27th Jan 2022. 9.00am

Regency View:


Regency View:


Somero’s ‘strong finish to 2021’ exceeds previous guidance

Somero (SOM) released a strong trading update yesterday in which it upped its full-year guidance…

The US-focused cement leveller said a “healthy North American” market had driven a “strong finish to 2021 that exceeds previous guidance”.

Somero expect revenue of approximately $133m (+50% v 2020) ahead of previous guidance of $130m, annual adjusted EBITDA of approximately $48m (+83% v 2020) ahead of previous guidance of $45m, and ending cash of approximately $42m (+18% v 2020) ahead of previous guidance of $39m.

After such a strong performance, Somero said it will be looking to invest in “increasing the Company’s addressable market by developing innovative solutions for new applications and market segments”.

And whilst they expect 2022 to be another “highly profitable” year, earnings are likely to be flat on 2021 given the need to invest.

With this in mind, we’ll be monitoring Somero’s price action closely with a view to crystalising profits.

SOM Daily Candle Chart

SOM Daily Candle Chart

Ideagen’s recurring revenues jump 41%

Compliance software group, Ideagen (IDEA) released an upbeat set of Interim Results last week in which it said it was having “continued success” with a transition to a Software as a Service (SaaS) model….

Recurring revenues jumped 41% to £34.2m (H1 2020: £24.3m), representing 88% of total revenue (H1 2020: 74%).

And recurring SaaS revenues surged 76% to £23.6m (H1 2020: £13.4m), accounting for 61% of total revenue (H1 2020: 34%).

Customer retention was a whopping 95% and Ideagen said it had “strong liquidity to pursue healthy acquisition pipeline”.

CEO, Ben Dorks commented:

“At our recent Capital Markets Day we set out our plan to capture more of this market opportunity and reach £200m of Annual Recurring Revenues by April 2025 through a combination of organic growth and acquisitions”…

“The second half of the year has begun in line with our expectations, and we remain confident in delivering on our targets for the full year.”

IDEA Daily Candle Chart

IDEA Daily Candle Chart

Ceres release ‘in-line’ trading update

Ceres Power (CWR) updated the market on the current state of its joint ventures last week…

The fuel cell producer said revenue and other operating income for the 12 months to 31 December 2021 is expected to be “in line with previous guidance at approximately £31.5m”, up 44% from £21.9m in the prior calendar period, with “consistently high gross margin”.

Cash and short-term investments were approximately £250 million as at 31 December 2021.

Ceres also said that discussions with Weichai on the planned strategic relationship including a joint venture in China are “progressing positively”, and that its joint venture with Doosan was “preparing for a soft launch of the product commercially in 2022”.

Ceres CEO, Phil Caldwell commented:

“We’ve had another year of strong growth in 2021 and made important strategic investments in our team, our partners and our technology to ensure that Ceres is well-positioned to take advantage of the global urgency for clean energy technologies”…

We have made good progress with our key strategic partners of Bosch, Weichai and Doosan as they look to scale production of our technology globally, and with the development of new partnerships. I look forward to providing further updates on our commercial progress in the coming months.”

CWR Daily Candle Chart

CWR Daily Candle Chart

Learning Tech reflect on ‘remarkable year’

In a trading update, released this week, Learning Technologies (LTG) said it is globally scaled group was now better able to serve “a much larger proportion of the £100 billion addressable market”.

The e-Learning group said trading was “ahead of expectations” with strong organic revenue growth and acquisitions performing well.

Learning Tech expect revenues to be “not less than £254m” (2020: £132.3m). With organic revenue growth expected to be “not less than 7%” – driven by a robust performance in its Content & Services division alongside the continued growth within the Software & Platforms division which has a high proportion of multi-year contracts.

CEO, Jonathan Satchell said:

“Following a remarkable year at LTG, it is very encouraging to report that the business is delivering on all fronts”…

“Sustained business momentum across both our divisions in 2021 drove continued growth on a like-for-like basis. Additionally, the investments made last year in highly attractive acquisitions are already creating value”…

“As an enlarged and globally-scaled Group, we are now able to serve a much larger proportion of the £100 billion addressable market. Amid the pressing need for organisations to effectively develop, motivate and retain their talent, we are excited and optimistic for the year ahead.”

LTG Daily Candle Chart

LTG Daily Candle Chart

Restore sees record levels of revenues

Document storage group, Restore (RST) posted a bullish trading update yesterday…

Restore said full-year performance would be “ahead of its previous expectations” as activity levels continued to grow through the final quarter.

