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Diagnostics developer and manufacturer Abingdon Health (LON: ABDX) improved interim revenues from £1.1m to £2.4m, while operating costs were stable. The pre-tax loss halved to £1.22m. Three new contract development and manufacturing contracts have been won since the end of 2023. There are own-label tests being launched by retailers where orders will be delivered in the second half. The share price jumped 44.4% to 9.75p.
Bushveld Minerals (LON: BMN) has received the rest of the $12.5m loan from Southern Point Resources. This will be settled when the promised subscription money is received. Orange Trust has increased its stake from 4.68% to 5.75%. The share price improved 13.8% to 1.65p.
Graphene technology developer Versarien (LON: VRS) has entered a licence agreement with Brazil-based Montana Quimica, which supplies paints and wood preservatives. The deal allows Montana Quimica to use Graphlinks formulations in its products. The initial fee is £50,000 with a further £25,000 when manufacturing starts. Royalties are 5% of revenues. The share price increased 15.5% to 0.65p.
Following the share price rise earlier in the week the 90p/share bid for SmartSpace Software (LON: SMRT). The share price rose a further 13.3% to 85p. The bid approach for smart building technology company from Sign In Solutions Inc was revealed earlier this year and the rival bidder pulled out. This recommended offer values SmartSpace Software at £28.4m.
FALLERS
ECR Minerals (LON: ECR) raised £585,000 at 0.3p/share. The share price slipped 22.1% to 0.335p. There were also shares issued for directors’ remuneration and other creditors. The cash will be spent on gold rare earths projects in Victoria and Queensland. Axis Capital Markets has been appointed as joint broker.
Oil and gas company Bowleven (LON: BLVN) is raising up to £1.6m at 0.1p/share via a 4.83208580680976-for-one open offer. The share price declined by one-fifth to 0.2p. Crown Ocean Capital will acquire shares not taken up in the offer, which could take its stake above 30%, so shareholders will have to approve this at a general meeting on 2 April. This will provide working capital and some of the near-term funding for the Etinde permit joint venture.
Supercapacitors manufacturer Cap-XX (LON: CPX) says that Maxwell is applying for more time to lodge a claim of costs relating to the recent patent case. Management is hopeful that negotiations with Maxwell will come to a settlement before the court have to make a judgement. The share price slid 15.6% to 0.0675p.
Oxford Biodynamics (LON: OBD) has raised £9.9m at 9p/share and the market price fell 11.1% to 9.4p. The cash will finance the personalised healthcare company’s commercial development of the EpiSwitch range of products. Versions for cancer and prostate screening have been launched with further versions for bowel cancer and canine cancer planned.
Ex-dividends
Brooks Macdonald (LON: BRK) is paying an interim dividend of 29p/share and the share price improved 22.5p to 1772.5p.
Fiske (LON: FKE) is paying an interim dividend of 0.25p/share and the share price is unchanged at 85p.
Heavitree Brewery (LON: HVT) is paying a final dividend of 3.5p/share and the share price is unchanged at 275p.
LPA Group (LON: LPA) is paying a final dividend of 1p/share and the share price is unchanged at 77.5p. Shoe Zone (LON: SHOE) is paying a dividend of 14.9p/share and the share price slumped 17p to 235p.
Hedge Fund Tribeca has written to Glencore urging it to shift its listing to Sydney to achieve a higher share price.
The letter said: ‘London is no longer the home of mining’.
The letter penned by Glencore’s major shareholder Tribeca represents another blow for the London’s markets struggling to attract and keep companies listed on its exchanges.
Many will hope London could maintain its prowess in the mining industry, given that large technology companies tend to shun London in favour of New York.
“Mining giant Glencore is facing pressure from an activist investor to change its primary listing from London to Sydney. Commentary included accusations that London is no longer the home of mining, which doesn’t quite reflect the significant other names in the sector still housed by the city,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
London’s FTSE 100 is home to major global mining giants, including Glencore and Rio Tinto. Anglo American and Antofagasta.
BHP shifted its main listing to Sydney in 2021. If Glencore were to follow, it would be a disaster for the London Stock Exchange.
The sector has faced the pressure of a slowing Chinese economy, leaving miners trading near multi-year lows which will be a factor behind the grievances detailed in Tribeca’s letter.
