City round-up: James Fisher; Strix; Together; Real Good Food
James Fisher, the Cumbrian marine engineering group, increased interim revenues, but fell into a half-year loss, it revealed today.
Turnover rose from £215m in last year’s restated figures, to £252m in the six months to June 30, 2023. However, a restated pre-tax profit of £5.5m in 2022 became a pre-tax loss of £4.4m this year, which the group said was due principally to refinancing legal and advisory costs (£9.3m) and higher interest rates offsetting the positive operating performance.
Net debt on a covenant basis at June 30, 2023, was £154.5m, compared with £142.1m at December 31, 2022, and £172.4m at June 30, 2022.
No dividend has been recommended.
The group said it has achieved continued progress in simplification of the group. Three operating divisions are aligned to market verticals, the sale of the Swordfish Dive Support Vessel, Nuclear Decommissioning business and obsolete assets generated net proceeds of £18.1m, and key initiatives are under way in establishing the One James Fisher operating model.
Chief executive, Jean Vernet, said: “All three divisions delivered revenue and profit growth against the first half of 2022, with a particularly strong increase seen in the Energy division, driven by demand for the group’s well-testing, artificial lift and bubble curtain offerings against a relatively weak comparator period.
“The group’s new divisions have now been embedded into the operating and reporting structures of the group, and whilst there remains significant work to do to achieve the anticipated commercial and operating synergies, progress has been positive to date.”
He added: “Further strategic progress is expected in the second half of the year as the group continues to execute its stated aims of simplifying and focusing the portfolio.
“Although the geopolitical and economic climate remains uncertain, the board is confident that it is taking the right steps to create a platform for sustained recovery. Trading in July and August was in line with expectations and the group’s full year expectations remain unchanged.”
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AIM-listed Strix Group saw a decline in pre-tax profits for its traditionally weaker first half of the financial year, it revealed today.
The Isle of Man-based kettle controls, appliances, and water purification and disinfection solutions group, enjoyed a 28.6% boost to first half sales of £65.2m in the six months to June 30, 2023. However, pre-tax profits fell from £11.6m to £6.8m, a 41.4% reduction, which it said was due mainly to interest and finance fee costs which had an adverse variance in the current first half period of £3.7m compared with the same period last year due to an increase in the net debt to fund the Billi acquisition and a higher interest rates environment.
Strix acquired Australian business, Billi, for £38m in October last year.
Net debt has increased from £61.3m last year to £93.1m this year, and the interim dividend has been cut by 67.3% from 2.75p per share in 2022 to 0.9p per share.
Chief executive, Mark Bartlett, said: “The continued macro headwinds have resulted in a reduction in demand in kettle controls in the key export regulated markets of UK and Germany during H1 and a slower than anticipated recovery.
“Whilst recent order rates are tracking in a positive direction, we now anticipate the path to a return of normalised growth to take longer and for there to be a decrease in the short term revenues within this category.
“The group’s second half of the year is always stronger than the first and weighted to Q4 driven by the replenishment of stock and normal seasonal uplift, the performance required in Q4 to achieve the full year outcome is lower than in 2022 and 2021.”
He added: “Given the increase in net debt due to the strategic acquisition of Billi, and with the high interest rates environment, the board continues to take precautions to balance the capital allocation priorities. To be prudent, the board has decided to prioritise the reduction of debt with a clear plan to net debt/EBITDA to below 1.5x over the medium term.
“Despite the short term headwinds, Strix is also announcing Strategic Business Objectives which will deliver group revenue of £206m and gross profit of £80m by the end of financial year 2026, reflecting the attractiveness of the underlying markets that it operates within.”
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Gerald Grimes
Cheadle-based specialist lender, Together, said it delivered another strong annual performance in announcing its results for the the year to June 30, 2023.
Interest receivable and similar income was up 45.6% at £572.9m (2022: £393.4m), while pre-tax profits rose from £151.5m last year to £158.6m.
Together successfully raised or refinanced more than £2bn of facilities to support its growth ambitions in the reporting period.
Gerald Grimes, group CEO designate, said: “Together delivered another strong performance during the year, as we successfully grew the loan book to £6.4bn with very low LTVs and headline arrears, and the group remained highly profitable and cash generative.
“Against the backdrop of continued economic volatility we maintained our focus on delivering value for our stakeholders, making strategic decisions to control our origination volumes, increase our nominal rates, maintain prudent LTVs and manage our costs.
“These actions resulted in the group delivering an attractive net interest margin of 5.2%, underlying profit before tax of £163.6m and cash receipts of £2.2bn during the year.”
He added: “At the same time we increased our support for our customers in what has been a challenging year for many people and businesses and made good progress in delivering our strategic priorities and shaping our business for a sustainable future. We also further strengthened and diversified our funding, raising or refinancing over £2bn of facilities during the year.
“While the UK’s economic outlook is showing early signs of improvement, with inflation beginning to trend lower and the pace of interest rate rises slowing, macroeconomic challenges remain.
“As high street lenders retrench from more complex cases, we expect many more individuals and businesses to look to specialists to support opportunities. With a clear purpose, a proven and well-funded business model and a successful multi-cycle track record, Together will continue to be there to help underserved customers solve problems and realise opportunities, as we have been for the last 50 years.”
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Real Good Food Group
Liverpool-based food ingredients manufacturer, Real Good Food, suffered a fall in half year turnover, in the year to March 31, 2023, but it managed to halve its pre-tax losses, it announced today.
Revenues fell from £40.431m to £32.441m, due mainly to due to macroeconomic headwinds, but last year’s pre-tax loss of £18.978m became a pre-tax loss this year of £9.003m, which, it said, reflected reduced gross margins and operating leverage.
During the year the group secured an additional £2.5m revolving credit facility from Hilco Private Capital in November 2022, and £0.55m in short-term shareholder loans, from Downing and Omnicane, on April 6, 2023 to support the group’s radical reform programme.
Total net debt increased to £31.2m, up from £25.5m the previous year.
Volumes were about 26% lower year-on-year, the most severe reductions being US sales (32% lower) and sales into Europe (22% lower). The reductions were market driven rather than customer losses.
Also, key input costs continued to rise during the year with costs on average being 30% higher.
The impact on the business was partly mitigated with prices to customers being increased, averaging 21% with increases ranging between five per cent and 34% – overall in-year impact being 10.6%. Limited availability of key ingredients across the sector also affected performance.
A radical reform programme, which was launched in September 2022 to return the business to profitability, is almost complete and tracking in line with expectations. To date, around £8m of price resets, efficiency gains and cost savings have been secured for fiscal yar 2024.
The group said current trading has seen market conditions remain challenging, albeit the self-help improvements made since September 2022 have been transformational.
There is new management in place to continue to drive the radical reform programme.
After five months of trading in financial year 2024, demand is higher than last year and, despite sales being broadly the same due to cash constraints, EBITDA is better.
The group has recently agreed terms for a 12-month extension of the Hilco loan facility through to November 18, 2024. The facility is being renewed at £2.3m. A further announcement will be made in due course.
Executive chair, Mike Holt, said: “Market conditions remain challenging; we are, however, starting to see volumes in some segments beginning to slowly rebuild and we are gradually trading our way into a better place as the busier autumn season kicks in.
“The radical reform programme we have implemented over the last year has been transformational and, with new management now in place, the group is well positioned to make further gains, particularly in manufacturing efficiencies, sales, and customer focus.
“We have recently agreed a loan extension with Hilco which provides a more secure platform to continue our journey to sustainable and satisfactory profitability.”
