Avast EBITDA drops 7.6%, profits fall on higher costs

Natasha Doris
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Avast EBITDA drops 7.6%, profits fall on higher costs

Avast shares dipped 0.1% to 679.8p in late morning trading on Tuesday, following a 7.6% drop in adjusted EBITDA to $249.7 million and a 4.4% fall in adjusted EBITDA margin to 52.9%.

The software company said its EBITA decline was linked to higher investment into its Digital Trust Services sector.

Avast confirmed an operating profit slide to $172.6 million from $226.7 million on the back of higher exceptional costs of $25.3 million and higher additional costs of $27.8 million.

The company highlighted a 0.2% decline in statutory revenue as a result of its Family Safety mobile business disposal in FY 2021.

However, Avast reported a 0.2% rise in adjusted revenue to $472 million, alongside a 0.2% uptick in billings to $483.7 million. Meanwhile, consumer direct revenue climbed 1.4% to $407.1 million.

The group mentioned strong cash generation, with unlevered free cash flow of $217.1 million and levered free cash flow of $204.3 million.

Avast further noted a resilient balance sheet with $378 million in cash and available liquidity.

The company announced a fully diluted EPS of 13c compared to 20c the year before.

Avast/Norton merger

Avast highlighted its recommended merger with NortonLifeLock, after the Competitions and Markets Authority (CMA) approved the transaction, following its conclusion that the merger would not significantly reduce UK competition in the sector.

The current statutory deadline for the CMA’s final report is scheduled for 8 September 2022.

Dividend

Avast recommended a HY1 2022 dividend of 4.8c per share, following its second interim dividend for 2021 of 11.2c paid in February 2022 and a total FY 2021 dividend of 16c per share.

Legal & General reports modest profits growth, raises dividend

Natasha Doris
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0
Legal & General reports modest profits growth, raises dividend

Legal & General shares were flat at 271.7p in early morning trading on Tuesday after the company reported an 8% operating profit growth to £1.1 billion in HY1 2022 compared to £1 billion the last year.

The legal group announced a post-tax profit rise to £1.1 billion against £1 billion in HY1 2021 and a return on equity of 21.3% from 22% the year before.

The company noted a solvency II coverage ratio of 212% against 182% year-on-year.

Legal & General commented all four of its divisions were well-positioned to capitalise on structural market opportunities and to deliver profitable growth across the medium-to-long term, notwithstanding market volatility.

“We’ve made a good start to the year, with operating profit and EPS up 8%, cash and capital generation up double digits, DPS up 5% and a return on equity of 21%,” said Legal & General CEO Sir Nigel Wilson.

“We have delivered for our institutional clients and retail customers, while generating good volumes and margins in a buoyant PRT market and continuing to scale LGC at pace – both in the UK and now also in the US – originating assets for our own business and for third parties, whilst also delivering a positive outcome for the economies where we invest. Our balance sheet is strong and highly resilient, with a solvency ratio of 212% and with 100% of cash flows received from our Direct Investments.”

“We are committed to providing financial security for our customers and colleagues in a tough economic climate and remain confident in our ability to grow profits sustainably and at attractive returns over the long-term.”

Legal & General recommended a 5% HY1 2022 dividend hike to 5.4p compared to 5.1p in the previous year.

Abrdn swings to £320m loss as adverse market conditions drag revenues lower

Natasha Doris
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0
Abrdn swings to £320m loss as adverse market conditions drag revenues lower

Abrdn shares fell 3.5% to 166.8p in early morning trading on Tuesday after adverse market conditions buffeted the company in HY1 2022, dragging revenues down.

The firm swung to an IFRS pre-tax loss of £320 million from a profit of £113 million, driven by £313 million in losses from the change in fair value of its significant investments over the financial period.

Abrdn reported an 8% slide in fee-based revenue to £696, along with a 28% drop in adjusted operating profit to £115 million, as a result of market movements.

The company noted a higher cost/income ratio at 83% against 79% year-on-year due to lower revenue.

