On first glance at Revolymer 's (REVO) half-year figures, the £4.4m "net utilisation of cash resources" - ors cash-burn - looks distinctly like a red flag for a company that ended the period with just £97,000 cash in the bank and £6m in liquid investments. Unpack those outflows, which were up from £1.2m in the same period in 2015, however, and £2m went on June's purchase of fellow polymer-focused peer Itaconix, and were further exacerbated by an absence of research and development tax credits.
Fortunately, the company cobbled together gross funds of £5.8m from its institutional backers after the end of the period to cover the cash portion of the acquisition. Subsequently, Itaconix landed the first post-deal sales of its water soluble polymer, CHT, to a large US retailer, which will use the product in a private-label automatic dishwashing detergent. The Aim-traded group will hope additional sales start to pick up soon. That's because prior to these numbers, Revolymer announced the divestment of its nicotine gum business - its sole source of revenues until September - to medicated chewing gum group Alkalon, in return for a 15 per cent minimum stake in the combined entity, rather than cash.
Analysts at Panmure Gordon are forecasting an adjusted pre-tax loss of £4.6m and a loss per share of 6.1p this year, narrowing to losses of £4.1m and 4.7p in the year to December 2017.
REVOLYMER (REVO) | ||||
---|---|---|---|---|
ORD PRICE: | 38p | MARKET VALUE: | £29.9m | |
TOUCH: | 36-40p | 12-MONTH HIGH: | 92p | LOW: 35p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 14p* | NET CASH: | £6.1m^ |
Half-year to 30 Jun | Turnover (£000) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2015 | 594 | -1.6 | -0.5 | nil |
2016 | 578 | -2.0 | -3.1 | nil |
% change | -3 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £9.6m, or 12p a share. ^Including investments at hand. |