CMC Markets to exceed earnings forecast as client retention remains high

Liam Roche
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CMC Markets to exceed earnings forecast as client retention remains high

CMC to deliver operating income above £330m in 2022

CMC Markets (LON:CMC) said on Thursday that its net operating income for the year ending in March is expected to exceed its initial forecast.

The online trading platform confirmed in a market update that its net operating income will be above its initial expectation of £399.6m following a strong performance during the current financial year.

The company also changed its expectations for 2022 by saying that it will now deliver operating income above £330m for the next financial year.

CMC Markets said its client retention remained well above 80% in Q4. Increased spending on marketing allowed the company to retain a high percentage of its clients.

Peter Cruddas, chief executive of CMC Markets, commented:

“I am delighted by the strong performance of the business so far during the last quarter of our financial year. Our relentless focus on supporting clients with market leading technology and service has fuelled record growth and puts us in a great position as we start the next financial year,” said Cruddas.

“Over the last 12 months, market volatility has driven up client activity across the industry. I am particularly pleased that our new clients are demonstrating similar behaviours to existing long-term, high value clients, which supports our longstanding strategy. Our client acquisition rates are very encouraging and reflect the advancements we have made in our technology, pricing and execution of trades.”

“Robust risk management continues to be fundamental to the ongoing success of the business and, together with ongoing refinement of our analytics and learnings from client behaviour, is a key competitive advantage.”

“The resilience of our platform continues to be evident through very high uptime. Our ability to support increased trading activity, unobstructed through recent periods of heightened market volatility, has built trust with clients and embedded CMC as a key partner in fulfilling their trading ambitions,” Cruddas concluded.

Strix set to heat up

Andrew Hore
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Strix set to heat up

A stronger second half made up the first half profit shortfall for kettle components manufacturer Strix Group (LON: KETL) and the new Chinese factory is on course to be fully up and running in August. New products outside of the kettle sector are increasing the potential market for AIM-quoted Strix.
In 2020, revenues were 2% lower at £95.3m, while underlying pre-tax profit was 2% ahead at £30.9m. That profit does include a small contribution from last autumn’s acquisition of Laica.
Strix has edged up its share of the kettle controls market to 55% and it has three-quarters of the regulated segm...

UK inflation slows to 0.4% in February

Liam Roche
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UK inflation slows to 0.4% in February

Expected rise offset by downward pressure in other areas

UK inflation unexpectedly fell in February as the prices of clothes and second-hand cars dropped sharply, the Office for National Statistics (ONS) announced today.

The ONS confirmed the rate fell by 0.4% in February, down from 0.7% the month before.

Economists had previously anticipated an increase in inflation on account of rising fuel and energy prices. However, the expected rise was offset by downward pressure in other areas, including second-hand cars and clothing.

Clothing and footwear prices fell between January and February for the first time since 2007 and are 5.7% lower than a year before, the biggest annual decline since November 2009.

Danni Hewson, financial analyst at AJ Bell, suggested the figures should be analysed in the context of the pandemic.

“Looking at today’s figures you’d be forgiven for wondering why there has been such concern about rising inflation. Lockdown three has dented seasonal clothing sales at a time we traditionally see prices rise. The cost of toys and computer games have fallen as have second-hand cars and public transport,” said Hewson.

“But these falls must be put into context. Shops are still shut, children had yet to return to school and many workers continue to do their jobs from home. It’s impossible to compare with what’s normally expected. The economy has been distorted and many of the measures the ONS usually looks at have been missing.”

Hewson also looked ahead, warning of the possibility of UK inflation on the horizon.

“Trying to quantify what will happen when lockdown ends is rather like trying to read tea leaves. But February’s figures do raise some red flags and suggest inflationary pressures may be brewing. Creeping commodity prices are beginning to be felt by the consumer. Motor fuels saw a 0.11% hike and housing costs like water and electricity were up 0.1%,” Hewson said.

“Add to that strong wage growth figures, pent up demand and savings for those lucky enough to have missed out on the worst effects of the pandemic and these figures are likely to be the low point. Few doubt the Bank of England’s belief that rising inflation is inescapable in the short term and investors and savers should be prepared.”

FTSE 100 slips as ONS confirms UK inflation falls to 0.4%

Liam Roche
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FTSE 100 slips as ONS confirms UK inflation falls to 0.4%

The FTSE 100 slipped by 0.4% on Wednesday, lurking at a 19-day low of 6,679. The news came as the Office for National Statistics (ONS) confirmed the UK inflation rate fell to 0.4% last month, down from 0.7% in January.

“Given the extent to which inflation fears have impacted the markets in recent week, one would think a UK CPI reading of 0.4%, half of the 0.8% forecast, would be a boost to the FTSE,” said Connor Campbell, financial analyst at Spreadex.

