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| Bargain Britain
** FTSE Fledgling is made up of UK companies listed on the main market that are too small to be included in the FTSE All share index |
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Writing land values back up
A force in VoIP New mines coming on stream
Acquisitive strategy back on track No longer an Island From beauty products to mining Southern Bear profit warning AIM listing to be cancelled In's and Out's from the Bridge Hall CFD Desk Featured stocksComs (COMS)
Directors dealingsDirectors dealings can provide a useful insight The above list of transactions represents a selection of the directors' buys and sells reported last week |
There was further evidence that the housing market is improving, as one of the UK's leading housebuilders was confident enough to write land values back up. This news was contained in the final results of Persimmon, where underlying operating margins in the second half improved to 6%, up from the 1.6% seen in the first half. Even though sales revenue fell by 19% to £1.42 billion, Persimmon was able to stay in the black before exceptional items. The management has been focusing on cash generation, keeping costs under control and conserving cash, which means that no dividend will be paid in respect to 2009. This strategy has allowed for an impressive debt reduction, as net borrowings have more than halved during 2009 to £267m, which is comfortably within the Group's £1bn facilities. Looking ahead, Persimmon sported strong forward sales of £900m, which represents a 29% increase on a year ago. In the first half of 2010, ninety new sites are scheduled to open. The all important land bank remains pretty healthy, as it consists of 60,454 plots, which represent sufficient supply for six years. At the time John White, Group Chairman, said: “Our cash generation and cost control have placed the business in a strong position both operationally and financially for a recovering market. Prices have held firm since the beginning of the year and we remain focused on improving our operating margins and to profitably grow the business.”
Low-cost quality telephone service provider Coms, reckons it now has a 5% share of the hosted internet telephony market in the UK. This market share figure is based on data published by research consultancy Ilume in December 2009, which was able to report that in the last three months of 2009, the UK Voice over Internet Protocol (VoIP) market grew by 11% quarter-on quarter. It has always been thought that there was a big opportunity in businesses migrating from landlines to internet IP telephony systems in order to cut costs. In the past year the Company has been refocused on two clear lines of business. Firstly, there is the Coms business which provides internet telephony services direct to small and medium sized business (SMEs); and secondly VCOMM which supplies solutions to enterprise customers through distributors and system integrators. The important re-branding has been completed and the new website has gone live, which thoroughly reflects their focus on providing telephony and audio, as well as video conferencing services to the SMEs. A recent trading update reported that in the year ended 31 January 2010, Coms’ revenue climbed by 33% to £3.23m. Despite this healthy improvement to the topline, the Company will still make a loss, although the directors were at pains to point out that Coms hit profitability in January; and so it does look as though the operational changes made during the year have improved efficiencies.
A strong set of figures for 2009 were announced by Fresnillo, which is the biggest silver producer on the planet. Total revenue was 18% higher at $850m, EBITDA climbed by 47% to $497m and earnings per share rose 140% to 44.9 cents, helped by higher metal content being extracted at its Saucito development works, along with higher silver grades being mined at Cienega. With 70% of operating costs being in the Mexican Peso, the 21% devaluation of the Peso softened the blow of rising input costs. In 2009, attributable silver and gold production rose 9% to 37.9 million ounces and 5% to 276,584 ounces respectively. Frenillo has an enviable asset base, consisting of four producing mines, all in Mexico, which are: Fresnillo, Cienega, Herradura and Soledad-Dipolos. There is plenty of expansion to come, as in the production pipeline are the Saucito development project plus three advanced exploration prospects (San Juan, San Julian and Oryiso). In all, the Group has mining concessions covering some 1.75 million hectares of Mexico, which underpins its rising production profile. Chief Executive Jamie Lomelin commented that: “..We have achieved record attributable silver production, the completion of development works and the start up of operations at Soledad-Dipolos, advances at the Saucito project, substantial increase in total resources, and mineralisation extended at all exploration prospects. We enter 2010 with a strong cash position and no debt on the balance sheet and on track to achieve our aim of delivering one new mine or mine expansion per year until 2014.”
