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Read on to see an article posted on the OMG blog on 25 April 2021:

Party on

The FTSE 100 lost -1.1% to 6,938, while the FTSE 250 eased -0.63% with the Aim All Share improving + 0.92%. The rate of economic  recovery maybe slightly higher than expected as shops open Retail Sales comparatively surge and the Composite PMI jumped to 60 from 56 . The CPI Inflation (Consumer Price Index) increased to 0.7% in March from its February’s low of 0.4%  which would be an alarming pace of acceleration if it  were  to continue. The Governor of the BOE made little reference to increasing Interest Rates any time soon or before  Q2 of 2022  a message  that  is  open to divergent  market implications.

The Red Flags are from the States with  an Interest Rates set  to be left unchanged  at 0.25%,  but  with Increasing Consumer Confidence and GDP set to improve to 6.5% from last quarters 4.3%.  A hint that US rates may increase could be  first  signal that the  world Covid Recovery party is beginning to  end. In the meantime, if  the Indian Covid crisis  can be  ignored the rest of the worlds  recovery party is in full swing.



WSG  – 4.2p-   Long Covid recovery

FCCN – 20.5p- Creditor mercy

PEN  – 45p – Much Improved


SAR – 2.1p –  Well  Drugged up

AVCT – 233p – Covid-19 test potential

BYOT – 7p – Accelerating profitability

Buy Now - £72.60/year



Westminster Group plc (AIM: WSG)

4.2p (4.1p-4.3p)

Mkt Cap:  £12m

Next Results: Finals Friday 30th April

The finals to December 2020 from this supplier of managed services and technology-based security solutions worldwide start including the benefits of the oversubscribed £5m placing at 4p with warrants at 7p. The funds provide working capital to support the growth and delivery of the pipeline of near-term potential major projects and together with recently secured contracts these should  start being closed  also for the current year the removal of debt, saves around  £0.3m in annual interest and fees.

Westminster supply over 900 products, available equipment for security solutions, covering; Screening, Metal Detection, Barriers, Surveillance and Inspection and Search that  cover land , sea and air. There is a diverse range of customers in 78 countries across 6 continents including National Governments, Sports Stadia, Educational Facilities, Conference/Exhibition Centres, Shopping Malls, Financial Institutions, Hospitality Sector and Medical Centres etc.  Despite the new funds conversion has been moderate but an expanded £750,000  order  was closed for an existing UK  Home  builder client  for guarding and security services. It is providing Rapid Deployable Walkthrough Metal Detector, system to a London College.  A repeat order was provided to a theatre in Wiltshire with a number of WG 420s for body temperature detection.  A Tanzanian company was supplied with several radiation meters to use with their existing X-Ray Scanners.  A leading global investment management corporation was supplied with a range of fever screening and safety equipment for deployment to its worldwide offices as part of its ‘Return to Work’ programme.

The Interims, before the funding reported a 24% increase in Revenue to £7m and a PBT of £0.24m compared to an £0.8m loss demonstrating the robust business with multiple revenue streams from various sources around the world. The issue is that orders can be large and are often delayed there are currently several large-scale, long-term projects under discussion in various parts of the world, some even under signed MoUs, any of which if secured would be transformational.  As a distributor there is high operating leverage so when the orders are closed with average GP margins of 40%, its profits can grow faster than costs.  The Trading update in March had a Covid cautious spin on the H2 2020 as it was a more challenging period due to the prolonged impact of Covid lockdowns and travel restrictions. This delayed the signing of various anticipated contracts and the delivery of various contracts already signed. So, finals reported on Friday revenues is expected at around £10m (2019: £10.9m) but due to improved margins still expect to deliver a pre-tax loss broadly in line with market expectations.  Then we should anticipate that coming out of Covid and when travel restrictions lift the revenue to grow as the large transformation contracts are closed.



The balance sheet is debt free with significant saving being made on interest payment.


Trading Strategy

Ignoring these finals but the rebound could be swift once the ‘eminent’ contracts are closed, so a speculative buy.


Last OMG! 10p



French Connection (LSE: FCCN)

20.5p (20- 20.75p)
Market Cap:  £19m

Next Results Finals Wednesday 28th April

You know FCUK fashions for its woman’s, men’s, and kids’ clothes but over recent years the brand has been stretched to cover home furnishings from glass to furniture to rugs. The Finals to January 2021 will be reported on Wednesday 28th April.  It distribution is grounded in bricks and mortar rather than clicks, so at the Interims to July 2020 the chairman stated that, ‘it has undoubtedly been the most difficult trading period that the Group has ever faced’…..  but  then it got worse with the second closure in November even worse as this was followed by the January to March shutdowns.

The acute Finance challenges have been solved by kicking the ‘day of debt reckoning’ into the  post Covid future.  As suppliers had no option but to extend payment terms and increased discounts, its landlords agreed to rent holidays and deferred payments, while its factories reduced quantities and cut costs and HMRC payments were rescheduled.

