Rutherford Health runs out of cash

Andrew Hore
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Rutherford Health runs out of cash

Former Aquis-quoted proton beam therapy provider Rutherford Health (LON: RUTH) is being placed in liquidation after more than £240m was invested in the business. The four oncology therapy centres are likely to be closed.
There was a lack of patients during the Covid pandemic, and a huge cost base did not help. Cash outflows meant that a regular cash injection was required.
Rutherford Health was backed by Woodford Investment Management, who invested a significant amount of the money spent on the business. Schroder UK Public Private Trust (LON: SUPP) bought the remaining Woodford stake at the en...

Why companies left AIM in May 2022

Andrew Hore
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Why companies left AIM in May 2022

There was a limited number of departures and new admissions on AIM during May. There was one new admission and three cancellations. In February there were more new admissions than cancellations, but in the subsequent three months cancellation numbers have been much higher than new entrants.
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18 May 2022
Lekoil Ltd
Nigeria-focused oil company Lekoil Ltd (LON: LEK) made the switch from AIM to Aquis. Trading in the shares was suspended at 0.95p on 30 September 2021. Although the shares have been admitted to Aquis they will continue to be suspended until the latest audited accounts are publis...

Rockwood Strategic acquires Titon stake

Andrew Hore
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0
Rockwood Strategic acquires Titon stake

Rockwood Strategic (LON: RKW) has acquired a 8.75% stake in window ventilators and parts manufacturer Titon Holdings (LON: TON). Rockwood Strategic’s focus is companies valued at less than £250m with potential for unlocking value.
The stake was acquired on 30 May when the share price was 81p. It has subsequently risen to 86p. Part of the stake appears to have come from the MI Sterling Select Companies Fund which has sold all its shareholding.
Rockwood Strategic was previously known as Gresham House Strategic and was gong to be wound up after Gresham House was dropped as investment manager. Gre...

Bens Creek commences HVB delivery to Integrity Coal Sales

Natasha Doris
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0
Bens Creek commences HVB delivery to Integrity Coal Sales

Bens Creek shares were flat at 90p in early afternoon trading on Monday following the company’s reported delivery of High Vol B (HVB) product to offtake partner Integrity Coal Sales, after transport commenced on 1 June via railroad.

Bens Creek had built up an inventory of clean coal which it started delivering at approximately 11,000 tonnes per train load from its 3.2 mile rail spur connecting to the Norfolk Southern Railway system, which transports the coal to Norfolk, Virginia.

The move comes on the back of the group’s supply of Run of Mine coal by truck, which it used while it finished the remediation of its wash plant and railway spur line.

The company noted that additional rail deliveries of its HVB product at a similar quantum were expected over the coming weeks.

“The arrival of the first railway cars is a significant milestone, as it affirms the full remediation of the Bens Creek project, from the commencement of both High Wall Mining (HWM) and Underground Mining, the processing of the coal through the wash plant, the buildup of inventory and delivery via a “fast flood” rail load out system onto Norfolk Southern railcars on our remediated 3.2 mile rail spur,” said Bens Creek CEO Adam Wilson.

“Whilst we were some weeks behind our originally planned schedule of railroad deliveries, we are very pleased now to be fully functional and we remain on track to meet our obligations to our offtake partner, Integrity, for the supply of HVB coal, as previously announced.”

Loan Facility

Bens Creek also confirmed an update on its existing loan facility with major shareholder MBU Capital Group Limited.

The firm pointed out its initial loan facility of up to £10 million in October 2021, on admission of Bens Creek’s ordinary shares to AIM trading, with £2.3 million drawn down by the company at admission.

The loan facility is set to remain in place to support the company’s ongoing working capital requirements, however the terms of the MBU loan facility have reportedly been varied.

The group commented that the conversion price had been increased, with any additional amounts drawn down under the loan facility from 7 April 2022 increased to 60p instead of 15p per share.

Bens Creek said £7.3 million had been drawn down by the company as of 5 June 2022, of which £5 million was capable of conversion at 60p per share, and the firm added that it had cash balances in excess of £5 million.

