1Spatial revenue set to surpass expectations

Liam Roche
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1Spatial revenue set to surpass expectations

1Spatial revenue to exceed £24m for the year

1Spatial (AIM:SPA) announced on Monday that it expects to post better than forecasted financial results for the second half of the company’s trading year.

The Location Master Data Management (LMDM) software and solutions company expects its yearly revenue will exceed £24m, up from £23.4m the previous year. Recurring revenue is also forecasted to have increased on the year, along with committed revenue and longer-term contracts.

Adjusted EBITDA is expected to be in excess of £3.2m.

The AIM-listed company has improved its cash performance, with net cash increasing to £4.3m, up from £3.9m the previous year. The increase in net cash is after payment of deferred consideration of €0.7m (£0.6m), and the result of a strongly positive operating cash flow and a positive free cash flow for the full year. 

1Spaitial’s share price is up by 1.79% to 34.1p on Monday’s mid-morning trading.

1Spatial expects to continue its progress in the coming year, while remaining cautious over how the pandemic continues to unfold.

Commenting on the update, 1Spatial CEO, Claire Milverton, said:

“I am delighted to report such a solid set of numbers and significantly improved cash performance against the challenging backdrop of the global pandemic. Our expertise in the cleansing and management of location data means we sit right at the heart of changes across multiple sectors.”

“Whether that be in helping governments and energy providers prepare to meet the green agenda, supporting the investment in infrastructure upgrades as the world’s economies prepare for post-COVID recovery, or implementing digital transformation strategies. We closed the year strongly and look to the future with increasing confidence,” Milverton continued.

Reach to pay dividend despite falling print sales

Liam Roche
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Reach to pay dividend despite falling print sales

Reach revenue down £600.2m

Reach PLC (LON:RCH) has announced a 14.6% fall in revenue to £600.2m for the year.

Revenue from the media organisation’s digital operations rose by 10.6%, while print fell 18.9%.

The group – which operates the Daily Mirror along with a host of other publications – put its performance down to the impact of the coronavirus pandemic.

Reach’s adjusted operating profit was also down by 12.8% to £133.8m.

Reach’s final dividend will remain the same from 2019 at 4.26p per share. At early morning trading on Monday, Reach’s share price is down by 1.05% to 236p.

Commenting on the results and the year ahead, chief executive Jim Mullen said:

“A radical reorganisation of our business model not only makes us more efficient, it also enables our changing culture, which is evolving to support a growth led agenda.”

“We have delivered our strategic milestones ahead of our original expectations and will now increase investment to accelerate delivery, focusing on the use of enhanced customer insight to drive engagement and our medium-term objective of doubling digital revenues,” Mullen added.

“Resilience in print circulation is the foundation for the strong cash generation which underpins strategic investment, our pension commitments and growing returns to shareholders.”

“While macro-economic uncertainty resulting from Covid-19 clearly remains, the group is well placed to make good progress during 2021 and to generate increased long term value as the strategy gathers momentum.”

Last July, Reach announced it would cut its staff by 550, more than 10% of its workforce.

FTSE 100 regains ground early on following disappointing end to February

Liam Roche
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FTSE 100 regains ground early on following disappointing end to February

The FTSE 100 surged on Monday morning following a disappointing end to the previous week. The index of the UK’s top companies rose by 1.89% to 6,605.73 soon after the trading day commenced.

Richard Hunter, head of markets at Interactive Investor, said: “The FTSE 100 is seeing a relief rally following a poor end to last week. 

“The increase in the oil price is a factor, and as an index increasingly being seen as providing value, international investors may be tempted to buy into any strength. The index remains ahead by 2.0 per cent in the year to date, with the state of the nation likely to be revealed later in the week when the terms of the Budget are revealed.”

The surge in the FTSE 100 comes amid expectations that Rishi Sunak will upgrade forecasts on the UK’s economic recovery from Covid-19.

FTSE 100 top movers

Home builders Persimmon (5.48%), Taylor Wimpey (5.04%) and Barratt Developments (4.5%) are the biggest risers on the FTSE 100 at early morning trading.

