Deltic Energy loss widens to £1m in HY1 2022 on higher costs

Natasha Doris
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Deltic Energy loss widens to £1m in HY1 2022 on higher costs

Deltic Energy shares dropped 4% to 3.6p in early morning trading on Wednesday after the natural resources firm announced a widened loss to £1 million in HY1 2022 compared to a loss of £691,754 the year before.

The company reported a cash outflow of £2.4 million in the financial term against £873,064 in HY1 2021.

Meanwhile, Deltic Energy confirmed a £1 million operating loss from £674,718, including cash expenditure of £1.1 million, a write down on its Blackadder licence at £48,188 and additional non-cash costs unrelated to existing licences.

The firm also noted £7.6 million in cash on its balance sheet in HY1 2022 against £11.1 million the last year.

Deltic Energy mentioned it remained fully funded for its Pensacola well operations, which are projected to provide strong return levels along with its Selene prospect if supply insecurity and high gas prices continue into the coming year.

“I am extremely proud of what we have achieved in the year so far and very excited about the outlook for our company,” said Deltic Energy CEO Graham Swindells.

“We have seen considerable progress made across our business, with key developments involving our Pensacola and Selene Prospects, which contain over 600 BCF (P50 Prospective Resources) of natural gas, as well as progressing the licences which formed part of our transformational farmout and partnership with Capricorn Energy.”

“As we stand on the verge of drilling our first well on Pensacola with our partner Shell, and with Selene now to follow, we are further demonstrating the success of our business model which is focussed on identification of early stage opportunities and taking them from licensing through to drilling whilst introducing partners of the highest calibre.”

The AIM listed group said it would not issue a dividend, returning shareholder returns via capital growth as opposed to capital distribution.

Haydale raises cash to get nearer to profitability

Andrew Hore
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Haydale raises cash to get nearer to profitability

Haydale Graphene Industries (LON: HAYD) has raised £5m at 2p a share and an open offer at the same price could raise up to £510,000. This will fund the scaling-up of operations.
Haydale is developing inks and other products using its graphene technology that can be used in the aerospace, automotive, medical and electronics markets. It has its own scalable process called HDPlas that enables the production of these products.
The fundraising was announced as the market was closing and the share price had already fallen 12.3% to 2.5p. The share price has slumped by one-quarter over the past five d...

Half of UK households face fuel poverty this winter

Natasha Doris
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Half of UK households face fuel poverty this winter

Half of UK households face fuel poverty this winter unless the government intervenes, according to EDF Energy UK senior executive Philippe Commaret.

He warned families across the country would suffer a “catastrophic winter” as fuel bills soar to triple the level of last winter.

The energy price cap has surged jaw-dropping amounts in recent months, and is set to climb to estimated heights of £5,000 per year by 2023 according to analysts.

Starting from October this year, all UK households will receive £400 towards fuel bills, with the lowest income eight million primed to receive an additional £650.

However, the small measure will do little to help the most vulnerable against the soaring energy costs, and experts as well as the Liberal Democrats and Labour have urgently called for more support, including a freeze on the energy price cap.

The rising cost of living has started to bite, with increased energy prices adding to the pain of higher food and consumer goods costs as inflation reaches 10.1%, with a rise to 13% expected in October 2022.

“When you look at the figures, without further support from the government, more than half of the UK households will be likely to be in fuel poverty in January,” said Commaret.

“Which means they will have to spend more than 10% of their disposable income to pay for their energy bill.”

Dollar rises against pound and Euro ahead of Jackson Hole

Natasha Doris
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Dollar rises against pound and Euro ahead of Jackson Hole

The dollar rose against the Pound and the Euro ahead of the Jackson Hole convention this week, at which US Federal Reserve chairman Jerome Powell is expected to announce higher interest rates across the country.

The US currency has enjoyed renewed strength as the Euro struggled on a deepening energy crisis and the Pound was hit by weak PMI data, with the flash composite output index at 50.9 in August compared to 52.1 in July, marking an 18-month low.

Meanwhile, the war with Ukraine has seen Russia announce unscheduled maintenance on the Nord Stream 1 pipeline, which transports gas from Russia to Germany. The operations will see the gas supply shut off from 31 August to 2 September, disrupting energy supplies across the continent and sending prices through the roof.

One pound equated to 1.1782 dollars in early afternoon trading and one Euro reached 0.9941 dollars, remaining below parity since its slide yesterday.