And restore expects to report record levels of full-year revenue and underlying operating profit.

Restore also said that the eight acquisitions completed in 2021 are “all contributing financially” and are “either in line with, or ahead of, plan”, and they have “enabled the business to significantly extend its geographic footprint and service offering”.

Annualised revenue run rate has increased 18% to £255 million with profitability showing “strong progression in H2 as a result of the increased scale, efficiency gains and synergy realisation”.

Charles Bligh, CEO, commented:

“The critical nature of the services we provide, the recurring and highly cash generative nature of the business model and the strong team we have in place gives a high degree of confidence as we look ahead to more exciting growth in 2022 in line with the ambitious growth objectives I described in the capital markets day last year.”

RST Daily Candle Chart

RST Daily Candle Chart

Character Group on-track to meet full-year expectations

Toy maker, Character Group (CCT) said it“maintained a steady performance” in the lead up to and through theChristmas 2021 period despite the global supply crisis…

In a trading update, released this week, Character said global logistical challenges “continue to impact the export of product from the Far East to UK”.

Despite this headwind, Character’s turnover increased by 23% in the four-month period ended 31 December 2021 compared to the previous year (in part benefiting from delayed shipments in August 2021).

Character said the bulk of this growth was attributable to sales to the USA and Scandinavia, whilst turnover in the UK and the rest of the world remained largely flat.

On its outlook, Character’s statement read:

“Assuming no further worsening of the trading conditions, including adverse COVID developments impacting normal commercial activity, the Board believes that the Group will achieve current market expectations for the year ending 31 August 2022.”

CCT Daily Candle Chart

CCT Daily Candle Chart

Science Group deliver ‘outstanding performance’

Science Group (SAG) posted yet another strong trading update last week in which it said 2021 will be another record year for the group…

The ‘Science as a Service’ consultancy said, “the momentum reported during 2021, which resulted in multiple profit forecast upgrades during the year, continued through the final months.”

As a result, Science Group expect revenue in excess of £80m and adjusted operating profit in the order of £16m – an increase of over 45% on the prior year (£10.9m).

“This outstanding performance, delivering a very strong operating margin, has been achieved in a challenging environment due to the ongoing Covid pandemic and global supply chain constraints” read the trading update…

“All the divisions have contributed to this success, with the Group overall benefitting from the operational efficiencies resulting from the greater scale following the 2019 Frontier acquisition.”

Science Group’s board will recommend a 25% dividend hike, to 5 pence per share at the next Annual General Meeting.

SAG Daily Candle Chart

SAG Daily Candle Chart

Gattaca sees full-year profit ‘significantly below market expectations’

Gattaca (GATC) released an unscheduled profit warning earlier this month, causing the shares to drop gap lower for the second time in three months…

The engineering and tech recruiter said it now anticipates Full-Year 2022 (End July 2022) profit before tax to be “significantly below market expectations”.

The weak forecast is due to a slower than expected recovery in its contract business, which typically represents 75% of Gattaca’s NFI (Net Fee Income).

Gattaca now expect Half-Year 2022 NFI will be around £22m (H1 2021 £20.5m) and Full-Year 2022 NFI to be around £45m (FY2021 £42.1m), with Full-Year 2022 underlying profit before tax to be around breakeven.

Being on the wrong side of profit warnings is part and parcel of stock investing. And it is the key reason that we seek to diversify our portfolio across several sectors and geographies.

We will wait for the dust to settle before conducting a full review of our position in Gattaca.

GATC Daily Candle Chart

GATC Daily Candle Chart

Enwell fall after Ukraine imposes temporary gas-price regulation

With tensions between Russia and Ukraine escalating, Enwell Energy (ENW) provided the market with a ‘Ukraine Update’ last week…

The gas producer said the Ukrainian government has imposed temporary, partial gas-price regulation to support certain production of foods.

All independent gas producers in Ukraine must sell up to 20% of their natural-gas production until April 30 at a price set at its cost of sales, plus a margin of 24%, and existing production taxes.

And while the regulation is a temporary measure, Enwell said it was a “very concerning situation for the independent gas producers in Ukraine, and indeed for the investment climate in Ukraine generally”.

Enwell did not comment on the Russian tensions, but there appears to have been some progress this week following a united show of force from NATO and its allies regarding Russian sanctions.

ENW Daily Candle Chart

ENW Daily Candle Chart


All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.