Intertek Group sees 18.7% increase in profit before tax

Anshula Kumar
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Intertek Group sees 18.7% increase in profit before tax

Intertek Group shares traded down 0.1% at 5,378p after decent results on Tuesday morning.

Intertek Group saw revenue grow 6.5% at constant rates to £2.7bn in 2021. Revenue excludes the past impact of any business disposals or closures, but includes acquisitions after their 12-months of ownership.

Two acquisitions were completed in 2021 which had a consideration of £480.9m. The companies acquired were, JLA Brasil Laboratório de Análises de Alimentos S.A., and SAI Global Assurance.

Laboratory, technology and equipment upgrades received an investment of £97.1m reflecting 3.5% of revenue.

Product division revenues grew 9.1% to £1.7bn in 2021. There was a 2.8% rise in revenue to £575.4m in the trade division. Resources revenue was £455.6m after a 1.6% rise.

Operating profit rose 15.4% to £473.9m in 2021, with highest contributions coming from the product division with £399.7m. The Group’s profit before tax increased by 18.7% to £445.5m.

The Group expects their clientele to increase investments in 3 areas, resilient supply chains, product and service innovation, and sustainability.

“Our free cash flow performance was excellent, driven by further improvements in working capital providing the Group with a strong balance sheet and the flexibility to invest in growth.  Our ROIC was strong at 18.2% with an excellent organic ROIC of 24.4%, up 350bps year on year at constant rates,” commented Andr é Lacroix, Chief Executive Office, Intertek.

“The supply chain disruption being experienced by corporations across multiple industries has made the need for comprehensive risk-based quality, safety and sustainability assurance more critical than ever.”

Steve Clayton, fund manager of the HL Select UK Growth Shares fund, further highlighted the importance of supply chain solutions currently.

“Intertek provides Assurance, Testing, Inspection and Certification services that help global corporations manage their complex supply chains. No surprise then to see the group growing strongly at a time when keeping track of every leg in the supply chain has never been more important.”

“The business generates high returns, and these jumped a further 350bps in the year, to almost 25% before the impact of acquisitions in the year. We see the group maintaining and building this.”

The HL Select UK Growth Shares fund has a position in Intertek.

Dividend remained unaltered at 105.8p, same as it was for 2019 and 2020.

finnCap issues buy recommendation on Kingswood

UK Investor Magazine
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finnCap issues buy recommendation on Kingswood

finnCap have initiated a buy recommendation on wealth management company Kingswood. finnCap have attached a price target of 39p with their recommendation.

Kingswood has undergone a dramatic turnaround under the lead of CEO David Lawrence and finnCap now forecast EBiTDA of c£20m.

Kingswood has embarked on a wave of acquisitions since the new CEO started in 2020 and now has Kingswood £9.1 billion of Assets under Advice and Management and over 19,300 clients.

The company has global operations after entering the US with a number of acquisitions.

Kingswood is now pursing further growth by continuing their strategic acquisitions. Funding for their strategy is readily available after Pollen Street Capital provided up to £80m of growth capital to fund acquisitions.

finnCap highlighted the benefits of increasing scale for wealth management companies and made comparisons to the high margin business model of St James’s Place.

FTSE 100 sinks as the West unleashes sanctions on Russia

UK Investor Magazine
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FTSE 100 sinks as the West unleashes sanctions on Russia

The FTSE 100 plunged once more on Monday as the West stepped up their fight against Russia with a raft of economic sanctions.

In a unified effort from Western countries to economically punish Russia, Russia was banned from Swift and the central bank had its assets frozen.

At the time of writing, the FTSE 100 had fallen by 1.21% as markets digested the implications on the wider financial system.

The Russia central bank has been banned from accessing assets which will slow down the entire Russia financial system, and the sanctions on banks has led to queues of Russians trying to get hold of their cash, raising fears of a run on the banks.

The Russian central bank doubled interest rates to 20% after the Rouble sank 30%.

Although there was a comprehensive package of sanctions imposed on Russia, they spared the exports of oil and gas on which the Russian economy so much relies.

“Disturbing footage of Russia’s invasion of Ukraine over the weekend and the former’s decision to put its nuclear forces on high alert has served to spook investors once again, with equity markets falling across Europe,” said Russ Mould, investment director at AJ Bell.

“Weighing on the FTSE 100 was a 6.1% decline in BP, its biggest one-day fall since November 2021 and driven by the decision to exit its stake in Russian oil producer Rosneft.”

BP

BP announced it would seek a sale of its 19.75% stake in Rosneft and the financial impact would start to be evident in first quarter results.

The company is reported to have agreed to relinquish its stake in Rosneft following pressure from business secretary Kwasi Kwarteng over the weekend. BP will also step down from the board of the Russian petroleum producer.

