PFG revs up, MCRO special dividend & CINE - Interims

Updates today from three stocks I have written up in the past - see the categories list to the right of the blog for links to these.

In pole position on the grid we have an acquisition of Duncton Group from Provident Financial Group (PFG) and a small placing of £120 million of new stock to finance it. The Moneybarn operational brand that comes with it was founded in 1992, provides car finance to non-standard customers in the UK, operating mainly through brokers with additional distribution sourced through independent car dealers and from its website directly to customers. The business offers secured car loans, predominantly through conditional sale agreements and with the car typically used for necessities such as travelling to work rather than for luxury or discretionary purposes.

Provident Financial said in its announcement about the acquisition:

"The acquisition of Moneybarn broadens the product offering to the group's target customer base and creates a third leg of earnings that complements the organic growth opportunities available to the group. Moneybarn's origination has been muted recently, given funding constraints, and this leaves scope for growth going forward. The board believes that the business is highly scalable, given the strength of broker relationships and market leading credit decisioning, combined with the strength of the group's balance sheet. Potential opportunities for synergies with the group's existing businesses, including enhancements to underwriting and collections capabilities, the development of a business-to-consumer proposition and leveraging the Vanquis Bank customer base, will be evaluated post-acquisition."

They also mentioned that it will be immediately accretive to underlying earnings just on the basis of refinancing the £144.8 million of debt that comes with it. The price of seems reasonable at around 6x the stated pro forma EBITA of £20.3 million.

Overall seems like a sensible addition to their range of products at a reasonable price which enhances earnings immediately and provides scope for further synergies from enhanced underwriting, collections and cross selling to opportunities to existing customers.

Meanwhile Micro Focus (MCRO) have announced an in line interim management statement and a proposed return of value to shareholders of 60 pence per share, totalling approximately £84m ($140m) in cash. This is equivalent to around 7% of the recent share price of 864 pence - nice. The shares will undergo a consolidation when this is paid and shareholders will be able to choose whether to receive it as income or capital. This is in addition to the 3%+yield from the regular dividends that they are also expected to pay this year. On the outlook they said:

"Management's outlook remains unchanged from that given in the preliminary results for the year ended 30 April 2014 issued on 19 June 2014. We believe we have a strong operational and financial model that can continue to provide strong returns to shareholders. The model requires low single digit revenue growth in the medium-term and we remain confident that this can be delivered.

If the exchange rates experienced in the year to date were to continue for the remainder of the year, the comparative revenues for the year ended 30 April 2014 would increase from the reported $433.1m to $435.2m on a constant currency basis."

Finally today we have had interim results from Cineworld (CINE) - which seem to be fairly steady as they go about integrating after the merger with Cinema City. The figures are therefore a bit messy but they seem to have outperformed a fairly subdued cinema market in the period which was hit by the World Cup and a slower release schedule as a result. They have also suggested that synergies are now expected to be £5m of which £2m has already been achieved, although that doesn't seem that bigger deal in the context of an £800 million+ market cap.

They edged up the dividend by 2.7% to 3.8p on a rights adjusted basis and they are expecting a strong second half release schedule so they seem OK if a little dull on a P/E of 14x and a yield of 3.4% but they do have some more growth opportunities in less developed markets now.