Peel Hunt shares fall on 33.5% revenue drop to £121m, 57% profit fall to £33.1m

Natasha Doris
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Peel Hunt shares fall on 33.5% revenue drop to £121m, 57% profit fall to £33.1m

Peel Hunt shares decreased 4.1% to 112.2p in late afternoon trading on Thursday following a 33.5% drop in FY 2022 revenue to £121 million against £196.9 million in FY 2021.

The company announced a 57% pre-tax profit fall to £33.1 million from £77 million, alongside a basic EPS of 21.1p compared to 47.8p the last year.

Peel Hunt confirmed a cash hit of 25.8% to £76.7 million compared to £103.4 million.

However, the firm noted a 106.8% growth in net assets to £100.1 million against £48.4 million.

Peel Hunt reported that all three of its business divisions continued to make progress, with investment banking achieving record results for its second consecutive year at a 32% revenue increase to £57.9 million. The sector executed 46 equity fundraises, with advisory revenue up 166% to £8.4 million as the department acted on 19% of announced UK mid-and-small-cap takeovers.

The group commented that its execution services business delivered revenue of £42.9 million in FY 2022 compared to £166.7 million in FY 2021, and its research and distribution results were resilient, however revenues slid to £30.2 million from £36.3 million year-on-year. The sector apparently gained substantial market share in institutional commissions across the term.

Peel Hunt added 19 new corporate clients to its portfolio, with an additional four added in the period since the close of FY 2021, which brought its complete number to 164 clients.

“Against this backdrop, our performance was resilient, with all three divisions continuing to make progress, demonstrating the benefit of our diversified business model,” said Peel Hunt CEO Steven Fine.

“We generated record Investment Banking revenue for the second consecutive year, continuing to grow our corporate client base while being more active than any other investment bank in UK ECM transactions.”

“Alongside this, both Execution Services and Research & Distribution delivered solid performances, as we continued to develop our trading technologies and to win market share in institutional commissions.”

Peel Hunt reported a final dividend of 3.1p, in line with the company’s dividend policy.

Water Intelligence revenue grows 44% to $54.5m

Natasha Doris
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Water Intelligence revenue grows 44% to $54.5m

Water Intelligence shares increased 4% to 739p in late afternoon trading on Thursday, after the group announced an annual revenue growth of 44% to $54.5 million in FY 2021 compared to $37.9 million in FY 2020.

The firm reported an adjusted EBITDA rise of 48% to $10.3 million from $7 million year-on-year, along with a statutory EBITDA increase of 72% to $11.4 million against $6.7 million.

Water Intelligence mentioned an adjusted pre-tax profit climb of 36% to $6.9 million compared to $5.1 million, and a statutory pre-tax profit surge of 80% to $7.6 million from $4.2 million.

The company also noted a strong balance sheet with adequate resources to carry out its growth plan, with $23.8 million in cash against $6.8 million the last year, net of bank debt of $15.5 million, with net of bank debt and deferred payments to franchisees of $1.8 million in cash.

It highlighted an adjusted EPS climb of 29% to 30.2c compared to 23.5c the year before, alongside a statutory EPS growth of 85% to 36.1c from 19.5c.

Water Intelligence successfully executed eight acquisitions, with five franchise, two bolt-on and one for technology.

The group also completed three financings, with two equity and £23.8 million added, and one bank debt with $3.2 million added.

The firm added 132 new workers to its headcount, including 73 technicians over the FY 2021.

“Despite Covid-19 disruptions, we delivered across the board in both 2020 and 2021 to deliver on our mission of building a world-class multinational growth company in an important space – water infrastructure,” said Water Intelligence executive chairman Dr. Patrick DeSouza.

“The marketplace now faces new challenges with inflation and labour retention layered on top of Covid-related issues.  We will step forward to meet these latest challenges as well.”

“Our management team has only gotten stronger during 2021 as we added senior leaders and have continued to add technicians to meet strong market demand for our services and products. With the support of our investors, we have a strong balance sheet enabling us to navigate confidently in the short, medium and long run.”

Water Intelligence commented that it was confident in further company development in FY 2022, and said it was well-placed to navigate inflationary challenges to meet market expectations for the term, with a strong Q1 reported already.

The company did not recommend a dividend for FY 2021, following its lack of dividend payout in FY 2020.

Oracle Power reports 90.4% gold recoveries within 72 hours from Northern Zone Gold Project

Natasha Doris
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Oracle Power reports 90.4% gold recoveries within 72 hours from Northern Zone Gold Project

Oracle Power shares were down 9.3% to 0.2p following the company’s reported positive metallurgical results from the first of three samples delivered from its 100% owned Northern Zone Gold Project in Western Australia, which indicated gold recoveries of 83.3% within six hours and up to 90.4% within 72 hours.

