Year of consolidation for Ilika before Stereax sales take off

Andrew Hore
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Year of consolidation for Ilika before Stereax sales take off

Battery technology developer Ilika (LON: IKA) has commissioned its manufacturing plant for Stereax batteries and there is significant interest from medical technology companies, but it will be another year until sales start to ramp up so investors will have to be patient.

Process optimisation and product qualification continues at the facility and then initial products can be sold for pre-clinical studies for medical technology products. Management has decided to focus on this sector rather than the sensors market. Sales will be slower building up, but the medical markets could be much bigger.

It could take five years to go from pre-clinical studies to mass production. The potential products include implanted medical devices, smart orthodontics and cardiac sensors. The potential pipeline is much larger than the capacity of the manufacturing facility. Licensing the technology could become a possibility in three years. A US supplier would be useful given the potential customer base.

Liberum is expecting a rise in Stereax revenues from £31,000 to £200,000 this year before a jump to £6m in 2023-24. That is slower than previously expected.

Meanwhile, the development of the larger Goliath battery for luxury electric cars continues. Ilika would be one of the few European producers of solid state batteries. Goliath batteries could achieve a level of performance in excess of existing technology by 2024. A pilot plant could be started next year with a larger scale plant likely at the UK Battery Industrialisation Centre later.

Cash

There is plenty of cash in the bank to undertake the investment required in both Stereax and Goliath battery technologies thanks to the £24.7m raised at 140p a share last July. Net cash is £22.6m and that could fall to £12.2m by April 2023 after which the cash outflows from operations and investment should start to reduce.

This year the loss is expected to fall slightly from £8.15m to £7.79m on revenues improving from £496,000 £1m – mainly due to greater grant income.

At 45.5p, down 10.8%, the share price is not much more than one-third of the placing and open offer price last year, which itself was a significant discount to the then market price.

The focus for Stereax on medical technology has slowed initial sales growth, but there are still enormous prospects for Stereax and Goliath. Investors got overexcited a few years ago and pushed up the share price but there appears an opposite overreaction in the current share price.

AIM movers: CMO downgrades guidance and Concurrent Technologies medical order

Andrew Hore
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AIM movers: CMO downgrades guidance and Concurrent Technologies medical order

CMO Group (LON: CMO) is the largest faller on the day having almost halved to 39p – last year’s placing price was 132p. The online retailer of building products says revenues in the 27 weeks to June 2022 are 10% ahead, or 2% higher like-for-like. Guidance is that full year revenues will increase from £76.3m to at least £86m, but previously £95.5m was expected. The EBITDA estimate has been reduced from £5.55m to around £3.7m – similar to last year. Supply problems have increased prices and trading has been getting tougher since Easter.

T42 IOT Tracking Solutions (LON: TRAC) has signed a distribution agreement in Argentina for its shipping container tracking systems with an estimated value of more than $16m over four years. That sent the share price 39% higher at 14.25p. The deal includes recurring revenues and sales should start in 2023.

Aeorema Communications (LON: AEO) says that the year to June 2022 was its strongest ever with a 130% jump in revenues and a pre-tax profit of at least £700,000. The live events agency benefited from the ending of Covid restrictions for in-person events and virtual events are continuing. There is £1.65m in the bank. The share price rose 27.3% to 70p.

Embedded computer boards supplier Concurrent Technologies (LON: CNC) has received a new order from a global medical technology company. The initial order is worth $2.2m in the first year of product shipments and there should be orders for several years. This further diversifies the customer base away from defence, which was 70% of the revenues of £20.5m in 2021. The share price is 9.4% higher at 81.5p and it is 5.2% ahead of the level at start of the year, which is a significant outperformance of AIM.

Drink brands owner Distil (LON: DIS) says first quarter revenues have decreased by 81% to £120,000. The share price dived 14.8% to 1.15p. Management says that there is a one-off impact from stock being removed from a distributor so that Distil can handle its own UK sales. Marketing spending is higher, and the benefits of the distribution change are not expected to show through until next year. Export sales increased.

Ironveld (LON: IRON) has raised £4m at 0.3p a share to finance the acquisition and refurbishment of Ferrochrome Furnaces Ltd and may raise up to £1m more. Directors’ loans and fees of £351,000 has been capitalised. Management has raised the cash because it is not certain that Grosvenor Resources will be able to complete the promised cash injection. Shareholder approval is required at a general meeting on 1 August. A time has not been set for the requisitioned general meeting to remove two directors. The share price fell 7.8% to 0.355p – having been 0.705p one month ago.