Down at the bottom, Bunzl (-1.99%), Informa (-1.63%) and B&M European Value Retail (-0.037%), were the only three companies to lose ground on the FTSE 100 index.

Bunzl

Bunzl’s (LON: BNZL) currency adjusted profit before income tax is up by 25.6% to £715.6m as demand for supplies rose during the pandemic. The distribution company saw its adjusted revenue climb by 9.4% compared to the year before, up to £10.1bn. 

The FTSE 100 company announced a dividend of 54.1%, up 5.5% from the year before, while basic earnings per share rose by 22% to 128.8p. Shortly after market opening, Bunzl’s share price is down by 3.13% to 2,167p per share.

Reach

Reach PLC (LON:RCH) announced a 14.6% fall in revenue to £600.2m for the year. Revenue from the media organisation’s digital operations rose by 10.6%, while print fell 18.9%.

The group – which operates the Daily Mirror along with a host of other publications – put its performance down to the impact of the coronavirus pandemic.

Bunzl profits up following surge in demand for supplies during pandemic

Liam Roche
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Bunzl profits up following surge in demand for supplies during pandemic

Bunzl acquires three “highly complementary” companies

Bunzl’s (LON: BNZL) currency adjusted profit before income tax is up by 25.6% to £715.6m as demand for supplies rose during the pandemic.

The distribution company saw its adjusted revenue climb by 9.4% compared to the year before, up to £10.1bn.

Bunzl announced a dividend of 54.1%, up 5.5% from the year before, while basic earnings per share rose by 22% to 128.8p. Shortly after market opening, Bunzl’s share price is down by 3.13% to 2,167p per share.

A surge in bulk orders of disposable gloves, hand sanitiser and masks helped the distributor to grow its profit significantly during the pandemic.

Frank van Zanten, chief executive of Bunzl, discussed the effect of the pandemic on the business:

“The pandemic has served to highlight the vital role that Bunzl plays in ensuring supplies of essential products as well as the benefits of our diversification. As a result of our extensive supply chains and our Asia sourcing and auditing operation, we were able to quickly source and deliver significant quantities of quality assured Covid-19 related products, such as gloves and masks,” said van Zanten.

“Consequently, we were able to offset the negative impact that restrictions had on many of our customers’ businesses, particularly in the foodservice and retail sectors. I am very proud of the role we have played in serving and protecting front line heroes.”

The FTSE 100 company confirmed on Monday it had completed three acquisitions of “highly complementary” companies.

The specialist distribution group acquired Deliver Net in January, in addition to Disposable Discounter and Pinnacle in February.

Commenting on the acquisitions, Frank van Zanten, Chief Executive Officer of Bunzl, said:

“I am pleased to welcome Deliver Net, Disposable Discounter and Pinnacle into the Bunzl family.  All three businesses demonstrate our continued focus on growing Bunzl through the acquisition of high quality businesses. Further, these acquisitions demonstrate Bunzl’s continued acquisition momentum, with our pipeline remaining active and discussions ongoing.”

Investors bid up Auction Technology price

Andrew Hore
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Investors bid up Auction Technology price

Online auctions provider Auction Technology Group (LON: ATG) got off to a strong start in its first week on the Main Market. Boosted by Covid-19 restrictions making normal auctions more difficult, demand for online auctions has boomed in the past year.
The company raised £247.4m at 600p a share, while existing shareholders pocketed £51.5m after the over-allotment option was exercised. The company was valued at £600m. There was a 30% gain at the end of the first week of trading.
Business
The genesis of the business was the trade magazine Antiques Trade Gazette and it still generates nearly 10% ...

Town Centre dividend surprise

Andrew Hore
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Town Centre dividend surprise

Town Centre Securities (LON: TOWN) provided a pleasant surprise with a 1.75p a share interim dividend. This indicates the confidence of management even though revenues have declined due to Covid-19.
Town Centre has collected 85% of rents since last March and 3% more relates to deferral agreements. Some high street retailers remain unwilling to pay rents, although Boots has started to pay after threatened legal action.  
The reduction of exposure to retail and leisure properties continues and they currently account for 39% of the portfolio – pure retail is 26%. A further £1.4m of sales are...

