Trading Update

Rockwood Strategic PLC

03 October 2024

 

Rockwood Strategic plc
("RKW" or the "Company")

Trading Update

Rockwood Strategic plc (LSE: RKW) today provides an update ahead of publication of its unaudited results for the six months ended 30^th September 2024 (the "Period").

Highlights

-     NAV Total Return performance in the Period of 22.7% to 252.7p per share, which compares to a fall in the FTSE AIM All-Share of -0.4% and an increase in the FTSE Small Cap (ex-ITs) of 13.2%.

-     Total Shareholder Return in the Period was 21.4%.

-     NAV Total Return performance in the three years to 30^th September 2024 of 48.3%, which compares to the FTSE Small Cap (ex-ITs) of -5.83% and the FTSE AIM All-Share of -40.5%. The Total Shareholder Return in this period was 67.6%.

-     The Company's shares traded at an average premium to NAV of 4% in the Period and ended the Period at a 1% premium.

-     Significant investor demand resulted in the issuance of 3,243,573 new shares in the Period, increasing the share count by 10% and, alongside performance, growing NAV to £87m. NAV has now grown 137% in the last two years, building scale. Net Cash at Period end was c.£3m, 3.4% of NAV.

-       Twenty-one Period end holdings, with the top ten investments cumulatively representing 68% of NAV. Of these, nine are AIM listed, representing 33% of NAV.

-       Four new portfolio investments purchased during the Period, two sold. Full details will be provided in the Company's Interim Report.

Portfolio Highlights

-       The largest holding, Funding Circle Holdings plc, rose 217% as they announced the successful sale of their loss-making US operations, a 'stream-lining' initiative leading to UK profitability for the first time, and significant share buy-backs.

-       Filtronic plc rose 88% due to significant profit and revenue upgrades as a result of a reaching a strategic partnership with Elon Musk's SpaceX and related new orders.

-       New holding Capita plc announced the disposal of Capita One Ltd for £180m, materially reducing debt.

-       RM Group plc announced a significant contract win with the International Baccalaureate Organisation and solid Interim results.

-       James Fisher & Sons plc completed the important disposal of RMS Pumptools for £90m, reducing their leverage considerably.

-       Pressure Technologies plc announced exchange of contracts on the sale of its PMC division for an EV of £6.2m, focusing the group on the Chesterfield Special Cylinders business and strengthening its balance sheet.

-       Difficult trading, mainly due to external factors, was experienced at Centaur Media plc, Flowtech Fluidpower plc and Hostmore plc. The latter we sold as the debt levels were too high. We also exited Young & Co's Brewery Plc, where the shares were received as part of the takeover of City Pub Company Plc.

-       During the period we were heavily engaged with material Board developments at Pennant International Group plc and provided some more investment to support the business as it pivots to software solutions. We also supported Argentex plc which has gone through a profit, strategy and management reset, which whilst disappointing, should still eventually deliver our target returns. We also backed an acquisition by Facilities by ADF plc, a new holding, which appears set for considerable profit growth in the provision of production facilities to the U.K.'s Film and Television industry.

-       Finally, trading updates were positive at both M&C Saatchi plc and Galliford Try Holdings plc, the latter outlining exciting new medium term financial objectives.

Richard Staveley, Fund Manager, Harwood Capital LLP said:

"We are pleased to have navigated a volatile period for UK small companies delivering strong NAV growth and further outperformance of peers and relevant indices ahead of our target returns. The change in Government has raised widespread concerns about the future taxation of gains made from investing in the British stock market, and potential changes to other reliefs that may restrict risk capital finding its way into the UK's most promising small companies. We hope sense prevails. We remain focused on finding the very best opportunities in this inefficient market. We are excited about the prospects for our undervalued holdings in the quarters and years to come, where self-help and valuation upside are the primary drivers of return."

For further information, please contact:

Rockwood Strategic plc Chairman	Noel Lamb	020 7264 4444
Harwood Capital LLP Investment Manager	Christopher Hart	020 7640 3200
Singer Capital Markets Advisory LLP	James Maxwell James Fischer	020 7496 3000

 

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