City round-up: Surface Transforms; Frenkel Topping; OTAQ; PRS REIT; Huddled; Kelso
Surface Transforms, the specialist brakes manufacturer based in Knowsley, has revised down its full year forecasts, blaming a failure to hit growth targets.
CEO, Kevin Johnson, said: “While we are delivering new highs in terms of output and revenues in 2024, the pace of growth is significantly behind plan.
“Revenues in Q3 are expected to be significantly down on plan and we have revised our output and revenue plans for Q4 materially downwards. As a result, revenues for the full year are now expected to be circa £11m which is significantly lower than current market expectations of £17.5m.
“The impact of delays to the pace of growth has led to operational inefficiencies and cash constraints. We continue to manage cash flows carefully and are reviewing all available funding options to enhance our cash flow going forward.”
He made the announcement in today’s unaudited half year results for the period to June 30, 2024, which revealed a 58% increase in revenues, to £4.7m, but a pre-tax loss of £7.6m, which compares with a pre-tax loss of £5.6m at this point last year.
In May the AIM-listed company raised more than £9.5m in an open offer for its shares. This was in addition to a £13.2m local authority loan – ringfenced for capital expenditure – which was announced on December 11, 2023.
Cash as at June 30, 2024, was £5m (H1-2023: £4.5m).
Mr Johnson said: “2024 continues to be a year with contradictory positions. Real progress on scaling up and delivering growth is being made, however the pace of growth is not as we had anticipated.
“Output and revenue have improved post period end, with volumes having more than doubled during Q3 compared to Q2. The key drivers for achieving this growth have been the delivery of capacity upgrade projects and process/equipment refinements which are leading to increases in overall manufacturing yield.
“The rate of growth in output and revenue growth is, however, slower than we had planned. H2 revenues are expected to be circa 40% down on plan, excluding engineering revenues. The key drivers that are resulting in a slower pace of growth are delays to enhancing capacity and also yield improvement projects.”
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Richard Fraser
Frenkel Topping, the Salford-based specialist financial and professional services firm, reported better unaudited interim revenues and an increase in funds under management (FUM), but revealed a decline in pre-tax profits for the period to June 30, 2024.
The listed group, which operates in the Personal Injury (PI) Clinical Negligence (CN) space, revealed that turnover rose from £16m in 2022, to £17.9m. FUM jumped by 15% to £1.455bn, but pre-tax profits fell from £2.428m to £1.741m.
Cash and cash equivalents stood at £4.1m, down from £4.9m the previous year.
Richard Fraser, group CEO, said: “There is much to be content with, in particular the performance of the group to drive FUM growth, the completion of the consumer duty review and the acquisition of Northwest Law Services Limited, which has been performing in line with expectations since completion in April 2024 and is well set for future growth.
“However, 2024 has, this far, not come without challenges, particularly within Partners in Costs Limited (PIC) where we have not yet been able to achieve the growth that management expected this year.
“The medium term prospects for PIC remain positive and the board is confident that this is a short term issue which it has taken swift action to address with a number of changes to processes and personnel implemented.”
He added: “As previously announced, PIC acted as a drag on the group’s overall performance in H1, mainly due to recruitment and technology implementation impacting its ability to handle increased workloads. Pleasingly, demand for PIC’s services is clear and with a considerable effort having gone in to address the short-term headwinds, the board is seeing PIC start to regain momentum.
“We are particularly encouraged by the growth in FUM during the period of £120m, a testament to the success of our group-wide strategy in recent years beginning to come to fruition and the hard work of our sales team.
“By comparison, in the previous full financial year FUM grew by £148m and the company is tracking well ahead of this.”
He said: “Somek & Associates continues to go from strength to strength, having increased our number of Medico-Legal expert witnesses by 17%, enabling us to handle an increased number of instructions in an area of high demand. This remains a key focus area and opportunity for future growth.
“Demand also remains strong within Care and Case Management and we continue to increase our headcount and geographical reach within this sector in order to expand and fulfil the further untapped potential. Having evaluated a number of potential acquisition opportunities in this space the board has resolved to focus on growing this business division organically.
“We are trading in line with revised management’s expectations and well poised to continue to make progress in growing the business in the medium term.
“The FUM pipeline going into H2 is encouraging and overall, the opportunity remains to consolidate its position as the leader in financial and professional services in the PI and CN space and that the vast majority of businesses acquired have integrated well and are performing to management’s expectations.”
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Lancaster-based marine technology group, OTAQ. saw revenues decline and pre-tax losses increase in its unaudited results for the six months to June 30, 2024.
