19th May 2022. 8.57am

Regency View:


Regency View:


Ideagen agrees to £1.1bn takeover offer

With various bid rumours circulating for several weeks, Ideagen (IDEA) announced last week that it had reached a takeover agreement with private equity firm Hg Pooled Management…

The deal, worth £1.09b (US$1.34b) agreed to a 350p per share cash offer for the compliance software group.

Ideagen has also issued a second statement confirming it is still in talks with a second bidder, French private equity firm Astorg, but this morning Astorg announced that it was pulling out of the running.

We will be looking to close our position in Ideadgen at the 350p agreed offer price in the coming days.

IDEA Daily Candle Chart

IDEA Daily Candle Chart

Anglo Asian Mining profits drop as it begins business revamp

Anglo Asian Mining (AAZ) released a sobering set of Full Year results this week in which profits dropped two-thirds from $35.7m to $12.6m…

Cost inflation and lower output levels at Anglo Asian’s key facilities in Azerbaijan were behind the drop in profitability, with all-in sustaining costs (AISC) per ounce of gold production increasing to $843 from $702.

Revenues have also declined from $102.1m to $92.5m in 2021, while cash flow also dipped from $52.8m to $29.3m.

Overall, gold production levels have dropped over the 12-month period, slipping from 56,864 ounces to 48,680 ounces.

Anglo Asian are looking to transition the business from a one-site company in Azerbaijan to a miner with multiple operations globally. And the miner has made a flurry of acquisitions and investments to reflect its new ambition…

Deals includes agreements with the government of Azerbaijan for three new contracted development, a production sharing agreement at Gedabek (a key site for the company) and a $2.2m investment in a 19.8 per cent stake in the Canadian miner, Libero Copper & Gold Corporation.

AAZ Daily Candle Chart

AAZ Daily Candle Chart

Midwich trading in line after record 2021 results

Midwich (MIDW) said in an update last week that trading in the first four months of 2022 had been in line with forecasts.

Audio-visual (AV) distributor, which was holding its annual general meeting, noted that its record revenue and adjusted profit before tax in 2021 was achieved as the professional AV market remained below pre-Covid levels.

Chairman Andrew Herbert said the company remained committed to its strategy of delivering strong organic growth, supplemented by targeted acquisitions, as well as building on its expertise across a broader range of markets and products.

“The board was delighted to welcome the DVS and Nimans teams to the group early in the new year, further strengthening our capabilities and presence in the UK AV market,” Herbert said.

“Trading in the first four months of the current year has been in line with the Board’s expectations and we look forward with confidence.”

Midwich said it would announce a trading update for the six months ending 30 June on 19 July.

MIDW Daily Candle Chart

MIDW Daily Candle Chart

Eckoh profits expected to be ahead of forecasts; ‘material growth’ predicted for 2023

Eckoh (ECK) published an upbeat trading statement this week ahead of the release of prelims for the 12 months ended March 31…

The secure payment specialist said its operating profit for the year just gone will be 5% ahead of market consensus as it added that it expects to see ‘material growth’ in 2023.

Eckoh said the performance reflected ‘strong progress’ in its US secure payments operation, and a ‘resilient’ performance in the UK. US annual recurring revenues were 60% higher than last year.

The group exited the year with a better than expected £2.8m in the bank. While this represented a sharp decrease in its cash balance from £11.7m a year earlier, Eckoh pointed out that its December acquisition of Syntec was part-funded from its own reserves.

The market’s reaction to the upbeat was one of cautious optimism with the shares bouncing from key support at 39p.

ECK Daily Candle Chart

ECK Daily Candle Chart

Tremor deliver record revenue in Q1

Tremor International (TRMR) said it had got off to a strong start to the year – delivering record Q1 revenue and earnings…

The connected TV (CTV) advertising group said Q1 adjusted earnings (EBITDA) was $33.6m on margins of 47%.

“Our diverse product portfolio serves as a competitive advantage as it provides resiliency across our model, enabling Tremor to maximize revenue opportunities, and served as a catalyst that drove contribution ex-TAC growth of 13% in Q1 2022 compared to Q1 2021” said Ofer Druker, Tremor’s CEO.

“Our efficient operating model enables a healthy balance sheet, significant operating leverage, strong free cash flow conversion, and robust profitability as evidenced by our 47% adjusted EBITDA margin on a Contribution ex-TAC basis, which we believe to be best-in-class for the industry” he added.

The shares have had an underwhelming start to the year, but this seems to reflect the bearish sentiment towards small-cap US-focused stocks. For this reason, we expect Tremor’s qualities to shine through over the long-term.

TRMR Daily Candle Chart

TRMR Daily Candle Chart

Character Group posts double-digit rise in revenue but profit falls

Toy manufacturer, Character Group (CCT) reported a fall in interim profit as margins came under pressure amid a “challenging” backdrop.

While group revenue in the six months to February 28 jumped 22% to £90.9m, pretax profit decreased by 14% to £6.5m.

Cost of sales rose by 30% to £68.3m with this rate of growth outpacing its revenue rise.

Character reported a gross profit margin of 24.8%, below the 29.2% registered a year ago, as it noted higher production and freight costs.

“Although the majority of countries where we sell or distribute our products relaxed or even eliminated Covid-19 restrictions, the strict controls applied in China, where almost all of the group’s manufacturing takes place, resulted in delays in production at factories and shipping exports to our global markets…

Consequently, this led to extended lead times, uncertainty over delivery dates and significant cost increases,” read the statement.

Character declared an interim dividend of 7.00 pence per share, reflecting a 17% increase compared to 6.00p a year before.

CCT Daily Candle Chart

CCT Daily Candle Chart

Science Group climbs with first-half profits ahead of 2021

In a brief trading statement released yesterday, Science Group (SAG) said it expects the first-half profit to be ahead of 2021.

The science-as-a-service consultancy made a good start to the year up to April, which was slightly ahead of the board’s expectations.

While it is monitoring the ongoing impact of inflation on materials, energy, and wages, it is largely offsetting this due to the strong US dollar compared to sterling, according to its statement.

Science Group maintained its strong balance sheet with gross cash as of 30 April was £38.4m and net funds of £23.4m, leaving the door open for further acquisitive growth…

“The Board to continue to evaluate corporate opportunities to increase the scale and/or development of the Group”.

The shares are roughly back to where we entered last year, and with a strong dollar tailwind, we expect the shares to retest last years highs.

SAG Daily Candle Chart

SAG Daily Candle Chart

K3 Capital puzzled by share price drop, says outlook remains ‘strong’

K3 Capital (K3C) said it was unaware of any reason for its recent share price slide and confirmed it was confident about its outlook for the year, with all three divisions showing ‘strong’ activity levels.

The advisor to small and medium enterprises has seen its share price fall 30% in the last three months.

Recent acquisitions were performing in line with its plan, the statement added, and the pipeline is ‘healthy,’ with several bolt-ons being evaluated.

Following its February interim results announcement, K3 reiterated it had started the second half of 2022’s financial year well.

Despite a mildly positive reaction to the trading statement, the market remains unconvinced, and the shares continue to trend lower. Given the strength of K3’s comments, we view the price action as short-term profit taking and remain unconcerned.

K3C Daily Candle Chart

K3C Daily Candle Chart


All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.