Roquefort Therapeutics (LON: ROQ) has announced its second acquisition in seven months. Cancer medicines company Oncogeni Ltd is being acquired for the issue of 50 million shares and there is a placing to raise £1.01m at 14p a share.
This is the second acquisition since Roquefort floated as a shell on the standard list back in March 2021. The original placing was at 5p a share. Last November, Lyramid was acquired for cash and shares and there was a £3m placing at 10p a share.
The group’s focus is early-stage biotech operations. The latest deal means that it has a portfolio of four cancer programs.
Oncogeni
Two pre-clinical families of innovative cell and RNA oncology medicines come with Oncogeni, as well as a laboratory facility in Stratford-upon-Avon.
Oncogeni’s founder, Nobel Laureate, Professor Sir Martin Evans is joining the board as is Ajan Reginald who will become the new chief executive.
The shareholder base will be widened with new shareholders including global pharmaceutical company Daiichi Sankyo and biotech investor CH Health.
Financial statements for the year to May 2022 show net assets of £14,556. There should be further information released when the proposed acquisition is finalised.
There are programmes for two existing technologies being developed by Roquefort Therapeutics. The ROQA1 and ROQA2 potential antibody programmes demonstrated significant anti-cancer activity in in vivo models of metastatic tumours. The other technology programme has demonstrated that lead oligonucleotide drug candidates significantly reduce Midkine mRNA levels in human cancer cells.
Xeros Technology Group shares fell 1.6% to 40.8p in late afternoon trading on Wednesday following an adjusted EBITDA loss of £6.3 million against £6.8 million, and a pre-tax operating loss of £6.9 million compared to £7.6 million in FY 2021.
The group reported a revenue growth of 23.1% to £500,000 from £400,000 year-on-year as a result of licence partner sales in HY2 2022 driving revenue growth and margin increase.
Xeros Technology noted a reduction in administrative expenses of 4.8% to £7.2 million compared to £7.6 million and a net cash outflow from operations reduction of 8.3% to £5.8 million against £6.3 million. The company mentioned cash at 31 May 2022 of £4.3 million.
The firm announced a selection of highlights across the year, including the first licence of its XFilter to a leading domestic washing machine component supplier and the planned domestic launch of its machine technology by a leading Indian manufacturer in Q4 2022.
Xeros Technology also reported its Denim Finish technology had been trialled by multiple major retail brands and its new Xeros brand identity and marketing programme had been launched to drive growth.
The group confirmed its cash burn rate remained at planned levels of £500,000 per month in the financial year.
The company mentioned its revenue was entirely in the hands of third parties, which rendered its intake difficult to predict. However, Xeros Technology said it expected to achieve EBITDA profitability and cash breakeven in 2024 based on its existing and targeted contracts.
The firm added that it expected further levels of investment to fund its business in FY 2023, with its board currently working on plans to secure the necessary investments.
“This has been a year of significant progress in embedding Xeros’ technologies into product lines of key licensing partners laying a strong foundation for future growth,” said Xeros chairman Klaas de Boer.
“The transformation of the Xeros brand and the supporting marketing programme are key to accelerating the commercialisation of our transformational technologies.”
Landore Resources shares fell 4.5% to 20.2p in late afternoon trading on Wednesday, after the company announced a widened post-tax loss of £3.9 million from £2.5 million in FY 2021.
The mining group reported that operating expenses were in line with its budget and expectations, with financing secured of £3.5 million in February 2021 by the issuance of shares for 30p per share.
Landore Resources confirmed no debt and commented it was capable of raising additional equity where required to execute its development plans.
The company highlighted several of its ongoing operations at its Junior Lake property, including its BAM gold deposit, in which a total of 353 NQ and HQ diamond drill holes for approximately 69,857 metres had been completed with a discovery rate of 21 ounces of gold for every metre drilled.
“During 2021 all of Landore Resources’ exploration efforts were focussed on the Junior Lake property; drilling to further infill, extend and deepen the BAM Gold resource to 1,496,000 ounces of gold – a considerable increase of 481,000 ounces (47%) from the 2019 Mineral Resources Estimate,” said CEO Bill Humphries.
The firm also mentioned its battery metals deposit, which currently hosts two defined deposits in B4-7 and VW with a combined 55,581 tonnes of Nickel Equivalent Metals and potential for growth. The group is currently reviewing the deposits with the aim of maximising its value for the electric vehicles sector.
