musicMagpie revenues fall as Disc Media & Books demand slides

Natasha Doris
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musicMagpie revenues fall as Disc Media & Books demand slides

musicMagpie shares fell 9% to 45.5p in early morning trading on Wednesday following a reported revenue dip to £71.3 million in HY1 2022 compared to £72.8 million in HY1 2021.

The technology upcycler confirmed its growth in Consumer Technology mostly offset the expected post-Covid drop in Disc Media and Books demand.

musicMagpie announced Consumer Technology revenue made up 65% of total revenue, with a 15.9% growth year-on-year to £46 million against £39.7 million.

“I am pleased that the business has delivered a strong performance in our strategically important Consumer Technology division, which now represents two-thirds of our total revenue,” said musicMagpie CEO Steve Oliver.

Meanwhile, the company’s Disc Media and Books revenue fell 23.6% to £25.3 million from £33.1 million in HY1 as a result of Covid-19 lockdowns.

The circular tech economy group highlighted a gross profit slide to £19 million from £23.7 million, along with a gross margin decrease to 26.6% compared to 32.6% on the back of a change in overall product mix towards Consumer Technology, with a rising proportion sourced from intermediary wholesale partners.

The firm also reported a pre-tax loss of £1.0 million from a HY1 2021 loss of £17.7 million, with a post-tax loss of £3.2 million against £17.7 million in HY1 2021.

musicMagpie noted a net debt climb to £3.3 million against £1.8 million, in line with management expectations.

The company announced an investment into Consumer Technology with rental assets of £3.6 million from £1.4 million year-on-year, and investment in IT platforms of £2.2 million against £900,000 the year before.

The firm also confirmed its new committed three-year £30 million revolving credit facility with HSBC UK and Natwest, signed post-period, in a move to drive future rental growth.

FY 2022 guidance

musicMagpie commented its outlook included an expansion of Consumer Technology, with an expected rise in rental subscribers.

“I am also delighted with the progress being made in our device rental subscription service,” said Oliver.

“In light of the continuing squeeze on consumer spending, we believe that this will become an increasingly attractive option to a wider range of consumers seeking to replace their non-discretionary technology products in a cost-effective way.”

“Whilst the successful growth of this offering has a short-term compression on the financial performance of the business relative to a one-off sale, it will deliver higher revenue and EBITDA over the life of the device.”

The company added it anticipated growth from its partnership with sales channel Back Market, alongside additional listings with partners such as Amazon.

musicMagpie said it was confident in revenue and EBITDA for HY2 2022, with expected resilience in Disc Media and Books gross margins and sales from Back Market projected to carry the group into a strong HY2 financial period.

“Notwithstanding the challenges presented by the current macroeconomic uncertainty, we expect consumers will continue to seek ways to raise cash and save money and as a result, we are confident that the business is well positioned for future growth in H2 2022 and beyond,” said Oliver.

Peel Hunt believes that ITM Power will be a leader in electrolyser sector

Andrew Hore
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Peel Hunt believes that ITM Power will be a leader in electrolyser sector

Peel Hunt has initiated research on ITM Power (LON: ITM) and the broker believes it is in a good position to be a leader in the electrolyser market. Peel Hunt has set a target price of 500p.

Sheffield-based ITM Power develops and manufactures electrolyser technology that can produce hydrogen from green sources. This could be in the form of gas, ammonia or methanol.

An electrolyser uses electricity to split water into hydrogen and oxygen through electrolysis. The hydrogen can be stored as compressed gas or liquified.  

Electrolyser market

In 2020, there was 90 million metric tons of hydrogen produced using natural gas that was used by industrial businesses. There was 50% used in chemical manufacturing, 40% used in oil refining and 10% in iron and steel production. There are new uses that replace fossil fuels.

By 2030, the IEA expects green hydrogen to provide 85 million metric tons out of 210 million metric tons of hydrogen production. By 2050, green hydrogen should account for 340 million metric tons out of a total of 545 million metric tons.

Peel Hunt believes that ITM Power could become profitable in the year to April 2025. That is based on revenues of £233.8m. On that basis, there should not be any need for further cash injections in the next few years. ITM Power raised £250m last year.

Cash could still be around £135m by the end of April 2025, if the forecasts are proved correct. This could then help to fund the expansion of capacity.

The full year figures are due to be published on 8 August. Total backlog was 755MW at 1 June 2022. Revenues of £5.1m and a loss of £27.7m is estimated. ITM Power has been quoted for nearly two decades. It has taken a long time but it is getting to an important point in its development.

