FTSE 100 dips ahead of Jackson Hole convention

Natasha Doris
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FTSE 100 dips ahead of Jackson Hole convention

UK equity markets eased on Wednesday with the FTSE 100 dipping 0.5% to 7,450.7 as European and Asian markets also took a hit, reflecting investor positioning ahead of the Jackson Hole convention.

“Markets seem to have lost their momentum following the rally since mid-June. Investors have become nervous once again, with all eyes on Federal Reserve chair Jerome Powell and what he says this coming Friday,” said AJ Bell investment director Russ Mould.

“Investors are worried that the US central bank will continue to raise interest rates at a rapid pace, despite lower-than-expected inflation figures in July. If this happens, we could well see another leg down in global markets as the summer draws to a close.”

The US saw lower inflation results in July at 8.5%, falling from its June height of 9.1%. The drop in inflation sparked some hope the US Fed would ease up on inflation rate hikes, however the markets are currently gearing up for a hawkish response from Powell on Friday.

The Hang Seng slid 1.2% to 19,268.7 and the SSE Composite fell 1.8% to 3,215.2.

The German DAX dipped 0.1% to 13,171.1, the French CAC was flat at 6,363 and the Italian FTSE MIB dipped 0.1% to 22,348.8. European indices recovered from these early losses to trade in positive territory just after midday.

Meanwhile, US markets remained flat in pre-open trading, with the Dow Jones at 32,874, the S&P 500 at 4,127.5 and the NASDAQ at 12,884.5.

Miners

Miners fell after a series of poor manufacturing data from major economies suggested demand for natural resources was starting to wane.

Anglo American shares dropped 1.9% to 2,887, Antofagasta fell 2.1% to 1,137.5p, Endeavor declined 0.8% to 1,794.5p, Glencore slid 0.9% to 501.1p and Rio Tinto decreased 1.6% to 4,960.7p.

UK manufacturing reached a 27-month low at 46 in August against 52.1 in July, denting hopes across the mining sector.

The news certainly added pressure to the sector amid wider fears of an international production slowdown as the cost of living crisis and falling consumer demand continued to bite.

Whitbread

Whitbread shares dipped 0.6% to 2,519p following its surprising move to invest £200 million into a new hotel development in Central London.

The bold commitment marks an unexpectedly risky decision in light of the current macro-economic uncertainty.

“Whereas many companies will be battening down the hatches for fear that a recession will hurt their business, Whitbread has done the opposite by committing £200 million to a new hotel development in central London,” said Mould.

“Its purchase of 5 Strand will provide the opportunity to build accommodation in prime tourist territory, using its ‘hub by Premier Inn’ concept which features compact rooms.”

“Interestingly, the building was sold four years ago to an Indian property developer with the intention of creating a luxury 200-bedroom hotel. Now it’s going to be Whitbread’s latest project in squishing in as many rooms in as possible.”

Cineworld, Tekcapital, and Greatland Gold with Alan Green

UK Investor Magazine
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Cineworld, Tekcapital, and Greatland Gold with Alan Green

Alan Green joins the Podcast as we delve into a selection of UK equities and key market themes. We start by looking at the options available to central banks and governments to tackle to growing cost of living crisis and soaring inflation, and how market perceptions will drive price action in the short term.

Cineworld is on the brink after being devastated by the pandemic and the slow return of cinema goers amid low levels of new blockbusters. They have recently announced they are considering Chapter 11 Bankruptcy and shares have plummeted, we explore the possible outcomes for the company.

Tekcapital has recently completed the IPO of portfolio company Lucyd on the NASDAQ and Alan outlines the key elements of the transaction of how it has fared since. We conclude with an overview of the Tekcapital portfolio.

The Greatland Gold share price has experienced sharp declines this year, despite a number of positive updates at the Havieron asset. We look at the most recent update on the Newcrest JV and how the saga could play out for investors.

AIM movers: Poor first half sales at OptiBiotix Health and stakebuilding in Drumz

Andrew Hore
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AIM movers: Poor first half sales at OptiBiotix Health and stakebuilding in Drumz

OptiBiotix Health (LON: OPTI) is the worst performer today with a 26.8% slump to 20p after it said that sales of the core prebiotics business fell in the first half due to customer delays in restocking and postponing of product launches. Larger partners are placing fewer, but more significant orders, which can make revenues lumpy. Orders may recover in the second half as delayed product launches happen. Since its spin-off on Aquis, 40%-owned ProBiotix Health (LON: PBX) is no longer consolidated, which is no surprise to any but the most naïve people. That spin-off has resulted in a gain in book value of £13.8m. There is £1.5m of cash. The share price of 20.7%-owned SkinBioTherapeutics (LON: SBTX) has been falling in recent weeks. It fell a further 7.9% to 20.5p today. This may be because OptiBiotix has previously sold shares to raise cash, although SkinBioTherapeutic revenues have also been disappointing.

