AIM movers: Jet2 uncertainty and Simec Atlantis Energy tidal boost, plus ex-dividends

Andrew Hore
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AIM movers: Jet2 uncertainty and Simec Atlantis Energy tidal boost, plus ex-dividends

Airline and tour operator Jet2 (LON: JET2) more than trebled revenues in the year to March 2022, but the loss from continuing operations also increased from £369.9m to £388.8m. Seat capacity increased from 2 million to 7.1 million and average load factor edged up from 66% to 69.2%. The company’s own cash is £1.08bn. The prospects for this year depend on the aviation sector returning to a level of stability, as well as future bookings. The shares fell 12.8% to 776.2p.

Simec Atlantis Energy Ltd (LON: SAE) has secured a contract for difference for the MeyGen tidal energy site in Scotland that guarantees £178.54/MWh for 15 years. This covers 28MW of power in Scotland. The full project can generate much more than this. This has helped the share price recover most of its losses in the past few weeks. The share price jumped 83.1% to 2.3p. Last week, bondholders voted to defer interest payments due on 30 June. The total payments of £350,000 are deferred until September.

Diagnostics company Novacyt (LON: NVCT) reported a slump in interim revenues from £52.2m to £16.5m – non-Covid revenues fell from £4.8m to £3.5m. Full year revenue expectations have been reduced to £25m – from £35m-£45m – and it will move back into loss. Costs are being reduced and they should reach an annualised level of £17m by the end of the year.  There is still £99.6m in the bank. The share price slumped 24.9% to 111.75p, although it is above its low for the day.

In-game brand advertising technology company Bidstack (LON: BIDS) increased interim revenues from £820,000 to £2.1m and gross margins are improving. Revenues from the Azerion media sales partnership are building up. New advertising standards could make media buyers more confident about purchasing in-game advertising. The shares are 14% higher at 2.85p.

Symphony Environmental (LON: SYM) has received new orders for its d2p anti-insect technology from Rivulis, which makes drip irrigation products. The orders are worth more than $340,000. Rivulis has placed smaller orders in the past. This is for a range of irrigation pipes for farmers. This follows last week’s agreement with bread maker Bimbo. Symphony could breakeven this year. The shares rose a further 8.6% to 19p.

Radiation and bio-detection technology developer Kromek (LON: KMK) has secured a distribution agreement with Smiths Detection Inc for its wearable radiation detection and identification products in North and South America. This boosted the share price by 7.8% to 9.975p.

Ex-dividends

Polar Capital (LON: POLR) is paying a 32p a share final dividend and the share price fell 29p to 481p.

Camellia (LON: CAM) is paying a 102p a share final dividend and the share price fell 25p to 6175p.

Concurrent Technologies (LON: CNC) is paying a 1.4p a share final dividend and the share price fell 3p to 75p.

James Cropper (LON: CRPR) is paying a 7.5p a share final dividend and the share price fell 40p to 895p.

Lift services and electrical components manufacturer Dewhurst (LON: DWHT) is paying a 4.5p a share interim dividend and the share price is unchanged at 1075p.

Next Fifteen Communications (LON: NFC) is paying a 8.4p a share final dividend and the share price fell 10.5p to 922.5p.

Premier Miton (LON: PMI) is paying a 3.7p a share interim dividend and the share price fell 4p to 117.5p.

Tavistock Investments (LON: TAVI) is paying a 0.07p a share dividend and the share price is unchanged at 8.625p.

Currys cautious about short-term prospects

Andrew Hore
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Currys cautious about short-term prospects

Better than expected results from telecoms and electrical goods retailer Currys (LON: CURY) perked up the share price, but management is cautious about the trading outlook and a profit fall is anticipated.  

Underlying pre-tax profit of £155m was expected, but the outcome was £186m, although this was partly down to one-off factors, including a revaluation of the telecoms network debtor. There were cost savings of £69m in the UK and a switch from online to store sales helped margins. The past problems obtaining products are easing.

Revenues dipped from £10.3bn to £10.1bn, although they were flat on a constant currency. There was a decline in the UK revenues that was offset by growth in Greece. On a constant currency basis there was growth in the Nordics. Group like-for-like revenues were 3% lower.

