Synectics major end-user markets boost revenues in HY2 2022

Natasha Doris
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Synectics major end-user markets boost revenues in HY2 2022

Synectics shares were up 0.9% to 106p in early afternoon trading on Tuesday, following the company’s trading report for HY1 2022, in which the group confirmed continued momentum in its major end-user markets including oil and gas, and US gaming.

The security and surveillance systems firm commented that recovery was less evident in sectors such as casinos and gaming resorts in the Asia-Pacific region, as a result of subdued leisure-related travel.

Synectics mentioned trading was in line with management expectations, with a positive turnaround from the same term last year.

The company highlighted a revenue climb of 20% in its core system division, which reportedly drove its strong results as markets hit by the Covid-19 pandemic began to recover.

However, its UK-centred integration division Synectics Security saw a fall in revenue on the back of customer-led delays on several important projects that had been scheduled for completion over the period.

Operating profits were projected to hit a similar level to the company’s seasonally strong HY2 2021, with a profit of £400,000 compared to an operating loss of £800,000.

The firm noted revenues of approximately £23 million against £22 million in HY1 2021, with net cash of £3.9 million at 31 May 2022.

Synectics confirmed progress on its large advanced infrastructure surveillance projects, including Deutsche Bahn in Berlin, and the Cloud-based deployment of Synergy for the City of London Corporation and the City of London Police, which act as important reference sites for the group’s core advanced technology.

The firm commented that it expected further acceleration in its progress over HY2 2022.

“A strong team performance has meant we have been able to deliver our goals for this period despite increasing challenges in the supply chain and with markets still subdued,” said Synectics CEO Paul Webb.

“We have all been working through our ‘return to work’ challenges, and are in good shape now to push on together and deliver further improved results in the second half of this financial year and beyond.”

FirstGroup operating profit rises to £806.1m as pandemic travel restrictions ease

Natasha Doris
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FirstGroup operating profit rises to £806.1m as pandemic travel restrictions ease

FirstGroup shares were up 1.6% to 135p in late morning trading on Tuesday, after the travel company reported an operating profit rise to £806.1 million in FY 2022 against £285.8 million in FY 2021.

FirstGroup said its operating profit climbed on the back of easing pandemic travel restrictions, with a consequential growth in passenger volumes.

The company also mentioned a stronger First Rail performance than expected at the start of the year and central cost reductions ahead of plans following the sale of its three North American businesses for a combined enterprise value of $4.6 billion.

The firm announced a revenue fall to £5.5 million compared to £6.8 million last year, however, FirstGroup confirmed a pre-tax profit spike to £654.1 million from £115.8 million, linked to the sale of its American businesses

The group also noted a decline in net debt to £619 million against £2.6 billion.

FirstGroup said its trading outlook remained uncertain as a result of broader macroeconomic volatility, however the company mentioned it expected to make significant progress in FY 2023.

First Bus has reportedly hit 76% of 2019 passenger volume recently, with the level expected to grow in the coming year, weighted in HY2 2023.

First Rail is projected to perform strongly in FY 2023, with current trading ahead of management expectations.

FirstGroup commented that it was also on track to realise a further £5 million in previously announced central cost savings.

“The transformed Group has momentum and we expect to make significant further progress in the year to March 2023,” said FirstGroup CEO Graham Sutherland.

“With leading positions in bus and rail, a strong balance sheet and a clear purpose, FirstGroup has many opportunities ahead to deliver sustainable shareholder value creation while delivering the vital services that are key to achieving society’s sustainability and economic goals.”

The company noted an EPS surge to 60.2p compared to 6.5p, and announced a dividend per share of 1.1p, resulting in a total dividend of £8.1 million.

FTSE 100 continues decline as S&P 500 enters bear market

Natasha Doris
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0
FTSE 100 continues decline as S&P 500 enters bear market

The FTSE 100 fell again on Tuesday as early strength in housebuilders and banks shares wasn’t enough to offset concerns over volatility in US stocks and upcoming central banks decisions.

