AVEVA swings to £6.5m loss on OSLsoft acquisition

Natasha Doris
-
0
AVEVA swings to £6.5m loss on OSLsoft acquisition

AVEVA shares were down 0.3% to 2,222p in early morning trading on Wednesday after the company swung to an operating loss of £6.5 million in FY 2022 against an operating profit of £36.6 million in FY 2021.

AVEVA mentioned its loss was primarily on the back of the amortisation of intangible assets of £226.1 million related to its acquisition of OSLsoft, an international real-time industrial operational data software and services group, from expenses of £95.7 million the last year.

The firm announced a revenue climb of 44% to £1.1 billion compared to £820.4 million, and confirmed a “deferred revenue haircut” of £50.3 million linked to its OSlsoft acquisition.

OSLsoft’s main product is its PI System, a data-management software which reportedly enables customers to curate, analyse and share real-time industrial sensor-based data across business systems throughout company operations.

The company highlighted an annualised recurring revenue growth of 10.2% to £768.7 million against £697.8 million, alongside an adjusted EBIT climb of 7.7% to £365.1 million compared to £354.7 million year-on-year.

AVEVA noted that its integration of OSLsoft had progressed in line with management expectations, with strong advancement made in product integration which is set to drive substantial longer-term synergies.

Outlook FY 2023

The firm commented that its outlook anticipated an annualised recurring revenue growth in FY 2023 to a rate between 15% to 20% per year, underpinned by its business model transition to subscription, improving end market conditions, synergies related to the OSLsoft PI system integration and rising prices.

AVEVA said it would continue to conduct business with non-sanctioned companies linked to Russia where there is no legal basis to terminate its contracts, and confirmed it had ceased new business in the country. Russian operations accounted for an estimated 2% of the group’s business in FY 2022.

The firm noted that wage inflation would affect its margins, and would be offset through price increases eventually, after an initial hit to company margins as a result of salary hikes coming at the start of the year, with price increases taking effect later on after contracts had been renewed and new business had been signed to the company.

AVEVA mentioned its revenue growth was expected at a lower level in FY 2023 on an organic constant currency basis, and its adjusted EBIT margin was projected to reduce before resuming growth in FY 2023.

“AVEVA delivered a solid set of results in FY22 as the business recovered following disruption caused by the Covid pandemic,” said AVEVA CEO Peter Herweck.

“During the year we made good progress with the integration of OSIsoft and have recently launched integrated products that will drive further revenue synergies.”

“I am excited about the opportunities ahead of us as AVEVA enables the connection and digitalisation of the industrial world. We are focused on accelerating growth in Annualised Recurring Revenue and expect AVEVA’s growth rate on this metric to significantly improve.”

AVEVA reported a basic loss per share of 20.8p from an EPS of 11.4p, however the group increased its dividend 4.3% to 24.5p against 23.5p the year before.

Gooch & Housego set for second half recovery

Andrew Hore
-
0
Gooch & Housego set for second half recovery

It was a tough first half for photonics company Gooch & Housego (LON: GHH) although management is confident that the second half will be much better. Next year should show a much greater recovery in profit.

In the six months to March 2022, revenues fell by 7% to £54.1m, while pre-tax profit was more than one-quarter lower at £3.6m. Even so, the interim dividend was raised from 4.5p a share to 4.7p a share. Net debt is £5.9m.

Demand for products supplied by the industrials division continued to be strong but staff shortages due to Covid meant that it was difficult to satisfy demand. Component shortages are being managed. This is the one

Life science revenues were slightly lower with increased demand for products for elective surgery offset by the loss of Covid-related ventilator revenues.  

There was a sharp decline in aerospace and defence division revenues. Again, there were staff shortages due to Covid and customer were also hit. That meant that orders could not be delivered to the client. There are indications of recovering commercial aerospace demand. Delays and new contracts mean that the order book is nearly 50% ahead of one year ago.

Forecast

The group order book is 26% ahead at £119.9m. Price rises are being pushed through to cover higher costs.

