Just Group loss widens to £226m on rising interest rates and investment losses

Natasha Doris
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Just Group loss widens to £226m on rising interest rates and investment losses

Just Group shares gained 1.6% to 76.2p in early afternoon trading on Tuesday, following a 15% rise in underlying operating profits to £74 million in HY1 2022 compared to £64 million year-on-year.

However, the financial services group reported a widened IFRS post-tax loss of £226 million against £70 million the last year, as a result of economic variances driven by rising interest rates and the loss on the sale of its third LTM portfolio, which led to investment and economic losses of £353 million.

Just Group noted a 3% dip in retirement income sales to £879 million from £909 million, with an underlying organic capital generation of £31 million against £25 million.

The firm highlighted a return on equity of 6.2% from 5% the last year, driven by higher operating profits.

Its solvency II capital coverage ration increased 20% to 184% compared to 164%, and its IFRS net assets dropped 10% to £2.1 billion against £2.4 billion.

Just Group said it currently had a record pipeline of over £5 billion, providing confidence in meeting or exceeding its FY 2022 growth ambitions.

“This is a strong set of results which continues to demonstrate our ability to generate profitable growth within a sustainable capital model,” said Just Group CEO David Richardson.

“Following our strong H1 22 we have increased confidence of delivering 15% growth in underlying operating profit per annum, on average over the medium term.” 

“We have a unique opportunity to build substantial value to shareholders and deliver our purpose to help more people achieve a better later life.”

The firm recommended a reinstated HY1 2022 dividend of 0.5p per share.

IWG shares plummet on missed return to profit, revenue grows on hybrid working demand

Natasha Doris
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0
IWG shares plummet on missed return to profit, revenue grows on hybrid working demand

IWG shares plummeted 10.4% to 172.8p in late morning trading on Tuesday, after the group missed an expected return to profit with a reported post-tax loss of £81.3 million in HY1 2022 against £173 million in HY1 2021.

IWG announced an adjusted operating loss of £2.2 million from £31.8 million, alongside an adjusted pre-tax loss of £70.2 million compared to £163.3 million.

The group noted an adjusted EBITDA of £565.6 million from £528.6 million year-on-year.

However, the company confirmed a 22.3% system-wide revenue growth to £1.4 billion against £1.1 million, driven by strong demand for hybrid working.

“IWG’s latest results indicate progress in the business, with improvements in both occupancy rates and pricing,” said AJ Bell financial analyst Danni Hewson.

“Unfortunately, it cannot escape the cost pressures hurting companies worldwide. Neither can it be relaxed about Covid as certain markets continue to experience lockdowns, which has a negative impact on demand for some of its serviced offices.”

“Before the numbers came out, analysts had forecast IWG returning to profit this year at £48.6 million. Given the ongoing cost pressures and lockdown disruptions, it seems likely this estimate will have to be scaled back.”

IWG mentioned a net debt of £7.1 billion compared to £6.7 billion the last year.

The firm reported an adjusted loss per share of 11.6p against 11.7p the year before.

“We have delivered strong revenue performance with record visibility of the forward order book with occupancy and pricing improvements,” said IWG CEO Mark Dixon.

“We continue to build resilience and cost efficiency into our business, and we have repeatedly demonstrated our ability to address new challenges.”

“These attributes will be important as we continue to navigate the headwinds created by increased geopolitical tensions in Europe, general inflationary pressures, and the ebb and flow of COVID-related restrictions in some markets.”

IWG declined to resume its dividend payouts, and said it was focused on maintaining sufficient company funding due to market volatility.

AIM movers: Cordel on track and Kropz delays

Andrew Hore
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AIM movers: Cordel on track and Kropz delays

Rail infrastructure monitoring technology provider Cordel Group (LON: CRDL) has won a five-year contract with Angel Trains to install fully automated monitoring hardware on in-service passenger trains. This enables real-time monitoring of the rail infrastructure. Previously the technology was used on trains specifically used for analysis and maintenance of the track. Angel Trains supplies the trains to Great Western Railways. The share price jumped 23.8% to 6.5p

Corporate finance firm Marechale Capital (LON: MAC) has completed a fundraising for explorer and developer Weardale Lithium, in which it holds a 8.5% stake. The County Durham-based lithium company plans to offer a domestic supply from its lithium brine projects. The Marechale Capital share price rose 19.1% to 2.5p.

Crestchic (LON: LOAD) continues to beat expectations and forecasts have been upgraded for the loadbanks manufacturer and hirer for the third time this year. Trading momentum continues to accelerate and its largest ever loadbank hire contract has recently been secured. The additional capacity is there to grow the business following the factory investment. Demand from datacentres is strong and oil and gas demand is recovering with overall utilisation at record levels. There is visibility into 2023. The 2022 pre-tax profit forecast has been raised from £5.2m to £7.2m and the 2023 figure from £5.8m to £8.1m. There was a 16.9% increase in the share price to 229p.

Northcoders (LON: CODE) has won a £4m contract from the UK government to provide scholarships for software training for individuals. The cash will fund software development and data engineering skills training. The contract stretches into 2023. More than 85% of forecast 2022 revenues of £6.5m, up from £3m, are covered by contracted work, while 30% of the 2023 forecast of £10.5m is covered. Northcoders appears on course to meet the £800,000 pre-tax profit target for 2022 and there will be increasing belief that the expectations of a quadrupled 2023 profit of £3.2m can be achieved. The shares are 12.5% ahead at 270p. That is a 50% increase on Last July’s placing price.

Fusion Antibodies (LON: FAB) has submitted a patent application for the company’s bispecific designs for antigen display. The technology uses a reporter part that can increase the success rate in identifying highly potent antibodies. This sparked a 8.57% increase to 12.75p.

Kropz (LON: KRPZ) says that its Elandsfontein phosphate project has been delayed due to initial ore variability and that made it the worst performer on AIM with a 30.5% decline to 5.25p. This means Kropz immediately requires $4.2m of additional funding. A $7.3m bridge loan facility has been agreed with ARC Fund on top of the existing facility. The bridge loan is payable on demand. Further funding is likely to be required for working capital.

Nexus Infrastructure (LON: NEXS) has reduced its guidance for 2022-23 two months after reporting its interims. Operating profit is expected to be between £3.8m and £4.2m. The consensus forecast had been £5.95m. Management blames delays in the eSmart Networks EV charging business for pushing that division into loss and for the group being set to breakeven rather than make a profit in the second half. The utility connections and civil engineering businesses are trading as expected. The share price fell 13.2% to 145p.

Avast EBITDA drops 7.6%, profits fall on higher costs

Natasha Doris
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0
Avast EBITDA drops 7.6%, profits fall on higher costs

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

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

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

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

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

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

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

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

Avast/Norton merger

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

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

Dividend

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

Legal & General reports modest profits growth, raises dividend

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Share buyback and dividend

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

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

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

Lok’nStore remains on track

Andrew Hore
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0
Lok’nStore remains on track

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

Solid State completes £36m Custom Power acquisition

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

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

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

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

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

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

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

Lexington Gold updates JORC Mineral Resource Estimate

Natasha Doris
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0
Lexington Gold updates JORC Mineral Resource Estimate

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

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

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

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

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

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

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

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

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

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

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

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