A one-off wealth tax could “transform lives”

Safiya Bashir
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0
A one-off wealth tax could “transform lives”

A group of leading tax experts and economists are calling on the government to launch a one-off wealth tax to raise money amid the Coronavirus pandemic.

The Wealth Tax Commission has said that taxing the richest in society is the most fair and efficient way to respond to the impact of the pandemic and that by taxing millionaires an extra 1% above a £1m threshold could raise £260bn over just five years.

“We’re often told that the only way to raise serious tax revenue is from income tax, national insurance contributions, or VAT. This simply isn’t the case, so it is a political choice where to get the money from, if and when there are tax rises,” said Arun Advani, assistant professor at the University of Warwick.

A 1% per year tax rate would be the equivalent of raising VAT by 6p or the basic rate of income tax by 9p.

Rebecca Gowland is the head of inequality campaigning at Oxfam. She commented: “At a time when so many people are facing hardship as a result of the pandemic, this feasible and deliverable one-off wealth tax could transform lives – an uncomfortable truth for vested interests that are likely to resist it.

“The difference this revenue could make for the most vulnerable in society is staggering. Just a quarter of the extra money raised would be enough to keep and extend the social security weekly uplift and allow us to meet our lifesaving aid promise to the world’s poorest people.”

The UK government’s budget deficit is on track to hit almost £400bn this year.

Global equities flat despite US stimulus hopes

Jamie Gordon
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Global equities flat despite US stimulus hopes

Finishing the day without making any notable ground, global equities appeared largely unphased by the positive chatter surrounding US stimulus talks.

In spite of fresh calls for stimulus, there seems to be some disagreement over whether there’s a total gridlock, or whether we’ll see a new deal tabled within the next week or so.

Responding to the stimulus whispers, and a lack of ground-breaking corporate or economic news, global equities struggled for a reason to move on Tuesday – with the Monday drift continuing, alongside a lack of motivation to push higher.

Speaking on the stimulus hopes, and a quiet day for global equities, IG Chief Market Analyst, Chris Beauchamp, said: “A host of indicators suggest stock markets around the globe are stretched to the upside, and probably vulnerable to a near-term correction, but for now sellers do not seem to be able to summon up the necessary momentum to provide the spark for a big drop.”

“The rise in cases across the US seems finally to have galvanised American lawmakers into action, although the $900 billion discussed is certainly well below the mooted levels of late summer, and even this amount may not make it through unscathed.”

“Even if the bill does go through, the lack of a ‘trillion’ in the headline could mean markets greet it with a collective shrug, deeming it insufficient to provide a real boost for the US economy.”

Providing some glimmer of hope were US equities, with the Dow Jones opening with a 0.38% rally, keeping it above the 30k benchmark. Just short of last Friday’s all-time-high, the index sits at 30,183 points.

Elsewhere in global equities, Eurozone equities were all spurred on by the cheery US index open. The FTSE and DAX both finished up by 0.05%, having recovered 40 and 75 points, to finish at 6,558 and 13,278 points respectively. Meanwhile, even having recovered by 38 points, the CAC finished down by 0.23%, at 5,560 points.

EQTEC WTE acquisition could power 37.5k homes

Jamie Gordon
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0
EQTEC WTE acquisition could power 37.5k homes

Gasification tech solutions company, EQTEC plc (AIM:EQT), announced that it has signed a Share Purchase Agreement to take full ownership of the Deeside Refuse Derived Fuel Project, via the acquisition of Logik WTE Limited.

The company said this latest acquisition is part of a portfolio under review of waste to energy infrastructure. Assuming the requisite financing is in place, EQTEC expects to act as the project’s developer, providing design and core advance gasification tech, and retaining a portion of the O&M contract.

EQTEC said that conversations with potential EPC companies are ongoing and the documentation required for tendering the EPC contract for the first phase of the Deeside RDF Project is currently being produced. Once EPC offers are reviewed, the company will reach a final decision on the project’s funding structure.