In response to difficult trading conditions, the board of professional services group Strontium decided to conserve cash, cut costs and restructure its business into two units. This plan seems to be working as the interim results revealed that revenue increased by 23% to £1.28m, which allowed the pre-tax profits to double to £145,720. Strontium specialises in acquiring small professional services businesses but with the outlook for the UK economy looking increasing bleak in late-2007, the decision was taken to maximise the returns from its two main subsidiaries: Miad UK Ltd and The Leading Eye Holdings Ltd. In the six months to 31 December 2009, revenue increased at Miad UK, which is a leading NHS-dedicated non-clinical training, development and education consultancy. In the past, Miad has undertaken a lot of work for the car industry and the board reports that there are tentative signs of a return of the automotive business side, particularly outside of Europe. The Leading Eye is a research, education and communications agency and in February 2009 established an arm in Sydney, which is already approaching breakeven. The management of these businesses continue to attract overseas contracts, which in the first half of the year accounted for 20% of revenues. Although the board expect that 2010 will remain challenging, the directors believe that Strontium is now in a strong position to revert to its strategy and in the next six months will be seeking new opportunities for investment.
It seems to have been a long time coming, but AIM-listed San Leon Energy is finally to acquire Island Oil & Gas. The deal which was first mentioned in October has now been ironed out and Island shareholders will get 1 New San Leon share for every 2.3 Island shares they hold. The acquisition values Island at £13.74m which equates to 10.10p per share but this deal will need the approval of shareholders in an EGM. Bryan Benitz, Island Chairman, commented that “Unlocking the full potential value of Island's diverse and attractive portfolio of assets is more likely to be realised as a result of this acquisition. The agreement between San Leon and PGS Ventures (editor’s note: PGS Ventures AS is to provide up to $50m of seismic acquisition, interpretation and field evaluation over San Leon’s European assets) provides the financial ability to progress the evaluation of Island’s substantial portfolio of Atlantic Margin licences and accelerate the monetisation thereof. In addition the Enlarged Group’s greater scale and assets should be a more attractive proposition for investors. The Island Board is thus of the view that the best way forward in generating future value for Island Shareholders would be to pool our interests with San Leon.”
Restructuring proposals have been announced by The Core Business (TCB), which had failed in its goal to make money out of launching and distributing personal care products and beauty brands. Alfred Henry Corporate Finance and TCB's largest secured creditor Trafalgar, have teamed up to provide financial backing to take the Company through a CVA and at least salvage some value for shareholders. However a capital reorganisation, followed by a financing, will see existing shareholders diluted out of sight as following a consolidation, an existing investor with 100,000 shares ends up with 16 new ordinary shares. It is proposed to change name to Chalkwell Investments and going forward it will be a shell for a natural resources business to be reversed into. Under AIM rules, the Company has until late-January 2011 to make a substantial acquisition before trading in the shares becomes suspended. There has been a clear out in the boardroom with Leo Knifton and Nigel Weller from Alfred Henry being proposed as directors. This pair has been active in restructuring and refinancing small quoted companies over recent years albeit with mixed results for investors.
Support services and fire protection/prevention business Southern Bear has issued a trading statement in which the board pointed out that sales and profits will be significantly below market expectations in the year to 31 March 2010. The problems are threefold. Firstly, sales orders have been postponed by customers, which means that significant revenues and profit will be deferred until the year to 31 March 2010. Secondly, adverse weather conditions during the winter months, have meant that several orders will not be completed before the year-end. Lastly, there has been poor trading results and exceptional costs associated with the disposal of the engineering businesses. Despite all that, the directors do believe that the financial position of Southern Bear remains sound.
Sutherland Health Group announced that administrators have been appointed to the Company. The board had expected to enter into a contract to sell the Company's operating subsidiaries to resolve a winding up petition to be heard in court on 26 February 2010. However, on 25 February, the agreement to settlement was withdrawn which resulted in a withdrawal of the potential purchaser from the proposed sale and so the board had no choice but to appoint administrators. The AIM listing is now to be cancelled.
A very sideways market has been in effect this week. No conviction was committed to the market until later in the week, when the Greek austerity measures rekindled some of the appetite for equities. These measures, backed up by some good UK Economic data from the Purchasing Managers Index for the services sector, showed a headline reading of 58.4, up from 54.5 in January and the highest level since January 2007. Larger companies led the upturn in this data, with smaller businesses showing their activity as being broadly flat, overall these latest service sector readings were welcomed.  |
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