FTSE 100 endures glum session as energy crisis deepens

Natasha Doris
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FTSE 100 endures glum session as energy crisis deepens

The FTSE 100 endured a glum session of trading on Tuesday as the cost of living crisis encroached on all sides, setting investors up for a pessimistic outlook on the horizon.

Strikes across sectors from the post office to barristers have highlighted the emerging depth of the UK’s trouble, with the energy crisis set to deepen as UK households face a devastating winter ahead.

The blue chip index reflected the depressing outlook with a 0.4% drop to 7,502.3 in late morning trading.

“The FTSE 100 was under pressure on Tuesday amid a gloomy global market outlook,” said AJ Bell investment director Russ Mould.

“Warnings of a ‘catastrophic’ winter energy crisis in the UK from EDF will do little to lift a dark consumer mood on these shores.”

US markets

Markets across the Atlantic remained flat after heavy losses on Monday, as analysts noted the upcoming Jackson Hole summit was certain to bring grim news for the market in the spectre of higher interest rate hikes.

The NASDAQ was stagnant at 12,913 in pre-open trading, with the S&P 500 and Dow Jones flat at 4,143.5 and 33,079, respectively.

“The hopes earlier in the summer that inflation might have peaked, and the Federal Reserve might, in turn, ride to the market’s rescue, are looking increasingly forlorn,” said AJ Bell investment director Russ Mould.

European energy crisis

European markets also braced for Russian maintenance on the Nord Stream 1 pipeline which connects the country to Germany, sending prices through the roof across the continent.

Gas supplies through the pipeline are set to grind to a halt from 31 August to 2 September.

“European natural gas prices saw a renewed surge after unscheduled ‘maintenance’ works by Russian state energy operator, Gazprom, on the pipeline which links Russia and Germany,” said Mould.

“It seems likely this is an attempt by the Kremlin to remind Europe of its leverage as the war in Ukraine continues to rage and sanctions against Russia continue to bite.”

The German DAX was flat at 13,229, the French CAC dipped 0.1% to 6,372.4 and the Italian FTSE MIB rose 0.6% to 22,299.5.

BT

BT shares enjoyed a 1.2% climb to 158p after the UK government confirmed it would take no action against Altice UK Sarl’s increased stake in the company.

The telecommunications group had been under the magnifying glass following Altice UK Sarl’s raised stake to 18% from 12% in December 2021, sparking concerns of an attempted takeover.

The group said it had no intention of mounting a takeover, and would be bound by its statement under UK company law.

“BT shares crept up following relief that the UK Government won’t make major shareholder, French billionaire Patrick Drahi, sell any of his 18% stake after a review on the grounds of national security,” said Mould.

“However, the whole affair is a reminder of the sensitivities around critical national infrastructure and the implications this could have for BT’s future strategy.”

Aim movers: Alba Mineral Resources buys minority in Clogau gold mine

Andrew Hore
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Aim movers: Alba Mineral Resources buys minority in Clogau gold mine

Alba Mineral Resources (LON: ALBA) has agreed to acquire the 10% minority interest in the company that owns the Clogau gold mine and plans to dewater the Llechfraith mine shaft. It is also buying back a 3% net smelter return royalty leaving a 1% net smelter royalty and £72,000 of loans held by the vendor. The total cost is £400,000 in the form of 200 million Alba shares at 0.2p each, which was a 25% premium to the closing price. There are also 81.9 million warrant exercisable at 0.4p each. The share price has risen 9.03% to 0.175p.  

Power Metal Resources (LON: POW) is preparing for its first drilling programme at the Molopo Farms Complex nickel copper platinum project in Botswana. Precision drill targeting is underway. There are two more high-priority targets selected for electro-magnetic surveys. The share price increased by 8.33% to 1.625p.

Rambler Metals & Minerals (LON: RMM) says underground diamond drilling at the Ming copper gold mine in Newfoundland and Labrador has intersected a new zone of copper mineralisation. This sparked a 6.17% rise in the share price to 21.5p.

AMTE Power (LON: AMTE) says it is achieving operational developments for all three battery cell technologies and there is significant commercial interest in the technology. Ultra High Power cells for the automotive sector are achieving a six-minute full charge time. There are five non-binding MOUs with automotive partners. Ultra Safe cells for energy storage have reached the energy density specification. WH Ireland believes that year to June 2022 revenues could grow to £16.2m and generate a pre-tax profit of £1.4m. That assumes the injection of additional cash through debt or equity, with some contribution from grants. The share price moved 5.95% ahead to 98p.

