Results Update – Ceres Power, Collagen Solutions, ClearStar and Ocado

Results Update - Ceres Power, Collagen Solutions, ClearStar and Ocado

Ceres Power

Ceres Power Holdings PLC (CWR) is a fuel cell technology and engineering company which seeks to embed its technology in mass-market energy products for various markets. The company develops and commercialises its fuel-flexible SteelCell® technology for applications such as combined heat and power for commercial and residential sectors, which has enabled the company to start to establish itself in major markets like Japan, Korea and the USA.

Trading Update

As the company experienced continued steady progress across existing contracts with its commercial partners, for the year ended 30 June 2019, it expects to beat its previous expectations of around £15 million to post revenue of approximately £16.5 million, indicating a growth of 135%. Due to high margin license revenue, operating loss and cash outflows from operating activities declined considerably, and cash and short-term investments were higher than £71 million at 30 June 2019. The company doubled its revenue for the fourth consecutive year, helped by partnerships with Weichai Power and Bosch and renewed interest in the fuel cell sector.

Financial Highlights (H1 FY 2019, in £)

(Source: Company Filings)

Driven by new licence fees, revenue and other operating income was reported at £8.3m, reflecting an increase of 168%. As the company focused on high margin license fees, gross margin rose from 46% in H1 FY18 to 82% in H1 FY19. Although primary operating costs increased by 16% from £7.8m in H1 FY18 to £9.1m in the current period, the operating loss decreased by 52% from £6.2m to £3.0m in the period, helped by improved revenue and gross margin. During the period, the company raised £75.9m net from the issue of new equity and held cash, cash equivalents and short-term investments at 31 December 2018 worth £78m.

Share Price Commentary

Daily Chart as at July-09-19, before the market closed (Source: Thomson Reuters)

On 9 July 2019, at the time of writing (before the market closed, GMT 2:15 pm), CWR shares were trading at GBX 176.00, up by 4.14% against the previous day closing price. Stock’s 52 weeks High and Low is GBX 209.95/GBX 123.26. The company’s stock beta was 0.37, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalisation was £258.45 million.

Conclusion

The company will announce the full year results in early October. Though, the company seems optimistic about its technology and product as a path to hydrogen and a net zero carbon future is offered by fuel cells. The company is well positioned to benefit from a surge in interest in the fuel cell sector and boasts a strong balance sheet and world-class partners.

Collagen Solutions

Collagen Solutions PLC (COS) is a Glasgow-headquartered company which develops, manufactures and supplies engineered medical-grade collagen biomaterials and tissues. The products are used in research, medical devices, and regenerative medicine by pharmaceutical and medical device groups. The company primarily operates in the United States with locations in California and New Zealand and is listed on the London Stock Exchange.

Financial Highlights (FY 2019, in £m)

Led by a rise in North America and product development revenue, in the year ended 31 March 2019, the company reported a growth of 22% in revenue and other income to £4.51 million, while revenue excluding other income grew by 18% to £4.15 million. Adjusted LBITDA (before separately identifiable items) was £1.22 million, against £1.71 million in FY 2018, while cash balances at 31 March 2019 was £1.68 million. Indicating the stability of financial foundations of the company, the core business was profitable at the EBITDA level during the last quarter of the year, reflecting an essential inflection in the core business. During the period, the company secured 29 customers and 16 new customer agreements and signed two blue-chip development customers.

Share Price Commentary

 Daily Chart as at July-09-19, before the market closed (Source: Thomson Reuters)

On 9 July 2019, at the time of writing (before the market closed, GMT 2:45 pm), COS shares were trading at GBX 3.81, up by 0.2% against the previous day closing price. Stock’s 52 weeks High and Low is GBX 5.40/GBX 2.51. The company’s stock beta was 0.04, reflecting significantly less volatility as compared to the benchmark index. Total outstanding market capitalisation was £16.88 million.

Conclusion

As the company continues to repay the Norgine Ventures debt and invests in several growth initiatives including commercialisation, it will continue to make losses and burn cash for a couple of years. The company will seek to make further improvement in its financials, including solidifying core business profitability and aims to deliver on existing opportunities and build a longer-term revenue stream.

