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An encouraging AGM statement, with trading nicely in line and order books ahead of not only this time last year but also the £860m at the 30/9 year end.

They would never say at this early stage that they expected to trade ahead of expectations as they have done in recent years, but the outlook statement reflects the healthy state of the business:

"The long-term structural growth drivers in the UK's regulated infrastructure markets, combined with the expertise across our businesses provides significant opportunities across the Group and the Board looks to the future with confidence."

FYI per an article last week on Proactive, Shore Capital reiterated their Buy recommendation.

A couple of interesting points:

(1) Shore believe "“Even at a discount to UK peers, you can still double the current share price“ on a bid coming in for ACSO:

"Currently, the company is trading at a discount to its UK and US SaaS peers, which ShoreCap believes is unwarranted, while in the long term, it is operating in a structurally growing market with an increasing number of visitors and demand for digitalisation.

“The group helps its customers gain a greater share of visitors' wallets as well as improve overall efficiency and ultimately if not valued by the market, we believe these characteristics could also make [Accesso] a bid target.

“Even at a discount to UK peers, you can still double the current share price.“

'Buy' is the recommendation."

(2) Shore "is forecasting underlying cash profits of US$23 million for the 12 months" (today's £148.5m revenues were slightly behind Shore's $151m forecast, but margins must have been rather better than expected since ACSO traded in line with EBITDA expectations).

Edison have now issued a new note, and make some interesting points:

(1) They "see scope for upside, particularly in Online Marketing, where we believe that click or revenue per 1,000 session rates are starting to stabilise while volumes continue to grow"

(2) Major events such as the upcoming US presidential election could drive advertising spend and upside to our forecasts"

(3) Team Internet reports launching more products than ever before and signing up a record number of new demand and supply side partners during FY23, which should also support growth"

They summarise:

"29 January 2024

Team Internet’s FY23 trading update confirmed that trading has remained robust with double-digit sales growth across Online Marketing and Online Presence. The total revenue and EBITDA margin were slightly ahead of market consensus and our forecasts, both of which were upgraded in November 2023. Estimated FY23 net debt of US$74m was lower than our US$80.9m forecast, with operating cash conversion reverting to close to 100%. We maintain our FY24 estimates, but these could prove conservative, especially if advertising spend recovers. At 4.8x FY24e EV/EBITDA and 6.4x FY24e P/E, Team Internet's rating looks low given the company’s growth profile, diversity and growing track record."

""Back future tech winners via Frontier IP

Smart technology funds are investing in tile company Alusid ahead of an IPO – and so can you through this below-the-radar investment company

January 22, 2024

by Simon Thompson

Portfolio attracts high-profile technology investor

50 per cent share price discount to NAV

Edinburgh-based Frontier IP (FIPP:40p), a technology investment company that provides commercialisation services to university spin-outs in return for ‘free equity’ stakes, has announced a successful capital raise for portfolio company Alusid. Alusid creates premium-quality tiles and architectural surfaces

by recycling industrial waste ceramics, glass and other materials, much of which would end in landfill.

As part of a larger £1.13mn funding round, Octopus AIM VCT funds are investing £0.5mn in Alusid, which values the company at £9.5mn. Frontier IP holds a 35.4 per cent equity stake in Alusid worth £3.3mn. The cash proceeds will be used to support Alusid's expansion into new product ranges and territories. For instance, the

company is developing hard-wearing floor tiles, which are expected to launch commercially this year, and is in discussions with potential distributors in Scandinavia and Northern Europe. It is also exploring options for an IPO later this year.

There is clear momentum in Alusid’s business. In the past year, the company has launched environmentally friendly products with Topps Tiles, the UK's largest tile retailer, and is in collaboration with Imerys, a world leader in speciality minerals, to develop floor tiles. Other customers include H&M, Pret a Manger, BBC and Starbucks.

Prospects for further gains on Frontier’s portfolio are being woefully undervalued. To put this into perspective, Frontier holds a liquid £2.3mn stake in Nasdaq-listed Exscientia (US: EXAI)Exscientia (US: EXAI), a clinical-stage pharmaceutical technology company, pro-forma cash of £2.5mn (after factoring in operating expenses in the past six months), a £33mn equity portfolio, £5.9mn of debt investments and £1mn of trade receivables.

