Holders Technology (LON:HDT) - CORP: Interims
Market Cap: £1.6m; Current Price: 40p
Interims: Encouraging growth in LED and improvement in margins
- H1 revenue fell 21.3% to £5.5m with 14.9% growth in the LED division (to £1.3m) failing to offset the 28.5% decline in the PCB division (to £4.1m). Both divisions suffered from the strengthening of sterling against the Euro. A 200bps improvement in gross margin and cost savings of £0.3m resulted in a 44% reduction in LBIT and LBT to £95k, however.
- The fall in PCB revenue reflected a reasonably tough comparative period in the German market and the impact of the terminated supplier agreement in the UK at the end of FY14. Management has succeeded in replacing some of this lost revenue with new products and also reduced costs and the PCB division generated a small profit (£35k from £112k). The LED division increased revenue and margin and the EBIT loss was reduced to £72k from £247k. LED represents the main area of growth for Holders and management has broadened its range of manufacturer relationships. The move to custom LED solutions from components is also benefiting LED margins.
- Net cash was £0.5m (FY14: £0.6m) and a 0.25p interim dividend is proposed (H1 FY14: 1.0p). Inventory levels reduced slightly to £2.5m (FY14: £2.6m) and there is scope for some further reduction but Holders’ depth of stock is a key differentiator for its customers. Net assets ex goodwill at £3.9m (equivalent to 99p/share) stand at considerable premium to the current share price.
- Profit forecasts for FY15 and FY16 remain unchanged with the expected return to profit in H2 continuing into FY16 but we reduce our revenue forecasts for both years to reflect sterling’s strength. This is offset by higher gross margin assumption and a lower cost base. We have maintained the 2016 dividend forecast of 2.0p.
NORTHLAND CAPITAL PARTNERS VIEW: Reasonable H1 performance in the face of the weakening euro and the loss of a long term PCB contract at the end of FY14. The growth in the LED business is encouraging and remains the core focus for growth with the addition of a number of manufacturers. Management has also improved gross margins and reduced the operating cost base. As a result, we expect the business to move back into sustainable profit in H2. The shares continue to trade at a substantial discount to net assets.
Beximco Pharmaceuticals (LON:BXP): Half yearly report
Market Cap: £67m; Current Price: 17.25p
Domestic sales increased 15.4%
- Beximco Pharmaceuticals announced unaudited financial results for the six months ended 30 June, 2015.
- Net sales increased by 17.4% to Bangladesh Taka (BDT) 6,249.2m / £51.1m (2014: BDT 5,322.2m / £40.2m)
- Domestic sales increased 15.4% to BDT 5,882.5m / £48.1m (H1 2014: BDT 5,099.2m / £38.5m)
- Export sales increased 64.4% to BDT 366.7m / £3.0m (H1 2014: BDT 223.0m / £1.7m)
- Profit after tax increased by 39.3% to BDT 1,009.2m / £8.3m (H1 2014: BDT 724.3 / £5.5m)
- Over the period Beximco launched 11 products in its domestic market and completed 21 registrations for 19 products in 10 countries. The group also entered five new countries (Australia, Indonesia, Costa Rica, Burundi and Iraq).
- Finally Beximco recently became the first Bangladeshi pharma company to be approved by the US FDA.
NORTHLAND CAPITAL PARTNERS VIEW: Beximco’s sales are accelerating, with the group achieving 15.4% sales growth in its domestic market (HoH) vs. previously reported 2014 YoY growth of 9%. Moreover, management reported good visibility on the group’s order book and indicated that it remains confident of achieving full year targets.
Audioboom (LON:BOOM): Interims
Market Cap: £29.4m; Current Price: 5.5p
Progress on KPIs but revenue remains minimal
- Focus remains on growing the number of registered users, content partners and app downloads and revenue was minimal at £46k (H1 FY14: £24k (five month period)). Underlying adj. operating loss increased substantially to £2.9m (H1 FY14 loss of £0.75m) reflecting heavy investment in sales and marketing. Cash used in operating activities increased to £2.7m and net cash was £6.2m (FY14: £8.9m, H1 FY14: £3.1m), following last October’s £8m placing. Management is targeting profits and cash generation in FY17.
- In terms of operating metrics, Audioboom now has more than 4m registered customers (FY14: 3.1m), >3,000 active content partners (FY14: >2,000) and 1.5m mobile app installs. Record activity in May. In-vehicle deal with AUPEO! and app integration with Apple CarPlay and Android Auto; revenue referral agreement with Audible and advertising rev share agreement with Cumulus Media, the US’s second largest radio group (post period end).
- Service will remain free to use and advert-free until the app user base has reached ‘considerable critical mass’. In the interim, revenue will come from sharing advertising revenue from content providers that use Audioboom’s platform to embed audio content across their own web sites and apps.
NORTHLAND CAPITAL PARTNERS VIEW: Progress in the company’s KPIs but this is yet to translate into revenue and the increased cost base resulted in substantial H1 losses – greater than FY14. Management is choosing not to monetise its service at this point and focusing on building up users and content partners. As such, the commercial model is still not fully proven. Management should be able to throttle back the cost base to ensure its cash resources last until it hits its target of cash generation in FY17 but Audioboom needs to build a much higher profile in a congested consumer market.