City round-up: Bodycote; Strix; Appreciate Group

Bodycote Vacuum Furnace

Macclesfield-based Bodycote, a provider of heat treatment and specialist thermal processing services, said it was “cautiously optimistic” in a trading update covering the four months to April 30, 2021, today.

Ahead of the group’s 68th annual general meeting at mid-day, it revealed total group revenue for the period was £208m, down two per cent at constant currency and four per cent at actual rates.

Based on constant currency, and compared with the same period in 2020, Bodycote said its automotive revenues have recovered strongly across all geographies with growth of 19% in the period. It even registered growth in January and February which, in the prior year, were barely impacted by the pandemic.

General industrial revenues were up one per cent, with revenue levels continuing to improve quarter by quarter as industrial production recovers.

Aerospace and defence revenues were 19% lower – 35% lower on an organic basis – as the civil aerospace business remains subdued. However, there are very early signs of a pick up in the business.

Energy now only represents seven per cent of group revenues and were 21% lower, reflecting a substantial drop-off in both onshore and offshore business in reaction to the significant fall in demand driven by the pandemic. The recovery in oil prices in recent months has yet to materialise in greater demand for the oil and gas businesses.

Bodycote said the group’s restructuring plan is now substantially complete, and it remains on track to deliver £20m of cost savings in 2021, with £10m to be delivered in 2022.

With the savings from the restructuring coming through and continued careful management of costs, margins for the business as a whole are above last year’s levels, despite the lower revenues.

Net debt as at April 30, 2021 was £76m – excluding lease liabilities – after paying £57m in final settlement of the Ellison Surface Technologies acquisition, as well as £11m for payment of the dividend in February. Free cash flow of £25m during the period reflects continued strong underlying cash flows.

The group said: “We are seeing improvement in revenue trends across most of our key markets and the group is benefiting from last year’s restructuring. We are, therefore, cautiously optimistic as we look forward to the remainder of this year.”

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Mark Bartlett, Strix CEO (Credit: Twitter / Strix Group)

AIM-listed Strix Group said it expects to report revenue growth of approximately 30% for 2021, in an update ahead of its annual general meeting at 9am today.

The Isle of Man-based group specialises in temperature control systems for kettles, but has diversified into water purification and disinfection solutions in the livestock farming industry in China.

It said at this morning’s meeting, chief executive Mark Bartlett will say: “We are pleased to report that our improved performance in the second half of 2020 has continued so far through the first half of 2021 and now anticipate delivering revenue growth of circa 30% for the group during 2021.

“The kettle controls category is performing strongly, particularly within the regulated segment and a strong order book gives management confidence for H2 2021 and beyond.

“We have also successfully implemented price increases on some of our legacy products in both kettle controls and water categories, which alongside a range of other efficiency measures, including continued automation and strategic initiatives, has enabled us to proactively offset cost inflation.

“Our HaloPure technology continues to gain wider recognition by the market and two further contracts have been secured this month at a regional government-owned livestock company in China. This livestock company owns more than 40 farms in three provinces which will help further promote the profile of this solution. Given this momentum, I am confident of securing 10 installations during the financial year, which remains in line with our previously communicated plans to commercialise this technology.

“Strix remains in a very strong financial position to continue to deploy capital consistent with our allocation of capital priorities and invest in compelling growth opportunities with particular focus on a new product development and commercialisation strategy that supports our growth ambition. We are also actively seeking opportunities that will add value across the group through niche acquisitions or technologies.”

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Appreciate Group CEO Ian O’Doherty

Appreciate Group, the Liverpool-based gift and reward vouchers specialist, has entered a new partnership with PayPoint that will see its gifting products offered to consumers via PayPoint’s network of 28,000 retailer partner stores across the UK.

Consumers will now be able to purchase Love2Shop e-gift cards at PayPoint outlets. These cards can then be exchanged so that customers can shop with some of the nation’s main high street and online brands, including Argos, Halfords, Marks & Spencer, ASOS, Costa and Uber Eats.

Appreciate said it is also working with PayPoint to supply its retailers with marketing support for its retailer partner stores so that awareness of the product in-store can be maximised.

Ian O’Doherty, Appreciate chief executive, said: “This is an exciting opportunity for Appreciate Group as the partnership provides our first physical distribution network for Love2Shop e-gift cards. Overnight, it provides us with a network of 28,000 stores that reach into the heart of communities throughout the UK.

“Following recent success in building out our digital offering, this agreement further enhances our offer and adds depth to how customers can access our products.

“Looking ahead, working with partners who we believe can strengthen our proposition and help us drive growth, such as PayPoint, is a key component of our plans for future growth.”

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