Meanwhile, Abrdn total net outflows ballooned to £35.9 billion compared to £5.6 billion, reflecting the final LBG (Lloyds Banking Group) tranche withdrawal of £24.4 billion.

Abrdn confirmed a fall in assets under management to £508 billion against £542 billion the last year, as a result of lower markets and its final LBG tranche, slightly offset by the inclusion of AUA from its acquisition of interactive investor.

The firm commented its ambitions for revenue and profit growth would take longer than expected due to adverse market conditions.

Abrdn also noted an estimated price tag of £150 million in restructuring costs in FY 2022, alongside additional costs associated with its investments vector cost actions set to be predominantly funded by proceeds from the disposal of non-core assets.

“The half year Group results largely reflect the challenging global economic environment and market turbulence,” said Abrdn CEO Stephen Bird.

“When I became CEO in late 2020 I said that we would pursue a strategy of diversification by refocusing our Investments business in to areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market.”

“We are doing exactly that and the addition of interactive investor transforms our UK retail presence and future revenue streams. The strength of our balance sheet means that we can continue to invest and reward shareholders.”

Abrdn reported the commencement of the first £150 million buyback of its £300 million shareholder return programme.

The company recommended a HY1 dividend of 7.3p for the financial term.

Intercontinental Hotels Group launches $500m share buyback as revenue soars

Natasha Doris
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0
Intercontinental Hotels Group launches $500m share buyback as revenue soars

Intercontinental Hotels shares dipped 1.1% to 4,960p in early morning trading on Tuesday, after the hospitality company announced a 52% total revenue climb to $1.7 billion in HY1 2022 against $1.1 billion the year before.

The group reported a 162% operating profit spike to $361 million from $136 million in the previous year.

The firm mentioned significant improvement across regions in trading, with revenue in the Americas rising 44.9% to $471 million against $325 million and EMEAA growing 184.5% to $239 million from $84 million year-on-year.

However, revenue in Greater China fell 39% to $36 million against $59 million on the back of extended Covid-19 lockdowns and travel restrictions across the country.

Intercontinental Hotels highlighted a 30% net debt reduction to $1.7 billion compared to $2.4 billion year-on-year.

“The recovery in demand and pricing led to group profit more than doubling versus 2021, with profitability in the Americas now ahead of 2019,” said Intercontinental Hotels Group CEO Keith Barr.

“The EMEAA region also saw excellent improvement in performance. Whilst Greater China had a tough period as Covid-related travel restrictions were tightened, we have since seen a strong recovery in the most recent months, although risk of further volatility in trading in the region still remains.”

The firm added it was confident in a positive FY 2022 outlook, despite macro-economic headwinds and market volatility.

“Whilst the economic outlook faces uncertainties as central banks and governments take action to manage inflation, we remain confident in our business model and the attractive industry fundamentals that will drive long-term sustainable growth,” said Barr.

Intercontinental Hotels confirmed a basic EPS surge of 348% to 117.4¢ compared to 26.2¢ the last year.

Share buyback and dividend

The hotels firm also reported a new $500 million share buyback programme to return value to shareholders.

Intercontinental Hotels recommended a HY1 dividend of 43.9¢ per share after suspending its payout last year.

“Having reinstated a final dividend in respect of 2021 six months ago, the strong performance seen in 2022 to date, together with the confidence we have in continued progress, has led us to reintroduce an interim dividend at a level 10% higher than when last paid and launch an initial $500m share buyback,” said Barr.

Lok’nStore remains on track

Andrew Hore
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Lok’nStore remains on track

There was yet another forecast upgrade after self-storage sites operator Lok’nStore (LON: LOK) published its full year trading statement. The property revaluation for the end of July 2022 will be reported with the results on 31 October and that could spark another upgrade.
Self-storage revenues were 17.3% higher. Stripping out new stores and the four stores sold in the period, the increase was 24.9%. There were increased occupancy levels and prices were raised by 13% over the year. There are 40 freehold and managed sites.
Three new sites were opened during the year. Basildon, Bedford, Peterbor...