“With the necessary buildup of Inventory (circa 30,000 tons of clean and 5,000 tons of ROM, equating to circa $12m of revenue), ahead of the first train arriving, the board of directors increased the conversion price on its pre agreed £10m facility with MBU for any subsequent drawdowns post the date of Admission to 60p from 15p per share, to reduce the potential dilution to shareholders, should the loan be converted rather than repaid,” said Wilson.

“Because of the buildup of inventory, management felt it was prudent to draw down on the facility to maintain a strong surplus cash balance, whilst we waited for the delayed train to arrive from Norfolk Southern.”

FTSE 100 rises on commodities gains after China ends lockdowns

Natasha Doris
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FTSE 100 rises on commodities gains after China ends lockdowns

The FTSE 100 was up 1.4% to 7,644.6 in late morning trading on Monday following a welcome rally in commodities shares.

The mining sector gained on easing lockdown restrictions in China, as the country’s reopening boosted demand across the industry after the celebrations of Jubilee weekend.

“Appropriately following a platinum-themed celebration, the move higher was powered by the mining sector as investors look for a rebound in demand for metals now China is relaxing its Covid restrictions,” said AJ Bell investment director Russ Mould.

Anglo American shares climbed 3.2% to 3,976p, Antofagasta gained 2.3% to 1,530p, Croda shares increased 2.1% to 6,906p, Endeavor shares flew 4% to 1,876p, Fresnillo shares were up 2.7% to 790.3p, Glencore shares saw a boost of 2.5% to 537p and Rio Tinto shares rose 2.7% to 5,918p.

There may be danger on the horizon with the coming release of the US inflation figures later in the week, after the US markets experienced volatility following positive job numbers on Friday last week.

The update sent skittish movements across the Atlantic on apprehension the US Federal Reserve might be incentivised to speed up monetary policy tightening through additional interest rate hikes.

In Friday, the NASDAQ was down 2.4% to 12,012.7 and the S&P 500 was down 1.6% to 4,108.5 with futures pointing to a rebound on Monday.

“In the current through the looking glass environment the apparent ‘good’ news of better-than-expected US jobs numbers was taken badly by the market as it was seen as a potential catalyst for the US Federal Reserve to go harder and faster on interest rates,” said Mould.

“It showed just how nervy sentiment remains despite a recent stabilisation in the markets.”

The Hang Seng enjoyed gains of 2.7% to 21,653.9 as Asia-focused companies rose on the swell of optimism from Asian markets, with Prudential shares up 4.9% to 1,068p and Scottish Mortgage Investment Trust rising 1.4% to 807.3p.

Melrose Industries shares flew 4.4% to 139.3p in light of its $650 million sale of its Ergotron business to funds managed by the Sterling Group.

The Ergotron business was the final component of its Nortek Air Management sale to Madison Industries for £2.6 billion in April 2021.

“The sale of Ergotron is the final step in our Nortek ownership cycle, capping what has been a very successful acquisition for Melrose shareholders,” said Melrose CEO Simon Peckham.

CRH shares increased 2.4% to 3,313p after it acquired residential fencing and railing solutions company Barrette Outdoor Living for $1.9 billion.

“Barrette is an excellent addition to CRH. Our Architectural Products business has been one of our fastest growing businesses in recent years and the acquisition of Barrette complements and enhances our existing offering of sustainable outdoor living solutions in North America,” said CRH CEO Albert Manifold.

AstraZeneca shares dipped 1% to 10,325p despite the pharmaceutical group’s jointly-developed breast cancer drug Enhertu displaying an improved overall survival rate in its phase three trial and its leukaemia treatment Calquence demonstrating a sustained survival upside in another phase three trial.

Clontarf Energy fails to strike oil at Sasanof-1 well

Natasha Doris
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0
Clontarf Energy fails to strike oil at Sasanof-1 well

Clotarf Energy shares plummeted 70.1% to 0.1p in late morning trading on Monday after the oil exploration group confirmed its failure to intersect commercial hydrocarbons at its Sasanof-1 exploration well located 207 km northwest of Onslow, Western Australia.

