Made.com confirms possible equity capital raise

Natasha Doris
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Made.com confirms possible equity capital raise

Made.com shares fell 10.4% to 8.8p in late morning trading on Thursday after the furniture group confirmed speculation that it was considering a potential equity capital raise to “strengthen its balance sheet.”

“Turns out that selling on-trend but relatively pricey furniture is not a great model in the current economic environment,” said AJ Bell financial analyst Danni Hewson.

“Online furniture retailer Made.com looks like it is being forced to pursue an emergency fundraise, which had been euphemistically hinted at in a statement a month ago when it said it was ‘exploring ways to strengthen its financial position.'”

The company said it would be pursuing a range of possible options to return its finances to decent health, and would announce any further decisions or strategies to investors.

“Investors have seen the shares lose more than 90% of their value and may be reluctant to put good money after bad, although if they want to protect some continuing value in their investment they may have little choice,” said Hewson.

“In different times Made.com might have been a decent proposition, and it has continued to win market share, but now it faces a desperate scramble to reduce costs in order to keep the lights on. Made.com needs to sort out inventory issues – effectively clearing out excess stock by selling at a discount – and hope this doesn’t undermine the brand and make it difficult to sell at full price in the future.”

“The company has to make sure it gets the basics of retail – holding the right amount of stock while still having what customers want, when they want it – spot on in the future as it is likely to have very little margin for error.”

Rank Group swings to £82.1m pre-tax profit as venues reopen post-Covid

Natasha Doris
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Rank Group swings to £82.1m pre-tax profit as venues reopen post-Covid

Rank Group shares decreased 2.3% to 85.9p in late morning trading on Thursday after the gaming company revised its underlying operating profit lower to £40 million in FY 2022 following poor performance across its Grosvenor venues.

The company reached an underlying operating profit of £40.4 million, in line with its downward revised guidance.

Rank Group swung to a pre-tax profit of £82.1 million against a loss of £92.9 million the last year, alongside a post-tax profit of £66.2 million compared to loss of £72 million as venues reopened after Covid-19.

Meanwhile, the entertainment firm reduced its net debt to £162.6 million from £256.7 million.

The company reported an EPS of 14.2p against a loss per share of 16.5p the last year.

“It was a challenging year for our UK venues businesses, with unexpectedly softer trading across the Grosvenor estate in the second half of the year. Our nine London casinos, which account for over 38% of Grosvenor’s revenue in normal trading conditions, have seen very weak customer volumes with overseas visitors few in number, and only starting to return in the final few weeks of the year. The lower than expected Grosvenor trading in H2 led us to reset full year operating profit expectations as announced in Q4,” said Rank Group CEO John O’Reilly.

“Whilst we have been seeing improvements in London in recent weeks, the trading environment across the UK is likely to remain difficult in the months ahead with inflationary pressures squeezing consumer discretionary expenditure and cost increases, particularly in energy prices, putting pressure on profit margins.”

“However, we are taking actions to drive further efficiencies in the venues businesses, and we are seeing strong revenue growth in properties which have recently benefitted from our accelerated capital investment programme.”

Rank Group did not recommend a dividend for FY 2022.

B&M appoints Oliver Tant as non-executive director

Natasha Doris
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B&M appoints Oliver Tant as non-executive director

B&M announced the appointment of Oliver Tant as non-executive director to the company on Thursday.

Tant is set to take up the position on 1 November 2022, and will also succeed Ron McMillan as chair of the Audit & Risk Committee in July 2023 and join the Nomination Committee.

McMillan is scheduled to resign after nine years as a non-executive director from the B&M board.

Tant’s previous work experience includes a term as Imperial Brands CFO from 2013 to 2021, and his present role as non-executive director and Audit Committee chair designate of Redrow.

He is also currently positioned at Brookfield Asset Management as a financial consultant at portfolio company Modulaire Group.

“I am delighted that Oliver has agreed to join the Board of B&M. His previous roles at Imperial Brands and KPMG give the combined experience of a Big Four audit partner with eight years as CFO of a FTSE 100 business,” said B&M chairman Peter Bamford.

