Liv Garfield continued to thank the Severn Trent team; “I want to say thank you to all of my awesome colleagues; it has been a challenging time, and across each and every part of the business, they have shown amazing commitment to ensuring our customers have continued access to one of life’s essentials. We know that this is a difficult time for our customers, and I am incredibly proud of the ways in which the business has responded. We also understand that for many people this will be a difficult time financially, and we have stepped up our support for those on our Priority Services Register and customers that need extra help with their bills.”
“Our business remains strong and we have made further progress against the things that really matter to our customers with leakage, supply interruptions and water quality complaints all improving. We have invested £3 billion in our long- term future over the past five years and are now very focused on emerging from this crisis in the best possible shape to deliver against the exciting plans we have set out for the next five years.” Severn Trent increases dividend
Severn Trent (LON:SVT) has increased their dividend as the water company enjoyed higher revenues in the year to 31st March, although profit fell due to exceptional costs.
Severn Trent shares rose tentatively on Wednesday morning as the group increased its dividend 7.2% to 100.08p. This would equate to a 4.1% yield with shares trading at 2,415p.
Exceptional costs meant profit after tax reported fell 49.6% to £159 million.
However, the underlying business was strong and revenue was 4.3% higher at £1,844m due to RPI-linke price increases and increased revenue from business services.
“Operationally, this has been another year where we have delivered for all of our stakeholders. However, the last few weeks have been extraordinary; not only for our business, but for the country,” said Liv Garfield, Chief Executive of Severn Trent.
Liv Garfield continued to thank the Severn Trent team; “I want to say thank you to all of my awesome colleagues; it has been a challenging time, and across each and every part of the business, they have shown amazing commitment to ensuring our customers have continued access to one of life’s essentials. We know that this is a difficult time for our customers, and I am incredibly proud of the ways in which the business has responded. We also understand that for many people this will be a difficult time financially, and we have stepped up our support for those on our Priority Services Register and customers that need extra help with their bills.”
“Our business remains strong and we have made further progress against the things that really matter to our customers with leakage, supply interruptions and water quality complaints all improving. We have invested £3 billion in our long- term future over the past five years and are now very focused on emerging from this crisis in the best possible shape to deliver against the exciting plans we have set out for the next five years.”
Liv Garfield continued to thank the Severn Trent team; “I want to say thank you to all of my awesome colleagues; it has been a challenging time, and across each and every part of the business, they have shown amazing commitment to ensuring our customers have continued access to one of life’s essentials. We know that this is a difficult time for our customers, and I am incredibly proud of the ways in which the business has responded. We also understand that for many people this will be a difficult time financially, and we have stepped up our support for those on our Priority Services Register and customers that need extra help with their bills.”
“Our business remains strong and we have made further progress against the things that really matter to our customers with leakage, supply interruptions and water quality complaints all improving. We have invested £3 billion in our long- term future over the past five years and are now very focused on emerging from this crisis in the best possible shape to deliver against the exciting plans we have set out for the next five years.” Adamas at a discount
Asia-focused investment company Adamas Finance Asia (LON: ADAM) trades at a significant discount to its NAV. A rise in the share price after the 2019 figures has not made much of a dent in that discount.
Adamas was originally focused on investment in Chinese businesses, but the remit has been widened to other parts of Asia and Australia following the appointment of Harmony Capital as investment manager.