Solid State completes £36m Custom Power acquisition

Natasha Doris
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0
Solid State completes £36m Custom Power acquisition

Solid State announced its completed acquisition of battery systems and energy solutions provider Custom Power LLC on Monday.

The company acquired the Los Angeles based firm for a maximum consideration of £36 million on a debt-free, cash-free and normalised working capital basis.

“We are delighted to have completed the transformational acquisition of Custom Power, which represents a step-change in our power business,” said Solid State CEO Gary Marsh.

“The newfound scale and increasingly international offering open up opportunities in specialist and growth markets driven by decarbonisation and the drive for cordless power.”

“We look forward to integrating Custom Power and welcoming our new colleagues to the Solid State Group.”

Solid State shares dipped 0.2% to 1,122.6p in early morning trading on Monday.

Lexington Gold updates JORC Mineral Resource Estimate

Natasha Doris
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0
Lexington Gold updates JORC Mineral Resource Estimate

Lexington Gold shares gained 5.3% to 3p in early afternoon trading on Monday after the mining group reported an updated independent JORC Mineral Resource Estimate (MRE) for the Loflin side of the Jones-Keystone-Loflin (JKL) project.

The updated JORC MRE confirmed a total inferred resource of 2,596,000 tonnes at 0.99 g/t Au for 82,700 oz of contained gold.

Lexington Gold also highlighted a 27% rise in contained gold achieved for the Loflin deposit that forms part of the JKL project, increased from 65,000 oz estimated in September 2021.

The firm noted the potential for mineralisation at Loflin to remain open down-dip, to the north-east along the plunge of the syncline.

The company added there was potential for a significant further increase in resources for Loflin and Loflin South through additional drilling.

Lexington Gold reported 3D modelling and drilling delineated a north-east to south-east shallow plunging synclinal fold structure with shallow gold mineralisation in the core of the structure.

In addition, the group said the maiden JORC Resource for the Jones-Keystone side of the JKL side of the project was expected shortly after the 1m assay results were received.

“We are very pleased by this 27% upgrade to our initial maiden JORC resource at Loflin, which forms part of the JKL Project, following the extremely successful 2021/2022 reverese circulation drilling campaign,” said Lexington Gold CEO Bernard Olivier.

“The updated JORC resource for Loflin also includes over 9,000 gold ounces from the newly discovered Loflin South. The resource is located at shallow depths, with the entire upgraded JORC resource located between surface and a maximum depth of 125m. Mineralisation at Loflin remains open along strike to the north-east and down-dip, while Loflin South remains open in all directions.”

“We continue to believe that the recent drilling results will also enable the establishment of a significant maiden JORC Resource estimate for the nearby Jones-Keystone of potentially up to 100,000 ounces.”

“The updated resource for Loflin and the anticipated maiden resource for Jones-Keystone will result in a substantial combined JORC resource for the JKL Project, and there is also significant potential for further expansion through additional drilling.”

TheWorks.co.uk warns of retail uncertainty

Andrew Hore
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0
TheWorks.co.uk warns of retail uncertainty

TheWorks.co.uk (LON: WRKS) is the latest retailer to warn that weak consumer confidence and demand will hit trading this year. Increased freight and wage costs and the aftermath of a cyber security incident are creating additional problems for the fully listed arts, books, toys and stationery retailer.

The share price has fallen by more than one-fifth to 36.8p. This is the lowest the share price has been for 18 months, although it is more than double the all-time low in November 2020.

Underlying EBITDA for the year to April 2002, will be around £16.5m, rather than the previous guidance of £15m, because of lower stock provisions. However, in the first quarter of this financial year, like-for-like sales are 2.5% lower, with higher store sales offset by a sharp decline in online sales. The online sales are still 40% ahead of pre-Covid levels and they are less than 10% of the total sales.  