Itaconix (LON: ITX) increased interim revenues by 124% to $3m. This sparked a 11.4% rise in the share price to 6.85p. Revenues trebled from cleaning applications using the company’s plant-based ingredients, but beauty and hygiene revenues declined due to lower order volumes. That hit gross margin. There was $900,000 of net cash at the end of June 2022.

UK GDP, Wetherspoons, and Mode with Alan Green

UK Investor Magazine
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UK GDP, Wetherspoons, and Mode with Alan Green

Alan Green joins the UK Investor Magazine Podcast for our weekly instalment of markets and Uk equities.

UK GDP rose 0.5% in May dispelling fears about an impending recession, for now. The impact of bank holidays and a boost in travel spending drove the boost, despite ongoing fears of a cost of living crisis.

We look at the current playbook for inflation and a potential snap back in markets.

However, the boost in economic activity was missed by Wetherspoon that suffered a contraction in sales, albeit an improvement on prior quarters declines. The demographics of the Wetherspoon customer may be to blame as their core ale sales suffer while spirits grew.

Bitcoin app Mode has had a torrid year during the crypto crash and we discuss recent activity at the activity. Revenue nearly tripled in 2021 but increases in their expenses meant continued cash burn.

Golden Metal Resources is set for a spin out from Power Metal Resources and help crystalise valuation creation by the parent company. We outline the Golden Metal Resources portfolio and progress of the IPO.

Watch the Power Metal Resources investor presentation here.

ITV under investigation by CMA for competition infringement

Natasha Doris
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ITV under investigation by CMA for competition infringement

ITV has confirmed it is under investigation by the Competition and Markets Authority (CMA) for its purchase of freelance services which support the production and broadcasting of sports content in the UK.

ITV has been identified in the investigation, along with BT Group, IMG Media and Sky UK.

The investigation was launched under section 25 of the Competition Act 1998 into suspected infringements of the Chapter One prohibition of the Act by companies involved in the production and broadcasting of sports content.

The CMA announced it had “reasonable grounds to suspect one or more breaches of competition law.”

However, the organisation highlighted it was too early to confirm if any breaches had been committed, and that no assumptions should be made of any infringement of the Act.

ITV said it was complying with the probe, and was committed to working with the CMA while the investigation took place.

“ITV is committed to complying with competition law and is cooperating with the CMA’s inquiries. ITV does not propose to comment on this investigation further at this stage,” said the company in a statement.

UK economy grows 0.5% in May on GP appointments, retail sector shrinks

Natasha Doris
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0
UK economy grows 0.5% in May on GP appointments, retail sector shrinks

The UK economy grew 0.5% in May after two consecutive months of contraction, according to figures released by the Office of National Statistics (ONS).

The ONS confirmed GDP was estimated to currently be 1.7% above its pre-Covid-19 levels.

“After all the doom and gloom about the state of the British economy May’s growth figures might have some people wondering what all the fuss has been about,” said AJ Bell financial analyst Danni Hewson.

“A slight uptick had been anticipated, but at 0.5% the pace of growth has caught many by surprise.” 

“Put simply, people have been living their lives, playing catch up, and doing all that housekeeping they hadn’t yet been able to get round to.”

The growth was attributed to a 0.4% climb in services output linked to human health and social activities, which rose by 2.1% on the back of a significant increase in GP appointments and served to offset the decline of track and trace.

“Anyone who has tried to book an appointment with their doctor over the last few weeks won’t be surprised to learn that GP visits have played a big part in boosting May’s numbers, something which has offset the drag from a real tapering off of test and trace operations and booster vaccine programmes,” said Hewson.

Meanwhile, output in consumer-facing services declined by 0.1% over May due to a 0.5% fall in retail trade.

However, non-consumer facing services grew by 0.5% after a drop of 0.8% in April.

The ONS reported a 0.9% rise in production, boosted by a 1.4% growth in manufacturing and a 0.3% increase in electricity, gas, steam and air conditioning supply.

“Manufacturers have really turbo charged operations despite all the price hikes they’ve experienced,” said Hewson.

“It suggests that supply blockages may finally have worked their way through the system and that many have been able to pass on extra costs to their customers.”

The figures also mentioned a 1.5% climb in construction over the month, after a 0.3% uptick in April, marking the seventh consecutive month of growth for the sector.

“Construction has had another great month, bolstered by housebuilding in a market that’s only slightly coming off the boil, and by the changing requirements of business that need to reconfigure workspaces after Covid restrictions or embrace new ways of working,” said Hewson.

Cautious Optimism

The figures painted an optimistic picture of the UK economy over May after the dire news of the previous two months. However, experts stressed the importance of cautious optimism despite the GDP growth.