Landore Resources said its planned works for 2022 included recommencement of drilling at the BAM gold deposit in July, alongside drilling the highly prospective Felix area along strike and to the west for gold and battery metals.
The company is also scheduled to kick off drilling on the Lamaune gold deposit to advance it to defined resource status.
The mining group added it had plans to commence feasibility studies in HY2 2022 on the BAM gold deposit as the resource passed the one million ounce target.
“On behalf of my fellow directors I wish to thank our shareholders for their continued support together with Landore’s Management and Exploration team for their dedication and perseverance in advancing our highly prospective Junior Lake Property,” said Humphries.
The FTSE 100 was down over 1.5% in early afternoon trading on Wednesday in light of the Office of National Statistics’ (ONS) latest inflation figures for May, which saw UK CPI hit another 40-year record of 9.1%.
The reading was in line with economists expectations and markets are bracing for a further squeeze on consumers this summer.
“There may have been a bit of relief this morning that UK consumer price inflation, while still at decades-long highs, was nonetheless bang in line with expectations,” said AJ Bell investment director Russ Mould.
“However, this relief will have rapidly dissipated as it dawned that retail prices are now experiencing double-digit increases and factory gate prices are above forecasts and the highest since the 1970s.”
“The FTSE 100, which has held up better than many of its global peers, is now flirting with a drop below the 7,000 mark for the first time since the March sell-off.”
— UK Investor Magazine (@UKInvestorMAG) June 22, 2022
All eyes are primed to turn to the US Federal Reserve and chairman Jerome Powell for hints of the institution’s next move on monetary policy.
“Inflation will also be on the agenda when US Federal Reserve chair Jerome Powell testifies before lawmakers in Washington,” said Mould.
“His comments will be closely followed for clues on what the Fed might do next with monetary policy and whether the risks of a recession in the world’s largest economy are increasing.”
JD Sports Fashion
JD Sports Fashion shares gained 4.9% to 112p on a strong slate on results, including revenues of £8.5 billion and record pre-tax profits before exceptional items of £947.2 million.
However, analysts warned that the company’s good news only accounted for its results before the Ukraine war, and economic volatility combined with the rising cost of living is set to see JD Sports expect no growth in FY 2023.
— UK Investor Magazine (@UKInvestorMAG) June 22, 2022
“While JD Sports has reported a record set of results, it must be noted that this financial period ended before the Ukraine crisis unfolded and inflation surged higher,” said Mould.
“Therefore, it is not representative of the current environment in which consumers are under considerable financial pressure and are losing confidence with regards to the economic outlook, which will curb their ability and willingness to keep spending at levels seen in 2021.”
“This headwind is clear to see in the retailer’s forward earnings guidance. After seeing pre-tax profit more than double in the past financial year, JD now expects no profit growth at all in the current year.”
Natwest shares rise as Oil Price Falls
Natwest shares rose 4.1% to 230.5p after the UK government confirmed it would continue to sell down its stake in the bank for the next year.
The trading plan reported in July 2021 is set to end no later than 11 August 2023 and will continue under the management of Morgan Stanley with unchanged conditions.
Meanwhile, Shell and BP took a hit as the price of oil dipped below $110 per barrel to $109 for benchmark Brent Crude, with shares falling 3.1% to 2,084.2p and 2.7% to 384.6p, respectively.
Berkeley Group and Housing Market
Berkeley Group shares fell 3.5% despite a pre-tax profit growth of 6.4% to £551.5 million and a revenue climb of 6.6% to £2.3 billion year-on-year on the back of the strong housing market in FY 2022.
However, with interest rates rising to 1.25% and inflation speeding rapidly towards 11% in October, it appears the cost of living crisis might serve to bring the housing market back to ground level.
The housing giant’s drop in cash from £1 billion to slightly above £250 million might also give investors reason to be nervous over the firm’s prospects in FY 2023.
Berkeley Group profits climb to £551.5m, higher prices absorb cost inflationhttps://t.co/YLjyT4V3md
— UK Investor Magazine (@UKInvestorMAG) June 22, 2022
“Berkeley is known as the cream of the crop when it comes to housebuilders and its latest update suggests it is continuing to deliver on its strategy which involves taking brownfield land and turning it into desirable housing developments,” said Mould.
“It’s worth noting the significant drop in its net cash position from more than £1 billion to a little more than £250 million.”
