City round-up: AO World; Surface Transforms; Nichols

AO World, the Bolton-based online electrical retail group, said it has received FCA (Financial Conduct Authority) approval for its £10m cash offer for Stockport’s musicMagpie business.

They announced the offer, by way of a Court-sanctioned scheme, on October 2.

Today (November 6), both parties say they are pleased to announce that the FCA has determined to approve the acquisition.

They add that the acquisition remains subject to other conditions including the scheme being approved by the requisite majority at each of the Court Meeting and the General Meeting to be held on November 20, the Court sanctioning the scheme at the Court Sanction Hearing, and the delivery of a copy of the Court Order to the Registrar of Companies.

The scheme is expected to become effective in Q4 2024 or Q1 2025.

The deal values musicMagpie at approximately £9,982,105, but at 9p a share is a sufficient premium on the closing price of 5.75 pence per musicMagpie shares as of October 1, 2024.

In 2021 musicMagpie floated on the stock market at 193p per share with a market capitalisation of £208m.

However, this year the business, which specialises in refurbishing consumer technology, disc media and books in both the UK and US, has been under offer since approaches from BT and private equity investor Auerlius Group, although those two suitors issued statements to say they were no longer in talks.

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Andrew Kitchingman (courtesy MPac Group)

Surface Transforms, the specialist brakes manufacturer based in Knowsley has announced that Andrew Kitchingman, non-executive chairman, has resigned with immediate effect.

He was appointed to the role on September 16, 2024.

It said Ian Cleminson will become chairman on an interim basis until a successor has been appointed.

Ian Cleminson said: “Andrew’s time with the company was unfortunately brief and we wish him well in his future endeavours.

“While short term business priorities are focused on operational improvements and tight management of cash, we are reviewing strategic opportunities to bring longer term financial stability to the company.”

In September the company revised down its full year forecasts, blaming a failure to hit growth targets.

CEO, Kevin Johnson, said at the time: “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.”

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Nichols, the Newton-le-Willows-based diversified soft drinks group and maker of the Vimto drink, has provided further details on its growth strategy, including new medium-term ambitions. 

Nichols’ management team will provide an update on the execution of the group’s strategy, providing insights into each business unit and the key growth drivers.

The strategy aims to create shareholder value by building a high margin, highly cash-generative, diversified business, leveraging the strength of the differentiated Vimto brand. 

In the medium term the group’s ambition is to deliver:

• Total revenues of at least £225m, representing a +30% versus FY24 consensus, – management believes FY24 analyst consensus is for revenue of £172.6m, adjusted PBT of £30.2m and an adjusted PBT margin of 17.5%.
• PBT margin expansion to 20%, representing a +250bps increase versus FY24 consensus.
• Profit before tax of at least £45m, representing +50% versus FY24 consensus.

The delivery of the strategy and financial ambitions are underpinned by a strong balance sheet, and a disciplined capital allocation framework focused on enhancing shareholder value. 

Nichols also revealed that current trading remains in line with management expectations.

Chief executive, Andrew Milne, said: “The delivery of our medium term financial ambition for creating shareholder value will be underpinned by our proven approach to innovation, focus on growing distribution in existing markets, expanding into new geographies, and investing in our brands.

“We are very excited by, and confident in, the growth opportunities that lie ahead.”