React Group shares surge 10% on higher demand
React Group shares (LON: REAT) surged over 10% on Tuesday morning as the group released a trading update for the year ended 30 September 2020.
The cleaning, hygiene, and decontamination company reported a 42% organic growth in revenue to approximately £4.4m – up from £3.1m.
React Group said the growth in revenue was partly due to underlying performance in the core business, and the growing demand of cleaning amid the Coronavirus pandemic.
Thanks to the increase in Corona-related decontaminations and other projects for the group, React expects pre-tax profit for the year ending 30 September to be ahead of market expectations.
The cleaning group saw a growth in demand from healthcare, rail, and facilities management sectors.
Shaun Doak, chief executive of the group, said: “We are pleased to have delivered another year of strong progress in which we saw accelerating organic growth and achievement of the Group’s first full year profit.
Whilst we have seen a level of disruption from COVID-19, we have also experienced incremental demand. Core sectors of the business performed well alongside net new customer relationships that have evolved in areas of development such as education and residential care homes. This was not true of every sector however, work declined at the height of lockdown in the judiciary where we sanitise and decontaminate courtrooms, cells, and custody vehicles. The sector has since been returning to near normal activity as restrictions have eased.
The new financial year has started well with momentum continuing. The immediate outlook is positive, although we are mindful that the seemingly ever-changing environment in which we work can bring with it both opportunities and challenges. As a management team we are reviewing tactics almost daily to ensure REACT remains an effective solution for our customers, our colleagues remain safe, and the business profitable.”
React Group shares (LON: REAT) are trading 5% at 1,26 (1050GMT).
Justin Urquhart Stewart speaks at the UK Investor Magazine Virtual Conference 20th October
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Metro Bank reveals increase in lending, shares rise
Metro Bank shares (LON: MTRO) surged by over 4% on Wednesday as the group revealed a 2% increase in lending.
In an update for the third quarter, the lender said that it handed out £15.09bn in loans for the three months to 30 September.
Metro Bank provided £1.3bn through the Bounce Back Loans scheme to over 33,000 customers, as well as report growth in loans for small and medium-sized businesses.
In the update, the lender did not provide an update for its bottom line. For the first half of the year, Metro Bank reported a £240m loss.
The bank did say that activity levels are continuing to gradually recover post-lockdown. New account openings tracking higher at around 90% of pre-pandemic levels.
Daniel Frumkin, the chief executive, said: “In a challenging environment, Metro Bank has delivered a good performance with loan growth reflecting our support for government-backed lending schemes.
“We have made further progress against the strategic priorities we set out at the beginning of 2020, completing the acquisition of RateSetter in the quarter and launching new initiatives which enable us to meet more customer needs. The continued dedication of our colleagues and their focus on excellent customer service underpins our position as the UK’s best community bank.”
Metro Bank shares (LON: MTRO) are trading 1.45% higher at 60,36 (0934GMT).
FTSE 100 down on lockdown fears
The FTSE 100 fell in early trading on Wednesday over concerns of new Coronavirus restrictions.
Although there was optimism over achieving the US stimulus bill, the growing fears of new lockdowns across Europe dampened the blue-chip index.
Connor Campbell from Spreadex said: “Nancy Pelosi and Steven Mnuchin appeared to have made progress on a stimulus agreement – the House Leader said she was ‘optimistic’ a deal could be struck in the next few days – but with Mitch McConnell reportedly privately telling Republican senators he has advised the White House to nix the package.
“This because it would put senators up for re-election in the tricky position of either going against the President, or backing a deal their fiscally conservative base would be opposed to.”
Campbell added: “As tighter restrictions are introduced across the UK and Europe, investors are clearly concerned that a new lockdown will lead to slower economies.
“The FTSE dropped 0.8%, sinking back to 5850 after straining to finish just above 5900 on Tuesday. Its morning was exacerbated by a sharp rise by sterling, which was up half a percent against the dollar and 0.3% against the euro following a 0.5% increase in UK inflation in September. The strength of that rise is perhaps surprisingly, given the lack of Brexit deal progress – or, rather, the active pursuit of a no deal exit – in the last few days.
“Over in the Eurozone, as the continent continues to shutter towns and cities to combat coronavirus, the DAX dipped under 12700 to hit a near one-month low as it fell 0.6%, with the CAC also down 0.5%.”
Today saw inflation increase from 0.2% in August to 0.5% in September, helped up by the Eat Out to Help Out scheme, which ran through the month of August, and over 100m meals were bought.Inflation increases – yet remains well below BoE target
UK inflation rose 0.5% last month following the end of the Eat Out to Help Out scheme.
New data from the ONS consumer price index (CPI) showed inflation to increase from 0.2% in August to 0.5% in September.
The rise of restaurant meals and transport helped to push up the level of inflation. The ONS explained:
“Transport costs, and restaurant and café prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions (of 0.23 and 0.21 percentage points, respectively) to the change in the CPIH 12-month inflation rate between August and September 2020.
“This was partially offset by smaller downward contributions from furniture, household equipment and maintenance; games, toys and hobbies; and food and non-alcoholic beverages.”
