The schedule is now out for Mello, and it’s looking pretty packed:
A reminder that tickets can be purchased here, and the organisers have given us a discount code M25Simpson50 to get 50% off ticket prices. See you there!
Here’s a selection of what we looked at this week:
Goldplat (GDP.L) - Q3 Operating Results
Ghana is doing well with investments in plants to meet demand and clear the built-up inventories. However, high-grade material from South America has been sent to South Africa to utilise capacity there, which means operating profits are down. The FX moves have been much more favourable than recently, which means the underlying performance is much more similar:
Ghana achieved an operating profit for Q3 of £684,000 (FY Q3 2024 - £1,499,000) and a profit before tax for Q3 of £784,000 (FY Q3 2024 - £820,000).
South Africa is struggling as usual, only breaking even despite sending South American material there instead of Ghana, although there is a timing aspect to this, and Q4 should benefit more from this switch:
The South African operation achieved an operating profit for Q3 of £10,000 (FY Q3 2024 - £119,000) and a loss before tax for Q3 of £15,000 (FY Q3 2024 - profit of £70,000) and was supported by stable production, improved cost management and the increasing gold price. South Africa's performance continues to be impacted by a reduction in supply from current mining operations.
Sounds like cost savings and some new supply agreements should improve SA in the future, though. With the lower tax rate in Ghana, they should have generated around £650k PAT for what has undoubtedly been a tough quarter, meaning this remains probably the cheapest stock on the UK market on an earnings basis. They continue to flag potential shareholder returns:
The focus remains on further reducing inventory levels in Ghana, whilst increasing cash on hand, progressing the approval of the TSF pipeline, continuous cost management efforts in South Africa, increasing market share in South Africa and expanding in Brazil. This should provide stability in working capital requirements and ultimately enhance the ability to return cash to shareholders.
However, until the money is in their bank accounts, investors continue to doubt them, given the history.
Inspiration Healthcare (IHC.L) - Preliminary Results
Loss-making and increasing net debt, despite a placing in the year, is not a good look:
· Group revenue of £38.3m (FY24: £37.6m) up 1.7% on prior year
· Gross profit reduced by 8.4% to £16.4m (FY24: £17.9m) as gross margin declined to 42.8% (FY24: 47.5%)
· Adjusted EBITDA1 of £0.2m (FY24: £2.0m)
· Adjusted operating loss2 before non-recurring items of £1.9m (FY24: loss of £0.4m)
· Operating loss of £14.7m (FY24: loss of £4.9m)
· Operating cash outflow of £1.5m (FY24: inflow of £2.0m)
· Net debt3 (excluding IFRS16 lease liabilities) increased to £8.3m (FY24: £6.0m)
They claim a good start to FY26, and improved cash flow from releasing inventory. However, inventory doesn’t look elevated, receivables are higher than the previous year, but even if they were paid, it wouldn’t really change the financial situation by much.
At least the debt is funding working capital, so it is likely to be more supported by the banks than funding losses with no assets. It does sound like there are a couple of pretty big orders in the bag for the next year, which will help. Although we can’t see a quantified order book to verify this. They say:
We start FY26 with a strong order book and continue the back-to-basics actions to gain further efficiencies and improve customer satisfaction.
We have no idea what the issues are, but that seems critical. Some things are easier to recover from than others. The biggest problem is that on a forward P/E of 60.7 for FY26 and 13 for FY27, it is not exactly cheap, given the track record of this business.
Logistics Development Group (LDG.L) - Portfolio NAV Update
Things seem to be going well here:
As at 31 March 2025, LDG's unaudited estimated net asset value ("NAV") per share was £0.246 which reflects an increase of 10.25% compared to the prior period being 31 December 2024. Post the Tender Offer, with the subsequent cancellation of 110,526,315 Ordinary Shares, the unaudited estimated NAV was £0.261 on the same basis.
Until you realise that:
The NAV, in respect of private investments, has been assessed and reported to the Board by the Company's investment manager, DBAY…
And 98.54% of the investments are now private:
React (REAT.L) - Interim Results
The idea behind this company seems sound. There’s a big pool of small specialist cleaning businesses available to buy at cheap multiples. They're better businesses than you might think, with a large chunk of repeat/recurring business, and the margins are ok compared to more standard cleaning businesses.
However, the reality seems far removed from this. After a huge section about how great they are, we get the profits warning:
In light of prevailing sector specific and global economic pressures extending business decision cycles, particularly for higher value contracts, the Board is adopting a cautious approach to conversion of new business in the second half of FY 2025 and results are now expected to be below market expectations.
The management team here are nothing if not innovative, converting 'adjusted EBITDA’ directly to EPS is pretty impressive:
· Basic (loss)/earnings per share of (1.18p) (H1 2024: 0.41p), reflecting an incremental increase in amortisation and depreciation as a direct result of the acquisition of 24hr Aquaflow Services.
· Adjusted EBITDA earnings per share of 6.07p (H1 2024: 6.02p).
The thing is, an adjusted EPS excluding acquisition-related amortisation would probably be fair, but by quoting an adjusted EBITDA per share, it’s pretty obvious they think their real results are subpar.
It gets worse when we look at the organic results with revenue £9.3m vs £10.6m in the last H1, with organic EBITDA pretty much halving. That’s not great for a company claiming 85% repeat or recurring revenue. There appears to be a big mess in this company, and it seems they may need a specialist cleaning team to deal with it.
Crimson Tide (TIDE.L) - Second Interim Results
We’ve been critical of their own-developed software amortisation period a in the past, especially for mobile apps, and they did shorten it a little, but it sounds like they have now fully bitten the bullet:
Our Balance Sheet has experienced a revaluation of our software intangible asset to reflect a desire to shorten our amortization period and reduce the valuation of legacy software. Our goal is that capitalized development cost is similar to the amortized value on an annual basis reflecting continual improvements in our product.
Other than that, the main update is:
During the period, we did not add new recurring revenues at the level we hoped. Part of the reason for this was due to management time being diverted onto corporate work, while part was due to customer signature delays and lengthening sales cycles.
With £2m of net cash, it is not immediately toast. Although if it keeps losing an underlying £500k every six months, it will be eventually. There just doesn't seem to be a sustainable scale of business in here, which makes it even more bonkers that shareholders turned down the merger with Checkit. At least they could have reduced admin costs to slow the demise, and the shareholders could have consoled each other.
That’s it for this week. Have a great weekend!
Goldplatt the company that never fails to disappoint. Just look at the chart. I hold - unfortunately
Gentle cynicism at some accounting practices and and the oblique company statements is the forte of this Substack. Congrats.