Persimmon announced on Tuesday that it had signed the UK government’s developer pledge, following discussions with the Department for Levelling Up, Housing and Communities (DLUHC).
The pledge reportedly sets out the housing sector’s commitments to removing cladding and fixing fire safety issues in any building over 11 metres, and follows Persimmon’s earlier pledge in 2021 to protect its leaseholders from the costs of replacing cladding and making the necessary amendments to remove fire hazards linked to a selection of its properties.
According to Persimmon, the pledge commits its signees to address fire-safety concerns on all buildings 11 metres or over developed by the company 30 years before 5 April 2022, and to not claim any financial assistance from the government’s Building Safety Fund.
The building firm added that it believed the £75 million provision laid out for rectification works will remain sufficient to cover the necessary expenses covered under the Pledge.
“Over a year ago we said that leaseholders in multi-storey buildings Persimmon constructed should not have to pay for the remediation of cladding and fire related issues,” said Persimmon CEO Dean Finch.
“We are pleased to reaffirm this commitment today and sign the Government’s Developer Pledge.”
“We made this commitment last year as we believed it was not only fair for leaseholders but also the right thing to do as one of the country’s leading homebuilders.”
“We are pleased that we were able to work constructively with the Government to secure this agreement.”
Persimmon shares remained flat at 2,209.5p in late afternoon trading on Tuesday after the report.
A currency management solutions company, Alpha FX Group announced on Tuesday that it has recommenced its trading relationship with a key Norwegian client.
As a result of the impact on the client from the start of COVID-19, the company entered into a settlement agreement with the customer in March 2020, under which weekly repayments for unpaid margin would be required until June 2022.
The client’s financial situation has improved since that time, and they have routinely met all 104 of their weekly payback commitments. As a result, the outstanding gross balance as of 1 April 2022 has been decreased to £2.9 million.
Alpha FX can resume its trading relationship as a result of the client’s solid financial status and the regularity with which they have paid and decreased their outstanding liabilities.
Furthermore, as a goodwill gesture in re-establishing a trade relationship, the group has agreed to extend the client’s remaining weekly repayments, which were originally scheduled to conclude at the end of June 2022, until the end of December 2022.
Alpha has no reservations about the client’s capacity to fulfil their responsibilities under the terms of the original agreement as the client’s financial condition is the best it has been since the beginning of the relationship.
“Having learnt from the experience of having too much concentration to one client in March 2020, we have instituted limits on the value of our exposure to any client regardless of the strength of their credit standing. Additionally, since that experience, we have added further enhancements to our risk processes and controls with the aim of further protecting against such an occurrence in the future,” said Morgan Tillbrook, Chief Executive Officer, Alpha FX.
“We also continue to provide investors and stakeholders with improved visibility and assurance, by publishing our top 20 client and currency exposures on our website, the largest of which currently represents 4.86%.”
Petropavlovskshares (LON: POG) have been smashed by its exposure to Russia caused by the Russian invasion of Ukraine. However, the question is, are the damages permanent?
Petropavlovsk’s shares have fallen nearly 80% since the start of January 2022. The gold producer shares were once trading at 16.00p in February 2022, just before the invasion began. The stock closed at 3.85p on Monday as the stock rebounded from its lowest levels around 1.50p.
Petropavlovsk
Petropavlovsk is a major integrated Russian gold producer with JORC Resources of 19.50Moz of gold, including 7.16Moz of gold reserves.
Pioneer, Malomir, and Albyn, as well as the Pokrovskiy Pressure Oxidation (POX) Hub, are all located in the Amur Region of Russia’s Far East.
Since its inception in 1994, Petropavlovsk has produced a total of 8.7Moz of gold and has a proven track record of mine development, growth, and asset optimization.
Petropavlovsk is amongst the region’s leading employers and a major contributor to the region’s long-term economic growth.
The gold miner made headlines in January as KPMG found corporate governance problems including wrongdoing such as inflating the cost of mining licenses and conflict of interest to benefit senior management. Petropavlovsk’s chairman acknowledged the errors found in the report and reiterated that the company is installing new rules, policies and procedures in place to instil a “culture of zero tolerance for improper business practices.”
Later in January, the announced its sales and production report for Q4 2021 where the company noted a 26% year-on-year increase in total gold production from 1.135koz to 1.431koz as a result of improved output across its mines.
The group’s sales in Q4 2021 increased to 1.301koz from 1.131koz in Q4 2020.
The total gold production in 2021 for the group amounted to 4.498koz which was 18% lower than 2020. However, the group’s gold out was well within the guidance of 4.3koz to 4.7koz.