Ignoring the possibility of valuation uplifts in the forthcoming interim results, the £22.5mn market capitalisation company is rated on a 50 per cent discount to book value.

That’s an extreme discount considering the progress being made by multiple investee

companies including its largest holding, Plymouth University spin-out Pulsiv Solar, a green technology company that has developed on-chip technology to improve the energy efficiency of power supplies, battery chargers, LED lighting and photovoltaic solar cells.

Frontier IP’s 18 per cent stake in Pulsiv had a read-through valuation of £9.3mn following Pulsiv's last fundraising. So, although Frontier IP’s share price is slightly shy of my last buy call (‘Bag a technology bargain buy’, 31 October 2023), there is a clear disconnect between the value embedded in an exciting investment portfolio and the price a

WH Ireland are still waiting to produce new forecasts, but make some useful points:

"Croma Security Solutions (CSSG) – Corporate – H1 update: rapid pace of growth;

contract streams underpin; M&A offers good opportunities"

"We are encouraged by the continuing positive pace of growth, which we view as both organic and acquisition based. On the score of organic growth, we note last week’s release by the Home Office of data relating to outcomes following a crime, which shows a further increase in the year to September 2023 in unsuccessful investigations (“completed without suspect”) to over 40% of total crimes, in addition to c.38% described as posing “evidential difficulties”, while criminals charged are under 6% (2014:17%). We anticipate that underlying demand for CSSG’s services will continue to grow."

"We believe that many more consolidation opportunities of this kind are available for CSSG. It is important to note the cash available to the company to generate earnings enhancing growth through market consolidation, given that in addition to the last announced year end net cash of £2.1m, further substantial payments are to be expected in respect of Vigilant (£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.4-0.5m each, plus the redemption of £1.3m of Vigilant shares anticipated for July 2024)."

"WHI view: In addition to underlining the consolidation opportunity for CSSG, this

morning’s update provides further evidence of the very reasonable prices that

the company is paying for its acquisitions, with the most recent £0.4m

consideration paying for a profitable two-site business and additionally including

a site valued at £0.35m freehold. With sites typically turning over revenues in

the range of £300-350k (though these can be more sizeable or smaller), we believe that the resources available to CSSG make a meaningful site acquisition programme, further expanding the national geographical footprint and offering operational gearing opportunities, very much within the company’s grasp.

Also in this morning’s update, it is good to see the contract renewal with an NHS trust. Historically, CSSG has announced similar contracts, and combined with contracts with national cinema chains and other major clients, we believe that these renewals indicate a helpful strand of repeat earnings where the company is effectively well embedded with its clients."

The clue here is in the terrific cash flows, which will be recognised at some point. Plus such high recurring income.

Zeus Capital this morning note adjusted operating cash conversion being strong at around 100%.

They've raised their forecasts in line with the RNS, and now see 22.4c EPS last year rising to 25.1c EPS this year and 27.3c EPS next year.

They also see net debt falling this year to just $21.8m - and then a $33.1m cash pile at the end of next year.

So the shares trade at only 4.7x EV/ EBITDA 2024, 6.6x PE and a 15.6% FCFF yield.

In particular, "Online Presence peers trade at 8.9x EV/ EBITDA 2024 and Online Marketing peers trade at 7.3x, 85% and 52% valuation premiums to Team Internet".

Given the recent run-up there may have been some early profit-taking, but there could be a bigger rise this afternoon and subsequently as the market catces on to the huge value for sale here.

From Alliance Pharma's trading update today - hopefully bodes well for VLG's Kelo-Cote production:

"Continued strong consumer demand, particularly in China, drove significant recovery in Kelo-Cote franchise revenues in H2, leading to FY23 revenues of £63.2m, up 29% CER (FY22: £50.0m)"

Here's the rest of ST's tip in the IC FYI:

""On course for double-digit earnings growth

Time Finance uses wholesale funding facilities to finance its lending and remains funded to continue cherry-picking business to hit its £230mn lending target by June 2025. That’s worth noting since an increasing proportion of incremental gross profit earned on new lending converts into operating profit given the company has a relatively fixed cost base.