NAV
In 2019, NAV declined from 88p a share to 72p a share. There were some shares issued in the period to Infinity Capital Group as part of the purchase of a stake in another business and combined with the 2019 loss is the reason behind the fall in NAV per share. There was also a share buy back at a discount to NAV, though. Chinese dolomite quarry company Future Metal Holdings accounts for more than two-fifths of NAV. Production has recommenced at the mine and it should build up over the rest of this year. Cash should be generated and some of this could be distributed to Adamas.Cash
There was $4.1m in the bank at the end of 2019. There are investment opportunities but there is limited cash to invest. Many of the recent investments are in the form of a convertible, which provides an income for the company and helps to cover costs. There was a net loss of $2.8m last year, although that includes a $1.9m management incentive that was not paid at the year end. Also, 50% of that payment will be in shares. The incentive fee is based on NAV rather than NAV per share. Adamas has raised cash through a corporate bond issue. There was $1.9m raised last year and a further $1.7m raised in recent weeks, which adds to the cash pile. Up to $10m can be raised via this bond. The bond matures in October 2022 and there is an annual interest charge of 12.5%. Since the end of 2019, 1.26 million shares have been sold at 16.1p a share thereby raising £203,500. Longer-term, as income covers the cost base there is potential for a dividend.Portfolio
Future Metal is valued at $44.7m while the convertible bond investment in Hong Kong catering group Fook Lam Moon is valued at $27.5m. These make up the majority of the portfolio in terms of value. Newer investments include DocDoc, a Singapore-based AI technology focused clinical information provider. This investment is worth $2.2m but there is significant potential upside. Management says that there are plenty of investment opportunities. Many smaller companies in Asia find it difficult to obtain investment. Due diligence is important, and any additional investment will be carefully chosen. Many of the opportunities are technology companies, but there are also potential investments in other sectors.Discount
At 27.5p, the shares are trading at a 61% discount to NAV. That seems excessive, although there are reasons. At this stage a significant discount is warranted due to the lack of liquidity of the investments and the Adamas shares as well. There is a 55% majority shareholder and Infinity Capital Group owns 15.4%. Trading in the shares is at low levels. This is partly due to the fact that the shares are tightly held, but also due to a lack of investor interest. There will dilution from the issue of incentive fee shares, plus any loss, if there is one this year. There are positives, though. Future Metal already has a substantial valuation, but once the mine is fully up and running and generating cash it could provide an uplift in the valuation and thereby the Adamas NAV. It will also provide income to limit or prevent a group loss. DocDoc also provides upside, although it may not show through this year. There could always be disappointments to offset any positive moves in valuations, though. Adamas has an experienced management team and the potential for new investments is attractive. A three-fifths discount to NAV appears too high. A lower discount would probably be fairer at this stage in the group’s development. However, there is the worry that poor liquidity could mean that any buying interest might trigger a sharp rise in the share price before any purchase can be made.FTSE 100 turns red on poor economic data
The FTSE 100 rallied early on Tuesday, building on a strong session on Monday, only to give the gains back and slip into the red by the afternoon.
Early top risers in the FTSE 100 were airlines IAG and easyJet who were up 9% and 5% respectively in early morning trade, but fell back as the session progressed.
Th optimism was around a possible scheme called ‘air bridges’ that would allow travellers to fly to certain destinations that hadn’t had large outbreaks of coronavirus.
“It is the case we should consider further improvements – for example, things like air bridges enabling people from other countries who have themselves achieved lower levels of coronavirus infection to come to the country,” said Grant Schnapps as he outlined plans in the commons.
However, the initial optimism led by the airlines soon fizzled out as a raft of economic data once again confirmed the dire situation in European economies.
New car sales fell 76% in Europe in April as the coronavirus lockdown curtailed new purchases. The auto sector is a major constituent of the European economy and the German Dax and French CAC 40 was soon followed by the FTSE 100 into the red.
The European construction sector was also hit with activity falling 15% from a year ago.
“The market is trying to weigh up optimism around a vaccine with the fact that earnings expectations already bake in a pretty strong rebound in the second half of this year,” said Mike Bell, global markets strategist at JP Morgan.
The market also digested the latest instalment of UK jobs data which pointed to a significant jump in unemployment claims, despite a broad furlough scheme in the UK.
“It has taken a while to filter through, but now the UK is starting to see the same kind of horrific jobs data as the US. After ducking the expected ballooning of unemployment claims in March, April reflected the fact that the pain was merely delayed by a month,” said Connor Campbell, analyst at Spreadex.
“The claimant count change for last month rose by 856,500 – to put that in perspective, March’s increase was 5.4k, while analysts were forecasting an increase of 675,000.”
The FTSE 100 was trading at 6,020, down 0.4%, just after 12pm in London.