For 2022, Petropavlovsk had further reduced its gold production guidance between 3.8koz and 4.2koz which didn’t help investor sentiment.
Impact of Russia
Russia invaded Ukraine on the 24th of February after which Russian stocks began to crumble, with of course Petropavlovsk taking a barrage of punches due to its exposure in Russia.
The group released an announcement regarding the implications of Russian sanctions on the company in hopes to regain investor confidence in early March. Petropavlovsk said it does not consider its shares or debt instruments to be securities in which dealings are limited under the regulations.
Due to 50.10% ownership of Petropavlovsk being free from Russian entities and being domiciled in the UK, the company believed it would not be subject to sanctions.
Petropavlovsk has a $200m term loan and an $86.7m revolving credit facility with Gazprombank the company addressed in a statement.
The conditions of the facilities enabled Petropavlovsk to sell its gold to Gazprombank which was hindered due to the clauses of the sanction.
“Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group’s gold output,” Petropavlovsk warned.
The sanction led asset freeze resulted in the company defaulting on payments such as an interest payment of $560,000 due on the term loan and the rouble equivalent of $9.5m under its revolving credit facility.
The assets being locked up with Gazprombank would lead to a barrier in operations and financial obligations for the gold miner. In order to prevent future issues from rising, the company began to discuss possible restructuring of the group’s debt with its advisers and the bank.
The alternative options however remain unclear for the company as factors such as the length of the sanctions impacting Gazprombank also play a role.
The company also announced the resignation of Natalia Yakovleva an independent non-executive director from the Board on Monday.
Petropavlovsk Valuation
Petropavlovsk shares once peaked at 27.66p during April 2021. The company has since lost 84.3%.
The group has a market cap of £152.4m and a ROCE of 19x.
Even though Petropavlovsk’s shares plummeted since the start of 2022, on Monday the shares gained 13%. Is that a sign of optimism for the gold miners? Maybe.
The reality is, apart from the exposure to Gazprombank, Petropavlovsk has a limited association with Russia. If the company establishes a successful plan to restructure its debt and avoid failure of future payments, there may be hope.
Based on current speculation, a goal of 16p for the Petropavlovsk share price seems difficult, but not unachievable.
FTSE 100 fell to 7,546 in early afternoon trade inn Tuesday, as the West placed more sanctions on Russia following the discovery of horrifying evidence of war crimes in Ukraine.
Oil prices gained 1.5% to $109 a barrel on Tuesday as a resolution to the war slips away and leading global exporter Saudi Arabia announced a rise in its oil prices for May.
The only positive impact of the rising oil prices fell on energy stocks such as BP, which gained 0.7% to 379p.
Shell shares lost 0.2% to 2,111p following the announcement of reported payments to the government. The group has paid $58.7b to governments. However, the group collected $46.1b in excise duties, sales taxes and levies on its fuel and other products on behalf of international governments.
Though rising oil prices may be “bad news” for the economy, heavyweights like BP can help “limit the losses for the FTSE 100” according to Russ Mould, Investment Director, AJ Bell.
FTSE 100 Risers
Croda shares rose nearly 4% to 8,055p after the UK government approved a £15.9m grant for the company to expand its manufacturing facility in Leek, Staffordshire.
“This investment will meaningfully enhance our lipid system capability and manufacturing capacity, ensuring that Croda plays a central role in both the development and future supply of this important delivery technology,” said Daniele Piergentili, President of Croda Life Sciences.
Halma shares gained 1.7% to 2,589p after HSBC increased the group’s price target from 2,120p to 2,365p.
Auto Trader shares increased 1.3% to 658p, despite Credit Suisse cutting Auto Trader’s price target from 532p to 514p.
ITV shares rose 0.04% to 82p on rumours of the group acquiring Channel 4 after the UK government said they would privatise the broadcaster that is funded by advertising, but publicly owned.
FTSE 100 Fallers
Kingfisher shares sank nearly 3% to 253p as the DIY consumer goods company’s shares faced the brunt of investor concern that consumers will be prioritising their expenses for essentials with the rise in the cost of living, leaving home improvement projects on the back burner.
Housebuilder stocks saw a fall today with Barratt Development losing 3% and Taylor Wimpey losing 2.8%.
“Housebuilders have been in the doldrums since the start of the year despite a supercharged housing market as investors priced in the cost of making repairs,” said Danni Hewson, a financial analyst at AJ Bell yesterday.
Vodafone shares fell 1.9% to 123p as Berenberg cut the group’s price target to 145p from 150p.