The S&P 500 officially entered a bear market, with the index down 3.8% to 3,749.6 yesterday and tumbling 21.8% year-to-date.

“The US market entered bear territory last night, with its main markets dropping to long-forgotten lows. The crux of the concern plaguing investors is how harshly the Fed plans to tackle rising inflation in the face of stark new CPI data,” said Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown.

“Getting the balance wrong and hiking interest rates too aggressively could see recession fears become a reality.”

The markets are currently bracing for the US Federal Reserve’s interest rate decision on Wednesday, with investors anticipating a significant hike.

The NASDAQ plummeted 4.6% to 10,809.2 and the NYSE dropped 3.7% to 14,527.9 in advance of the Fed’s expected hawkish move.

“The Fed is focused on inflation and the economy, not the markets, yet its actions have significant influence on the direction of stocks and bonds,” said Russ Mould of AJ Bell.

“A decision to raise rates by more than half a percentage point could cause chaos on the markets and put a bigger dent into investors’ portfolios than they’ve already seen this year.”

However, the European markets managed to avoid the massive slide, with the French CAC falling 0.6% to 5,981.8, the German DAX down 0.3% to 13,383.4 and the Italian FTSE MIB dipping 0.4% to 21,819.8.

Housebuilders defy gravity

The housing market continued to defy gravity, with Persimmon share up 1.8% to 2,158p, Barratt Developments rising 1.8% to 484.2p, Taylor Wimpey gaining 1.2% to 123.7p and Berkeley Group Holdings climbing 1.2% to 4,017p.

“The housebuilding sector continues to shine despite all the gloom about cost of living pressures and rising interest rates,” said Mould.

“A shift towards hybrid working means those who can afford it are often looking for extra space to accommodate a home office.”

“Supply of new homes remains a long-term issue in the UK and this is helping to support the market.”

Banks gain

Meanwhile, the banking sector was spurred higher by the prospect of higher interest rates from the Bank of England on Thursday, with the institution anticipated to hike rates 0.25% to 1.25% at its meeting this week.

Standard Chartered shares rose 2.4% to 593.8p, HSBC shares gaining 2.2% to 514.1p, Lloyds shares up 1.2% to 4,334p and NatWest shares increasing 1.1% to 221.5p.

ITV

ITV shares rose 1.1% to 68.1p following the company’s 79.5% acquisition of natural history film producer Plimsoll Productions for £103.5 million.

The acquisition is set to deepen ITV’s relationships with companies in the streaming industry and expand its entertainment offerings across its customer base.

“Growing ITV Studios with an exciting pipeline of premium programmes is core to our strategy as we further diversify the business by genre, by geography, by customer and grow ahead of the market,” said ITV CEO Carolyn McCall.

Mould added: “The move will strengthen ITV’s position in natural history content which has widespread appeal around the world.”

“ITV has been trying to beef up its content arm with a view to having programmes that appeal beyond its UK domestic audience and this acquisition looks like a winner.”

Ashtead sinks

Meanwhile, Ashtead shares sank 4.9% to 3,617p despite reporting a 19% rise in FY 2022 revenue to $7.9 billion compared to $7.6 billion in the previous year.

The company also increased its final dividend by 40% to 67.5c against 48.2c.

“Construction equipment rental group Ashtead continues to achieve strong sales and earnings growth and its latest results are a reminder of how the business is top of its class when it comes to generating strong returns,” said Mould.

Xeros Technology share price doubles on licence deal

Andrew Hore
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Xeros Technology share price doubles on licence deal

Germany-based washing machine pumps and drives manufacturer Hanning has signed a ten-year global licence to manufacture and sell the XFilter washing machine filter technology developed by Xeros Technology Group (LON: XSG). This is in anticipation of legislation related to microfibres. The Xeros share price has doubled on the news.

