Ascential widens operating loss to £35.2m despite double-digit revenue growth

Natasha Doris
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0
Ascential widens operating loss to £35.2m despite double-digit revenue growth

Ascential shares decreased 6.4% to 273.2p in late morning trading on Monday after a widened reported operating loss of £35.2 million in HY1 2022 compared to £2.4 million in HY1 2021.

Ascential attributed the loss to the amortisation of acquired intangibles at £17.5 million and share-based payments at £7.6 million, alongside non-trading items for acquisition earnouts, transaction and integration costs, and the expensing of build costs for its new ERP and Salesforce systems at £33.2 million.

The firm also noted a non-cash charge of £31.4 million for the impairment of the Edge Digital Shelf intangibles, along with the expenses of its strategic shift to refocus its foundational services on the leading global marketplaces.

Acential confirmed its results were in line with market expectations, with an adjusted EBITDA of £67.2 million against £42.8 million the last year, and a margin of 25.8% compared to 27.8%.

The company announced a revenue climb across all four sectors of £260.7 million against £154.3 million, reflecting continued structural growth in end markets, assisted by a bounce-back from major events.

The group highlighted an adjusted EPS profit from continuing operations of 8p against 5.7p the last year.

“Ascential has had an excellent first half of the year, with strong growth in group revenue and profit in line with expectations. Each of our segments delivered double digit revenue growth: all the more pleasing given the challenging macro backdrop,” said Ascential CEO Duncan Painter.

“We are making good progress with our mission to make Digital Commerce the number one, global real-time platform that powers eCommerce by enhancing our capabilities, expanding our partnerships with leading eCommerce marketplaces and increasing our addressable market through complementary acquisitions.”

Ascential commented its outlook included strong results for its Digital Commerce and Product Design businesses in FY 2022, with continued recovery anticipated for its Marketing and Retail and Finance sectors.

“Despite the current macro-economic uncertainty, all our businesses are well positioned to drive the success of Ascential now and in the long term, as we continue to invest to extend our market leadership and maximise our future profitable growth,” said Painter.

XP Power swings to HY1 loss on supply chain and inflationary challenges

Natasha Doris
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0
XP Power swings to HY1 loss on supply chain and inflationary challenges

XP Power shares fell 6.5% to 2,840.6p in late morning trading on Monday, after the company announced a reported operating loss of £45.2 million in HY1 2022 from an operating profit of £17.1 million the last year.

The power solutions firm announced a pre-tax loss of £47.4 million compared to a pre-tax profit of £16.4 million year-on-year, alongside a diluted loss per share of 180.6p against an earnings per share of 68.1p.

XP Power confirmed an operating cash flow loss of £13.1 million compared to an operating cash flow of £19.7 million in the previous year.

Meanwhile, the company highlighted a net debt of £102 million from £20.3 million in HY1 2021.

However, XP Power mentioned a 3% uptick in revenue to £123.6 million against £119.9 million the year before.

“While underlying demand remained strong across all sectors, a combination of external supply chain factors, which restricted our capacity to deliver to customers, and inflationary pressures have produced a challenging backdrop in the first half,” said XP Power chair James Peters.

“The team is working hard to mitigate these industry-wide challenges, with an improvement in performance in Q2 being sustained into the early weeks of the second half. While we are confident of a substantially better performance in the remainder of 2022 supported by the inventory on hand and a record, committed order book, there remains a wider range of full year outcomes than in prior years including scenarios where full year outturn is at the lower end of current analyst expectations.”

“Longer term, the Group’s prospects remain bright, we are excited by the additional capacity to come from our new Malaysian facility and the opportunities that will provide. We are confident of delivering strong revenue growth and significant long term value creation as we outperform our end markets.”

The group noted an interim dividend of 37p, remaining flat against the last year.