Shares in corporate finance adviser Marechale Capital (LON: MAC) continue to rise on the back of yesterday’s results. NAV increased from £686,000 to £3.63m, or 3.8p a share. The share price has risen 5.08% to 3.1p.

Alaska-focused oil and gas explorer Pantheon Resources (LON: PANR) says a report by Baker Hughes AHS indicates that the Theta West #1 well penetrated a world class petroleum system with abundant good quality reservoirs. The previously indicated recoverable resource is 1.7 million barrels of oil, which is 10% of the estimate of oil in place. Flow testing will be the most important thing for determining whether the Pantheon Resources wells are commercial. The share price edged up by 3.08% to 134p.

Australia-focused explorer Artemis Resources Ltd (LON: ARV) initially recovered its share price loss following yesterday’s disappointing drilling results at the Osborne nickel prospect. However, today the share price has fallen 10.9% to 2.1p.

Wishbone Gold (LON: WSBN) has secured an option to acquire the Anketell gold copper project, which is north of the company’s Red Setter project in Western Australia. The option payment is £25,000. The consideration would be £50,000 in cash and 2.17 million shares at 14.75p each. The share price fell 3.33% to 14.5p.

Powerhouse Energy (LON: PHE) is proposing a joint venture with Aquis-quoted Hydrogen Utopia International (LON: HUI) to develop a plant using non-recyclable waste plastic to produce hydrogen. Powerhouse Energy shares dipped 2.78% to 1.75p. Hydrogen Utopia International will be allowed to recover its costs of €250,000 with a €250,000 premium. This is similar to the agreement for the Tipperary plant.

Powerhouse Energy enters waste plastic to hydrogen facility JV in Poland

Natasha Doris
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Powerhouse Energy enters waste plastic to hydrogen facility JV in Poland

Powerhouse Energy Group shares fell 2.9% to 1.7p in late morning trading on Tuesday, after the company announced its proposed joint venture with Hydrogen Utopia International.

The project is set to see the firms develop a non-recyclable waste plastic to hydrogen facility in Konin, Poland.

Powerhouse Energy confirmed the two companies had agreed in principle to establish a joint venture vehicle, equally owned by each group.

Both groups will be contributing to development costs for the Konin project on an equal basis.

The agreed heads of terms included a stipulation that Powerhouse Energy not make any entry payments to Hydrogen Utopia, however Hydrogen Utopia will be allowed to recover its costs to date up to €250,000 at the close of the project, with a €250,000 premium.

Powerhouse Energy announced a similar agreement with Hydrogen Utopia on 13 July 2022 at Lanespark, Co Tipperary in Ireland. In addition, it announced it would be taking a 50% shareholding in Protos Plastics to Hydrogen No 1 on 15 August 2022.

“This formalises PHE’s position in the Konin project and brings to an end speculation within the market on what PHE’s role will be. We now have the task of agreeing the detailed documents for all three projects at Protos, Lanespark and Konin, which will conclude PHE’s recently adopted policy of holding at least some level of control of the projects on which it embarks,” said Powerhouse Energy interim chairman Keith Riley.

“I am well aware that this increases our cash flow, so an important aspect of the project controls we are implementing is careful cash management and expenditure control which we have built into the management forecasts. HUI has made a fast start in Poland, and announced that it had signed a Letter of Intent with the City of Konin on 3 February 2021.”

“Events in Eastern Europe since, however, inevitably mean that this project is likely to fall behind. In consequence, I am confident that the three developments can be phased.”

Eckoh – orders increasing significantly, as too are its profits

Mark Watson-Mitchell
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Eckoh – orders increasing significantly, as too are its profits

We are looking for this £123m market capitalised customer engagement security solutions business to push its profits up by around 50% in this current trading year.

We are also looking for the shares of Eckoh (LON:ECK) to rise substantially in response to further items of good news.

About The Company

Set up way back in 1997, this Hemel Hempstead based Group provides secure payment products and customer contact solutions in the UK, the US, and internationally. 

It offers customer engagement solutions, such as advanced interactive voice response (IVR), speech recognition IVR, visual IVR, chatbots, and an artificial intelligence (AI) customer service. 

Its solutions enable enquiries and transactions to be performed on whatever device the customer chooses, allowing organisations to increase efficiency, lower operational costs and provide a true omnichannel experience.

The company also provides secure payment solutions, which include CallGuard, an automated IVR system; DataGuard for payments made over the web or a mobile; ChatGuard for payments made through a web chat or chatbot; EckohPAY, automating recurring payments through secure IVR; Pay by Link, a secure digital payment link; online payments, payment methods, personal customer data, remote agent payments; and payment card industry compliance solutions. 

