Cineworld – 211.2p

16 December 2019 – acquisition

The company has announced its intention to acquire Cineplex, the largest cinema operator in Canada, for C$34 per share in cash.  This implies an enterprise value for Cineplex of C$2.8bn (US$2.1bn).  The deal is expected to be double digit accretive to earnings and free cash flow in the first full year following completion.  This further increases the scale of operations and the company could soon be knocking on the door for promotion to the FTSE 100.  We see no reason to change our BUY rating.

Keller Group – 675p

12 December 2019 – trading update

The group has issued a positive trading update for 2019 with the results for the year expected to be in line with expectations, whilst cash flow in the fourth quarter of the year has continued to be strong.  The APAC business will return to profitability in 2019 following its successful restructuring and the group now has a more focused strategy which will drive the withdrawal from non-core markets.  The group will return surplus cash to shareholders to maintain an efficient balance sheet and this is expected to lead to dividends of 40p for 2019 and 44p for 2020 putting the shares on an attractive yield.  We maintain our recommendation of BUY.

 

Belvoir Group – 123.5p

12 December 2019 – acquisition and trading update

Belvoir Group, which is the UK’s largest property franchise, has announced that wholly owned Belvoir Group subsidiary Newton Fallowell Limited has agreed to acquire the business and assets of the estate agency business operated by Lovelle Estate Agency Limited and Lovelle Bacons LLP.  This is a privately owned independent predominantly franchised estate agency network operating in Lincolnshire and the Humber region with 19 branches.  The overall consideration is £2.0m, to be satisfied in cash from existing cash reserves.  The acquisition will be earnings accretive in 2020. In the year to 31 March 2019 the acquired business made an operating profit of £500k and at that date had net assets of approximately £100k.  The shares remain cheap and are a BUY.

 

 

 

 

The legal form of the Acquisition is split into the acquisitions of specified parts of two separate legal entities Lovelle Estate Agencies Ltd (“LEA Ltd”) and Lovelle Bacons LLP (“LB LLP”) which are under the common ownership of the vendors.  Completion is expected to take place on 6 January 2020 in respect of LEA Ltd and on 20 January 2020 in respect of LB LLP.  LB LLP will continue to operate its surveying and commercial arms.

 

Current trading

Trading in the second half of the financial year to date continues to be strong, and the Board is confident that the Group is in line to comfortably achieve market expectations for the full year.

DWF Group – 122p

11 December 2019 – interim results and acquisition

The global legal business providing Complex, Managed and Connected Services, has issued its half year results for the period to 31 October 2019.  Net revenue was up 10% to £146.8m (2018: £133.4m) and underlying adjusted profit before tax £9.7m (2018: £9.4m).  This translated into adjusted diluted earnings per share of 2.6p versus 3.6p last year.  A final dividend in relation to the last full year of 1.0p per share was paid.  The first interim dividend for this year, 1.25p per share, is payable on 20 December 2019.  A second interim dividend is expected to be paid in February 2020 with the final expected to be paid in September 2020.  The dividend policy is to retain sufficient capital to fund ongoing operating requirements and to invest in long-term growth.  The target dividend pay-out ratio is up to 70% of adjusted profit after tax.  The acquisition of leading independent Spanish law firm Rousaud Costas Duran for up to €50.5m (£42.5m) in shares and cash, of which €7.4m (£6.2m) is payable in cash at completion with up to €15.5m (£13.1m) in deferred or contingent cash consideration has also been announced.  The shares remain a BUY.

 

Hargreaves Services – 287p

10 December 2019 – acquisition by Hargreaves Raw Material Services

Hargreaves Raw Material Services has acquired 94.9% of DK Recycling und Roheisen GmbH from DK Holdings GmbH for €1. The acquired business is based in Duisburg, Germany on a site adjacent to Hargreaves Raw Material Services’ CPP.  DK Recycling und Roheisen’s audited accounts for the year ended 31 December 2018 were prepared under German accounting standards and showed revenue of €135m, a loss before tax of €2.2m and net assets of €15.8m. After fair value adjustments to comply with IFRS, net assets are thought to be approximately €1. The principal adjustments relate to the recognition of pension liabilities, provisions against inventory, provisions for taxation liabilities and the write down of certain items of plant and machinery. The latest management expectation is that DK Recycling und Roheisen will break even for the year ending 31 December 2019.  This deal does not really affect our view on the value of the company and we keep our BUY rating.

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