Imperial Brands slashes dividends to conserve cash
Tobacco and vaping firm, Imperial brands (LON:IMB), has slashed its dividend to help conserve cash as operating profit slumped 20% in the first half 2020.
Imperial Brands shares fell over 6% on Tuesday morning as the company rescued the dividend from 62.56p to 41.70p.
Imperial Brands has long been considered a strong income play and the dividend cut will be a blow to investors.
The dividend cut comes amid a drop in profit which the company attributed to a fall in sales in their Next Generation Products (NGP) such a vapes and impairment charges amounting to £95m.
However, overall revenue was down just 0.9% as their traditional tobacco products gained market share.
“While we delivered against our revised expectations, we are disappointed with these results, and we remain fully focused on all opportunities to strengthen performance,” Dominic Brisby and Joerg Biebernick, Joint Interim Chief Executives of Imperial Brands in a statement.
They continued to to explained the current state of demand for their product mix:
“Our enhanced focus on tobacco has driven stronger in-market execution and an improved share performance, with gains in most of our priority markets. We have reduced our NGP spend following the poor returns on investment last year and this, together with recent weaknesses in the vapour category, has resulted in lower NGP revenue.”
“Overall, COVID-19 has so far had only a small impact on trading but we expect this to be more pronounced in the second half due to continued pressures on our duty free and travel retail business, changes in consumption patterns including downtrading and a reversal of some first half inventory build.”
“Agreeing the sale of our premium cigar business for €1.2 billion in the current climate was a major achievement and will further simplify the business and reduce debt. Deleveraging remains a key priority, such that the Board has decided to rebase the dividend by one-third to accelerate debt repayment, while retaining a progressive dividend policy, growing annually from the rebased level. This will strengthen the balance sheet and support a more flexible approach to capital allocation in the future.”
However, overall revenue was down just 0.9% as their traditional tobacco products gained market share.
“While we delivered against our revised expectations, we are disappointed with these results, and we remain fully focused on all opportunities to strengthen performance,” Dominic Brisby and Joerg Biebernick, Joint Interim Chief Executives of Imperial Brands in a statement.
They continued to to explained the current state of demand for their product mix:
“Our enhanced focus on tobacco has driven stronger in-market execution and an improved share performance, with gains in most of our priority markets. We have reduced our NGP spend following the poor returns on investment last year and this, together with recent weaknesses in the vapour category, has resulted in lower NGP revenue.”
“Overall, COVID-19 has so far had only a small impact on trading but we expect this to be more pronounced in the second half due to continued pressures on our duty free and travel retail business, changes in consumption patterns including downtrading and a reversal of some first half inventory build.”
“Agreeing the sale of our premium cigar business for €1.2 billion in the current climate was a major achievement and will further simplify the business and reduce debt. Deleveraging remains a key priority, such that the Board has decided to rebase the dividend by one-third to accelerate debt repayment, while retaining a progressive dividend policy, growing annually from the rebased level. This will strengthen the balance sheet and support a more flexible approach to capital allocation in the future.” FTSE 100 soars on vaccine hopes
The FTSE 100 surged on Monday as a strong start to the trading session was boosted by a positive update from a US company working on a COVID-19 vaccine.
The morning had started with optimism around the reopening of economies which was accentuated when US-based Moderna said they have received positive early signs from a coronavirus vaccine trial.
“These interim Phase 1 data, while early, demonstrate that vaccination with mRNA-1273 elicits an immune response of the magnitude caused by natural infection starting with a dose as low as 25 µg,” said Tal Zaks, Chief Medical Officer at Moderna.
“When combined with the success in preventing viral replication in the lungs of a pre-clinical challenge model at a dose that elicited similar levels of neutralizing antibodies, these data substantiate our belief that mRNA-1273 has the potential to prevent COVID-19 disease and advance our ability to select a dose for pivotal trials.”
“With today’s positive interim Phase 1 data and the positive data in the mouse challenge model, the Moderna team continues to focus on moving as fast as safely possible to start our pivotal Phase 3 study in July and, if successful, file a BLA,” said Stéphane Bancel, Chief Executive Officer at Moderna.