Oil and gas company Arrow Exploration (LON: AXL) reported a 17% increase in proved reserves to 3.567 MMBls and the net present value jumped 164% to $77.7m. Additional drilling targets have been identified. There will be a five well programme commencing in the fourth quarter. The share price fell 13% to 16.75p, although it had been rising in previous days and is still higher than at the beginning of August.

The share price of Haydale Graphene Industries (LON: HAYD) has fallen 8% to 2.3p following the post-close announcement yesterday that it was raising £5m at 2p a share and there is going to be an open offer at the same price that could raise up to £510,000. The share price had already declined 12.3% to 2.5p before the placing announcement.

Membrane-free electrolyser technology developer Clean Power Hydrogen (LON: CPH2) has been hit by engineering and scale up issues, as well as supply problems. Sales income from the initial units will not be realised until 2023. The company’s cash position should be higher than forecast due to a recent licencing deal. The share price slipped by 7.45% to 43.5p, which means it is below the February placing price of 45p.

Shares in investment company Drumz (LON: DRUM) have risen on the back of stakebuilding by James and Olga Simmons. They took a 3.04% stake in May, and this has subsequently increased to 5%. The share price rose 24% to 0.775p and it has risen 47.6% over two days.

Esports company Gfinity (LON: GFIN) has launched Athlos Game Technologies, which is a tournament-based platform that can help to increase average revenues per user. The share price recovered 14.3% to 1.2p. In March, Gfinity raised £2.7m at 1.25p.

Cornish Metals Inc (LON: CUSN) says the four latest drill holes at the South Crofty tin project in Cornwall have intersected multiple mineralised zones. Including tin, zinc and copper. The assay results will go towards developing a mineral resource. This has pushed up the share price by 5.63% to 18.75p.

Yacht services provider GYG (LON: GYG) directors have been buying shares ahead of the general meeting to gain shareholder approval for the cancellation of the AIM quotation. That has helped the share price recover 5.26% to 20p. Before the cancellation announcement the share price was 31p.

Rail and events software and services provider Tracsis (LON: TRCS) beat forecasts in the year to July 2022 and the shares have moved ahead by 4.67% to 1055p. finnCap has upgraded its earnings forecast from 33.2p a share to 34.5p a share. There was a sharp recovery in the events and traffic data business, while the other businesses continue to grow. Implementations of Tracsis software continue despite the rail strikes. The full year results will be published on 9 November.

Sopheon swings to loss $791k pre-tax loss, signs eight new SaaS clients

Natasha Doris
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Sopheon swings to loss $791k pre-tax loss, signs eight new SaaS clients

Sopheon shares dipped 0.7% to 645p in late morning trading on Wednesday, after the firm swung to a $791,000 pre-tax loss in HY1 2022 compared to a HY1 profit of $518,000 the year before.

Sopheon attributed its loss to interest, depreciation and amortization, impairment charges and share-based payment costs at a total of $3.7 million.

The company announced $15.7 million in revenues for HY1 2022 compared to $16.5 million in HY1 2021.

Sopehon reported materially more multi-year SaaS against perpetual licence and service contracts, resulting in deferral in relative revenue recognition. The group mentioned eight new SaaS customers signed.

It noted SaaS ARR of $9.3 million on 30 June 2022 compared to $7.6 million in the previous year.

The firm highlighted an adjusted EBITDA of $2.9 million from $2.8 million year-on-year.

The group confirmed net cash of $23.5 million after funding M&A and dividends, with no debt.

The company said its FY 2022 revenue visibility was currently at $34.1 million against $31.2 million the last year, including revenue to be recognised from its recently announced US Navy agreement closed in July this year.

Sopheon also pointed out the acquisition of UK-based SaaS front-end of innovation management business Solverboard in its HY1 highlights for an initial consideration of $900,000, less than six months after its acquisition of UK-based Saas project management firm ROI Blueprints.

“I am pleased to report revenue visibility already approaching 2021’s full year results with most of H2 still ahead of us. We continue to show good ARR growth especially in SaaS, supported by high levels of retention,” said Sopheon executive chairman Andy Michuda.

“Commercial traction is also building, with both a faster pace of net new sales and the signing of the largest single deal in our history with the US Navy – underpinning future performance. Our strategic initiatives are broadly on track and in a time of continued global uncertainty, our substantial cash reserves provide additional confidence for execution both in terms of organic initiatives, and to move quickly if further acquisition opportunities arise.”

