Petards Group insecure with fundamentals downturn and profit warning

Jamie Gordon
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2
Petards Group insecure with fundamentals downturn and profit warning
Developer of advanced security and surveillance systems Petards Group plc (LON: PEG) posted a regression in their financial results and a profit warning, following a tepid first half. The Company’s order book slid down from £19 million to £15 million year-on-year during the first half, which led a dip in revenues to £8.9 million, down 8% on-year. Owing to their sales performance, the Group’s adjusted EBITDA narrowed from £1.085 million, to £0.766 million. Additionally, the Company’s pre-tax profit folded from £0.514 million to £0.206 million and their cash position swung from £1.0 million net cash to £0.7 million net debt.

Petards Group shareholders shared a similarly bleak overview, with diluted EPS contracting from 0.88p to 0.35p.

Petards Group comments

Raschid Abdullah, Chairman, said,

“The Group continues to benefit from a good order book which at 30 June 2019 included revenues of almost £7 million for the second half of 2019. This has been supplemented by orders received since June, the majority of which will benefit 2020.”

“There is also a strong pipeline of new contracts under negotiation which it is anticipated will add to the Group’s order book in due course. The Group continues to secure the majority of opportunities available to it, although more recently the timing of expected orders has been later than originally envisaged. Some of the Department for Transport (DfT) franchising decisions during 2019 have affected the timing of some orders.”

“The Board remains confident in the Group’s future prospects and expects to return a satisfactory, albeit lower than previously anticipated, performance for 2019 weighted towards the second half of the year.”

Investor notes

After dipping over 20%, the Company’s shares recovered slightly, now down 10.26% or 2.00p to 17.50p per share 19/09/19 13:36 BST. The Group’s p/e ratio is 9.70, their dividend yield is unavailable. Elsewhere in the tech sector, there were updates from; SCISYS Group PLC (LON: SSY), Pebble Beach Systems Group PLC(LON: PEB), ULS Technology PLC (LON: ULS), Midwich Group PLC (LON: MIDW), ProPhotonix Ltd (LON: PPIX), Frontier Developments PLC (LON: FDEV) and Gamma Communications PLC (LON: GAMA).

SCISYS posts ‘creditable’ first half as CGI takeover nears

Jamie Gordon
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3
SCISYS posts ‘creditable’ first half as CGI takeover nears
Supplier of software and IT services for space, government, media, commerce and defence sectors SCISYS Group PLC (LON: SSY) posted somewhat downbeat fundamentals alongside solid operational progress, ahead of their anticipated acquisition by CGI Group Holdings Europe Ltd. The Group was largely preoccupied during the first half by their upcoming takeover by CGI, with a cash offer of 254.15p per share being accepted in August.

There was some good financial progress to report on SCISYS’s behalf, with revenues rising 2% year-on-year to £29.4 million and their order book increasing from £92.2 million to £102.5 million on-year.

However, there was some downward movement in the Company’s fundamentals, with adjusted operating profit contracting from £2.5 million to under half that sum, at £1.2 million, for H1 2019. The overview for SCISYS shareholders was similarly tepid, with adjusted basic EPS narrowing from 6.1p to 2.2p on-year and the Group’s dividend yield decreasing from 1.60% to 0.95% during the course of the first half.

Operationally, the Company reported impressive progress. Their Enterprise Solutions and Defence division delivered ‘record’ first half results, Space division in Germany secured further Galileo ground segment orders of €9.7 million and their Media Solutions division registered a newsroom software deal with ‘a major European broadcaster’.

SCISYS Group comments

Mike Love, Chairman, said,

“We are pleased with our continued solid operational performance and my thanks goes out to the divisions and staff for achieving these results. Understandably, the takeover offer from CGI that was announced on 14 June significantly occupied SCISYS senior management and resulted in some exceptional expenditure. Notwithstanding this, we have delivered a creditable set of results for the period.”

“Our shareholders voted to approve the CGI takeover on 7 August which we expect to complete in the second half of 2019; we are currently working with CGI to obtain the necessary regulatory approvals for the bid to proceed to the final Court approval stage.”

“The business continues to perform in line with board expectations though, as already highlighted and in common with previous years, we expect our 2019 results to be more weighted towards the second half of the financial year.”

Investor notes

The Company’s shares stand at 254.00p per share 19/09/19 12:30 BST. Analysts from finnCap reiterated their ‘Corporate’ stance on SCISYS Group stock, their p/e ratio is 19.08. Elsewhere in the tech sector, there were updates from; Pebble Beach Systems Group PLC (LON: PEB), ULS Technology PLC (LON: ULS), Midwich Group PLC (LON: MIDW), ProPhotonix Ltd (LON: PPIX), Frontier Developments PLC (LON: FDEV), Gamma Communications PLC (LON: GAMA) and Maintel Holdings plc (LON: MAI).