“A dulling of recovery hopes as Europe tackles a third wave of coronavirus are a bit of a double-edged sword for the market as they also seem to have cooled the inflation fears which have had investors in a tizz,” added AJ Bell investment director Russ Mould.

“What markets would really like is a Goldilocks situation where the recovery is neither too hot to avoid causing prices to rise uncontrollably, nor so cold that it prompts another downturn,” Mould continued.

FTSE 100 Top Movers

IAG (3.3%), Kingfisher (2.43%) and Whitbread (1.99%) were the top risers on the FTSE 100 post-lunchtime.

Taylor Wimpey (-2.71%), Polymetal International (-1.62%) and BT Group (-1.59%) were the top fallers on the UK index.

Musk confirms Tesla cars can be bought using bitcoin

Liam Roche
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Musk confirms Tesla cars can be bought using bitcoin

Non-US customers able to use bitcoin to buy Tesla later this year

Tesla (NASDAQ:TSLA) chief Elon Musk announced on Wednesday that their cars can now be bought using bitcoin.

Musk, who confirmed in February that the company has purchased $1.5bn worth of bitcoin, made the announcement via a tweet on Wednesday.

With the continued volatility of the cryptocurrency, this means the price of a car could vary each day.

Elon Musk made an additional tweet outlining the company’s plan to organise its own internal software to handle bitcoin payments, which “operates Bitcoin nodes directly”. Nodes refer to computers that process bitcoin transactions.

Musk also confirmed that rather than convert payments into fiat currency, Tesla will retain them in bitcoin.

At present, only American customers will be able to buy Tesla using bitcoin, although Musk said his company would accept payments from outside the US later in the year.

The price of bitcoin, which has nearly doubled in 2021, rose on Musk’s announcement to above $55,000 having retreated over the past week.

“Tesla’s decision to both accept payment for its cars in bitcoin and hold that bitcoin on its balance sheet rather than convert it to dollars will likely build more momentum for the cryptoasset,” Simon Peters, cryptoasset analyst at brokerage eToro, said in emailed comments. 

“Tesla and other companies are showing that crypto is here to stay, and its mainstream adoption is only going to increase. In terms of market dynamics, as more companies hold bitcoin on their balance sheet, so the finite supply is depleted even more, and this is likely to cause a supply-side squeeze and boost prices over the longer-term.”

Last week, Deutsche Bank analyst and Harvard economist Marion Laboure predicted “the next two or three years should be a turning point for bitcoin.”

“Bitcoin’s current valuation is pricing in a shift toward cross-border digital currencies; the hypothesis is that bitcoin, as the leader, will benefit from network effects and become an important means of payment in the future,” Laboure wrote in a report on the future of payments.

Softcat end of year results to surpass expectations

Liam Roche
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Softcat end of year results to surpass expectations

Softcat hikes dividend by 18.5% to 6.4p per share

Softcat (LON:SCT) outperformed its own upgraded forecasts at the halfway stage of the financial year as the IT company remained resilient during the pandemic.

The FTSE 250 company expects to surpass its full-year expectations too as it has further invested in its growth strategy during the past 12 months.

Total headcount was 1,658 at the end of January, up 12% from the year before, while the IT company said it did not make use of government support.

While cost savings on account of the coronavirus pandemic are expected to shrink over the second half of the year, Softcat said it is positive over its potential to grow its market.

During H1 to 31 January 2021, Softcat’s revenue rose by 10% to £577m, while pre-tax profit jumped up 29% to £57m as reduced costs increased the company’s operating profit.

The interim dividend, which will be paid out in May, was raised by 18.5% to 6.4p per share.

Despite the widespread move to remote working, Softcat’s customer base rose to 9,600 by 1.5%, as the public sector held steady and corporate demand resurged following a dip early on in 2020.

The Sofcat share price rose by 11% to 1,731p on Wednesday as markets opened.

Graeme Watt, chief executive of Softcat, commented on the results:

“We are pleased with the strong performance in the first half of the financial year in which we continued to grow and take share in a market that has remained relatively resilient during the pandemic. We did see a reduction in income from some corporate customers during the last quarter of our previous financial year, but during the current period that effect has gradually diminished.”

“In addition, the business has benefitted from a temporary reduction to some elements of the cost base, although we expect this to normalise as the second half develops. The Company has taken no form of government support during the pandemic nor made any headcount reductions and we expect that to continue to be the case. We have been delighted to be able to put part of our Marlow head office to good use as a Covid vaccination centre over the past few months and this will continue into the summer.”

Oriole Resources confirms active drilling campaigns at core projects

Liam Roche
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Oriole Resources confirms active drilling campaigns at core projects

Oriole Resources narrows pre-tax loss

Oriole Resources (LON:ORR) is strongly positioned for the year ahead as the company confirmed active drilling campaigns at its core projects in Cameroon and Senegal, in addition to its investment projects in Djibouti and Turkey, in its full-year results.

