AIM Income review - Hybridanhybridan.com/wp-content/uploads/2016/07/30th-june-2016.pdf · increased by 10.9% in FY 2016 to £1.06 million, with revenue up 12.6% to £10.10 million,

Source: www.iii.co.uk

Index multiples

Source: Bloomberg HYBRIDAN LLP 20 Ironmonger Lane, London, EC2V 8EP Website: www.hybridan.com Tel: 020 3764 2341 Email: [email protected]

AIMing for income

So what is the profile of a typical AIM quoted company? The market’s

detractors may argue that London’s junior market is peppered with cash

consuming companies that are not sufficiently advanced in their route to

profitability nor corporate governance regimes to justify their listing.

Supporters of the London Stock Exchange’s growth market would say that

the Alternative Investment Market is the world’s most successful market

for growing companies rewarding investors prepared to brave the risks of

earlier stage funding, and driving innovation and job creation. Neither

view suggests that AIM would be a fertile hunting ground for income

generating stocks. However a glance at the FTSE AIM All Share

constituents (Source: Fidessa) suggests that over 250 of its members or

circa a quarter of the market’s members pay dividends.

It is likely these numbers will be something of a surprise to some members. They

were to us. With AIM being over 20 years old it is a sign of emerging maturity. Such

a universe of stocks has a number of tax advantages for tax efficient income

investors, including the ability to wrap the stocks in an ISA, stamp duty exemption

and in some cases relief from inheritance tax.

The dividend payers on AIM come from a wide variety of sectors and we suggest

that some of the yielders on AIM offer a more exciting blend of growth and income

than some of the monolithic big cap cash cows that some may view as relatively

stable safe havens such as Persimmon the FTSE100 housebuilder which whose share

price has fallen over 40% in the aftermath of the Brexit referendum. Tesco scrapped

its dividend in early 2015 and Pharma giant GlaxoSmithKline is down circa 15% from

its May 2013 highs against a backdrop of critical patent expiries. There have been

similar underperformances amongst large cap financials, resource extractors and

even some utilities. These larger beasts are simply too big to defend against greater

macro trends.

Pennant International (LON:PEN), which amongst other activities supplies part

task trainers to military bodies has announced over £13m of contracts since 1st June

and is well placed to reinstate dividends in 2016 with consensus suggesting a 3.8%

yield and 7.3x PE.

Avingtrans (LON:AVG) is cash rich following the disposal of its Aerospace Division

and is well placed to fund the forecasted 1.9% yield and make selective acquisitions.

Petards Group* (LON:PEG), the developer of advanced security and surveillance

systems, is enjoying strong cash flows and has net cash on the balance sheet, which

could allow a dividend to be introduced which we believe could help drive a re-rating

from the current year diluted PE multiple of 6.6x.

With uncertain economic times ahead we like the look of value footwear retailer Shoe

Zone, which is upgrading its format, and generates strong cash flows. The 5% plus

yield is more than 1.5x covered with operating cash conversion in excess of 100%.

Reviewed by Derren Nathan * Denotes a corporate client of Hybridan LLP For analyst certification and other important disclosures, refer to the Disclosure Sectio

FTSE 100 CY2016 CY2017PE 16.0 13.7EV/Sales 1.5 1.4EV/EBITDA 9.0 8.1Dividend Yield 4.4% 4.6%

FTSE 250 CY2016 CY2017PE 14.5 12.9EV/Sales 1.4 1.3EV/EBITDA 9.9 9.0Dividend Yield 3.2% 3.4%

FTSE AIM All Share CY2016 CY2017PE 26.3 17.1EV/Sales 1.2 1.1EV/EBITDA 12.8 9.2Dividend Yield 2.0% 1.1%