The Eat Out to Help Out scheme ran through the month of August and over 100m meals were bought.
Jonathan Athow, the deputy national statistician for economic statistics at the ONS, said airfares usually have a much higher impact on inflation at this time of year.
“Airfares would normally fall substantially at this time due to the end of the school holidays, but with prices subdued this year, as fewer people have been traveling abroad, the price drop has been less significant,” he said.
Despite the increase, inflation remains to be well below the 2% target set by the Bank of England.
According to Paul Dales, chief UK economist at Capital Economics, the central bank is likely to introduce new measures to boost the economy next month.
“With CPI inflation just 0.5% in September, it’s hard to think of reasons why the Bank of England won’t launch another £100bn or so of QE at the November meeting. And despite public borrowing still jumping, the government may yet spend more,” said Dales.
MMC Ventures gains B Corp status and illustrates venture capital as force for good
Research-led venture capital fund, MMC Ventures, announced that it has become a certified B Corp, and in turn has joined the effort to create a more inclusive and sustainable economy.
To gain certification, B Lab UK had to first analyse the company and confirm that in addition to making a profit, it meets five areas of social and environmental standards: governance, workers, community, environment and customers.
Having been assessed on issues such as its diversity strategy, staff compensation, energy usage and waste management, MMC Ventures now joins the ranks of 3,500 B Corp businesses across the globe. The UK businesses make up around a third of B Corp companies, which include Pip & Nut, TOMS and Innocent Drinks.
The certification will also make MMC Ventures one of the ‘very few’ venture capital firms to make it through the assessment process, with just 2.5% of global B Corps members being equity investors.
The company said that it has a history of backing purpose-led businesses; such as recipe box business, Gousto, which is committed to recycling and reducing waste; online knitting community, Wool and Gang, which disrupts normal manufacturing methods; and coffee subscription service, Pact Coffee, which pays a premium to its farmers versus Fair Trade rates.
In addition to its core Series A investing, MMC Ventures said it will be deploying ‘a significant portion ‘ of the capital from its £52 million Seed fund on investing exclusively in sustainable technologies and the circular economy.
Investments from this fund – called The MMC Greater London Fund – include Qflow, a software provider that reduces the impact of construction on the environment, and Unmade, which uses software into textile manufacturing machines, and means brands only produce what is actually being sold.
Speaking on the company’s B Corp certification, Bruce Macfarlane, founder and managing partner of MMC Ventures, said: “2020 marks the 20th anniversary of the founding of MMC. While we celebrate that milestone and all the firm has achieved, we wanted to find a means of demonstrating the community-minded values of fairness, honesty and respect on which we were founded. B Corp certification was the answer”.
Kate Sandle, director of Programmes and Engagement of B Lab UK, added: “Being able to welcome MMC Ventures to the B Corp community is hugely exciting. Their commitment to doing business differently will be an inspiration to others and really help spread the idea that we can redefine success in business to be as much about people and planet as it is about profit”.
The news marks yet another company successfully committing to more sustainable business practices. Supporting ethical and innovative initiatives is a worthy cause, and MMC’s new B Corp certification should see it gain more traction with the growing crowd of discerning investors.
FTSE flips to green as Dow Jones rebounds ahead of stimulus deadline
With something of a mood change from Monday’s drop, the FTSE escaped the fates of its Eurozone counterparts, and enjoyed modest gains as trading came to a close.
Starting the day off with a fall of 0.3%, to 5,867 points, the FTSE has since recovered, up 0.26% to 5,900 in the afternoon. Meanwhile, having fallen by around 0.5% apiece, the CAC and DAX are now down by around 0.04% and 0.92%, to 4,941 points and 12,737 respectively.
Unlike its European peers, however, the FTSE was able to flip back to green as the Dow Jones opened in a bright mood on Tuesday afternoon. Speaking on the Dow’s optimistic start, Spreadex Financial Analyst, Connor Campbell, stated that:
“The key was that the Dow Jones opened in rebound mode, climbing 215 points after sinking by 410 points last night, pushing its not inconsiderable weight back across the 28,400 mark.”
“The day is far from over for the US indices, however, and more volatility could still be expected in the run-up to Nancy Pelosi’s stimulus deadline this evening. That is unless investors are now comfortable with the assumption a deal isn’t getting gone this side of the election, based on Joe Biden’s consistent lead in the polls (and the sizeable relief package a blue wave would likely produce).”
While the Dow Jones open helped the FTSE to push through the poor sentiment generated by new lockdown restrictions in Wales, it was also able to book some notable progress of its own. The FTSE 100 saw some solid performance from travel and tourism, with IAG up 6.85%, Intercontinental Hotels Group rising 3.59% and Rolls-Royce up 3.18%. However, for many, the FTSE 250 remains the star of the show on Tuesday, with Cineworld currently posting a 10.29% rally, Vesuvius up by 5.49%, and Britvic bouncing by 6.80% as it signed a new bottling agreement with PepsiCo.Bellway shares fall amid Covid disruption
Bellway has released its preliminary results for the year ended 31 July 2020.