The outlook remains uncertain and Christmas trading is important. Sales are expected to grow but not as much as previously expected and they will not provide the additional profit to cover higher costs. Expectations have been “materially lowered”. Revenues of £259.8m and EBITDA of £14.7m was the previous consensus.

Despite the problems, a full year dividend of 2.4p a share is promised.

FTSE 100 gains, Next targets £15m stake in Joules

Natasha Doris
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FTSE 100 gains, Next targets £15m stake in Joules

The FTSE 100 kicked off a quiet day of trading in the second week of August, with the blue-chip index gaining 0.6% to 7,487.6 in early afternoon trading as the market defied the cost of living crunch and gained closer to the breakeven mark.

“The summer is supposed to be a quiet time for markets as many people are sitting on the beach, rather than glued to a screen trading stocks and shares. So far, this summer is proving to be a decent session, and one that will provide a nice surprise when people get back to their desks after a bit of sun, sand and sea,” said AJ Bell financial analyst Danni Hewson.

“The FTSE 100 managed to press ahead … at the start of the new trading week, meaning it has been on a positive run since mid-July. The 6% gain for the current rally to date means the UK blue chip index is less than 1% away from hitting breakeven for the year so far.”

“That’s considerably better than the S&P 500 index in the US which is down nearly 14% year to date.”

US markets are currently bracing for a significant rate hike in the US Federal Reserve’s next meeting, following better than expected nonfarm payroll figures last week, which beat analyst expectations with 528,000 jobs added in July.

The Dow Jones rose 0.4% to 32,889 in pre-open trading, with the S&P 500 gaining 0.4% to 4,166.7 and the NASDAQ increasing 0.6% to 13,315.7.

Meanwhile, Brent crude oil tumbled to $93 per barrel, diving to levels unseen since before Russia’s invasion of Ukraine in February.

Shares in Shell and BP appeared unshaken, however, gaining 0.2% to 2,155p and 0.4% to 412.9p, respectively.

Next

Next shares fell 0.3% to 6,420p following reports that the FTSE 100 fashion company was eyeing an equity investment in AIM-listed retailer Joules.

The investment would amount to approximately £15 million, with Joules noting the injection would be “no less than Joules’ current market price.”

“Posh wellies seller Joules has found a new lease of life on the stock market following news of a potential investment in the business by retail giant Next,” said Hewson.

“Joules has been struggling this year, with disappointing sales, supply chain problems and rising costs. Once a shining star in the retail sector, Joules saw its share price collapse after a string of profit warnings.”

“Next doesn’t typically buy companies outright so it seems unlikely that an initial investment in Joules will lead to a full takeover. Instead, expect to see it become an influential shareholder and for more of Joules’ products to appear on Next’s website.”

Lok’nStore revenues driven higher by strong storage demand

Natasha Doris
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0
Lok’nStore revenues driven higher by strong storage demand

Lok’nStore shares increased 0.2% to 1,033p in late morning trading on Monday after the company reported a 17.3% climb in self-storage revenue and a 24.9% rise same-storage revenue in its HY1 2022 trading update.

The storage firm announced a 13% growth in pricing, with occupancy driven by strong demand for self-storage.

Lok’nStore confirmed its new store pipeline added 44.1% to owned trading space, with four new stores scheduled to open in FY 2023.

The company added three new Landmark stores in Warrington, Wolverhampton and Stevenage, taking its total number of portfolio trading stores to 40, with strong early trading in all new store units.

“Trading in the year to 31 July 2022 has been excellent with same-store self-storage revenue up 24.9% against last year driven by continued strong demand for self-storage across the UK,” said Lok’nStore executive chairman Andrew Jacobs.

“We have made significant progress on our new store pipeline, whilst remaining conservatively geared, including adding a new Landmark Store site in Bolton, Greater Manchester, in recent weeks. We are onsite at four new stores, all of which will open in 2023, accelerating our earnings growth in the future.”

“We will report on the updated valuation of our stores in our Preliminary Results and with our strong revenue growth and new stores opened during the year we expect our store values will rise to reflect this continued progress.”

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