Increasing Returns to Scale – Louth Online http://louthonline.com/ Fri, 18 Nov 2022 22:07:25 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 http://louthonline.com/wp-content/uploads/2021/03/louthonline-icon-70x70.png Increasing Returns to Scale – Louth Online http://louthonline.com/ 32 32 Just Eat Takeaway: Need first aid with sustained money consumption http://louthonline.com/just-eat-takeaway-need-first-aid-with-sustained-money-consumption/ Fri, 18 Nov 2022 20:40:00 +0000 http://louthonline.com/just-eat-takeaway-need-first-aid-with-sustained-money-consumption/

petekarici/iStock Unreleased via Getty Images

Investment thesis

Just eat takeout (OTCPK:JTKWY) (OTCPK: TKAYF) Q1-3 FY 2012/2022 results highlighted slowing customer activity with lower orders and pressure on cost inflation. With cash burn and a leveraged balance sheet, management seeks cash with asset sales, demonstrating that the business model cannot sustainably generate shareholder value. We have a sell rating on the stock.

quick primer

Just Eat Takeaway is an online food ordering and delivery service headquartered in Amsterdam, operating in 22 countries and serving 94 million customers. The company was formed from a merger between Takeaway and Just Eat in January 2020, and the acquisition of GrubHub for $7.3 billion in June 2021. Its primary geographic markets are North America, Western Europe North, UK and Ireland.

Key peers include Delivery Hero (OTCPK: DLVHF), Deliveroo (OTCPK: DROOF), DoorDash(DASH), and Uber Eat (UBER).

Key financial data with consensus forecasts

Key financial data with consensus forecasts

Key financial data with consensus forecasts (Enterprise, Refinitiv)

Our goals

Shares of Just Eat Takeaway have corrected 58% year-to-date, in line with its peer group, as it saw accelerating year-over-year losses and overspending on acquisition by Grubhub. After a profile of cash consumption during the 2012/2021 financial year and a consensus expecting this situation to continue during the 2012/2023 financial year, we wish to assess whether there are fundamental reasons for investing in stocks.

Chart
Data by Y-Charts

A return on investment?

From the company Q3 FY12/2022 The business update highlights that the company’s Adjusted EBITDA is turning profitable sooner than expected, following a period of significant investment in the business. This led the company to update its guidance for H2 FY12/2022 for positive adjusted EBITDA, compared to the previous guidance range of minus 0.5% to minus 0.7% of gross transaction value. . A positive margin is better than a negative margin, but overall it conveys very little good news given its non-GAAP adjusted status. Underlying trends are negative, with third quarter orders down 11% YoY and gross deal value down 5% YoY at constant exchange rates – geographically only Northern Europe recorded growth, with the key North American market down 8% year-on-year, and the UK and Ireland down. by 5%.

The first half of FY 2012/2022 demonstrated cost inflation pressures, with operating costs visibly increasing year-over-year in courier costs (+32%), personnel costs (+86% ) and other operating expenses (+53% year-on-year). Although year-over-year comparisons are skewed by the acquisition of GrubHub, it nevertheless highlights that increased sales volume does not generate positive returns. We expect trading conditions to deteriorate in the second half of the 2012/2022 financial year, with the cost of living crisis having a major impact on the UK economy, as well as southern Europe.

Management is now steering a slowdown in gross deal value to low-single-digit year-on-year growth. This deterioration in fundamentals is a concern for the solvency of the company, and the asset sale activities highlight this problem. The balance sheet looks quite strong with a leverage ratio of 0.2x in FY12/2021. However, a closer look shows that more than 50% of equity is made up of intangible Grubhub assets that have questionable value – this has already been reduced from €8.3 billion to €5.5 billion. in the first half of the 2012/2022 financial year – clearly the acquisition was overvalued. The sale of iFood to raise €1.8 billion in cash shows the underlying weakness of the business, and further exploration of a partial or full sale of Grubhub will be a double-edged sword. as further intangible impairments will be crystallized, further reducing equity.

It would appear that the generation of positive free cash flow in fiscal year 2012/2020 was ad hoc. Accounting profit is a fiction, but money is money, and no amount of restatement of the numbers will hide the fact that the company remains in a very bad state.

A decelerating growth profile

Management talks about being well capitalized and positioned to capture profitable future growth. The consensus does not seem to share this view, estimating a decelerating sales growth profile (which will be exacerbated by any sale of assets to maintain liquidity), and a continuation of operating losses for the next two years. A positive free cash flow is estimated for the financial year 2012/2024, but hardly makes a noticeable difference in the indebtedness.

The €2.1 billion bonds currently outstanding will have their first maturity in 2024 of €250 million, followed by €600 million in 2025. These could be covered by the sale of iFood which is preferable to refinancing as borrowing costs have increased. However, debt servicing will need to be balanced against the company’s cash depleted state – and given the company’s poor track record, we expect to see minimal cash generation over the medium term.

To focus on survival, we believe the company will start to pull out of the markets – this has already started with discontinued operations in Norway, Portugal and Romania. We expect to see more releases in southern European markets, and continued loss of market share in key markets such as the UK where “super-apps” such as Uber continue to grow.

If a cash burn pattern persists, the business will face going concern questions as many of its restaurant partners face difficulties – a recent survey found that more than a third of businesses UK hotel businesses, including pubs, restaurants and hotels, could go bankrupt early next year.

Evaluation

Without earnings, free cash flow and dividends, stocks are not undervalued. A PBR of 0.4x seems to show strong value, but we noted that equity is at risk due to future impairment of Grubhub’s intangible assets.

Risks

The upside risk comes from the Grubhub divestment which raises sufficient cash to provide sufficient runway to rebuild the business. The company could eventually put itself up for sale if business conditions deteriorate.

Downside risk arises from a significant deterioration in trading conditions in the UK, Southern Europe and parts of North America, resulting in lower gross transaction values ​​and commissions. An inflationary increase in operating expenses will lower profitability or result in long-lasting losses and cash burn.

Conclusion

Just Eat Takeaway operates a low return business, with scale being the only way to gain competitive advantage. Acquiring scale with Grubhub has been too costly, the business environment is about to deteriorate from both a demand and cost perspective, and the company is set back to access liquidity. We price stocks as a sell.

Editor’s Note: This article discusses one or more securities that do not trade on a major US exchange. Please be aware of the risks associated with these actions.

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Dubai takes the top spot as a location for branded residences in S… http://louthonline.com/dubai-takes-the-top-spot-as-a-location-for-branded-residences-in-s/ Wed, 16 Nov 2022 20:21:10 +0000 http://louthonline.com/dubai-takes-the-top-spot-as-a-location-for-branded-residences-in-s/ (MENAFN– Middle East.Info)

  • Global growth in the branded residences sector is expected to continue, with the Middle East leading the charge thanks to pipeline growth

  • By scale of increase in the current offering of branded residency programs, Egypt, Saudi Arabia, Cyprus, Qatar and Costa Rica each saw growth of over 300%

Dubai: South Florida and New York are the top three locations for branded residences globally, based on their supply of completed and ongoing projects, says real estate adviser Savills in its latest Spotlight on Branded Residences . These areas have well-established luxury real estate markets and attract a range of domestic and international buyers for both commercial and cultural activities.

Top hotspots for branded residency programs

Completed and current pipeline

Branded residences, as a real estate industry, have proven incredibly resilient in the face of global uncertainty and change. Over the past 10 years, the sector has grown by more than 150% and the pipeline of future branded residences remains strong. Today, there are 640 systems, representing nearly 100,000 units, operating on every continent except Antarctica. Supply levels are expected to exceed 1,100 systems by 2027, nearly doubling current levels.

Riyan Itani, Head of Global Residential Development Consulting, Savills , said: “After several years of evolution, the branded residences sector has proven to be resilient and adaptable to adverse market conditions, offering security and reliable quality to buyers and attractive returns to developers and brands. With a strong and geographically diverse pipeline, as well as the continued commitment of developers and brands to the sector, the sector should continue to grow in the short term.

In the Middle East and Asia-Pacific, growth hotspots, both in terms of pure economic growth and wealth creation, are attracting more interest and development from global brands. Regions have seen respective increases of 400% and 216% in their plan supply levels over the past decade. Global growth in the branded residences sector is expected to continue, with the Middle East leading the charge thanks to pipeline growth. Across the region, current supply is expected to increase by 86% by the end of the forecast period. Central and South America (71%) ranks second in terms of supply growth and Europe (55%) rounds out the top three fastest growing locations.

By pipeline volume, the United States, United Arab Emirates, Vietnam and Mexico are expected to add the most systems – over 30 systems in each country over the forecast period, with the United States expected to add more than 70 systems. By scale of current supply increase, Egypt, Saudi Arabia, Cyprus, Qatar and Costa Rica lead the way, each with over 300% growth, further illustrating the increasing trend investments in brands in the Middle East and Central and South America. .

Swapnil Pillai, Associate Director – Research, Savills Middle East said, “Brands around the world are looking for new locations to expand their portfolios and globally mobile, affluent people will continue to drive demand for branded residences. Developers and brands jointly identify HNWI growth hotspots to enrich their offer. Over the past five years, the highest growth rates in terms of the number of HNWIs have been observed in North America (53%), followed by the Middle East (34%) and Asia-Pacific (31 %). This is consistent with our observations of the largest increase in branded residence stock over the same period.

“Going forward, the Middle East is expected to experience a sharp increase in the number of HNWIs over the next five years. The United Arab Emirates is expected to see a 22% increase in the number of affluent households, while Saudi Arabia (13%), Kuwait (51%) and Qatar (22%) are also expected to experience healthy growth in the number of wealthy households. wealthy households. wealthy residents. This bodes well for the market for branded residential developments in the region.

While still high, growth in branded residential development in prime locations in Dubai, South Florida and New York is slowing as many brands seek expansion opportunities in emerging cities and resort locations, according to the report.

Of the top 15 locations, 10 of them are resort destinations or emerging destinations, demonstrating how diversified the branded residence sector has become. Cities and resorts in emerging markets such as Phuket, the Caribbean and Mexico are climbing the rankings as buyers seek additional residences in vacation and seasonal areas. These locations are led by luxury and non-luxury brand developments

Top Players by Pipeline Completion and Supply

Parent companies and parent groups, with a large number of brands under their umbrella, continue to compete for market share and brand recognition. Marriott International remains comfortably at the top of the hotel parent company rankings, where it has been since 2002. However, in recent years there have been rising stars and new entrants to the market, both in terms of type and location of hotel. the parent brand. Accor, for example, ranks third in number of properties completed in 2022, dropping from fifth place in 2021.