Forecasts are being maintained. Pre-tax profit could dip from £12.6m to £11m even with the cost benefits of restructuring. That still suggests a small decline in second half profit. The share price jumped 75p to 930p, which is still one-third lower than one year ago. That is 27 times prospective 2021-22 earnings, although it does fall to 19 next year. Gooch & Housego has strong positions in its main markets, so it warrants a high rating. There is also potential for acquisitions to boost earnings. There are available bank facilities to do a significant deal.

JD Sports found guilty of price-fixing Rangers FC merchandise by CMA

Natasha Doris
-
0
JD Sports found guilty of price-fixing Rangers FC merchandise by CMA

JD Sports shares were down 3.8% to 118.5p in late afternoon trading on Tuesday after the Competitions and Markets Authority (CMA) found the FTSE 100 retailer guilty of fixing prices on Rangers Football Club replica clothing in collaboration with Elite Sports.

The CMA confirmed provisional findings including price-fixing on a number of Rangers-branded replica kits and other products between September 2018 until at least July 2019.

The institution mentioned that Rangers FC were part of the collusion, to the extent of fixing the retail price of adult home short-sleeved replica shirt from September 2018 to mid-November 2018.

The report found that JD Sports and its associates allegedly colluded to stop the company from undercutting the retail price of the shirt on Elite Sports’ Gers Online store.

The CMA stated that Rangers was concerned about JD Sports selling the Rangers replica top at a lower price than Elite, which was functioning as its ‘retail partner’ at the time.

https://twitter.com/CMAgovUK/status/1534057129786716161

The subsequent understanding saw JD Sports raise the price of its Rangers replica football shirt by almost 10% from £55 to £60 in order to bring it in line with prices which Elite was charging on its Gers Online site.

JD Sports and Elite are also under scrutiny for alleged price fixing of training wear and replica kits over a longer time, without the involvement of Rangers FC, including the timing of discounts close to the end of the football season in 2019 to avoid competition between them and to protect their profit margins to the detriment of football club fans.

JD Sports and Elite reportedly confessed to “cartel activity” and requested leniency throughout the CMA’s investigation. The organisation said if both parties comply with the process, they would receive a reduction on the financial penalties imposed by the CMA.

Companies found guilty of infringing on the prohibitions in the Competition Act 1998 may be fined up to 10% of its annual international group turnover.

“We don’t hesitate to take action when we have concerns that companies may be working together to keep costs up,” said CMA executive director of enforcement Michael Grenfell.

“Football fans are well-known for their loyalty towards their teams. We are concerned that, in this case, Elite, JD Sports and, to some extent, Rangers, may have colluded to keep prices high, so that the 2 retailers could pocket more money for themselves at the expense of fans.”

JD Sports confirmed that it would recognise a provision of £2 million in its financial statements for FY 2022 in representation of the company’s best estimate of its payable liability in relation to the investigation, including legal costs.

FTSE 100 retail stocks fall as cost of living bites

Natasha Doris
-
0
FTSE 100 retail stocks fall as cost of living bites

The FTSE 100 was down 0.2% to 7,590.3 in early afternoon trading as the market appeared to brush the Boris Johnson confidence vote off its shoulder and move ahead to more pressing issues, including hard times on the horizon for consumer-facing businesses.

Figures from the British Retail Consortium (BRC) announced today reported a 1.1% fall in sales across May, marking the second consecutive monthly decline.

“The pressure on households from rapidly rising prices is reflected in weak retail sales data for May and figures from Barclaycard showing spending on essentials like food, fuel and utilities bills is going up rapidly,” said AJ Bell investment director Russ Mould.

“This will send a chill down the spine of any consumer-facing businesses which are dependent on discretionary spending.”

https://twitter.com/HarvirDhillon/status/1534085153361993730

JD Sports shares were down 5.9% to 115.9p on the back of the Competition and Markets Authority (CMA) revealing it had found the retailer and Elite Sports guilty of fixing prices for Rangers Football Club merchandise.