The Northern Zone is Oracle Power’s intrusion related gold system, and hosts wide gold mineralised felsic porphyry intrusions.

The mining firm announced that the metallurgical results would form the basis for moving forward with diamond and RC drilling to define a maiden inferred JORC resource, based on its previously reported Exploration Target of 200 to 250 mega-tonnes at 0.4 to 0.6 grams per tonnes in gold for 2.5 to 4.8 million ounces in gold.

Oracle Power confirmed its results included a composite sample based on strongly weathered felsic units with 30% quartz vein material, with a drill head grade at 0.9 grams per tonne in gold and very low copper content into solution.

“The positive metallurgy at Northern Zone is the next step for the Company to move the project forwards,” said Oracle CEO Naheed Memon.

“We have defined a large exploration target of 2.5 to 4.8Moz gold, and with the widths of mineralisation intersected in this and historical drill programmes, and now with an understanding of potential recovery, around 90%, this ensures we are in a strong position to move to the next step of increasing confidence in the tonnes and grade of the gold deposit.” 

“Northern Zone is now a priority for the Company and the main focus of our activities in Australia. In line with this, our exploration teams will increase efforts on Northern Zone, moving from Jundee East, which has not returned the results required to warrant further work at the moment.”

ECB points to interest rate hike in July, announces end to net asset purchases

Natasha Doris
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ECB points to interest rate hike in July, announces end to net asset purchases

The European Central Bank (ECB) sent a wave of relief across the markets, after the institution announced it would be raising interest rates for the first time in 11 years, with a 25 basis points hike scheduled for its July meeting after maintaining current rates throughout June.

The interest rates increase is set to kick off after the ECB formally ends its purchases of net assets on 1 July this year.

The ECB confirmed that the governing council intended to continue reinvesting in the principal payments from maturing securities purchased under the APP for an extended term beyond the date when it begins to raise the key ECB interest rates, and for as long as required to maintain decent liquidity conditions and the requisite monetary policy stance.

The Bank is set to keep interest rates for June on deposit facility, main refinancing operations and marginal lending facility at minus 0.5%, 0% and 0.25%, respectively.

The ECB also downgraded its growth forecast, with the Eurozone currently facing record levels of inflation at 8.1% at the close of May, four-times its target level, linked to soaring food and energy crisis as a result of the Ukraine conflict.

Inflation is currently projected at 6.8% for 2022, with a decrease to 3.5% in 2023 and a drop to 2.1% in 2024.

Meanwhile, the Eurosystem is expected to see an annual real GDP growth at 2.8% in 2022, followed by a 2.1% rise in 2023 and a 2.1% increase in 2024.

The organisation indicated an additional interest rates hike at its meeting in September, however it mentioned that the level of its increase depended on the trajectory of the medium-term inflation projections.

“Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate,” the ECB said in a statement.

“In line with the Governing Council’s commitment to its 2% medium-term target, the pace at which the Governing Council adjusts its monetary policy will depend on the incoming data and how it assesses inflation to develop in the medium term.”

Analysts pointed out the positive reaction the ECB confirmation sparked in the markets, with its decision to keep rates at their current level met with an uptick in optimism going forward in 2022.

“With inflation in the eurozone more than 4 times higher than the 2% target it was no surprise to see the ECB maintain their key rates at current levels at their meeting today,” said ZEDRA global head of Fiduciary Investment Services Toby Sturgeon.

“Markets reacted positively with the Euro appreciating in the immediate aftermath of the decision.”

“The focus was more on the on the potential for future rate hikes rather than today’s news as it looks increasingly likely that July will see a 25bp increase in base rates with the potential for 2 two further 25 bp increases at future meetings.”

FTSE 100 sinks after ECB ends asset purchases

Natasha Doris
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FTSE 100 sinks after ECB ends asset purchases

The FTSE 100 was down 0.4% to 7,562.3 in midday trading on Thursday as all eyes turned to the European Central Bank (ECB) and their decision to end an unprecedented asset purchase programme.

Analysts pointed to the pressure of tackling soaring inflation amid the impact of the conflict in Ukraine as reasons for negativity in markets.

In addition, the ECB suggested they were to follow today’s move with a series of interest rate hikes just as global economies started to show signs of weakness.

“The ECB has been behind the curve in responding to inflation and may find it hard to be too aggressive with rate hikes given a more fragile economy,” said Russ Mould of AJ Bell.