Non-American brands such as Emaar and Banyan Tree have become global competitors. As more and more residents of regions other than North America and Europe move up the wealth ladder, the demand for branded products that can meet their needs will increase.

For non-hotel brands, there is more activity and jostling for position compared to hotel parent brands, but YOO remains at the top of the charts. From established players in design, fashion, golf and wealth brands to new entrants in automotive, music and art brands, such as the recently announced Louvre Residences in Abu Dhabi, growth non-hotel brands demonstrates that buyers do not appear to be limited to traditional hotel offers. Brands such as Mahindra (Pininfarina), LightArt and DAMAC

(Roberto Cavalli) will move up the rankings in the future.

Fast-growing economies such as Brazil, the United Arab Emirates and India are leading the pack for the non-hotel pipeline, with each country forecasting growth of more than 70% in the non-hotel brand program from existing levels. current supply. The lifestyles offered by these non-hotel brands, and the fact that there are fewer existing residences, offer the perfect combination for trophy assets for the growing number of high net worth individuals.

About Savills

Savills plc is a global property services provider listed on the London Stock Exchange. Present in the Middle East for over 40 years, Savills offers a wide range of specialist advisory, management and transaction services in the United Arab Emirates, Oman, Bahrain, Egypt and Saudi Arabia. Expertise includes property management, residential and commercial agency services, property and commercial asset valuation, and investment and development advice. Originally founded in the UK in 1855, Savills has an international network of over 600 offices and associates employing 39,000 people across the Americas, UK, Europe, Asia-Pacific, Africa and the Middle East.

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MPC Capital Releases Nine-Month 2022 Figures and Significantly Raises Full-Year 2022 Guidance http://louthonline.com/mpc-capital-releases-nine-month-2022-figures-and-significantly-raises-full-year-2022-guidance/ Mon, 14 Nov 2022 09:36:02 +0000 http://louthonline.com/mpc-capital-releases-nine-month-2022-figures-and-significantly-raises-full-year-2022-guidance/ EQS-Ad-hoc: MPC Münchmeyer Petersen Capital AG / Keyword(s): Change in 9-month forecast/figures
MPC Capital Releases Nine-Month 2022 Figures and Significantly Raises Full-Year 2022 Guidance

14-Nov-2022 / 10:33 CET/CEST
Disclosure of privileged information according to. in Article 17 MAR of Regulation (EU) No 596/2014, transmitted by EQS News – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

DISCLOSURE OF INDOOR INFORMATION ACC. TO ARTICLE 17 MARCH

MPC Capital Releases Nine-Month 2022 Figures and Significantly Raises Full-Year 2022 Guidance

– Very positive operational development in the first nine months of 2022
– Annual forecast for EBT adj. increased to approximately €15.0 million
– Sustained interest in real estate investments linked to the energy transition

Hamburg, November 14, 2022 – MPC Münchmeyer Petersen Capital AG (“MPC Capital”, Deutsche Börse Scale, ISIN DE000A1TNWJ4), Hamburg-based asset and investment manager, has increased its consolidated revenue to 27.1 million euros in the first nine months of the 2022 financial year, increasing from 24.6 million euros the previous year. Management fees amounted to €21.2 million (9M 2021: €20.3 million), transaction fees to €5.7 million (9M 2021: €4.1 million euros).

Consolidated profit before tax (EBT) amounted to 28.8 million euros after the first nine months of 2022. Operating EBT adjusted for the proceeds from the sale of the Dutch real estate business (EBT adj.) s amounted to 12.3 million euros. During the same period of the previous year, MPC Capital generated an EBT of 5.1 million euros. The EBT (adjusted) margin has therefore improved significantly, from 21% the previous year to 45% in the first nine months of 2022.

Cash and cash equivalents (cash and bank balances) increased to €57.7 million as of September 30, 2022 (December 31, 2021: €38.5 million). The equity ratio was 82% (31 December 2021: 75%).

Significant increase in earnings forecasts

Despite difficult economic and geopolitical conditions, the positive development of activity in the first half of 2022 continued in the second half above the assumptions on which the initial forecast was based. EBT adj. after nine months was already above the full-year 2022 guidance range, and further earnings contributions are expected for the fourth quarter of 2022.

In this context, the Management Board has decided to significantly increase the EBT adj. guidance for the full year 2022 from the initial range of EUR 8.0 million to EUR 12.0 million to approximately EUR 15.0 million. The consolidated revenue forecast for 2022 remains unchanged.

The positive outlook and increased earnings forecast is primarily due to the continued high earnings contribution from the co-investment portfolio, which includes both steady investment returns and realized exit earnings. In addition, MPC Capital benefits from an ever-growing interest in real estate investments linked to the energy transition. For example, MPC Capital was able to launch long-term investment projects for methanol-powered container ships in the third quarter of 2022. The demand for renewable energy projects also remains high.

Substantial dividend growth expected

The Management Board intends to pay approximately half of the Group’s net profit after tax and minority interests, adjusted for the proceeds from the sale of the Dutch real estate business, to shareholders as a dividend. This would represent a significant increase compared to the dividend for the 2021 financial year. The Management Board will propose the exact amount of the dividend when presenting the 2022 consolidated accounts in the spring of 2023.

Note: Figures for the third quarter and first nine months of 2022 have not been audited or revised.

This release contains forward-looking statements that are subject to certain risks and uncertainties. Future results could differ materially from those currently anticipated due to various risk factors and uncertainties, including, among others, changes in business, economic and competitive conditions, exchange rate fluctuations, uncertainties in litigation or investigative procedures and availability of funding. MPC Capital AG assumes no responsibility for updating the forward-looking statements contained in this release.

Contact person and discloser in accordance with article 17 of MAR

MPC Capital SA
Stefan Zenker
Head of Investor Relations and Public Relations
Such. +49 40 38022-4347
Email: s.zenker@mpc-capital.com

About MPC Capital AG (www.mpc-capital.com)

MPC Capital is a global asset and investment manager for real estate assets in the areas of real estate, renewable energy and maritime transport. Its range of services includes the selection, initiation, development and structuring of investments, through active management to divestment. With approximately 170 employees and over 25 years of experience, MPC Capital offers institutional investors access to investments in selected markets with attractive growth and return opportunities. As a responsible and family-owned company, listed on the stock exchange since 2000, MPC Capital contributes to meeting the financing needs to achieve the global climate objectives.

14-Nov-2022 CET/CEST EQS distribution services include regulatory announcements, financial/corporate news and press releases.
Archives on www.eqs-news.com

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LIFESTANCE HEALTH GROUP, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q) http://louthonline.com/lifestance-health-group-inc-management-report-and-analysis-of-the-financial-situation-and-operating-results-form-10-q/ Wed, 09 Nov 2022 21:33:18 +0000 http://louthonline.com/lifestance-health-group-inc-management-report-and-analysis-of-the-financial-situation-and-operating-results-form-10-q/
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes appearing elsewhere in this Quarterly Report on
Form 10-Q and our audited financial statements and the accompanying notes as
well as "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in our Annual Report on Form 10-K
for the year ended December 31, 2021. Some of the information contained in this
discussion and analysis or set forth elsewhere in this Quarterly Report on Form
10-Q, including information with respect to our plans and strategy for our
business, includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, including those factors set forth
under "Risk Factors" Part II, Item 1A in this Quarterly Report on Form 10-Q as
well as those discussed in the Annual Report on Form 10-K for the year ended
December 31, 2021, our actual results could differ materially from the results
described in or implied by the forward-looking statements contained in the
following discussion and analysis.

LifeStance Health Group, Inc. was formed as a Delaware corporation on January
28, 2021 for the purpose of completing an initial public offering ("IPO") and
related transactions in order to carry on the business of LifeStance TopCo, L.P.
("LifeStance TopCo") and its consolidated subsidiaries and affiliated practices.
LifeStance Health Group, Inc. wholly-owns the equity interest of LifeStance
TopCo and operates and controls all of the business and affairs and consolidates
the financial results of LifeStance TopCo and its wholly owned subsidiaries and
affiliated practices. Unless the context otherwise indicates or requires, the
terms "LifeStance Health Group", "LifeStance Health", "LifeStance", "we", and
"our" as used herein refer to LifeStance Health Group and its consolidated
subsidiaries and affiliated practices.

Our business


We are dedicated to improving the lives of our patients by reimagining mental
health through a disruptive, tech-enabled in-person and virtual care delivery
model built to expand access and affordability, improve outcomes and lower
overall health care costs. We are one of the nation's largest outpatient mental
health platforms based on the number of clinicians we employ through our
subsidiaries and our affiliated practices and our geographic scale, employing
5,431 licensed mental health clinicians as of September 30, 2022. We combine a
personalized, digitally-powered patient experience with differentiated clinical
capabilities and in-network insurance relationships to fundamentally transform
patient access to mental health treatment. By revolutionizing the way mental
health care is delivered, we believe we have an opportunity to improve the lives
and health of millions of individuals.

Our model is designed to empower each of the key stakeholders in the healthcare ecosystem – patients, clinicians, payers, and specialist and primary care physicians – in alignment with our shared goal of delivering better outcomes for patients and to provide high quality mental health care.

Patients - We are the front-door to comprehensive outpatient mental health care.
Our clinicians offer patients comprehensive services to treat mental health
conditions across the clinical spectrum. Our in-network payor relationships
improve patient access by allowing patients to access care without significant
out-of-pocket cost or delays in receiving treatment. Our personalized,
data-driven comprehensive care meets patients where they are, through convenient
virtual and in-person settings. We support our patients throughout their care
continuum with purpose-built technological capabilities, including online
assessments, digital provider communication, and seamless internal referral and
follow-up capabilities.

Clinicians - We empower clinicians to focus on patient care and relationships by
providing what we believe is a superior workplace environment, as well as
clinical and technology capabilities to deliver high-quality care. We offer a
unique employment model for clinicians in a collaborative clinical environment,
employing our clinicians through our subsidiaries and affiliated practices. Our
integrated platform and national infrastructure reduce administrative burdens
for clinicians while increasing engagement and satisfaction.