“I am sure that he will add a great deal of value both as a Non-Executive Director and in his future role as Audit & Risk Committee Chair.”

“Ron has been an outstanding Chair of the Audit & Risk Committee and has played a critical role in the successful transition of B&M from IPO in 2014 to a FTSE 100 company. However, it is now right that we plan for his succession. On behalf of the Board, I would like to thank Ron for his service to B&M and look forward to working with him over the remaining period of his directorship.” 

B&M shares fell 1% to 418.6 in early morning trading on Thursday.

Helios Towers revenue grows 25% on slate of African acquisitions

Natasha Doris
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Helios Towers revenue grows 25% on slate of African acquisitions

Helios Towers shares rose 1% to 136.5p in early morning trading on Thursday after the telecommunications firm reported an 25% revenue growth to $265.4 million from $212.4 million in HY1 2022.

Helios Towers said its revenue increase was driven by acquisitions in Senegal, Madagascar and Malawi, along with strong organic tenancy growth, CPI and climbing power prices.

The UK-based group announced a 19% adjusted EBITDA climb to $136.1 million against $114.2 million as a result of revenue growth and higher fuel costs in the DRC across Q2.

Meanwhile, Helios Towers noted a 48% operating profit surge to $39.8 million compared to $26.9 million on the back of increased revenue, offset by a rise in administrative expenses linked to the firm’s expansion.

However, pre-tax loss increased to $122.2 million compared to $83.8 million, on the back of year-on-year growth in non-cash expenses from fair value movements of the embedded derivatives in the company’s bond and foreign exchange movements on Euro and US dollar denominated intercompany borrowings.

The group confirmed a 38% net debt rise to $1 billion from $786 million the year before.

“We have delivered strong organic tenancy growth in the first half of the year, which combined with the successful integration of acquired assets in Senegal, Madagascar and Malawi has resulted in impressive year-on-year financial performance,” said Helios Towers CEO Tom Greenwood.

“Despite broader global macroeconomic uncertainty, our uniquely positioned platform, highly visible base of quality earnings and unparalleled structural growth continues to drive sustainable value creation for all of our stakeholders.”

Marshalls hikes dividend 21%, Marley integration raises debt to £252.3m

Natasha Doris
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Marshalls hikes dividend 21%, Marley integration raises debt to £252.3m

Marshalls shares slid 0.6% to 452.1p in early morning trading on Thursday, after the firm announced an EBITDA fall to £45.7 million in HY1 2022 compared to £56.4 million the last year.

The building materials group reported an operating profit drop to £27.3 million from £41 million.

Marshalls confirmed a pre-tax profit decline to £23.9 million against £38.9 million year-on-year, after adjusting items including acquisitions costs of £20.7 million.

Meanwhile, revenue grew to £348.4 million compared to £298.1 million due to two months of contribution from its Marley acquisition, which was completed on 29 April 2022, and a 7% like-for-like growth.

Net debt rose to £252.3 million from £52.4 million linked to the bank financing implemented to partially fund the acquisition of Marley.

The company highlighted a basic EPS slide to 7.9p from 15.3 million the year before.

Marshalls hiked its dividend 21% to 5.7p per share compared to 4.7p in HY1 2021.

“Marshalls delivered a robust first half trading performance, demonstrating the strength of our business model and the benefits of greater diversification resulting from the transformational Marley deal completed in April 2022 and other acquisitions of recent years,” said Marshalls CEO Martyn Coffey.

“Looking forward, the Board acknowledges that the macro outlook is becoming less certain due to geopolitical events driving up inflation and adversely impacting consumer confidence.” 

“Notwithstanding this, the Board’s expectations for the Group as a whole remain in line with market expectations for the full year, with the more positive backdrop within Marshalls Building Products and Marley expected to balance the continuation of tougher trading conditions in Marshalls Landscape Products, which has greater exposure to the discretionary element of private housing RMI.”