XFilter enables microfibres and microplastics released during washing to be captured and safely disposed of. The built-in filters should last the life of the washing machine. This type of technology will be required in France from 2025 and other countries are likely to follow suit.

In today’s announcements the spelling XFilter is used, when previously it was called XFiltra. It is unclear whether the name has been changed.

Textiles testing institute Hohenstein has tested XFilter and verified that it can capture more than 99% of microplastics. Xeros already has a development agreement with a large Asian washing machine manufacturer and these tests were undertaken with this client.

Xeros will receive an undisclosed royalty on every filter that is manufactured by Hanning. The licence deal will not generate any revenues until late 2023, though.

Hanning is estimated to supply components for 8.5 million washing machines each year – around one-third of those made in Europe. This could Xeros has a current cost base of around £7m, so even a small royalty on a proportion of the Hanning-supplied washing machines could generate significant revenues.

Funding

There was £6.2m in the bank at the end of February 2022 and Xeros continues to lose money. Although management said that there was enough money to get Xeros into the first quarter of next year, there may be additional cash required earlier than that. A sustained share price rise may make it difficult to resist a fundraising in the next few months.  

In March 2021, a placing and open offer at 240p a share raised £9m. The current share price is 63.5p, up 31p, and it has been even higher during the day.

Xeros joined AIM in March 2014 at 123p a share, but there was a subsequent one-for-100 share consolidation, so the comparative price is 1230p. The current share price has fallen more than 99% from that level.

ITV acquires Plimsoll Productions for £103.5m

Natasha Doris
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0
ITV acquires Plimsoll Productions for £103.5m

ITV shares were up 1.2% to 68.1p in early morning trading on Tuesday, following the company’s acquisition of a 79.5% interest in Plimsoll Productions for approximately £103.5 million from private equity firm LDC, Plimsoll Productions CEO Grant Mansfield and other existing company shareholders.

The agreement values the company, which is currently the largest independent producer of natural history programmes, at £131 million.

The remaining 20.5% of share capital will reportedly be held by Mansfield and other members of the management team and strategic investors of Plimsoll Productions.

ITV confirmed that there are Call and Put arrangements in place which will provide the company with the option of acquiring the remaining 20.5%, with the consideration payable dependent on Plimsoll’s profit growth performance in the term until December 2027.

The cash amount is capped at £79.5 million and is payable from 2028 onwards.

Plimsoll Productions generated an EBITDA of £10 million for FY 2021. ITV added that under its ownership, Plimsoll will report to a calendar year and under ITV’s episodic revenue recognition policy.

Plimsoll Productions is estimated to deliver a forecasted EBITDA of approximately £5.5 million in HY2 2022 on this basis.

ITV highlighted that the transaction will be earnings accretive from day one, and is expected to accelerate ITV Studios’ international expansion and its business with global streaming platforms.

The transaction is reportedly set to be financed through existing cash resources.

The move comes as part of ITV’s strategy to broaden its reach in the world of streaming entertainment, with Plimsoll Production’s strong ties to global streamers set to deepen ITV’s relationships in the sector.

ITV confirmed that Grant Mansfield and his senior management and creatives are set to stay with the company and manage the business, and would be working alongside ITV Studios managing director Julian Bellamy, Unscripted UK director Angela Jain, and the rest of their team.

“Growing ITV Studios with an exciting pipeline of premium programmes is core to our strategy as we further diversify the business by genre, by geography, by customer and grow ahead of the market,” said ITV CEO Carolyn McCall.

“Through Plimsoll Productions, as a Studio, we can continue to capitalise on the growing demand for natural history and factual programming and I am really pleased to welcome Grant and the team.”

Ashtead looks to Canada and US rental markets as UK demand subsides

Natasha Doris
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0
Ashtead looks to Canada and US rental markets as UK demand subsides

Ashtead shares were down 1% to 3,762p in early morning trading on Tuesday after a reported 19% revenue growth to $8 billion, reflecting a 22% climb in rental revenue and growth across all regions.