Payors - We partner with payors to deliver access to high-quality outpatient
mental health care to their members at scale. Long-term analyses demonstrate
that $1 spent on collaborative mental health care saves $6.50 in total medical
costs, representing a compelling opportunity for us to drive improved health
outcomes and significant cost savings. Through our validated patient outcomes
and extensive scale, we offer payors a pathway to achieving these savings in the
broader healthcare system.

Primary care and specialist physicians - We collaborate with primary care and
specialist physicians to enhance patient care. Primary care is an important
setting for the treatment of mental health conditions-primary care physicians
are often the sole contact for patients with a mental illness. We partner with
primary care physicians and specialist physician groups across the country to
provide a mental healthcare network for referrals and, in certain instances,
through co-location to improve the diagnosis and treatment of their patients.
Our measurable patient outcomes also provide primary care and specialist
physicians with a valuable, validated treatment path to improve the overall
health of our mutual patients.

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Impact of COVID-19


With the COVID-19 pandemic placing an unprecedented strain on daily life,
existing trends in mental health care have worsened dramatically since the
beginning of the pandemic. The pandemic and post-pandemic measures have resulted
in dramatically increasing stressors and leading to poorer overall mental and
physical health.

While the impact of the COVID-19 pandemic has increased stressors associated
with mental health, we believe that a combination of factors contribute to our
total patient visits and related revenue, including, among others, long-term
trends in reduced stigmatization of mental health. Even before the pandemic, we
saw the need to have a platform supported by leading technology to give us the
ability to treat patients virtually or in-person.

We believe COVID-19 represents a paradigm shift in the importance of and focus
on mental health care. We have seen significant increase in patient demand as
well as payor and employer adoption of mental health coverage options during the
pandemic and it is now integrated into health care offerings more than ever
before. However, as the pandemic has surged and waned, we believe there has been
some impact on our operations due to patient and clinician illness, resulting in
cancellations of appointments, deferrals and fewer appointments initially
scheduled.

Key Factors Affecting Our Results

Increase center capacity and visits to existing centers

We have built a powerful organic growth engine that allows us to drive growth within our existing footprint.

Our clinicians


As of September 30, 2022, we employed 5,431 psychiatrists, advanced practice
nurses, psychologists and therapists through our subsidiaries and affiliated
practices. We generate revenue on a per visit basis as clinical services are
rendered by our clinicians. As our existing centers mature, we grow our physical
capacity by leveraging our hybrid clinical model to increase our average
clinicians per center, effectively expanding the four walls of our centers.
Recruiting new clinicians and retaining existing clinicians in our existing
centers enables us to see more patients per center by expanding our patient
visit capacity. We believe our fully employed model offers a superior value
proposition compared to independent practice. Our network relationships provide
clinicians with ready access to patients. We also enable clinicians to manage
their own patient volumes. Our platform promotes a clinically-driven
professional culture and streamlines patient access and care delivery, while
optimizing practice administration processes through technology. We believe we
are an employer of choice in mental health, allowing us to employ highly
qualified clinicians.

We believe we have significant opportunity to grow our employed clinician
base-we estimate there are approximately 650,000 mental health clinicians in the
United States, providing us with a meaningful runway to grow from our current
base of 5,431 clinicians employed through our subsidiaries and affiliated
practices, as of September 30, 2022. To capitalize on this opportunity, we have
developed a rigorous and exclusive in-house national clinician recruiting model
that works closely with our regional clinical teams to select the best
candidates and fulfill capacity in a timely manner. As we grow our clinician
base, we can grow our business, expand access to our patients and our payors and
invest in our platform to further reinforce our differentiated offering to
clinicians. We have available physical capacity to add clinicians to our
existing centers, as well as an opportunity to add new clinicians with the
roll-out of de novo centers and acquire additional clinicians through our
acquisition strategy. Our virtual care offering also allows clinicians to see
more patients without investments in incremental physical space, expanding our
patient visit capacity beyond in-person only levels.

Our patients


We believe our ability to attract and retain patients to drive growth in our
visits and meet the availability of our clinician base will enable us to grow
our revenue. We believe we have a significant opportunity to increase the number
of patients we serve in our existing markets. In 2021, our clinicians treated
more than 570,000 unique patients through 4.6 million visits. We believe our
ability to deliver more accessible, flexible, affordable and effective mental
health care is a key driver of our patient growth. We believe we provide a
superior and differentiated mental health care experience that integrates
virtual and in-person care to deliver care in a convenient way for our patients,
meeting our patients where they are. Our in-network payor relationships allow
our patients to access care without significant out-of-pocket cost or delays in
receiving treatment. We treat mental health conditions across the clinical
spectrum through a clinical approach that delivers improved patient outcomes. We
support our patients throughout their care continuum with purpose-built
technological capabilities, including online assessments, digital provider
communication, and seamless internal referral and follow-up capabilities.

We utilize multiple strategies to add new patients to our platform, including
our primary care and specialist physician relationships, internal referrals from
our clinicians, our payor relationships and our dedicated marketing efforts. We
have established a large network of national, regional and local payors that
enables their members to be referred to us as patients. Payors refer patients to
our platform to drive improvement in health outcomes for their members,
reduction in total medical costs and increased member satisfaction and
retention. Within our markets, we partner with primary care practice groups,
specialists, health systems and academic institutions to refer patients to our
centers and clinicians. Our local marketing teams build and maintain
relationships with our

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referring partner networks to create awareness of our platform and services,
including the opening of new centers and the introduction of newly hired
clinicians with appointment availability. We also use online marketing to
develop our national brand to increase brand awareness and promote additional
channels of patient recruitment.

Our primary care and medical specialist referral relationships


We have built a powerful patient referral network through partnerships with
primary care physicians and specialist physician groups across the country. We
deliver value to our provider partners by offering a more efficient referral
base, delivering improved outcomes for our mutual patients, and enabling more
integrated care and lower total health care costs. As we continue to scale
nationally, we plan to partner with additional hospital systems, large primary
care groups and other specialist groups to help streamline their mental health
network needs and drive continued patient growth across our platform. Our vision
over time is to further integrate our mental health care services with those of
our medical provider partners. By co-locating and driving towards integration
with primary care providers, we can enhance our clinician's access to patients.
We anticipate that we will continue to grow these relationships while evolving
our offering toward a fully-integrated care model in which primary care and our
mental health clinicians work together to develop and provide personalized
treatment plans for shared patients. We believe these efforts will help to
further align our model with that of other health care providers, increasing our
value to them and driving new opportunities to partner to grow our patient base.

Our payers


Our payor relationships, including national contracts with multiple payors,
allow payors access to our services through in-network coverage for their
members. We believe the alignment of our model with our payor partners'
population health objectives encourages third-party payors to partner with us.
We believe we deliver value to our payor partners in several ways, including
access to a national clinician employee base, lower total medical costs,
measurable outcomes, and stronger member and client value proposition through
the offering of in-network mental health services. The strength of our payor
relationships and our value proposition allowed us to secure rate parity between
in-person and virtual visits, either by contract or payor policy. To expand this
network and grow access to covered patients, we continue to establish new payor
relationships and national contracts while also seeking to drive regional rate
improvement for our patients and clinicians. We believe our payor relationships
differentiate us from our competitors and are a critical factor in our ability
to expand our market footprint in new regions by leveraging our existing
national payor relationships. As we continue to grow, we believe our scale,
breadth and access will continue to be enhanced, further strengthening the value
of our platform to payors.

Expand our central base in existing and new markets


We believe we have developed a highly replicable playbook that allows us to
enter new markets and pursue growth through multiple vectors. We typically
identify new markets based on the core characteristics of patient population
demographics, substantial clinician recruiting opportunities, untreated patient
communities and a diverse group of payors. To enter new markets, we seek to open
de novo centers or acquire high-quality practices with a track record of
clinical excellence and in-network payor relationships. Once we enter a new
market, our powerful organic growth engine drives our growth through de novo
openings, center expansions, clinician recruiting and tuck-in acquisitions. We
anticipate focusing on continued expansion, both in our existing markets and in
new geographies, where mental health care remains a large unmet need.

De Novo Constructions


Our de novo center strategy is a central component of our organic growth engine
to build our capacity and increase density in our existing MSAs. From our
inception in 2017 through September 30, 2022, we have successfully opened 307 de
novo centers, including 81 de novo centers in 2022, 106 de novo centers in 2021
and 78 de novo centers in 2020. We believe there is a significant opportunity to
use de novo center openings to address potential patient need in our existing
markets and new markets that we have determined are attractive to enter. We
systematically locate our centers within a given market to ensure convenient
coverage for in-person access to care. We believe our successful de novo program
and national clinician recruiting team can support additions of new centers and
clinicians.

In 2021, we transitioned to a more sustainable design for all new de novo centers that reimagine the mental health care experience for patients and clinicians while reinforcing our commitment to sustainability.

Acquisitions


We have built a proprietary pipeline of acquisition targets, providing us with
significant opportunities to scale through potential acquisitions. We believe
the highly fragmented nature of the mental health market provides us with a
meaningful opportunity to execute on our acquisition playbook. We seek to
acquire select practices that meet our standards of high-quality clinical care
and align with our mission. We believe our guiding principle of creating a
national platform built with a patient and clinician focus makes us a partner of
choice for smaller, independent practices. Our acquisition strategy is deployed
both to enter new markets and in our existing markets. In new markets,
acquisitions allow us to establish a presence with high-quality practices with a
track record of clinical excellence and in-network payor relationships that can
be integrated into our national platform. In existing markets, acquisitions
allow

                                       24
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us to grow our geographic reach and clinician base to expand patient access. For
newly acquired centers, we typically fully integrate them into our operational
and technology infrastructure within four to six months following an
acquisition.

Center margin


As we grow our platform, we seek to generate consistent returns on our
investments. See "-Key Metrics and Non-GAAP Financial Measures-Center Margin"
for our definition of Center Margin and reconciliation to loss from operations.
We believe this metric best reflects the economics of our model as it includes
all direct expenses associated with our patients' care. We seek to grow our
Center Margin through a combination of (i) growing revenue through clinician
hiring and retention, patient growth and engagement, hybrid virtual and
in-person care, existing office expansion, and in-network reimbursement levels,
and (ii) leveraging on our fixed cost base at each center. For acquired centers,
we also seek to realize operational, technology and reimbursement synergies to
drive Center Margin growth.