“Recent acquisitions have rounded out our product roadmap, and we are on the cusp of introducing a new go-to-market approach that significantly expands our addressable market and competitive advantage. This is one of the most exciting periods in my time at Sopheon, with both momentum and opportunity in equal measure.”

OptiBiotix Health shares tumble as HY1 sales “materially lower” than expected

Natasha Doris
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OptiBiotix Health shares tumble as HY1 sales “materially lower” than expected

OptiBiotix Health shares tumbled 27.4% to 19.7p in late morning trading on Wednesday after the group reported current sales in its new structure following its listing of ProBiotix on the AQSE to be “materially lower” than expected in HY1.

The health sciences firm reported expected sales of £120,000, with sales normalising in HY2, but at insufficient levels to account for its HY1 deficit, with a return to growth in FY 2023.

OptiBiotix attributed its poor sales to delays in partners restocking due to uncertainty in the macro-economic environment, alongside delayed regulatory approvals postponing launches until HY2.

The company confirmed it had received the appropriate approvals, and expected launches over the next several months.

OptiBiotix added it was progressing discussions to increase its number of larger partners to mitigate the risk of heavy impacts linked to partner delays in its future sales.

The group noted a balance sheet with gross assets of £22 million against £28 million the year before, with approximately £1.5 million in cash compared to £993,000 at the close of June.

OptiBiotix mentioned several highlights in its outlook, including its GoFigure product launches in India and Saudi Arabia.

The group also noted its recent deal with fragrance and taste company Firmenich to facilitate the introduction of SweetBiotix to large markets.

“The Company has invested in expanding its commercial and business development team in key strategic markets like the USA and Asia and as part of its drive to build its direct-to-consumer sales. We hope to see the return on this investment later this year and more significantly in FY 2023,” said OptiBiotix CEO Stephen O’Hara.

“The aim for the second half of the year is to focus on growing sales with existing partners, building the online direct to consumer business, and launch GoFigure products in India with Apollo Hospitals and in the Kingdom of Saudia Arabia with Nahdi Medical. We will also be looking to attract more larger partners, particularly from the USA, and in-license or acquire additional technologies to ensure a continuous pipeline of solutions to strengthen our position as one of the leading companies in the rapidly growing microbiome space.”

“We are fortunate in having a healthy balance sheet and £1.5m cash in the bank to continue to invest in building the business. We also retain exposure to the growth potential in probiotics and skincare through the Group’s shareholdings in ProBiotix Health plc and SkinBioTherapeutics plc.”    

Camellia suffers poor HY1 on monsoon conditions and subdued demand

Natasha Doris
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Camellia suffers poor HY1 on monsoon conditions and subdued demand

Camellia shares dipped 1.6% to 6,000p in early morning trading on Wednesday following lower production levels due to heavy monsoonal conditions across northern India and Bangladesh.

The group highlighted higher wages for workers across west Bengal and for Assam, bringing welcome news for farmers and employees. However, Camellia noted higher prices were not currently expected to completely offset the impact of its reduced crop intake and stronger wages.

Camellia said its macadamia operations continued to harvest and process product at higher expected volumes year-on-year.

However, the company added demand was lower due to lockdowns in China, and US and Japanese demand remained subdued, with pricing for commercial grades still under pressure with no prospect of recovery for the current period.

Camellia mentioned its ATJ Engineering investment continued to face supply chain problems on production scheduling, impacting profitability.

The firm noted a dent in its returns from BF&M, its 36.9% owned associate, which reported a net post-tax loss of £12.3 million Bermudian dollars, representing a loss of £4.6 million for Camellia.

Camellia mentioned cash and cash equivalents net of borrowings at £37.1 million on 30 June 2022.

The company said its outlook was reliant on its agriculture division, where the majority of its harvesting and sales would take place in HY2 2022.

Camellia added its outlook would also be reliant on BF&M’s HY2 results, however if the group enjoyed a normal financial term, revenue would come slightly above market expectations with an adjusted pre-tax profit below market expectations.

K3 Business Technology Group revenue slides to £19.9m

Natasha Doris
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K3 Business Technology Group revenue slides to £19.9m

K3 Business Technology Group shares dropped 4.4% to 127.5p in early morning trading on Wednesday following a slide in revenue to £19.9 million in HY1 2022 against £20.9 million the year before.

K3 Business Technology confirmed a loss for the financial period of £2.7 million from a profit of £5 million in the previous year.

The software solutions group announced a loss from continuing operations of £2.8 million from £2.5 million the last year, in line with management expectations.

The loss was related to depreciation and amortisation of acquired intangibles, exceptional reorganisation and acquisition costs and share-based payment charges for a total of £3.6 million compared to £3.4 million in HY1 201.

The company further mentioned a pre-tax loss from operations of £2.5 million, remaining flat year-on-year, alongside a pre-tax loss from continuing operating of £2.7 million from £3.6 million.