The final dividend is 2.15p a share, taking the total to 3.15p a share. Net cash was £44m at the end of April 2022. The pension liability was reduced from £482m to £257m.

Guidance

There remains uncertainty about consumer spending. The 2022-23 pre-tax profit is likely to be in the range of £130m-£150m, partly due to lower margins. The business will continue to be cash generative and there are plans for capital investment of £140m-£160m.

Currys is targeting an underlying operating margin of 3% by 2023-24. Last year, the operating margin improved from 2.5% to 2.7%.

Persimmon housebuilding volumes decline

Andrew Hore
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Persimmon housebuilding volumes decline

Housebuilder Persimmon (LON: PSN) says interim revenues declined although profit will be slightly higher than expected. However, planning delays will further hit volumes in the rest of the year and there are set to be small downgrades in pre-tax profit forecasts.

The share price had already fallen by around one-third this year and it declined a further 4.1% to 1789p.

Completions were just over 10% lower at 6,652 in the first half. Revenues fell from £1.84bn to £1.69bn, although forward sales were slightly higher at £1.87bn. the group is 75% forward sold for the year. House price rises are offsetting cost inflation of materials and labour. Demand for homes also remains strong.

The guidance on full year completions is between 14,500 and £15,000, which is 3%-6% below the Peel Hunt forecast. Operating margins are likely to be lower. That could reduce existing forecasts by up to 5%.

Cash

Buying additional land and paying £399m in dividends has reduced the cash pile, but net cash was still £780m at the end of June 2022. There were 8,800 plots added during the period.

A further 110p a share special dividend will be paid on 8 July but should still leave net cash at more than £400m.  

Sterling rallies as Boris Johnson resigns

UK Investor Magazine
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Sterling rallies as Boris Johnson resigns

Sterling bounced back against the dollar on Thursday as Boris Johnson finally resigned after a humiliating week of resignations by those closest to him.

Ministers appointed only two days ago either quit or called for his resignation on Thursday which provided to be the final nail in the coffin for Johnson’s time as Prime Minister.

“The clash of political camps and the row over whether the Prime Minister should stay or go is over. With the mood music changing so abruptly in Westminster and Boris Johnson finally deciding to leave 10 Downing Street, the pound lifted against the dollar, heading back up to $1.20 before dipping back slightly,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

The pound has suffered against the dollar this week as investors bought into the dollar on global recession fears.

How M&G Investments is aligning funds with Paris climate change goals

UK Investor Magazine
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How M&G Investments is aligning funds with Paris climate change goals

M&G Investment are taking the alignment with the Paris climate change goals head on with a range portfolios dedicated to fighting climate change.

M&G has dedicated funds forming a pincer movement on climate change.

On one side there are the funds such as the M&G Climate Solutions and M&G Positive Impact funs investing in companies already providing a measurable positive impact on the environment.

Supporting these efforts are M&G’s Paris aligned funds which invest in companies whose operations may not necessarily be directly reducing carbon emissions, but are minimising their impact and working towards net zero.

M& Investments offer two Paris Aligned funds in the M&G Global Sustain Paris Aligned Fund and M&G European Sustain Paris Aligned Fund. The two funds include holdings such as Microsoft, WH Smith, Novo Nordisk, Schneider Electric and Unilever.

There is a central theme within M&G’s sustainable-focused team that by seeking out companies with strategies aligned with Paris goals, they will discover high quality businesses that will produce attractive long term returns.

Having met with members of the team driving forward M&G’s Paris Aligned funds, there is a sense this school of thought is quickly moving through the organisation, beyond the funds dedicated to fighting climate change.

Weighted Average Carbon Intensity

Company selection for the Paris Aligned portfolio is dictated largely by the carbon intensity of the company. M&G aims for the overall portfolio to have a carbon intensity 50% below the benchmark average. If a company has a carbon intensity level above this 50% target, M&G expects the company has a science based target in place to help reduce carbon emissions.

Science based targets

A key feature of the M&G investment process is the presence of science based targets within the business. These targets provide the basis for assessing companies’ willingness to move towards Paris targets, even if they may not be operating in a sector that first springs to mind when selecting sustainable investments. 

