Thursday, 4 December 2014

API Group interims

API Logo

API Group PLC a global supplier of foils, films and laminates.  I have a holding in my growth portfolio (epic code: API).

API's interim results announced on 3 December had little seasonal cheer about them.  Revenues were £56.4m down 1% on last year, although they were up 1.6% at constant currency. 

The really bad news came in operating profits (excluding exceptionals) that were down 20% at £2.8m, caused by the Foils Americas division, where sales were down 24% causing a £0.4m loss compared to a profit last year of £1.1m.

Underlying EPS fell 37% to 2.4p and reported EPS also 2.4p was down 29.4%, although an interim dividend of 0.75p was declared, up 7.1% on last year.

Free cash flow showed an outflow of £(4.8m), compared to an outflow last year of £(2.9m), after payment of dividends of £1m, the net cash of £0.2m from the beginning of the year was reduced to a net debt of £5.7m. 

Management state that "...The Group has experienced tough trading conditions so far in the second half, with the outlook for profits this financial year slightly down on previous expectations..."

Management state that the expected slow recovery in metallic pigment orders at Foils Americas will be partly offset by the seasonally weaker second half in the US market for graphics foils.  There was little good news elsewhere - Foils Europe is experiencing sluggish markets on the continent, while Laminates have strong order levels, profits will be diluted by a weaker sales mix and  Holographics is expected to drop below break-even in the third quarter.

Not comfortable reading; I continue to hold at this stage and will review my position at the full year and decide then whether to cut my losses.


Anite interims

Anite plc

Anite is a global provider of hardware and software solutions, systems integration and managed services within its core markets of Wireless and Travel. I have a holding in my growth portfolio (epic code: AIE).

Anite released their interim results on 2 December.  Revenue was up 3.3% to £49.0m and adjusted operating profit up 89% to £5.1m.  A good turnaround, but on weak comparatives.
Adjusted EPS was up 117% to 1.3p, with reported EPS 0.1p compared to a loss last year of (0.5)p.  The interim dividend was increased by 9.6% to 0.63p.
Although group order intake was down 4.6% to £49.4m, it still produced a book to bill ratio of 1.
Free cash flow was strong up from £3.8m last year to £6.3m.  Following dividend payments of £3.7m and the net proceeds from the sale of the Travel Business less the acquisition of Xceed producing £20.8m the company's net cash position was increased from £6.1m at the end of last year to £29.8m.  Placing the company in a healthy position, along with its strong FCF to develop the business.
Management commented on outlook for the rest of the year "...Given the recent momentum we have seen across the Group and the specific opportunities identified for the second half, the Board remains confident of meeting its full year expectations..."
A step in the right direction in returning the business to meaningful profits and at today's price of 84p, places the company on 15x expected earnings for this year, still below the industry median.

Monday, 1 December 2014

Aberdeen Asset Management finals

A global investment management group, managing assets for both institutional and retail clients from offices around the world. I have a holding in my income portfolio (epic code: ADN).

Aberdeen Asset Management released their final results today showing that net revenues were 3.6% higher at £1,117.6m and underlying profit before tax had increased by 1.6% to £490.3m.

With a 5% increase in average shares in issue due to the SWIP acquisition, underlying EPS decreased 4.1% to 31.1p, with reported EPS down 13.1% to 22.79p due to increased amortization and acquisition costs.  A final dividend of 11.25p was declared, making 18.0p for the full year – an increase of 12.5% and covered 1.3x by earnings and 2x by free cash flow.  Aberdeen Asset Management have an excellent record of paying out increasing dividends as demonstrated by the chart below, where the pay-out was increased by 18% pa over this period.

Click on chart to enlarge

Free cash flow at £442.2m was 3% below last year and after paying dividends of £222m and purchasing £64m of their own shares net cash was improved to £653.9m.

AuM were £324.4bn, a £124bn increase that included £134.9bn added from the SWIP acquisition.

Click on chart to enlarge

Management stated in their outlook "...We remain confident that, over the longer term, we will be able to deliver attractive returns, both for our investment clients and our shareholders..."

ADN is a strong dividend payer with plenty of headroom within their level of cash generation and net cash balances.  Despite halving my position in early 2012, they still represent 8% of my income portfolio and, have performed well over the 8 years I have held them, both in terms of the SP and more importantly the 16% pa growth in dividends I have received.