The AIM-listed exploration company posted a loss before tax of £320,000, down from £1.67m loss the year before.

The improved performance came about as a result of a £317,000 foreign exchange gain on its Senala asset in Senegal, successful growth of its Turkish consultancy business and cost-saving measures that reduced the group’s administrative overheads by 35%.

The company confirmed it ended the year with a cash balance of £1.75m.

Just recently, Oriole Resources revealed it was making progress on its 3,080 metre drill programme at the Bibemi gold project.

Tim Livesey, chief executive of Oriole Resources, commented on the diffciculties faced by the company during 2020 while looking ahead.

“Whilst 2020 was a difficult and unprecedented year at a global level, at Oriole we succeeded in advancing the Company’s pre-stated development goals of signing of a drill contract and securing the necessary funds to allow us to finish the year poised for the commencement of our maiden drilling programme at Bibemi in Cameroon. With initial results anticipated in Q1, and continuing into Q2, we look forward to building our knowledge of the extensive gold mineralisation on the licence.”

“We also secured, alongside our partner, a district-scale package of eight new licences in central Cameroon covering 3,592 km2. We believe the area to be highly prospective for gold, both from historic results and from our initial remote sensing studies on the area. A reconnaissance visit has already been completed ahead of an upcoming stream sediment sampling programme, which we anticipate will commence in Q2.”

“The next stage of exploration at Faré will be an RC and DD programme, which is planned for completion by the end of Q2, and we also look forward to the planned RC and DD programme at Madina Bafé later in the year.”

Bellway to reinstate dividend as strong demand lifts revenue

Liam Roche
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0
Bellway to reinstate dividend as strong demand lifts revenue

Bellway forecasting sale of 10,000 homes for coming year

Bellway (LON:BWY), the homebuilder, has reinstated its dividend after completing a record number of homes in the first half of the year.

The FTSE 250 company posted an 11.6% rise in revenue from the year before to £1.7bn, while operating profit remained flat at £297.7m.

Bellway is forecasting sales of 10,000 homes for the full year up to 31 July 2021, which would be a substantial increase on the 7,522 sold in the 12 months prior.

Having been cancelled last year on account of the pandemic, the company reinstated its dividend at 35p per share.

The homebuilder confirmed in a statement alongside its results that the average sale price of its homes jumped to £303,206, as well as saying there was strong underlying demand in the housing market.

Bellway has also made a “significant investment in land, with a record 8,848 plots contracted.”

The Newcastle-based homebuilder has also put aside £20m to deal with cladding related issues in apartment blocks following the Grenfell disaster.

Commenting on the results, chairman, Paul Hampden Smith, said:

“Bellway has delivered a good first half trading performance, achieving record first half revenue because of its strong brought forward sales position and investment in work-in-progress. We have delivered this growth, while retaining our core focus on quality and customer care and have been recognised as a five-star homebuilder for the fifth consecutive year.”

“We have acted cautiously and responsibly throughout the COVID-19 pandemic, ensuring safe working practices across all our construction sites, sales centres, and divisional offices. In addition, we continue to offer support to our colleagues, whose ongoing efforts have been crucial in helping Bellway emerge strongly from this global crisis, with ongoing mental health and wellbeing campaigns.”

“As a responsible developer, Bellway recognises concerns with regards to fire safety in apartment buildings.  As part of our efforts to help building owners of legacy apartment schemes, we have recognised an additional net legacy building safety expense of £20.3 million in the period.”

“The brings the total amount provided by the Group since 2017, in relation to fire safety, to £131.6 million. This is a substantial sum which demonstrates Bellway’s responsible approach to supporting customers with regards to this issue.”

The London Stock Exchange Group presents at the UK Investor Magazine Virtual Conference

UK Investor Magazine
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The London Stock Exchange Group presents at the UK Investor Magazine Virtual Conference

The London Stock Exchange Group addresses the UK Investor Magazine Virtual Conference 23rd March 2021.

Tim Davis, Regional Head of Primary Markets at the London Stock Exchange, delivers an intriguing presentation focusing on three key areas; an overview of UK markets in the Main Market and AIM, how AIM has evolved and the London Stock Exchange’s green investing activities.

There is also insight on capital raising activity and how London is a truly international market.

Download the presentation slides here.

Ergomed consolidates North American growth

Andrew Hore
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Ergomed consolidates North American growth

Contract pharma research provider Ergomed (LON: ERGO) is in the top forty best AIM performers over five years with a 635% increase in the share price and it is not far from quadrupling over the past year. That means that the shares have a heady rating, but the growing market and potential for earnings enhancing acquisitions make it appear warranted.
Ergomed decided to concentrate on third-party services rather than co-development more than two years ago. Last year, two major acquisitions were made in the important North American market and management would like to further increase scale in the...

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