The well was drilled to a total depth of 2,390 metres by the company’s Valaris MS-1 rig, with zero reported incidents.

Clontarf Energy confirmed that the well would be plugged and abandoned permanently, according to its plans, followed by the start of de-mobilisation activities.

The firm is currently exploring other opportunities, with a 49% joint-venture to explore and develop new salt lakes for lithium resources in Bolivia under discussion.

The policy is still under review since the country has not yet exported any battery-grade lithium.

Clontarf Energy also signed a Memorandum of Understanding (MoU) on the Sedimentary Basin in Chad, and noted an export pipeline from the country with available capacity. The negotiations have been subject to a few issues including political uncertainty in the Sahel and funding.

The company is further waiting on the ratification of a signed Ghana Tano 2A Petroleum Agreement, with progress still pending following negotiations with the new government in May 2017 to confirm details of the agreement.

Pound sterling rises despite Boris Johnson confidence vote

Natasha Doris
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0
Pound sterling rises despite Boris Johnson confidence vote

The Pound sterling rose higher on Monday morning, despite the upcoming confidence vote against Prime Minister Boris Johnson which is scheduled between 6pm and 8pm tonight.

The Pound exchange rate compared to the Euro was trading a third of a percentage point higher at 1.1679 and the Pound against the Dollar was trading 0.4% higher at 1.2540.

The confidence vote against Johnson follows the Partygate scandal, which saw 16 events attended by Members of Parliament detailed in a report by Sue Gray between May 2020 and April 2021 which violated Covid-19 rules.

A total of 83 attendees of the events were issued fines for breaking the Covid-19 regulations, including Johnson and Chancellor Rishi Sunak.

The report noted “failures of leadership and judgement in No 10 and the Cabinet Office”, which is the backdrop of today’s confidence vote.

The vote was called after 54 letters from Conservative MPs were submitted to Tory backbench committee chair Graham Brady requesting Johnson’s removal from office.

A minimum of 180 Conservative MPs would be required to vote against Johnson to kick him out as Prime Minister.

If he manages to evade eviction later today, he will be protected from an additional vote for the coming year.

Lloyds share price: a safe harbour from inflationary shocks?

Natasha Doris
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0
Lloyds share price: a safe harbour from inflationary shocks?

The Lloyds share price is down 8% year-to-date, so how does a discerning investor choose whether to go in on the banking mainstay for their portfolio?

Lloyds’ shares are currently trading at a PE ratio of 5.9, which is could be perceived to offer value compared to its fellow banks, with HSBC at 9.5 and NatWest Group at 9.7.

The banking group also boasts a forward PE ratio of 7, indicating positive analyst profit forecasts for the year ahead, given the volatile macroeconomic conditions geared up to intensify for the rest of 2022.

Lloyds’ has a dividend yield of 4.4%, with a dividend cover of 3.9, cinching the company’s reputation as more than capable of dealing out and growing its dividend, with adequate room to spare if the market capsizes amid geopolitical tensions.

Financial Results

Lloyds reported strong results for Q1 2022, with a post-tax profit of £1.2 billion against £420 million in Q4 2021 and a 12% year-on-year net income growth to £4.1 billion.

As a result of its promising Q1 2022 results, Lloyds actually enhanced its guidance for its banking net interest margin and return on tangible equity, with the former projected to be above 270 basis points and the latter estimated beyond 11%.

The bank also said it expected operating costs of £8.8 billion and risk-weighted assets beyond £210 billion by the close of 2022.

Lloyds has also shored up its financial balance for provisions against increased risks tied to inflation, with an additional £100 million added to its reserves in Q1 2022 to protect from inflation shocks, predominantly in its Retail book, which is considered more vulnerable to disposable income falls on the climbing cost of living.

Consensus

Lloyds’ has reported a strong performance over the last quarter, with climbing revenues they may be helped by higher interest rates, notwithstanding the shocks of inflation growth in 2022.