British American Tobacco shares were down 1.1% to 3,524p as the company announced that cost inflation linked to the Ukraine conflict was impacting its supply chain, however it stated confidence in its FY 2022 guidance of 2% to 4% revenue growth.

The tobacco giant reported an estimated FY tobacco industry volume at minus 3% as a result of geopolitical volatility, and rumblings that the government is set to argue for an increase in the minimum legal age to purchase tobacco further served to put a dampener on consumer optimism.

“In the same way a lapsed smoker might light up a cigarette to calm their nerves, volatile trading has seen investors reach for the likes of British American Tobacco (BAT) despite all the associated ethical concerns,” said Mould.

“However, in a reminder of the regulatory pressure on the industry, a UK Government report looks set to be released today which will argue for an increase in the minimum age at which you can buy tobacco products. Even potentially raising it every year so the current generation of children can never buy cigarettes.”

“BAT knows this is the direction of travel and is investing heavily in areas like e-cigarettes and vaping to try and ensure its business isn’t eventually regulated out of existence, particularly in the West.”

Consumer stocks looked downtrodden in anticipated of higher rate hikes from the ECB, with rising food prices dealing a blow to supermarkets across the index.

Sainsbury’s shares plummeted 6.3% to 208.3p, Ocado dropped 3.2% to 921.3p, B&M fell 2.5% to 364.7p and Tesco slid 2.5% to 253p, representing the latest in a spiral for the industry as food inflation hit 4.3% in May after its 3.5% climb in April this year and consumers pared back spending on unessential food products.

Meanwhile, DIY giant Kingfisher dropped 2.8% to 248.6p as consumers threw home improvement on the back burner and tightened their belts for leaner times ahead.

“Big ticket items … were always going to be the first place where people think twice about handing over the cash. If you’re under financial pressure, the idea of paying more than £1,000 for something is a big commitment,” said Mould.

Greatland Gold Havieron announces 12-month Havieron expansion drilling programme

Natasha Doris
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Greatland Gold Havieron announces 12-month Havieron expansion drilling programme

Greatland Gold shares were up 0.2% to 12.2p in late morning trading on Thursday, following the company’s development and exploration update from its Havieron gold-copper project in Western Australia.

Greatland Gold announced that the South East Crescent high grade zone had been identified as extending over 1,000 metres of continuous mineralisation, and remained open, alongside high grade results within the Northern Breccia which continued to demonstrate potential further high-grade mineralisation adjacent to the South East Crescent Zone.

The mining group is scheduled to launch an extensive drilling programme across the next 12 months to provide the opportunity to expand its Havieron asset.

The company reported it had seven drill rigs on site, which were all focused on growth targeting.

Its South East Crescent is set for continuous drilling to test for extensions to the resource, with drilling planned up to 400 metres below the Updated Mineral Resource.

The Eastern Breccia will see continued drilling to define its greater mineralised footprint, including definition of recently announced higher-grade zones, while the Northern Breccia drilling will be aimed to extending high-grade zones of mineralisation at depth.

Greatland Gold confirmed it would be drilling to define geophysical targets outside the primary Havieron system, with follow-up drilling scheduled at regional targets on the Havieron mining lease.

“The growth drilling programme continues to expand Havieron‘s mineralised system. The existing high grade mineralised zone of the South East Crescent now extends a further 100 metres below our previous Mineral Resource estimate,” said Greatland Gold managing director Shaun Day.

“Testament to the scale of Havieron, there is now continuous mineralisation observed over 1,000 metres of vertical extent with the system remaining open at depth.” 

“With an extensive growth drilling programme planned over the next twelve months, there is tremendous potential to further expand the Havieron resource and unlock the true scale and value of the broader system.”

Drilling Results

The drilling programme revealed a slate of positive results, with HAD133W9 returning 85.8 metres at 3 grams per tonne in gold and 0.06% copper from 1,604 metres and 25.3 metres at 1.1 gram per tonne in gold, along with 0.08% copper from 1,471 metres.

Greatland Gold confirmed that high-grade results in the Northern Breccia reinforced the potential for additional high-grade sulphide mineralisation adjacent to the South East Crescent zone.

HAD055W4 returned 149.9 metres at 2.7 grams per tonne in gold and 0.12% copper from 877.4 metres, with 13.9 metres at 22.8 grams per tonnes in gold and 0.46% copper from 1,013 metres.

HAD055W5 further returned 39.6 metres at 2.8 gram per tonne in gold and 0.07% copper from 983.6 metres, and 0.5 metres at 96 grams per tonne in gold and 0.1% copper from 1,020.7 metres.