Further, the company and Logik are also in discussions about a framework collaboration agreement, covering proposed cooperation for the development of a portfolio of waste to energy projects Logik is currently pursuing across the UK.

Commenting on today’s acquisition, David Palumbo, CEO of EQTEC, said: “We are pleased to have signed this SPA to acquire the Project SPV for the Deeside RDF Project after completing our due diligence, making good progress on funding discussions and shortlisting EPC companies for the Project. We estimate that, with the application of EQTEC’s advanced gasification technology, the Project would convert hundreds of thousands of tonnes per year of non-recyclable everyday household and commercial waste otherwise destined for landfill or incineration.”

“In this way, EQTEC expects to be able to significantly improve both the economics and the environmental impact of this plant and many traditional waste-to-energy facilities, bringing employment to the local area and economic and environmental benefits to both the local community and large industrial energy users, whilst delivering attractive returns to EQTEC’s shareholders.”

The Deeside RDF Project is made up of 6.27 hectares of land at the Deeside Industrial Estate. The company said that its seeking additional planning permission, in order for its gasification etch to be applied to the project, and reduce its potential environmental and cost impact.

At present, EQTEC predicts the project will convert hundreds of thousands of tonnes of non-recyclable waste per year, into 20MW of green electricity – enough to power 37,500 homes and 27MW of thermal heat production. 

The company said that the electricity and heat could be exported to the grid or sold locally. It added that its preference would be to create private wire and heat networks using the surplus electricity and heat, as it is already aware of interest from a large industrial energy user in the area.

The company’s statement added that: “EQTEC estimates that the additional capacity for the thermal conversion of waste, utilising the Group’s advance gasification technology, would generate additional revenues for the Project SPV of c.£16 million in gate fees, c.£6 million in electricity sales and up to £1.5 million in heat sales.”

The SPA is set to take place for an initial consideration of £2.31 million, with a £300,000 deposit and the outstanding balance payable within 12 months of signing the SPA. Following this, there will be a deferred conditional consideration of £2.29 million which will be paid upon the project achieving certain milestones.

Additionally, a fixed dividend share will be issued to Logik, giving it the right to 5% of distributable EQTEC profits – though no voting rights in the company. Finally, there will be an additional development premium or overage payment, ‘subject to a maximum further amount’ of £5.4 million, payable on the achievement of two financial conditions. 

Neil Spencer, Director of Logik, added: “LOGIK secured planning on the proposed project site over 12 months ago and, together with EQTEC, we look forward to continuing to work closely with all local stakeholders to help ensure this project gets built and secures additional planning that will further enhance the benefits to the local community.” 

“We are very encouraged to be working with a team with the experience and credibility of EQTEC and remain optimistic of what we expect to achieve in Deeside and in further potential collaborations with EQTEC on a portfolio of waste to energy projects that Logik is currently progressing in the north of England and across the UK.”

Coral Products return to profit, shares surge

Safiya Bashir
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0
Coral Products return to profit, shares surge

Coral Products shares were 31.46% higher on Monday after the group revealed its half yearly report for the six months ended 31 October 2020.

The specialist in the design, manufacture and supply of plastic products reported a 2,064% growth in reported pre-tax profits from £25,000 to £541,000 in the six months to the end of October.

Underlying earnings per share surged 257.7% to 0.93p and Underlying EBITDA was up 21% to £1.62m.

Coral Products said in the update that they had returned to profit despite the impact of the pandemic and ongoing Brexit uncertainty.

“Particularly pleasing is the Group’s return to profit when considering the huge negative impact of the Covid-19 pandemic on our customer base has meant that the new business expected from the new and improved food packaging and the 23 litre/55 litre recycling products have not been realised in the current period. It is expected that both will positively impact the business in the final quarter of this financial period,” said the group in a statement.

