Thursday February 14th 2019

Thursday February 14th 2019

Legal publishing – Blockchain software - Marketing agency - Electricity-generating boilers
- Energy supplier - Traffic telematics – Marine technology –
Waste management

Law Business Research | Cygnetise | Collider £6m | Flow Group £98.8m | Good Energy £90.4m | Trakm8 £26.8m | SRT Marine Systems £11m | O’Donovan Waste Disposal £19m

News about 8 UK growth companies and/or accelerators + turnover in the GRID marketplace 29th October - 4th November 2017:

LAW BUSINESS RESEARCH: Legal publishing - London
£150m for law data service | Sunday Times. October 29.
DZ profile: Law Business Research Limited
Business: information source used by thousands of lawyers, which publishes journals and legal rankings. Titles include publications such as Latin Lawyer. It also sets up events for lawyers around the world.
Launched: 1996
Location: London W11
Founders: Richard Davey, Callum Campbell and Sebastian O’Meara, a former BBC journalist
Investment: sold the business to BOWMARK CAPITAL, a buy-out firm, in 2013 after a period of rapid growth
News: Bowmark Capital has appointed DC Advisory to work on a sale of Law Business Research, which could be about to change hands for up to £150m.

CYGNETISE: Blockchain software - London
Blockchain app raises £1m | Sunday Times. October 29.
DZ profile: Cygnetise Limited
Business: Blockchain software developer. The company’s app helps businesses to manage their authorised signatory lists and cut the risk of fraud. Founder: “We are potentially the first UK company to launch a live commercial application utilising blockchain technology.”
Launched: 2016
Location: London
Founder: Steve Pomfret, chief executive
Investment: raised £1m of seed funding - private investors contributed half of the funding; the rest was provided by CALIBRATE MANAGEMENT. Had a pre-funding valuation of £6m

COLLIDER: marketing agency - London
Entrepreneurs: Collider boss is London events kingpin who’s popping up all over town | Alex Lawson, The Evening Standard. October 30.
DZ profile: Collider Limited
Business: marketing agency which boasts a client roster of corporate titans including GOOGLE, LAND SECURITIES, ASTRAZENECA and UNILEVER. Also ALL3MEDIA. Collider began by specialising in handling launches, growing that arm through the 2015 acquisition of Shoreditch’s COMMUNICATION BY DESIGN, and is increasingly offering live experiences, putting brands on the street A recent campaign for tortilla brand MANOMASA saw branded pop-up Latin American bars spring up around London. Digital and social media endeavours (boosted by acquisitions), and traditional advertising work, each make up a third of revenues.
Launched: 2003
Location: Bermondsey, London
Founders: Anton Jerges, chief executive and long-time business partner Del Manning. In the Eighties Jerges worked for two ad agencies. In 1997, he struck out with Manning, with agency QUDOS, homing in on launches, riding the dotcom bubble and growing telecoms market. After expanding, he and Manning sold out six years later, to focus on new product launches, repositioning brands and breathing life into consumer staples with Collider.
Staff: staff numbers have mushroomed from 14 in 2013, to their present 40 through acquisitions, gaining new business and hanging onto existing clients.
Financials: In the past three years annual turnover has tripled to £6m — it is set to near £7 million this year
News:
1. the first few years saw steady expansion but moving from Guildford, Surrey into London in 2012 coincided with fresh impetus and the acquisition spree.
2. TV industry veteran Tony Kelly was brought in as chairman, and its third significant shareholder.
3. It’s not been straightforward though: in 2015, Jerges’ team were floored when they discovered their accountant had skipped the country with company money.

Small-cap focus: retail energy minnows challenge the big six | Nathalie Thomas, FT. November 4.

Large electricity and gas suppliers in the UK have …. a proliferation of challengers trying to undercut them …now about 60 retail energy companies active in the market. At the same time, the government has threatened to cap
….recent results from some of the challengers, many of which are private or even council-owned, show that they, too, are finding the market tough amid intense competition for customers. Meanwhile, more than 80 per cent of households in the UK still do not switch despite the opportunity to save as much as £300. Listed challengers to the “big six” include:

FLOW GROUP: electricity-generating boilers - Suffolk
DZ profile: Flowgroup Plc
Business: originally focused on developing electricity-generating boilers. It entered the retail energy market in 2013 but had been trying to sell that business this year. After talks fell apart, it changed tack, raising £25m to help build the energy supply business and downsizing its boiler operation. As of June 30, the company had just over 255,000 customer accounts but has not been immune to the problem of “churn” — savvy energy consumers shopping around and leaving for cheaper rivals.
Launched: 1998
Location: Ipswich, Suffolk
Financials: Revenues £98.8m, Pre-Tax -£ 45.8m to 31-Dec-16. Revenues rose 71.6 per cent in the first six months to £71.8m, but like many other more recent energy market entrants, it is lossmaking. Pre-tax losses rose to £13.6m in the first half from £8m a year earlier.
Investment: share price has slumped from 10.75p a year ago to below 1p. It fell sharply before the change of strategy and fundraising in May, as the company warned of challenges to its boiler business. House broker CENKOS SECURITIES.
News:
1. Flow is reducing the cost of serving each customer and has outsourced some of its back-office operations in an effort to break even by the end of 2018.
2. It is also moving away from using price comparison sites, which charge commission, and is targeting new customers via telesales. It believes these customers will ultimately deliver higher value.