Next sales rise, warns against warm September weather

Dina Caruso
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0
Next sales rise, warns against warm September weather
British retailer Next (LON:NXT) posted a rise in sales on Thursday in its half year results, though it warned that the warm September start has hindered sales more so than the prevailing political uncertainty. Shares in Next were down during trading on Thursday. Total group sales for the half year ending in July 2019 rose 3.7% to £2,058.8 million, compared to the £1,986.2 million figure reported a year earlier. Additionally, statutory profit before tax rose by 4% to £327.4 million. However, Next added in its half year results that the “the first few weeks of the Autumn season have been disappointing”. Indeed, Next said that the warm start to September has hindered sales to a greater extent than the political uncertainty which prevails as the nation approaches the extended Brexit deadline. “It is very hard to determine whether the uncertainty over Brexit is having any effect on consumer spending and we can find no evidence that it is affecting spending on small ticket price items,” Next added. “Some suggest that the fact of Brexit, of itself, might undermine consumer confidence. Certainly, the first few weeks of the Autumn season have been disappointing,” Next continued. “However, we believe that the warm start to September has done much more to hinder sales than the political temperature.” “Our experience is that political storms, of themselves, rarely affect sales and consumers only change their behaviour when those events directly impair their income or increase their non-discretionary expenditure. Our view is that Brexit will only materially affect consumer spending in the event that it triggers inflationary pressure on prices or logistical problems at our ports.” With the extended Halloween Brexit deadline fast approaching, the question remains – will the UK leave the European Union with a deal to prevent a spooky departure? Shares in Next plc (LON:NXT) were trading at -4.18% as of 12:33 BST Thursday.

UK retail sales drop in August

Dina Caruso
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0
UK retail sales drop in August
New data revealed on Thursday that monthly retail sales dropped in August. The quantity of goods purchased in August dropped by 0.2%, according to latest data from the Office for National Statistics. The data shows that non-store retailing contributed the largest to this fall, “partially offsetting the strong growth reported last month for this sector,” said the Office for National Statistics. “Non-store retailing was the largest negative contributor on the month, with the amount spent and quantity bought both contributing negative 0.3 percentage points,” the report said. Year-on-year growth shows that the quantity purchased in August 2019 rose by 2.7% – though this is a slow down compared to the stronger growth witnessed earlier this year, peaking at 6.7% in March. The data from the Office for National statistics also shows that department stores have now experienced 12 consecutive months of no growth in the sector. As the extended Brexit deadline approaches, the only thing certain is additional uncertainty. Will the UK be able to secure a deal by the deadline and prevent a chaotic departure from the European Union? Brexit uncertainty is a factor cited by many that has weighed on consumer confidence in recent months. Moreover, several British retailers have struggled for survival amid the difficult trading conditions to hit the UK high street. Earlier this month, retailer John Lewis posted a loss in its half year results as trading conditions for the British retailer “continued to be difficult”. It also warned that a no-deal departure from the European Union would have a “significant” impact on its business. “Should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate that impact,” John Lewis’ Sir Charlie Mayfield warned earlier this month in its half year results.

Diageo outlines sales outlook

Dina Caruso
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0
Diageo outlines sales outlook
The British multination alcoholic beverages company Diageo (LON:DGE) issued an update on Thursday ahead of its 2019 AGM. Shares in the owner of Captain Morgan, Tanqueray, Gordon’s and Guinness were down during trading on Thursday morning. Chief Executive Ivan Menezes said that Diageo continues to expect organic net sales growth to be towards the mid-point of the 4% to 6% range, with organic operating profit growing roughly one percentage point ahead of organic net sales. “This is consistent with what we are targeting over the medium-term,” the Chief Executive continued. Diageo underlined that, due to a strong prior year comparable, for the first half it expects organic operating profit growth to be in-line with or slightly behind organic net sales growth. “Fiscal 20 has started well as we continue to build on the momentum and consistent progress we are making in the execution of our strategy. Our focus remains on delivering quality sustainable growth. This is supported by a culture of everyday efficiency that enables us to invest smartly in marketing and growth initiatives while expanding margins,” Ivan Menezes said. The Chief Executive added that the company was closely monitoring changes to global trade policy as Diageo is not immune from any impacts this might have. “We would not be immune from significant changes to global trade policy and continue to monitor this closely,” Ivan Menezes said in a company statement. Earlier in July, Diageo reported an operating profit of £4 billion in its preliminary results. For the year ended 30 June 2019, operating profit rose 9.5%. The multinational alcoholic drinks company is the owner of Gordon’s gin. Indeed, it said that a strong growth in gin continued with Tanqueray and Gordon’s growing to double digit in Europe and Turkey, and Western Europe continued to gain market share in gin. Shares in Diageo plc (LON:DGE) were trading at -0.43% as of 10:40 BST Thursday.