The company commented that the revenue increase fed into a 38% rise in underlying pre-tax profit to $1.8 million, which was helped by saving efforts, despite higher levels of activity bringing back some previous costs.

Ashtead mentioned an estimated rental revenue rise of 12% to 14% in the coming year, with growth in the US and Canada projected to offset a decline in the UK as pandemic-related medical demand subsides.

“We’re pleased to see Ashtead’s been making hay while the sun shines. But the real progress has been growth in the group’s end markets,” said Hargreaves Lansdown equity analyst Laura Hoy.

“As demand from the healthcare sector starts to wane, Ashtead’s growing position in the US should continue to drive sales in the year ahead.”

The firm reportedly spent $414 million on share buybacks in the year, and announced a 67c final dividend, bringing the total dividend for the term to 80c.

“The group’s had to open its wallet to fund the expansion, but a the balance sheet remains in reasonably strong condition,” said Hoy.

“That’s despite $414m spent on share repurchases this year. Although the group’s approved further buybacks this year, management is unlikely to keep up with this level of repurchases given the pressing need for increased investment in the business.”

“For now all appears to be well at Ashtead, and the inflationary environment’s done little to dull the shine. However with a recession still a very real concern in the group’s largest markets, construction spending could start to shrink which would undo much of this progress.”

OnTheMarket revenue climbs 32% to £30.4m on higher number of paying customers

Natasha Doris
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OnTheMarket revenue climbs 32% to £30.4m on higher number of paying customers

OnTheMarket shares were flat at 86.4p in early morning trading on Tuesday after the company announced a revenue climb of 32% to £30.4 million in FY 2022 against £23 million in FY 2021.

Revenue grew on the back of a higher number of paying customers, the migration of customers on discounted rates towards full-tariff contracts, maintained growth in new homes revenues, and Covid-19 customer support discounts that amounted to £2.6 million in 2021.

OnTheMarket reported an adjusted operating profit rise of 13% to £2.7 million compared to £2.4 million, on the back of an 80% climb in marketing investment to £10.6 million against £5.9 million in FY 2021, along with an operating loss of £600,000 from an operating profit of £1.2 million in the last year.

The property portal firm also highlighted a post-tax profit of £100,000 following a profit of £2.7 million in FY 2021.

The group noted a drop in year-end cash of 21% to £8.4 million compared to £10.7 million, in part linked to its investment in Glanty Limited since its acquisition, and full furlough scheme repayment over the term, representing together an estimated £2.6 million in cash payments.

OnTheMarket highlighted mostly flat average advertisers listed at 13,732 against 13,285 year-on-year, alongside an 8% uptick in total advertisers at 31 January 2022 to 13,732 from 12,687.

The company also confirmed a slight boost in traffic of 6% to 283 million visits against 267 million in the previous year.

Guidance FY 2023

OnTheMarket commented that its trading had kicked off to a strong start in FY 2023, with UK residential property markets remaining active and property demand significantly outweighing supply.

The company said its board believed the firm’s recent operational and financial progress, along with its loyal advertiser base, provided a good platform for the implementation of its strategy.

“I am delighted to be reporting a strong set of results which show that our strategy is working. Having listened and engaged with thousands of agents we are more convinced than ever in our strategy of building a differentiated, tech-enabled property business,” said OnTheMarket CEO Jason Tebb.

“With our strong performance and momentum in the business the future remains very exciting for OnTheMarket. We are continuing to deliver increased value to our customers and serious property seekers, with innovative new products and a refreshed brand.”

“I would like to thank the OnTheMarket team for their hard work and commitment to delivering for all of our stakeholders.”

Go-Ahead recommends consortium bid

Andrew Hore
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Go-Ahead recommends consortium bid

Go-Ahead (LON: GOG) is recommending a bid from a consortium of Kinetic TCo and Globalvia Inversiones that values the bus and rail operator at £647.7m.