“Attention will now turn to how exactly BP will affect an exit and likely bidders for its stake,” said Russ Mould, investment director at AJ Bell.

“There could be interest from Qatar, which already has its own position in Rosneft, or perhaps another name in the Middle East or China whose relations with Russia are less toxic.”

FTSE 100 movers

Although the FTSE 100 fell sharply, several companies saw decent gains. The top risers included BAE Systems, Hikma Pharmaceuticals and Bunzl..

BAE Systems share price enjoyed a rise of 10.6% to 722.5p on the back of Russia’s invasion of Ukraine spurring purchase orders and interest in the arms contractor.

Hikma Pharma was up 8.73% to 2,117p per share and Bunzl saw an increase of 6.27% to 2,932.5p.

Bunzl plc released its financial results from 2021 on Monday, and reported that it had seen its pretax profit amount to £568.7 million, an increase of 2.3% from £555.7 million in 2020.

Russian Listings Sink

FTSE 100 companies with a focus on Russia were gain destroyed by traders reacting to latest develops in the crisis.

Evraz shares sank 28% to trade at 147p on Monday following the new sanctions from the West on Russia.

Evraz has seen serious swing in their share price since Friday when the Russia-focused steel producer was up a good 20% after releasing their earnings report.

Net profit increased by 262% to $3.1bn in 2021 as sales jumped on higher commodity prices. EBITDA increased by 126% to $5bn.

Polymetal

Polymetal shares plunged 46% to 426p and was the FTSE 100’s top faller as investors fled the stock.

Polymetal said last week that all its operations in Russia and Kazakhstan continue as usual and the sanctions announced to that point had not affected Polymetal.

This is no longer likely to be the case for the FTSE 100 miner with fresh sanctions over the weekend.

BP announces intention to exit 19.75% Rosneft stake

Natasha Doris
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BP announces intention to exit 19.75% Rosneft stake

BP has announced its intention to exit from the company’s 19.75% stake in state-owned Russian oil company Rosneft, worth approximately $14 billion.

The BP share price was rocked by the news and dropped by 5% to 359p in early trade on Monday.

The energy giant is estimated to take a hit of $25 billion, which it is expected to begin report in its Q1 2022 financial results, following confirmations that the company would no longer recognise a stake in Rosneft’s reserves, net income and production.

The company reportedly chose to drop its stake following a twenty-minute call from Business Secretary Kwasi Kwarteng to discuss the implications of BP’s stake in the Russian petroleum producer, which it has held since 2013.

The move came as BP executives Bernard Looney and Bob Dudley also announced their departure from the Rosneft board.

“Like so many, I have been deeply shocked and saddened by the situation unfolding in Ukraine and my heart goes out to everyone affected,” said Looney.

“It has caused us to fundamentally rethink BP’s position with Rosneft.”

BP chair Helge Lund added: “Russia’s attack on Ukraine is an act of aggression which is having tragic consequences across the region.”

“BP has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change.”

“It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.”

“The Rosneft holding is no longer aligned with BP’s business and strategy and it is now the board’s decision to exit BP’s shareholding in Rosneft.”

“The BP board believes these decisions are in the best long-term interests of all our shareholders.”

Analysts have weighed in that BP made a wise decision to sell its Rosneft stake, however they cited that the company will be in a poor negotiating position to find a buyer for its shares.

“In a move that feels seismic but at the same time completely unsurprising, BP has announced plans to offload its stake in Russian oil company Rosneft,” says Russ Mould, investment director at AJ Bell.

“Remaining invested in Rosneft could almost be literally construed as fuelling the Russian war effort and that would not have been a sustainable position for much longer.”

“Despite the financial cost shareholders are likely to be relieved that BP has taken pre-emptive action.”

“There had already been indications that the UK government was uncomfortable with BP‘s Russian links although forcing it to exit its holding in Rosneft would probably have required legislation.”

“Attention will now turn to how exactly BP will affect an exit and likely bidders for its stake.”

“Ultimately the company is in a weak negotiating position and may have to accept a cut price deal.”

Mission Group announces Livity acquisition

Anshula Kumar
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Mission Group announces Livity acquisition

Mission Group has acquired Livity for £0.1m in an all cash deal.

Mission Group a group of marketing agencies and the creator of Work That Counts which consists of a network of 16 agencies that generate long-term growth for their clients.

Livity is a youth focused creative company which collaborates with businesses associated with the Generation Z.

The company works with major brands to help them understand and engage with a Generation Z audience through bespoke marketing campaigns. Clients of Livity include Nike, Google, Footlocker, YouTube, NPSCC Childline and Dr. Martens.

Livity reported a gross profit of £1.1 million, pre-tax losses of £0.4 million, and net liabilities of £0.6 million for the financial year ending 31 December 2020.

