Informa swings to £90.9m profit as GAP II strategy progresses on schedule

Natasha Doris
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Informa swings to £90.9m profit as GAP II strategy progresses on schedule

Informa shares fell 3.5% to 579.6p in late morning trading on Thursday, despite a 59.1% HY1 2022 revenue increase to £1 billion compared to £688.9 million the last year.

The exhibitions group confirmed an adjusted operating profit climb of 226.6% to £234.5 million against £71.8 million in HY1 2021 as a result of strong revenue and effective cost management.

Informa reported a statutory operating profit of £90.9 million compared to a £55.4 million loss in the previous year, due to higher revenues, lower Covid-19 exceptional costs and profit growth on divestment.

The company mentioned a higher free cash flow of £178.4 million from £134.1 million, including a doubled capital reinvestment into digital services and enhanced technology capabilities.

Its GAP II strategy also served to boost its revenues and profits across the interim period, with its investment programme reportedly progressing according to schedule.

“As outlined in our recent Market Update, Informa’s first half results underline the benefits of our GAP II strategy, with strong growth in revenues, profits and cash,” said Informa CEO Stephen A. Carter.

“We remain on track to achieve the upper-end of 2022 guidance, with good forward visibility in Subscriptions, Exhibitors, Delegates and Digital Services, whilst continuing to deliver accelerated shareholder returns, additional growth investment and further targeted expansion.”

Informa also resumed its dividends on the strength of its balance sheet and confidence in future cash flow growth, recommending a dividend of 3p per share for the HY1 2022 period.

Consortium increases Go-Ahead bid

Andrew Hore
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Consortium increases Go-Ahead bid

The consortium of Kinetic TCo and Globalvia Inversiones has increased its bid for bus and trains operator Go-Ahead (LON: GOG). This bid is being recommended by the Go-Ahead board.

The consortium originally offered 1450p a share in cash and a special dividend of 50p a share instead of a final dividend for the year to 2 July 2022. The lat4est offer is still 1450p a share, but the special dividend has been increased to 100p a share, making the value of the bid 1550p a share.

The board, which previously recommended the original offer, and institutional investors backing the bid hold 27% of the Newcastle-based transport company shares. It appears that some institutions were not as happy with the original bid as the board and pushed for a higher offer.

A general meeting to approve the takeover on 8 August has been adjourned and moved to 16 August. The vote requires 75% shareholder approval.

The consortium originally offered 975p a share back in January, so this is significantly more than it wanted to pay. The other potential bidder ASX-listed Kelsian (ASX: KLS) decided not to make an offer.

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. Globalvia manages 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.

AIM movers: Falanx rebounds and ex-dividends

Andrew Hore
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AIM movers: Falanx rebounds and ex-dividends

There was a 21.7% rebound in the Falanx (LON: FLX) share price to 0.7p following its trading statement. The share price had reached a low of 0.525p on Tuesday. The cyber security services provider grew 2021-22 revenues by 14% to £3.5m and improved its gross margin. The loss was reduced. There was cash of £2.7m at the end of June 2022. These figures will be announced in September. Investment is being made in the core business and there is a high level of potential business, particularly for cyber security monitoring.

Ukraine-focused property investor Arricano Real Estate (LON: ARO) has returned from suspension following the publication of its 2021 accounts. Net assets were $163.8m at the end of 2021. The share price rose 11.1% to 25 cents, which values Arricano Real Estate at $23.2m.

Galileo Resources (LON: GLR) has commenced drilling at the 75%-owned Luansobe copper project in Zambia. The share price increased by 8.1% to 1p.

Smart communications technology provider CyanCommode (LON: CYAN) has won an advanced metering infrastructure project order in the Middle East and North Africa region. The deal is worth $2.5m and will take 18 months to complete. The share price improved 6.1% to 15.25p.

Financial services provider STM Group (LON: STM) said at its AGM that first half trading was slower than anticipated. The pipeline of potential business remains encouraging, but it is taking longer to secure the business. Management believes that STM can still achieve 2022 expectations. A trading statement will be released when the acquisition of Premier Pensions is completed later this month. The share price is 6.25% lower at 22.5p. Malcolm Berryman stepped down from the board ahead of the AGM vote. Chairman Duncan Crocker is also leaving the board later.

The Immupharma (LON: IMM) share price has fallen following the £1.1m fundraising at 5p a share on Wednesday afternoon. The drug developer has entered into a sharing agreement with Lanstead Capital for £1m of the fundraising, which means Immupharma may receive more or less than £1m depending on the price each month for 24 months. The benchmark price is 6.667p, so if the market price is lower less money will be raised. The share price had already fallen 0.52p to 5.7p and it has fallen a further 8.42% to 5.22p. There is a broker option that could raise a further £1.3m.

