Market Update: How Australian Markets Performed on 21st April 2020?

Summary

• Uranium markets continue to be dominated by the effects of Covid-19 in the near term
• Pressure Technologies set to deliver margin improvements in its Chesterfield Special Cylinders division (CSC).
• Marlowe acquires subscription-based HR & employment law compliance services provider Deminos Consulting Limited.
• Iomart Group expects revenue of approximately £112 million for the year ended 31 March 2020 compared to £103.7 million in FY19.

Yellow Cake Plc (LON:YCA)

Yellow Cake Plc in a performance update confirmed an extremely strong capital position, reassuring shareholders that at present it is not that badly affected, either financially or operationally due to the outbreak of Coronavirus.

In a quarterly operating update, the company stated that it has adequate working capital for at least two years before embracing any measures to secure any new fund. A no-debt company, YCA reported that the value of physical uranium (U3O8) held by it increased over the quarter from US$240.4 million to US$263.5 million, reaching US$312.5 million on 17 April 2020. The company’s approximate net asset value was £2.88 per share, as at 17 April 2020.

Global uranium spot market price ended CY2019 at US$25.00/ lb U3O8, a decline of 12% Y/Y, having averaged US$25.68/ lb U3O8 for the year. However, during March, the spot uranium price rose sharply, increasing 11% to US$27.40/lb U3O8. The company reported that transactional volumes increased significantly to 9.0 million lbs (U3O8) and reported record number of monthly transections.

YCA stock is trading at GBX 203.00, down 1.22%, on June 15 as at 2:55 PM GMT. The stock has posted a year to date return of negative 1.67% with the 52-week high and low at GBX 228.00 and GBX 148.20, respectively.

Pressure Technologies Plc

Pressure Technologies (LON:PRES) is a leading designer and manufacturer of high-pressure, safety-critical components and systems, serving the global defence, energy and industrial gases market. Headquartered in Sheffield, England, Pressure Technologies is an AIM listed group that operates through two manufacturing divisions over five sites with over 220 people across the UK and Europe.

The group’s overall revenue increased by 34% to £28.3 million in FY2019 (2018: £21.2 million) and the adjusted operating profit for the period increased to £2.2 million (2018: £1.0 million). This improvement represents an increase in return on revenue to 8% (2018: 5%) and reflects, in particular, the strength of UK and overseas defence projects in Pressure Technologies’ Chesterfield Special Cylinders division (CSC). Under this project, the group has already identified savings and are expected to deliver margin improvements for the UK and export projects from 2020.

Outlook: Pressure Technologies reported ‘the current trading performance, order intake and strategic progress made in both divisions giving the Board confidence in the outlook for 2020.’

PRES stock last traded at GBX 88.00, remaining unchanged on June 15 as at 2:55 PM GMT, with the year to date return standing at negative 25.11%. The 52-week range of the stock is recorded at GBX 143.50 and GBX 82.50, respectively.

Marlowe Plc (LON:MRL)

As per the trading statement for the year ended 31 March 2020, Marlowe Plc continued to make strong progress in the period, with substantial revenue growth of 44% to approximately £185 million. Its organic growth rose to 7% driven by a combination of improved customer retention, strong new business sales, and successes with the group's cross-selling strategy.

The company has completed eight acquisitions in the year, deepening its presence in existing markets as well as broadening its safety and compliance capabilities into both HR and employment law compliance and occupational health. Further, the integration of Clearwater, acquired by Marlowe in May 2019, made strong progress during the year with synergies delivered in line with the company’s expectations.

Marlowe confirmed a robust financial position with net debt of £32.4 million on 31 March 2020. However, the company has experienced disruption in its business due to COVID-19 as its staff were unable to gain access to certain client sites in order to complete contracted work.

Going forward, Marlowe expects its health, safety and compliance service sectors to remain in sharp focus that could potentially provide the growth opportunities for the group in the current year.

On 29 May 2020, Marlowe announced acquisition of Deminos Consulting Limited which provides subscription-based HR & employment law compliance services to a range of small and medium enterprises (SMEs) across the UK.

MRL stock was trading at GBX 472.50, down 1.77%, on June 15 as at 2:56 PM GMT. The stock has posted a 52-week high and low at GBX 510 and GBX 319, respectively.

Iomart Group Plc

In a pre-close trading statement, Iomart Group Plc (LON:IOM) reported its expectation to achieve the revenue of approximately £112 million for the year ended 31 March 2020 as compared to £103.7 million in FY19, adjusted EBITDA to be approximately £43 million as compared to £42.2 million in FY19 and the adjusted profit before tax to be around £22.5 million as compared to £25.5 million in FY19.

The cloud-computing company iomart completed two acquisitions during the second half of the year, including the managed private cloud division of privately owned ServerChoice Limited, and Memset Limited, both reportedly expected to be immediately earnings enhancing. In COVID-19 scenario, the reliance on virtual work system has increased the relevance of Cloud, which perhaps could provide a strong momentum in iomart business.

CEO Angus MacSween stated that while trading may be impacted in the coming months, iomart is set to gain advantage from high levels of recurring revenue, a robust balance sheet and a wide customer base.

Iomart stock was trading at GBX 361.50, up 1.12%, on June 15 as at 2:58 PM GMT. The 52-week high and low of the stock are recorded at GBX 405.00 and GBX 229.00, respectively.