Investments in Growth

We will continue to focus on long-term growth through investments in our centers
and technology. In addition, we expect our general and administrative expenses
to increase in the foreseeable future due to our planned investments in growth
initiatives and public company infrastructure.

Key Indicators and Non-GAAP Financial Measures


We evaluate the growth of our footprint through a variety of metrics and
indicators. The following table sets forth a summary of the key financial
metrics we review to evaluate our business, measure our performance, identify
trends affecting our business, formulate our business plan and make strategic
decisions:

                                      Three Months Ended September 30,      

Nine month period ended September 30,

                                        2022                   2021                  2022                   2021
(in thousands)
Total revenue                      $       217,560       $         173,835     $        630,182       $        477,516
Revenue growth                                  25 %                    70 %                 32 %                    *
Loss from operations                       (38,839 )              (124,668 )           (164,162 )             (172,594 )
Center Margin                               60,293                  52,052              174,325                147,258
Net loss                                   (37,853 )              (120,452 )           (168,908 )             (199,167 )
Adjusted EBITDA                             15,379                  10,694               42,493                 37,813

* Denotes not significant due to lack of comparability between partial periods.


Center Margin and Adjusted EBITDA are not measures of financial performance
under GAAP and are not intended to be substitutes for any GAAP financial
measures, including revenue, loss from operations or net loss, and, as
calculated, may not be comparable to companies in other industries or within the
same industry with similarly titled measures of performance. Therefore, non-GAAP
measures should be considered in addition to, not as a substitute for, or in
isolation from, measures prepared in accordance with GAAP.

Center margin


We define Center Margin as loss from operations excluding depreciation and
amortization and general and administrative expenses. Therefore, Center Margin
is computed by removing from loss from operations the costs that do not directly
relate to the delivery of care and only including center costs, excluding
depreciation and amortization. We consider Center Margin to be an important
measure to monitor our performance relative to the direct costs of delivering
care. We believe Center Margin is useful to investors to measure whether we are
sufficiently controlling the direct costs of delivering care.

Center Margin is not a financial measure of, nor does it imply, profitability.
The relationship of loss from operations to center costs, excluding depreciation
and amortization is not necessarily indicative of future profitability from
operations. Center Margin excludes certain expenses, such as general and
administrative expenses, and depreciation and amortization, which are considered
normal, recurring operating expenses and are essential to support the operation
and development of our centers. Therefore, this measure may not provide a
complete understanding of the operating results of our Company as a whole, and
Center Margin should be reviewed in conjunction with our GAAP financial results.
Other companies that present Center Margin may calculate it differently and,
therefore, similarly titled measures presented by other companies may not be
directly comparable to ours. In addition, Center Margin has limitations as an
analytical tool, including that it does not reflect depreciation and
amortization or other overhead allocations.

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The following table provides a reconciliation of operating loss, the most comparable GAAP financial measure, to central margin:


                                      Three Months Ended September 30,      

Nine month period ended September 30,

                                        2022                   2021                  2022                   2021
(in thousands)
Loss from operations               $       (38,839 )     $        (124,668 )   $       (164,162 )     $       (172,594 )
Adjusted for:
Depreciation and amortization               17,884                  13,777               50,311                 38,779
General and administrative
expenses (1)                                81,248                 162,943              288,176                281,073
Center Margin                      $        60,293       $          52,052     $        174,325       $        147,258




(1)

Represents senior executive salaries, wages and benefits, finance, human resources, marketing, billing and accreditation support, and technology infrastructure, as well as stock- and share-based compensation. units for all employees.

Adjusted EBITDA


We present Adjusted EBITDA, a non-GAAP performance measure, to supplement our
results of operations presented in accordance with GAAP. We believe Adjusted
EBITDA is useful in evaluating our operating performance, and may be helpful to
securities analysts, institutional investors and other interested parties in
understanding our operating performance and prospects. Adjusted EBITDA is not
intended to be a substitute for any GAAP financial measure and, as calculated,
may not be comparable to companies in other industries or within the same
industry with similarly titled measures of performance. Therefore, our Adjusted
EBITDA should be considered in addition to, not as a substitute for, or in
isolation from, measures prepared in accordance with GAAP, such as net income or
loss.

We define Adjusted EBITDA as net loss excluding interest expense, depreciation
and amortization, income tax benefit, gain (loss) on remeasurement of contingent
consideration, stock and unit-based compensation, management fees, transaction
costs, offering related costs, CEO transition costs, litigation costs, and other
expenses. We include Adjusted EBITDA in this Quarterly Report because it is an
important measure upon which our management assesses, and believes investors
should assess, our operating performance. We consider Adjusted EBITDA to be an
important measure because it helps illustrate underlying trends in our business
and our historical operating performance on a more consistent basis.

However, Adjusted EBITDA has limitations as an analytical tool, including:

although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and Adjusted
EBITDA does not reflect cash used for capital expenditures for such replacements
or for new capital expenditures;

Adjusted EBITDA does not include dilution resulting from stock-based compensation or any cash outflows included in stock-based compensation, including our repurchases of outstanding common stock; and

Adjusted EBITDA does not reflect interest expense on our debt or cash requirements to service interest or principal payments.

                                       26
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A reconciliation of net loss to Adjusted EBITDA is presented below for the three
and nine months ended September 30, 2022 and 2021. We encourage investors and
others to review our financial information in its entirety, not to rely on any
single financial measure and to view Adjusted EBITDA in conjunction with net
loss.

                                    Three Months Ended September 30,        

Nine month period ended September 30,

                                         2022                2021               2022                   2021
(in thousands)
Net loss                            $       (37,853 )     $  (120,452 )   $       (168,908 )     $       (199,167 )
Adjusted for:
Interest expense                              4,189             3,503               14,763                 35,309
Depreciation and amortization                17,884            13,777               50,311                 38,779
Income tax benefit                           (4,353 )          (8,751 )            (10,106 )              (15,300 )
(Gain) loss on remeasurement of
contingent
  consideration                              (1,176 )             906                 (562 )                1,463
Stock and unit-based compensation
expense                                      34,870           120,689              152,235                150,809
Management fees (1)                               -                 -                    -                  1,445
Loss on disposal of assets                      144                 -                  144                      -
Transaction costs (2)                           210               126                  507                  3,656
Offering related costs (3)                        -                 -                    -                  8,747
Endowment to the LifeStance
Health Foundation                                 -                 -                    -                 10,000
CEO transition costs                            494                 -                  494                      -
Litigation costs (4)                            104                 -                  104                      -
Other expenses (5)                              866               896                3,511                  2,072
Adjusted EBITDA                     $        15,379       $    10,694     $         42,493       $         37,813


(1)
Represents management fees paid to certain of our executive officers and
affiliates of our Principal Stockholders pursuant to the management services
agreement entered into in connection with the TPG Acquisition. The management
services agreement terminated in connection with the IPO.
(2)
Primarily includes capital markets advisory, consulting, accounting and legal
expenses related to our acquisitions.
(3)
Primarily includes non-recurring incremental professional services, such as
accounting and legal, and directors' and officers' insurance incurred in
connection with the IPO.
(4)
Litigation costs include only those costs which are considered non-recurring and
outside of the ordinary course of business based on the following
considerations, which we assess regularly: (i) the frequency of similar cases
that have been brought to date, or are expected to be brought within two years,
(ii) the complexity of the case, (iii) the nature of the remedy(ies) sought,
including the size of any monetary damages sought, (iv) the counterparty
involved, and (v) our overall litigation strategy.
(5)
Primarily includes costs incurred to consummate or integrate acquired centers,
certain of which are wholly-owned and certain of which are affiliated practices,
in addition to the fees paid to former owners of acquired centers and related
expenses that are not reflective of the ongoing operating expenses of our
centers. Acquired center integration and other are components of general and
administrative expenses included in our unaudited consolidated statements of
operations and comprehensive loss. Former owner fees is a component of center
costs, excluding depreciation and amortization included in our unaudited
consolidated statements of operations and comprehensive loss. These costs are
summarized for each period in the table below:

                                       Three Months Ended September 30,     

Nine month period ended September 30,

                                        2022                      2021                 2022                     2021
(in thousands)
Acquired center integration (1)    $           641           $           755     $          1,854         $          1,670
Former owner fees (2)                           49                       106                  336                      262
Other (3)                                      176                        35                1,321                      140
Total                              $           866           $           896     $          3,511         $          2,072


(1)
Represents costs incurred pre- and post-center acquisition to integrate
operations, including expenses related to conversion of compensation model,
legacy system costs and data migration, consulting and legal services, and
overtime and temporary labor costs.
(2)
Represents short-term agreements, generally with terms of three to six months,
with former owners of acquired centers, to provide transition and integration
services.
(3)
Primarily includes severance expense unrelated to integration services.

                                       27
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Operating results

The following table provides a summary of our financial results for the three and nine months ended September 30, 2022 and 2021:


                                      Three Months Ended September 30,      

Nine month period ended September 30,

                                        2022                   2021                  2022                   2021
(in thousands)
TOTAL REVENUE                      $       217,560       $         173,835     $        630,182       $        477,516
OPERATING EXPENSES
Center costs, excluding
depreciation and
  amortization shown separately
below                                      157,267                 121,783              455,857                330,258
General and administrative
expenses                                    81,248                 162,943              288,176                281,073
Depreciation and amortization               17,884                  13,777               50,311                 38,779
Total operating expenses           $       256,399       $         298,503     $        794,344       $        650,110
LOSS FROM OPERATIONS               $       (38,839 )     $        (124,668 )   $       (164,162 )     $       (172,594 )
OTHER INCOME (EXPENSE)
Gain (loss) on remeasurement of
contingent
  consideration                              1,176                    (906 )                562                 (1,463 )
Transaction costs                             (210 )                  (126 )               (507 )               (3,656 )
Interest expense                            (4,189 )                (3,503 )            (14,763 )              (35,309 )
Other expense                                 (144 )                     -                 (144 )               (1,445 )
Total other expense                $        (3,367 )     $          (4,535 )   $        (14,852 )     $        (41,873 )
LOSS BEFORE INCOME TAXES                   (42,206 )              (129,203 )           (179,014 )             (214,467 )
INCOME TAX BENEFIT                           4,353                   8,751               10,106                 15,300
NET LOSS                           $       (37,853 )     $        (120,452 )   $       (168,908 )     $       (199,167 )


Total Revenue

Total revenue increased $43.8 million, or 25%, to $217.6 million for the three
months ended September 30, 2022 from $173.8 million for the three months ended
September 30, 2021. This was primarily due to an increase composed of $42.5
million of patient service revenue due to the increase in patient visits and
$1.3 million of nonpatient revenue.

