Aga Foodservice Group (LON:AGA) (AGA, 85.5p, £59.20m) Following the recent trading update, the interims to 30 June 2010 come as no surprise. Even in a challenging environment, revenues increased by 5% to £123.4m (H109: £117.8m).  Sales of AGA cast iron cookers in H1 2010 are up on the previous period, but sales of the all-in-one cooker and boiler Rayburn and Stanley models were appreciably lower. Improvements in efficiencies have moved the group back into profitability with adjusted pre-tax profits of £0.7m (H109: losses £1.9m) and adjusted EPS of 1.7p (H109: -0.4p). Exceptional gains of £16.3m related to the net pension credit. Net cash at the end of the period stood at £22.4m. In a sign of management confidence, the interim dividend has been restored to 0.7p per share. The outlook statement is slightly mixed. The Board state the current level of sales leads suggests improving trends. However, household finances continue to suffer a backdrop of squeezed disposable income, high inflation, VAT increase and ongoing public spending cuts. With consumer confidence at weak levels, there is a risk that demand could for AGA products could soften. We expect sales to remain flat y-o-y. AGA’s export growth, product innovation and breadth of range of appliances provide growth opportunities for the firm. The group is well placed for a recovery in the market, which we do not anticipate in the near term. We believe there is scope for the market to downgrade 2010 PBT from £5.0m and EPS of 5.2p. On an earnings basis, the stock is expensive, trading on a prospective 17x 2010 PER. However when you strip out the net cash and interest on the earnings, the stock is rated on a reasonable c.11x. Given investors sentiment towards UK consumer cyclical stocks remain fragile, we reduce our recommendation to a HOLD.  

Biome Technologies (LON:BIOM) (BIOM, 0.13p, £7.65m) Interims to June 2010 saw on-going revenues rise 40% to £6.7m (£4.8m, though against reported last year was £8.06m which included 100% of the Biotec JV of which only 50% is consolidated now) with the underlying loss before tax reduced to £1.74m (£2.68m). Net cash of £1.14m (net debt of £4.61m) reflected the £0.71m cash outflow from operations, helped somewhat by a positive working capital movement and the £2.69m cash rise during the period and the reduced consolidation of the £3.27m promisary notes taken from 50% shareholder…

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