ClearStar

ClearStar Inc (CLSU) is an AIM-listed technology and service provider to the background check industry that serves many industries and businesses by providing important data on applicants. Combine the latest technology with remarkable client service, the company offers background and drug screening solutions to help make process convenient and secure, and the results comprehensive and compliant.

Trading Update

In the six months ended 30 June 2019, the company reported revenue growth of approximately 17% to $11.6m to achieve its highest ever six-month revenue. Direct services, which accounted for approximately 36% of total revenue, rose by 49%. The group expects to achieve strong revenue growth for the full year 2019, supported by strong recurring revenue and upselling of further services.

Financial Highlights (FY 2018, in $m)

Driven by the new direct customers that were won in 2017, the revenue of the group increased by 13% over the year to $20.1m to achieve its highest ever annual revenue. The increase in revenue enabled the company to generate positive EBITDA for 2018, which was $154k, against a loss of $391k in FY 2017. Net loss was $1.3m as compared with a $2.0m loss for 2017, while loss from operations declined to $1.3m (2017: $1.9m).

Share Price Commentary

 Daily Chart as at July-09-19, before the market closed (Source: Thomson Reuters)

On 9 July 2019, at the time of writing (before the market closed, GMT 3:20 pm), CLSU shares were trading at GBX 58.90, up by 9.07% against the previous day closing price. Stock’s 52 weeks High and Low is GBX 87.00/GBX 50.22. The company’s stock beta was 0.37, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalisation was £19.66 million.

Conclusion

The interim results for the first half of the financial year 2019 will be announced in September 2019. As existing customers adopt further services, and the company wins contracts from new customers, it delivered strong revenue growth with an increase in its run rate. The company remains confident of achieving strong growth for the full year 2019 amid an expanding pipeline and a booming jobs market in the United States.

Ocado Group

Ocado Group PLC (OCDO) is one of the largest online grocery retailers in the UK. The company’s main objective is to provide its customer with a better shopping experience. The company divides its product based on the service, price and range. The company is currently having a customer base of over 580,000 people.

Financial Highlights (H1 FY 2019, in £m)

(Source: Company Filings)

Driven by additional fees earned from Morrisons and an increase in the average number of orders per week, adjusted revenue grew by 10.5% to £874.0 million in comparison to H1 FY2018 revenue of £791.2 million. Total Income was up by 16.8% as the company provided its suppliers with more ways to grow their revenues through its website, helping the company to increase its media revenue. Despite the competitive nature of the market, the growth in gross profit exceeded the rate of revenue growth to post an adjusted gross profit of £304.0 million. As the company invested more in developing the teams needed to support its international growth, the adjusted EBITDA declined by 46.3% over the last year to £18.7 million. Statutory loss before tax increased to £142.8 million from £13.6 million in H1 FY2018, while adjusted loss before tax rose to £43.0 million from £12.9 million in H1 FY2018. Diluted loss per share was 19.77p (1H 2018: loss per share of 2.22p), and basic loss per share was 19.77p (1H 2018: loss per share of 2.22p).

Share Price Commentary

Daily Chart as at July-09-19, before the market closed (Source: Thomson Reuters)

On 9 July 2019, at the time of writing (before the market closed, GMT 4:25 pm), OCDO shares were trading at GBX 1,238.5, up by 5.80% against the previous day closing price. Stock’s 52 weeks High and Low is GBX 1,440.50/GBX 730.60. The company’s stock beta was 1.39, reflecting more volatility as compared to the benchmark index. Total outstanding market capitalisation was £8.28 billion.

Conclusion

The company provides a unique and proprietary end-to-end solution for online grocery which has cemented its position as a technology-driven global software and robotics platform business. Over the last six months, the centre of gravity at Ocado Group has shifted, as the group focuses on growing its Ocado Solutions business and applying its technical expertise to adjacent markets and other verticals. The company expects to achieve retail revenue growth of 10-15% in the balance of the 2019 financial year, with further increase in underlying EBITDA expected for Ocado Retail.

 

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