Airtel Africa shares dropped 2.8% to 140p on Tuesday after the company reported that it is unsure about the financial impact of regulatory SIM card measures at its Nigeria telecommunications unit that the group adopted.
Flutter Entertainment shares have been falling for quite some time, and on Tuesday, the shares dropped 1.4% to 8,965p as the UK announced the ban on using celebrities in advertising gambling products to curb its appeal to children under the age of 18.
The FTSE 250 was up 0.1% to 21,363 and the AIM was up 0.5% to 1,061 in early afternoon trading on Tuesday. Trustpilot helped the FTSE 250 higher with a 9% gain and raft of positive updates from AIM constituents.
Stronger commodities prices supported markets after Saudi Arabia said they were raising their May oil prices.
The price of Brent Crude oil rose to $109 per barrel following its plummet to $104 on Monday after state oil supplier Saudi Aramco increased its selling price for May to $9.35 per barrel for its Arab Light crude.
FTSE 250 Risers
Reviews company Trustpilot Group enjoyed a rise of 6.8% to 153.3p as the stock began to recover from a sharp selloff in 2022 which has seen their shares halve in value.
Lithuanian classifieds company Baltic Classifieds Group shares increased 4.9% to 153.8p as the stock continued to bounce back from significant losses sustained as the conflict in Ukraine began.
The IP Group surged 4.5% to 93.8p after the company’s First Light Fusion portfolio company reported a world first projectile-based fusion success which has the potential to open up the industry for faster and cheaper fusion energy.
FTSE 250 Fallers
Darktrace shares suffered a dip of 6.2% to 422.7p after investors turned pessimistic following claims by JP Morgan that the company looks set to struggle with customer retention amid rising competition and a projected increase in customer acquisition expenses.
“High competition and low customer stickiness will likely translate to higher customer acquisition costs and prompt Darktrace to increase investments in existing and new product development – both of which will limit margin leverage going forward,” said a spokesperson for JP Morgan.
Moneysupermarket.com fell 3.9% to 181.7p following speculation from Barclays that the insurance broker looks like it’s set for a weak period in Energy, and a current drop in its Money and Travel divisions, resulting in the bank dropping its rating from overweight to equal weight.
Housebuilding and urban regeneration group Countryside Properties dropped 2.6% to 271.4p as the rising cost of living impacts consumer spending.
AIM Risers
Osirium Technologies shares rose 45.1% to 9.2p following a strong Q1 report with growth in contract values along with a return to pre-pandemic levels.
Abingdon Health enjoyed an uptick of 17% to 12p after the firm reported the completion of the technical transfer of its Vatic KnowNow Covid-19 antigen test for diagnostics technology group Vatic Health.
Longboat Energy saw an increase of 17% to 72p in light of the company’s recent Kveikje exploration well oil and gas discovery based in the Norweigan North Sea.
“Excellent reservoir quality, close proximity to infrastructure and multiple development options make this an important and valuable resource and we look forward to working with the operator to mature the forward plan,” said Longboat CEO Helge Hammer.
“We believe that this is an asset that can be commercialised via either development or transaction given the high-value barrels that we have discovered.”
Sovereign Metals shares soared to touch all-time highs after the company announced their Kasiya Titanium Rutile project holds the world’s largest resource and is preparing for an updated scoping study.
Next Fifteen Communications rose as they released 2021 results that pointed to a 36% increase in revenue and encouraging organic revenue growth.
Echo Energy shares jumped 6% after production for Q1 2022 averaged 265 bopd, an increase of 10% compared to Q4 2021.
Borders and Southern Petroleum rose fractionally following the completion of a £1.35m funding round.
AIM Fallers
The Intercede Group plummeted 23.9% to 44.5p after the company reported an estimated 10% decline in revenue for 2021 on the back of delays in significant deals for the group.
Keras dipped 13.1% to 0.08p following a decline in interest after the shares surged to 0.09p from 0.04p after its acquisition of the Diamond Creek mine.
Gooch and Housego shares fell 4% after the group said revenue was expected to be weighted to the second half.
The international home repairs and improvements business, Homeserve delivered results for FY2022 earlier today which were in line with the group’s expectations.
HomeServe made significant strategic and financial progress in FY22, achieving an acceleration in performance over FY21, which was in line with expectations.
HomeServe’s three business divisions saw strategic progress with innovative new products gaining traction in North America, progress in building three complementary businesses in EMEA – Membership, HVAC and Claims Assitance; and progress in Home Experts on creating businesses to match homeowners with deals of quality.
North American Membership and HVAC
North American Membership and HVAC segment performed strongly.
