28th Jan 2021. 8.55am

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Boohoo buy Debenhams

We’ve talked for months about the size of Boohoo’s £389 million acquisition war chest, and the online retailer has been flexing its muscles this week…

Boohoo (BOO) have snapped up Debenhams for £55 million – permanently closing its 124 stores in the process.  

This is Boohoo’s fifth acquisition of a UK Highstreet brand in the last twelve months, but Debenhams has much higher significance than Warehouse, Oasis, Coast or Karen Millen.

In the year to August 2020 Debenhams’s online business generated £400 million in revenue and earnings of £12.7 million. And Boohoo plan to relaunch Debenham’s website as a marketplace for a host of third-party brands.

The market’s reaction to the acquisition has been broadly positive, and the shares were up when the news broke on Monday.

BOO Daily Candle Chart

BOO Daily Candle Chart

Anglo Asian announce special dividend

It’s been quite a start to the year for Anglo Asian Mining (AAZ)

First, AAZ announced news of a copper-gold discovery at Zafer, situated approx 1.5 kilometres northwest of the Gedabek processing plant.

The discovery was a significant drill hole intersection of copper-gold mineralisation at 113 metres grading 0.5% copper and 0.7 grammes per tonne gold.

This was followed by positive news relating to its restored contract areas in regions that were disrupted by the Azerbaijan / Armenian war. The news sent the shares surging 15% higher and back towards their summer highs.

Finally, this week, Anglo Asian announced plans to pay a special dividend of US$0.015 per share in respect of the year ended December 31, 2020. The dividend will be paid on March 11, 2021 in pounds sterling.

Commenting on the payout, CEO Reza Vaziri said:

“The company executed on its plans in the last quarter of 2020 and, helped by good metal prices, delivered the expected strong cash generation.”

AAZ Daily Candle Chart

AAZ Daily Candle Chart

Pan-African on-track to deliver its full-year production guidance

South African gold miner, Pan-African Resources (PAF) reported a 5.9% increase in production, to 98,386 ounces of gold, for the six months ended December 31, 2020.

Production from the Barberton Mines contributed 52,354 ounces while the Elikhulu and Evander delivered 26,863 and 19,169 ounces respectively.

PAF is on track to deliver its full-year production guidance, which is set at 190,000 ounces.

Recent weakness in the underlying gold price has seen the shares fall back from their early-Jan highs, but PAF’s long-term technical structure remains bullish.

PAF Daily Candle Chart

PAF Daily Candle Chart

Begbies books biggest insolvency acquisition to date

Begbies Traynor (BEG) announced the acquisition of CRV – a specialist in financial distress, fraud and asset recovery for £20.8m.

The deal consists of an initial cash consideration of £12m financed through the group’s existing facilities. There is a contingent cash consideration of up to £4m plus earn out of up to £4.8m.

Begbies Executive Chairman, Ric Traynor commented:

“The acquisition of CVR is our largest insolvency acquisition to date and is expected to be immediately earnings enhancing. The increase in scale and capabilities leaves the group well-positioned to increase its market share and continue to grow its business recovery and financial advisory revenues. The group continues to consider further acquisition opportunities and organic investments in both of its divisions, in line with our stated strategy.”

BEG Daily Candle Chart

BEG Daily Candle Chart

Keystone Law reports ‘exceptionally strong’ December trading

Keystone Law (KEYS) released a very upbeat trading statement last week…

The Challenger law firm said that trading throughout December and early January had been ‘exceptionally strong’. And as a result, Full-Year adjusted profit is expected to be ‘materially ahead’ of current market expectations.

CEO James Knight said:

“In what has been a very difficult year for many the core attributes of the Keystone model have really come to the fore” …

“The investment we have made over many years, in both the technology and the culture, has ensured that our lawyers have been fully operational all year and have continued to deliver high quality legal services to our clients.

“Having said that, the strength of trading over the past two months has somewhat taken us by surprise.”

KEYS share price has burst into life in recent weeks and this is very encouraging. We are now anticipating a re-test of the February highs.

KEYS Daily Candle Chart

KEYS Daily Candle Chart

Craneware posts healthy earnings

Craneware (CRW) has continued its recovery, announcing another robust trading update last week…

The US healthcare-focused fin-tech firm updated its full-year market expectations, with revenue of $74m and adjusted earnings of $25.3m.

For the six months ended 31 December, increased sales momentum resulted in growth at both the revenue and adjusted earnings levels of greater than 5% compared to the first half of the prior year – when revenue was $35.9m and adjusted earnings stood at $12.7m.

Its customer retention rate remained above 90% and the dollar renewal rate of customers at the end of their multi-year contracts has returned to approx 100%.

The shares have formed a new higher swing low on the price chart – marking a significant improvement in Craneware’s technical backdrop.

CRW Daily Candle Chart

CRW Daily Candle Chart

Midwich returns to growth with strong year end

Midwich (MIDW) said it expected to deliver 4% revenue growth at £710m in the second half of 2020, compared to the same period in 2019.

A strong November and December helped the international audio-visual distributor offset some of the impact of the pandemic earlier in the year.

Underlying sales, before the effect of acquisitions, were still 14% down year-on-year in 2020. But there was improvement in this figure from a decline of 22% in the first half to a decline of 7% in the second half.

Encouragingly, net debt has reduced from £53m in 2019 to around £20m as of 31 December 2020 thanks to strong cash generation.

Group managing director, Stephen Fenby commented:

“I am pleased with the group’s significant achievements in what was a very challenging year for both the world economy and our industry. Despite significant challenges, we managed to continue our long-term year-on-year revenue growth.

“Although markets for many of our higher margin product areas were significantly depressed (and continue to be so), I am pleased that the group was able to grow its share of the business available. This demonstrates that our service levels have remained high and that we are well placed to capitalise on future market demand when it returns fully.”

MIDW Daily Candle Chart

MIDW Daily Candle Chart

Learning Tech continues to grow recurring revenues

Learning Technologies Group (LTG) delivered a reassuringly robust trading update last week in which it said Full-Year revenue and earnings will be ahead of consensus.

The group also said its net cash position at the end of the year was “significantly ahead of consensus” at £70.2m, which will be used to implement its aggressive acquisitive growth strategy.

Full-Year revenues are will be no less than £131m, up from £130.1m in the prior year, while recurring revenues increased to 80% from 74% driven by the strong performance of its software & platforms division and the expansion of its business in open-source learning management systems.  

The news follows the $14.2m acquisition of analytics firm Reflektive earlier in the month.

Whilst the shares have seen some selling pressure at 173p, we believe the confidence that LTG have shown through their recent acquisitions will soon be reflected in their share price. 

LTG Daily Candle Chart

LTG Daily Candle Chart

Robinson says adjusted profit ahead of current market expectations

Robinson (RBN) released a solid trading update last week in which it said revenues are expected to be £37m for the year, a 6% increase on 2019.

The packaging firm also anticipates adjusted profit before tax for 2020 to be ahead of current market expectations, and ahead of 2019.

During the year, Robinson has invested £4.6m in additional and replacement production equipment and in the refurbishment of a manufacturing building in its UK business. The investment was funded by strong cash generation from operations resulting in net debt of £6.6m (2019: £6.9m).

Chairman, Alan Raleigh commented:

“Despite the uncertain economic environment, we remain committed to ongoing delivery of our target of mid to high single digit sales growth and a 6-8% return on sales”.

The shares now appear to be entering a sideways consolidation and as long as swing support at 133p continues to hold, we’ll be more than happy to keep them in our portfolio.

RBN Daily Candle Chart

RBN Daily Candle Chart


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