HSBC post-tax profits hit $9.2bn in HY1 2022

Natasha Doris
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0
HSBC post-tax profits hit $9.2bn in HY1 2022

HSBC shares gained 5.5% to 542p in early morning trading on Monday, after the banking firm announced an $800 million post-tax profit growth to $9.2 billion in HY1 2022.

The bank reported a reported pre-tax profit fall of $1.7 billion to $9.2 billion, reflecting a net charge for expected credit losses and additional credit impairment charges, against a net release in HY1 2021.

HSBC confirmed an adjusted pre-tax profit slide of $900 million to $10.7 billion.

The company highlighted a slight revenue drop to $25.2 billion as a result of foreign currency translation impacts and HY1 2022 losses on scheduled business disposals.

Meanwhile, HSBC reported an adjusted revenue rise of 4% to $25.7 billion on the back of higher net interest income and high revenue performance from Global Foreign Exchange in Global Banking and Markets.

The banking firm added its reported ECL were a net charge of $1.1 billion, reflecting stage three charges of $800 million, alongside extra allowances to reflect increased economic uncertainty and inflation, slightly offset by remaining Covid-19 reserves.

HSBC also noted an operating expenses decrease of 4% linked to foreign currency translation impacts, while its adjusted operating expenses fell 1%.

The group confirmed a return on tangible equity of of 9.9%, marking a 0.5% growth year-on-year, including a 2.3% annualised impact of a deferred tax asset gain.

Meanwhile, its CET1 ratio reached 13.6%, representing a 2.2% decline against 31 December 2021.

HSBC commented its FY 2022 outlook remained positive, with an anticipated net interest income of at least $31 billion for FY 2022 and a minimum of $37 billion for FY 2023.

“Our first-half performance reflects the continued impact of our strategy, with gathering revenue momentum and tight cost control,” said HSBC CEO Noel Quinn.

“The progress that we’ve made growing and transforming HSBC means we are in a strong position as we enter the current rates cycle.”

“We are confident of achieving a return on tangible equity of at least 12% from 2023 onwards, which would represent our best returns in a decade.”

The banking giant said it expended a dividend payout ratio of 50% for 2023 and 2024, with an intention to return to quarterly dividends in 2023.

However, HSBC confirmed it expected the quarterly dividend for the first three quarters to initially be reinstated at a lower level than its prior dividend of 10c per share paid until the end of 2019.

“As a result, we are providing more specific dividend payout ratio guidance of around 50% for 2023 and 2024. We understand and appreciate the importance of dividends to all of our shareholders,” said Quinn.

“We will aim to restore the dividend to pre-Covid-19 levels as soon as possible. We also intend to revert to quarterly dividends in 2023.”

HSBC announced a HY1 dividend of 9c per ordinary share, which is set to be paid in cash.

Pearson operating profits climb on English and Assessments sectors

Natasha Doris
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0
Pearson operating profits climb on English and Assessments sectors

Pearson shares rose 6.8% to 808.2p in early morning trading on Monday following an adjusted operating profit growth of 22% to £160 million in HY1 2022.

Pearson attributed its profit climb to a positive trading performance, FX benefit and property savings, slightly offset by inflation, portfolio investment and phasing costs in 2021.

The education group reported an underlying sales increase of 6% to £1.7 billion, driven primarily by a 16% rise in its Assessment and Qualifications business as a result of US Student Assessment and UK & International Qualifications after exam timetables started to normalise post-Covid.

Sales were also boosted by a 22% surge in Pearson’s English Language Learning sector, as improved global mobility aided expansion in the Pearson Test of English (PTE).

The company announced an adjusted EPS increase to 22.5p compared to 10.5p in HY1 2021.

Pearson noted an operating cash flow of £9 million against £10 million the last year, with the drop through of climbing profits offset by a growth in receivables on the back of strong revenue increases in HY1 which will be collected in HY2.

The group mentioned a HY1 net debt of £810 million from £646 million, with operating cash offset by dividends, share buyback and tax.

