I Read The News Today Oh Boy! 22-Jan-2018

Monday, Jan 22 2018 by
19

Morning All!

Accrol Group ( Accrol Group (LON:ACRL) ) – 36p – £46.4m – PER n/a

Unaudited Interim Results For The 6 Months To End October 2017 – Operating loss of £5.7m compared to an Operating Profit of £3.9m last time. Revenue up 13.1% to £72.3m (£63.9m last time), Net debt is up £9.4m to £29.3m. New CEO believes “that the capabilities of this business are significant and, if well managed, it can deliver a considerably improved performance in the medium term”. Still expects a small loss (adjusted EBITDA) this year but expects to operate within its borrowing covenants while work on the turnaround continues. And, the CFO has gone, surprised?

I just can’t get interested here.

Goals Soccer Centres ( Goals Soccer Centres (LON:GOAL) ) – 77p – £57.9m – PER 9.43

Trading Update For The 12 Months To End December 2017 – Sales flat and the Board anticipates profits for 2017 will be broadly in line with the lower end of market expectations. The search for a new CEO is at an advanced stage.

Hardly inspiring stuff!

DESCRIPTION – Operator of 5-a-side soccer centers across approximately 50 centers in the United Kingdom and 3 in the United States.

Revolution Bars ( Revolution Bars (LON:RBG) ) – 168p – £84.0m – PER 10.8

Trading Update For The 26 Weeks To 30-Dec-2017 – Revenue for the period up 10.6% (£73.7m), Christmas period LFL up 5.9%. And, here’s a bit of honesty – “Directors believe that the 27 weeks to 6 January 2018 provides a better benchmark for underlying performance.  LFL sales during the 27 weeks to 6 January 2018 were up 1.9%”. Expects FY to be in-line.

I hold here and continue to do so. Fundamentals seem fine to me and of course there’s still that prospect of a bid North of 200p.

Connect ( Connect (LON:CNCT) ) – 105.6p – £261.5m – PER 6.57

Trading Update For The 19 Weeks To 13-Jan-2018 – Revenue down 3.5% to £564.5m, decline of newspaper and magazine sales greater than the revenue growth in Mixed Freight and Pass My Parcel (PMP). Expects FY adjusted PBT to be in the range of £42m to £45m - Dividend expectations underpinned by a continued good cash performance. PMP Revenue is up 222% YTD (£2.5m) but still likely to incur the same level of losses as last year. 2 year £15m targeted efficiencies to be greater in year 2.

I hold here and whilst this update is uninspiring, I will retain faith whilst that Dividend yield (almost 10%) doesn’t look like it’s in danger. Yes the Net Debt concerns me too!

Just spotted this which is a concern - Update on the Disposal of the Books division to Aurelius Equity Opportunities. Will have to keep an eye on the market reaction this morning and hopefully some clarification on this disposal.

Michelmersh Brick Holdings ( Michelmersh Brick Holdings (LON:MBH) ) – 88.5p – £72.1m – PER 10.8

Trading Update For The 12 Months To End December 2017 – In-line and “demand from the house building and RMI markets continues to be robust and Group's well-balanced forward order book for 2018 reflects this trend”.

Interesting enough although the Net Debt (circa 30% of Mkt Cap) is a concern. I will remain Neutral for now but will dig a little deeper on this one.

Learning Technologies ( Learning Technologies (LON:LTG) ) – 74.8p – £427.6m – PER 35.3

Trading Update For The 12 Months To End December 2017 – Expects Revenues to be not less than £51.8m (2016: £28.3m), Adjusted EBIT materially ahead of market expectations at not less than £14.0m (2016: £7.0m) and Net cash is £1.0m (2016: Net Debt of £8.5m). Objective is to deliver run-rate revenues of £100m and run-rate EBIT of £25m by the end of 2020.

Truly impressive growth here, just need to see how that translates into actual Profit. One to research a little more.

Strix ( Strix (LON:KETL) ) – 138p – £262.2m – PER 11.1

Trading Update For The 12 Months To End December 2017 – Inline.

Looks OK but probably priced about right for what looks like a slow grower with a small Dividend yield.

Animalcare ( Animalcare (LON:ANCR) ) – 293p – £175.5m – PER 18.3

Trading Update For The 12 Months To End December 2017 – Seems broadly in-line.