This helps explain why house broker Cavendish expects 30 per cent growth in operating profit to £5.6mn on 12 per cent higher revenue of £30.8mn in the 12 months to 31 May 2024. On this basis, expect both pre-tax profit and earnings per share (EPS) to rise by more than a quarter to £5.4mn and 4.3p, respectively.

Factoring in further growth in loan receivables to £210mn by 31 May 2025, analysts expect annual revenue of £33.1mn to deliver operating profit of £6.6mn, pre-tax profit of £6.3mn and EPS of 5.1p in the 2024-25 financial year. This implies the shares are rated on modest forward price/earnings (PE) ratios of 8.5 (2024) and 7.3 (2025).

Moreover, by recycling profits back into the business, tangible net asset value (TNAV) is also delivering double-digit growth, rising 13 per cent to £36.4mn (39.3p) year on year and on course to hit £38.8mn (42p) in May 2024 and £44mn (47.5p) in May 2025. The value being created for shareholders has not been lost on investors, hence why the share price has risen 41 per cent since I spotted the opportunity (‘Alpha Research: Business is booming for this underrated lender to SME’s’, 18 August 2023) and is up 19 per cent since my last buy call (‘Six micro-caps worth buying’, 9 November 2023).

The modest single-digit earnings multiple and 21 per cent discount to May 2025 TNAV estimates suggest the re-rating has further to run and I upgrade my target from 40p to 50p. Buy."

Tipped by ST in the IC - but subscription-only so I can only see the article's intro:

Https://www.investorschronicle.co.uk/ideas/2024/01/25/tap-into-this-bargain-priced-sme-lender/

"Tap into this bargain-priced SME lender

Business is booming for a lowly rated alternative provider of finance to SMEs

January 25, 2024

by Simon Thompson

Gross lending up 24 per cent to record £188mn

First-half pre-tax profit and EPS up a third to £2.7mn and 2.33p

Business continues to boom for Bath-based Time Finance (TIME:37.5p), an alternative provider of finance to more than 10,000 small and medium-sized enterprises (SMEs).

In the latest six-month trading period, own lending book origination increased 29 per cent to £47.3mn, which in turn boosted gross lending to a record high. Importantly, credit quality remains robust, a reflection of the fact that invoice and hard asset finance account for 70 per cent of total lending, up from 50 per cent in 2021. A doubling of the average deal size since then and dealing with a lower number of enquiries from more established and credit-worthy businesses is another reason why delinquency levels are holding steady at 6 per cent. All lending is made from the company’s own balance sheet or through brokering on business that does not meet its strict lending parameters."

Today's 6-month trading statement looks good:

- revenues up 13.5% year on year

- major NHS contract renewal

- acquisitions trading well and looking like a bargain with the £0.35m freehold property included

- more acquisitions likely

Looks like an encouraging and nicely in-line trading statement today, with revenues up 6% despite the move away from lower margin staffing work (presumably Six Flags).

The new acquisitions are trading well with substantial customer wins, and overall revenue growth is expected to increase further to 9% along with raised margins. Nice to see the first contract win in Saudi Arabia too, which will hopefully be the first in what could be a lucrative opportunity.

Excellent trading statement - and well ahead of consenus expectations.

For example, $835m revenues compares to Zeus's forecast of $825.3m, and $96m EBITDA compares to Zeus's forecast $91.8m.

Great news that both divisions are now delivering 14%-16% annual growth.

And "we anticipate that these (online and AI) concurrent trends will significantly bolster our performance and help us outperform in any cycle" is soothing to hear!

Borrowing would have been much reduced had it not been for $40m of buybacks, which given today's news will hopefully prove to have been good value.

TIG looks in very good shape. Perhaps this time the sellers have been drained and the share price can finally reflect the very positive outlook.

This is from the full year results

“CamGraPhIC is another company making excellent technical and commercial progress with its graphene-based photonics technology. The company was already working closely with major multinationals in data and telecommunications but is now starting to gain traction from beyond the sector and from governmental organisations.”