Alex Goat, Chief Executive Officer, Livity, said, “I am incredibly proud of the journey Livity has been on and we are excited to enter the next chapter. Mission’s focus on creativity, innovation and entrepreneurialism makes it a natural fit for Livity. They understand that brands need to act with meaning and have actively embraced our purpose. We are looking forward to becoming part of Mission, exploring its brilliant network and planning the future together.”

Mission Group’s brand, strategy, creative, and content strengths will be improved as a result of the deal, which will reinforce the Group’s Generation Z marketing offerings.

With Livity, Mission gains access to next generation talent. Livity’s creative talent strategy, which is diverse by nature, is focused on young people and developing their potential based on their talents and interests.

“I’m delighted to welcome our new colleagues at Livity into the Mission family. Mission has a strong track record of acquiring, integrating and helping ambitious businesses to grow and expand to meet their true potential, both in the UK market and beyond. Our Clients and prospects are acutely aware of the growing influence of Generation Z and are eager to explore how they can successfully engage with the youth audience. Livity offers them unparalleled expertise and guidance and I look forward to working closely with the team as we embark on this exciting new phase of growth to realise Livity’s full potential,” commented James Clifton, Chief Executive, The Mission Group.  

Mission Group shares dropped 1% to 59.7p on Monday morning in what was a broadly volatile wider market.

Tortilla Mexican Grill and Compass Group’s plans for expansion

Anshula Kumar
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0
Tortilla Mexican Grill and Compass Group’s plans for expansion

Tortilla Mexican Grill announces a strategic agreement with Compass Group’s Chartwells Universities.

Tortilla Mexican Grill established in the UK since 2007 is a fast-casual Mexican restaurant. Opened by two Californians in response to the deficit of Mexican grills in London, the restaurant now has over 50 locations.

Compass Group is a foodservice company with over 500,000 locations. The Group segregates their business by sectors such as business, healthcare, education, sports and defence. Chartwells Universities provide students with dynamic experiences in catering and dining services. Chartwells collaborates with partners like Subway, Leon, Costa, Greggs. Their focus is on delivering food to students which is convenient, delicious, and varied.

As part of their strategic partnership, Chartwells will open at least 14 Tortilla locations on a franchise basis across their universities.

As part of a trial by Chartwells, Tortilla’s highly customizable, cheap service is already offered at Middlesex University, Brunel University, Sussex University, and Swansea University, with more openings expected this year.

This partnership brings together two like-minded companies that are devoted to developing greener, more sustainable methods of doing business. They are both progressive and focussed on delivering fresh with a value-for-money products that appeal to a diverse clientele.

“We are excited to partner with Chartwells Universities and launch new sites across the UK. In recent years, we have been successful in adapting the brand for new locations and formats, and this will be another opportunity for us to showcase our ability to bring Tortilla to customers across a breadth of locations. This is an important agreement for us and will support our long-term UK growth ambitions, while driving consumer awareness within a key target demographic,” said Andy Naylor, Chief Financial Officer of Tortilla.

Tortilla share price is trading at 174p, barely changed despite the significance of the deal.

CentralNic Group to acquire VGL Verlagsgesellschaft for €60m

Natasha Doris
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CentralNic Group to acquire VGL Verlagsgesellschaft for €60m

The CentralNic Group announced on Monday that it is set to acquire VGL Verlagsgesellschaft for a reported enterprise value of €60 million.

The CentralNic Group is reportedly expected to pay an initial consideration of €67 million upon its acquisition of the online marketing company from its present shareholders.

The acquisition is expected to increase the company’s pro forma revenue and EBITDA to $470.5 million and $57.9 million respectively for its results over the financial year in 2021.

VGL reportedly generated $55.3 million of revenue and US$10.9 million of Adjusted EBITDA from 31 December 2020 until 31 December 2021.

CentralNic further announced that it will be raising up to £42 million through a placing of an estimated 35 million new ordinary shares at the expense of 120p per share.

The Company is also set to provide all qualifying shareholders with the opportunity to subscribe for an aggregate of up to 2,500,000 Open Offer Shares.

The move has been announced in an effort to raise up to £3 million, on the basis of 1 Open Offer Share for every 100.46403360 existing ordinary share owned by the company shareholders at the record date.

“The acquisition of VGL is a natural extension of CentralNic’s online marketing business and a major step in adding content-based marketing solutions to its comprehensive suite of services,” said Ben Crawford, CEO of CentralNic.

“Millions of customers rely on the value-added content provided by VGL to make informed decisions when purchasing online, leading the world’s foremost e-commerce companies to use VGL for customer acquisition.”

Valentin Dushe, co-founder of VGL added: “We are very pleased to welcome CentralNic as our new shareholder and partner.”