In addition, the stock appears undervalued compared to peers, and more than adequately covers its dividend payments and looks set for growth in the coming months.

There are far worse bets to place than Lloyds’, however time will tell how well the bank has shored up its defences against the looming cost of living crisis as inflation looks set to hit 10% by autumn this year.

CRH acquires Barrette Outdoor Living for $1.9bn

Natasha Doris
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3
CRH acquires Barrette Outdoor Living for $1.9bn

CRH shares gained 2.4% to 3,314p in early morning trading on Monday, following the group’s reported acquisition of Barrette Outdoor Living for $1.9 billion.

The company reached an agreement with TorQuest Partners and Caisse de dépôt et placement du Québec (CDPQ) to purchase the residential fencing and railing solutions firm for approximately ten times its EBITDA pre-synergies.

CRH noted that Barrette reported a pre-tax profit of $79 million and gross assets of $1.2 billion for the year ended on 1 January 2022.

The deal is set to be financed through existing financial resources and is scheduled to close in HY2 2022, subject to regulatory approval.

The agreement follows the recent divestment of CRH’s Building Envelope business, and falls in line with the group’s strategy to create shareholder value with active portfolio management and the optimised reallocation of capital.

“Barrette is an excellent addition to CRH. Our Architectural Products business has been one of our fastest growing businesses in recent years and the acquisition of Barrette complements and enhances our existing offering of sustainable outdoor living solutions in North America,” said CRH CEO Albert Manifold.

“It also demonstrates the continued execution of our integrated solutions strategy to create further value for our customers, our business and our shareholders.”

“We welcome the Barrette team to CRH and look forward to working with them on the next phase of our growth and development.”

Edinburgh Worldwide Investment Trust NAV per share falls 34.1% in HY1 2022

Natasha Doris
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2
Edinburgh Worldwide Investment Trust NAV per share falls 34.1% in HY1 2022

Edinburgh Worldwide Investment Trust shares increased 3.2% to 181.7p in early morning trading on Monday, despite a NAV per share fall of 34.1% against the comparative index decline of 6.8% in HY1 2022.

The trust, which is managed by £240 billion management fund Ballie Gifford, reported a share price drop of 38.5% as the company noted the challenging backdrop of the stock markets over the last six months.

However, the firm commented that its NAV per share value rose by 80.7% over the past five years against a comparative index growth of 40.7%, alongside a share price climb of 79.1%.

Edinburgh Worldwide investment trust announced that 19 of its stocks generated positive absolute returns, however 35 stocks dropped over 50% over the term.

The NAV return per share amounted to minus 0.23p compared to minus 0.31p year-on-year, with no interim dividend payment recommended.

The group mentioned that 5550,000 shares were issued over the six months, with 3,525,695 bought back and held in treasury and 3,192,854 additional shares bought back and held in treasury since the end of HY1 to 31 May 2022.

Portfolio Acquisitions

The firm acquired six new holdings over the HY1 term, which it funded primarily through reductions to Tesla and its exit from nerve repair firm AxoGen, with four listed companies and two private companies.

Its positions in Schrödinger and AbCellera reportedly reflected the growing use of software to fine-tune drug developments, boosting efficiency in time and finances.

The trust added that it contributed to the IPO for Expensify as an important provider of expense management software for the underserved small and medium-sized business market, and on the back of its potential to evolve in functionality with improvements to its billing, invoicing and payroll segments.

Edinburgh Worldwide also invested in fertility benefits group Progyny, which works to improve economic access to fertility services for US corporate employees. The firm reported high growth potential, and market data which suggested the company’s fertility outcomes were notably higher than industry averages.

Its stake in DNA Script was reportedly due to the group’s offering of enzymatic DNA-synthesis for the expanding synthetic-biology business, alongside its commercialisation of an enzymatic DNA printer, representing a foothold for increased commercial traction.

The company further invested in BillionToOne, which aims to increase the accuracy, efficiency and accessibility of molecular diagnostics. The trust noted its interest in the firm’s progress so far.

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