They've now appointed an interim CEO, as per this on LinkedIn.

"Ben Jensen

It's great to be able to share that I’ve started a new position as Interim Chief Executive Officer at CamGraPhIC Ltd!

I'm really looking forward to sharing some of the amazing progress we have made over the last few years and talking about how we are scaling Graphene Integrated Photonics (GIP) into a high volume foundry process.

Alan Thompson

Development & Government Affairs and Relations | Development Bank | Strategy / Value Proposition

Congratulations Ben! Look forward to continuing the overlap with Space applications.

Ben Jensen

Author

Thanks Alan. There’s definitely a good overlap with this technology."

More good news, this time from Walter Lilly:

Https://www.walterlilly.co.uk/walter-lilly-thrilled-to-have-been-appointed-the-mlc-at-harwell-design-and-construction-works-framework/

"19th January 2024

Following a competitive public sector tender process earlier this year, Walter Lilly are thrilled to have been appointed to the Mary Lyon Centre at MRC Harwell (MLC@Harwell) Design and Construction Works Framework for national funding agency, UK Research and Innovation (UKRI).

UKRI works in partnership with universities, research organisations, businesses, charities, and government departments to foster prime environments for research and innovation to flourish. By collectively uniting nine bodies including seven Research Councils, Innovate UK and Research England, the UKRI connects world class researchers and innovators with customers, end-users and the general public.

This Framework will primarily serve the Medical Research Council (MRC), whose vision for their Harwell campus in Oxford we will be helping to realise throughout the duration of our two-year appointment.

Targeting carbon neutral status by 2040, MRC are embarking upon a path of transformation over the coming years which we are honoured to be supporting. Focusing on the design and construction of planned works to existing buildings as well as brand-new facilities, the Framework intends to deliver highly sustainable premises at the forefront of improving human health through ground-breaking scientific discovery"

And Lilly also won late in December an additional £5.5m contract here:

Https://bidstats.uk/tenders/2023/W51/813039654

I've been away from the BB for a week, so just catching up comments-wise - the RNS was a surprise to say the least!

Ken Ford is a highly successful and experienced guy, so there are likely to be good reasons for Mike's departure. My gut feeling is that Mike has done a terrific job in getting SDI to where it is today, but that he's not necessarily the man who can extract maximum organic growth from the melange of businesses which have been acquired as he's perhaps always looking for the "next thing" and not necessarily running the existing business in the best manner.

Nevertheless, it shouldn't be forgotten that Mike has grown what was a tiny microcap to a now £67m m/cap company and taken the share price from 10p or less (where I invested here) to the current 60p+ and at one time 200p. And it's good to see Mike thanked in the RNS and Mike being similarly complementary in his comments.

With 5.8p EPS forecast for the year ending soon, and 7.4p EPS for the year starting on 1st May, it's possible that this is now a fantastic buying opportunity on an incredibly low P/E - if those figures are merely met then the share price could double or more.

On the other hand, if you believe Mike's departure presages a further warning then there may still be further pain to come. Certainly the macro background isn't promising. You pays your money....

Last year's "ahead of expectations" trading update was on a Monday, the 23rd January. A Monday RNS normally indicates good news (as opposed to a Friday!) - let's hope this coming Monday fits that scenario....

It was certainly encouraging to see the company issuing (at 211,000 a relatively limted number of) options 10 days ago - exercisable at 95p. There wouldn't be much point in doing so at this time and at such a price if the results were going to be disappointing.

Fingers crossed :o))

PEG's m/cap is now £2.1m after the trading update, against a cash pile of essentially £1.5m including the delayed receipt.

The below expectations update reflects the hiatus in train build industry expenditure, bur even so isn't a complete disaster as I assume QRO continues to trade well, resulting in a new WH Ireland forecast of a £0.6m LBT for 2023.

I just wonder what PEG would be worth if the 3 divisions were sold off separately. Surely a multiple of £2.1m?

WH Ireland - presumably after discussions with management - have retained their forecasts for this year of £10.9m revenues, £0.3m PBT and 1.1p EPS, with £2.3m net cash at the end of the year.