The company currently estimates a £2 million hit on its financial statements to cover the legal costs for its regulatory violation.

“Fresh from the probe into its ill-fated takeover of Footasylum, which was a contributory factor in the departure of long-standing boss Peter Cowgill, the regulator has put the company on the back foot over fixing the price of sales of Rangers FC replica kit,” said Mould.

“The size of the provision to cover any resulting liabilities is modest but, nonetheless, this is an unwelcome distraction as the business looks to reset in the wake of Cowgill’s exit.”

https://twitter.com/CMAgovUK/status/1534057129786716161

Supermarkets suffered a blow as the rate of 4.3% food inflation impacted consumer wallets, with Ocado sliding 3.5% to 917.8p, B&M falling 2.9% to 371.7p, Sainsbury’s down 1.9% to 223.3p and Tesco dipping 1.7% to 256p.

Retailers saw investor interest depart as inflation rates and the rising cost of living devoured consumer expendable income, with DIY giant Kingfisher dropping 4.3% to 255.1p, and fashion company Next declining 2.8% to 6,313p.

Meanwhile, US markets prepared for interest rate hikes on Friday, yet appeared rather steady, with the NASDAQ up 4% to 12,061.3 and the NYSE up 0.3% to 15,848.4.

Zephyr Energy announces State 16-2LN-CC well to recommence, crypto-mining facility

Natasha Doris
-
6
Zephyr Energy announces State 16-2LN-CC well to recommence, crypto-mining facility

Zephyr Energy shares were down 4.3% to 4.6p in early afternoon trading on Tuesday following the company’s announcement that its State 16-2LN-CC well was set to recommence, facilitated by a co-located crypto-mine facility which is currently under development.

The well is part of the energy firm’s Paradox project in Utah, with liquid volumes produced from the operation set to be sold to refineries in the state, and produced gas volumes to be sold to fuel onsite power generators, which will provide electricity for the co-located crypto-mining facility.

Zephyr Energy confirmed that its initial one megawatt crypto-mining facility would be funded through existing cash resources or from third-party investment, with facility capital payback anticipated in under two years at current crypto-currency prices.

The crypto-mine is scheduled to launch in around eight to 12 weeks, with well work to be conducted over the term during which the State 16-2LN-CC well is expected to recommence production.

“Over the last twelve months, a growing number of U.S. upstream oil and gas operators (including an immediately adjacent Paradox Basin oil and gas operator) have chosen to co-locate crypto-mining facilities at well sites in order to benefit from the growing demand for natural gas to fuel dedicated sources of power generation,” said Zephyr Energy CEO Colin Harrington.

“Our planned crypto-mining facility will enable Zephyr to meet its near-term objectives – it will allow us to accelerate revenues from the State 16-2LN-CC well, to earn additional revenues from the crypto-mine infrastructure, and to enable a long-term test which will provide valuable information about the well’s production profile.”

Dominion Energy

Zephyr Energy added that it expected to tie its gas production to the nearby gas infrastructure recently bought by US Fortunate 500 group Dominion Energy in the longer term, after Dominion reported its plans to refurbish and expand the natural gas infrastructure running across Zephyr’s territory.

The company is estimated to be available to accept gas volumes from Zephyr’s wells in 2023.

Paradox Expansion

Alongside the energy firm’s work on the State 16-2LN-CC well, it also mentioned it was at an advanced stage of planning for a three-well drill programme on the Paradox project, expected to commence in HY2 2022.

“The coming months will be a period of intense activity on the Paradox project,” said Harrington.

“In addition to the re-start of State 16-2LN-CC well production and launch of crypto-mining operations, we are in detailed planning for our forthcoming three well drill programme.”

“We look forward to providing regular updates as we prepare to commence drilling in the upcoming months.”

Zephyr Energy noted that the well design was completed, with all permit applications submitted and negotiations currently in progress with rig vendors.

“We are hugely excited to embark on the next steps to open up the Paradox Basin resource play,” said Harrington.