AIM Income review

30 June 2016

2

Page

1. Company profiles ...................... 3

1.1 Bioventix ...................... 3

1.2 Best of the Best ...................... 4

1.3 Norcros ...................... 5

1.4 InterQuest Group ...................... 6

1.5 Shoe Zone ...................... 7

1.6 Castings PLC ...................... 8

1.7 DX Group ...................... 9

1.8 Hargreaves Services ...................... 10

1.9 Juridica Investments Limited ...................... 11

1.10 Aeorema Communications ...................... 12

1.11 Ibex Global Solutions ...................... 13

1.12 Prime People ...................... 14

1.13 Central Asia Metals ...................... 15

1.14 Getech Group ...................... 16

1.15 Jarvis Securities ...................... 17

1.16 Charlemagne Capital Limited ...................... 18

1.17 Entu (UK) ...................... 19

1.18 Fusionex International ...................... 20

1.19 Nahl Group ...................... 21

1.20 Andrews Sykes Group ...................... 22

1.21 Highland Gold Mining ...................... 23

1.22 Pennant International Group ...................... 24

1.23 Petards Group ...................... 25

1.24 Avingtrans ...................... 26

3

1. Company profiles

We take a closer look at some of the income paying stocks on AIM below as well as some that could potentially join that list.

Priced week of 20 June 2016

1.1 Bioventix (BVXP) 1005.00p £50.76m

1 year performance

Source: Fidessa Bioventix is a biotech company which deals with the production and engineering of antibodies specialising in the

development of high-affinity sheep monoclonal antibodies (SMAs) for use in immunodiagnostics. In FY 2015 profits

before tax were up 39% to £3.1m, off revenue increases 23% to 4.3m from the previous financial year. Revenues from

the core business which produces many chemicals including testosterone and progesterone remained robust and have

provided “a firm base for the growth that has come from vitamin D.” Growth continued to be strong in the six months

ending December 2015 allowing for a 50% hike in the interim dividend. The cash pile grew by £0.8m to £4.6m.

Company Fundamentals

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield

30-06-2015 4.33 3.11 50.66p 19.8 0.4 40% 24.00p 2.4% Source: DigitalLook Consensus Forecasts

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 30-06-2016 4.80 3.60 57.30p 16.9 1.3 13% 40.20p 4.2% 30-06-2017 5.00 3.70 59.70p 16.2 3.9 4% 42.50p 4.4% Source: DigitalLook

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1.2 Best of the Best (BOTB) 189.00p £19.12m

1 year performance

Source: Fidessa Best of the Best PLC is a “Dream Car” company that operates in major UK airports, and has been doing so since 1999.

The company gives out a “Dream Car” every week, and has given out over £18m worth of cars to date. Profit before tax

increased by 10.9% in FY 2016 to £1.06 million, with revenue up 12.6% to £10.10 million, from £8.97 million the

previous year. This year, they have made a significant investment in digital marketing and commenced TV advertising, in

order to attract more people to their competitions. Their weekly car competition continues to be well received and to

drive sales. Dividends per share increase slightly to 1.30p from 1.20p, generating a dividend yield of 0.7%. The company

has cash of circa £1.2m.


Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 30-04-2016 10.10 1.06 9.70p 19.5 1.7 13% 1.30p 0.7% Source: DigitalLook Consensus Forecasts

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 30-04-2017 11.20 1.20 9.10p 20.3 -3.3 -6% 1.40p 0.8% 30-04-2018 12.10 1.40 10.70p 17.3 1.0 18% 1.50p 0.8% Source: DigitalLook

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1.3 Norcros (NXR) 194.00p £118.33m

1 year performance

Source: Fidessa Norcros is a group of businesses that supplies innovative branded shower taps, bathroom accessories, tiles and

adhesives, and has operations primarily in the UK and also in South Africa. Revenue increased slightly by 6.3% in 2016

to £235.9m from £222.1m the previous year, complemented by an underlying profit before tax increase of 40.2%, to

£15.4m from £11.0m in 2014. This was the seventh consecutive year of growth, with a full year dividend per share

increase of 17.9% to 6.60p from 5.60p. However, net debt increased substantially, by 128.9%, from £14.2m in 2014 to

£32.5m in 2015. This year, they acquired Croydex and Abode, two smaller companies, which has help them “further

progress towards [their] strategic growth target.” With likely Brexit headwinds ahead we have some concerns about the

level of dividend payments going forward.