“Glencore’s performance has been dented by lower commodity prices, particularly in its coal portfolio in recent months. Disappointing share price performances are often a trigger for activist attention, and there are also some Glencore specific reasons for the weakness in valuation. A change of listing won’t magically fix these, but arguably could help the group refocus,” Lund-Yates said.
“The bigger question marks centre around calls for Glencore’s coal business to remain in the portfolio. It’s been broadly expected that Glencore would look to de-merge these assets at some point, so pressure not to do this means a strategic rethink could be on the cards, if the activists can drum up enough shareholder support.”
Vistry shares gained on Thursday after the homebuilder released full-year earnings revealing resilience in its partnerships approach to new homes.
Vistry’s strategy of focusing on affordable housing through partnerships with local authorities and associations delivered 16,118 new homes in 2023, down only 5.4% proforma compared to the prior year.
The company, which operates client-facing Bovis Homes, Linden Homes and Countryside Homes, now delivers the majority of its completed units through partnerships and has enjoyed greater stability than housebuilders focusing on the private market.
The successful integration of Countryside Partnerships has yielded cost synergies as well as greater coverage of the market.
Revenues for the year were 29.6% higher on an adjusted basis to £4.04bn and operating profit rose 8.2%. An enhanced focus on the affordable end of the market will ultimately pressure margins, but the group is now a high-volume operator, and sacrificing margins will be acceptable to shareholders if profits grow.
Vistry shares added 1% on Thursday and are now up 47% over the past year. This compares to a 5.7% gain for Persimmon and 22% rise for Taylor Wimpey. The market clearly sees value in Vistry’s partnership model.
“Vistry’s transition to a partnerships giant has meant its full-year numbers have held up better than many of its peers. Partnerships involve teaming up with local authorities and housing associations to provide affordable housing. These partners foot most of the bill which reduces Vistry’s risk and frees up cash to deploy elsewhere in the business,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“But it comes at a cost – the profits in this kind of work aren’t as juicy. That’s exactly what we’ve seen play out in 2023. Despite underlying revenue climbing around 30%, underlying operating profit only edged around 8% higher as margins came under pressure.
“Vistry will need to ramp up volumes if it wants to offset the impact of lower volumes on overall profits. The mammoth £4.6bn order book gives investors some comfort in this regard, providing near-term revenue visibility as the group looks to increase completions this year, targeting growth of around 8.5% to 17,500 new homes.”
Aquis-quoted cannabidiol products supplier Voyager Life (LON: VOY) has revealed plans to merge with Northern Leaf, which had planned to join AIM late last year. This should value the combined group at £5m – the Voyager Life share price is unchanged at 11p – if deferred consideration is paid in full. That requires Northern Leaf to generate revenues of more than £5m by March 2025.
Jersey-based medical cannabis supplier Northern Leaf was the second company to be awarded a UK commercial high THC licence – the other was former AIM company GW Pharmaceuticals. Prior to 2023, the company had raised £16m over three years. Northern Leaf raised £3m in pre-IPO cash via a preference share issue in April 2023, followed by at least £1m raised via a loan note with the right to convert into shares at a discount to an AIM flotation price.
Voyager Life is offering 10 million shares for Northern Leaf, plus up to 2 million shares if the individual shareholders do not sell within six months. The deferred consideration of up to 21.9 million shares is split into two tranches. If revenues are more than £2m, the 10.95 million shares will be issued, while the rest will be issued based on how near to £5m the revenues end up.
AIM-quoted investment company Seed Innovations (LON: SEED) owns 0.55% of Northern Leaf. It invested £600,000 in a convertible loan note in 2021 and converted this into shares in April 2023. That stake had been valued at £960,000 before being reduced to £444,000 last September and then to £13,000. The merger values the stake at £5,000. The Seed Innovations share price is unchanged at 2.05p because it has already taken most of the hit.
In May 2023, Northern Leaf received Good Manufacturing Practice accreditation from the UK’s Medicines and Healthcare Products Regulatory Agency for its flower product as an active pharmaceutical ingredient. The following month the company gained accreditation for its 100,000 square feet cultivation facility in Jersey. The facility has the capacity to deliver nine tonnes of cannabis flower each year. There are already customers.
Because of the poor financial state of Northern Leaf, the Takeover Code requirements have been waived. Voyager Life will require more cash for the deal to go through. Stanford Capital and SI Capital are the brokers.
