currently 18.
However, I note that the “Industry” used to benchmark valuation metrics is “Specialty Retailers”. This means it’s measured against the likes of NXT (I own), KGF, JD., BRBY (I own) and FRAS. Many - not all - of the retailers in this category have extensive brick-and-mortar operations and they should trade cheaply compared to brands sold online and via distributors.
I’ll round up the FY26 EPS forecast to 9.5p. At the latest price, that puts the shares on a P/E multiple of 15x.
It's worth noting that the CEO and CFO still own 39% of the company between them.
Their revenue capacity is said to be around £160m, thanks to a factory expansion that was completed last year.
I’m tempted to break my IPO rule, which says that I can’t get positive about a new IPO until two years have passed or the share price has fallen 50%.
The IPO price here was 150p 140p (latest price: 143p), and it has still been listed for less than a year.
I’m going to respect the rule and stay neutral on this for the time being. But I’d be happy to keep this on a watchlist - it’s beginning to look interesting to me.
Nanoco (LON:NANO)
Up 2% to 13.45p (£26m) - Full Year Trading Update & Director Retirement - Graham - AMBER/RED
Nanoco Group plc (LSE: NANO), a world leader in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials emanating from its technology platform, today provides the following year end
I’m not a scientist and so I can’t pretend to understand what this technology is all about.
Products and markets listed on Nanoco’s website include: iris recognition/face recognition, driver assistance systems, robotic vision, TV/phone displays, and optical security tagging.
I’ve been AMBER/RED on the stock, most recently last November, due to cash burn.
A large shareholder - Milkwood - tried to shake up the board and keep cash inside the business, but that effort failed.
According to interim results published in April, the strategy remains to “divest the Group’s trading business”. They were “actively engaged with a number of potential acquirers”.
Today’s update brings the following news:
FY July 25 revenues £7.6m, exceeding forecasts (£7.2m).
Underlying adjusted EBITDA “moderately ahead of expectations”.
Cash reduces to £14m, “above market expectations due to lower than anticipated litigation costs and positive working capital variances”.
The monthly cash cost base is £0.5m.
Estimates: thanks to Cavendish for a fresh update this morning. The EBITDA forecast for the year just finished is £1.5m (previous: £1.3m).
Their new EBIT number for the year is marginally positive (£0.18m), having previously been marginally negative (-£0.02m).
However, it’s important to note that there are no forecasts for the current year (FY July 2026).
CEO comment:
"This has been an important year for Nanoco during which our business development team has been fully focused on enhancing Nanoco's profile and maximising our organic growth prospects. Consequently, we have a number of promising, ongoing discussions with companies across several industry segments regarding future product developments, some of which are in new areas for the Group. In tandem, we remain in discussions with multiple parties as we assess our strategic options to maximise value for shareholders, and look forward to updating shareholders in due course."
Director retirement: the founder and Chief Technology Officer retires and is replaced internally by a “Director of Technology” (a non-Board position). The retiring founder owns 4% of the shares - not a huge overhang if he was inclined to sell them.
Graham’s view
I’m inclined to stay AMBER/RED on this.
Given that the company is engaged with “multiple parties”, looking for acquirers, there is always the possibility that we’ll wake up some morning to fantastic buyout news for shareholders here.
But the divestment strategy must bring downsides. Surely the company’s employees and joint venture partners would prefer a firm outcome, to help them plan for the future?
Hopefully we’ll get a conclusion to this process before too long.
The £14m cash balance does account for over half of the current market cap. And the company is apparently operating around breakeven, which should help to limit cash burn.
If I was more comfortable with the science behind the company, perhaps I could take a more positive view. But overall, the investment thesis here is unclear to me. FY25 revenues are lower than FY24 revenues, a fact not mentioned in today’s full-year update. Perhaps I could be educated to a more bullish stance, but a healthy dose of caution seems sensible.
Stockopedia categorises it as a Momentum Trap:
Roland's Section
Tribal (LON:TRB)
Up 24% to 58p (£126m) - Roland - Interim Results - AMBER/GREEN
Tribal (AIM: TRB), a leading provider of software and services to the international education market, is pleased to announce its interim results for the six months ended 30 June 2025.
When Mark covered Tribal’s full-year results in March, he took an AMBER/GREEN view, commenting that he could see “little reason” for the share price drop on that day.
Today’s half-year results suggest he may have been correct. Tribal shares have risen by 30% since then (prior to today’s gains) and the outlook statement suggests full-year results are now likely to be ahead of expectations, thanks mainly to £4m of recent contract wins.