M&G say they expect in excess of 90% of portfolio companies will have science based targets in place by 2025.

Investment Process

Speaking at an investor event in June, Deputy Fund Manager of the M&G Global Sustain Paris Aligned Strategy, Mike Oliveros, drove home the rigorous selection process that sees very few changes to the Paris portfolios.

Engaging with companies is an integral part of their investment process. Oliveros noted that when they initially set about reaching out to companies they were often met with stoney faces, but are now enjoying high levels interaction. 

Indeed, M&G highlighted they are actively engaged in influencing portfolio companies’ behaviour as they believe by doing this they will improve investment returns in the long term.

There is a belief that companies actively working to align their business models with Paris targets will outperform. This may be down to the ability to unlock value by providing low emission services that are set to enjoy increased future demand. It also means they could avoid financial penalties.

New AIM admission: LifeSafe Holdings

Andrew Hore
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New AIM admission: LifeSafe Holdings

LifeSafe Holdings has developed fire safety products, using eco-friendly fluid. Raising the cash and joining AIM will help the company develop further products, build up inventories and finance additional marketing.
 It is estimated that 17% of the 23.5 million UK households in England have a fire extinguisher. The extinguishers can also be sold to commercial premises. There are trials with fire services in the UK. There is also a link-up with digital home insurer Locket, which encourages use of technology to reduce insurance costs.
The share price ended the first day of trading at 77.5p ...

ActiveOps invests for the future

Andrew Hore
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ActiveOps invests for the future

Management process automation software provider ActiveOps (LON: AOM) is investing in sales and development to boost future growth and that will lead to a higher loss this year.

AIM-quoted ActiveOps provides software that helps to improve the efficiency and consistency of back office operations of organisations. The financial sector is the major market. This is an international business with Europe generating the majority of revenues. North America, though, has the strongest growth prospects.

In the year to March 2022, revenues improved from £20.4m to £22.9m, while the underlying loss increased from £400,000 to £900,000. Net cash is £13.8m. Spending on development continues to increase.

Revenue growth

Annual recurring revenues (ARR) are £20.1m. Net revenues retention was 102% as existing clients spend more. This is a lower percentage than the previous years because of unusually high customer churn. The top 40 accounts grew ARR by 19%.

This year, revenues are expected to improve to £24.6m, but the loss could rise to £2.5m. ActiveOps could be near to breakeven in terms of operating cash flow, though, because of the SaaS-based revenues.  

The strength of the US dollar could provide an additional uplift to revenues. In the first quarter, three new clients have been gained in North America and Asia.

Active Ops is not immune to the general fall in technology share prices. The share price fell a further 4.1% to 71p. Last March’s flotation price was 168p. Once ActiveOps passes breakeven, then profit should grow faster than revenues. The annual recurring revenues should provide a floor to the short-term share price.

FTSE 100 jumps as the pound trades at 2-year lows

UK Investor Magazine
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FTSE 100 jumps as the pound trades at 2-year lows

The FTSE 100 was a beneficiary of a weaker pound on Wednesday after the UK government was plunged into chaos. London’s leading index was 1.4% higher at 7,125 at the time of writing.

“Turmoil in Westminster is adding another layer to the uncertainty hanging over the prospects for the UK economy amid a darkening global outlook.  The pound has plummeted to levels not seen since March 2020 in the early days of the pandemic,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“However, the flight to the dollar accounts for much of the slide in sterling we’ve seen over the last 24 hours as investors take fright about the worries about recessions hitting.”

The FTSE 100 has an inextricable inverse relationship with the pound and today’s move highlights how the FTSE 100 doesn’t reflect the strength of the UK economy.

Asset managers jump

Asset and investment managers were among the top risers as abrdn stormed 6% higher and St James’s Place added 3.5%.

abrdn announced a £300m share buyback on Wednesday.

Investment platform Hargreaves Lansdown gained 4% as the new Chancellor hinted at tax cuts that could provide taxpayers with additional cash to invest.

Retail stocks, including JD Sports and Ocado, also surged on hopes a tax cut would boost demand for their goods.