The consortium is offering 1450p a share in cash and there will also be a special dividend of 50p a share instead of a final dividend for the year to 2 July 2022. The consortium originally offered 975p a share back in January.

The share price has been much higher than the offer price, but not since early 2020. The all time high back in 2007 was nearly double the bid level.

Kinetic is the largest bus operator in Australia and New Zealand. Globalviamanages transport infrastructure concessions, including highways and railways. It already operates in Spain, the US, Ireland, Portugal, Costa Rica and Chile.

Go-Ahead has bus operations in the UK, Singapore, Ireland and Sweden, plus rail franchises in the UK, Germany and Norway.

Rival

There is a rival, and it is unclear if it will put in a bid for Go-Ahead. Earlier in the day, Go-Ahead management said that there were two bidders that it had allowed to undertake due diligence. The other was Kelsian Group Ltd, which was previously known as SeaLink Travel Group.

ASX-listed Kelsian (ASX: KLS) is Australia’s largest land and marine transport business and it also has operations in the UK and Singapore.

The Go-Ahead board said that the revised proposal from Kelsian was at a level where they would “would be minded to recommend” a firm proposal. It is unclear whether this offer was higher or lower than the recommended bid, but presumably the recommendation would not have been made if a firm offer was at a higher price.

Palm oil price rise partly offsets lower production at Dekel Agri-Vision

Andrew Hore
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Palm oil price rise partly offsets lower production at Dekel Agri-Vision

A bumper crude palm oil price is good news for palm oil plantations operators. Cote d’Ivoire-based Dekel Agri-Vision (LON: DKL) has not been producing as much as the previous year, but this is offset by the higher price.
Dekel increased crude palm oil sales by 276% to 4,025 tonnes in May 2022, compared to the previous May. That includes delayed sales from April, and there was a year-on-year reduction in production when April and May figures are combined.
Although the amount of fruit processed was much lower extraction rates improved from 20.8% to 23.5% over the year. The average palm oil price...

B.P. Marsh announces total shareholder return of £17.6m, raises FY 2022 dividend

Natasha Doris
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0
B.P. Marsh announces total shareholder return of £17.6m, raises FY 2022 dividend

B.P. Marsh shares were up 1.7% to 297p in late afternoon trading on Monday, after the group reported a total shareholder return of £17.6 million for its FY 2022.

The firm highlighted a NAV increase of £16.7 million to £166.6 million from £149.9 million, representing an 11% growth.

B.P. Marsh further mentioned a NAV per share climb of 46.3p in 462.7p compared to 416.4p in the last year.

The company announced a consolidated post-tax profit of £17.5 million against £13.7 million the year before, alongside an equity portfolio valuation uptick of 14.7% compared to 10.9%.

B.P. Marsh drew attention to its three disposals across the year of Walsingham for £5.2 million, MB for £3.6 million and Mark Edwards Partners for £1.1 million.

The firm completed a further disposal after the end of the year for Summa, which was valued at £9.6 million.

“The Group has delivered another strong set of results, against a difficult macro-economic environment, namely Covid-19,” said B.P. Marsh chairman Brian Marsh.

“The Group continues to demonstrate the effectiveness of its investment criteria, and following a number of successful disposals, will be looking for more high-quality investment opportunities to bolster an already high performing portfolio.”

The company warned investors about inflationary headwinds, but reportedly remained confident it could accomplish growth in the coming year ahead.

“There remain headwinds for all businesses, particularly the conflict in Ukraine and the inflationary environment, but I remain confident that working closely with our portfolio companies we can continue our growth trajectory and deliver for our investors.”

B.P. Marsh proposed a dividend of 2.7p per share, which is scheduled for payment in July 2022, representing a 14% raise from its dividend of 2.4p year-on-year.

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