City round-up: JD Sports Fashions; Real Good Food; Flowtech Fluidpower; Frenkel Topping

The board of Bury-based sports and athleisurewear group JD Sports Fashions said it is looking at raising new funds to cover future acquisitions.

It was responding to reports last night (January 25) that it was in talks regarding a £400m share sale which could be announced later this week.

If the group proceeds with a fund raise, the new cash would go some way to bolstering the group’s acquisition reserves following the £491m takeover of Shoe Palace last month, a retailer based on the West coast of America.

Approximately half the purchase price was paid in cash.

In a Stock Market announcement this morning, the group said: “The board of JD Sports Fashion Plc notes the recent press speculation concerning the possibility of the group undertaking an equity capital raise.

“The board confirms that it is exploring additional funding options with a view to increasing its flexibility to invest in future strategic opportunities and that this may involve a non pre-emptive equity placing.

“A further announcement will be made as and when appropriate.”

However, the group later updated its response just after 4pm, saying: “The board regularly reviews its capital structure in light of its international growth strategy and confirms that at the current time there is no further relevant information to disclose in relation to an equity capital raise.”

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Real Good Food

Real Good Food, the Liverpool-based food ingredients business, said it has suffered throughout the pandemic lockdowns, in its half year results announcement for the period to September 30, today.

Revenues fell 26.4% from £32.423m last year to £23.877m this time round, while pre-tax losses of £3.975m compared with a pre-tax loss of £2.506m the previous year.

The impact of lower revenues was partially mitigated by cost savings, new business, and the Government’s furlough scheme. Underlying adjusted EBITDA was £0.3m (2019: £2.8m).

Net debt at September 30, 2020, stood at £45.1m, up from £39.9m at the same point last year, and 344.4m on March 31, 2020, being largely shareholder loans.

The credit facility with Leumi ABL increased by £2m to £10.9m to provide additional headroom during the difficult trading conditions.

The group said the impact of COVID-19 was most severe in the first quarter, during the first lockdown. However, with lockdown restrictions easing, it said it is pleasing to see that trading has improved in both its divisions with third quarter, post the interim period end revenues in line with financial year 2020, and board expectations.

The fourth quarter expectations within the Brighter Foods division remain positive, notwithstanding the latest national lockdown, while quarter four is traditionally a quieter period for cake decoration.

Executive chairman, Mike Holt, said: “Although the group inevitably had a difficult first half, due to the impact of COVID-19 and Brexit uncertainties, Q3 performance was much improved on the first half and in line with last year. Both our businesses are getting stronger and more resilient due to operational efficiencies made during the last 12 months.

“Once COVID-19 restrictions are lifted, Brighter Foods is well-placed to continue the growth reported in FY20 – capitalising on its additional capacity, market opportunities and new product innovation capabilities – and Renshaw should continue to benefit from its recent restructuring and greater focus on product innovation and customer service.”

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Flowtech Fluidpower’s Skelmersdale base

Skelmersdale-based hydraulics group Flowtech Fluidpower warned today that 2020 revenues will be lower than the previous year, in a trading update this morning.

It said that, in line with the challenging market conditions experienced as a result of the COVID-19 pandemic, it expects to report 2020 revenue of £95.1m, a 15% reduction against a 2019 figure of £112.4m. The majority of this reduction was seen in the components division.

Prior to the first national lockdown in March 2020, and in particular the closure of certain customer sites, revenue was slightly ahead of expectations. The impact of the pandemic resulted in April revenue being 41% down compared with April 2019 and the second quarter 33% down against that of 2019. Since April, revenues have recovered.

The first half was 22% down and the second eight per cent down against comparative 2019 periods.

Net debt at December 31, 2020 was £11.7m – comprising £10.8m net bank debt and £0.9m of COVID-19-related support from HMRC which will be repaid by the end of March 2021. This represents a £4.9m reduction compared with £16.6m at December 31, 2019.

The continued progress made with reducing underlying operating costs has ensured that financial performance has, in the circumstances the company has faced, remained satisfactory and provides a good base for the future.

However, it remains difficult to forecast accurately given the ongoing impact of, and uncertainty caused by, COVID-19.

Non-executive chair, Roger McDowell, said: “The continued focus on cash has put us in a healthier position to deal with the prevailing market conditions. Whilst not underestimating the difficulties, we are cautiously optimistic of improving performance in 2021.”

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Richard Fraser

Salford financial services firm, Frenkel Topping , has appointed the Right Honourable Mark Field as a non-executive director with immediate effect.

Mr Field is a former MP and FCO Minister who, during his tenure in UK Parliament, represented the prestigious central London constituency of the Cities of London and Westminster.

He held this position for more than 18 years, during which time he also served as the Minister for State at the Foreign and Commonwealth Office and as vice-chair of the Conservative Party. Prior to this, Mark practised as a corporate lawyer at Freshfields and also set up, ran, and sold Kellyfield Consulting, a specialist legal recruitment company.

Since leaving Parliament, he has embarked on a portfolio career which includes senior advisory roles to multiple public and private sector companies. Most recently, he has been appointed as chairman of Capital International Bank, a new digital bank based in the Isle of Man.

Richard Fraser, Frenkel Topping chief executive, said: “The board is delighted to welcome Mark to the group, he brings with him a wealth of business and advisory experience and we look forward to working with him as we continue to execute our growth strategy and consolidation of the PI and clinical negligence marketplace.”

Mark Field said: “I am thrilled to be joining the Frenkel Topping team at this exciting time in its development. I have been impressed by the ambitious future plans set out by the senior executives and look forward to working alongside them to achieve success in consolidating the personal injury and clinical negligence sector.”