“The completion of our highly successful initial well test gave the Zephyr team the comfort to proceed with detailed evaluations of both near and long-term off-take solutions for the gas volumes from the State 16-2LN-CC well.” 

“The plan announced today allows us to both accelerate near-term production and benefit from long term gas sales optionality should the economic returns from the co-located crypto-mining facility meet internal expectations.”

Challenger Energy kicks off work at Trinidad & Tobago projects

Natasha Doris
-
0
Challenger Energy kicks off work at Trinidad & Tobago projects

Challenger Energy shares were down 12.2% to 0.1p in late afternoon trading on Tuesday, after the group released its work update for its assets across Trinidad and Tobago and Suriname for the balance of 2022 and preparatory work for 2023.

The company said its main focus was to deliver near-term production growth in volumes sufficient to offset natural reservoir decline and to hit approximately 550 to 600 barrels of oil per day (bopd) for its average production rate by the end of 2022, which would enable the firm to operate on a cashflow positive basis assuming prevailing oil prices.

Challenger Energy announced a slate of specific projects for its work programme across its Trinidadian assets, including recompletions of 10 to 15 existing wells with work targeted for each of its Gourdron, Inniss-Trinity and Bonasse fields scheduled to be completed by October 2022, following its successful recompletion program from March to April 2022.

The company are also set to reactivate 10 to 12 wells currently not in production, and kick off a schedule of intensive, continuous swabbing across all company fields in a move to reduce significant levels of fluid in the wellbore which have prevented wells from flowing.

The energy group mentioned the purchase of essential equipment, including a swabbing rig, vacuum tankers and additional production-related items, alongside upgrades and refurbishments to equipment and facilities throughout its assets in an effort to increase operational efficiency and bring in production delivery, cashflow improvements and cost savings.

“Over the past six months, we have worked hard to redefine Challenger Energy’s operations around a simple strategic focus: to build cashflow from our production base in Trinidad, and to reach a point where as a group we operate on a cashflow positive basis,” said Challenger Energy CEO Eytan Uliel.

“In the process we have re-evaluated every single aspect of the Trinidad operations, to see how best we can clear legacy items, drive efficiencies, and deploy precious capital in the most effective, production-growth oriented manner. The work program for the balance of 2022 reflects the outcome of this work.”

2023 drilling program

Challenger Energy highlighted nine potential new well opportunities across its Trinidadian portfolio which it was eyeing in support of a 2023 drilling programme, with the aim of hitting its longer-term production target of 1,000 bopd.

The group mentioned it would also be considering an appropriate funding strategy for the wells, in a bid to reduce the capital burden and risk to the firm of drilling activities, including risk-sharing opportunities with contractors and partners.

Challenger Energy also noted its application for an extension of the initial period for undertaking an extended well test in the Weg Naar Zee field in Suriname, recognising delays linked to the Covid-19 pandemic, and is set to facilitate a technical reassessment of the drilling strategy for the project.

It is currently considering the applicability of horizontal drilling and a steam injection enhance oil recovery programme, in a bid to improve recoverability and enhance project economics.

If its application is successful, drilling is expected to occur in 2023. The company is also considering potential partnership opportunities for the licence.

Challenger Energy added that its work program for the balance of 2022 is set to include a single waterflood pattern at the Goudron field, a potential steam injection at the Weg Naar Zee project in Suriname, along with additional waterfloods at the Goudron field, which is under consideration for 2023, and a proposed C02 injection enhanced oil recovery programme for the Inniss-Trinity field, which is currently under technical review for a potential start in 2023.

Amur Minerals Corporation reports Kun-Maine TEO project completion

Natasha Doris
-
1
Amur Minerals Corporation reports Kun-Maine TEO project completion

Amur Minerals Corporation shares declined 6% to 0.8p in late morning trading on Tuesday, following the completion of its TEO project for its Kun-Maine copper sulphide project in the Russian Far East.

The company said its TEO Project was complied by Oreoll LLC and GKZ Russian Federation certified experts across all project disciplines, and confirmed that the GKZ expert commission gave the green light to a 19 year open pit operation design, with revenue generation derived from two saleable concentrates, which would allow for the recovery of payable values for copper and nickel.