In addition, it supplies customer engagement, support, and cloud-based software solutions. 

Impressive Client Lists

The Group’s large portfolio of clients come from a broad range of vertical markets and includes government departments, telecoms providers, retailers, utility providers and financial services organisations.

Named customers include Transport for London, MetLife, tenpin, Capita, Thames Water, Boots, BMW, B&Q, Premier Inn, allpay, Ministry of Justice, O2, Addison Lee, The Body Shop, Barclays, Affinity Water, 1st Central, Bosch Siemens, Carnival, Concentrix, Co-Op, HM Passport Office, Legal & General, National Rail Enquiries, NFU Mutual, ScrewFix, Telefonica, Tesco Mobile, VW, Welsh Water, and Whitbread amongst hundreds of others.

A Very Healthy ARR

The Group for its last year to end March 2022 recorded a very strong annual recurring revenue figure of £25.2m out of its £31.8m total revenues, representing some 79.25% ARR.

That is always an investment signal that I look for when judging such technology companies as Eckoh.

Just imagine how you would feel if you were the Group’s Chief Financial Officer plotting out future capital expenditure. There is real strength for any company with such a high recurring cash figure to be used to counter future spend.

What is more it also gives tremendous confidence to its bankers.

And for that matter it should too be important for the Group’s investors, both professional and private.

A Very Good Shareholder’s List

With around 293m shares in issue the Group is currently capitalised at some £123m.

Canaccord Genuity Wealth is the largest holder with 16.6% of the equity, while Liontrust Investment Partners have 14.0%.

Other institutional holders include Herald Investment Management (5.59%), Butterfield Bank (Guernsey) (4.33%), BlackRock (4.08%), Cavendish Asset (3.86%), Chelverton (3.14%), Kestrel (2.99%), AXA (2.76%) and Close Asset (2.69%).

Recent Contract Wins

In April the company announced the renewal of its contract with Capita for a large public sector organisation. The core purpose of the service provided by Capita to its client is to maximise the successful collection of payments from the general public. 

The new contract is for 5 years and has a minimum value of £2.1m over the term, which is both longer and higher in value than the original agreement.

Then in the middle of this month it announced that it had won a 2-year contract worth a minimum of $1.3m with a leading, global hotel company following a successful competitive process.  

Eckoh will provide a cloud solution to the new client, incorporating both voice payment security, digital payments, and advanced speech recognition. When fully deployed, it is expected to cover more than 20 territories and an equivalent number of different languages.

At the same time the Group noted that it had a contract win following a competitive tender for voice payment security with the Irish division of one the world’s largest insurance companies. The deal is worth a minimum of £0.6m over 5 years.

Current Trading – Significant Advances

In June, when the Group’s finals were announced, there were indications that its order levels had grown substantially in the first two months of trading, compared to the prior year. 

Also, its new business pipeline had significantly strengthened, including major opportunities for large blue-chip organisations.

It now appears that trend is continuing, with orders showing even more strength, being far ahead of the same Q1 period in the last year.

In fact, the Group stated very clearly that its attractive pipeline of opportunities leads it to expect order levels to maintain their strength resulting in H1 for this year being significantly higher than the previous corresponding period last year.

At the same time as announcing its recent wins Nik Philpot, the Group’s CEO, stated that: 

“It is pleasing to see such a positive start to the financial year with the renewed strength of Eckoh’s order levels and our new business pipeline delivering significant wins. These and other recent contract wins are important for three reasons.

First, they underline the momentum behind our decision to invest in broadening our cloud proposition geographically, with multiple suppliers and product offerings to support the growing international mandates.

Second, they show the success of our strategy to cross-sell from our new suite of products.

Third, they show progress for our strategy to target attractive sectors which are best suited to our model, technology, and product suite.

We expect the momentum we have seen in the first few months to help support our expectations of significant revenue and profit growth for Eckoh this year.”

Analysts Opinion – Broker has a 92p Target Price

The Group’s NOMAD and Joint Broker is Singer Capital Markets, their analysts Kevin Ashton, Caspar Erskine and Harold Evans rate this company’s shares as a Buy.

For the current year to end March 2023 they are looking for revenues of £40.0m (£31.8m), while going for adjusted pre-tax profits of £7.6m (£5.2m), earning 2.0p (1.6p) per share and covering a 0.70p (0.61p) dividend.

Looking further ahead into the next trading year the analysts have £43.2m of sales, £8.3m of profits, earnings of 2.0p and a dividend of 0.80p a share.

