XPS Pensions Group – 135p

28 November 2019 – interim results

Interim results have been announced.  Total revenue for the six months ended 30 September 2019 was £56.3m (2018: £52.2m).  Pensions Administration revenue was up 19%, Pensions Investments up 11%, NPT up 56% but Pensions Actuarial and Consulting and SASS/SIPP revenues were flat.  Adjusted EBITDA was £13.3m (2018: £12.0m) due to higher revenue as well as the adoption of IFRS 16 – Leases.  Lease expenses which were previously included in administrative expenses are now included in depreciation and finance costs and therefore excluded from EBITDA.  Adjusted fully diluted earnings per share were 4.1p (2018: 4.2p).  The figure for 2019 includes the impact of adoption of IFRS 16 – Leases.  Cash of £2.6m was generated from operating activities.  As at 30 September 2019 net debt was £65.7m (2018: £48.0m).  The interim dividend was held at 2.3p per share.  We believe that this is a very interesting niche business.  BUY.



The FTSE 100 has closed down 13.35 points at 7,416.43

Pressure Technologies – 96p

27 November 2019 – trial verdict

The specialist engineering group recently announced that a trial had commenced in respect of the intended prosecution by the Health & Safety Executive following a fatal accident at its subsidiary Chesterfield Special Cylinders in June 2015.  Trial proceedings have concluded and the jury has delivered a guilty verdict pursuant to Section 2 of the Health and Safety at Work Act 1974.  A sentencing hearing has been scheduled for 9 December 2019 and it is likely that a penalty will be determined at that time.  This unfortunate incident is factored into the share price.  The shares are a BUY.

Alliance Pharma – 78.6p

27 November 2019 – return of licensing rights

The international healthcare group has announces that it has reached agreement with Duchesnay Inc. of Canada to return the UK and EU licensing rights to Xonvea.  This is a prescription medicine for the treatment of nausea and vomiting in pregnancy where conservative management has failed. The uptake of Xonvea in the UK has been slower thanoriginally anticipated, in part due to the ongoing delay in the issuing of updated clinical guidelines.  The market for Xonvea in Europe has also become more competitive, making an EU rollout less attractive for Alliance Pharma.  Under the terms of the agreement signed with Duchesnay, the £2.0m in milestone payments made to date by Alliance will be repaid to the Group, £0.25m in 2019 and the balance in 2020.  Alliance Pharma will continue to make Xonvea available to patients in the UK for up to 12 months to assist Duchesnay with the transition to a new licensee.  Non-underlying inventory provisions and associated restructuring costs in connection with the return of the Xonvea rights will be approximately £1.9m in the year ending 31 December 2019.  However, planned investment in Xonvea in 2020 and beyond is now set to be diverted into growth brands and international operations.  This means that there is no overall change to underlying trading expectations as a result of the decision.  We keep our BUY rating.

STM Group – 31.5p

27 November 2019 – trading update

The cross border financial services provider has provided an update on trading, with 2019 revenue expected to be approximately £23.0m.  Reported profit before tax is expected to be approximately £3.8m, with underlying profit before tax of approximately £2.5m.  The outlook for 2020 will also be impacted by slower new product revenue and the additional ongoing costs.  New business levels at Carey, which was acquired in February, have been hit by rebranding taking longer than expected and the application of the Carey Master Trust to The Pensions Regulator being more complicated than anticipated.  This is a significant blow but given the current valuation of the company there must be scope for recovery.  We now rate the shares as a SPECULATIVE BUY.

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