IAG share price: good value if air travel returns to normal

Liam Roche
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0
IAG share price: good value if air travel returns to normal

The coronavirus pandemic devastated not only International Consolidated Airlines (IAG) (LON:IAG), but the airline sector more generally. Heathrow confirmed a £2bn loss during 2020 as passenger numbers dropped to the airport’s lowest level since the 1970s. However, while the way back for the aviation is not imminent, there is now a roadmap which could tempt investors to look closely at IAG. The Prime Minister has ruled out non-essential travel until May 17, although there will be a review on April 12 on how to safely restart travel ahead of summer.

Good value?

British Airways owner IAG stomached a €7.4bn loss in 2020, a €10bn swing from the year before. “Our results reflect the serious impact that Covid-19 has had on our business,” said Luis Gallego, the chief executive of IAG. As a result, the airline’s share price is down to 191.95p, from 351.31p 12 months ago.

While other industries have experienced rallies as the vaccine roll-out picks up momentum, the aviation sector is being left alone by investors, while question marks remain over the future. On the assumption that travel returns to its normal levels during the summer, IAG shares could represent excellent value. Analysts at UBS Group have issued a 215p price target to its clients on Friday, as well as assigning the stock a “buy” rating. The price target is 12% above the stock’s current price.

Will flying return to pre-pandemic levels?

Airlines reported an influx of holiday bookings following the Prime Minister announcing a roadmap out of lockdown. The demand is there, according to chief executive of easyJet, John Lundgren: “We have consistently seen that there is pent-up demand for travel and this surge in bookings shows the signal from the government that it plans to reopen travel has been what UK consumers have been waiting for.”

However, the sector will need more than demand from consumers to secure its future. A question mark remains over the long-term effects of Covid-19, even once most people have received a vaccine jab. If the disease lingers then international travel could be restricted beyond May 17

“The challenge is to find a way to live with it without keeping huge restrictions in place,” says Azra Ghani, professor of infectious disease epidemiology at Imperial College London.

GRIT Real Estate Income Group: exposure to Africa’s rapid growth

Liam Roche
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GRIT Real Estate Income Group: exposure to Africa’s rapid growth

GRIT Real Estate Income Group is a leading pan-African property investment company with an actively managed and diversified portfolio of assets worth $849.2m.

There are three key aspects to GRIT’s business model. Firstly, the company’s client base consists of high-quality blue-chip multinationals which means its agreements are backed by guarantees. Secondly, GRIT’s revenues are denominated mostly (93%) in the US dollar or the euro, allowing the company to protect itself from currency risk. Finally, GRIT is diversified across the continent of Africa.

Why Africa?

With many of the world’s youngest populations, Africa is poised for growth both in the coming year and for decades to come. Following the pandemic, regional growth is forecasted at 3.4% in 2021. By 2030, 40% of Africans will be middle-upper class, while 50% of the continent will be urbanised. 

Strong population growth, a growing middle-class and increasing economic growth are trends that suggest Africa will be able to deliver strong and sustainable income, in addition to potential for income and capital growth for investors.

Diversification

GRIT’s holdings are well diversified across Africa and by sector. The countries where GRIT has its largest investments are Mozambique (39.3%), Mauritius (23.4%), Zambia (9.9%) and Morocco (8.7%). Office space (27.7%), retail (24.7%), hospitality (22.9%) and corporate accommodation (15.5%) are among the top revenue generating industries for GRIT. Out of a host of multinational tenants, Beachcomber (11.8%), Total (9.9%) and Vale (9.8%) are GRIT’s top three income generating clients.

Retail

At the recent UK Investor Magazine conference, Bronwyn Corbett, CEO of GRIT Real Estate Income Group, outlined the company’s decision to change its retail weighting based on trends that emerged prior to the pandemic.