Franchise Brands revenues and profits surge on 20% rise in Metro Rod and Metro Plumb sales

Natasha Doris
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Franchise Brands revenues and profits surge on 20% rise in Metro Rod and Metro Plumb sales

Franchise Brands shares rose 3.1% to 148.4p in late afternoon trading on Tuesday following a reported 60% surge in revenue to £44.5 million in HY1 2022 against £27.8 million in HY1 2021.

The multi-brand franchise business highlighted an adjusted EBITDA growth of 74% to £7.3 million from £4.2 million the last year, alongside a statutory pre-tax profit spike of 83% to £4.8 million compared to £2.6 million.

The firm’s Metro Rod and Metro Plumb system sales grew 20% to £28.5 million, with its results exceeding management expectations in part linked to its recent acquisition of Filta, which served to expand the company’s international footprint.

Franchise Brands confirmed an adjusted EPS climb of 51% to 4p from 2.7p and a basic EPS growth of 89% to 3p compared to 1.6p.

The group mentioned net cash of £4.7 million at 30 June 2022 against £6.5 million year-on-year, after £1.3 million of costs associated with its Filta acquisition and its £1.7 million Willow Pumps contingent consideration payment.

“The Group has had a highly productive and successful first half, with record organic growth primarily driven by Metro Rod and the transformational acquisition of Filta bringing highly complementary services, an international footprint and considerably enhanced scale,” said Franchise Brands executive chairman Stephen Hemsley.

“Beyond the near term, we are confident our largest businesses, Metro Rod and Filta, are well positioned to capture the clear opportunities to grow from their current small share of large, fragmented markets where scale is becoming still more of a competitive advantage, including through the implementation of efficiency-enhancing technology.”

Franchise Brands announced a 50% interim dividend climb following its strong interim performance to 0.9p per share against 0.6p per share.

“As a highly profitable and cash generative business, with a strong ungeared balance sheet, we are in a robust financial position to weather uncertain economic conditions, take advantage of future organic growth and acquisition opportunities, and deliver growing returns to shareholders, as we have today through a 50% increase in our interim dividend,” said Hemsley.

Uniphar confirms strong outlook on steady M&A pipeline

Natasha Doris
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Uniphar confirms strong outlook on steady M&A pipeline

Uniphar shares declined 2.3% to 310p in late afternoon trading on Tuesday after the group confirmed an EBITDA and gross profit performance in line with management expectations in its HY1 trading update.

The healthcare services company reported a gross profit rise of 5%, driven by organic growth across each sector and outperformance in its Supply Chain and Retail segment.

Uniphar highlighted a normalised free cash flow conversion in line with medium term guidance and a strong liquidity position, despite macro-economic pressures.

The firm said it remained focused on is strategy of building a pan-European presence across its Commercial and Clinical business, and completed three acquisitions in 2021 to advance its ambitions in the region.

The group confirmed its integration of BETMSLs, CoRRect Medical and E4H were progressing according to schedule, and reported a targeted mid-to-single digit organic growth in gross profit in the segment for the medium term.

Meanwhile, Uniphar commented its Product Access platform delivered mid-to-single digit organic growth over the period, with similar expectations for the FY and targeted double-digit growth in the medium term.

The company added the integration of its Devonshire acquisition from 2021 was ongoing and making good progress.

Uniphar confirmed its acquisition of Navi Group for its Supply Chain and Retail business was expected to close later in 2022. The group highlighted a target of low-to-single digit organic growth in gross profit across the medium term for the sector.

FY 2022 guidance

The firm commented its outlook remained strong, with M&A continuing to play a key role in its compounding growth strategy, while maintaining a disciplined approach to capital allocation.

“The Group has performed strongly during the period. The resilience of our business model and the diversity of our product offering has once again been demonstrated with each division delivering organic growth in gross profit during the period,” said Uniphar CEO Ger Rabbette.

“Once again, our Supply Chain & Retail division has outperformed its medium-term guidance demonstrating the benefits of our market leading position and the importance of continued investment in this division.”

“While the macro-economic environment remains uncertain, we have been successful in using our scale and deep relationships with our long-term partners to mitigate inflationary headwinds. We remain confident and are on track to achieve our strategic objective of doubling EBITDA within 5 years of IPO.”