They note that the company is winning more and more international deals and that the cross-selling potential that the Group has on its various offerings.

The broker has a twelve-month Target Price of 92.0p for the shares.

Conclusion – increased awareness will increase the share price

There are various corporate events ahead that will help to spur more interest in the Group’s shares.

First of all, the company’s AGM is being held on Monday 26th September – at that time there should be a Trading Update covering the run-up to the close of the company’s first half-year to end September.

Then on Tuesday 11th October the Group will be hosting a Capital Markets Day for analysts and investors at its Hemel Hempstead offices. That should see insights and demonstrations being given by the company. It will also spell out its product and technology strategies supporting the Group’s growth going forward.

It is apparent that the Group is really looking to up its market exposure, which in turn help to push investor awareness of its abilities and its potential.

The shares, which peaked at nearly 64p last December, are now trading at 44p, at that level they offer a very attractive upside, especially if its broker’s price hopes are fulfilled.

Wood Group EBITDA falls to $185m on poor projects and operations performance

Natasha Doris
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Wood Group EBITDA falls to $185m on poor projects and operations performance

Wood Group shares fell 4.8% to 142.8p in late morning trading on Tuesday after the group announced a 0.4% revenue decline to $2.5 billion in HY1 2022 compared to $2.5 billion the last year.

Wood Group commented its 18% growth in operations revenue and 2% consultancy increases were offset by a 15% expected decline in projects.

The firm reported a 5.1% fall in adjusted EBITDA to $185 million from $195 million after its consultancy performance was offset by its decline in projects and operations.

Wood Group confirmed an adjusted EBITDA margin decline of 0.4% to 7.2% against 7.6% year-on-year on the back of lower margins in operations and a slightly lower margin in consulting, both offsetting higher margins in projects.

The company highlighted an adjusted diluted EPS decrease of 36% to 5.7c compared to 8.9c on the back of its falling EBITDA and higher finance expenses.

Wood Group mentioned a free cash flow of negative $363 million, including a working capital outflow of $208 million and exceptional cash costs of $102 million.

“The strong order book gives me confidence for the future but there is a lot more to do on cash generation and this is our top priority. We are developing an updated strategy for Wood that will draw on our core strengths, return us to growth and deliver sustainable free cash flow,” said Wood Group CEO Ken Gilmartin.

“We perform complex work in critical industries and our outstanding technical expertise and strong long-term client relationships position us well for growth across targeted markets. We have the consulting and engineering capabilities to help the world solve the global challenges of energy security, decarbonisation and energy transition. I look forward to sharing our plans at our capital markets day in November.”

“In the meantime, we are focused on our culture and energising our people, performance excellence and strengthening our balance sheet through the completion of the sale of the Built Environment business, which we expect around the end of Q3.”

Fusion Antibodies widens pre-tax loss as Covid restrictions impact operations

Natasha Doris
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Fusion Antibodies widens pre-tax loss as Covid restrictions impact operations

Fusion Antibodies shares fell 3.3% to 84.5p in early morning trading on Tuesday after the group reported a widened pre-tax loss of £1.3 million in FY 2022 compared to £1.2 million the year before.

The firm highlighted a £1.3 million operating loss against £1.2 million and an overall FY loss of £1.2 million compared to £2.9 million, on the back of continued Covid restrictions, which presented challenges to business operations.

However, Fusion Antibodies confirmed a revenue growth to £4.7 million compared to £4.1 million, slightly ahead of management expectations.

Revenue was linked to the expansion of its existing services in discovery, engineering and supply, alongside the recognition of two milestone receipts.

The company noted a gross profit of £2.4 million from £2 million year-on-year.

Fusion Antibodies mentioned a £2 million cash position at year end against £2.7 million in the previous year.

The group said its outlook still appeared uncertain due to the volatile market environment, however Fusion Antibodies added it was confident in meeting the challenges with sufficient expertise and competence.

The firm also highlighted the appointment of Adrian Kinkaid as CEO earlier in August this year.

“We are pleased with our overall performance in the year given the challenges that still exist with Covid-19,” said Fusion Antibodies CEO Simon Douglas.

“Our full year revenues increased, and we have strengthened our Board with the additions of Dr Matthew Barker as a Non-Executive Director and more recently, the appointment of Dr Adrian Kinkaid as our new CEO.”

“We are delighted Adrian has come on board and we look forward to fully integrating him into the business. On behalf of the whole team, I would like to thank our shareholders for their continued support, and we feel positive for the next 12 months.”

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