Amur Minerals added that minor payable amounts for gold, palladium and platinum would also be recovered in the operations.

The mining firm noted that the design parameters would maximise revenue generation for the Russia Federation based on fully loaded tax and royalty schemes, with the total net present value deliverable to the Federation projected at approximately $628 million.

It also commented that its approach did not optimise the financial return to the operator of the project, which would be addressed during the mine planning stage, its final requirement.

Amur Minerals confirmed that the life of mine cutoff grade was stated at 0.2% nickel with an annual nominal production rate of 12.4 million ore tonnes selected.

The life of mine capital costs were projected at $1.9 billion, along with $1.1 billion for preproduction and construction costs, $698 million for sustaining expenses and $85 million in working capital.

According to the mining group, operating costs per tonne are currently estimated to be $42.3, including expenses linked to ore and waste mining, depreciation and royalties.

Its life of mine combined payable metals from the two concentrates are set to total 627,000 tonnes of nickel, 177,000 tonnes of copper, 1.5 tonnes of gold, 3.3 tonnes of platinum and 2.5 tonnes in palladium.

The company highlighted that nickel and copper account for 95% of the revenue from the two intermediate nickel and copper concentrate products.

“The TEO Project feasibility study results generated by the GKZ expert commission indicates the Kun-Manie operation should be scaled up to as much as 12.4 million ore tonnes per year for a 19 year open pit operation. This is a more than doubling of the previously anticipated capacity of 6.0 million ore tonnes per year,” said Amur Minerals CEO Robin Young.

Amur Minerals also noted the ongoing geopolitical upheaval in Russia, and mentioned that sources of funding would be scarce, particularly as Western companies had withdrawn from Russia as a result of the heavy conflict.

“The Company also notes that the present geopolitical situation related to the Russian Federation will impact the Company’s ability to develop Kun-Manie due to sanctions and restrictions implemented by the Federation.” 

“Sources for capital funding will likely be limited and western companies are no longer considering investment within Russia.”

BowLeven shares spike on potential partnership with Perenco at Etinde permit

Natasha Doris
-
0
BowLeven shares spike on potential partnership with Perenco at Etinde permit

BowLeven shares spiked 86% to 4.6p in late morning trading on Tuesday after the group reported a conditional agreement for Perenco to become its partner and operator at the Cameroon Etinde permit.

The company announced that it had been told by Etinde joint venture operator New Age Limited that it had signed a definitive conditional agreement with a subsidiary of Perenco S.A. to transfer the entirety of New Age’s participating interests in the permit to the firm, alongside its operatorship of the project.

BowLeven confirmed that the transaction would be subject to a slate of approvals, including customary regulatory approvals by the Cameroon government and the approval of the Etinde joint venture partners.

The terms of the conditional agreement reportedly stipulate that BowLeven and LUKOIL have a 30 day right of pre-emption over New Age’s interest.

BowLeven will also still be entitled to a final investment decision payment of $25 million from its Etinde joint venture partners, which would include Perenco on the completion of the transaction.

“The prospect of Perenco becoming our partner and operator at the Etinde permit is very positive news,” said BowLeven CEO Eli Chahin.

“We believe that Perenco’s proven Cameroon oil and gas developments and substantial experience provide an opportunity to accelerate our efforts to secure FID and the associated USD25m payment to Bowleven.”

“We look forward to engaging with Perenco and we will update shareholders in relation to Etinde developments in due course.”

National Express estimates £2.7bn FY 2022 revenue

Natasha Doris
-
0
National Express estimates £2.7bn FY 2022 revenue

National Express shares were down 4.3% to 258.8p in early morning trading on Tuesday, after the travel group reported its latest trading statement, with an expected FY 2022 revenue of £2.7 billion.

UK revenue is set to trend in line with expectations, with bus patronage at 85% of pre-Covid-19 levels and coach recovery progressing at a quicker rate than expected, along with airport volumes at two-thirds of pre-pandemic levels.