31-03-2016 235.90 15.40 28.50p 6.8 -0.1 -87% 6.60p 3.4% Source: DigitalLook No Consensus Forecasts

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1.4 InterQuest Group (ITQ) 80.50p £29.24m

1 year performance

Source: Fidessa The specialist recruitment business InterQuest Group operates in high growth areas in the “new digital economy”. Each

of their individual brands focuses on jobs within an in-demand skill area: information security, analytics, digital, telecom,

or technology. In 2015, revenue was up 5% from the £150.6m of 2014, reaching £158.6m. The net debt also decreased

by 28% to £6.0m from £8.3m. Their net operating margins also improved from 21.1% to 22.9%, improving their ability

to generate profits. The total dividend, after a second interim dividend of 2p per share, rose to 3p per share for the year,

0.5p higher than the 2.5p of 2014.

The company has cautioned since the Brexit result but optimistically mentions that is somewhat protected from wider

recruitment trends due to its focus on hard to find niche candidates in rapidly growing sectors in the new digital

economy, but nonetheless expects results to be materially below market expectations.

Company Fundamentals Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield



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1.5 Shoe Zone (SHOE) 198.50p £99.25m

1 year performance

Source: Fidessa Shoe Zone is a footwear company operating within the United Kingdom and Ireland that sells shoes at low prices. Over

time, it has opened more than 500 stores in different cities and towns throughout the UK and Ireland, and now has over

4,000 employees. In 2015, revenue reduced by 3.5% from £172.9m to £166.8m, “reflecting the planned closure of loss

making stores and difficult trading conditions in H1 2015.” The recently announced H1 2016 results showed continual

rationalisation of its portfolio with 23 closures, investment in online and additions to larger format stores. There was a

slight increase in the interim dividend from 3.2p to 3.3p.




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1.6 Castings PLC (CGS) 445.00p £194.16m

1 year performance

Source: Fidessa Castings PLC is an iron castings and machining group which is based in the UK and supplies its products to overseas

customers (67%). It can undertake the design, including virtual analysis, of some iron castings, can produce prototypes

and pre-series castings using full production processes, and also produce serial quantities of the finished product. In FY

2016, the turnover of the group increased by £1 million, to £132m from the £131m of the previous year. In addition to

regular dividends the company deemed it appropriate to pay a special dividend of 30p. The Pension is unusually in

surplus but this cannot be shown on the balance sheet under IAS 19.



2015-03-31 131.27 17.55 31.80p 12.3 -0.6 -20% 13.30p 3.0%



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1.7 DX Group (DX.) 18.00p £36.09m

1 year performance

Source: Fidessa

DX Group is a British mail, courier and logistics company, with operations throughout the United Kingdom and Ireland

and more than 3000 staff. Comprising the group are three subsidiary businesses, which are DX Network Services Ltd, DX

Secure and DX Freight. It began trading on AIM on 27 February 2014. Major competitors include Royal Mail, Parcelforce

and Yodel. Revenue remained fairly stable from 2014 coming into 2015, staying at around £300 million, with dividends

per share increasing from 2.00p to 6.00p over the same time period. However, this will be much lower in the current

period following a November profit warning. A recent trading statement was ‘in line’ with expectations and expressed

confidence about the medium term outlook.


Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 30-06-2015 297.50 24.80 10.90p 1.7 4.2 2% 6.00p 7.0%

Source: DigitalLook

Consensus Forecasts


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1.8 Hargreaves Services (HSP) 170.75p £54.49m

1 year performance

Source: Fidessa Founded in 1994, Hargreaves Services is an energy company which sources, produces, handles and transports coal not

only nationally but also internationally, throughout Europe. It has historically generated income through a mixture of

acquisitions and organically. Dividends per share increased by 9.8% from 16.7p in 2014 to 20.0p in 2015, reflecting

strong gross revenue of £485.9m amidst a challenging coal market and broader energy market. Through the sale of

some of certain business divisions, net debt decreased markedly from £68.8m in 2014 to £1.0m in 2015, further

affirming Hargreaves focus on protecting the balance sheet when energy companies around the world are facing

difficulties. However, important to consider is that Hargreaves may face considerable challenges with regards to revenue

in the future, with the decreasing popularity of coal as a source of energy given low oil prices and the gaining popularity

of renewable energy sources. Hargreaves is exiting from thermal coal as part of its strategy and is seeking to extract the

maximum it can in cash from its existing assets.