Ergomed revenue climbs 24%, ADAMAS integration brings additional benefits

Natasha Doris
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Ergomed revenue climbs 24%, ADAMAS integration brings additional benefits

Ergomed shares increased 7.5% to 1,086p in late afternoon trading on Tuesday after the group announced a total revenue growth of 24.8% to £69.9 million in HY1 2022.

Ergomed commented it anticipated total revenue and adjusted EBITDA for the FY term to be in line with market expectations.

The group said it currently had a strong operational cash flow, with a cash balance of £12 million after its £24.2 million net cash purchase of international specialist consultancy ADAMAS.

Ergomed mentioned its integration of ADAMAS was progressing well, with further synergistic benefits expected to materialise down the timeline.

The firm reported it was debt free with available debt facilities which recently increased from £30 million to £80 million.

The company noted a total order book of £284.5 million, with a climb of 18.7% since 1 January 2022. The group subsequently confirmed high visibility into HY2 2022 and beyond.

“Ergomed has delivered further significant strategic progress in H1 2022. Our strong organic growth has continued, with expansion into new territories and further strengthening of the Company’s Board and leadership team,” said Ergomed executive chairman Dr Miroslav Reljanović.

“We also continued to execute our disciplined M&A strategy with the acquisition of ADAMAS. This progress once again demonstrates Ergomed’s robustness, resilience and ability to sustain high growth, notwithstanding the challenging macro-economic environment.”

“The Board expects to deliver the anticipated trading growth and financial results for the full year in line with current market expectations , and we look forward with confidence to the rest of this year and beyond.”

FTSE 100 gains on strong corporate results

Natasha Doris
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0
FTSE 100 gains on strong corporate results

The FTSE 100 gained a 0.5% boost to 7,343.5 after a slate of positive results from the UK and US markets helped the FTSE 100 outperform European indices and US futures.

“The FTSE 100 made some modest progress on Tuesday morning as earnings reports on both sides of the Atlantic turn from a trickle to a flood,” said AJ Bell investment director Russ Mould.

“Some really big hitters report in the US later today, including Coca-Cola, McDonalds as well as Microsoft and Alphabet.”

“These could really define an earnings season which, up until now, has been pretty resilient given the backdrop.”

However, US markets slid in advance of the looming US Federal Reserve interest rates decision tomorrow, which is currently predicted to see a rate hike of up to 75% to tackle soaring 9.4% US inflation.

The Dow Jones dipped 0.3% to 31,851 in pre-open trading, with the S&P 500 falling 0.3% to 3,954.5 and the NASDAQ decreasing 0.5% to 12,292.5.

“Another defining moment this week comes with tomorrow’s decision on US interest rates. How hard will the US Federal Reserve push – will it serve up another 75 basis point rise as is widely expected? Or will it dial back a touch?” said Mould.

Unilever

Meanwhile, the FTSE 100 saw Unilever shares climb 2.7% to 4,022.2p as the firm enjoyed a €29.6 billion turnover in HY1 2022.

However inflation made its worrying mark by eating into the company’s operating margins over the financial period.

Unilever operating profits gained 1.7% to €4.5 billion, but its operating margin fell 200 basis points to 15.2% year-on-year.

The consumer goods firm announced an underlying profit rise of 4.1% to €5 billion and an underlying profit margin fall of 180 basis points to 17% as a result of cost input inflation.

“It’s no surprise to see inflation and global uncertainty called out as headwinds, but importantly for Unilever work done raising prices is keeping sales and profits moving in the right direction,” said Hargreaves Lansdown equity analyst Matt Britzman.

“Juggling higher prices and weaker consumers is a tough act to nail, so far Unilever looks to be doing a decent job.”

Mould added: “Consumers trading down to cheaper alternatives is an obvious risk for Unilever but, rather than trying to compete on price, the company is better off protecting itself from inflationary pressures by testing its pricing power.”

“In fairness the volume declines weren’t too alarming, suggesting its brands retain their hold over shoppers for now. Longer term, protecting the integrity of these brands by not compromising on quality to reduce costs is important.”

Compass Group

Compass Group joined the top risers with a 2.3% increase to 1,887.5p after its Q3 2022 results displayed a return to thriving business post-Covid.

The foodservice company reported a 49.7% growth in revenue, with all regions operating above 2019 levels over the period.

Compass Group also noted a 40 basis point rise in its underlying operating margin from 5.8% in HY1 2022 to 6.2% in the term.