Here's FIPP's RNS re new investment into Alusid from Octopus and a potential IPO for Alusid later this year:

Https://uk.advfn.com/stock-market/london/frontier-ip-FIPP/share-news/Frontier-IP-Group-plc-Octopus-invest-in-Alusid-as-part-of-equity-funding/93094966

Commentary in the Times:

Https://www.thetimes.co.uk/article/21alusid-xr5jkdkfv

"A company that turns recycled industrial waste into premium-quality tiles has been valued at £9.5 million before a potential stock market float, after raising more than £1.1 million from investors.

Alusid, which makes handmade tiles and surfaces such as table-tops at its factory in Preston, Lancashire, said that £500,000 of that sum had come from Octopus Investments, the financial services business that manages more than £13 billion of private equity, venture capital and listed company assets.

Proceeds from the initial public offering will be used to support the company’s expansion into new product ranges and territories. Alusid, which is developing hard-wearing floor tiles that are expected to be launched commercially this year, is also in talks with potential distributors in Scandinavia and northern Europe.

Last year the business signed a multi-year deal with Topps Tiles and it has produced its first range of mass-manufactured tiles for the retailer, with further product launches expected. Other customers include Pret a Manger, the BBC and H&M, the fashion group.

Alasdair Bremner, 43, the company’s chief executive, said: “We are delighted with the investment and support from Octopus and look forward to working with them. This is an important year for Alusid as we launch our first 98.5 per cent-recycled, low-carbon floor tile, expand our geographical reach and seek to become a public company.”

Bremner co-founded the business with David Binns, now its creative director, after being awarded an Arts Council grant to explore the “aesthetics of waste’ while working as an academic in the ceramics department at the University of Central Lancashire.

Neil Cragg, the chief executive of Frontier IP, which specialises in turning intellectual property into commercially viable ventures and which holds a 35.4 stake in Alusid, said: “The investment from Octopus represents important validation for Alusid, its capital-efficient business model and the quality of its products, made from a minimum of 91 per cent-recycled material, among the highest levels in the industry, if not the highest.”

And here's a new video from Alusid's CEO about the Octopus investment and upcoming IPO:

Https://www.youtube.com/watch?v=jwyMmymdAXo

"Alasdair Bremner, chief executive, of Alusid, a portfolio company of Frontier IP Group PLC, joined Proactive's Stephen Gunnion after the company raised £1.1 million, including £500,000 from Octopus Investments.

Bremner said the company will use the funding to expand its

Lovely to see FNX beating expectations once again. Finncap have retained their 270p target price for the moment, but when the interims are published this may be increased.

This is encouraging in particular:

"The business continues to make good progress on further international expansion and we hope to make announcements relating to this later in the year."

Along with the promising outlook statement:

"With high levels of repeating income, continued growth from existing clients and increasing opportunities for expansion in international markets, the Board remains confident in the growth potential for Fonix going into H2 FY24 and beyond."

Https://www.investegate.co.uk/announcement/rns/fonix-mobile--fnx/trading-update/8003155

Also good to see Rathbone Investment Management buying and disclosing going above 11% yesterday afternoon (though their holding does go up and down somewhat):

Https://www.investegate.co.uk/announcement/rns/fonix-mobile--fnx/holding-s-in-company/8006837

Tamesis Partners retain their 160p target price, and conclude:

"Valuation

As Peter Stokes, CEO, comments: “The Group has delivered outstanding compound annual revenue growth of 33% since 2020 and we are confident of maintaining our growth momentum as we start 2024”. The breakthrough into North America is particularly noteworthy and more than offsets issues in West Africa to our mind.

The shares are trading on 2024 PE and EV/EBITDA multiples of 6.8x and 2.6x respectively with a dividend yield of 3.4%. Not sure there are that many companies, certainly in the industry, generating 33% CAGR in revenue and paying a decent dividend.

Meanwhile the sector consolidates (it was a hard year generally for drlling contractors) thereby improving potential industry returns and the economic rent of those operating within it. After DDH1 was taken over by Perenti the no.1 drilling company in the sector, Boart Longyear, is to be taken private by a consortium of Private Equity investors. We retain our PT of 160p."