GOOD ENERGY: energy supplier - Wiltshire
DZ profile: Good Energy Limited
Business: Targets environment-conscious households that want to know 100 per cent of their electricity comes from renewable sources. It generates about 20 per cent of the power it supplies itself but it also contracts with 1,400 independent renewable energy developers.
Launched: 1999
Location: Chippenham, Wiltshire
Founder: Juliet Davenport
Financials: Revenues £90.4m, Pre-Tax £1.4m to 31-Dec-16. During the first six months of the year …Electricity and gas accounts fell 1 per cent ….Revenue rose 16 per cent to £52m but profit before tax fell 37 per cent to £700,000 as the company also absorbed restructuring and investment costs.
Investment: Floated on AIM in 2012. has been in a governance tussle with its biggest shareholder, rival green energy supplier privately-owned ECOTRICITY which pushed for two nominees to be installed on its board after amassing a stake of more than 25 per cent. Good Energy’s chairman, John Maltby, described the plan as “unworkable” given that Ecotricity was a direct competitor and the  Ecotricity withdrew its proposal in August. 
News:
1. After a strategic review last year, the company has decided not to build any more solar or onshore wind farms, as government subsidies are no longer available for new projects. Instead it has pursued agreements such as one struck with Dong Energy, now ØRSTED, in March to secure output from one of the Danish company’s offshore wind farms.
2. Like several other smaller players that are finding the competition tough, Good Energy is no longer chasing high customer growth targets at the expense of its profit margin. It is improving efficiency and has already cut administrative costs by £1m, while it is exploring new sources of revenue, including helping businesses to lower their carbon footprint and developing battery storage technology.

From previous 2 weeks:

Small-cap focus: transport tech companies face rough seas | Nic Fildes, FT. October 28.

TRAKM8: Traffic telematics – Dorset
DZ profile: Trakm8 Holdings Plc
Business: Telematics - the “black box” installed in cars by insurance companies to monitor driving performance - company which also provides fleet management technology. Has contracts with DIRECT LINE and SHELL.
Launched: 2005
Location: Shaftesbury, Dorset
Financials: Revenue £26.8m, Pre-Tax £0.7m to 31-Mar-17. First-half revenue increased 12 per cent to £14.7m, with the growth rate rising to 24 per cent when £1m worth of low-margin contracts that have been discontinued are excluded. No profit guidance was given and last year’s performance, when pre-tax profit crashed 77 per cent to less than £300,000, provides cause for caution.
Investment: Listing/Admission to trading - 29 Nov 2005. Market - AIM.

SRT MARINE SYSTEMS: Marine technology - Bath
DZ profile: SRT Marine Systems Plc
Business: specialist in marine automatic identification system technology that is used to stop boats colliding. Once part of SECURICOR.
Launched: 1987
Location: Bath
Staff: Simon Tucker, chief executive, became interested when he overheard a man complaining loudly on a train about the owners of his company.
Financials: Revenues £11m, Pre-Tax £1.2m to 31-Mar-17. A half-year trading update showed that revenue has risen 10 per cent to £2.9m but that it will lose £1.7m in the period compared with 1.5m in the same period a year earlier. It had £2.1m of cash. Sales of its em-trak boxes for smaller boats have risen 60 per cent in the half. MEGABUYTE, the research company, predicts that SRT’s second-half revenue, which is heavily weighted to that period will rise by third year on year to £15m.
Investment: was bought out in 2002 for £535,000 by a team led by Simon Tucker. SRT floated on Aim in 2005 and the company is now worth £44m.
News:
1. Its shares have dropped a third since June, mainly after it booked a £1.5m impairment charge in July on the postponement of a major contract with a government in Southeast Asia. The company said the customer still planned to adopt SRT’s systems in time but the project would not restart until March 2018.
2. The company has taken a £10m credit facility with a hefty 9 per cent coupon to fund a new satellite system called Ocean-SCAN so that SRT can control and produce better vessel tracking data. It has only drawn down £200,000 to begin with to guard against project delays that have long been the company’s Achilles heel.

O’DONOVAN WASTE DISPOSAL: Waste management - London
My First Million — Jacqueline O’Donovan, waste disposal tycoon | Natalie Graham, FT. October 21.
DZ profile: O'Donovan (Waste Disposal) Limited
Business: construction and demolition waste
Launched: 1959. Company in its current form registered in 1988
Location: Tottenham, North London
Founder: Joe O’Donovan
Staff: Jacqueline O’Donovan, 49, became managing director in 1990, after restructuring the business to continue the legacy of her father. Left school at 16 and a few months later her father died aged 51, leaving her and three older siblings with the task of scaling down and running the business. The 12-strong workforce of 1988 has today expanded to 160.
Financials: When she took on the company at 19, turnover was £175,000; by 2016, that had risen to £19m. Made first £1m profit 
News:
1. …brother Michael is chief executive. He purchases the assets and looks after the demolition arm of the company. Anthony and Caroline are operations directors. ….sister is in charge of skip hire, and Anthony oversees our five depots.
2. In 10 years’ time I would like to have doubled the size of the fleet and gone nationwide with the depots, and diversified into clinical waste and hazardous waste. There are a lot of people in this industry but I don’t think they come anywhere near us in terms of service, compliance and road safety.
3. The recession. …affected along with the construction industry, so …was scrutinising every area of expenditure, even diesel use. …did not make anyone redundant, but when people left or retired did not replace them, so everybody had to work longer hours. Turnover went down by 15 per cent, but profits went up, because had streamlined everything”