Joe Grimmond, Coral’s Chairman, said: “In my Chairman’s statement that accompanied the release of the 2020 accounts I expressed concerns over the uncertainties associated with the ongoing Brexit situation and coronavirus pandemic. Despite these concerns I am encouraged with the level of sales and profitability achieved over the period”.

Coral Products shares are trading 27.14% higher at 6,77 (1548GMT).

LSE listed companies fell by 396 since 2015

Jamie Gordon
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0
LSE listed companies fell by 396 since 2015

Data from financial education service, Buy Shares, indicated that the number of companies trading on the London Stock Exchange (LON:LSE) dropped by 396 – or 16.63% – between the Novembers of 2015 and 2020.

In 2015, the number of companies listed on the LSE stood at 2380, though this number had fallen to 1984 by last month. During the period, the highest number of monthly trades took place in March 2020, with an average of 2.03 million, versus the lowest number, 760,180, recorded in August 2020.

According to Buy Shares, a reason for the shift in the number of companies traded on the world-famous exchange is (perhaps inevitably) Brexit uncertainty, which has at the very least seen many companies take up additional listings at alternative exchanges.

Further, the company said that listings demands high fees, represent a regulatory burden, and comparatively high costs versus private markets – to the extent that small and mid-cap companies have found it more difficult to justify LSE entry.

A key driver behind this data, though, is the particularly adverse effect that the COVID-Brexit combination has had on UK securities in 2020. Between “a wipe-off [of] billions in stock values alongside extreme volatility and sell-offs”, the LSE was host to some of the worst-afflicted pandemic sectors, including air travel, energy and financial services.

Speaking on the reduced number of companies listed on the LSE, Buy Shares Editor, Justinas Baltrusaitis, said: “The relentless rise of private equity has given companies an attractive alternative to listing on a major platform like the London Stock Exchange. Companies are going private at a high rate due to depressed share prices, low-interest rates, and the massive attraction of Private Equity. Attractive valuations have enabled Private Equity funds to acquire companies with strong fundamentals at prices below recent norms.”

“However, the declining number of companies on LSE might increase in the future, considering that there are calls for government help. There are calls for the government to step in, especially in the backdrop of Brexit. With help from the government, LSE can attract global businesses to list in London, knowing they have access to the deepest capital pool, against a fair and consistent regulation.”

Further, the LSE will continue to benefit from its prime location, history, and social infrastructure, which other indexes will find hard to replicate.

Euromoney Instit. Investor acquires WealthEngine

Jamie Gordon
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Euromoney Instit. Investor acquires WealthEngine

Global B2B information service provider, Euromoney Institutional Investor (LON:ERM), announced the $14.5 million acquisition of WealthEngine Inc.

WealthEngine is a Software as a Service platform that provides data-driven intelligence analytics to wealth managers, luxury brands and not-for-profit organisations. The company profiles US individuals in order to identify potential donors and customers for its clients, with revenues primarily derived from subscriptions.

Euromoney Ins. Inv. Said the acquisition adds scale to its People Intelligence business, which is now comprised of Wealth-X, BoardEx and WealthEngine. The Group added that the WealthEngine acquisition compliments its other recent addition, Wealth-X, whose database profiles high and ultra-high-net-worth individuals.

When added to the relationship mapping services of BoardEx, Euromoney states that it now has ‘full coverage across the wealth intelligence value chain’. It added that WealthEngine’s Annual Contracted Value of subscriptions and pro-forma EBITDA are expected to be $15.0 million and $2.0 million respectively.

The Euromoney Institutional Investor statement said: “This highly complementary acquisition is expected to enhance the operating profit margin of People Intelligence and deliver accelerated growth over the medium-term. As a result, the acquisition is expected to be earnings accretive for Euromoney and deliver ROI above WACC in the current financial year.”

James Lavell, Group CEO People Intelligence, added: “The acquisition of WealthEngine is a great addition to the Group and supports our strategy by adding further scale to our 3.0 People Intelligence business. It brings leading technology, workflow solutions and must‐have data, which, when combined with Wealth-X and BoardEx, will enhance significantly the value we provide customers.”