“We are investing to scale up manufacturing so we can maximize the number of doses we can produce to help protect as many people as we can from SARS-CoV-2.”
Despite the positive update from Moderna, the vaccine still has a number hurdles to full approval and a global roll out will take many months, even if it is approved.
Nonetheless, equity markets soared on the news.
Connor Campbell, analyst and Spreadex noted:
“Vaccine news is sort of the holy grail of market-boosters at the moment, even if headlines often obscure the timelines regarding the production of such preparations,” said Connor Campbell
“The Dow Jones galloped out of the date, greedily taking back 670 points. That was enough to lift the index past 24350, around 1400 points off of the lows incurred last Thursday.”
“In turn this transformed a very strong European session into something more spectacular. A 200 point surge for the FTSE saw it touch its fingers to 6000, while a giddy 4.6% increase for the DAX sent the German bourse back above 10900.”
The FTSE 100 was trading above 6,000 as we moved towards the close in London.
FTSE 100 breaks losing streak as China data lifts commodities
The FTSE 100 halted a two-day decline on Friday as share rose tentatively as markets moves toward the end of choppy week for markets.
The FTSE 100 fell sharply on Thursday as investors became sceptical about the validity of a market rally during one of the worst recessions in history.
The scale of the economic downturn was again visible in the US weekly jobless claims released on Thursday as nearly 3 million people lost their jobs in the last week.
However, China produced more promising data over night casting a wave of optimism in equity markets on Friday.
Chinese industrial production rose 3.9% year-on-year in the month of April as factories reopened following months of lockdowns.
“News that China came out relatively okay in industrial production, that’s a big part of it. China resuming business even though it might be slow has given some confidence,” said Per Hammarlund, chief Emerging Market strategist at SEB.
The news helped buoy commodity prices and equities followed with miners Glencore, Rio Tinto, Anglo American and BHP Group all stronger on the day.
The FTSE 100 was 0.8% higher at 5,790 just after midday in London whilst the German Dax was up 0.9% to 10,430.
Hargreaves Lansdown was also one of the top risers, up over 4%, a day after the wealth management company released a jump in activity throughout the coronavirus crisis volatility.
BT was top of the pile on Friday lunchtime after the FT reported the embattled telecoms group said it was in talks to dispose of a stake in Openreach. BT Group have recently scrapped their dividend as part of a strategic move to focus on 5G and Fibre.
There was also good news in the fight against COVID-19 from the UK’s small caps as Avacta announced progress in the development of a potential treatment. Their Affirmer technology has been found to show promising signs in blocking the path of the COVID-19 infection.
Chinese industrial production rose 3.9% year-on-year in the month of April as factories reopened following months of lockdowns.
“News that China came out relatively okay in industrial production, that’s a big part of it. China resuming business even though it might be slow has given some confidence,” said Per Hammarlund, chief Emerging Market strategist at SEB.
The news helped buoy commodity prices and equities followed with miners Glencore, Rio Tinto, Anglo American and BHP Group all stronger on the day.
The FTSE 100 was 0.8% higher at 5,790 just after midday in London whilst the German Dax was up 0.9% to 10,430.
Hargreaves Lansdown was also one of the top risers, up over 4%, a day after the wealth management company released a jump in activity throughout the coronavirus crisis volatility.
BT was top of the pile on Friday lunchtime after the FT reported the embattled telecoms group said it was in talks to dispose of a stake in Openreach. BT Group have recently scrapped their dividend as part of a strategic move to focus on 5G and Fibre.
There was also good news in the fight against COVID-19 from the UK’s small caps as Avacta announced progress in the development of a potential treatment. Their Affirmer technology has been found to show promising signs in blocking the path of the COVID-19 infection. Avacta shares surge on COVID-19 treatment progress
Shares in London-listed biotech company Avacta (LON:AVCT) surged on Friday after the group announced progress in their development of a treatment for COVID-19.
Avacta said that they had discovered their Affrimer technology had blocked the interaction of the coronavirus infection with human cells which is a key pathway for the virus.