31-05-2015 662.16 24.90 95.41p 1.8 -0.2 -24% 20.00p 11.7% Source: DigitalLook

Consensus Forecasts


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1.9 Juridica Investments Limited (JIL) 51.88p £57.24m

1 year performance

Source: Fidessa

Juridica Investments Limited provides strategic capital to both the business community and legal markets for corporate

claims. Fundamental to its success as a company thus far have been its connections to many reputable clients including

Fortune 1000 companies, inventors, and major universities. 2015 has not been kind to the company, with a huge pre-tax

loss of $49.16m adding salt to the wounds of the $5m loss they suffered the previous year. However, a decrease in total

debt from $150.1 million in 2014 to $90.8 million in 2015 is encouraging as the company continues its ‘run-off’ strategy

but dividends will be very much linked to the timing of the realisation of its investments and outcome of funded

litigations.

Company Fundamentals Year Ending Revenue ($m) Pre-tax ($m) EPS P/E PEG EPS Grth. Div Yield

31-12-2015 5.37 -49.16 -44.49¢ -1.4 0.0 n/a 7.40¢ 9.7% Source: DigitalLook Consensus Forecasts

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31-12-2016 46.03 8.37 7.53p 6.9 n/a 0% 38.36p 73.9% 31-12-2017 9.76 1.39 1.26p 41.3 -0.5 -83% 6.97p 13.4% Source: DigitalLook

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1.10 Aeorema Communications (AEO) 30.50p £2.76m

1 year performance

Source: Fidessa

Aeorema Communications is a live events provider. Dividends per share increased by 50% to 3p in 2015, from 2p the

previous year. Revenue increased by £159,976 to £4,934,560 in FY June 2015, remaining relatively flat. The company

has a net cash position and although H1 2016 revenue was slightly down a stronger second half is anticipated.


30-06-2015 4.93 0.38 3.52p 8.7 -0.3 -30% 3.00p 9.8% Source: DigitalLook No Consensus Forecasts

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1.11 Ibex Global Solutions (IBEX) 102.50p £40.50m

1 year performance

Source: Fidessa The business process outsourcer IBEX Global Solutions has been in existence for over 12 years, offering a range of

services that attempt to solve or ameliorate problems facing the everyday customer. It prides itself on four key values

which are the bedrock of its identity: integrity, respect, transparency and excellence. Its services are becoming more

popular and its revenues are increasing consistently, as illustrated by gross revenue of $238.8 million in 2015 compared

with $184 million the previous year.

H1 2016 showed positive trends in underlying profitability and revenue. The company is paying out a high proportion of

its revenues but is supported by an increasing proportion of recurring revenues. The interim dividend was 5.1c per share

down from 6.8c reflecting the non-recurrence of a large project. Gearing is relatively high with debt of $22.3m.


Year Ending Revenue ($m) Pre-tax ($m) EPS P/E PEG EPS Grth. Div Yield 30-06-2015 238.81 7.24 19.69¢ 7.6 0.0 379% 13.60¢ 9.0% Source: DigitalLook Consensus Forecast


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1.12 Prime People (PRP) 98.00p £12.02m

1 year performance

Source: Fidessa Based in the United Kingdom, Prime People plc is a global specialist recruitment business. It delivers both temporary and

permanent recruitment services to not only the UK and Asia, but also the rest of the world. FY 2016 showed good

profitable growth but with the dividend having gone through a step change (doubled) in 2015, was held flat in 2016.

Surveying the business environment, Prime People conscious of several macro-economic headwinds, including the UK

referendum on EU membership, turbulent emerging markets and other volatility that may affect its clients' hiring plans.

However, the Group continues to find opportunities for expansion and has successfully incubated new business lines

over the past twelve months while increasing productivity per head and diversifying outside the UK.



31 03 2015 16.65 1.44 9.28p 10.6 0.4 31% 8.84p 9.0%

31 03 2016 20.75 2.15 13.84p 7.1 0.1 49% 8.84p 9.0% Source: DigitalLook No Consensus Forecasts

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1.13 Central Asia Metals (CAML) 144.25p £160.92m

1 year performance

Source: Fidessa Central Asia Metals is a company which deals predominantly with resource exploitation in Kazakhstan, Chile and

Mongolia. In the last financial year the company achieved record copper production of 12,071 tonnes and also record

copper sales of 12,040 tonnes. Although gross revenue at $67.3 million was lower than expectations had previously

suggested, the company expects to produce between 13,000 and 14,000 tonnes of copper in 2016, and is projected to

have record gross revenues. With no debt and a low cash cost of production, CAML is in a strong position to continue

growing as a company. ‘The Company is confident that it has sufficient funds available to finance the dividend policy,

complete the capital expansion at Kounrad and provide the Company with the financial flexibility to support the growth

of the business.’