H1: rising recurring revenue
These results show solid progress with growth in recurring revenue and improved margins:
Revenue up 2.3% to £45.3m at constant currency
Adjusted EBITDA up 18.4% to £8.3m
Pre-tax profit up 451.7% to £5.6m
Earnings per share up 322.9% to 1.8p
Net debt reduced by 61% to £3.9m
Sharp-eyed readers will notice the big discrepancy between the 18% increase in adjusted EBITDA and the 452% increase in pre-tax profit.
The main reason for this appears to be a big reduction in adjusting items compared to the first half of last year – these fell from £3.4m to £0.6m:
In fairness, most of the H1 24 items do look like genuine exceptionals. So perhaps we can hope for cleaner accounts from Tribal in the future.
This also means that today’s statutory pre-tax profit figure of £5.6m is a fairly reasonable measure of ‘real’ profit, in my opinion.
Adding back finance costs gives an operating profit of £6.0m – equivalent to a respectable 13.2% operating margin (FY24: 7.7%).
Cash generation is weighted to the second half of the year to reflect the timing of many licence renewals. But I don’t see anything much to worry about in the accounts – Tribal appears to be comfortably profitable and cash generative.
Trading commentary: Tribal is working through the loss of a large legacy contract that’s expected to have a £3m adverse impact on EBITDA. The company is also migrating customers away from perpetual licences and onto annual subscriptions, which can also have an adverse effect on short-term revenue.
Given these headwinds, today’s growth seems very encouraging to me. Gains appear to have been driven by new customer wins and upsells with existing customers, driving Annual Recurring Revenue (ARR) up by 5.5% to £59.9m:
Student Information Systems (SIS): revenue up 4.2% to £36.1m, with 9.6% growth in “core revenues” offsetting “the expected decline in legacy contracts”.
54 customers are now signed up for the Higher Education Full-Service subscription model. Cloud migration revenues rose by 16.5% as customers migrate or upsell from older services.
Three major software upgrades were released, “supporting customer transition to the cloud and entry into new markets”.
Etio (education services): revenue fell by 4.5% to £9.2m “following the successful completion of two major projects”. This was partially offset by the start of the Attendance Monitors project.
This division is said to have performed well “within a challenging market”.
Outlook: Tribal has won £4m of new business since the end of the half year, including two “significant new SIS wins” with London South Bank University and Durham University. On a year-to-date basis, these wins mean ARR has now risen by 12.7% to £64.0m since the start of the year.
Certain legacy contracts are also now expected to continue into H2, further underpinning FY25 expectations.
Together, these factors seem to have driven today’s upgrade to expectations:
the Board is increasingly positive about delivering FY25 results ahead of current market expectations.
Sadly, no upgraded broker notes are available to us today, so we’re left guessing at the potential impact on profit guidance for this year. Today’s c.25% share price rise suggests to me the market is pricing in a fairly significant upgrade. Tribal’s adjusted earnings had previously been expected to fall from 4.7p to 3.9p per share this year. I wonder if today’s updated guidance might be sufficient to neutralise this and improve the FY outlook to a flat result?
-
Update 15.45 (RH): Tribal's PR people have kindly sent me a new Singer note with updated earnings forecasts. Many thanks. These suggest adjusted earnings for the year are still expected to be lower than the 4.7p reported in FY25, but do suggest improved momentum with upgraded to both FY25 and FY26:
- FY25E EPS: 4.2p (+8% vs 3.9p previously)
- FY26E EPS: 4.4p (+10% vs 4.0p previously)
At the time of writing, Tribal shares re trading at 56p, putting the stock on a FY25E P/E of 13.3, falling to 12.7 in FY26.
-
Broker forecasts have shown a flat trend until recently -- I expect this picture to improve following today’s updated forecasts:
Roland’s view
I note that small cap specialist Harwood Capital recently increased its Tribal shareholding quite significantly. It looks like Harwood also shared Mark’s benign view of the March FY24 results:
I’m encouraged by today’s news, but frustrated that we have no visibility of new earnings expectations – with the share price up c.25% but no guidance available, it’s difficult for us as private investors to form an informed view without building our own financial model of the business.
I’d also note that at a statutory level, at least, Tribal’s quality metrics are quite average. However, I’d expect to see some improvement on these metrics when these interim figures are digested by Stocko’s algorithms:
I haven’t looked at Tribal before but do not see anything to dislike on this initial inspection. If my earnings guesswork is in the right ballpark, then I think the shares could also remain reasonably valued even after this morning’s gains.
I’m going to leave Mark’s AMBER/GREEN view unchanged today.