Tekcapital closes $7.4m Lucyd IPO as new products launched

UK Investor Magazine
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Tekcapital closes $7.4m Lucyd IPO as new products launched

Tekcapital has announced its portfolio company Lucyd will be launching a new line of innovative smart eyewear products following the completion of a $7.4m IPO on the NASDAQ.

Innovative Eyewear is launching the Lucyd® Lyte Fall ’22 smart eyewear line which further bolsters their range of glasses with smart capabilities such as audio functions and bluetooth. Lucyd smart eyewear is distributed in the US through retailers including Amazon and Walmart.

“Our mission at Lucyd has always strived to be the ‘go-to upgrade’ of your eyewear from sunglasses to prescription frames you wear all-day, everyday day. Simply put, the Lyte Fall ’22 collection comprises our most advanced glasses yet,” said Harrison Gross, Lucyd CEO & Cofounder.

Lucyd is targeting the $5.1 billion US hearables and digital assistant market and will invest the proceeds of this week’s IPO on marketing and developing new products.

Innovative Eyewear IPO Completion

Tekcapital’s IPO of Lucyd subsidiary Innovative Eyewear completed on Wednesday raising a total of $7.35 million, before the deduction of underwriting discounts and offering expenses.

The IPO consisted of 980,000 units, comprised of one share and two warrants with an exercise price of $7.50. As of the close of trade on the NASDAQ last night, each share was worth $5.36 and each warrant closed at $0.70 to total $6.76 per unit.

The IPO underwriters had been given a 45-day option to purchase additional shares/warrants and have taken up warrants to purchase 294,000 shares.

Wynnstay raising cash for capex and acquisitions

Andrew Hore
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Wynnstay raising cash for capex and acquisitions

Agricultural products supplier and retailer Wynnstay Group (LON: WYN) is raising £10.5m in a placing where the price will be set at 7am tomorrow morning, although the minimum will be 550p a share. The announcement was made after the official close the markets and the current share price is 660p.

Prices of milk and other farm products are rising, and this is sparking additional investment by farmers. Wynnstay believes that there are ways that it can use this trading backdrop to accelerate its growth.

Management have already declared that it wanted to redevelop the Calne feeds site that came with an acquisition earlier this year. This can be developed into a feed mill with a 185,000 metric tonne capacity and producing poultry and ruminant feed.

There are also opportunities for further acquisitions. Some of these are already being pursued by Wynnstay.

The company already has the shareholder approvals to issue enough shares to satisfy the demands of the placing.

The current share price is not far off the all-time high back in 2014. This is a cyclical business, so there tend to be cycles in the share price. The prospective 2022-23 multiple, before the latest placing, was just over 12. The placing will initially dilute earnings, although acquisitions could change that.  

FTSE 100 falls as UK inflation hits 10.1%

UK Investor Magazine
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FTSE 100 falls as UK inflation hits 10.1%

The FTSE 100 dipped on Wednesday after UK inflation increased concerns about domestic demand sending housebuilders lower, along with stocks exposed to the financial health of UK consumers and investors.

The FTSE 100 started the day in positive territory before ebbing into native territory throughout the session as the market digested the implications of higher inflation on rates and spending power.

“Unlike the US, where there is evidence surging prices have started to peak, inflationary pressures look pretty entrenched in the UK with further increases in energy prices still to come,” said AJ Bell financial analyst Danni Hewson.

“The inflation reading will only add to conviction that the Bank of England will hike rates a further 50 basis points at the next opportunity – providing consumers with a double whammy of rising food and energy bills as well as higher mortgage costs.”

The pound dipped against the dollar later in the day and overseas earners found support while UK domestic facing stocks sank, cementing a negative day for the Footsie.

Persimmon was the biggest faller after revealing a drop in first half completions, and took the rest of the housebuilders down with them. Persimmon gave up 5% while Taylor Wimpey and Barratt Developments shed over 2%.

Travel companies and retailers also suffered on concerns consumers ability to make discretionary purchases. Next sold off 1.8% and IAG shares decreased 3%.

Alcohol and Tobacco stocks

As investors sold UK domestic stocks, there was a rotation into defensive sectors and companies with reliable cashflows. British American Tobacco and Diageo were the top two risers as demand for their goods is largely inelastic and holds up well during tougher economic conditions.

