City round-up: OTAQ; Esken; PRS REIT; Unilever; Pebble Group
OTAQ, the Lancaster-based marine technology group, has announced that Matt Enright will resign from the board and as chief financial officer and company secretary with effect from July 31, 2023, to take up a new role outside the company. He was appointed to the board in June 2020 after joining the company in April 2020.
Justine Dowds has been appointed as interim chief financial officer. She has held a number of senior positions in a range of high growth companies across various sectors including property development, aviation charter services, IT and construction.
Most recently she was managing director of GB3 Limited, an IT managed services company, having joined the company in 2012 as finance and operations director. Prior to GB3, Justine worked for United Utilities and AstraZeneca having previously qualified as a Chartered Accountant with Arthur Andersen.
CEO, Phil Newby, said: “On behalf of the entire board, I would like to thank Matt for his contribution to the company, particularly in relation to the transition of OTAQ to a publicly listed business as well as his advice as the company has developed during the past three years. We wish him well for the future. We are delighted that Justine has agreed to join us as interim chief financial officer.”
Matt Enright said: “I have enjoyed my time working with the board and wider team at OTAQ. I believe the company is now well placed to benefit from the investments in resource and products made over the past three years, placing OTAQ on a sound growth path.”
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Lewis Girdwood
The break up of Esken has seen the finance chief of its aviation division Lewis Girdwood resign with immediate effect, with no plans to replace him.
In a statement to the stock market this morning the company said it did not feel that it was appropriate to look to the external market to replace him and that Nick Dilworth, Esken’s Chief Operating Officer and Director, Renewables, will take over his responsibilities as CFO, supported by the Company’s able finance function.
Dilworth has been a member of the Board since 2018. He has previously occupied a number of leadership roles and has a strong commercial background. Before his leadership roles in industry, he qualified as a Chartered Accountant with BDO LLP before joining Grant Thornton as a Corporate Financier.
David Shearer, Executive Chairman of Esken, said “On behalf of the board I would like to thank Lewis for all of his efforts over the last four years as CFO. This period has been a very difficult one for the Group and he has played a key role in ensuring that we navigated the many challenges that we have faced. He leaves with our best wishes for the future”.
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Rising rents for family homes has given a boost to listed property business PRS REIT.
In a trading statement this morning the company said its portfolio of single-family houses for rent is the largest of its kind in the UK and it continues to expand with 70 new rental homes added to the portfolio in the fourth quarter of the financial year. This has taken the total number of homes added during the financial year as a whole to 294 and the number of completed homes in the portfolio to 5,080 (30 June 2022: 4,786).
The estimated rental value (“ERV”) of the 5,080 completed homes at 30 June 2023 was £55.0m per annum, a 15% increase on the same point last year (30 June 2022: 4,786 homes with an ERV of £47.8m per annum). A further 444 homes, with an ERV of £3.8m per annum, were contracted at 30 June 2023, and are at varying stages of the construction process.
The statement also said occupancy levels and rent collection are high, whilst arrears are low and, over the 12 months to 30 June 2023, rental growth was at 7.5% across the portfolio.
“The PRS REIT remains in a very strong market position, and the Board is confident about prospects, with affordability (being average rent as a proportion of gross household income) at 25% and the Company’s costs substantially fixed following the recent debt refinancing.”
Charlotte Adolpho and Callum Stokeld, analysts with investment bank Panmure Gordon, reiterated their Buy recommendation today, saying: “Having completed its 5,000th home earlier in the year, the company now has 5,080 completed homes and has a further 444 homes contracted with an ERV of £3.8m pa.
“Operationally, the portfolio continues to deliver growth with like-for-like rental growth of 7.5%, rent collection at 99%, and total occupancy of 97%. Arrears remain low at c £0.6m, about 1% of the portfolio ERV.
“Shares have recovered by c 11.8% since the recent low about a month ago, largely reflecting the wider market environment, but remain down -5.4% YTD in 2023 and continue to trade at a discount of c -30% to estimated 2023 NAV, with a 4.8% yield. We retain our Buy rating.”