Sales of £1.510m were compared with £1.801m a year ago, and a pre-tax loss of £884,000 was more than the £773,000 loss in 2023.
During the period, Live Plankton Analysis was commercially launched, and the first customer contract signed. The sale of 19 Sealfence units to a new customer was achieved, while the development of new overseas markets for Offshore products is beginning to provide results.
Post-reporting period, the firm achieved a successful fundraise of £1.79m of Convertible Loan Notes, with an additional £1m broker option available until 31/12/24.
It also repaid, in full, the £0.8m outstanding Cbils loan.
OTAQ shipped a £350,000 connector order in July to a key client, and a cost reduction exercise was implemented to provide annualised cost savings greater than £500,000, with more than £150,000 expected to impact in 2024.
CEO, Phil Newby, said “We continue to push into new markets both for our existing product range and for the newly developed products such as LPAS and Minnowtech, in both our connectors and aquaculture businesses.
“The identified cost savings will allow the group to focus on delivering against our key strategic goals, providing the funds to concentrate sales and marketing efforts to maximise the commercial impact of our newly completed developments.”
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Steve Smith
The PRS REIT plc, the closed-ended real estate investment trust that invests in high-quality, new build, family homes in the private rented sector, has joined the FTSE 250 Index today.
The company manages the UK’s largest build-to-rent portfolio of single family homes, with over 5,400 homes completed, mostly across the major regions of England (excluding London).
The business was created by Sigma Capital Group and its subsidiary, Sigma PRS Management
Ltd, is the Investment Adviser, responsible for the delivery and asset management of the Company’s portfolio.
The current portfolio is expected to be completed in the first quarter of calendar 2025 and will total around 5,600 homes with an estimated rental value once fully let of c. £66.5m*.
Steve Smith, Chairman of The PRS REIT plc, commented: “The PRS REIT’s entry into the FTSE 250 Index is a significant landmark and could not have been achieved without the backing of our stakeholders, including investors, banking and housebuilder partners, supporters in government and Sigma Capital Group. The UK’s lack of quality rental housing remains an acute problem, and we are proud to have successfully pioneered a new approach for delivering modern family housing at scale and to have created the largest single family build-to-rent portfolio in the UK.”
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Martin Higginson
AIM-listed ecommerce business Huddled has posted revenues for the first half of 2024 of £5,274,000.
Bolstered by the Nutricircle acquisition, trading in Q2 2024 saw solid progress delivering £3,130,000 of revenue for the period, an increase of circa 46% vs £2,144,000 in Q1 2024.
The Group reported an expected adjusted EBITDA loss of £1,550,000 for the period (net of £602,000 PLC costs), which it described as “the building blocks for future growth”.
Martin Higginson, Chief Executive Officer of Huddled, commented: “H1 2024 was all about investment and growth, expanding our offering and solidifying the foundations of the business. Alongside this, we were pleased to deliver continued growth in revenues exceeding £5m. The acquisition of Food Circle Supermarket, now rebranded Nutricircle, followed by Boop Beauty in Q3 have strengthened the Group’s e-commerce portfolio, and underpinned our commitment to saving surplus stock from going to waste. We have demonstrated to manufacturers and suppliers alike that there is an alternative, allowing customers to save money on some of their favourite brands, from coffee to cosmetics, perfumes to protein shakes. The positive comments we receive on TrustPilot, as well as the thousands of customers that come back month after month is testament to our strategy.
“H2 2024 is now about continued growth, while also driving efficiencies from shared Group operations and expertise, all of which we believe will deliver a profitable and sustainable business model.”
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Sir Nigel Knowles, DWF
Activist investor Kelso has presented unaudited interim results which have shown “mark to market” non-cash unrealised losses in the first half of £0.9 million. This was predominantly driven by the fall in THG shares between January and the end of June 2024.
Sir Nigel Knowles, Chairman, Kelso Group, said: “We are delighted to present our interim results in our second year as a UK focussed active investor, identifying, engaging and unlocking trapped value in the UK stock market. Our strategy delivered a 55% IRR in our first year and we are confident in continuing to outperform our target IRR of 25% going forward. Alongside our existing strategy, Kelso’s strategy will include investing in listed single company acquisition vehicles where we believe there is considerable upside. I would like to thank our shareholders for their commitment to Kelso.”
Kelso is also to seed its first acquisition vehicle, Selkirk Group Plc, a new single company acquisition vehicle, which it intends to list on the AIM market in due course.