The risk of recession alarms remain heavy on the horizon, and customers have been spending less on retail and non-essential expenses as the cost of living crisis bites, with inflation currently at 9.1% and on-track to hit 11% by October this year.

“These figures represent just one month – albeit a crucial one because it means the quarter as a whole doesn’t meet the criteria for negative growth – but one month can never tell the whole story,” said Hewson.

“There are headwinds that are impossible to ignore. Retailers, hospitality venues, gyms, museums and children’s play centres are all feeling the weight of high inflation.”

“Households are strategically cutting back on their spending, which is a particular blow to the consumer services which still haven’t been able to get anywhere near their pre-pandemic glory days.”

Pagegroup profits climb 25.5% to £280.9m, on track to meet FY 2022 expectations

Natasha Doris
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Pagegroup profits climb 25.5% to £280.9m, on track to meet FY 2022 expectations

PageGroup shares dipped 0.2% to 428.8p in early morning trading on Wednesday, following a 25.5% climb in gross profit to £280.9m year-on-year in its Q2 2022 trading update.

The recruitment company hit a record performance in June and reported its second month with a gross profit above £100 million.

PageGroup mentioned a 29.4% increase in European, Middle-Eastern and African profits, alongside a 21% rise in France and a 32% growth in Germany.

The firm highlighted a 34.1% uptick in the Americans, a 30% climb in the US and a 40% rise in Latin America.

Meanwhile, its Asia-Pacific sector grew 11.7% with an 11% increase in China, a South-East Asia climb of 33%, a 15% uptick in Japan and a 47% rise in Indian.

PageGroup also confirmed a 22.6% growth in the UK, with a 13% climb in its Michael Page segment and a 56% rise in its Page Personnel business.

The company noted an increase of 307 in fee earner headcount in the financial period to 6,734 from 6,427 in Q1 2022.

“We delivered increased levels of productivity, with the Group continuing to benefit from favourable trading conditions, including wage inflation and increased fee rates resulting from the high demand and short supply of candidates, as well as a shorter time to hire facilitated by video interviewing, and investments in new systems,” said PageGroup CEO Steve Ingham.

“We continued to invest in headcount to enable us to capitalise on future growth opportunities. We added 307 fee earners in Q2, broadly in line with recent quarters, with the most significant increases in the markets where we saw the strongest performances and highest potential for future growth.”

PageGroup announced a net cash position of £135 million, against £122 million in Q1 2022 and £164 million in Q2 2021.

The group added it expected its FY 2022 operating profit to hit market expectations at £205 million.

“Looking forward, we are clearly aware of the heightened degree of macro-economic and political uncertainty that exists globally, particularly with regards to increasing inflation in the majority of the markets in which we operate,” said Ingham.

“We are monitoring all KPIs in the business regularly, but to date we have seen no significant changes apart from the usual seasonal movements.” 

Totally revenues increase to £127.4m on higher demand

Natasha Doris
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0
Totally revenues increase to £127.4m on higher demand

Totally shares fell 3.5% to 43.9p in late afternoon trading on Tuesday following a reported 12% growth in revenue to £127.4 million in FY 2022 compared to £113.7 million in FY 2021.

The company announced a 24% climb in underlying EBITDA to £6.2 million against £5 million, alongside a rise in pre-tax profit to £1.3 million from £100,000 in the previous year as a result of higher demand for its services.

Totally confirmed an 18% gross margin from an 18.3% gross margin year-on-year, and cash of £15.3 million at 31 March 2022 against £14.8 million.

The firm highlighted an Urgent Care revenue increase of 3.6% to £109.2 million, a Planned Care revenue climb of 43.7% to 7.5 million and an Insourcing Revenue growth to £10.3 million across the financial term.

Totally mentioned a slate of operational high points, including services delivered to 2.5 million patients, £59 million in new contracts including a three-year deal with King’s College NHS Foundation Trust for a new urgent treatment centre, and £72 million in contract extensions.

“During the year, we continued to help manage increasing demand whilst progressing our buy and build strategy to ensure we are positioned strongly to support the NHS and other healthcare providers over the next five to ten years,” said Totally chairman Bob Holt OBE.

“We significantly grew our insourcing capability in response to growing demand, mobilised new services within urgent care, and contributed to strategic projects to improve the delivery of existing service models, such as NHS 111, to ensure that every patient can access the support they need.”

“Everything we do is made possible by the experience and commitment of our teams, whether they are leading the integration of our new businesses or supporting patients on the front line. We thank all of those who work for us, and those we work with, for their continued engagement and commitment to patient care.”