Its net new business expanded 9.1% and customer retention rate remained high at 96.1%.

“Some may be disappointed that Compass have not been able to fully absorb current margin pressures, given their renowned strengths in micro-managing costs within the group,” said Hargreaves Lansdown Select fund manager Steve Clayton.

“But the bigger picture is that the group has now put the pandemic firmly behind it, has restored margins above 6% and doubled its run-rate of new business growth, whilst keeping client retention above 96%.”

Oil rises on supply fears

The price of oil rose on supply fears, as Russian energy company Gazprom confirmed gas supplies through the Nord Stream 1 pipeline to Germany would fall to 20% of capacity.

The threat is set to throw European countries into hot water, as states struggle to stock up on supplies in advance of the winter season.

European Commission President Ursula von der Leyen previously asked European regions to reduce gas usage by 15% from August until March in a move to ration supplies after von der Leyen accused Putin of attempting to “blackmail” Europe into paying for gas in Roubles.

A draft law was passed today by EU energy ministers, which included voluntary steps to cut gas consumption and launch mandatory measures if insufficient supplies were saved across the trading bloc.

Benchmark Brent Crude hit $106 per barrel. Shares in the FTSE 100 oil giants gained, with BP increasing 1.7% to 393.5p and Shell climbing 1.6% to 2,103.2p.

Greencore Group revenue grows 35% as company raises prices to fight inflationary costs

Natasha Doris
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0
Greencore Group revenue grows 35% as company raises prices to fight inflationary costs

Greencore Group shares slid 3.7% to 103.3p in late morning trading on Tuesday following a reported 35% growth in revenue to £486.2 million in Q3 2022.

The convenience foods group highlighted a 41% revenue climb to £333.4 million against the previous year, alongside a 23.5% rise to £152.9 million in other convenience food categories.

Greencore reported a pro forma revenue increase of 25.8% year-on-year, with a 31.2% growth in food to go and a 15.5% climb in other convenience food categories.

The group commented its pro forma revenues were driven by increased volumes, a low-teen percentage growth in underlying pricing and increased revenue in the company’s Irish ingredients trading sector.

The food producer said it noted limited demand impact in its categories, however it would continue to closely monitor the effect of increased prices on a consumer level.

Greencore highlighted constructive customer dialogue, price recovery mechanisms, supply chain management and operational efficiencies as its chosen methods to navigate inflationary costs and supply chain challenges.

The company also noted its intention to recommence value return of up to £50 million over the two years, starting with a share buyback programme, which is set to see it repurchase ordinary shares for a maximum aggregate consideration of £10 million.

FY 2022 guidance

Greencore said it was confident in its potential to deliver yearly volume growth and cashflow progression in its peak seasonal trading period in HY2.

The firm mentioned it currently expected a FY operating profit between £72 million and £77 million, and an adjusted EPS between 9.2p and 10p.

Greencore anticipated a net debt at the end of FY 2022 of approximately £200 million, with net debt: EBITDA below two times, as measured under financing agreements.

The group confirmed it would continue to monitor the impact of inflationary costs on consumer demand.

“I am encouraged by the progress we have made during Q3 against the backdrop of inflationary pressures for the industry,” said Greencore executive chair Gary Kennedy.

“Revenue and profit conversion through the period has been encouraging and we are confident in our ability to continue to manage the various industry challenges and end the year strongly.”

“Our leading market positions, close customer relationships and intense focus on efficiencies mean that we look to the future with optimism, and we expect to deliver a strong year on year improvement in profitability, cash flow and returns for FY22.”

Vietnam, inflation, and future economic expansion with Vietnam Holding’s Craig Martin

UK Investor Magazine
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Vietnam, inflation, and future economic expansion with Vietnam Holding’s Craig Martin

The UK Investor Magazine were delighted to be joined by Craig Martin, Chairman of Dynam Capital, the manager of the Vietnam Holding Investment Trust.

Craig provides a comprehensive update on the Vietnam Holding portfolio and the factors driving performance in 2022 including inflation, interest rates, and the dynamics of Vietnam’s retail investors.

We highlighted the difference between Vietnam’s energy mix and those facing social unrest such as Sri Lanka and Pakistan. 

Vietnam produces a lot of its own food so has been able to avoid much of the negativity associated with rising food prices and inflation.

We finish by looking forward to the rest of 2022 and what it holds for Vietnam Holding.

Find out more on the Vietnam Holding website here.

