City round-up: Nanoco; GB Group; AJ Bell; Dechra Pharmaceuticals; C4X Discovery
Nanoco Group, the Manchester-based developer of materials used in the manufacture of monitors and TV screens, said it has deliverd “a critical year in which we delivered key value enhancing milestones” in an update today.
It issued a note on its annual results for the year to July 31, revealing a 19% increase in revenues to £2.5m, improved adjusted LBITDA of £2.1m, compared with £2.8m previously, an equity fundraising that extended its cash runway to CY 2025, beyond expected breakeven point, and cash of £6.8m at year end, with the average net monthly burn rate now under £0.2m.
During the peiod the group achieved a significant contract extension with a European electronics customer to deliver materials validated for commercial production in the short term. It is continuing development work with a major Asian chemicals customer and is consolidating all operations into Runcorn to deliver long term cash savings of net £0.7m pa.
The group is involved in intellectual property litigation with Samsung which is expected to begin in Texas soon. It said it ha “strengthened belief and confidence in our case”.
CEO, Brian Tenner, said: “We have consistently delivered on all of our target milestones throughout the period. The full year contract with the European electronics customer covers product validation and new material development. This is a clear sign of their commitment to commercialising infra-red sensors using Nanoco’s quantum dots. We maintain our goal of being ready in H1 FY23 for potential commercial production orders in the short term.
“We are consolidating our core R&D and scale up capabilities in our Runcorn production facility to deliver sustainable net savings of around £0.7m pa. The over subscribed equity fund raise significantly extended the cash runway beyond when we expect to be self-financing. This has also allowed targeted strategic investments in new equipment and additional personnel as we increase our overall activity levels across the business, including new R&D staff to support new materials for other quantum applications.
“We are also pleased with the developments in our litigation against Samsung during the period. We patiently await a confirmed date for that trial.
“We have increased the potential to create significant shareholder value in our organic activities and the Samsung litigation in the short to medium term. We will be working hard to continue these trends, particularly with confidence in the visibility of commercial production orders and an initial outcome to the trial in Texas during H1 FY23. The board, therefore, has growing confidence in the strength of the investment proposition and value inherent in the business.”
::
GB Group chief executive Chris Clark
GB Group, the Chester-based identification verification specialist, expects to report first half revenue of £133.8m, compared with £109.2m last year, representing growth of approximately 22.5%. Growth in the half year included contributions from the recently acquired Acuant and Cloudcheck businesses.
This more than offsets a tough prior period comparative that included a c.£8.8m benefit from unusually high and non-repeating transaction volumes driven by the US stimulus project and cryptocurrency trading.
In its trading update for the six months to September 30, today, ahead of releasing its figures on November 29, the group said its Location and Fraud segments both performed well with double-digit constant currency growth.
The Identity segment was particularly impacted by the reduction in activity from cryptocurrency and ‘gig-economy’ fintech customers in the Americas. Cryptocurrency revenues normalised from the prior year’s exceptional levels, but at lower volumes than expected, and this impact is expected to continue in the second half. The wider regions and sectors continued to perform well, and the group is encouraged by the pipeline of opportunities to offset this impact over the next six months.
The group’s adjusted operating profit margin in the first half is expected to be approximately 21%. This is expected to improve in the second half of the year as revenues are traditionally stronger and some of the significant opportunities in the pipeline are closed.
GB says it has a strong cash generative business model and this has enabled further repayment against the $210m of debt drawn to finance the Acuant acquisition. Total repayments of $45m have now been made resulting in an outstanding balance of $165m. However, on a sterling basis, net debt at 30 September 2022 increased to £132.6m, reflecting a £22.2m retranslation impact since the year end from the conversion of the US dollar denominated debt into pound sterling.
The first half also saw the impact of the £9.6m dividend payment and £2.5m used for on-market share purchases related to a newly created Employee Benefit Trust.
The board said it remains positive about the long term prospects for GBG, saying: “As we look forward to the second half of the year, which typically sees a greater revenue weighting, growth is expected to accelerate as we execute our strong pipeline of new business across our diverse geographic footprint and customer sectors. Despite the macroeconomic conditions the board’s expectation for the full year remains unchanged and, given the long term structural growth drivers at work in our markets, the board remains highly confident in the long term opportunities ahead.
CEO, Chris Clark, said: “I am proud of the way that the GBG team have delivered excellent service and support for our customers despite the challenging economic backdrop over the past six months.
“GBG has evolved as a business over the past 18 months and is now one of the world’s leading pure-play identity software providers. Details will be shared at our half year results in November for a Capital Markets event that will take place early in 2023 for investors and analysts. The event will include an update on Acuant and further detail on how we are capitalising on the structural growth opportunities in front of us.”
::
Michael Summersgill
Manchester investment platform, AJ Bell, issued a trading update for its financial year ended September 30, 2022, today, which showed customer numbers increased by 57,687 in the Platform Business to close at 425,652, up 16% in the year, as the company’s dual-channel model continued to deliver strong organic growth in both advised and D2C customers.
Assets under management (AUM) increased by 27% in the year to close at £2.8bn.
Underlying net inflows in the year were £1.05bn, an increase of 14% versus the prior year. All of AJ Bell’s multi-asset funds have outperformed their Investment Association sector benchmark over one, three and five years to September 30, 2022.