Harvest Minerals Ltd (LON: HMI) has decided not to go ahead with the purchase of the Miriri phosphate project in Brazil because it believes that it is uneconomic.  There was an initial share price fall but it is currently unchanged at 11.2p.

Ex-dividends

CML Microsystems (LON: CML) is paying a final dividend of 5p a share and the share price rose 10p to 410p.

Circle Property (LON: CRC) is paying a final dividend of 3.5p a share and the share price is unchanged at 253p.

Greencoat Renewables (LON: GRP) is paying a dividend of 1.54 eurocents a share and the share price fell 0.25 cents to 120.25 cents.

Ingenta (LON: ING) is paying a final dividend of 2p a share and the share price rose 6p to 96.5p.

James Latham (LON: LTHM) is paying a final dividend of 19p a share and the share price fell 5p to 1342.5p.

Nichols (LON: NICL) is paying an interim dividend of 12.4p a share and the share price rose 30p to 1135p.

Hikma Pharmaceuticals profits drop on weaker Generics sector

Natasha Doris
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Hikma Pharmaceuticals profits drop on weaker Generics sector

Hikma Pharmaceuticals shares plummeted 8.1% to 1,618.5p in late morning trading on Thursday, after the company reported a 27% operating profit drop to $239 million in HY1 2022 against $326 million the year before.

Hikma attributed its declining profits to lower pricing in its Generics sector and a high comparative in HY1 2021 due to an impairment reversal.

The FTSE 100 group confirmed a flat revenue of $1.2 billion year-on-year, including strong performance in Injectables and Branded offsetting weaker pricing in Generics, with chronic medications driving 80% of branded revenue growth across the financial term.

“Hikma’s resilient first half performance is a testament to the strength of our core underlying business, supported by the breadth and depth of our portfolio and capabilities,” said Hikma Pharmaceuticals CEO and executive chairman Said Darwazah.

“Double digit profit growth in our Injectables and Branded businesses has helped to offset a decline in Generics caused by industry-wide competitive pressures.”

Hikma announced a profit attributable to shareholders fall of 30% to $173 million from $248 million year-on-year.

The pharmaceutical firm also noted a 25% slide in cashflow from operating activities to $169 million against $224 million in HY1 2021.

The company mentioned a basic EPS decrease of 29% to 76.2c million compared to $1.07 in the previous year.

FY 2022 guidance

Hikma reported an anticipated Injectables revenue increase in the mid to high-single digits, along with a Branded revenue growth in the low-single digits.

The group mentioned an expected Generics revenue between $650 million to $675 million.

“Our increasingly differentiated portfolio, market leading positions, unique manufacturing footprint and the strength of our customer relationships form a strong foundation for further progress and we are confident in our outlook for the future,” said Darwazah.

“We expect to maintain good momentum in Branded and Injectables and for Generics to return to growth in 2023.”

Hikma Pharmaceuticals hiked its dividend by 6% to 19c per share from 18c per share last year.

Glencore revenues soar to $134.4bn as market volatility leads to record prices

Natasha Doris
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Glencore revenues soar to $134.4bn as market volatility leads to record prices

Glencore shares gained 1.6% to 453.4p in late morning trading on Thursday following a 43% revenue growth to $134.4 billion in HY1 2022 against $93.8 billion in HY1 2021.

The mining giant reported an adjusted EBITDA surge of 119% to $18.9 billion from $8.6 billion linked to record pricing across coal, gas and physical premia.

“Global macroeconomic and geopolitical events during the half created extraordinary energy market dislocation, volatility, risk, and supply disruption, resulting in record pricing for many coal and gas benchmarks and physical premia, underpinning a $10.3 billion increase (119%) in Group Adjusted EBITDA to $18.9 billion,” said Glencore CEO Gary Nagle.

Meanwhile, Glencore confirmed an 846% spike in income attributable to equity holders to $12 billion compared to $1.2 billion the year before.

The company announced a basic EPS rise of 820% to 92c from 10c in the previous year.

Glencore further mentioned a 62% reduction in net debt to $2.3 billion against $6 billion year-on-year.

The commodities firm also highlighted shareholder returns of $4.5 billion, consisting of an 11c per share special distribution and a $3 billion share buyback, amounting to $8.5 billion in total shareholder returns in FY 2022.

“Allied to the record EBITDA, our net working capital significantly increased during the period, with some $5 billion invested into Marketing, primarily Energy, in line with the materially higher oil, gas and coal prices, and their elevated volatilities,” said Nagle.