Total revenue increased $152.7 million, or 32%, to $630.2 million for the nine
months ended September 30, 2022 from $477.5 million for the nine months ended
September 30, 2021. This was primarily due to an increase composed of $149.0
million of patient service revenue due to the increase in patient visits and
$3.7 million of nonpatient revenue.

Functionnary costs

Center costs, excluding amortization and depreciation


Center costs, excluding depreciation and amortization increased $35.5 million,
or 29%, to $157.3 million for the three months ended September 30, 2022 from
$121.8 million for the three months ended September 30, 2021. This was primarily
due to a $30.1 million increase in center-based compensation due to the increase
in clinicians and visits and a $5.4 million increase in occupancy costs
consisting of center rent and utilities and other operating expenses consisting
of office supplies and insurance due to the increase in centers.

Center costs, excluding depreciation and amortization increased $125.6 million,
or 38%, to $455.9 million for the nine months ended September 30, 2022 from
$330.3 million for the nine months ended September 30, 2021. This was primarily
due to a $105.2 million increase in center-based compensation due to the
increase in clinicians and visits and a $20.4 million increase in occupancy
costs consisting of center rent and utilities and other operating expenses
consisting of office supplies and insurance due to the increase in centers.

General and administrative expenses


General and administrative expenses decreased $81.7 million, or 50%, to $81.2
million for the three months ended September 30, 2022 from $162.9 million for
the three months ended September 30, 2021. This was primarily due to a decrease
of $83.7 million in salaries, wages and employee benefits, which included an
decrease of $85.8 million in stock and unit-based compensation expense primarily
relating to RSAs and the RSUs granted at the time of IPO and slightly offset by
increases of $1.1 million in occupancy costs and $0.9 million in other operating
expenses, including professional services and insurance.

General and administrative expenses increased $7.1 million, or 3%, to $288.2
million for the nine months ended September 30, 2022 from $281.1 million for the
nine months ended September 30, 2021. This was primarily due to increases of
$20.5 million in salaries, wages and employee benefits, which included an
increase of $1.4 million in stock and unit-based compensation expense and

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$4.6 million occupancy costs and slightly offset by a decrease in $18.0 million in other operating expenses, including professional services and insurance related to our IPO and contribution to the LifeStance Health Foundation.

Depreciation and amortization


Depreciation and amortization expense increased $4.1 million to $17.9 million
for the three months ended September 30, 2022 from $13.8 million for the three
months ended September 30, 2021. This was primarily due to the amortization of
intangibles and depreciation during the periods.

Depreciation and amortization expense increased $11.5 million to $50.3 million
for the nine months ended September 30, 2022 from $38.8 million for the nine
months ended September 30, 2021. This was primarily due to the amortization of
intangibles and depreciation during the periods.

Other expenses

Gain (loss) on remeasurement of contingent consideration


Gain (loss) on remeasurement of contingent consideration increased $2.1 million
to a $1.2 million gain for the three months ended September 30, 2022 from a $0.9
million loss for the three months ended September 30, 2021. This was primarily
due to changes in the weighted probability of achieving the performance and
operational targets.

Gain (loss) on remeasurement of contingent consideration increased $2.1 million
to a $0.6 million gain for the nine months ended September 30, 2022 from a $1.5
million loss for the nine months ended September 30, 2021. This was primarily
due to changes in the weighted probability of achieving the performance and
operational targets.

Transaction costs


Transaction costs increased $0.1 million to $0.2 million for the three months
ended September 30, 2022 from $0.1 million for the three months ended September
30, 2021. Transaction costs increased primarily due to higher fees related to
corporate transactions.

Transaction costs decreased $3.2 million to $0.5 million for the nine months
ended September 30, 2022 from $3.7 million for the nine months ended September
30, 2021. Transaction costs decreased primarily due to lower fees related to
corporate transactions.

Interest Expense

Interest expense increased $0.7 million to $4.2 million for the three months
ended September 30, 2022 from $3.5 million for the three months ended September
30, 2021. This increase was primarily due to higher borrowings outstanding
during the period.

Interest expense decreased $20.5 million to $14.8 million for the nine months
ended September 30, 2022 from $35.3 million for the nine months ended September
30, 2021. This decrease was primarily due to lower borrowings outstanding during
the period as a result of our voluntary prepayment of outstanding borrowings
with proceeds from our IPO, which occurred in the second quarter of 2021.

Other income (expenses)

The other charges went to $0.1 million for the three months ended September 30, 2022 of $0 for the three months ended September 30, 2021.


Other expense decreased to $0.1 million for the nine months ended September 30,
2022 from $1.4 million for the nine months ended September 30, 2021 primarily
due to the termination of the management services as a result of our IPO during
the second quarter of 2021.

Tax benefit


Income tax benefit decreased $4.4 million to $4.4 million for the three months
ended September 30, 2022 from a $8.8 million benefit for the three months ended
September 30, 2021 primarily due to taxable loss and non-deductible equity
awards for the three months ended September 30, 2022.

Income tax benefit decreased $5.2 million to $10.1 million for the nine months
ended September 30, 2022 from $15.3 million for the nine months ended September
30, 2021 primarily due to taxable loss and non-deductible equity awards for the
nine months ended September 30, 2022.

Cash and capital resources


We measure liquidity in terms of our ability to fund the cash requirements of
our business operations, including working capital needs, capital expenditures,
including to execute on our de novo strategy, contractual obligations, debt
service, acquisitions, settlement of contingent considerations obligations, and
other commitments with cash flows from operations and other sources of funding.
Our principal sources of liquidity to date have included cash from operating
activities, cash on hand and amounts available under the 2022

                                       29
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Credit agreement. We had cash and cash equivalents of $90.3 million and $148.0 million of the September 30, 2022 and December 31, 2021.


We believe that our existing cash and cash equivalents will be sufficient to
fund our operating and capital needs for at least the next 12 months. Our
assessment of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement and involves
risks and uncertainties. Our actual results could vary because of, and our
future capital requirements will depend on many factors, including our growth
rate, the timing and extent of spending to acquire new centers and expand into
new markets and the expansion of marketing activities. We may in the future
enter into arrangements to acquire or invest in complementary businesses,
services and technologies. We have based this estimate on assumptions that may
prove to be wrong, and we could use our available capital resources sooner than
we currently expect. We may be required to seek additional equity or debt
financing. In the event that additional financing is required from outside
sources, we may not be able to raise it on terms acceptable to us or at all. If
we are unable to raise additional capital when desired, or if we cannot expand
our operations or otherwise capitalize on our business opportunities because we
lack sufficient capital, our business, results of operations and financial
condition would be adversely affected.

Our future obligations primarily consist of our debt and lease obligations. We
expect our cash generation from operations and future ability to refinance or
secure additional financing facilities to be sufficient to repay our outstanding
debt obligations and lease payment obligations. As of December 31, 2021 and
September 30, 2022, there was an aggregate principal amount of $161.2 million
outstanding under the May 2020 Credit Agreement and $220.5 million outstanding
under the 2022 Credit Agreement, respectively. As of September 30, 2022, our
non-cancellable future minimum operating third-party lease payments totaled
$299.0 million, and our non-cancellable future minimum operating related-party
lease payments totaled $6.1 million.

Debt

May 2020 credit agreement


On May 14, 2020 and in connection with the TPG Acquisition, LifeStance Health
Holdings, Inc., one of our subsidiaries, entered into the May 2020 Credit
Agreement. The May 2020 Credit Agreement provides for senior secured credit
facilities in the form of (i) $37.5 million original and delayed draw principal
amount of Closing Date Term B-1 Loans and $222.5 million original and delayed
draw principal amount of Closing Date Term B-2 Loans, and (ii) $20.0 million of
Revolving Commitments. On November 4, 2020, we entered into the First Amendment
to the May 2020 Credit Agreement which, among other things, provided for
incremental credit facilities in the form of $16.6 million original principal
amount of First Amendment Term B-1 Loans and $98.4 million original principal
amount of First Amendment Term B-2 Loans. On February 1, 2021, we entered into
the Second Amendment to the Credit Agreement, which provided for incremental
delayed draw term loans in the aggregate principal amount of $50.0 million. On
April 30, 2021, we entered into the Third Amendment to the Credit Agreement,
which provided for incremental delayed draw term loans in the aggregate
principal amount of $70.0 million. On May 16, 2022, in connection with the
closing of the 2022 Credit Agreement, the outstanding debt on the May 2020
Credit Agreement was repaid in full.

Borrowings under the May 2020 Credit Agreement were subject to variable interest
rates determined at LIBOR plus 3.00% to 7.09%. We were required to make
quarterly principal and interest payments through May 14, 2026. Under the terms
of the May 2020 Credit Agreement, we were subject to a requirement to maintain a
Total Net Leverage Ratio as of the last day of each fiscal quarter to not exceed
8.00:1.00, which maximum level steps down to 7.25:1.00 beginning with the fiscal
quarter ending June 30, 2022 and to 7.00:1.00 beginning with the fiscal quarter
ending June 30, 2023. We were in compliance with the financial covenants since
the inception of the May 2020 Credit Agreement through payoff.

Credit agreement 2022


On May 4, 2022, LifeStance Health Holdings, Inc., one of our subsidiaries,
entered into the 2022 Credit Agreement. The 2022 Credit Agreement establishes
commitments in respect of a senior secured term loan facility of $200.0 million
(the "Term Loan Facility"), a senior secured revolving loan facility of up to
$50.0 million (the "Revolving Facility") and a senior secured delayed draw term
loan facility of up to $100.0 million (the "Delayed Draw Term Loan Facility").

