… averts a more immediate crisis but it is not the end game.”
Last Week …
… the FTSE 100 at 5702 increased by 3.9% with the FTSE 250 jumping 4.9%. The Aim All Share Index at 734 improved 3.7%. The purring catalyst is Euro debt relief as the pain is being shared widely and a trillion is being found with the Chinese committing support. Dreary UK economics largely played off the main stage while US GDP growth at 2.2 % supported the renewed optimism.
This week …
…. initially the focus is on Euro economic statistics where there are Retail Sales, Unemployment and PMI Indices. Disappointment here may be counterbalance by an improvements in US Jobless Claims and Productivity reported on Thursday. Market could fall back when detail is added to Euro debt restructuring plans.
Hangar 8 (HGR8) – £6.84m at 108p
Passenger jet manager and operator Hangar 8 says that it has benefited from becoming a publicly quoted company because it has raised the company’s profile. Hangar has increased the number of jets that it has under management from 19 to 32 over the past 14 months. There are 14 jets available for chartering and this part of the business is growing fastest. Charter rates are rising and the number of charter hours flown was 58% higher at 3,1813.
The benefits of using Hangar 8 include saving a jet owner 20% on their insurance costs and it can also provide fuel at lower prices. Hangar 8 has an airline licence so it does not have to pay VAT on the importation of a jet on behalf of an owner. Hangar 8 has a wide geographic spread of operations. Management fees are paid monthly and are based on the type of aircraft.
Revenues jumped from £10.9m in the year to April 2010 to £18.2m in the 14 months to June 2011. Most of the growth came from charter revenues, which grew from £8.19m to £14.1m.
The costs of restructuring the business in order to float and the costs of the flotation itself led to Hangar 8 reporting a loss in the 14 months to June 2011, even though revenues were 67% higher at £18.2m – although the pro forma comparatives are for a 12 month period. The underlying pre-tax profit was £636,000. There are plans to bring maintenance in-house, which should save money and could improve margin.
House broker Daniel Stewart forecasts that the profit will increase to £1.2m in the year to June 2012 – helped by that higher profile. Increased investment in staff and growing the business led to a cut in the profit forecast from £1.5m. The shares still trade on 7x prospective earnings.
Hangar 8 had £2.22m in the bank at the end of June 2011.
Hangar 8 has shown that it can grow organically and it plans to make bolt-on acquisitions.
Tristel (TSTL) – £15.8m at 39.5p
An infection control products supplier, Tristel’s figures for the year to June 2011 were in line with the downgraded expectations but there are positive signs for international sales this year. Tristel had already warned that the costs of investing in launching products for the personal care sector and delays in gaining regulatory approval in China and Germany would drag down profit, especially as revenues were slower than expected in coming through.
There were some initial sales of Crystel non sterile products to cosmetics and toiletries manufacturers but they only contributed £38,000 of the revenues of £9.29m, up from £8.76m the year before.
Overseas sales rose from £747,000 to £1m. Sales in China were £78,000 and these are expected to rise to £600,000 this year, while German sales are forecast to improve from £50,000 to £300,000. No further regulatory approvals are required for these sales to be achieved. This means that Tristel is on course to double overseas sales this year. This will offset falling revenues from cleaning products for endoscopes in hospitals. Last year’s underlying profit slumped from £1.5m to £500,000. Analysts forecast a recovery in profit to £1m giving a prospective P/E of 12x for the June 2012 year-end.
Tristel had net cash of £325,000 at the end of June 2011.
Telford Homes (TEF) – £37.3m at 77p
Housebuilder, Telford Homes has experienced strong demand for its flat developments from Malaysia and other overseas markets. This shows that London property is still an attractive investment opportunity for overseas buyers and there are also UK owner occupiers interested in buying. The Avant-Garde development in East London achieved sales of 124 units in three overseas markets plus 62 UK sales. There was a 30% increase in contracts exchanged, to 288, during the six months to September 2011. Telford is widening its geographic spread by looking for land in North and Central London.
A profit of £2.5m is forecast for the year to March 2012, rising to £7.5m in 2012-13 giving P/Es of 24 falling to 6.9x, while yielding 4.2% and 5.4%.
Telford says that it has enough cash and available bank facilities to finance the land purchases it requires to add to its development pipeline.
Energetix (EGX) – £19.95m at 30.75p
As planned Neil Bright (64) has retired and is not a significant shareholder. Earlier in the month two directors have bought £67,000 worth of shares in Energetix Group the day after the energy efficient products developer released its interim figures. Chief executive Adrian Hutchings bought 69,500 shares at 28.5p each, taking his stake to 17.4%, while chairman Clare Spottiswoode acquired 167,000 shares at the same price – the first shares she has bought since taking up the role. Energetix has two main businesses: microCHP boiler developer Genlec and back-up power generator Pnu Power.
Genlec intends to start supplying its Kingston boiler in the second half. The Kingston uses gas to make electricity in the home. It is made up of a boiler with a reverse refrigeration circuit and it also produces heat. A buyer could save £200 a year on electricity charges and can also generate income from feed-in tariffs.
Pnu Power is already selling its compressed air-based back-up power system and it is gaining repeat orders from National Grid with more to come in the future. Data centres are a market that is only just being addressed but it could be a significant generator of revenues. The first installation was in 2008 and there have been no failures when back-up power is required.
Sales are growing more slowly than hoped at voltage optimisation products developer VPhase, where Energetix owns 42.8%, but new deals should help them to increase over the next year or more. VPhase is no longer consolidated in Energetix’s figures but the value of the investment is adjusted in the balance sheet for its share of the loss..
There was a £1.19m cash outflow in the first half of 2011. Capitalised development spending increased from £392,000 to £560,000. There was £1.96m in the bank at the end of June 2011. Borrowings totalled £1.83m. Increasing revenues should help to reduce the cash outflow so the cash should last into 2012.