Protein boost moves Science in Sport nearer to profit

Andrew Hore
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0
Protein boost moves Science in Sport nearer to profit

Sports nutrition products supplier Science in Sport (LON:SIS) is on course to move into profit in 2020. The latest figures show good progress towards that goal helped by last year’s acquisition of PhD Nutrition.
AIM-quoted Science in Sport could generate a positive EBITDA in 2019 but it will be a proper pre-tax profit in 2020.
Interims
In the first half of 2019, revenues jumped from £9.9m to £24.9m. PhD was not included in the first half of last year - it only contributed 25 days figures for the full year. PhD cost £32m and was partly funded by a £29m share issue at 60p each. It added premi...

Bid news awaited from accesso Technology

Andrew Hore
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0
Bid news awaited from accesso Technology

Ticketing technology provider accesso Technology (LON: ACSO) remains up for sale and remains in talks with more than one potential purchaser. There could be news by the end of September.
AIM-quoted accesso has grown via acquisition and it needs to bring all those acquisitions on to one platform in order to make the most of the deals. That is being done, but the performance is being held back while the customers wait for the updated offer.
The first customers are being put on the new platform, but there appears some way to go until it is properly rolled-out. This won’t be completed until 2021....

Fed rate cut anticipation leaves markets muted

Jamie Gordon
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1
Fed rate cut anticipation leaves markets muted
In a nigh-on Mexican stand-off, markets and investors wait with bated breath as the US Fed makes its rate announcement. Despite pressure from Trump, Powell wishes to make only modest cuts in a strategy he described as not shooting his monetary bullets too early. Both fearing the impact of, and even potentially causing a recession, the Fed is being urged to cut rates and kicks-start growth. The fear is; if QE is laid on too heavy-handedly by central banks, will we see a repeat of the late noughties crash but without any interest rate wiggle room (and ultimately fiscal resources will have to come to the rescue once again)? Speaking on market behaviour this afternoon, Spreadex Financial Analyst Connor Campbell stated,

“Predictably investors kept their cards close to their chests on Wednesday, unwilling to act until the Fed reveal what they have planned.”

“Currently the CME FedWatch tool has the likelihood of a rate cut at 70.4 – an increase on this morning’s 56.5%, and yesterday’s 63.5%, but well off the 95%-plus levels seen at the start of the month. Potentially more important than the expected slash may be what the central bank hints at for the future; a lack of guidance could be just as harmful as an unexpectedly hawkish statement.”

“The Dow Jones slipped 0.1% after the bell rang on Wall Street, taking the index back under 27100. The FTSE was unchanged at 7320, almost smack bang in the middle of the range it’s been stuck in for the last week. Only the Eurozone indices found any traction, and even that merely translated to the DAX and CAC rising 0.2% and 0.3% respectively.”

“Sterling largely recovered from the disappointment of a weaker than forecast UK inflation reading, one that fell from 2.1% to 1.7% month-on-month, i.e. the worse level since the end of 2016. Against the dollar it was down 0.2%, but above $1.248, while a 0.1% slip against the euro kept it at €1.1285.”

Elsewhere in markets and macro economic news, there have been updates from; ECB stimulus, the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Jo Johnson quitting, Hilary Benn’s Brexit delay bill, Parliament being prorogued, Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).

Avingtrans revenue growth pumps up full-year profits

Jamie Gordon
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0
Avingtrans revenue growth pumps up full-year profits
Energy and medical sector critical components engineering firm Avingtrans plc (LON: AVG) has seen progress across its fundamentals for the full-year ended 31 May 2019. Owing to its acquisition of Hayward Tyler Group during FY18 and 11% underlying organic growth, the Company’s revenues jumped 34% year-on-year to £105.5 million. This pushed up the Group’s gross margin by 1.2%, to 26.7%, and led a 65% surge in adjusted EBITDA, to £9.4 million.

Additionally, its cash inflow from operating activities increased to £9.0 million, up from a £6.9 million outflow during FY18. Further, its net debt contracted considerably, from £7.1 million, to £2.0 million.

The situation was similarly peachy for Avingtrans shareholders, with their adjusted diluted EPS hiking from 8.4p to 14.9p and their full year dividend rising from 3.6p to 3.8p per share.