The loans under the Term Loan Facility and the Delayed Draw Term Loan Facility
bear interest at a rate per annum equal to (x) adjusted term SOFR (which
adjusted term SOFR is subject to a minimum of 0.75%) plus an applicable margin
of 4.50% or (y) an alternate base rate (which will be the highest of (i) the
prime rate, (ii) 0.50% above the federal funds effective rate and (iii)
one-month adjusted term SOFR (which adjusted term SOFR is subject to a minimum
of 0.75%) plus 1.00%) plus an applicable margin of 3.50%. The loans under the
Revolving Facility bear interest at a rate per annum equal to (x) adjusted term
SOFR plus an applicable margin of 3.25% or (y) an alternate base rate (which
will be the highest of (i) the prime rate, (ii) 0.50% above the federal funds
effective rate and (iii) one-month adjusted term SOFR plus 1.00%) plus an
applicable margin of 2.25%.

The 2022 Credit Agreement also contains a maximum First Lien Net Leverage Ratio
financial maintenance covenant that requires the First Lien Net Leverage Ratio
as of the last day of each fiscal quarter to not exceed 8.50:1.00. First Lien
Net Leverage Ratio means the ratio of (a) Consolidated First Lien Secured Debt
outstanding as of the last day of the test period, minus the

                                       30
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Unrestricted Cash Amount on such last day, to (b) Consolidated EBITDA for such
Test Period, in each case on a pro forma basis. As of September 30, 2022, we
were in compliance with all financial covenants under the 2022 Credit Agreement.

Cash flow

The following table summarizes our cash flows for the periods indicated:

                                                     Nine Months Ended September 30,
                                                       2022                   2021
(in thousands)
Net cash provided by (used in) operating
activities                                       $         16,871       $        (21,215 )
Net cash used in investing activities                    (109,165 )             (114,514 )
Net cash provided by financing activities                  34,601           

329,023

Net (decrease) increase in cash and cash
equivalents                                      $        (57,693 )     $   

193 294

Cash and cash equivalents, beginning of period            148,029           

18,829

Cash and cash equivalents, end of period $90,336

212 123

Cash flows generated by (used in) operating activities


During the nine months ended September 30, 2022, operating activities provided
$16.9 million of cash, primarily impacted by our $168.9 million net loss and
$206.9 million in non-cash charges. This was partially offset by changes in our
operating assets and liabilities of $21.1 million. During the nine months ended
September 30, 2021, operating activities used $21.2 million of cash, primarily
impacted by our $199.2 million net loss and $207.2 million in non-cash charges.
This was partially offset by changes in our operating assets and liabilities of
$29.2 million.

Cash flows used in investing activities


During the nine months ended September 30, 2022, investing activities used
$109.2 million of cash, primarily resulting from our business acquisitions
totaling $40.3 million and purchases of property and equipment of $68.9 million.
During the nine months ended September 30, 2021, investing activities used
$114.5 million of cash, primarily resulting from our business acquisitions of
$58.7 million and purchases of property and equipment of $55.8 million.

Cash flows generated by financing activities


During the nine months ended September 30, 2022, financing activities provided
$34.6 million of cash, resulting primarily from net borrowings of $237.5 million
under the 2022 Credit Agreement, partially offset by payments of loan
obligations of $181.2 million, a prepayment for the debt paydown under the May
2020 Credit Agreement of $1.6 million, payments of debt issue costs of $7.3
million and payments of contingent consideration of $12.3 million. During the
nine months ended September 30, 2021, financing activities provided $329.0
million of cash, resulting primarily from our IPO of net proceeds of $548.9
million, borrowings of $98.8 million under the May 2020 Credit Agreement,
partially offset by payments of loan obligations of $311.1 million, payments of
debt issue costs of $2.4 million and payments of contingent consideration of
$6.3 million.

Critical Accounting Estimates

Our consolidated financial statements have been prepared in accordance with
GAAP. The consolidated financial statements included elsewhere in this Quarterly
Report include the results of (i) LifeStance TopCo, L.P., its wholly-owned
subsidiaries and variable interest entities consolidated by LifeStance TopCo,
L.P. in which LifeStance TopCo, L.P. has an interest and is the primary
beneficiary for the period prior to the completion of the IPO and (ii)
LifeStance Health Group, Inc., its wholly-owned subsidiaries and variable
interest entities consolidated by LifeStance Health Group, Inc. in which
LifeStance Health Group, Inc. has an interest and is the primary beneficiary for
the period ended September 30, 2022. Preparation of the consolidated financial
statements requires our management to make judgments, estimates and assumptions
that impact the reported amount of total revenue and expenses, assets and
liabilities and the disclosure of contingent assets and liabilities. We consider
an accounting estimate to be critical when (1) the estimate made in accordance
with GAAP is complex in nature or involves a significant level of estimation
uncertainty and (2) the use of different judgments, estimates and assumptions
have had or are reasonably likely to have a material impact on the financial
condition or results of operations in our consolidated financial statements.
Actual results could differ materially from those estimates. To the extent that
there are material differences between these estimates and our actual results,
our future financial statements will be affected. For a description of our
policies regarding our critical accounting estimates, see "Critical Accounting
Estimates" in our Annual Report on Form 10-K for the year ended December 31,
2021. There have been no significant changes in our critical accounting
estimates or methodologies to our consolidated financial statements.

Recently Adopted and Issued Accounting Pronouncements

Recently issued and adopted accounting pronouncements are described in Note 2 of our unaudited consolidated financial statements.

                                       31
--------------------------------------------------------------------------------

Emerging Growth Company Status


We are an emerging growth company, as defined in the JOBS Act. Under the JOBS
Act, emerging growth companies can delay adopting new or revised accounting
standards issued subsequent to the enactment of the JOBS Act until such time as
those standards apply to private companies. We have elected to use this extended
transition period for complying with new or revised accounting standards that
have different effective dates for public and private companies until the
earlier of the date that we (i) are no longer an emerging growth company or (ii)
affirmatively and irrevocably opt out of the extended transition period provided
in the JOBS Act. As a result, our unaudited consolidated financial statements
may not be comparable to companies that comply with the new or revised
accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earlier to occur of: (i) the
last day of the fiscal year (a) following the fifth anniversary of the
completion of the IPO, (b) in which we have total annual gross revenue of $1.235
billion or more, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our common stock that is held by non-affiliates
exceeds $700.0 million as of the prior June 30th; and (ii) the date on which we
have issued more than $1.0 billion in non-convertible debt during the prior
three-year period.

© Edgar Online, source Previews

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The size of the global lithium-air battery market is expected to have http://louthonline.com/the-size-of-the-global-lithium-air-battery-market-is-expected-to-have/ Mon, 07 Nov 2022 13:10:00 +0000 http://louthonline.com/the-size-of-the-global-lithium-air-battery-market-is-expected-to-have/

Global lithium-air battery market size

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— North America: United States, Anguilla, Antigua and Barbuda, Canada, Costa Rica, Dominican Republic, Grenada, Saba, Sint Maarten, Martinique, rest of North America

— Europe: UK, Germany, France, Italy, Spain, Hungary, Ireland, Luxembourg, Monaco, Netherlands, Poland, Rest of Europe

— Asia Pacific: China, Japan, India, Southeast Asia, Afghanistan, Australia, Cambodia, Hong Kong, Rest of Asia Pacific

— Latin America: Brazil, Argentina, Bolivia, Chile, Colombia, Cuba, Mexico, Rest of Latin America

— The Middle East and Africa: GCC Countries, South Africa, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Oman, Qatar, Algeria, Ceuta, Libya, Morocco, Tunisia, Burundi, Ethiopia , Sudan, Chad, the Democratic Republic of Congo, Tanzania, the rest of the Middle East and Africa

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Aspen Ambulance District warns it could ‘go into the red’ if 6A fails | New http://louthonline.com/aspen-ambulance-district-warns-it-could-go-into-the-red-if-6a-fails-new/ Sat, 05 Nov 2022 09:00:00 +0000 http://louthonline.com/aspen-ambulance-district-warns-it-could-go-into-the-red-if-6a-fails-new/

Amid rising operational costs and diminishing returns on service reimbursements, the Aspen Ambulance District is seeking approval for an increase to its current property tax allotment from voters in Tuesday’s election.

Ballot Number 6A asks if district taxes should be increased to $2.44 million per year “for the sole purpose of providing a stable source of funding for the Aspen Ambulance District.” The 24/7 ambulance service, covering more than 160 square miles around Aspen, is currently collecting 0.501 mills, and the districts are looking to increase that to 1.1 mills, which is $110. in taxes for every $100,000 of assessed value to owners.

The district is on track to run out of reserve funds this fiscal year and run into the red in 2023.

“We wouldn’t ask if it wasn’t absolutely necessary,” Aspen Ambulance District Manager Gabe Muething said in a phone interview with the Aspen Daily News. “It really will go all the way to operations and if we don’t get it we will literally go into the red in a matter of months.”

Muething said operating at a deficit immediately affects the district’s ability to buy new ambulances, replace aging equipment and supplies, and train its staff. He called it a security issue.

According to a 2021-2032 fund balance projection by the Aspen Valley Hospital District, the ambulance district is expected to see its ending fund balance drop from $167,468, to less than $300,000, by the end of the year. of 2022.

“If we don’t get it, we’ll really have to think about what steps we would need to take to reduce some of our services or reduce some of our capacity to see how we can extend the life of some of the equipment that we have and it’s a really tough decision and definitely one we don’t want to have to make,” Muething said.

In the past five years alone, district spending has increased 18.2%, according to a voter’s guide to PitkinVotes.com and mailed to local voters. Rising operating costs and purchases of new equipment, fuel and other items were aggravated not only by an increasing volume of services provided, but also by a decrease in the reimbursement rate of insurance companies, because a growing percentage of the population benefits from Medicare or Medicaid.

Muething says companies reimburse paramedic services at a flat rate and the problem would not be solved by simply raising prices.

“These, as government payers, usually pay us much less than what we charge and there’s really no going back,” Muething said. “We can increase our prices tenfold and they still won’t pay it, so we’re out of luck.”

The district also sees a 27% non-revenue services rate, according to a presentation to the Pitkin Board of County Commissioners in July. While the percentage remained stable, the number of cases increased with the total volume of services provided.

The district only charges if it transports a patient. If a patient refuses transportation or receives on-site treatment by Aspen Ambulance District personnel before being transported by something else, such as an emergency helicopter, the district does not generate revenue.

Voters last approved a factory tax increase to benefit the ambulance district in 2014, raising funds to build a new station, bringing it to the current rate of 0.501 mils. The district first received 0.82 mills in 1982, dropping to 0.22 in 1992 with the passage of the State Taxpayer Bill of Rights, or TABOR.