In the Non-platform business customer numbers increased by one per cent, closing at 14,937. Net outflows in the year were £2bn (FY21: £0.6bn) following the previously reported closure of AJ Bell’s institutional stockbroking business.
Michael Summersgill, who took over as chief executive from founder Andy Bell, said: “I am incredibly proud to have succeeded Andy as AJ Bell’s CEO and am pleased to update on another very successful year for the company.
“Organic customer growth of 16% and net inflows of £5.8bn over the year, with £1.2bn of net inflows in the last quarter alone, once again demonstrates the strength of our dual-channel platform, with both advised and D2C channels performing very well.
“Advised platform inflows were strong throughout the year and customer numbers grew 15% as advisers helped their clients to navigate significant market volatility. Net inflows for the final quarter of £0.9bn were in line with the previous two quarters, with advisers continuing to utilise the breadth of our product offering and growing suite of investment solutions to meet a wide range of client needs.
“Despite the challenging economic backdrop, our business model continues to perform exceptionally well. We have a talented and experienced management team in place that is focused on achieving our growth ambitions in the investment platform market. Together we are extremely excited about the long term prospects for AJ Bell.”
Phil Dobbin and Rae Maile, analysts with investment bank Panmure Gordon, said: “AJ Bell’s flow performance in Q4 has matched our expectations and has certainly demonstrated a better performance in the most recent quarter than others.
“There was, as anticipated, a sharp slowdown in flows in the D2C platform, but the resilience of the Advised platform is a key differentiator for the business.
“Our estimates are unchanged at this stage. The company has continued to deliver material growth, but the rating has fallen back to levels which do not do justice to the track record. BUY.”
::
Dechra Pharmaceuticals, the Northwich-based vet products group, issued an update ahead of its AGM this morning, saying the board remains confident in the ability of the business to continue delivering against its strategic growth drivers and to achieve current market expectations1 for the 2023 financial year, the phasing of which is expected to be second half weighted.
Trading in the first quarter of the financial year, relating to the three month period to 30 September 2022 was, as expected, below the prior year against a challenging comparator, which was due to the elevated levels of market growth during the COVID-19 pandemic and the phasing of price increases.
Operationally, integration of the two US acquisitions made in July and August 2022, has been successful and the group’s cost base and supply chain remain tightly controlled.
Dechra will announce its interim results on February 27, 2023.
Dr Mike Mitchell and Dr Julie Simmonds, analysts with investment bank Panmure Gordon, said: “A brief update from Dechra in conjunction with today’s AGM sees the company remaining confident of delivery against strategy, and of achieving current market expectations for FY2023.
“Dechra recently updated a company-compiled assessment of analyst forecasts and against the consensus estimate for group underlying EBIT of £191m, our £188.0m forecast looks in line.
“As we have noted elsewhere in the veterinary pharma sub-sector, prior year comps are challenging due to the strength of market growth during the COVID-19 pandemic, however, given our existing view on operational performance we maintain our estimates. We expect Dechra to release a half-year trading update on 12 January 2023, in advance of interim results due on 27 February 2023.”
::
C4X
Manchester-based drugs discovery business, C4X Discovery Holdings, and Shanghai Stock Exchange listed company HitGen Inc, have announced a research collaboration project to identify novel, small molecule hits against an inflammatory target for further C4XD development.
The aim of the project is to augment C4XD’s growing pipeline of small molecule inflammatory disease candidates for pre-clinical development and out-licensing to the pharmaceutical industry. In this initial collaboration, C4XD and HitGen have developed an approach for HitGen to apply its DEL screening technology platform to identify hits against a commercially valuable target for inflammatory diseases.
If successful, C4XD will then apply its molecule design Conformetrix technology to translate these hits into suitable starting points for a small molecule programme, which can then be progressed through C4XD’s rigorous Drug Discovery process. C4XD has the option to extend the collaboration with HitGen during this Drug Discovery phase to leverage HitGen’s growing R&D capabilities.
Dr Clive Dix, CEO of C4XD, said: “In line with our strategy to collaborate with innovative technology partners, C4XD extensively evaluates the small molecule discovery landscape and builds relationships with high potential complementary companies. We believe this collaboration with HitGen gives us access to a world-leading screening technology, which perfectly complements both our Drug Discovery expertise and Conformetrix technology and could enable C4XD to unlock a highly challenging target in inflammation. We are looking forward to working with their team and continuing to build on this exciting relationship.”
Dr Jin Li, chairman of the board and chief executive of HitGen, said: “C4XD is a highly innovative company and has developed some very high-value assets using their proprietary Conformetrix technology. Combining their expertise with HitGen’s world leading DNA-encoded library technology platform, we look forward to identifying good starting points for further development into valuable leads for the inflammatory target. We hope the collaboration could eventually turn into a strong partnership to deliver a number of solutions for highly unmet medical needs.”
Dr Julie Simmonds and Dr Mike Mitchell, analysts with investment bank Panmure Gordon, said: “This partnership marks a new approach to expansion of the C4XD pipeline, with a focus on novel compound scaffolds; if successful we believe these novel molecules could be more attractive to out-licensing partners. The partnership has the potential for expansion. We maintain our BUY recommendation.”