“CentralNic is a highly experienced player in the market as well as the perfect fit for VGL Group, and will support us in executing our envisaged growth strategy on both a national and an international level.”

“We share the same vision and values and strongly believe that not only our users, but also the Company itself stand to significantly benefit from this new partnership.”

AIM-listed CentralNic share price saw a drop of over 6% on Monday morning as the company also released preliminary full year results which saw revenue for 2021 increase by 71% to $410.5m.

Nostra Terra Oil and Gas: Well Well Well!

Anshula Kumar
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Nostra Terra Oil and Gas: Well Well Well!

Nostra Terra Oil and Gas has successfully reached planned total depth with Pine Mills – Fouke 2 Well.

Nostra Terra Oil and Gas is an exploration and production company which has projects in the Permian Basin, Texas, and East Texas. Nostra Terra is an AIM listed company.

The Company has reported that the Pine Mills – Fouke 2 Well has safely reached 6002 feet of the intended total depth post the drilling announcement on February 17th. The well has drilled just below the Cretaceous Woodbine Formation.

Logs show 23 feet of pay sand in two Cretaceous Woodbine reservoir sections. The highest interval being in the same reservoir part as the offset Fouke 1 well. The Fouke 2 sits higher up on the structure and the reservoir has an internal which is both of better quality and thicker (17 feet) than Fouke 1. The Fouke 2 discovered an extra pay section of 6 feet thickness, in the Woodbine Dexter interval. The section was found to be bearing in the Fouke 1.

The completion process has started and the well will be covered and cemented through both pay gaps. The pay sections will then be drilled, the completion equipment will be positioned in the hole, and the surface production equipment will be placed.  The well will then instantly start generating into the Fouke 1 location’s surface facilities, which have been enlarged to accommodate the Fouke 2 volumes.

In the Fouke 2 well, Nostra Terra has a 32.5 percent working interest. The impact of the well on the oil in place is being assessed and the markets will be notified on the update post evaluation.

“We’re very excited about the results of the Fouke 2 well. The Fouke 1 well reached payout (where the full cost of the well was recovered) in under a year. Logging results from this well are better than the Fouke 1 and also exceeded our pre-drill estimates.  Given the higher commodity prices in today’s market and the expected production rates from the Fouke 2, we anticipate an even more rapid payout for this well. We look forward to completing and producing the well in short order,” commented Matt Lofgran, Chief Executive Officer, Nostra Terra.

Nostra Terra shares are trading up 5% at 0.48p on Monday morning despite severe volatility elsewhere in London listed energy companies.

Is Bens Creek share price Justified?

Andrew Hore
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Is Bens Creek share price Justified?

Metallurgical coal producer Bens Creek Group (LON: BEN) is the best performing 2021 AIM new admission with a 500% increase since 19 October. This is a company that has only just started to generate revenues from its coal mine in West Virginia. Yet, it is valued at £211.8m.
Proven and probable recoverable reserves were 2.34 million tons at the time of the flotation, but there are also many millions of tons of in-place coal resources.
There is existing infrastructure and Bens Creek has invested in capital equipment for mining. It is early days and production is starting to build up. The sale of ...

Live Company Group: two new contracts for BRICKLIVE send shares higher

Anshula Kumar
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1
Live Company Group: two new contracts for BRICKLIVE send shares higher

Live Company has secured two contracts for Bricklive’s Paddington and Paw Patrol.

News of the contract wins saw Live Company Group (LVCG) shares jump up by 10.5% to trade at 5.1p.

Live company group organises live events and entertainment. One of the two divisions of LVCG is Bricklive.

Bricklive provides brick-based events focuses on creating an atmosphere that stimulates interactive play, nurtures creativity, collaboration, and physical experiences in a welcoming and secure setting.

Touring Trails

The BRICKLIVE organises touring trails which proved to be popular in venues with high visitor attractions.

The BRICKLIVE range of touring trails have proved to be enormously popular with venues including visitor attractions, zoos, town centres and shopping malls. Their adaptability means they’re suitable for a wide variety of locations, both semi-permanent and pop-up. Their trail models are used by venues to build a dynamic, engaging route map around their site, providing visitors with an enjoyable day out.

Bricklive’s first contract is for Paw Patrol with Northampton BID. The event will run from 12th to 27th March. A trail-map will be set up for collection, where visitors can respond to questions based on their favourite Paw Patrol characters’ models inclusive of Chase, Marshall and Skye.

The second contract for Bricklive is for Paddington with a heritage steam railway. This is not the first collaboration with the iconic railway company. The event will run from May half term.

“I am delighted that we continue to see interest and confirm bookings for the iconic Paddinton Bear and Paw Patrol models throughout the UK. Congratulations to my team for securing these further bookings which I am sure will delight children and parents alike,” said David Cilitira, Chairman, Live Company Group.

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