Avingtrans comments

Roger McDowell, Chairman, said,

“It has been a record year for the Group, in terms of orders, revenue and profit, reinforced by the deft execution of our now well-proven Pinpoint-Invest-Exit strategy (PIE). The former Hayward Tyler Group (HTG) businesses performed very well in their first full year with the Group and the Ormandy turnaround produced a solid, if modest profit in its first full year since acquisition in February 2018. The recent, tactical acquisitions of Tecmag, Texas; Booth, Bolton, UK; and Energy Steel, Michigan are all integrating well thus far. The Energy divisions and their management teams have proven themselves to be commercially astute and we continue to focus on profitable growth, to build valuable, enduring businesses. Our budding medical division continues to make slow, but steady progress, as it seeks to develop new technologies, to break through into new sectors.”

“We continue to concentrate on aftermarket opportunities, servicing end-user customers with comprehensive solutions, resulting in good growth and strong prospects. The nuclear life extension and decommissioning arenas are fertile ground for us, as demonstrated by contract wins in the period worldwide. Other market areas are also proving fruitful – such as renewable energy – and a more stable oil and gas environment has seen us win important contracts in that sector. Brexit and tariff wars are unwelcome distractions for the Group, but they will not cause us to deviate from our well-planned course. Despite the chill in the macroeconomic air, we remain quietly confident about our prospects in both Energy and Medical, with our strong Balance Sheet allowing us to be both agile and resilient. Recent order wins and our pipeline of opportunities underpin that outlook.”

Investor notes

The Company’s shares were up 0.79% or 1.90p to 241.90p per share 18/09/19 15:07 BST. Analysts from finnCap reiterated their ‘Corporate’ stance on Avingtrans stock. Elsewhere in energy and medical news, there have been updates from; AFC Energy plc (LON: AFC), John Laing Environmental Assets Group Ltd PLC (LON: JLEN), IGAS Energy PLC (LON: IGAS), Trinity Exploration & Production PLC (LON: TRIN), Integumen PLC (LON: SKIN), Medica Group PLC (LON: MGP) and EMIS Group (LON: EMIS).

Velocys shares dip as it commercialises alternative fuels and revenues dive

Jamie Gordon
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4
Velocys shares dip as it commercialises alternative fuels and revenues dive
Sustainable fuel technology Company Velocys PLC (LON: VLS) saw losses during the first half alongside a contraction in revenue, as it commercialised its alternative fuels. The Company’s operating losses narrowed from £11.0 million to £5.2 million year-on-year during the first half, it also added that it raised £7 million in funds during July. However, the positive effects of these developments were offset by its revenues folding from £392,000 to £22,000. Velocys said its Bayou Fuels Mississippi project was converted to a solar power source with carbon capture capabilities. The Group said this would significantly improve its returns and would create, “an attractive differentiator for investment into this project.” The Company added that its Immingham UK project had completed all pre-FEED work and it had delivered one reactor and all the catalyst to its client Red Rock Biofuels.

Velocys comments

Henrik Wareborn, CEO, said,

“2019 has been a positive year for the Company. The demand for our Fischer Tropsch technology is growing on both sides of the Atlantic, which is why we have concentrated our efforts on project development and reactor manufacturing. These last six months have seen Velocys accelerate the move from concept to commercialisation – transitioning from research, development and testing, to focusing on commercial scale client delivery and operational excellence.”

“We have delivered our first reactor and all catalyst charges to our client in Oregon (Red Rock Biofuels) and the manufacturing of the remaining reactors is advancing. We are now focusing all our efforts on commercial delivery – for our client in Oregon and for our two projects in Mississippi, USA (Bayou Fuels) and Immingham, UK (Altalto).”

“None of this would have been possible without the recent support of our shareholders new and old along with the hard work and dedication that all our staff have put in to achieve the Company’s goals. I would like to make a personal thanks to Dr Pierre Jungels for his guidance of the Company over the years that he has been Chairman and wish him well for the future.”

Investor notes

The Company’s shares dipped 8.39% or 0.23p to 2.48p per share 18/09/19 14:23 BST. Analysts from Numis reiterated its ‘Buy’ stance on Velocys stock. Neither the Group’s p/e ratio nor their dividend yield are available; they are continuing to implement their long-term strategy, which doesn’t promise much return for shareholders in the immediate future. There have been recent renewable energy updates from; AFC Energy plc (LON: AFC), John Laing Environmental Assets Group Ltd PLC (LON: JLEN), SIMEC Atlantis Energy (LON: SAE), Aquila European Renewables Income Fund (LON: AERI), PowerHouse Energy Group (LON: PHE), PowerHouse Energy Group (LON: PHE) and SIMEC Atlantis Energy (LON: SAE).
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