“Despite this build, significant cash was generated, which reduced Net debt to $2.3 billion, allowing for today’s announcement of $4.5 billion of “top-up” shareholder returns, comprising a $1.45 billion special distribution ($0.11 per share) alongside a new $3.0 billion buyback program ($0.23 per share).”

“Today’s additional returns lift total 2022 shareholder returns to $8.5 billion.”

FY 2022 guidance

Glencore reported a strong outlook for LNG and coal prices as a result of the volatile macroeconomic environment.

However, the firm said its outlook for metals held less clarity, with labour, water and energy shortages, alongside supply chain problems and rising costs, and the prospect of a weak Chinese economic recovery.

“Looking ahead, tightening financial conditions and a deteriorating macroeconomic environment present some uncertainty for commodity markets through the second half of the year,” said Nagle.

“However, with few short-term solutions to rebalance global energy markets, coal and LNG prices look set to remain elevated during this period, particularly given the current challenge of securing sufficient and reliable energy supply for the Northern hemisphere winter ahead.”

“For metals, the outlook is more complex, balancing supply risks, amid labour, water and energy shortages, supply chain disruptions, growing sovereign risk uncertainty and rising costs, against likely weakening end-use markets ex-China. There are some recent signs of China recovering from its Q2 trough, which could help to offset potentially weaker conditions in other key consuming markets.”

Sanderson Design Group – strong cash and licensing revenues showing in first half year

Mark Watson-Mitchell
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Sanderson Design Group – strong cash and licensing revenues showing in first half year

This morning’s Interim Trading Update for the six months to end July from Sanderson Design Group (LON:SDG) showed a very solid performance by the luxury furnishings business despite various pressures with supply, cost price inflation and other hassles like ceasing its business with Russia.

The reorganisation, that was set underway since the change in leadership in 2019, has helped to progress the group and the first six months showing looks set to lift both sales and profits for the current trading year to the end of January 2023.

What the company does

Sanderson Design Group designs, manufactures, markets, and distributes luxury interior furnishings, fabrics, paints and wallpapers worldwide.

The company, which has showrooms in Chelsea Harbour, London; in Manhattan, New York, in Chicago, Dubai and Amsterdam, serves designers, retailers, distributors, and architects.

Employs some 600 people the company operates in two segments, Brands and Manufacturing.

The Brands segment designs, markets, sells, distributes, and licenses Sanderson, Morris & Co., Harlequin, Zoffany, Scion, Clarke & Clarke, and Archive by Sanderson Design brands.

This segment offers wallpapers and fabrics, homewares, window coverings, furniture items, bedding products, cushions, paints, scarves, and leather goods.

The Manufacturing segment manufactures wallcoverings and printed fabrics.

It has a strong UK manufacturing base comprising Anstey wallpaper factory in Loughborough and the Standfast & Barracks fabric printing factory, in Lancaster. Both sites manufacture for the Company as well as for other wallpaper and fabric brands.

In addition, the Company derives licensing income from the use of its designs on a wide range of products such as bed and bath collections, rugs, blinds and tableware.

Recent tie-ups looking good

Recent agreements with Harrods, NEXT, Bedeck, Ben Pentreath and Sophie Robinson are all very encouraging.

Next full price sales shine as warm weather boosts formal wear sector

Natasha Doris
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Next full price sales shine as warm weather boosts formal wear sector

Next shares rose 2.3% to 6,906p in early morning trading after the FTSE 100 fashion group announced a Q2 full price sales climb of 5% as warm weather and social events sparked a resurgence in its formal wear business.

Next suspected its strong sales were also linked to the closure of several competing brands over the last three years, which was supported by the ONS statistic that overall money spent on clothing declined 6% compared to pre-pandemic levels.

The retailer highlighted a 12% climb in retail sales, with broadly flat online sales.

“Next isn’t immune to the cocktail of headwinds facing UK retailers, but it tends to be better at managing them than most. These results are no exception,” said Wealth Club head of equities Charlie Huggins.

“Next is no longer just a UK fashion retailer selling its own products. It’s broadened out into Homewares and Beauty and is selling more third-party brands through its website than ever before, both in the UK and internationally. This is helping to keep it relevant while opening new avenues for growth.”

FY 2022 guidance

The fashion company reported an increase in FY 2022 profit guidance of £10 million to £860 million, reflecting a rise of 4.5% compared to last year.

Next maintained its full price sales guidance for HY2 of a 1% growth, and noted an EPS guidance increase of 7.2%.

“Make no mistake – if the consumer catches a cold, Next will feel it. But it’s unlikely investors will lose their shirt, given the resilience of its business model,” said Huggins.