K3 Business Technology highlighted an adjusted EBITDA uptick to £1 million from £900,000, along with a gross margin rise to 60% against 58%, reflecting higher margins in K3 Products and Third-Party Solutions.

The firm also noted to acquisition of sustainability-focused software developer ViJi in January 2022, broadening its offering in supply-chain transparency and traceability, and increasing operational investment by £200,000.

“K3 Products has clear growth opportunities in its fashion and apparel markets and we are focusing on three critical areas for customers – Sustainability, Omni-channel and Business Insights. The acquisition of the Sustainability-focused software developer, ViJi, in the period, will enhance our offering here,” said K3 Business Technology Group CEO Marco Vergani.

“Third-party Solutions performed well and remains a significant cash generator.  We are investing in products and delivery resource to support growth.”

“The second half of the financial year is typically stronger than the first, with substantial cash inflows due from software licence and support and maintenance contract renewals. While there are increasing macroeconomic uncertainties, we remain confident of our long-term strategic direction and will continue to focus on growth, cash and costs.”

K3 Business Technology confirmed net cash at £1.4 million against £4.4. million year-on-year, with the firm expecting its FY 2022 financial position to close “significantly higher” as a result of seasonal weighting of cash inflows.

Deltic Energy loss widens to £1m in HY1 2022 on higher costs

Natasha Doris
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Deltic Energy loss widens to £1m in HY1 2022 on higher costs

Deltic Energy shares dropped 4% to 3.6p in early morning trading on Wednesday after the natural resources firm announced a widened loss to £1 million in HY1 2022 compared to a loss of £691,754 the year before.

The company reported a cash outflow of £2.4 million in the financial term against £873,064 in HY1 2021.

Meanwhile, Deltic Energy confirmed a £1 million operating loss from £674,718, including cash expenditure of £1.1 million, a write down on its Blackadder licence at £48,188 and additional non-cash costs unrelated to existing licences.

The firm also noted £7.6 million in cash on its balance sheet in HY1 2022 against £11.1 million the last year.

Deltic Energy mentioned it remained fully funded for its Pensacola well operations, which are projected to provide strong return levels along with its Selene prospect if supply insecurity and high gas prices continue into the coming year.

“I am extremely proud of what we have achieved in the year so far and very excited about the outlook for our company,” said Deltic Energy CEO Graham Swindells.

“We have seen considerable progress made across our business, with key developments involving our Pensacola and Selene Prospects, which contain over 600 BCF (P50 Prospective Resources) of natural gas, as well as progressing the licences which formed part of our transformational farmout and partnership with Capricorn Energy.”

“As we stand on the verge of drilling our first well on Pensacola with our partner Shell, and with Selene now to follow, we are further demonstrating the success of our business model which is focussed on identification of early stage opportunities and taking them from licensing through to drilling whilst introducing partners of the highest calibre.”

The AIM listed group said it would not issue a dividend, returning shareholder returns via capital growth as opposed to capital distribution.

Haydale raises cash to get nearer to profitability

Andrew Hore
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Haydale raises cash to get nearer to profitability

Haydale Graphene Industries (LON: HAYD) has raised £5m at 2p a share and an open offer at the same price could raise up to £510,000. This will fund the scaling-up of operations.
Haydale is developing inks and other products using its graphene technology that can be used in the aerospace, automotive, medical and electronics markets. It has its own scalable process called HDPlas that enables the production of these products.
The fundraising was announced as the market was closing and the share price had already fallen 12.3% to 2.5p. The share price has slumped by one-quarter over the past five d...

Half of UK households face fuel poverty this winter

Natasha Doris
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Half of UK households face fuel poverty this winter

Half of UK households face fuel poverty this winter unless the government intervenes, according to EDF Energy UK senior executive Philippe Commaret.

He warned families across the country would suffer a “catastrophic winter” as fuel bills soar to triple the level of last winter.

The energy price cap has surged jaw-dropping amounts in recent months, and is set to climb to estimated heights of £5,000 per year by 2023 according to analysts.

Starting from October this year, all UK households will receive £400 towards fuel bills, with the lowest income eight million primed to receive an additional £650.

However, the small measure will do little to help the most vulnerable against the soaring energy costs, and experts as well as the Liberal Democrats and Labour have urgently called for more support, including a freeze on the energy price cap.

The rising cost of living has started to bite, with increased energy prices adding to the pain of higher food and consumer goods costs as inflation reaches 10.1%, with a rise to 13% expected in October 2022.

“When you look at the figures, without further support from the government, more than half of the UK households will be likely to be in fuel poverty in January,” said Commaret.

“Which means they will have to spend more than 10% of their disposable income to pay for their energy bill.”

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