Highlighting the changing shape of consumption in Africa and how GRIT are harnessing the opportunity, Corbett outlined recent projects adapted to the needs of the African consumer.

“The retail in Africa that we believe in is convenience shopping. We’ve got malls in Zambia that have brought a 12,000 sqm space to 4.5m people in an area where people previously had to walk for 6 hours to shop,” Corbett said.

Performance

GRIT controlled its costs throughout the pandemic in order to offset the impact on revenue. This leaves the company well positioned to rebound once the impact of Covid-19 falls away. 

The company’s profit rose by 19.7% to $12.9m in 2020, while gross rental income fell by 0.1% to $31.6m. GRIT’s assets performed well during 2020 with the total income produced rising by 3.1% to $849.2m. GRIT’s EPRA NAV per share rose by 6.3% to 124.4 cents per share, suggesting an undervaluation by the stock market.  

GRIT’s board suspended its dividend payout for the second half of 2020 to protect the company during the pandemic. However, the property firm has proposed a resumption of its dividend of 1.5 cents per share in 2021 due to its LTV reduction and strong rent collections.

Outlook

GRIT has three developments underway in Mauritius and Kenya, each with yields above 10%. The company also has two redevelopments being processed in Mozambique and Senegal with target closing dates before the end of 2021. 

The group had an LTV of 50.2% in 2020, which is expected to fall to 49.3% in 2021, and remains a focus for GRIT.

Chinese consumer trends: the online ecosystem and growing luxury demand

UK Investor Magazine
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Chinese consumer trends: the online ecosystem and growing luxury demand

Sandrine Zerbib, founder of Chinese online consumer platform Full Jet, joins the UK Investor Magazine Podcast to discuss key Chinese consumer trends and the evolution of the luxury market.

We look at the strength of the Chinese consumer after a recent report by Morgan Stanley that pointed to consumption in China doubling to $12.7 trillion in 2030.

Sandrine provides detailed insight on the Chinese online consumer markets and explains the ecosystem and key platforms used by brands to distribute their products. There are significant differences between the West’s leading online platforms such as Amazon, eBay, Facebook and YouTube, and those driving online consumption in China.

We pay particular attention to the luxury markets and how they have developed in recent years. For example, Burberry has enjoyed years of growth in China. With an innovative engaging model, Burberry are still seeing strong growth figures that has been helped by consumers spending their cash domestically as coronavirus restrictions prevents them spending abroad.

Bitcoin plummets as Bill Gates wades into the debate

Liam Roche
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0
Bitcoin plummets as Bill Gates wades into the debate

Bitcoin falls by 20% in five days

Bitcoin is down by 9.53% in 24 hours following the cryptocurrency’s recent surge to record highs.

The price of of the cryptocurrency is now valued at just above $46,000, down from $51,600 a day before.

The cryptocurrency reached an all-time high of $58,000 on Sunday as a series of institutional investors put their weight behind the controversial blockchain technology.

Friday’s fall represents a 20% drop in value within the space of a week.

Michael Saylor, co-founder of Microstrategy, the software company, restated his view that the cryptocurrency was here to stay following his company’s announcement that it had taken its holdings to 90,531 bitcoins, valued at $4.5bn.

“The company now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value,” he said.

“We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities… with the objective of using the proceeds to purchase additional bitcoin.”

Microsoft founder Bill Gates also waded into the debate recently, warning retail investors against investing in bitcoin. The billionaire cited Tesla CEO Elon Musk as someone who could afford to take risks by holding the cryptocurrency.

“Elon has tons of money and he’s very sophisticated, so I don’t worry that his bitcoin will sort of randomly go up or down,” Gates said.

“I do think people get bought into these manias who may not have as much money to spare. My general thought would be that if you have less money than Elon, you should probably watch out.”

The news means more of the same for bitcoin’s rising yet volatile price. At the beginning of 2020 one bitcoin was valued at under $10,000.

Investment bank JP Morgan recently revealed a long-term price target of $146,000.

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