Improvements in early works

Greatland Gold confirmed its construction activities by Newcrest Mining were progressing, with an exploration decline advance of 377.5 metres at the close of May 2022, alongside a fully-commissioned fuel facility.

The firm mentioned that the decline experienced improved ground conditions across the June quarter, with advance rates showing improvement after alterations in the design of the decline brought the first downward spiral forward to the current advance position.

The change has allowed the decline to transition into more optimal ground conditions.

“Pleasingly, the decline has encountered better ground conditions, resulting in recent improvements to the decline advancement rates,” said Day.

The feasibility study under work by Newcrest Mining is reportedly progressing and key contracts have been awarded, with the feasibility study anticipated for delivery in the December 2022 quarter.

FirstGroup shuts down £1.2bn takeover offer from Squared Advisors Capital

Natasha Doris
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FirstGroup shuts down £1.2bn takeover offer from Squared Advisors Capital

First Bus shares slid 0.5% to 136p in late morning trading on Thursday, after the travel company reportedly turned down a series of unsolicited offers from Squared Advisors Capital to purchase the entire issued and to be issued share capital of the firm for £1.2 billion.

First Bus revealed on 26 May that the most recent offer from Squared Advisors proposed a cash component of 118p per share from FirstGroup, alongside a contingent right to up to an additional 45.6p per share, based on the outcome of the First Transit earnout, along with the net proceeds realised from the Greyhound legacy assets and liabilities.

The company protested that the offer of 118p per share “significantly undervalued” the group’s continuing operations and its prospects, and that the contingent right to up to 45.6p per share failed to provide its shareholders with sufficient certainty.

FirstGroup commented that its board had subsequently unanimously rejected the proposed takeover deal.

Mitie Group shares rise on 58% revenue climb to £3.9bn

Natasha Doris
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Mitie Group shares rise on 58% revenue climb to £3.9bn

Mitie Group shares were up 6.9% to 65.9p in late morning trading on Thursday after the firm announced a 58% climb in revenue to £3.9 billion in FY 2022 against £2.5 billion in FY 2021.

The company attributed its soaring revenue to new contract wins, growth at Interserve Facilities Management and £448 million from flexible rapid-response Covid-19-related contracts.

Mitie Group reported a 184% growth in operating profit before other items of £167 million from £59 million, with a higher operating profit margin of 4.2% against 2.3% the last year, as a result of contributions from its higher-margin, Covid-19 contracts.

The firm’s operating profit after other items rose to £72 million against £4 million the year before, reflecting the company’s stronger performance over the year.

Its legacy Interserve business saw a 90% rate of contract renewal in the term, with cost synergies of £30 million.

Meanwhile, Mitie Group commented that its new contract wins, 90% renewal level and extensions hit approximately £3.8 billion in total contract value, with a book-to-bill ratio of 105%.

“Through our investment-led strategy, Mitie has reached an inflection point earlier than anticipated. We delivered a strong financial performance in FY22, with good underlying growth,” said Mitie Group CEO Phil Bentley.

“The Group is now able to leverage its capital base to focus on long-term value creation, accelerating investment in growth and delivering enhanced shareholder returns.”

“Thanks to the hard work of our 72,000 colleagues, Mitie has recovered strongly from the pandemic, delivering a record £4bn of revenue in FY22, operating profit of £167m and free cash flow of £133m. The Interserve business is performing strongly under our stewardship and our ability to rapidly mobilise flexible contracts led to robust COVID-related business.”

The company announced an average daily net debt fall to £25 million compared to £47 million, with net cash of £27 million at the end of the year and a free cash inflow of £133 million from £25 million in the previous year, as a result of increased profitability and lower working capital.

The Mitie Group also mentioned its acquisitions of £27 million in fast growing, high return business disposals, including the disposal of Mitie Document Management for £40 million.

The company commented that it anticipated mid-to-high single digit revenue growth, along with good operating margin progress, on the back of its recent contract wins from institutions including Netflix, Poundland, Primark and Hammerson, and contract renewals for its military base support in Cyprus, Ascension Islands and the Falklands.

The firm noted an EPS before other items of 9.2p, marking a significant increase from 3.1p linked to a higher operating profit and a lower effective tax rate.

The Mitie Group highlighted its initial £50 million share buyback scheme launched in the year in a bid to increase returns to shareholders, and confirmed a final dividend recommendation of 1.4p per share, with a total dividend of 1.8p for FY 2022.

