DWF Group – 70p

29 May 2020 – trading update

The legal group has revealed that its business suffered more than expected in April from the effects of coronavirus and so profits for the year to 30 April will be lower than previously expected.  Previously the group had expected revenue growth of between 15% and 20% for the year but this actually emerged at 11%.  The group has seen activity levels increase in May and helped by strong cash collections in April net debt at the year end was £64.9m, a little better than expected.  The group has implemented the previously announced cost reduction programme and is looking at extending this.  The company has also announced that Sir Nigel Knowles, the current chairman, who is well known in legal circles is to take over as CEO.  Although the statement is a little disappointing, the downturn comes as little surprise given the circumstances and with the shares having halved in the last three months we believe they are a BUY FOR RECOVERY.

Character Group – 240p

28 May 2020 – interim results

Interim results have been announced.  For the period ended 29 February 2020, turnover was £51.7m (2019: £58.8m) and profit before tax was £2.5m (2019: £5.6m).  Adjusted basic earnings per share were 9.60p (2019: 20.98p).  Diluted earnings per share, on the same basis, were 9.58p (2019: 20.67p).  The business remained highly cash-generative throughout the period, with net cash held at the end of the period of £16.8m versus £18.6m a year earlier.  Since March 2020 Covid-19 has deeply impacted sales.  Many retailers in the UK and overseas closed their shops and stores and the distributors for international markets substantially scaled back their operations. Although online channels have remained open the overall impact of the pandemic has been severe.  Nevertheless, the company has a strong balance sheet and should bounce back relatively quickly.  The shares are a LONG TERM BUY.

Tandem Group – 245p

28 May 2020 – trading update

A trading update has been provided although it remains difficult to predict how the year as a whole will turn out.  The impact of Covid-19 on trading has been mixed.  Bicycle sales have been materially higher, with revenue 77% ahead of last year and the forward order book significantly higher, although restocking quickly enough has been a problem.  Online sales have also been strong and outdoor products have sold well.  The national retailer business has been hit, with the majority of toy shops closed and there has been a material impact on revenue.  National retailers have also been slower to place new orders and the national retailer order book is approximately 21% behind last year.  Overall, revenue is slightly ahead of the prior year but the overall order book is approximately 3% behind last year.  The company expects revenue to fall behind the prior year during the summer period.  A further update is anticipated at the AGM on 25 June.  We feel that the shares remain cheap and 2020 should be a very profitable year.  BUY.

Surgical Innovations – 1.3p

28 May 2020 – trading update

The company has announced a trading update revealing that due to Covid-19, group revenues in the first quarter of 2020 were down 25% compared with last year, although in April the decline in revenues had increased to 70%.  This level of decline is likely to continue for the second quarter as a whole as elective surgery using the group’s equipment is either cancelled or postponed.  The group has taken action to reduce costs with 85% of the staff furloughed by 1 May at which time the group had cash balances of £1.65m (1 January 2020: £1.28m).  All unnecessary expenditure has been suspended and senior staff have taken pay cuts of up to 50%.  The company has also reorganised its credit facilities providing enough liquidity to take the company through the current crisis.  Before the pandemic hit, the group was making gains in market share and as and when the market gets back to some sort of normality it hopes these will continue.  In the short term there is little to go for in the shares but we believe that at the current level they are a SPECULATIVE BUY.

Ramsdens Holdings – 141.5p

27 May 2020 – second interim results

Results for the twelve months to 31 March 2020 have been released.  Revenue was £59.5m versus £46.8m in the same period a year earlier.  Underlying profit before tax was up 19% to £8.0m (2019: £6.7m).  Net assets increased by £4.1m from 31 March 2019 to £35.0m and at the period end net cash was £11.1m.  Given the ongoing impact of the Covid-19 pandemic available cash resources are being preserved and no second interim dividend has been declared at this time.  We keep our BUY rating.

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