I just can’t work out why this is rated so highly, based on the forecasts on Stockopedia. Will remain on the sidelines for now.

A great day to all!


Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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Accrol Group Holdings plc, formerly Accrol Group Holdings Limited, is an independent tissue converter manufacturing toilet rolls, kitchen rolls, facial tissues and away from home products (AFH). Its AFH products include Centrefeeds, Hand Towels, Hygiene Rolls, Toilet Tissue, Wiping Rolls, Standard Jumbo and Mini Jumbo. Its Consumer Paper Products include Envirosoft, Facial Tissues, Handy, Mega, Mighty, Sofcell, Softy, Thirsty Bubbles and Triple Softy. The Company supplies a range of Independents, Discounters and Multiples, as well as a range of AFH customers throughout the United Kingdom. It imports Parent Reels from around the world and converts them into finished goods at its manufacturing, storage and distribution facility in Blackburn, Lancashire. The Company has 15 converting lines in operation providing capacity of approximately 118,000 tons per annum. Its subsidiaries include Accrol UK Limited, Accrol Holdings Limited and Accrol Papers Limited. more »

LSE Price
24.75p
Change
-1.0%
Mkt Cap (£m)
35.1
P/E (fwd)
32.0
Yield (fwd)
n/a

Goals Soccer Centres plc is a United Kingdom-based company engaged in the operation of outdoor soccer centers. The Company operates in the United Kingdom and United States, and operates in the operation of soccer centers segment. The Company offers 5-a-side soccer centers across approximately 50 centers in the United Kingdom and one in Los Angeles, the United States. The Company's centers are in locations, including Aberdeen, Beckenham North, Beckenham South, Chingford , Coventry, Sheffield, Norwich, Sunderland, Teeside, Bexleyheath, Birmingham (Perry Barr), Birmingham (Star City), Black Country (Wolverhampton), Kingston (Tolworth), Bradford, Bristol North, Bristol South, Glasgow South, Wimbledon, Plymouth and Heathrow, among others. The Company's subsidiary includes Goals Soccer Centres Inc, which is engaged in the trading business. more »

LSE Price
85.5p
Change
 
Mkt Cap (£m)
64.3
P/E (fwd)
11.4
Yield (fwd)
0.3

Revolution Bars Group plc is a United Kingdom-based operator of bars. The Company has a trading portfolio of approximately 60 bars located predominantly in town or city high streets, which operate under the Revolution and Revolucion de Cuba brands. The Company's bars focus on a drinks and food-led offering, and typically trade from late morning, during the day and into late evening. Revolucion de Cuba bars are characterized by their 1940s Cuban-inspired style, with dark woods, traditional bar counters, antique tiles, vintage furniture, Havana-style ceiling fans, and original Cuban artwork and photographs. Its bars are located in various places, such as Cambridge, Ipswich and Norwich in South East; Bath, Plymouth and Southampton in South West; Birmingham, Derby, Leicester, Loughborough and Milton Keynes in Midlands; Cardiff and Swansea in Wales; Blackpool, Chester and Huddersfield in North West; Sheffield, Sunderland and York in North East, and Edinburgh and Glasgow in Scotland. more »

LSE Price
145.6p
Change
 
Mkt Cap (£m)
72.8
P/E (fwd)
8.6
Yield (fwd)
3.8



  Is Accrol Group fundamentally strong or weak? Find out More »


18 Posts on this Thread show/hide all

MrContrarian 22nd Jan 1 of 18
4

My morning smallcap tweet:

Revolution Bars (LON:RBG), Goals Soccer Centres (LON:GOAL), Chamberlin (LON:CMH), OneView (LON:ONEV), IXICO (LON:IXI), Animalcare (LON:ANCR), Connect (LON:CNCT)