“While this was used to invest for future growth and Berkeley still enjoys a healthy buffer, there may be some concern among shareholders that the company doesn’t have more cash on hand to help sustain capital returns if there is a pronounced downturn in the housing market.”
Housebuilder shares across the market dropped as the cost of living crisis threatened the gravity-defying industry, with Persimmon sliding 2.5% to 1,802.5p, Barratt shares dipping 0.8% to 456p and Taylor Wimpey shares dropping 1.7% to 115.2p.
The UK Investor Magazine Podcast is joined by Alan Green for a discussion around UK equities and the global economic environment.
We start by looking at the latest UK inflation data which jumped to a whopping 9.1% in May with predictions it will continue to rise through the summer. Our focus shifts to the market’s perception of this data and what it means for central bank action.
With major central banks set for further interest rates hikes, there is a real risk of a recession both in the UK and US. However, there is plenty of room for easing after this which will be welcomed by the markets and could spark an equities rally.
Berkeley Group Holdings shares stumbled in early trade after the Housebuilder said their margins were being squeezed by rising input prices and a lower mix of housing sales.
We explore Coinsilium in a backdrop of crypto volatility and drill down into their blockchain operations.
We finish with a rundown of Vela Technologies portfolio, especially a number of upcoming IPOs from their portfolio companies.
Liontrust Asset Management shares dipped 1.7% to 913.8p in late morning trading on Wednesday following a reported 127% spike in pre-tax profit to £79.3 million compared to £34.9 million in FY 2022.
The company announced a 64% increase in adjusted pre-tax profit of £96.6 million against £59 million year-on-year.
“Over the past 13 years, we have successfully grown Liontrust by seeking to deliver discipline and excellence in everything we do and focusing on long-term positive outcomes for our investors,” said Liontrust Asset Management CEO John Ions.
“The success of this approach is shown by our strong sales, growth in AuMA and profitability, and a 53% increase in total dividends for the financial year.”
“These positive outcomes have been achieved through Liontrust’s investment teams, their rigorous and robust processes, and first-class service and communications.”
"The success of our focus on delivering discipline and excellence in everything we do is shown by our strong sales, growth in AuMA and profitability, and a 53% increase in total dividends for the financial year." John Ions, Chief Executive. Read more > https://t.co/XGbVOzt4MC
The firm also confirmed a rise in assets under management and advice of 8.5% to £33.5 billion compared to £30.9 billion, with the acquisition of Majedie Asset Management Limited on 1 April 2022 adding £5.2 billion, growing Liontrust’s pro forma assets under management to £38.7 billion.
“We continue to add value through M&A. On 1 April 2022, we completed the acquisition of Majedie Asset Management, which has broadened our distribution and investment capability,” said Ions.
“Majedie was appointed manager of one of the oldest investment trusts in 2020, which is testament to the team’s investment strength and provides a presence in this market.”
Liontrust Asset Management reported an assets under management total at £34.2 billion on 17 June 2022.
The company noted net inflows of £2.5 billion in FY 2022 against £3.5 billion in FY 2021. Liontrust had the second-highest net retail sales in the UK in 2021, according to the Pridham Report.
Liontrust Asset Management commented that it was well-positioned to achieve its objectives for the coming year, and did not expect the wider macroeconomic picture to notably impact its results going forward.
“Whatever the challenges ahead for the global economy, our investment excellence, robust processes and high-quality service give me great confidence that over the long term we can continue to deliver positive outcomes for our investors and therefore our shareholders and other stakeholders,” said Ions.
The group announced a total dividend of 72p against 47p, representing an increase of 53% from last year.
Asia-focused investment company Jade Road Investments (LON: JADE) is selling part of its stake in China-based wind turbine blade manufacturer Meize Energy Industries. Jade Road Investments has a 7.2% stake and will receive $1.2m in cash in three tranches, leaving it with a 6.3% stake valued at $10m. The company has already received $400,000 with the rest due for payment in July and August. The Jade Road Investments share price rose 13.6% to 6.25p. That is well below the previously published NAV, but there is uncertainty about the company’s investment in Fook Lam Moon, which could lead to a write-down of up to $29.1m. Even so, the share price would still be at a discount to net assets. The 2021 group accounts are required to be published by the end of June.
The interim management team of financial publisher and events organiser Bonhill (LON: BONH) has decided to sell what remains of its original core publishing business to focus on the InvestmentNews and Last Word operations. The business solutions and governance division, as these operations are now called, generated revenues of £2.4m and EBITDA of £400,000 last year. The division could be sold as a whole or in parts. Bonhill had £1m in the bank at the end of June 2022. There has been a 9% recovery in first half group revenues as live events start up again. The share price rose 4.35% to 6p.