International Workplace (LON:IWG)
Down 17% to 189p (£1.9bn) - Roland - Interim Results - AMBER/RED
This serviced office / shared workspace provider operates in 120 countries, but is best known in the UK as the operator of Regus offices. It also has a number of other brands – see here and says it offers solutions “from one hour to five years”.
IWG claims to be by far the largest operator in this sector:
This isn’t a business we cover very often, but today’s half-year results have prompted a double-digit share price drop despite the company reiterating its full-year guidance – so I thought they might be worth a look.
H1 results summary: today’s half-year figures look pretty mixed to me – some numbers are up, but some are down.
Here’s a selection of key metrics:
System-wide revenue up 2% to $2,162m
Group revenue down 1.1% to $1,850m
Adjusted EBITDA up 6.1% to $262m
Operating profit flat at $68m
Pre-tax profit down 62.5% to $12m
Adjusted earnings up 22% to 1.1c per share
Understanding these results requires a quick assessment of IWG’s balance sheet. The company is targeting capital-light growth, but is burdened with a big legacy of more capital-intensive owned and leased properties:
Right-of-use assets (leases): $5.5bn
Property and equipment: $800m
It looks like some of these leased properties may currently be loss making, too. My sums show total lease liabilities of $6.5m, giving net lease liabilities of -$1.1bn.
In addition to all of these leases, IWG has net debt of $754m.
In simple terms, lease and finance costs broadly account for the whole of the reduction from adjusted EBITDA of $262m to pre-tax profit of just $12m.
To correlate this, my sums suggest free cash flow for the half year of $31m.
Company-owned vs franchise growth: in fairness, IWG does seem to be making an effort to move away from its historical strategy of leasing the properties it occupies and then sub-letting them to tenants.
The company has a Managed & Franchised division where IWG provides the management, branding and marketing for commercial landlords. This appears to be the main area of growth in the business. The number of centres open rose by 262 to 1,365 during H1, with fee income (gross profit) climbing 43% to $50m.
However, this part of the business is still small compared to the sluggish Company-owned division, where 2,895 centres generated an 8% increase in gross profit to $375m.
Digital & Professional Services: the other capital-light element of the business is the group’s services business. This contributed $98m of gross profit in H1, an underlying reduction of 10% despite a 6% increase in underlying revenue. I haven’t looked into this in any detail to understand what these services are.
Outlook: IWG has reiterated its FY25 guidance today, but it looks to me like expectations have been nudged downwards slightly all the same (my emphasis):
Adjusted EBITDA of $525m-$565m, but likely to be towards the lower end of the range due to further investment in Managed and Franchise segment growth
Today’s H1 EBITDA figure of $262m equates to $524m annualised. I don’t know if there’s much seasonality to this business, but this result does seem to suggest a figure towards the lower end of the range unless growth improves in H2.
I’d argue that EBITDA is not very meaningful here, given the extensive lease costs. But consensus forecasts prior to today suggested adjusted earnings of just 7.3c per share this year. That puts the stock on a FY25E P/E of 34 after this morning’s drop.
Roland’s view
IWG appears to be trying to pursue the same kind of capital-light success as hotel operator Intercontinental Hotels (LON:IHG). It may well succeed over time, but my initial impression is that it could be some time yet before the benefits of the Managed & Franchised operations outweigh the drag from the group’s portfolio of owned and leased properties.
A $1bn net lease liability also suggests to me that IWG may be struggling to make a profit from some of its company-owned properties.
To be fair, this business suffered painful disruption during the pandemic. Market conditions now seem to be normalising, with a growing number of companies wanting their workers back in the office for the majority of the time. That could be positive for IWG.
Another positive, perhaps, is that CEO Mark Dixon appears to be a 25% shareholder, giving him a strong incentive to create value for equity holders:
Brokers have been relatively positive on this stock until recently, but FY25 consensus was already falling before today’s update. I suspect a further reduction may be likely following today’s results:
Prior expectations are for a strong recovery in growth next year. That could provide support for a stronger valuation.
Personally, I’d be wary about jumping in following today’s results. Our research has found that companies often underperform following a profit warning – and while today’s results were not officially a downgrade, the outlook was not exactly bullish, either. I’m going to take a cautious view here and go with AMBER/RED.
See what our investor community has to say
Enjoying the free article? Unlock access to all subscriber comments and dive deeper into discussions from our experienced community of private investors. Don't miss out on valuable insights. Start your free trial today!
Start your free trialWe require a payment card to verify your account, but you can cancel anytime with a single click and won’t be charged.