31 12 2015 64.41 32.75 20.21¢ 11.2 -0.2 -64% 12.50p 8.7% Consensus Forecast


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1.14 Getech Group (GTC) 25.50p £9.58m 1 year performance

Source: Fidessa Getech Group is an oil services business that analyses gravitational field strength and magnetic data in order to better

equip companies to refine their exploration strategies to obtain the maximum amount of natural resources possible.

Gross revenue increased in 2015 by £2.05 million to £8.64 million, a surprisingly excellent performance that defies the

current low oil prices. Getech has thus far weathered the low oil price well and delivered 2015 dividends per share of

2.20p, the same as in 2014, showing that even in tough market conditions, Getech can still prosper financially and

deliver to their investors. However the market rather caught up with the company at the interims which moved into the

red and no dividend was declared. Forecasts suggest a significant cut to the final dividend. More recently the company

has acquired a competitor by a mixture of cash and shares.


Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31 07 2015 8.64 1.99 5.77p 4.4 0.8 11% 2.20p 8.6% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31 07 2016 9.00 0.70 1.70p 14.7 -0.2 -71% 0.70p 2.8% Source: DigitalLook

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1.15 Jarvis Securities (JIM) 324.00p £35.60m

1 year performance

Source: Fidessa

Since 1984, Jarvis Securities has been providing retail and outsourced financial services, with it operating a number of

retail stockbroking brands. Results for 2015 for this company were positive, with a 7% increase in profit before tax to

£3.39 million, largely due to increased interest income. JIM also increased its dividends per share by 61% to 26.50p,

although 10p thereof was a special dividend to distribute an accruing cash surplus. Although dividends are projected to

decrease from the extremely high levels that they are at as of present, they will remain sizeable and provide a healthy

dividend yield of over 5%, enough for it to remain one of the highest dividend paying stocks on AIM. Since the year end

the company has executed a non-binding heads of agreement with a financial services company to launch a new

automated wealth management service on behalf of a third party. Jarvis will provide administrative services including

account opening, maintenance, trading, and trade settlement. Based on forecasts provided to Jarvis, the value of the

contract to Jarvis is estimated to be revenue of £277,500 during the first year, increasing to £943,750 per annum by

year three.



31 -12 2015 7.61 3.39 24.46p 15.0 2.0 7% 26.50p 8.2% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31 07 2016 7.70 3.60 25.60p 12.7 2.7 5% 17.30p 5.3% 31 07 2017 7.80 3.70 26.10p 12.5 6.4 2% 17.50p 5.4% Source: DigitalLook

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1.16 Charlemagne Capital Limited (CCAP) 8.75p £25.45m

1 year performance

Source: Fidessa The asset management group Charlemagne Capital Limited provides a broad spectrum of investment services in

emerging markets, with a particular focus on equities. Pre tax profit dropped significantly in 2015 to $0.45 million in

comparison with the $3.11 million of the previous year. Despite the difficult market conditions which the Group itself

admits it had had to face, the dividend remained stable and roughly the same as the past five years, indicating that

CCAP have sizeable cash reserves with which to repay their investors during the somewhat tumultuous years. The

dividend yield for 2015 was 7.8%, and is projected to increase slightly in 2016 to 8.0%. However with the group

positioning itself for a recovery in emerging markets that may still be some way off. However the balance sheet is strong

with reported cash of $17.7m.