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Hein Schumacher
Consumer goods and foods group, Unilever, said it expects underlying sales growth for its full year to be above five per cent.
Presenting his first results as chief executive, Hein Schumacher welcomed a strong first half performance as the group reported revenues of €30.428bn, up from €29.623bn, and a pre-tax profit of €5.267bn, compared with €4.359bn a year ago.
The group operates a key home and personal care manufacturing site and research and development facility at Port Sunlight, Wirral.
Mr Schumacher said: “Unilever’s performance in the first half highlights the qualities that attracted me to the business: an unmatched global footprint, a portfolio of great brands and a team of talented people.
“My early immersion in the business has confirmed my belief in Unilever’s strong fundamentals. The task ahead is to leverage these core strengths – supported by our simplified operating model – to drive improved performance and competitiveness. This is our absolute priority and it will mean bringing greater focus and sharper execution, with science-backed innovations and investment behind our brands.
“This opportunity to step up our performance and unlock our full potential makes it an exciting time to lead Unilever. I look forward to sharing further details when we report our Q3 results in October.”
Looking ahead the group said in a volatile and high-cost environment, it will deliver another year of strong underlying sales growth in 2023. It expects underlying sales growth for the full year to be above five per cent, ahead of its multi-year range, with underlying price growth continuing to moderate through the year.
Its expectation for net material inflation (NMI) for 2023 is around €2bn of which €0.4bn is anticipated in the second half. It continues to expect a modest improvement in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind its brands.
Danni Hewson, head of financial analysis at Manchester investment platform, AJ Bell, said: “Decent headline sales growth across the business and an improvement in operating profit, operating margin and free cash flow helped to drive a five per cent spike in Unilever’s share price at the market open. That was one of its strongest sessions on the stock market in a long time, helped by quarterly sales beating estimates.
“But dig deeper and there are several reasons not to get carried away.
“First, group sales growth has come entirely from putting up prices, not shifting more units of products. The sign of a good business is one that can grow prices and volumes. Unilever’s group volumes actually declined in both the first and second quarter periods.
“Second, chief executive Hein Schumacher is still new in the role and it’s easy to get excited when a new leader delivers messages of optimism.
“He talks about bringing greater focus, sharper execution and a simplified operating model. We’ve heard all of this before and the proof of the pudding will be in the execution, not simply sweet-talking investors into thinking a new CEO automatically equates to greater success.”
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Christopher Lee, chief executive of Pebble Group
Pebble Group, the Stretford-based corporate promotions specialist, said its financial performance for the first half, to June 30, 2023, will show growth across all major financial metrics, compared with the same period in 2022.
In a first half trading update today, it said the working capital cycle remains consistent with prior years and, following a dividend payment in HY23 of £1m (HY 22: £nil), net cash on June 30, 2023 was £4.2m, against a £100,000 net debt at June 30, 2022, and net cash of £15.1m at December 31, 2022.
Facilisgroup, which provides a digital commerce platform for promotional products businesses in North America, is expected to show revenue in the period of circa 20% ahead of the prior period. Strong EBITDA margins have been maintained (HY 22: 47%).
The strategy to introduce further technology products, that widens addressable customer numbers, remains on track.
With its current rate of growth and excellent profit margins, the group expect Facilisgroup to become the majority contributor to group profits moving through 2024.
Brand Addition, which provides promotional products and related services under contract to many of the world’s most recognisable brands, is expected to deliver revenue slightly ahead of the prior period, and client retention has remained high.
EBITDA margins have been maintained (HY 22: 8.3%) through an improvement in gross margins compared with the prior period, matching the costs of the additional expertise invested into the business to support Pebble’s large international clients and their increasingly complex requirements.
Looking forward, the group, which is headed by CEO Chris Lee, said it is consistently progressing on its stated strategies and its HY23 performance leads it to expect that the group is on track to deliver FY23 results in line with current market expectations.
The group’s half year results will be announced on September 5, 2023.