Oil

Oil shares were largely flat as energy markets stabilised after a sharp decline yesterday.

“Having slumped in price last night, oil managed to claw back some of its losses on Wednesday as the market stabilised. The question is, how long will this stability last? On one hand, a recession could easily reduce oil demand. On the other, supplies remain tight, so we perhaps won’t see a big price crash if the world grinds to an economic halt,” said Russ Mould, investment director at AJ Bell.

Coats buys footwear components supplier Texon

Andrew Hore
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1
Coats buys footwear components supplier Texon

Industrial thread manufacturer Coats Group (LON: COA) has acquired Texon International Group for an enterprise value of $237m. This will increase the group’s presence in the Athleisure footwear sector.

Hong Kong-based Texon has facilities in Asia and Europe and previously had a private equity owner. It supplies insoles, heel counters, uppers and linings for footwear – 90% of revenues – and also supplies materials for handbags and accessories.

The main customers include adidas, Nike, Puma, Converse and Timberland and existing Coats clients could become its customers. Texon has a one-fifth market shares of the footwear structural components market.

In 2022, Texon is expected to generate revenues of $145m and operating profit of £18.5m. Underlying growth is expected to be around 10% a year and could be even better. There is enough capacity to generate revenues of $200m. Last year, Coats had revenues of $184m from the footwear and accessories sector.

Forecasts

Peel Hunt has upgraded its forecast for Coats for 2022 with revenues increasing from $1.57bn to $1.62bn and pre-tax profit edged up from $195m to $198m. A full contribution from Texon in 2023 has led to a pre-tax profit upgrade from $228m to $243m. There should be $5m of overhead cost benefits by 2024.

Net debt is expected to be $407m at the end of 2022, but cash generation should enable this to fall to $343m at the end of 2023.

The Coats share price rose 3.6% to 62.45p, which means that it is trading on around ten times prospective 2022 earnings, falling to eight next year.

AIM movers: Savannah Resources chief exec departs, Parkmead revenue increase

Andrew Hore
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0
AIM movers: Savannah Resources chief exec departs, Parkmead revenue increase

The departure of Savannah Resources (LON: SAV) chief executive David Archer has hit the share price, which slumped 30.8% to 2.3p. Dale Ferguson will be interim chief executive. The environmental impact assessment of the Barrosso lithium project in Portugal. Savannah Resources has six months to optimise the design of the project.

Energy supplier Parkmead (LON: PMG) says that its business in the Netherlands is generating record revenues thanks to higher gas prices, enabling a move into profit. This led to a 13.1% jump in the shares to 48.3p. In the year to June 2022, revenues of more than €14.5m were generated, compared with a forecast figure of €12.8m. This strong revenue generation continued into the new financial year. Exploration is being ramped up and two wells could be drilled earlier than previously expected.

Midlands-based property investor Real Estate Investors (LON: RLE) has sold £5.7m of properties so far this year with a further £10m planned. If the significant discount to NAV continues, then a special dividend will be considered. Contracted rental income is still £14m a year and the occupancy level is 85.9%. The share price rose 8% to 37.25p.

A first half trading updated from carbon fibre ceramic brakes manufacturer Surface Transforms (LON: SCE) shows a 240% increase in revenues and it is ready for further significant growth in demand following contract wins. This should help the company move towards profitability. The growth in interim revenues mainly came from Aston Martin Valkyrie production and development projects. The share price moved ahead by 8.1% to 47p.

Ecommerce technology provider Attraqt (LON: ATQT) says that interim revenues are in line with expectations, but it expects investment decisions to be delayed because of weak economic conditions. It is also taking longer for clients to build up to full usage. Annualised recurring revenues have risen by 15% to £23.4m. Attraqt increased last year’s total revenues by 9% to £22.9m but continues to lose money. There was £3.5m in the bank at the end of 2021. There was a 10% dip in the share price to 1.425p.

United Oil & Gas (LON: UOG) did not find any hydrocarbons at the ASV-1X exploration well in the Abu Sennan licence, onshore Egypt. The test results will be reviewed, and options considered. The share price fell 8.1% to 1.425p.

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