AIM movers: Dotdigital share price recovery and Brighton Pier pleases

Andrew Hore
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AIM movers: Dotdigital share price recovery and Brighton Pier pleases

Dotdigital Group (LON: DOTD) has more than halved this year, but a positive trading statement led to a 26.9% rise in the share price to 97.8p. The email marketing company increased full year revenues by 8% to £62.8m, while operating profit and cash were better than expected. A new management team has been appointed in North America, which had been a disappointing performer. There is no change in the finnCap profit forecasts, though. It expects a small rise in pre-tax profit to £14.4m in 2022-23.

Leisure and entertainment company Brighton Pier Group (LON: PIER) beat expectations for the year to June 2022. The shares rose 6.1% to 52.5p, Adjusted EBITDA was £10.8m, which is higher than the previously upgraded forecast of £10.4m. Net debt fell from £13.3m to £6.1m. Pre-tax profit is expected to more than quadruple to £6.4m, although it was boosted by government support measures such as a temporary cut in VAT and business rate relief. The ending of the support and cost inflation means that the equivalent 2022-23 pre-tax profit is expected to fall to £4.4m on flat revenues. However, Brighton Pier intends to change its year end to December. There will be 12-month figures followed by 78-week results to December 2022.

Mobile data computing services and technology provider Touchstar (LON: TST) increased first half revenues by 7% to £3.1m, with two-fifths of these revenues recurring. The order book is 75% ahead at £1.1m. Full year earnings could be 5.5p a share and net cash is expected to be £2.4m – at least one-third of the current market capitalisation. The share price rose 7.84% to 82.5p.

Kera Resources (LON: KRS) has undertaken a consolidation of 100 shares into one new share. The share price had already been declining, but today it is the worst performer with a 19.1% fall to 4.25p. The share price had been even lower.

Advance Energy (LON: ADV), where the share price has already fallen by nearly 98% this year, has fallen by a further 11.9% to 0.0925p following a fundraising that generated £425,000 at 0.085p a share. There are warrants attached to each new share that are exercisable at 0.13p a share. The cash will enable management to find a suitable reverse takeover candidate and fund due diligence.

Cyber security services and software provider Corero Network Security (LON: CNS) reported a 22% increase in order intake to $10.9m in the first half of 2022. Annualised recurring revenues are 21% ahead at $13.6m. Despite the strong interim trading statement, the shares were marked down by 8.6% to 10.15p.

Investment company Limitless Earth (LON: LME) reported a loss of £412,000 for the year to January 2022, while NAV fell from £1.98m to £1.57m. That is well below the market capitalisation of £6.9m. The share price fell 14.3% to 9p.

Mitie Group revenues rise 3% on new contracts and acquisitions

Natasha Doris
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Mitie Group revenues rise 3% on new contracts and acquisitions

Mitie Group shares gained 0.8% to 73.9p in late morning trading on Tuesday on the back of a 3% year-on-year uptick in revenue to £945 million in Q1 2023.

The professional services group announced new contract wins, renewals and extensions worth £778 across the financial period, contributing to its revenues and serving to replace the previous revenue from Covid-related contracts the last year.

Mitie Group mentioned £203 million in new contract wins, including US Visiting Forces, Hammerson, Poundland and GSK.

Its contract extensions and renewal rates exceeded 95%, with contracts such as DIO Ascension Islands, Cyprus and Falklands contracts, Vodafone, Starbucks and Jones Lang Lasalle.

Mitie Group also reported its completed acquisitions of P2ML, 8point8 and Customer Solar in Q1, with the former two creating a “market leading” telecommunications support services business for the company.

The firm added its acquisition of Customer Solar expanded its decarbonisation offering for its customers.

The group confirmed the three acquisitions brought its total number to seven over the last year, with a combined addition of £17 million in revenue across Q1.

Meanwhile, its £50 million share buyback programme launched on 9 June 2022 was amended on 14 July to alter the volumes of shares purchased each day to between 25% to 50% of the average daily trading volumes in a move to mitigate the low liquidity of the stock and improve programme efficacy.

The group confirmed it had bought and cancelled 10.5 million shares at an average price of 60p until 22 July, at a cash cost of £6.3 million.

FY 2023 guidance

Mitie Group commented its labour and parts inflation remained a challenge going forward, however the firm said it had implemented a range of margin-enhancing initiatives to increase margins in HY2 2023.

The company added it was confident in delivering on its management expectations for FY 2023.

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