Revolution Bars (RBG) Q2 LFL up 3.1%. ""I am delighted with our sales performance in the second quarter and over Christmas" But still guides H1 in line with mgmt exp. I hold.
Goals Soccer Centres (GOAL) Warns FY profits will be broadly in line with the lower end of market expectations. LFL down 0.5% despite upgrading over half the estate.
Chamberlin (CMH) Machining Claim Update - "substantial progress has been made towards resolving technical problems. In addition a satisfactory settlement has been reached with the supplier of the new machining cells."
Oneview Group (ONEV) NED loans $300k for up to 90 days at 1% per month, pending large customer receipts expected later in the first quarter of 2018.
Ixico (IXI) AGM stmt. Co-founder Derek Hill resigns, will maintain his close relationship with IXICO in a scientific advisory capacity. New year has started well.
Animalcare Group (ANCR) FY trading: rev up 10%, slightly ahead of management expectations. Earnings are expected to be broadly in line with management expectations. Probably below then.
Connect Group (CNCT) Warns adj FY pretax (cont) only £42m to £45m despite rev in line. Offers up 4 reasons - a poor sign. Sale of Books Division to the listed pan-European mid-market investor Aurelius Equity Opportunities scuppered as buyer "can see no way of financing this transaction". Connect will try to force it through.

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loudenr 22nd Jan 2 of 18

Re Connect (LON:CNCT) per the Stockreport if net profit is between £42m and £45m this is in line with last week's broker expectations. Am I missing something here? Or is this possibly an over-reaction to what sounds like a pessimistic trading update?

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janebolacha 22nd Jan 3 of 18
1

In reply to loudenr, post #2

RNS Number : 4943C
Connect Group PLC
22 January 2018
This announcement contains inside information

Connect Group PLC

("Connect Group" or "the Group")

Update on the Disposal of the Books division to Aurelius Equity Opportunities

We refer to our announcement of 21 December 2017 that we had signed an agreement ("SPA") to dispose of our Books Division to the listed pan-European mid-market investor Aurelius Equity Opportunities SE & Co. KGaA (together with its subsidiaries and affiliates, "Aurelius").

The disposal was conditional only on anti-trust merger approval from the German Federal Cartel Office which was subsequently received (as expected) on 17 January 2018. As a result, the SPA is now unconditional and under its terms completion is obliged to occur by 31 January 2018 at the latest.

Despite this, Connect Group has been notified by a letter received on Sunday 21 January 2018 stating, inter alia, that Aurelius Omega Ltd (the purchasing vehicle) "can no longer complete on the current terms (as we, the Directors of Aurelius Omega Ltd, can see no way of financing this transaction)". Connect Group has sought urgently to clarify Aurelius' position, including the legal basis, if any, upon which it purports not to complete on the transaction and we have reiterated in writing that Aurelius is legally obliged to complete the transaction on or before 31 January 2018. Further, Connect Group has reserved its right to pursue legal redress against Aurelius in light of this development.

Connect Group will make a further announcement in due course when appropriate.

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nigelpm 22nd Jan 4 of 18
2

Real blow out in CNCT - was expecting 10-20% fall - guess it puts the wafer thin margins under severe pressure and very unhelpful to have the "all but done" sale of the Books division back on the block again. I can't imagine there's any value in trying to pursue Aurelis - perhaps worth getting a compensation payout from them but should probably now focus on trying to re-sell it.

All in all 30% fall too much for me I bought some at 75p.

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loudenr 22nd Jan 5 of 18
1

In reply to janebolacha, post #3

I saw this too. This was announced on 21 December I believe when the share price was above 100p. Therefore, even if this disposal does not go ahead is Connect (LON:CNCT) in a 30% worse position than it was then?

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janebolacha 22nd Jan 6 of 18
2

Paul Scott gave Connect (LON:CNCT) a fairly good write-up, on value grounds, last time they reported:

https://www.stockopedia.com/content/small-cap-value-report-thu-26-oct-2017-cnct-cos-cth-alu-232858/

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matylda 22nd Jan 7 of 18
1

Connect (LON:CNCT) - Yep, I am a little puzzled at the drop even with the tame update and the news of the disposal.

Blog: Briefed Up
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cig 22nd Jan 8 of 18
1

In reply to nigelpm, post #4

Why not pursue Aurelius? It's not that they don't have the money (it's 1.5 billion euro fund!), it is that their funding is not as cheap as they planned and apparently they didn't read the small print of the deal. It's a tantrum. Unless there's a reverse small print trick that Connect (LON:CNCT) didn't read, it seems a clear case of being able to either push the deal through or get compensation.

It seems cheap to me too, though I'm not surprised by the market reaction. In addition to what has been said, it looks, possibly superficially, like DX Group.

