Fundamental AIM portfolio constituent, Jarvis Securities, announced a 69% increase in its second quarterly interim dividend to 11p, reflecting continuing strong trading for the stock broker as it benefits from the volatile environment. While the full year forecast dividend remains unchanged at 30p, equating to a yield of more than 5%, the suggestions are that this may be materially lifted if trading continues to be strong, as seems likely.
The share price of Halfords has continued to climb from March lows. As a provider of essential services, the UK’s leading provider of motoring and cycling products has remained open during the lockdown period, albeit under more restrictive conditions. The stock market is clearly encouraged by Halfords’ essential status pushing the shares back to September 2019 levels.
New arrivals to AIM over the past few months have had very different experiences, with one benefiting from the challenging corporate environment but others not so lucky.
The share price of Brickability Group, a distributor of construction materials, languishes well below its August 2019 IPO price, which looked reasonable value at the time, although plenty has happened since. As the construction sector gets back to work and with a more diversified offering than before, the group should be well-placed to progress.
Inspecs Group, the designer and manufacturer of eyewear frames, arrived on AIM in February and has seen its shares fall 12% from the IPO price. Thankfully the group’s factories in China and Vietnam are now almost back to full production capacity, although most of their retailer customers have been forced to close during the lockdown, with opticians among the first to be closed due to the close proximity to their customers.
Contrastingly, FRP Advisory Group, one of the UK’s largest restructuring firms, has seen its shares soar over 60% since arriving on AIM in March. Its services should unfortunately continue to be in high demand as the corporate world struggles.
Focusrite, the global audio products group and another constituent of our AIM portfolios announced in-line results for the six months ended 29 February 2020. Consumer demand for some of its products has been high, especially via ecommerce, while demand for others has been affected by the lack of live music events. The timing of acquisitions made not long before the pandemic struck wasn’t ideal, but this remains a nice business delivering attractive margins.
Sage Group, a constituent of our general portfolios, announced interim results which highlighted the considerable resilience of accounting software in the current climate. Organic revenue rose 5.7% to £935m with recurring revenue up 10.3% to £826m, representing 88% of the total. With cash continuing to flow and plenty of available liquidity, the group is easily able to commit to an interim dividend of 5.93p per share, up 2.5%.
Dart Group, which operates airline Jet2.com as well as smaller logistics business Fowler Welch, announced that it has put in place a £300m commercial paper programme to access the government’s COVID Corporate Financing Facility. The facility will be used to provide standby liquidity, should that be required, and is currently unutilised. Executive Chairman and 36% shareholder Philip Meeson commented that, together with the fully drawn bank facility of £100m, these two sources of additional liquidity will provide the Group with sufficient firepower to deal with the present disruption. The company continues to be encouraged by the volume of customer bookings for summer 2021 and their associated pricing. Dart is a constituent of many of our AIM portfolios and we continue to believe that the group’s Jet2 businesses will come out of the crisis in far better shape than many.
To keep up to date with the coronavirus impact on these and many other companies please visit our associates Investor’s Champion.
Have an excellent weekend