The interims to July  reported revenue down  51.3% to £23.9m which is  understandably  due to Covid. The underlying loss of – £12.2m compared to – £3.6m in 2019, as the sales declined resulting additional one-off stock provisions, mitigated by cost savings across all areas. Its wholesale revenues were £13.8m, down (49.3%), reflecting the closure of customers’ stores in all regions although some deliveries continued to on-line operators.  Retail revenues were £10.1m, down (57.6%) (2019: £23.8m), reflecting both the lockdown period but also the permanent closure of nine retail locations in the first half. Despite this the company have been able to secure the financing required to hopefully bridge the extended period of uncertain consumer demand but the revival in sales may take 12-18 months.

The shares rallied from 11p in February when the company started a formal process to find a buyer, but led to no formal offers as maybe the potential buyers, perhaps after looking at the books, concluded they could wait and get it cheaper.



Arguably there could be sufficient funding in place particularly if sales start to surge. As a US$6.5m loan was recently added with the Flushing Bank, NY USA which is for a period of 5 years with repayments commencing from the end of the 3rd year.  The NAV is £16.2m of which £14m is an intangible  ‘right of use’ licence and the stocks have built up to  £26m but there is  £25m that  is  becomes  payable to creditors who force the issue.


Trading Strategy

 Avoid for now as sadly, there are too many ways for shareholders to loss during a restructuring.


Pennant International (LSE: Pen) 46.5p   finals were delayed a week to Wednesday 28th . It provides an extensive range of technical training solutions and software products & services to clients around the world in the commercial, government and the defence sectors. Its orders tend to be lumpy playing havoc with setting revenue expectations and results have disappointed more than be a pleasant surprise. For Wednesday’s Finals Trading is expected to have improved significantly in the second half helped by the cost reductions of around £1m.  Pennant expects to make an EBITDA profit of approximately £1.0m with a £0.3m Operating Profit, contrasting with the Interims to June 16% revenue decline to £6.3m, a £2m EBITDA loss with a LBT £3.6m (loss £1.8m). Cash generation is strong and net cash is estimated at £2m and with the HSBC increased overdraft to £4m, sufficient   finance seems in place for the anticipated recovery. Buy 

Buy Now - £72.60/year




Sareum (Lse: SAR) is a UK based specialist drug development group listed in 2004, and  recently reported it Interims to  December. SAR  is  biotech researcher of small molecule therapies designed to treat various diseases, including autoimmune diseases, cancer and covid. It reported  substantial progress despite Covid  challenges and the price improved to 2.15p from 1.6p in March to  a £70m Mkt Cap.  There is a a validated track record of developing chemicals to clinical stage drugs   to a $300m licence deal and an experienced management team, with a deep understanding of molecular design, drug development. There is a strong pipeline of clinical and preclinical drug assets that address emerging, high value disease targets. SAR  is currently advancing therapies for autoimmune diseases (SDC-1801), cancers (SDC-1802) and covid (SDC-1801) which received a Research & Innovation grant of £174,000 awarded in December 2020 for six-month research project to investigate therapeutic potential of SDC-1801 in severe phase Covid , with results expected mid-year 2021.  Loss on ordinary activities for the six months ended 31 December 2020 (after taxation) of £0.55m and net cash was £1.3m and further funding seems likely. Wait for weakness.

Affimer technology developer Avacta (LSE:AVCT) expects to gain the CE mark for its AffiDX SARS-CoV-2 antigen lateral flow test and then launch the test in May. Forecasts do not include any income from these tests, which could be distributed in 25 European markets. This could test could become worth more than all the company’s other products and assets. There is capacity for between 5 million and 30 million tests to be produced each month. The test could conceivably generate £500m in revenues in a full year without utilising all that capacity and the gross margin could be more than 30%. finnCap’s low case estimate is that the test is worth £280m. The upside is considerably more.

The therapeutics part of the business is on course to start a phase I study for the AVA6000 treatment for solid tumours, the first treatment from the pre|CISION platform, in the third quarter. Cash is not concern because there should be net cash at the end of 2022 even though spending is being increased and this does not include the potential cash flow from lateral flow test sales.

There was a £1.7m write-off of intangible assets relating to the animal health business. This has been restructured and is back to breakeven. This is a non-core business that could raise a small amount of cash if sold. The share price slipped back to 233p after the 2020 results, which is nearly covered by the low case scenario and the other assets. Positive news later in the year about the rate of sales of the Covid-19 test should push the share price higher. Buy for the Covid-19 test growth and the longer-term potential of affimers.

Antimicrobial technology developer Byotrol (LSE: BYOT) confirmed it is on course to make a £1.5m pre-tax profit on revenues of £11m in 2020-21 and finnCap has introduced 2021-22 forecasts. Net cash was £1.7m at the end of March 2021 and it is forecast to grow to £2.8m one year later. The 2021-22 earnings are expected to grow by 23% to 0.39p a share. That is based on modest growth in revenues to £11.2m, which is based on flat product revenues as monthly sales return to more normal levels. There could be additional upside from additional licensing income. Byotrol should become an increasingly cash generative business and, at 7p, the prospective 2021-22 multiple of less than 15 is too low for a company with such growth prospects. Buy.

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