Despite the ongoing effects of the Omicron on HomeServe and its partners, policy retention was 86% remaining the same as in 2021, and affinity partner households increased to £73M from £66m in 2021.
To promote future growth, the company is expanding its customer offerings to let households engage in the green home revolution and align with partners’ to achieve carbon reduction goals.
HVAC As A Service provides worry-free heating and air conditioning replacements with a yearly servicing and breakdown cover for a monthly subscription. After a successful trial with a large utility in New York State, the service is now available.
Through a new 4.6m household utility relationship and expansion with an existing partner, HomeServe’s installation and maintenance proposition for domestic electric vehicle charging is now available to 9m households.
In addition, HomeServe’s water loss cover product, which is supplied on a bill by municipal water utilities to protect their customers from unexpectedly large expenditures due to home water leaks, has seen strong growth.
EMEA Membership and HVAC
The division continued to execute on its transformation and growth targets across EMEA Membership and HVAC.
Customer numbers ended the year in line with the group’s forecasts, and policy retention was higher than in 2021 in the UK, indicating that the company’s transformation plan is on track.
France and Spain did well, with the Spanish claims handling company seeing a significant increase in job volumes.
In the second half, HomeServe’s Japanese joint venture inked two more marketing agreements.
Home Experts
As planned, the Home Experts segment turned a profit for the first time in a full year, owing mostly to Checkatrade’s sustained growth as the UK’s top online platform for connecting homeowners with quality trades.
Checkatrade had 47,000 paying trades at the end of the year compared to 44,000 in 2021, and the average revenue per trade is likely to surpass the Milestone 1 objective of £1,200 compared to £939.
As trade supply and consumer demand began to rebalance in the second half, the number of trades on the platform increased.
With robust cash generation in HomeServe’s busier second half largely offset by the CET acquisition in the UK and subsequent attractive HVAC M&A across all of HomeServe’s Membership & HVAC companies, net debt on 31 March 2022 was 2x EBITDA.
The Property Franchise Group enjoyed a 0.5% rise to 348p in late morning trading on Tuesday after the company reported a 118% jump in company revenue in its final results for 2021.
The firm reported a network income rise of 67% to £157 million compared to £94 million in 2020 and a like-for-like network income boost of 17% to £110 million.
The company added that its adjusted earnings per share increased 61% to 27p compared to 16.8p in 2020.
The Property Franchise Group reported an increased sales pipeline by 73% to £26.5 million against £15.3 million in 2020, alongside a rise in managed rental properties to 74,000 from 58,000 in 2020.
The firm also expanded its portfolio with the acquisitions of estate agency Hunters in March 2021 and mortgage broker group Mortgage Genie in September 2021.
“2021 has been a milestone year for The Property Franchise Group,” said Property Franchise Group CEO Gareth Samples.
“Our determination to make the most of a buoyant sales market saw us achieve record levels of like-for-like revenue, Management Service Fees and profits.”
Samples pointed to a strong outlook for the company as activity returned to pre-pandemic levels.
“Looking ahead, we see an exciting period of further development for all our franchisees in 2022. While we expect over the year we’ll see sales activity return close to 2019 levels, so far we have seen continued high levels of demand for both sales and lettings, well above pre-pandemic norms.”
“Aside from market conditions, we have great confidence that the execution of our strategic initiatives, alongside the benefit of a full year’s contribution from our acquisitions, will underpin continued growth this year and beyond.”
The latest Russian sanctions imposed by the West due to Russia’s invasion of Ukraine have continued the halt in production for Germany’s Volkswagen and Sweden’s Volvo plants in Kaluga, Russia.
The 120 miles of the Kaluga region which is located southwest of Moscow said it receives more than $15b in investment since 2006 reported Reuters.
Operations in the Volkswagen Group’s plant were suspended in early March as a result of the war. The factory employs 4,200 employees and faced supply issues since the pandemic. However, the latest sanctions imposed resulted in continuing the halt in production.
The Volvo Group also had suspended production which employed 600 people to manufacture trucks.
Stellantis and Mitsubhi’s joint venture PSMA Rus plant, which employs 2,000 people may also halt production as the manufacturer is facing issues in production due to a lack of parts as a result of both the pandemic and increased sanctions according to Stellantis’ CEO.
Prior to the war and sanctions, the pandemic shrunk the companies’ production output. Russian car sales had reduced to 1.67m units in 2021.
The World Bank has warned that the war in Ukraine poses a threat to the recovery of developing East Asia and Pacific countries, which are currently struggling to deal with the impact of the Covid-19 pandemic.