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nigelpm 22nd Jan 9 of 18

In reply to cig, post #8

Obviously I'm not privy to the detail but it would make sense in my mind to focus on more important issues.

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janebolacha 22nd Jan 10 of 18

The books division was a relatively unimportant part of the Connect (LON:CNCT) business, as evidenced by the sale price to Aurelius being only £11.6m, only about 5% of the market cap:

"Connect Group PLC announces that it has signed an agreement to dispose of its Books division ("Connect Books") with the listed pan-European mid-market investor Aurelius Equity Opportunities SE & Co. KGaA ("Aurelius"), for a total cash consideration of up to 11.6m. Under the terms of the agreement, 10.6m will become payable at completion and up to 1.05m will be payable on the successful recovery of certain third party debt receivables and certain tax refunds from relevant tax authorities. The agreement with Aurelius is subject to common warranties, indemnities and limitations."

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JohnEustace 22nd Jan 11 of 18

In reply to janebolacha, post #6

Stockopedia had Connect (LON:CNCT) as a Value Trap at the time so one up for the computers possibly. It now rates as Contrarian. The dividend will be massive if it can be maintained.

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nicobos 22nd Jan 12 of 18
2

In reply to nigelpm, post #4

Connect (LON:CNCT) 's margins are low largely due to pass-through from newspapers so it's not suddenly going to be loss-making.

Aurelius should be pursued as their offer cannot have been conditional on financing being arranged and they can probably only pull out if there's been some Material Adverse Change to the underlying business or market (which doesn't seem to be the case).

The investment case for me comes down to whether the dividends are sustainable over the medium term. Whilst profits didn't surprise on the upside, they do appear to be real and provide decent cash-flow to service debt and pay a large dividend. Tempted to top-up my small position.

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JohnEustace 22nd Jan 13 of 18
2

Animalcare (LON:ANCR) was a lovely business up until the deal they did last year to acquire a European business. I couldn’t for the life of me see how the deal benefited Animalcare shareholders and fortunately sold my holding then. Perhaps the history pre that deal is driving the Stockopedia metrics?
As an aside that transaction won “Deal of the Year” at some AIM awards so I guess the advisors must have done well out of it.

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Ramridge 22nd Jan 14 of 18
6

Re. Connect (LON:CNCT) On today's news of an adj pre tax profit between £42m - £45m, my calcs show that the forecast eps is likely to be around 13, lower than the current consensus forecast of 15.9
So today's sharp SP fall to 75p makes the forecast pe (75/13=) 5.8 against the market forecast of 6.7

On today's sp an investment still looks attractive. However the big question is whether you can believe management that the company has turned the corner and operational efficiencies will materialise over the next 2 years. The RNS says that this is now likely to be back-end weighted - not a good sign.

It is only worth a punt if you believe there is no likelhood of further bad news further down the line. If there is we can see the market punishing the company severely again.
On balance IMO the risk/ reward ratio doesn't feel right.

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matylda 22nd Jan 15 of 18
3

Connect (LON:CNCT) - I sold my holding this morning.

Blog: Briefed Up
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TheArb 22nd Jan 16 of 18
2

In reply to MrContrarian, post #1

re Connect (LON:CNCT) declining revenues, increasing costs - not a happy combination. Neither does hiring Stuart Godman from DX Group inspire me with confidence. A shortage of LGV drivers sounds like more increased costs and drivers not where they need to be and unavailable when needed. Fuel costs must be going up as well.

https://www.racfoundation.org/data/uk-pump-prices-over-time

Dividend yields are a backward looking indicator and a 10% yield holds no weight with me. I will be interested to hear Paul's comments, it's been on my list of potential investments since he last wrote it up but I'm stepping back now. Not for me.

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MarkLDN 4th Feb 17 of 18

Started tracking CNCT a week ago and it is down 14.6% from 76p to 65p after confirmation of the failed sales process, a loss in market cap of £30m – so 2.56 times the expected sale price of the Books division.

Food for thought.

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hayashi22 4th Feb 18 of 18
1

Connect:Shares tend to overshoot/undershoot which reflects supply/demand at any particular point. At this juncture the sp is depressed due to there being more sellers than buyers primarily linked to a view as to management competency linked to the botched sale process of the books division.

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