Totally announced an EPS of 0.5p compared to 1p the last year, alongside a total dividend of 1p per share against 0.5p per share for FY 2022.

Sosandar narrows loss as revenue spikes 148% on order growth

Natasha Doris
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0
Sosandar narrows loss as revenue spikes 148% on order growth

Sosandar shares were up 4% to 19.2p in late afternoon trading on Tuesday after the firm’s FY 2022 results exceeded market expectations, including a revenue spike of 142% to £29.5 million against £12.2 million the last year.

The fashion group mentioned an EBITDA improvement to a loss of £200,000 compared to a loss of £2.9 million in FY 2021, with every month in HY2 2022 recording profitability.

Sosandar highlighted an increase in gross margin to 56% from 48% year-on-year, reflecting a return to normal trading conditions after the impact of Covid-19.

The company confirmed net cash of £7 million on 31 March 2022 against £3.9 million the year before, on the back of its equity fundraise in May 2021, investment in stock and the fashion brand’s profits in HY2 2022.

Sosandar noted a total order rise of 84% to 508,000, along with a climb in active customers of 65% to 223,000 and a 10% uptick in average order frequency to 2.2 times per year.

The group reported a strong start to business in FY 2023 and highlighted momentum from demand for spring and summer fashion as a driver for its sales in Q1 this year.

“We are incredibly proud to be reporting another period of sustained growth for Sosandar. It is thanks to our well-planned approach, together with our entrepreneurial, agile culture that we have delivered a significant increase in revenue, as well as moving into month-on-month profitability,” said Sosandar co-CEOs Ali Hall and Julie Lavington.

“This is an important milestone for us, and having achieved it we are now better positioned than ever for further success. Notwithstanding the current macro-economic environment, trading in the new financial year has started very well, with a record quarter for sales and three further consecutive months of profitability.”

“With the arrival of spring and summer, we have seen our customers seek out a wide variety of product, in particular smart clothes for work, bright colours for holidays and investment pieces such as leather.”

AdEPT Technology Group loss widens to £3m on restructuring costs

Natasha Doris
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1
AdEPT Technology Group loss widens to £3m on restructuring costs

AdEPT Technology Group shares were up 2.6% to 148.8p in late afternoon trading on Tuesday after the company announced a revenue increase of 18% to £68.1 million in FY 2022 against £57.9 million in FY 2021.

However, Adept Technology Group highlighted a pre-tax loss of £3 million from £500,000 in the previous year linked to restructuring costs, consisting of redundancy, settlement and salary expenses.

The company said the restructuring was set out to create a lower rate of operating costs which would benefit the group in future years.

The firm reported an underlying EBITDA rise of 21% to £11.9 million compared to £9.8 million the last year, alongside an adjusted fully-diluted EPS climb of 23% to 27.5p from 22.3p.

AdEPT Technology Group confirmed a gross profit increase of 17% to £32.4 million against £27.6 million year-on-year and an underlying EBITDA margin of 17%, which remained flat compared to the year before.

The company mentioned a series of operational highlights, including its acquisition of Datrix in April 2021, and the completion of Project Fusion creation of ONE AdEPT, providing a single set of financial and operational systems along with a scalable platform for growth.

The group also noted over 100 new customer wins, such as Multi-Academy Trust, the Co-op and TUC.

“The acquisition of Datrix, in April 2021, significantly extended the Group’s capabilities and enabled AdEPT to increase its potential ‘wallet share’ in the ever-expanding ICT space,” said AdEPT CEO Phil Race.

“The introduction of new partnerships and services that allow AdEPT to tap into the fast-growing markets of Software Defined Wide Area Networking (SD-WAN) and Secure Access Service Edge (SASE) is leading to significant sales successes.” 

Heading into FY 2023, AdEPT Technology Group reported continued momentum from Q4 2022 with strong recurring order intake, alongside an expected growth in demand as a result of client long-term ICT requirements.

The firm added its board was optimistic for the future of the technology market and for the prospects of its AdEPT project.

“The Board is pleased with the progress achieved during the year under review and the Group’s performance in the face of the many, well-documented macro challenges. Given our focus on this aspect of our business the pro-forma organic growth in Cloud Centric Strategic Services is a particular highlight of the period,” said Race.

“During the Period this team secured significant projects with organisations, including Nottinghamshire County Council, the Royal Surrey County Hospital, Public Health England and Trident IP.”

“Our newly developed ONE AdEPT platform enabled the rapid integration of the Datrix business, ahead of plan, and has created a efficient business with a strong infrastructure for growth.”

AdEPT Technology Group reinstated its dividend with 1p per share for FY 2022.

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