Following the update, Euromoney shares initially jumped by around 3%, though fell to a 0.58% rally, at 1,040.00p 13:00 GMT 08/12/20. The price is around 2.2% ahead of analysts’ consensus price target of 1,016p, but just short of its post-lockdown high of 1,064p a share.

Analysts currently have a consensus ‘Hold’ rating on the stock, while the Marketbeat community offers a 56.75% ‘Underperform’ stance. The company has a p/e ratio of 36.11, and a dividend yield of 3.17%.

Ferguson profits heat up 12%

Jamie Gordon
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0
Ferguson profits heat up 12%

Reporting its performance for the three months of trading ended October 31, heating and plumbing specialists, Ferguson plc (LON:FERG), announced bumper profits during Q1 2021.

The company’s revenues bounced 3.1% year-on-year, up to $5.37 billion, while its gross margin narrowed slightly, down by 0.1%, to 29.6%.

Its main progress was seen in the company’s profits, with trading profits up 11.8% year-on-year, from $451 million, to $504 million. Likewise, Ferguson underlying trading profits grew 12.2% to $486 million, while adjusted EBITDA hiked 12.7%, to $558 million.

In terms of the company’s cash position, strong trading and cost control meant that even with its two US bolt-on acquisitions, its net debt to adjusted EBITDA ratio fell from 0.8X, to 0.5X.

Commenting on the performance, Ferguson Chief Executive, Kevin Murphy, said: “We are pleased with the revenue growth in the first quarter and today’s results further demonstrate the resilience of our business model. We are firmly focused on revenue growth and continued market share gains at the same time as carefully controlling gross margins and costs. This approach has enabled us to deliver robust trading profit growth in the first quarter. Cash generation was good and our balance sheet remains strong. This has enabled us to continue to invest in the business including our technology platforms to drive the best digitally enabled customer relationships and a seamless omni-channel experience.” 

“Since the start of the second quarter Ferguson has continued to generate low single digit revenue growth in broadly flat markets although we remain cautious on the outlook for the year as a whole , considering current pandemic trends. Despite these potential headwinds the business is in very good shape and we are well prepared should there be any further market related disruption and overall management’s expectations for FY 2021 are unchanged.”

Following the update, Ferguson shares rallied by a modest 0.19%, to 8,496.00p apiece 08/12/20 12:30 GMT. This price is 21.3% ahead of analysts’ consensus target price of 6,689p, and around 0.89% behind its year-to-date high of 8,572p per share.

Analysts currently have a consensus ‘Hold’ stance on the company’s stock, alongside a 52.71% ‘Underperform’ rating from the Marketbeat community. The company has a p/e ratio of 20.06, and a dividend yield of 3.13%.

Studio Retail Group reports 199% profit increase, shares rise

Safiya Bashir
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0
Studio Retail Group reports 199% profit increase, shares rise

Studio Retail Group shares opened almost 10% higher on Tuesday after the group revealed interim Results for the 26 weeks ended 25 September 2020.

Group revenue surged 17.2% from £228.7m in 2019 to £268.0m, whilst pre-tax profit was up 199% from £5.0m to £15.0m.

Active customer base at the group was up 15% in the period to 2.1m at the end of September, including 1.4m with an active credit account. Online ordering levels in during the first half of the year was over 91%, up from 81% last year and the app had over 850,000 downloads since its launch in October 2019.

Looking forward, the Studio Retail Group said: “Studio’s multi-year transformation into a digital-first retailer, means that it is ideally positioned to serve the increasing number of customers who choose to shop online. Our growing customer base, coupled with strong processes and systems has meant we have been well-positioned to respond to record levels of activity during peak trading in recent weeks.”