National Express mentioned that German Rail revenue is almost four times pre-coronavirus rates, driven by new contracts, and North American shuttle revenue has exceeded 90% of 2019 levels on returns to office working environments.

However, the group has faced challenges on its school bus sector, with 10% of contracted routes not running due to industry-wide driver shortages.

National Express reiterated its medium-term guidance of delivering at least £1 billion in revenue growth from 2022-2027, with an average profit margin of 9% and recovery to pre-Covid-19 margins of approximately 10% later in the term.

The growth is projected to drive significantly more than £100 million in EBIT increases over the same period.

The travel firm said it expected recovery in profitability to lag its revenue recovery, resulting in margins initially below its 2022-2027 average, however it estimated a 2022 margin of approximately 7%.

National Express confirmed an estimated £1.25 billion in free cash flow between 2022 and 2027 with cash conversion rising to approximately 80%, and cash conversion in 2022 expected to hit close to 2019 levels.

The company added that it expected to reinstate its dividend in its FY 2022 results.

LXi REIT EPS falls 6.7%, portfolio value grows 64.6% as group eyes merger proposal

Natasha Doris
-
0
LXi REIT EPS falls 6.7%, portfolio value grows 64.6% as group eyes merger proposal

LXi REIT shares were down 0.2% to 144.9p in early morning trading on Tuesday following a reported 6.7% fall in EPS to 7p in FY 2022 compared to 7.5p in FY 2021.

LXi REIT confirmed a 33.3% increase in operating profit before fair value changes to £49.2 million from £36.9 million, along with a climb in rental income of 36.7% to £58.5 million compared to £42.8 million in the previous year.

The company announced a total NAV return growth of 12.6% to 18.2% against 5.6%, alongside an EPRA NTA per share climb of 13.4% to 142.6p from 125.7p the year before as a result of like-for-like portfolio value growth and the value acquired at purchase on new acquisitions.

LXi REIT mentioned a total shareholder return uptick of 1.6% to 23.3% compared to 21.7% and a portfolio value rise of 64.6% to £1.5 billion from £938.4 million in the previous year on the back of a 10.5% like-for-like rise, broadly spread across the trust’s sub-sectors including a 10.2% uptick in food stores and essentials, a 10.4% increase in pubs and a 9.2% climb in drive-thru coffee.

The firm noted a loan to value dip of 1% to 22% against 23%, and a total expense ratio increase of 10 basis points to 1% compared to 0.9% year-on-year.

“This has been another transformational year for the Group, delivering increased scale and diversification, with £354m of new equity raised and fully invested, as well as a strong financial performance with an 18.2% total NAV return. I thank our shareholders for their continued support in the year,” said LXi REIT chairman Cyrus Ardalan.

“Geopolitical uncertainty, as well as the cost of living crisis and inflation, have meant that global markets remain volatile and interest rates continue to rise but I am comforted by the defensive and robust platform that the Group enjoys through its diversified long-let assets, high quality tenant operators and inflation-linked rents.”

The REIT announced several acquisitions and disposals, including the completion on an Asda food store in Birmingham with a 22-year unexpired lease term and five yearly fixed uplifts of 3% per year compounded, alongside exchanged contracts to forward fund an M&S grocery store in Scotland with a total funding commitment of £5.7 million.

The company confirmed it was eyeing a proposed merger with Secure Income REIT, which is conditional on shareholder approval, and is scheduled for a vote at the shareholder general meeting on 22 June 2022.

“My fellow Directors and I believe that the proposed merger with Secure Income REIT plc brings together two complementary long, inflation-linked portfolios whilst maintaining the conservative and highly attractive investment case that our shareholders have benefitted from since IPO as well as the defensive scale that will support the Group in navigating the existing uncertainty,” said Ardalan.

LXi REIT announced a dividend per share growth of 8.1% to 6p compared to 5.5p the last year for FY 2022.

1...766767768...1,866Page 767 of 1,866