The organisation stated in its “East Asia and Pacific Economic Update: Braving the Storms” report that shocks from the Ukraine war and economic sanctions against Russia were disrupting the region’s supply chain and slowing global growth.
The World Bank said that major exporters of fuel including Mongolia and Thailand were in danger of seeing a decline in real incomes, and countries with a high dependence on exports including Malaysia and Vietnam were exposed to financial growth shocks.
The group added that overall economic growth is currently predicted to slow to 5% in 2022, representing a 0.4% point dip from expectations in October.
Following worsening global conditions, growth would slow to an estimated 4%.
“Just as the economies of East Asia and the Pacific were recovering from the pandemic-induced shock, the war in Ukraine is weighing on growth momentum,”said World Bank Vice President for East Asia and Pacific Manuela V. Ferro.
East Asia and Pacific Chief Economist Aaditya Mattoo added: “The succession of shocks means that the growing economic pain of the people will have to face the shrinking financial capacity of their governments.”
“A combination of fiscal, financial and trade reforms could mitigate risks, revive growth and reduce poverty.”
The World Bank explained four recommendations for policy action, including targeted household support instead of price control and unselective assistance to limit pain from economic shocks and facilitate growth-enhancing investment.
It also recommended stress-testing financial institutions to identify risks, reform trade-related policies in goods to enable the region to take advantage of movements in the international trade system, and invest in improvement of skills and enhanced competition to incentivise the adoption of new digital technologies.
Sovereign Metals updated its Mineral Resource Estimate (MRE) for Kasiya on Tuesday, where it confirmed Kasiya as a Tier 1 natural rutile deposit. The company also confirmed the mine’s potential to be a substantial source of low-CO2 footprint critical minerals natural rutile and graphite.
Kasiya is currently the world’s largest rutile deposit, with more than double the contained rutile of its closest rutile peer, Sierra Rutile, according to the latest MRE. Kasiya is also the world’s second-largest flake graphite deposit, according to the graphite by-product MRE.
Rutile mineralisation can be found in laterally extensive, near-surface, flat “blanket” form bodies in places where the weathering profile has not been substantially degraded. The MRE features extensive zones of exceptionally high-grade rutile that run simultaneously over an area of more than 180km2.
Overall, the new MRE reveals several additional substantial, but generally separate high-grade rutile zones, especially in the resource area’s southern and eastern regions. The discovery and identification of these new high-grade mineralised zones have been the driving force behind the resource base’s tripling.
Kasiya’s Latest MRE Findings
A total of 662M tonnes which is 37% of the total MRE, reports to the Indicated category, with a recovered grade of 1.73% RutEq at 1.05% rutile and 1.43% TGC.
The deposit is large, with high-grade rutile mineralisation grading 1.2%-2.0% in the first 3-5m from the surface. Mineralisation of moderate grade Rutile, which ranges in grade from 0.5%-1.2%, frequently continues from 5m to the end of the hole, where it remains open at depths of >10m in several drill-defined, N to NE-striking zones.
In the first 3-5m, graphite is generally depleted, with grades ranging from 0.1%-0.5% total graphitic carbon (TGC). Graphite grades normally grow with depth until about 8m, at which point they remain constant, ranging from 1%-8% TGC.
At depths of >8m, some of these zones contain graphite grades in the 4%-8% TGC range, indicating large coarse flake graphite volumes. So far the contained flake graphite by-product stands at 2.3b tonnes.
At depth, several higher-grade graphite zones have been discovered, which are usually connected with higher-grade rutile at the surface.
At a rutile grade of 1.01%, the underlined cut-off of 0.70% yields 1.8b tonnes, triple the previous MRE, with high-quality components yielding over 352m tonnes at a rutile grade of 1.44% at a 1.20% cut-off. At the global 0.7% cut-off, the total recoverable rutile equivalent grade for the MRE is 1.64% RutEq.
Sovereign’s Managing Director Dr Julian Stephens commented, “It is a really remarkable achievement by our team to have made the largest natural rutile discovery ever in just two years since initial identification. The JORC MRE of this scale and grade is clearly highly strategic, Tier 1 and of global significance in a market where natural rutile is in extreme supply deficit.”
“The step-change in scale will now allow us to examine potentially higher-grade throughput, increased production levels and a longer mine life in the upcoming scoping study update.”
“The company is targeting a large-scale, low carbon-footprint and environmentally sustainable natural rutile and graphite operation which will also positively impact the environmental footprint of titanium pigment and other industries, and provide a significant contribution to the economy of Malawi.”