The housebuilder saw sales and profits down amid Covid-19 disruption, however, trading has picked up since restrictions eased.
The number of housing completions fell by 30.9% from 10,892 to 7,522.
The group posted a fall in pre-exceptional operating profit fell to £321.7m from £674.9m a year previously. Bellway said that there was an exceptional Covid related expense of £25.8m spent on site-based costs as well as a £9.9m cost from aborted land deals.
After exceptional costs, pre-tax profits plunged 64.3% to £236.7m.
Trading in the first nine weeks of the new financial year has been strong thanks to a boom in the housing market. The average week reservations increased by 30.6% and the forward order book increased from £1.3bn to £1.9bn.
“Pent-up demand arising from the prolonged period of lockdown inactivity, together with Government support through the stamp duty holiday and provision of Help to Buy, have contributed to this reassuringly strong performance,” said Jason Honeyman, the chief executive.
“As the country emerges from the initial extended national ‘lockdown’ and adapts to ongoing restrictions at both a national and local level, there is substantial economic damage and an ongoing threat of a more widespread resurgence in the virus.”
“In addition, we are yet to see the extent to which unemployment will rise as the unprecedented support offered by the Government’s CJRS ends and is replaced with the Job Support Scheme,” he added.
Bellway shares fell 3.88% on Tuesday.
Energy: price cap extended till end of 2021
The government has announced plans to extend the energy price cap until the end of 2021.
According to the Department for Business, Energy and Industrial Strategy (BEIS), the new cap will mean that 11 million households across the UK will save on energy over the next year.
“The energy price cap has been vital in ensuring customers do not pay too much on their bills, which is why we are keeping it in place for at least another year,” said Alok Sharma, the Business and Energy Secretary.
“Switching energy supplier to find the best value deals is still the best way to save on bills, but this government is determined to make sure all customers are treated fairly and get the protection they deserve.”
The price cap was initially introduced in January last year after Theresa May hoped to end “rip off” tariffs from suppliers. The price cap was lowered over summer as wholesale gas prices plunged to a 20-year low.
Jonathan Brearley, Ofgem’s chief executive, said the regulator would “continue to protect consumers in the difficult months ahead as we work with industry and government to build a greener, fairer energy system”.
Peter Earl is the head of energy at Comparethemarket.com. He said: “There is a real risk that the British public interpret the government’s extension to the price cap as an endorsement that the cap is an affordable price to pay for energy, when it reality it should be considered the absolute ceiling that people pay.
“There are currently 191 energy tariffs on the market cheaper than the £1,042 price cap, and as the temperature drops and people turn the heating up a notch or two, switching to a competitively priced one or two year fixed-rate deal is an effective way for households to lock-in a cheaper energy deal,” he added.
Britvic shares bounce 7% on new 20-year bottling deal with PepsiCo
British soft drink producer, Britvic (LON:BVIC), saw its shares rally during Tuesday trading, as it announced a new two-decade-long bottling partnership with American giant, PepsiCo (NASDAQ:PEP).
The franchise bottling agreement covers the production, distribution, marketing and sales of PepsiCo carbonated soft drink brands – including Pepsi, 7UP and mountain Dew – in the UK.
The deal represents an extension of a pre-existing partnership, which began in 1987 and has now been extending until at least 2040, and will also include PepsiCo’s Rockstar energy brand, for which Britvic will take responsibility from November 1 this year.
The company also announced that it intends to make all of its UK plastic bottles out of recycled plastic by the end of 2022, which is three years earlier than initially planned. This change will cover the entire UK portfolio of Britvic and PepsiCo brands, and marks a notable step towards notable household names taking sustainability seriously, and adopting the circular economy.
Speaking on the announcement, Britvic CEO, Simon Litherland, said:
“I am delighted that we have formally extended our relationship with PepsiCo in Great Britain for a further 20 years. The powerful combination of the Britvic-owned and PepsiCo portfolio offers customers and consumers a broad range of great-tasting, trusted brands for any occasion. We are excited to add Rockstar to our offering and look forward to working together to grow the brand.”
“The announcement of our intent to move to 100% recycled PET in GB by 2022 is a significant moment for Britvic and our partnership with PepsiCo, demonstrating our joint commitment to protecting the planet today and for future generations. Both Britvic and PepsiCo have sustainability at the heart of their business strategies, and we will continue to work together to deliver on our shared ambition to protect the environment and offer healthier choices in the years ahead.”
The company added that better-than-expected trading across the peak summer period means that its full-year EBIT is predicted to be ‘slightly ahead’ of current market consensus, with trading benefitting from the reopening of UK hospitality since early July. Following the update, Britvic shares rallied by 6.80% or 51.00p, to 801.50p a share 20/10/20 13:40 BST. This current price is below its consensus price target of 880.91p, and lower than its six-month high of 866.00p. Analysts currently have a consensus ‘Buy’ rating on the stock, a 54.23% ‘Outperform’ rating from the Marketbeat community, and a p/e ratio of 12.55, below the consumer defensive average of 13.91.