Market research services provider System1 Group (LON: SYS1) has decided to replace dividend payments with share buy backs and tender offers. It anticipates paying out between 30% and 40% of post-tax profit for the year to March 2023. There are also plans to return an additional £1.5m to shareholders via a tender offer that will be undertaken after the 2021-22 figures are published on 12 July. At the end of March 2022, net cash was £8.7m. The share price has risen 10.5% to 304p.
Argentina-focused oil and gas company Phoenix Global Resources (LON: PGR) says that it is in discussions with 84% shareholder Mercuria Energy Group concerning a cancellation of its AIM quotation and a cash offer to purchase shares from independent shareholders at 7.5p each. That is 25% ahead of the previous closing price. The share price has risen 9.2% to 6.55p. Five years ago the share price was ten times that level.
Healthcare and technology investor and adviser NetScientific (LON: NSCI) has raised £1.5m at 67p a share. The share price has slumped 8.8% back to the 67p placing price.
JD Sports Fashion shares rose 4.3% to 111.4p in late morning trading on Wednesday, following an increase in revenue to £8.5 billion in FY 2022 against £6.1 billion in FY 2021.
The retailer announced an operating profit climb to £721.2 million compared to £385 million, along with a pre-tax profit growth to £654.7 million from £324 million year-on-year.
JD Sports reported an alternative performance measure operating profit before exceptional items of £1 billion against £482.3 million in the previous year, and a record pre-tax profit before exceptional items of £947.2 million compared to £421.3 million, including £125.6 million in profit from JD Sports’ combination of acquisitions across the year.
The group further mentioned an EBITDA before exceptional items of £1.6 billion from £990.2 million the last year.
JD Sports Fashion reported strong performances across the UK, Republic and Ireland and North America, with the UK and ROI highlighting a pre-tax profit before exceptional items of £471.2 million compared to £262.7 million.
The firm noted high levels of digital sales retention in Q1 while stores were temporarily closed, combined with positive demand upon reopening of physical store locations.
JD Sports mentioned a North American pre-tax profit before exceptional items of £343 million against £171.9 million, including contributions of £57.3 million from Shoe Palace and £50.6 million from DTLR.
The firm said it successfully capitalised on the favourable trading conditions boosted by a second round of fiscal stimulus from the US Federal government.
Meanwhile, the group’s outdoor sector returned to profitability with a pre-tax profit before exceptional items of £25.9 million compared to a loss of £6.1 million the last year as a result of elevated holiday demand across the UK as summer kicked off.
The group also mentioned it paid off the support it received from the Coronavirus Job Retention Scheme in full at a total cost of £24.4 million.
“This was another period of outstanding progress with the Group delivering a record headline profit before tax and exceptional items of £947.2 million, more than double the previous record of £438.8 million set in the period to 1 February 2020, which was the last completed financial year prior to the COVID-19 pandemic,” said interim chair Helen Ashton.
“This result demonstrates our capacity for growth in both existing and new markets, and the strength of our global proposition and consumer engagement in store and online.”
The firm added that the volatile geopolitical backdrop would bring economic headwinds, however it confirmed expected headline pre-tax profits and exceptional items for FY 2023 to fall in line with its performance for FY 2022.
JD Sports reported a basic EPS of 7.1p from 4.6p and a total dividend per ordinary share of 0.3p compared to 0.2p the year before.
Provexis (PXS) has signed two agreements with DSM relating to Fruitflow, an ingredient that helps normal blood flow and circulation. This will boost the profit of the AIM-quoted company and initially made Provexis the best performer of the day before the share price fell back to 0.95p (0.9p/1p), which is still a 10.5% increase.
There has been an alliance agreement with DSM for more than a decade and this is being changed into a transfer of business agreement that means that DSM customers for Fruitflow will become direct customers of Provexis at the beginning of 2023. DSM will assist with the transfer of the outsourced supply chain and production.
DSM will still receive a royalty on the gross profit of Fruitflow sales to customers it transfers to Provexis for four years. DSM Venturing has a 6.5% stake in Provexis.
The deal means that, assuming like-for-like sales and margins, Provexis would make a higher net profit in 2023 and it would increase in subsequent years. There should also be new direct customers added.