The FTSE 100’s rally continued on Wednesday morning after UK GDP expanded in January, and another strong session in the US helped lift the mood.
It isn’t often the FTSE 100 trades based on underlying UK economic developments, yet a 0.2% increase in UK GDP in January was enough to maintain positive sentiment and take stocks higher.
Early gains diminished and the FTSE 100 was trading flat higher at the time of writing.
“A pick-up in the UK economy and a rally in US tech shares on Wall Street last night helped to sustain the positive momentum on the markets,” said Russ Mould, investment director at AJ Bell.
“In line with the consensus estimate, UK GDP grew by 0.2% in January thanks to expansion in the services sector.
“While the figure is tiny, the fact it is growing at all is a positive. Investors want the UK’s recession status cast into the rear-view mirror so they can focus on how potential looser monetary policy could provide relief to consumers and businesses, and in turn feed into greater economic activity. Sadly, that could take time to play out.”
The risk-on sentiment in FTSE 100 stocks was evident in a cyclical-led rally. Miners were among the best performers, with Glencore and Antofagasta battling it out for the pole position on the leaderboard. The two miners were over 2% higher at the time of writing. Anglo American was up 1%.
Interest also increased in the utilities sector, as National Grid and United Utilities crept 1% and 1.7% higher, respectively.
Fresnillo was the FTSE 100’s biggest faller as gold retreated from record highs. St James’s Place extended declines with another 1.5% loss.
Video games services provider Keywords Studios (LON: KWS) was resilient in 2023 despite the tough video games market. The share recovered 12.7% to 1544.5p, but they are still below the level at the start of 2024. Adjusted pre-tax profit was 2% ahead at €114.7m on revenues 13% higher at €780.4m. Broader media business was hit by the writers’ strike in Hollywood and that knocked €20m off revenues.
Symphony Environmental Technologies (LON: SYM) has been boosted by a positive report from the US Environmental Protection Agency that pro-oxidant masterbatches “could significantly reduce the persistence of plastic pollution without creating undesired by-products”. This is based on a scientific evaluation and is a positive thing for the company’s d2w technology.
Woodbois (LON: WBI) is selling its Mozambique operations to focus on its timber interests in Gabon. The business will be bought by a local purchaser and the agreement should be signed in the next few weeks. Bans on exports and instability in the Cabo Delgado region mean that Mozambique is less attractive.
FALLERS
Supercapacitors manufacturer Cap-XX (LON: CPX) says its working capital position continues to deteriorate because of the costs of the patent infringement case and disappointing revenues. This has hampered the ability of the company to invest in R&D. Debt is not a potential source of funds and a share issue process has taken longer than expected. Cash is required by the end of the month. The share price slumped 82.1% to 0.0715p.
Blue Star Capital (LON: BLU) says investee company Dynasty Gaming & Media is acquiring the assets of Googly Media for $7.6m. The combined business will be valued at $15m, but that is much lower than expected. Blue Star Capital, which will convert $75,000 of loan notes into shares, previously valued its investment at £5.45m and it is now worth £450,000. The share price dived 44.8% to 0.04p.
Sareum (LON: SAR) issued a trading statement on Tuesday afternoon. The drug developer’s interim loss will be higher. The fall n the share price means that Sareum has not been able to draw down on its RiverFort subsidiary and it needs to raise additional cash. The share price declined a further 27.3% to 20p.
Medical imaging and data analytics services provider Ixico (LON: IXI) says 2023-24 revenues will be lower than expected at between £5.2m-£5.9m. Capital constraints are hitting the spending of biopharma clients. This has led to the postponement of trials. Cavendish expects a full year loss of £2.9m. The share price fell 16.2% to 7.125p.
Global Electric Vehicle sales have increased by around a third in early 2024 compared to the same period last year, according to data complied by EV research house, Rho Motion.
EV sales total 1.9m globally so far in 2024 compared to 1.5m the same period in 2023.
Charles Lester, Leading EV Data Analyst at Rho Motion, said: “We’re encouraged to see the global EV sales steadily increasing year on year as the global market has grown by 32% so far n 2024. Relatively new regions to EVs such as Latin America and the SE Asia peripheries are rapidly expanding and we can expect these to be the fastest growing markets for some time to come.”
China was the strongest region for sales growth with the US and Canada not far behind.