Pharma stocks AstraZeneca and Dechra were also among the gainers, adding around 1%.

AIM movers: Gooch & Housego disappoints, while boohoo takes stake in Revolution Beauty

Andrew Hore
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AIM movers: Gooch & Housego disappoints, while boohoo takes stake in Revolution Beauty

Earnings forecasts for Gooch & Housego (LON: GHH) have been slashed by up to one-third and the chief executive is retiring. The share price slumped 20.8% to 656p. Demand for photonics technology remains strong, but a lack of skilled labour in the US and UK and supply chain constraints have hampered the company’s ability to increase capacity. There has been high demand for lasers for semiconductor manufacture. Analysts have reduced their 2021-22 pre-tax profit forecasts to £7.5m-£8m, while a pre-tax profit of around £12m is expected for 2022-23. A 12.5p a share dividend is still expected this year. Mark Webster is retiring as chief executive after eight years. Charlie Peppiatt will succeed him after joining from TT Electronics.

Frasers Group (LON: FRAS) has bid 2p a share for MySale Group (LON: MYSL), which values the retailer at £13.6m, and the share price has slumped 21.9% to 2.1p. Frasers already owns 28.7%. MySale Group floated in 2014 at 226p a share.

Online fashion retailer boohoo (LON: BOO) has made a strategic investment in cosmetics supplier Revolution Beauty (LON: REVB), which recently announced a profit warning. boohoo has bought a 7.13% shareholding, while AXA and Jupiter have reduced their stakes during August. Revolution Beauty products are sold through several of boohoo’s websites. The Revolution Beauty share price recovered 23.5% to 29.65p, while boohoo was 2.9% lower at 59.55p.  

Gold and precious metals reclaimer Goldplat (LON: GDP) had a record year in 2021-22. Operating profit increased from £5.3m to £8m. Fourth quarter profit in South Africa was trebled and Ghana produced a flat profit contribution. The share price was 11.7% ahead at 9.1p.

Touchstone Exploration (LON: TXP) has received approval to develop the Cascadura area of the Ortoire block from the Trinidad and Tobago authorities. A multi-well surface production facility will be built. There was a further 10.7% gain in the share price to 108.5p.

Platinum and precious metals explorer Future Metals NL (LON: FME) has announced an oversubscribed fundraising of $5m at 12.5 cents a share and could raise up to $500,000 more from eligible shareholders. The cash will used to fund exploration at Panton in Western Australia with a focus on the potential for a nickel copper and platinum group metals sulphide discovery. The share price rose 7.7% to 7p.

Record second half sales helped Colefax (LON: CFX) to beat profit forecasts and report a doubled pre-tax profit of £10.8m in the year to April 2022. Net cash is £21.8m after spending £6.7m on buying back shares. There was a particularly strong performance from the decorating division. Housing activity and new products are driving growth. There could be a slowing in activity levels later this year and a 2022-23 pre-tax profit of £6m is forecast by Peel Hunt. The share price rose by 2.87% to 807.5p.

Persimmon, UK Inflation, and Power Metal Resources with Alan Green

UK Investor Magazine
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Persimmon, UK Inflation, and Power Metal Resources with Alan Green

UK Inflation hit 10.1% in July as soaring energy and food prices dragged the headline inflation figure to the highest levels for 40 years. We discuss how inflation is taking its toll on households and whether the new UK Prime Minister can do anything to bring it under control, given UK inflation is among the highest of the G7.

Persimmon results can be viewed as a comprehensive indicator of the health of the UK economy and we question what falling completions mean as average selling prices rise. We look at the Persimmon yield and how their cash generation can support this yield going forward.

Power Metal Resources soared 45% yesterday after the announcement of favourable findings at their Molopo Farms Complex Project in Botswana. Alan outlines what investors can look forward to in the near future.

We finish by exploring the offering AQUIS provides for investors and exciting growth companies following the announcement Hargreaves Lansdown would provide electronic trading for the APEX segment of the AQUIS Stock Exchange.

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