Tate and Lyle revenues grow 18% to £1.3bn, acquires Chinese dietary fibre group

Natasha Doris
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Tate and Lyle revenues grow 18% to £1.3bn, acquires Chinese dietary fibre group

Tate & Lyle shares were up 3% to 768p in early morning trading on Thursday following a reported 18% revenue growth to £1.3 billion against £1.2 billion and a year-on-year 14% pre-tax profit growth to £145 million compared to £134 million in FY 2022.

The food producer further noted a post-tax profit decrease of 9% to £146 million against £169 million.

Tate & Lyle confirmed a diluted EPS growth of 4% to 24.9p compared to 25.2p and a free cash flow of fall of £81 million to £72 million from £153 million.

The company announced a significant increase in innovation, with 35% new product revenue growth, reflecting strong demand for reduced sugar offerings and clean label solutions.

Tate & Lyle highlighted its acquisition of dietary fibre business Quantum Hi-Tech Biological Co., Ltd in China, which is set to strengthen its fortification offerings.

“This acquisition significantly strengthens our fortification platform and our position as a leading global player in dietary fibres, while extending our presence in China and Asia,” said Tate & Lyle CEO Nick Hampton.  

“FOS and GOS fibres are highly complementary to our existing fibre portfolio and will allow us to offer a broader range of solutions to our customers across key markets.”

The company also completed the sale of its controlling stake in Primary Products in the Americas creating Primient joint-venture.

The producer added that its strong balance sheet allowed for capacity to grow, and for a special dividend payment of £500 million delivered in May 2022, following gross cash proceeds of £1.1 billion on the sale of its Primary Products stake.

It reportedly mitigated £100 million in operational inflation through pricing, productivity, cost discipline and volume strategies, with its six-year productivity programme delivering approximately $150 million in benefits, two years ahead of schedule.

“This has been a landmark year for the company. New Tate & Lyle delivered double-digit organic revenue growth across all regions and double-digit profit growth despite significant inflation across the supply chain,” said Hampton.

“We also passed a major strategic milestone by refocusing the Group on our faster growing speciality food and beverage solutions business.”

“To do this during a global pandemic, while serving our customers, accelerating innovation and living our purpose is a testament to the resilience, ambition and agility of all my colleagues.”

The firm commented that it expected progress with adjusted pre-tax profit in line with market expectations, and revenue growth reflecting top-line momentum alongside the pricing through of higher input costs.

The company said its near-term aims were reportedly to manage continuity of supply and maintain the group’s financial strength and strategic progress.

Tate & Lyle recommended a final dividend of 12.8p for the year against a dividend payment of 30.8p in 2021.

British American Tobacco New Categories drive growth, £2bn share buyback scheme

Natasha Doris
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British American Tobacco New Categories drive growth, £2bn share buyback scheme

British America Tobacco shares were flat at 3,566p in early morning trading on Thursday, after the group announced strong revenue and volume growth across all three of its new categories.

The company’s Vuse, Velo and Glo brands are reportedly on track to deliver the firm’s £5 billion in new category revenue and profitability targets by 2025, with the group working to narrow losses in the categories for the current term.

British American Tobacco said its combustible business was maintaining its value, with an anticipated £1.5 billion in savings from its Quantum business simplification programme.

The tobacco giant confirmed that it would be returning £2 billion to shareholders through its 2022 share buyback scheme, alongside the increase of its dividend payouts.

The group also commented that it was in the process of transitioning its Russia-based business assets to align with legal requirements according to international and local law.

It warned that cost inflation was impacting its supply chain, however the company added that it remained confident in its FY 2022 guidance of 2% to 4% revenue growth at constant currency along with mid-to-single figure adjusted diluted EPS growth.

The firm noted in applying current foreign exchange rates, it would expect a translation tailwind of 2% on adjusted diluted EPS growth for HY1 2022 and 5% for FY 2022, and further mentioned a FY 2022 operating cash conversion in excess of 90% of adjusted profit from operations.

British American Tobacco highlighted a projected growth in its non-combustible product consumer base, which hit 19.4 million in Q1 2022, alongside scaled-up new category investment, with over £1 billion invested in the first half.

The company did highlight that its FY global tobacco industry volume was estimated to be minus 3% as a result of the geopolitical turmoil related to the Russian conflict against Ukraine.

“While we recognise that there will be challenges ahead and that there is more work to do, our execution capabilities continue to evolve, and we are rapidly transforming the business. We are now in our Faster Transformation phase and making strong progress,” said British American Tobacco CEO Jack Bowles.

“I am proud of the continued commitment and delivery of our teams and partners across the world as we work towards building A Better Tomorrow.”

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