Muething said the district is providing an “unprecedented level of care”, with paramedics trained to perform critical care duties when transport to a higher level facility than the Valley can offer is not immediately available. . They also venture into the backcountry or local rivers to do field work.

It was a sentiment echoed by Pitkin County Commissioner Patti Clapper when presenting voting questions to the BOCC on July 26.

“The other thing that the community needs to understand more is that we have increased our level of care to such an extent because the community has asked us in many cases, all cases probably, this increased level of care because that some of our demographics in our population needs more,” Clapper said.

She has been a strong supporter of ballot number 6A, trying to gain community support and helping set up a campaign account. She did not immediately return a phone call seeking comment on this story.

Opponents of 6A cite doubling tax revenue as a sticking point, suggesting increased billing as a solution. In a letter to the editor submitted to Aspen Daily News, Aspen resident Michael Maple said the 25% increase in service calls since 2014 did not justify the jump in revenue.

“The District and its operator, Aspen Valley Hospital, should adjust their operations and/or patient-to-client billings to balance their budget rather than seek to increase tax revenue,” Maple wrote.

Muething’s answer is that increasing the billing would not solve the financial problems. He also said some of the opposition to the ballot issue is based on the fact that it would double the district’s tax revenue.

He said that although it is factual, his counter is that it is not a significant change from going from half a thousand to just over one.

The election is on Tuesday and all ballots must be received by the county clerk by 7 p.m. to be counted.

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South Port NZ Ltd – 2022 Annual Meeting http://louthonline.com/south-port-nz-ltd-2022-annual-meeting/ Tue, 01 Nov 2022 01:05:04 +0000 http://louthonline.com/south-port-nz-ltd-2022-annual-meeting/

The diverse opportunities for South Port New Zealand Ltd – represented by a growing range of regional producers operating in Southland – were highlighted at the company’s annual shareholders’ meeting in Bluff today.

In fiscal year 2022 to June 30, bulk cargo again played a significant role in financial performance.

Reported profit of $12.8 million was impacted by two one-time adjustments, an after-tax interest rate derivative gain of $980,000 and a deferred tax adjustment of $680,000, with normalized after-tax profit up 6.8% to $11.16 million.

“This year, bulk freight volumes increased by 6.1%, with the main contributor being food volumes, influenced by weather conditions and a higher milk price,” said chairman Rex Chapman.

Despite the cost of infrastructure upgrades over the past five years, “South Port has been able to maintain an impressive record of total shareholder return,” Mr. Chapman said, noting that the 10-year cumulative TSR was 250%.

The annual dividend of 27 cents per share represents a payout of 55% of NPAT and also 73% of free cash flow.

The strength of the regional economy had given the port the confidence to invest in infrastructure development.

Chapman said spending under the company’s asset management plan peaked in FY21 and spending for FY22 was 35% lower at $2.8 million (4 .3 million for FY21).

In August, the company obtained resource consent for a dredging project, with the objectives of a zero chart depth of 9.7m in the channel, 10.7m in the mooring pockets of Island Harbor and 9.5 m in the passing basin.

Mr Chapman said a full meter increase in operational draft “will improve the margin of safety for vessel movements and provide greater capacity for vessels to take on additional cargo”.

“The importance of this project to the future of the Company cannot be underestimated,” said Mr. Chapman. “This will be the first opportunity to deepen the channel entrance since the early 1980s, and increasing our draft aligns with our goal of facilitating the best logistics solutions for the region. “

Work undertaken 40 years ago to deepen the channel used dredging equipment unable to remove fractured rock, leaving the channel at a draft of 8.5m.

Heron Construction was recently contracted to remove this fractured or fragmented rock which proved to be more effective than expected, with the result that we expect to achieve a baseline of 9.7m in the harbor entrance channel without require additional drilling and blasting activities, with estimated cost savings of approximately $10 million.

“We are currently in the process of contracting a suction dredge to deepen the swing basin and mooring pockets as permitted by resource consent and this work is expected to be completed in July 2023.

“When completed, the increased draft of 9.7m will allow for greater cargo volumes on currently calling vessels and the possibility of some increase in vessel size.”

Managing Director Nigel Gear said critical risks are a priority for the port industry. He noted the formation of an industry health and leadership group which includes ports, stevedoring companies, the port industry association, unions and regulators to focus on harm reduction At work.

The demolition of Hangar 6 allowed the port to separate container repairs from container terminal operations, reducing the risk profiles of both activities. The move also provided much-needed additional container storage.

“There were a number of times where there wasn’t enough space to store export containers, especially during peak season.”

The recently completed paving of South Rail’s 14,000m² log storage area will increase utilization, improve safety in log sorting and protect market eligibility for export logs.

Work is nearing completion on the Island Harbor access bridge with a single bay requiring the installation of impressed current cathodic protection; which is expected to extend the life of the bridge by 25 to 30 years.

The $11M upgrade to Town Wharf’s fueling dock and ancillary infrastructure was recently completed and will provide at least 50 years of additional use.

Regional projects

“The Port sees itself as a cornerstone of the regional economy and, as such, involved in ensuring the continued progress of the region.

Mr Chapman said: “We are now optimistic that NZAS will continue to operate beyond the current closure date of December 2024.

Key to this will be successful commercial negotiations for electricity supply and satisfaction of regulators and stakeholders with improved environmental outcomes and site remediation.

One such growth opportunity is the potential development of large-scale renewable hydrogen production in the Southland, promoted by Meridian Energy and Contact Energy.

Ngāi Tahu Seafoods and Sanford are working on an aquaculture opportunity for Southland.

The Ngāi Tahu Seafood Resource Consent Application has been accepted for processing under the Covid-19 Recovery (Expedited Consent) Act 2020. Stewart Island.

Sanford filed a consent to establish an offshore farm in the southern Strait of Foveaux. Their application is currently on hold pending further engagement from stakeholders.

“These apps are a vote of confidence in the southern region for large scale open water salmon farming and will present service opportunities for South Port.”

Securing the future of smelting and growth opportunities, such as green hydrogen and aquaculture, would be a very positive outcome for Southland’s economy, and potentially for South Port.

Mercury Energy has begun preparation for the first stage of the 240 MW wind farm at Kaiwera Downs, near Gore. “Components are expected to move through the port, which should be a welcome addition to next year’s cargo volume.”

Outlook

Mr Chapman said: “There are always uncertainties in any outlook and this year is no exception. Although global supply chains are beginning to normalize with previous congestion and the easing of high freight rates, there is still uncertainty in global markets. Record inflation rates globally, leading to higher central bank interest rates, are increasing the risk of recession in many economies.

“However, as a company, we have reason to be optimistic about our prospects, at least in the medium term. We expect to have a new mining project by the middle of next year. The port handles a range of diverse cargoes and there are short term opportunities with handling wind farm equipment and longer term opportunities in hydrogen and aquaculture.

“Trade for the first quarter of fiscal 2023 follows the development of fiscal 2022, which is encouraging and in line with expectations.”

“Logs and containers are still impacted by market conditions, but all other bulk cargoes follow in line or slightly ahead of fiscal 2022.”

“The roundwood market faces ongoing uncertainty due to lockdowns in China affecting residential construction rates in the market. We expect the decline in demand for logs shipped from New Zealand to last until the end of this calendar year. »

However, yields at the New Zealand docks have increased due to lower shipping costs and the recent weakness of the New Zealand dollar against the US dollar. Logs are traded in US dollars. The cost of shipping logs has fallen more than the cost of containerized freight.

ANZ Bank noted that this has been particularly helpful as freight now accounts for a significant portion of the cost of logs landed in China.

In recent months there has been a sharp reduction in spot freight rates on major shipping lanes and in charter costs. In the New Zealand context, freight rates are expected to decline at a slower pace and the return to reliable schedules for ship calls in the port industry remains uncertain.

In a volatile phase of global shipping, South Port has consistent and stable services from Mediterranean Shipping Company, one of the largest lines in the world.

Australia and New Zealand are seeing interest from new shipping companies. South Port is watching these new developments with interest, knowing that such businesses will need to attract long-term customers to ensure their future viability.

The cruise industry has made a welcome comeback with several ships on the coast. Although only a very small number of ships are expected to call at Bluff, we do provide pilot services for those visiting Fiordland.

“At this stage, we expect our full-year earnings to be consistent with last year and, based on this, we aim to maintain the current level of dividend.”

ENDS.

South Port NZ Ltd – Annual Meeting 2022 – Press release

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Why Farmers Should Care About Avocado http://louthonline.com/why-farmers-should-care-about-avocado/ Sat, 29 Oct 2022 23:44:34 +0000 http://louthonline.com/why-farmers-should-care-about-avocado/

Experts have urged more Nigerian farmers, especially young entrepreneurs, to take more interest in avocado farming.

This, they said, could open up more investment opportunities for them and attract high returns for young people who had no interest in farming.

Daily Trust on Sunday reports that in Nigeria, avocado is planted to some extent by some farmers, but productivity is generally low.

Nigeria is endowed with a large number of agricultural products, some of which have not received adequate national attention in terms of promoting their industrial use.

And government efforts to boost agricultural production and productivity by improving market linkages and access to e-extension technology are mainly oriented towards the development of basic commodities, such as cocoa, rice, corn, etc., with little or no emphasis on underutilized plant species, such as Avocado.

Among all fruits, only olive (oleo europa) and oil palm fruit (elaeisguineensis) can compete with avocado oil in content.

The avocado, commonly known as the African pear (dacryodes edulis), is a well-known plant in West Africa.

Its industrial transformation, according to the Director General of the Council, Professor Hussaini Doko Ibrahim, has the ability to promote the development of the country’s food and beverage, pharmaceutical and cosmetics industries.

He said the avocado is mostly found in forests, farmlands and farms in Nigeria. It grows mainly in southern and central Nigeria. The distribution, in terms of abundance, is closely related to vegetation conditions, with rainforest having the most abundant distribution.

The plant grows in situ in Imo, Abia, Anambra, Enugu, Ebonyi, Edo, Akwa-Ibom, Delta and Cross River states. Although commercialized to a reasonable extent, avocado is less abundant in the states of Lagos, Ogun, Ondo, Bayelsa, Taraba and Rivers compared to the states listed above.