“Meanwhile, the long-term growth prospects for the business are looking better than they have done for quite some time.”

Two UK Growth Companies with Hybridan’s Research Team

UK Investor Magazine
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Two UK Growth Companies with Hybridan’s Research Team

The UK investor Magazine was delighted to welcome Sacha Morris and Niall Pearson of Hybridan, the London-based small cap brokers.

We start by looking at Rural Broadband Solutions and the roll out of their high-speed broadband connectivity to rural areas. Sacha outlines their UK expansion strategy which will see them establish networks across the UK, having already provided services across Shropshire and Wales.

Niall provides a comprehensive overview of DSX International and their NHS accredited digital health care solutions. We breakdown each of DXS’s services in ExpertCare, MyVytalCare and CompleteCare. DXS have undergone a number of pilots with the NHS and we look forward to their next set of results for a gauge of the traction across the Uk healthcare system.

Rolls Royce looks to Civil Aerospace sector for FY 2022 takeoff

Natasha Doris
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Rolls Royce looks to Civil Aerospace sector for FY 2022 takeoff

Rolls Royce shares slid 4.7% to 86.4p in early morning trading on Thursday after the group swung to a statutory loss of £1.6 billion in HY1 from a profit of £394 million the last year.

The aerospace manufacturer reported a revenue growth to £5.6 billion against £814 million as a result of record Power Systems order intake, continued recovery in its Civil Aerospace flying hours and high revenue visibility in Defence due to a strong order book.

Rolls Royce confirmed a gross profit rise to £1 billion compared to £814 million in HY1 2021, along with an operating profit of £223 million from £38 million year-on-year.

Meanwhile, the company highlighted an operating margin increase to 4% compared to 0.7% the year before.

The engineering group reported a free cash outflow from continuing operations improvement of £1.1 billion to £68 million in the financial period, on the back of rising flying hours in Civil Aerospace.

The company added working capital was a £296 million outflow, with higher inventory resulting from the knock-on effect of supply chain disruption, which was partially offset by improved payables performance.

FY 2022

Rolls Royce said it expected inflationary and supply chain challenges to persist into 2023, and confirmed it was managing the issues through higher product pricing and a lower inventory in HY2 2022.

The firm also mentioned challenges in attracting sufficient talent to its staff, particularly in its engineering division for employees with certain skills.

The manufacturer confirmed an expected low-to-mid-single digit underlying revenue growth in FY 2022, alongside a relatively stable underlying profit margin against 3.8% in FY 2021 and a moderately positive cash flow.

Rolls Royce tied its expectations to anticipated improvements in Civil Aerospace and planned higher space large engine sales and large engine shop visits.

“We have progressed well in the first half of the year, with more than a £1bn improvement in free cash flow, strong order intake in Power Systems, increased engine flying hours and commercial discipline in Civil Aerospace, and targeted investment to support longer-term growth in Defence and New Markets,” said Rolls Royce CEO Warren East.

“We are actively managing the impacts of a number of challenges, including rising inflation and ongoing supply chain disruption, with a sharper focus on pricing, productivity and costs. As a result of the actions we have taken over the last few years, our Civil Aerospace business is becoming leaner and more agile, and we are executing on the levers of value creation we shared at our investor event in May.”

“This is setting us up to deliver on our commitments this year and in the future. We are making choices to manage the current challenges, deliver better returns, reduce debt, and generate long-term sustainable value.”

M&G to acquire financial services firm Continuum

Natasha Doris
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M&G to acquire financial services firm Continuum

M&G shares increased 1.6% to 217.6p in late afternoon trading on Wednesday after the group announced its intended acquisition of financial services firm Continuum for an undisclosed amount.

The investment manager confirmed it would be taking an initial 49.9% stake in the company, with a scheduled agreement initiated to acquire the remainder over the next two years.

Continuum will reportedly become part of M&G Wealth, which was launched in September 2020.

Continuum is set to retain its own brand and sit alongside M&G Wealth’s existing businesses, bringing over £1.5 billion in assets under advice to the company.

The agreement follows M&G’s recent acquisition of independent financial advice firm Sandringham Partners in January 2022.

“This deal adds another high class independent financial advice business into M&G Wealth to complement our existing network of advisers,” said M&G Wealth managing director David Montgomery.

“There is a growing need in the UK for consumers to be able to access financial advice services in a way that best suits their circumstances and requirements.”

“This ‘advice gap’ is something we are keen to help address. Continuum has a terrific reputation in the industry and grows our capability to provide a wider range of advice services and investment solutions to more clients.”

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