Microbiome
Provexis is partnering with DSM on a gut microbiome patent. The gut microbiome is the current focus of DSM, which will have preferential access to use and sale of Fruitflow-based products using the patent. The results of a gut microbiome human study will be submitted for publication in a scientific journal. This patent application says that there are health benefits beyond those relating to the heart.
Provexis will sell Fruitflow as an ingredient to DSM for use in its products, which would be sold on to its customers.
Chinese partner By-Health is working on a regulatory submission for the use of Fruitflow and its heart health benefits. This could help to multiply the sales in China.
Results
Provexis is a consistently loss-making business. Figures for the year to March 2022 should be announced in September. Revenues are estimated at £426,000 and the underlying operating loss of £173,000 is the lowest ever.
Angle (LON: AGL) reversed the Fruitflow business into Nutrinnovator in June 2005, so Provexis has been losing money for a long time. The all-share deal gave Angle a stake in the enlarged group that was worth £5.9m at the time.
There was £982,000 in the bank at the end of September 2021. Taking on the supply chain for Fruitflow could require additional working capital and losses will reduce the cash pile. Another fundraising may be required.
Inflation rose to a new 40-year record high of 9.1% in May, according to the latest figures from the Office of National Statistics (ONS).
The Consumer Price Index (CPI) increased by 0.1% from 9% in April to 9.1% in May, with climbing food and non-alcoholic beverage prices highlighted as the largest contributor to the new record.
The ONS also noted an 11.7% rise in Retail Price Index (RPI) inflation, marking another 40-year record for consumers across the UK.
Meanwhile, the Consumer Prices index including owner occupiers’ housing costs increased by 7.9%, with the climbing prices of fuel and electricity driving expenses higher, representing the highest level since the 1991 rate of 8% and the highest level since National Statistics series records began in 2006.
The Consumer Prices Index including owner occupiers’ housing costs grew 7.9% in the year to May 2022, up from 7.8% in the year to April https://t.co/xSN9anxUkm
— Office for National Statistics (ONS) (@ONS) June 22, 2022
Inflation gains ground
The Bank of England revised its inflation estimate from a peak of 10% to 11% in October this year, so while the UK has yet to hit the dreaded double-digits, experts warned that it isn’t far behind.
Analysts further highlighted that the Bank’s recent interest rates hike to 1.25% did little to stamp out rising inflation, and households are bracing for worse yet to come once summer makes way for colder weather in autumn.
“On a monthly basis, CPIH rose by 0.6% in May 2022, compared with a rise of 0.5% in May 2021 continuing to show the alarming rate of inflation the Bank of England has been unable to contain,” said XTB chief market analyst at XTB.
“This along with the energy cost crisis could prove to be significant issues for the economy to overcome and could begin to show its true effects on demand in the near future.”
AJ Bell head of personal finance Laura Suter added: “A slight uptick in inflation in May to 9.1% means that the UK public have been spared double digit inflation for now, but it’s just around the corner.”
“Soaring food costs are also playing their part, with the annual supermarket bill estimated to have risen by almost £400 as a result. Hardest hit were bread, cereals and meat, as they all suffered from the impact of the Ukraine/Russia crisis on grain supplies.”
“Food inflation is expected to increase again in June’s figures, partly due to the ongoing increase in prices and partly because the nation splashed out on fancier food during the Jubilee celebrations.”
“Once again fuel is the factor driving inflation higher, from home energy bills to petrol and diesel prices pushing up transport costs,” said Suter.
“As a result of rising energy costs, the 12-month inflation rate for electricity is 53.5% and for gas is an eye-watering 95.5%. And May saw another record broken, with the largest increase in transport costs since records began in 2006.”
“As a result of petrol and diesel prices hitting new records in May, the 12-month inflation rate for motor fuels hit the highest rate since 1989 – when the figures were first calculated.”
More pain to come
Consumers were warned to brace for even more pain this winter, with the energy price cap estimated to hit £3,000 in October as the cold weather sets in, draining household budgets as inflation reaches its anticipated peak.
“Unfortunately, more gloom lies ahead, and the hopes of inflation ebbing away later this year are dead,” said Suter.
“Energy costs will drive inflation higher later this year, with the latest estimates showing that the energy price cap will now rise to £3,000 in October, far more than many had expected, and that it won’t fall in the January update either.”
“It means one thing is for certain, this rising inflation isn’t going away any time soon and this coming winter could be tougher than the last.”