31 -12 2015 24.79 0.45 0.80¢ 16.2 0.3 60% 1.00¢ 7.8% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 2016-12-31 19.16 1.44 -0.21p 0.0 n/a 0% 0.70p 8.0% 2017-12-31 22.63 3.96 0.44p 20.1 n/a 0% 0.44p 5.0% Source: DigitalLook

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1.17 Entu (UK) (ENTU) 67.00p £67.00m

1 year performance

Source: Fidessa Entu provide energy-efficient homes that reduce energy costs for the average person; in particular energy-efficient

boilers, windows and doors that allow people to substantially reduce costs of energy. Revenue increased to £99m in

2015 as opposed to the £92.3m of 2014. The company pays a sizeable dividend yield of 8.0%, covered nearly 2x.

However the language used at the time of the finals, and the earlier closure of the solar business suggests that market

expectations are on the optimistic side. The company remains debt free.



2015-10-31 99.03 7.48 10.70p 6.3 0.0 n/a 5.34p 8.0% Source: DigitalLook Consensus Forecast


31 07 2016 104.00 7.50 9.10p 7.4 -0.5 -15% 5.30p 7.9% 31 07 2017 109.70 8.10 9.90p 6.8 0.8 9% 5.30p 7.9% Source: DigitalLook

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1.18 Fusionex International (FXI) 140.50p £66.46m

1 year performance

Source: Fidessa Fusionex International is an IT and software group that specialises in Big Data and Analytics. Notable clients include

Jaguar and KLM. Fusionex is rapidly growing with H1 revenue growth up 38% to RM 43.5m and a next generation

product launch just under its belt. Cash is very strong but investment (both operational and capital) is likely to push the

company into losses this year. The house brokers are however maintaining that the dividend will not be cut despite the

suggestion of consensus forecasts below.


Year Ending Revenue (RMm) Pre-tax (RMm) EPS P/E PEG EPS Grth. Div Yield

30 09 20 15 77.04 28.37 58.02¢ 3.6 0.0 n/a 11.50¢ 3.4% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 30 09 2016 16.35 -1.32 -4.09p 0.0 n/a 0% 0.99p 0.7% 30 09 2017 23.48 -0.22 -2.27p 0.0 n/a 0% 1.10p 0.8% Source: DigitalLook

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1.19 Nahl Group (NAH) 238.25p £108.88m

1 year performance

Source: Fidessa

NAHL Group is a consumer marketing business which focuses on the legal services market. Its business can be divided

into 3 subsidiary businesses, those of personal injury, conveyancing, and critical care. Revenue from continuing

operations increased by 15.7% to £50.7m in 2015 from £43.8m in 2014 with operating margins up 1.8% points to

30.8%. The total dividend for the year was also up by 19% to 18.75p. The acquisition of Fitzalan Partners and Bush &

Company adds Critical Care to the portfolio. The acquisition strategy has moved the company into net debt of £8.3m but

strong cash flows suggest that this should be quickly repayable whilst maintaining dividends.


31 12 2015 50.72 13.95 25.60p 9.3 0.8 11% 18.75p 7.9%

Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31 12-2016 54.85 17.77 30.54p 7.8 0.2 33% 20.08p 8.4% Source: DigitalLook

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1.20 Andrews Sykes Group (ASY) 310.00p £131.01m

1 year performance

Source: Fidessa Andrews Sykes Group is a specialist hire company in the United Kingdom, and a supplier of pumping, heating and

cooling solutions. In the 2015 financial year, dividends remained stable at 11.9p. Revenue from continuing operations

rose by around £4 million from the previous year to £60,058,000, showing slow growth in contrast to the rapid growth

that the company experienced in previous years. However EPS still grew 16% to 22.03p. Cash inflow from operations

was £12.1m vs equity payments of £10.6m. The Group is facing challenging markets but is reasonably well diversified

across Europe and the Middle East.


Year Ending Revenue ($m) Pre-tax ($m) EPS P/E PEG EPS Grth. Div Yield

31 12 2015 24.79 0.45 25.00p 12.4 0.3 60% 11.9p 3.8% Source: DigitalLook No Consensus Forecasts

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1.21 Highland Gold Mining (HGM) 91.00p £295.95m

1 year performance

Source: Fidessa Highland Gold Mining is a mining company which bases operations in the Russian Federation, from where it mines gold.