Pearson confirmed an available liquidity of £1.2 billion compared to £1.4 billion year-on-year at the end of HY1.

The company reiterated its outlook, including unchanged revenue and adjusted operating profit expectations for FY 2022.

The education firm highlighted the upside potential in English Language Learning, Virtual Schools and Clinical Assessment as a result of outperformance in HY1 and likely increased pressure in enrolments in OPM and higher education.

Meanwhile, the company said the growth in Pearson+ subscriptions would probably lead to a move in HE revenue recognition from Q3 to Q4.

“Pearson has delivered another encouraging financial performance in the first half of the year. We continue to make excellent strategic and operational progress, with momentum across the business,” said Pearson CEO Andy Bird.

“We are already seeing clear benefits from our increasingly diverse learning ecosystem, with Pearson serving more people across their lifelong learning journeys. Our digital strategy is progressing well; Pearson+ grew to 4.5m registered users, increasingly taking us direct to consumers.”

Pearson added it expected a net interest charge of £10-£15 million and an effective tax rate of 15% to 17%, reflecting the statute of limitations on a range of tax provisions which lapsed in April 2022.

“Our focus on delivery and execution remains and full year 2022 expectations are reaffirmed. In addition, the more integrated platform we are building across the company is creating efficiencies, underpinning our new guidance for accelerated margin improvement,” said Bird.

“We have a robust balance sheet which, together with our cash generation, will support continued investment in growth and create value for our shareholders.” 

Dividend and share buyback

Pearson recommended a HY1 dividend of 6.6p from 6.3p in HY1 2021, with a £350 million share buyback currently in progress and over £165 million in shares repurchased as of 29 July 2022.

New Aquis admission: Equipmake drivetrain potential

Andrew Hore
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0
New Aquis admission: Equipmake drivetrain potential

Equipmake Holdings has developed electric vehicle drivetrain technology that has won some initial contracts. It is still early days and the cash raised will help to increase capacity if additional work is won.
The share price ended the first day at 5.875p (5.5p/6.25p). There were five trades at between 5.65p a share and 6.1p a share. Just over 69,000 shares were traded.
Revenues are currently modest, but there are more than £400m of opportunities that are being negotiated. These include active discussions, soe with existing customers, or proposals that have been sent.
Positive news about this ...

Keller builds on strong foundations

Andrew Hore
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0
Keller builds on strong foundations

Keller (LON: KLR) is the largest geotechnical company in the world, and it is growing strongly. On 2 August it is publishing its interim figures. These should show that Keller is on course
At the end of 2021, there was a record order book of £1.3bn, with £787m of this in North America. Since then, significant orders have been won. Keller has gained a contract in Saudi Arabia, that could end up generating hundreds of millions of pounds. The NEOM project involves constructing a new city and there will be an initial £50m in revenues generated in the next 12 months.
The first half is normally less...

Hargreaves Services beats expectations

Andrew Hore
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0
Hargreaves Services beats expectations

Full year figures from AIM-quoted Hargreaves Services (LON: HSP) were better than previously upgraded expectations. Profit is forecast to fall this year, but they will still be significant.
In the year to May 2022, pre-tax profit improved from £21.2m to £32.7m. That included a £27.3m contribution from German associate HRMS, up from £13.6m in the previous year. Higher commodity prices and increased volumes of minerals traded continued to boost the HRMS performance. The steel waste recycling business moved into profit, while the carbon pulverisation plant is fully operational and broke even.
The...

Aquis weekly movers: Hydrogen Utopia US trading facility and Lekoil returns from suspension

Andrew Hore
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0
Aquis weekly movers: Hydrogen Utopia US trading facility and Lekoil returns from suspension

Waste plastic to hydrogen business Hydrogen Utopia International (LON: HUI) was the best performing Aquis-quoted share last week. There was a 38.9% rise to 9.375p, which took the share price back above the 7.5p placing price. The shares started trading on the US OTCQB Venture Market on 26 July. Executive director Howard White bought 55,500 shares at 9p each, taking his stake to 3.89%.