In 2024 year-to-date, China recorded a 34% increase in sales, with BYD’s ascendancy integral to global sales growth. BYD is China’s top domestic EV brands and has exported 60,000 units during the period making it the world’s largest exporter.
China’s growing dominance in the EV space was highlighted by BYD overtaking Volkswagen as the country’s top-selling brand.
“In recent months, China has been the point of concern [for Volkswagen] as BYD surpassed Volkswagen to become the top-selling brand in the country,” said Orwa Mohamad, Analyst at Third Bridge.
“Volkswagen faces challenges in China, including perception as an old legacy player, and stiff competition from domestic brands on EV innovation and software. Our experts say Chinese customers tend to favour more innovative and affordable cars from local brands such as BYD, XPeng, Zeekr, and SAIC.”
The timing of the Bank of England’s first move to reduce borrowing costs after a two-year hiking cycle is approaching.
After 14 rate hikes taking interest rates from 0.1% to 5.25%, the next move will almost certainly be a cut. Another hike would wreak havoc on UK financial assets.
The BoE has repeatedly said it will react to economic data. Many would argue recent data warrants lower interest rates.
Inflation has fallen but not yet hit the BoE’s 2% target. Indeed, the UK’s latest CPI reading of 4% is still substantially greater than where the Bank of England would like to see it.
However, ensuring inflation hits 2% is not a precursor to rate cuts. The Bank of England’s rate-setting panel, the MPC, will be aware that the OBR sees inflation falling to 2% in the coming months, echoing the BoEs’ forecasts.
The Bank of England has held off cutting rates to reduce the risk of inflation heating up again. This now looks unlikely. The significant risk for the BoE and the UK economy is that it is too late to start easing.
Growth is slowing, and the UK recession has done much of the heavy lifting for the Bank of England regarding reducing prices. If a disinflation cycle starts to build, the Bank of England could well find inflation languishing below the target rate.
Although the UK grew 0.2% in January, its economic data is starting to show signs of weakness. We all know the UK entered a recession in Q4 and is walking down a well-trodden path.
The UK entered a recession due to lower consumer spending, which is usually the first domino to fall. Next is jobs, and then loan defaults rise. We are already seeing signs of a slowdown in the UK jobs market after the unemployment rate rose to 3.9% and vaccines fell in early 2024.
If the BoE isn’t careful, the recession could well be a lot deeper than the shallow recession everyone is predicting. January’s GDP growth will encourage many, but we need to see more positive data points to establish robust growth.
“While this seems positive, GDP fell by 0.1 per cent in the three months to January in line with our forecast last month. In broader terms, UK economic growth has been near-zero since 2022 and GDP per head remains lower than pre-Covid,” said Paula Bejarano Carbo, NIESR Economist.
The Bank of England has to move fast and will likely cut rates by June.
After January’s GDP was released, Susannah Streeter, head of money and markets at Hargreaves Lansdown, said, “These figures are unlikely to be a game changer for Bank of England policymakers, with a June date now largely the earliest expected for an interest rate cut.”
Bond yields are pricing a cut. Equity markets are pricing a cut. Interest rate futures are pricing a cut. This will force the BoE’s hand before long.
Balfour Beatty shares were higher on Wednesday after the construction services group released 2023’s full-year results revealing a year of progress in terms of profits and revenue.
Revenue grew 7% to £9.6bn and underlying profit from operations (PFO) rose 2% to £236m. Profit before tax fell due to the impact of disposals.
Balfour Beatty shares were up 9% to 360p at the time of writing.
“Balfour Beatty has built a sturdy reputation with investors in recent years. The international infrastructure firm has consistently produced growing profits and delivered attractive shareholder returns. This morning’s earnings update will further cement that reputation,” said Mark Crouch, analyst at investment platform eToro.
“The business reported a jump in revenue and profits for 2023. Despite a marginal dip in the order book, they expect growth to continue into 2025. More welcome news for shareholders was the increase of the dividend and share buyback program, with the latter being raised to £100m, set to complete by December 2024. All are very good signs.”
Balfour Beatty’s outlook was particularly encouraging. The company said, ‘The Board expects an increase in PFO from its earnings-based businesses in 2024, with growth accelerating in 2025.’ The group sees investment in infrastructure projects supporting earnings in the coming periods as well as positive contributions from disposals.
Shareholders will enjoy a 10% increase in the final dividend to 11.5p.