“While we are yet to see any material adverse impact of the pandemic on customer repayments, we remain watchful of the volatile consumer environment. Nonetheless, the strength of our customer proposition, further investment in our digital capabilities, and the strong growth in the credit customer base – where there is a higher degree of loyalty – underpins our confidence in the sustainability of the medium-term growth prospects of the business.”

Commenting on the results, chief executive Phil Maudsley said:

“I am very proud of the way that this group has responded over the last few months to the challenges of Covid-19. These interim results are testament to the strengths of our digitally-focussed value business and the ability of our colleagues and customers to adapt rapidly to change.

“Our strategy to grow the Studio customer base and increase our customers’ spend with us, supported by our flexible credit offer has delivered a record trading performance which underpins our confidence in the Group’s medium-term growth prospects.”

Studio Group shares are currently trading +6.84% at 281,00 (1144GMT)

UK grocery market sees record November sales

Safiya Bashir
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0
UK grocery market sees record November sales

Over £10.9bn was spent in-store and online on groceries in November, making in the biggest month ever for the UK grocery market.

According to Kantar, grocery sales rose by 11.3% in the 12 weeks to 29 November as cafes, bars and restaurants were closed and people stayed at home.

“Take-home grocery sales rose by 11.3% during the 12 weeks to 29 November 2020, the fastest rate of growth since August. Take-home sales during the past four weeks increased by 13.9%, as eating and drinking out of home was restricted by the English national lockdown,” said the market researcher.

Alcohol spending surged by 33%, sales of festive lights were up by 238%, and turkey sales grew by 36%.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said:

“The three days before non-essential retail and hospitality closed on 5 November were especially busy, with grocery sales that week up by 17%. November as a whole saw shopper frequency hit its highest level since the beginning of the pandemic, suggesting more confidence among people going into stores.

“Those factors contributed to November being the single largest month ever for the supermarkets, with £10.9bn spent over four weeks. December’s numbers are likely to surpass that again, and we expect spend to be close to £12 billion in the month ahead, around £1.5bn more than last year.”

Morrisons shares were up 1.5%, Sainsbury’s shares were up by 0.9% and Tesco up 0.4% (0910GMT).

FTSE, pound and oil fall amid Brexit concerns

Safiya Bashir
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0
FTSE, pound and oil fall amid Brexit concerns

The FTSE 100 was lower this morning as markets remain subdued amid Brexit concerns.

The blue-chip index was down 16 points or 0.25% at 6539 at the start of trading, dragged down by the top fallers Intercontinental Hotels is the top faller and HSBC. The FTSE 250 was down 0.1%.

After slumping 0.2% at the start of the week, the pound is still down but less dramatically on Tuesday.

As Boris Johnson prepares for talks with Ursula Von Der Leyen, the markets and the pound will eagerly await the outcome of the meeting.

Kyle Rodda, market analyst at IG, commented: “Of course, the Brexit soap opera remains a key talking point, though still, little reliable or substantial information about the negotiations has been released.

“UK Prime Minister Boris is on his way to Brussels for talks with his counterpart Ursula Von Der Leyen, with the market likely to remain jumpy going into tonight’s trade as market participants await a definitive answer on the trade pact.”

Connor Campbell from Spreadex said: “With talks at a deadlock, Boris Johnson is off to Brussels for a face-to-face meeting with European Commission president Ursula von der Leyen – though not until Wednesday or Thursday.

“That means the pound might have to spend today’s trading uncomfortably waiting for any sign or signal that the worst-case scenario can be avoided.”

The price of oil was also down this morning, Brent Crude fell 0.5% to $48.55 per barrel.

Stephen Innes of Axi said: “Traders have turned to focus on the pace of the vaccine rollouts virus, and the virus’s merciless spread over the short term, while the increased probability of stretched or fresh lockdowns cloud the near term horizon.”

Across Europe, the Dax index was marginally lower, the CAC 40 was down 0.1% and the Europe-wide Stoxx 600 opened slightly higher.

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