It currently holds operations in the Khabarovsk, Zabaikalsky and Chukotka regions of Russia, as well as in Kyrgyzstan in

Central Asia. Operating profit in FY2015 saw a marked decrease to $22,413,000 from the $55,855,000, reflecting

challenging conditions in the precious metals market as a whole. However, the dividend per share remained constant at

4.5p. Q1 2016 showed a slight drop in production but an improvement in selling prices and the company is working

towards bringing new assets on stream. Dividends payments in 2015 were less than 20% of operating cash flows.


31 12 2015 276.18 13.89 -3.20¢ -41.2 0.0 n/a 4.5p 5.0% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield 31 12 2016 238.92 51.36 12.17p 7.7 n/a 0% 5.55p 5.9% 31 12 2017 266.61 70.60 16.66p 5.6 0.2 37% 6.94p 7.4% Source: DigitalLook

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80

90

100

110

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1.22 Pennant International Group (PEN) 52p £13.8m

1 year performance

Source: Fidessa 2015 was a tough year for the supplier of integrated logistic support solutions, products and services principally to the

defence, rail, aerospace and naval sectors and to Government Departments. Market conditions were challenging and

contract negotiations were delayed. As a result the final dividend was suspended preserving the company’s £1.1m net

cash balance. Trading so far this year appears robust with over £13m of contracts announced to date.

Source: Fidessa Company Fundamentals


31 12 2014 17.80 2.17 11.32p 7.4 0.1 76% 2.90p 5.5%

31 12 2015 9.89 -2.38 -8.71p -4.6 0.0 n/a n/a 0.0% Source: DigitalLook Consensus Forecast


31 12 2016 16.20 2.00 7.10p 7.8 n/a 0% 2.00p 3.8%

31 12 2017 17.20 2.20 7.80p 7.1 0.7 10% 2.17p 4.2% Source: DigitalLook

0

10

20

30

40

50

60

70

80

90

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1.23 Petards Group (PEG) 12.38p £4.3m

1 year performance

Source: Fidessa

The developer of advanced security and surveillance systems in April made an earnings enhancing acquisition of a

Automatic Number Plate Recognition provider and also provided a trading update suggesting a better than expected

start to the year. Petards enjoys strong cash flows and has net cash on the balance sheet, which could allow a dividend

to be introduced and/or the expansion of its acquisition programme.



31 12 2014 13.00 0.62 1.80p 6.6 0.0 n/a n/a 0.0%

31 12 2015 13.00 0.76 2.19p 5.6 0.3 22% n/a 0.0% Source: DigitalLook Consensus Forecast


31 12 2016 15.00 0.90 1.89p 7.1 -0.5 -14% 0.00p 0.0%

31 12 2017 16.00 1.01 2.08p 6.5 0.6 10% 0.00p 0.0% Source: DigitalLook

0

2

4

6

8

10

12

14

16

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1.24 Avingtrans (AVG) 165.00p £46.07m

1 year performance

Source: Fidessa Avingtrans is engaged in the provision of highly engineered components, systems and services to the energy, medical

and traffic management industries worldwide. Currently, the group has one operating division. Energy and medical:

engaged in the design and manufacture of safety critical equipment for the energy, medical, science and research

communities, including oil and gas extraction and processing equipment, nuclear process plant, machined and fabricated

pressure and vacuum vessels and components. The company has a solid balance sheet, net debt is currently in the order

of £6.1m and post the sale of the Aviation division this will become net cash of £47m. They also have a progressive

dividend policy, with a dividend per share for year end 31 May 2015 of 3.0p. The management have delivered this deal

and they have delivered on many deals over the last several years, both acquisitions and disposals. They have an

excellent track record and can take full credit for building up this Aviation division organically and will now focus intently

on the remaining divisions.


Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS

Grth. Div Yield

2014-05-31 60.26 2.53 14.10p 11.6 0.1 96% 2.70p 1.7%

2015-05-31 57.82 1.87 10.20p 10.9 -0.4 -28% 3.00p 2.7% Source: DigitalLook Consensus Forecast

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS

Grth. Div Yield

2016-05-31 21.85 0.30 1.00p 177.0 -2.0 -90% 3.05p 1.7%

2017-05-31 24.25 0.25 1.00p 177.0 n/a 0% 3.05p 1.7%

2018-05-31 30.65 1.30 7.90p 22.4 0.0 690% 3.10p 1.8% Source: DigitalLook Reviewed by: Derren Nathan

020406080

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