Coinsilium Group Ltd (LON: COIN) has been appointed adviser to Metalinq Labs Inc and it has a token purchase agreement to acquire $200,000 of future Metalinq tokens, which should be issued in 2023. Metalinq is a next generation Layer 3 protocol solution enabling interoperability between metaverses. Existing Indorse token owners (Coinsilium holds 5.35 million Indorse tokens) are eligible to receive Metalinq tokens. The share price jumped 20.4% to 2.95p.

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Fallers

Shares in Lekoil Ltd (LON: LEK) returned from suspension after the publication of interim results. The share price fell 18.4% to 0.775p. Thanks to finance income Lekoil reported a pre-tax profit of $836,000. Olapade Durotoye is leaving the board to take up a role at Savannah Energy. Lekoil is continuing its litigation with the former chief executive and Lekoil Nigeria.

TECC Capital (LON: TEC) shares fell 9.37% to 2.9p prior to their suspension. TECC Capital is subscribing for £300,000 of convertible loan notes in EDX Medical Ltd, with a reverse takeover expected to eventually happen. This is subject to due diligence. EDX Medical was founded by Sir Chris Evans to develop digital diagnostics products and services. It owns a laboratory in Cambridge and offers testing and genomic sequencing research.

AQRU (LON: AQRU) shares declined 6% to 1.175p, having floated as a shell in April 2021 at 5p a share. The decentralised finance company lost £2.32m in the six months to April 2022 and still had net cash of £6.1m.

In the year to March 2022, Oberon Investments (LON: OBE) increased its revenues by 75% to £6.7m. That includes an initial contribution from financial planning business Smythe House. The big increase in revenues came from corporate finance. The pre-tax loss was £581,000, after a £212,500 gain on investments. Funds under management increased by 80% to more than £1bn. The share price fell 5.05% to 4.7p.

Greencare Capital (LON: GRE) is still seeking a suitable cannabis-related acquisition. There is still £679,000 in the bank. The share price fell 1.64% to 30p, which values the company at more than five times its net assets.

New Aquis admission: Macaulay Capital providing cash for small companies

Andrew Hore
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0
New Aquis admission: Macaulay Capital providing cash for small companies

Macaulay Capital is run by an experienced investment team that has worked at Chelverton Asset Management, so it has expertise in the smaller end of the market. It is focusing on smaller companies with solid businesses that are too small to attract institutional investors. The flotation will provide access to additional cash and increase the profile of the company.
An initial investment has been made in a food manufacturer, which has also provided income for the company.
The shares ended the first day of trading at 21p (20p/22p), although there were no trades. All shares have all been issued at...

Shearwater gaining cyber contracts

Andrew Hore
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0
Shearwater gaining cyber contracts

Cyber security services provider Shearwater Group (LON: SWG) is growing rapidly on the back of increased demand for cyber security. New contracts worth £25m were won in the fourth quarter of the year.

In the year to March 2022, Shearwater revenues increased from £31.8m to £35.9m. Two customers account for more than two-thirds of those revenues. The overall growth was held back by a decline in software sales, while the products are re-engineered so that they are part of one integrated platform. The main growth was in security solutions. US revenues grew 26% to £1.5m.   

Shearwater moved from breakeven to an underlying pre-tax profit of £900,000. Higher depreciation and amortisation charges mean that pre-tax profit is expected to fall to £500,000 this year, although EBITDA should be higher. Historically, there tend to be upgrades later in the financial year.

There are already £14m of revenues secured for this year, which is 37% of the forecast of £37.7m. There is potential for software contracts, although there may be more SaaS-based revenues meaning that it will take time for these revenues to build up.

There are increasing numbers of cyber attacks and they can be highly costly to corporates. This is making them more aware of the requirement for good cyber security services and software to be in place.  

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