In most central parts of the country such as Kwara, Kogi, Benue, Niger and Nasarawa states, it occurs occasionally. It is also found to a lesser extent in Plateau and Kaduna states, an RMRDC document says.

Why Nigeria Should Pay Attention to Avocado

The global avocado trade is increasing. The main players in the export market are Israel, Mexico, South Africa, the United States and Chile, while the main importers of fruits include Belgium, France, the Netherlands, Sweden, Switzerland, the United Kingdom, Germany, Spain and, in America, the United States, Canada and Japan, producing countries realizing considerable income from the harvest.

For example, the value of avocado production in the United States was $426 million in 2020. The United States produced 206,610 tons. Total U.S. acres in production stabilized at 52,720. In 2020, the U.S. imported $2.4 billion worth of fresh avocados and exported approximately $45,502 worth of fresh avocados. The contribution of avocado imports to total US production increased by 273%, from $1.7 billion in 2012 to $6.5 billion in 2019/20.

In sub-Saharan Africa, Kenya is a major producer of avocados, with an estimated annual production of 180,000 tonnes in 2019. Each year, more than 1,000 containers are shipped to Europe, the Middle East, Russia and the United States. ‘Asia. Kenya has about 8,000 ha of cultivated land.

Some of the incentives that have contributed to the development of avocado farming in Kenya include increased interest and investment in the sector by the government, contract farming and the replacement of old trees with improved varieties. However, the major factors driving the global increase are oil content, nutritional and medicinal values.

Why Nigerian Farmers Don’t Care Much About Cultivation

According to Malam Yunus Isah, a retired farmer, despite its growing popularity, avocado development is facing some challenges in Nigeria.

He said avocado trees were much more expensive to establish than most other fruits. This, he says, makes it difficult for non-wealthy farmers to invest in large acreages.

“Before 2012, even in developed economies, only wealthy farmers were involved in large-scale farming because it was more expensive and considered an investment,” he said.

But RMRDC boss Prof. H. D Ibrahim insisted the harvest could be an opportunity to help young Nigerian entrepreneurs to work in agriculture as it is knowledge intensive and can open up opportunities. investment and high returns to young people who had no previous interest in agriculture.

To this end, he said that the RMRDC has made avocado development one of the strategic projects to boost the development program of agricultural products for industrial use.

As part of the project, he said the Council is collaborating with agricultural research teams and private sector agents to conduct productivity improvement trials on local varieties of avocados.

“The Council has also entered into agreements for the development of the internationally recognized HASS variety from Mexico and California to the United States of America for localization and adaptation trials in the country.

“Local Variety Council field trials have shown that productivity can be greatly improved under the conditions of farmers in the south of the country,” he said.

According to him, the Council has reached agreements with farmers interested in growing avocado in Nigeria on a large scale, and that more than eight farmers who have expressed interest are working with experts to assess their farms for the establishment of plantations.

This initiative, when fully completed, he said, would save the country more than N50 billion in foreign exchange equivalent, apart from its wealth and job creation potential.

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Equity portfolios impacted by the YFYS performance test http://louthonline.com/equity-portfolios-impacted-by-the-yfys-performance-test/ Tue, 25 Oct 2022 22:49:54 +0000 http://louthonline.com/equity-portfolios-impacted-by-the-yfys-performance-test/

David Bell (left), Jo Cornwell and Scott Bennett

The Your Future, Your Super (YFYS) performance test has had a significant impact on the investment behavior of asset owners and portfolio managers. According to research published by The Conexus Institute, super funds took on a shorter investment time horizon, reduced their portfolio management leverages and became more constrained in risk management in order to maintain or strengthen their performance test buffer.

speaking to Investment magazineit is Action Summit in Sydney, Jo Cornwell, portfolio manager of Aware Super – growth assets, said the performance test warrants the fund’s equity investment team to focus on its capital allocation framework and the allocation of its active risk budget.

“We want to have detailed monitoring of what are the main contributors to the active risk that we take in the portfolios,” she said. “But that doesn’t necessarily mean going straight to passive management to manage risk.”

Scott Bennett, Head of Quantitative Investment Solutions – Asia Pacific, Northern Trust Asset Management, also saw a strong push for super funds to reduce portfolio risk. “When you think about risking it’s not a straight leap into liabilities. I think a lot of investors recognize that they have an active risk budget that they have to spend and even more so now given the inflation But he noted that super funds do not end the tenures of their active managers.

The focus on risk budget management also highlights the importance of manager capacity and selection. “Do we trust our investment managers to achieve the objectives we have agreed with them and are they innovative in their fundamental research so that we have the utmost confidence in their ability to generate alpha in a more uncertain world? said Cornwell.

The $150 billion super fund has embarked on a strategy to manage approximately 50% of its assets in-house over the next few years to reduce costs and provide members with benefits of scale, in line with similar efforts by other large super funds.

This internal management strategy gave the equities team additional resources to manage tracking error more effectively. “If we identify an area where we need to manage the risk of tracking error, we have the internal capabilities to enable us to do so. It’s an advantage of our scale and size,” she said.

Test challenges

One of the challenges faced by performance testing equity portfolios is variability or tracking error relative to the benchmark. “It’s really how cyclical my performance model is and the idea is that we want that cyclicality to be very low,” Bennett said.

Another issue is that ESG-focused investments lead to high tracking error in the test, but this strategy cannot be ignored as every major super fund has a net zero target, he said.

Fund consolidation, which is not just limited to smaller, less successful funds, has caused significant capacity issues. Australia’s top 20 super funds account for more than 25 cents of every dollar invested in the Australian equity market, up from around 15 cents 10 years ago.

“From a capacity perspective and specifically when you think about markets like Australian equities, which are half of the overall equity allocation, that becomes a significant challenge,” Bennett said.

“As we go through this process of funds that fail or seek to fail, Your Future, Your Super is testing and increasing [pressure on] as they merge, this challenge will only become greater and greater from an implementation perspective. »

The test also hampered managers’ ability to generate returns, Bennett said. “This is probably the most challenging environment for real returns we have faced in the past two decades. The scope to actually manage [headwinds] effectively and actually creating wealth has left super funds feeling paralyzed,” he said.

Exposure to highly volatile assets is becoming increasingly difficult in the YFYS world. “The biggest challenges for us in a portfolio context are how we allocate off-benchmark positions,” Cornwell said.

“We’ve been thinking a lot recently about emerging market allocations, our China allocations and our micro and small cap allocations and deciding how we want to allocate this active risk budget,” she said.

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Can Legal & General escape the turmoil that has left bond markets on the brink of collapse? http://louthonline.com/can-legal-general-escape-the-turmoil-that-has-left-bond-markets-on-the-brink-of-collapse/ Sat, 22 Oct 2022 20:50:03 +0000 http://louthonline.com/can-legal-general-escape-the-turmoil-that-has-left-bond-markets-on-the-brink-of-collapse/

Can Legal & General escape the turmoil that has left bond markets on the brink of collapse? Asset manager enthusiastically plugged into liability-driven investing

Test: L&G boss Nigel Wilson has already won praise for his work

A little less than a year ago, Legal & General Investment Management celebrated a milestone anniversary.

It has been 20 years since it embarked on an innovative strategy for its pension fund clients. Britain’s biggest asset manager has enthusiastically embraced the strategy, boasting in a note last November that it “should help directors and sponsors sleep better at night”.

What was the name of this miraculous solution? Liability Driven Investing, or LDI – an abbreviation few had heard of until a few weeks ago. Today, it is synonymous with a near-collapse after a sell-off in the bond market following former Chancellor Kwasi Kwarteng’s ill-fated mini-budget.

Legal & General Investment Management is part of the L&G life insurance group, whose market value has fallen more than 10% since the mini-budget.

It’s a rare setback for chief executive of ten years, Sir Nigel Wilson, 65, who has won praise for investing in UK housing and infrastructure. Cleverly, he rejected a job offer from former prime minister Liz Truss as investment minister. He may find he has a lot to do in his day job, as LDIs aren’t the only issue worrying investors in the 186-year-old insurance company.

As recession fears grow, they also worry about the prospects for the tens of billions of pounds of corporate bonds he holds. The group admitted that the “extraordinary” and “unprecedented” sell-off in the bond market has “caused challenges” for its LDI clients.

The idea of ​​the LDIs, as the firm explained in its November 2021 note, was to reduce the risk that end-of-career schemes would not be able to pay pensions when they fell due. L&G has become the biggest player in an industry that has reached £1.6trillion. It has attracted more pension plans to use the strategy by increasingly using leverage – increasing returns, but also risk, by borrowing. In November, L&G had more than 800 LDI customers.

Analysts estimate that this year it managed £400bn of LDI funds, or 30% of its assets under management.

When the UK bond market crashed, it created a selling spiral that prompted the Bank of England to step in with a temporary promise to buy up to £65 billion worth of bonds.

L&G was able to reassure investors this month that the intervention had eased pressure on customers and that, as an intermediary between customers and lenders, its balance sheet was not at risk.

Rival Schroders, a smaller player in the LDI market, revealed this week that it had taken £20 billion from the assets of the market’s maelstrom.

But for L&G, its LDI assets under management have likely taken a £40bn hit, according to an analyst covering the sector.

He said it would have little direct impact on the group’s profits. But what markets fear is a rise in corporate bond spreads – the difference between the rates bondholders can charge for corporate loans and the lower rates on government bonds. benchmark British. An increase in these spreads implies nervousness about the prospects of companies. It could spell trouble for L&G, which holds £80bn of corporate bonds to provide a stream of income to pay out pensions to pensioners, the analyst said.

“If there are a lot of defaults and downgrades in the credit market, L&G would be negatively affected,” he said. “Nothing has happened yet, but widening spreads are seen as a precursor to downgrades and defaults.”

The analyst said L&G’s bond portfolio had performed “extremely well” during previous stresses. But he added: ‘I understand the fears that if there is a big global credit event, a recession where companies sink and cannot pay their debt – something unexpected – then L&G would be affected.’

He added that this scenario is not currently the prevailing opinion.

L&G said it had encountered no difficulty meeting “collateral calls” in its annuity portfolio.

JPMorgan analysts said in a recent note that the LDI episode had “more positive than negative consequences” for the sector, as it could prompt companies to offload their pension funds to life insurers such as L&G.

L&G declined to comment.

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