The Avacta share price had leapt over 30% by mid morning on Friday to trade at 140p. Avacta shares are up 700% in 2020, making them one of the best performers on London exchanges so far in 2020.
The company’s Affirmer technology has been the driving force behind the rise with initial applications in COVID-19 testing now potentially providing a vitally important treatment.
Analysts also noted the possibility for a deal with large pharmaceutical companies could be a material development for the treatment and Avacta themselves.
“Beyond the obvious reputational and commercial, albeit presently wholly unquantifiable, short and longer-term opportunities that could emerge from Avacta’s partnerships with Cytiva and Adeptrix, potential now to also partner with Big Pharma in an effort to develop a globally significant coronavirus neutralising technology, suggests a further major inflection point and opportunity for the creation of significant near-term value for shareholders,” noted Barry Gibb, Research Analyst of Tuner Pope Investments to the UK Investor Magazine.
“Alongside this, the Group also continues to forward its other exciting developments and partnered programmes plus licensing relationships for its diagnostics reagents,” Mr Gibb concluded.
The Avacta CEO outlined the progress Avacta had made with the treatment that seeks the block interaction with the virus.
“This is a very exciting development in the COVID-19 programme. It only took four weeks to generate more than fifty Affimer reagents that bind the SARS-COV-2 virus spike protein and amongst those we now know that there are neutralising Affimers that block the interaction with a key human cell surface receptor, raising the potential for a therapy to prevent infection,” said Dr Alastair Smith, Chief Executive Officer of Avacta Group.
He continued to explain the attention the wider industry was paying to this particular type of COVID-19 therapy.
“Recently GSK invested $250 million in Vir Biotechnology Inc3 to develop potential antibody treatments for COVID-19 by selecting antibodies from recovered patients, and AstraZeneca also recently announced that it would start a programme to find new monoclonal antibodies that block the spike/ACE2 interaction4.”
“There is significant potential for a therapy that could help prevent infection and limit the progression of the disease, providing immediate benefit to patients. With a large and well-resourced partner, a neutralising Affimer therapy could potentially be developed more quickly than a vaccine and we believe that the likelihood of success would be high.”
“I look forward to updating the market further on this and on the development of a COVID-19 antigen rapid saliva test with Cytiva which continues apace.”
Analysts also noted the possibility for a deal with large pharmaceutical companies could be a material development for the treatment and Avacta themselves.
“Beyond the obvious reputational and commercial, albeit presently wholly unquantifiable, short and longer-term opportunities that could emerge from Avacta’s partnerships with Cytiva and Adeptrix, potential now to also partner with Big Pharma in an effort to develop a globally significant coronavirus neutralising technology, suggests a further major inflection point and opportunity for the creation of significant near-term value for shareholders,” noted Barry Gibb, Research Analyst of Tuner Pope Investments to the UK Investor Magazine.
“Alongside this, the Group also continues to forward its other exciting developments and partnered programmes plus licensing relationships for its diagnostics reagents,” Mr Gibb concluded.
The Avacta CEO outlined the progress Avacta had made with the treatment that seeks the block interaction with the virus.
“This is a very exciting development in the COVID-19 programme. It only took four weeks to generate more than fifty Affimer reagents that bind the SARS-COV-2 virus spike protein and amongst those we now know that there are neutralising Affimers that block the interaction with a key human cell surface receptor, raising the potential for a therapy to prevent infection,” said Dr Alastair Smith, Chief Executive Officer of Avacta Group.
He continued to explain the attention the wider industry was paying to this particular type of COVID-19 therapy.
“Recently GSK invested $250 million in Vir Biotechnology Inc3 to develop potential antibody treatments for COVID-19 by selecting antibodies from recovered patients, and AstraZeneca also recently announced that it would start a programme to find new monoclonal antibodies that block the spike/ACE2 interaction4.”
“There is significant potential for a therapy that could help prevent infection and limit the progression of the disease, providing immediate benefit to patients. With a large and well-resourced partner, a neutralising Affimer therapy could potentially be developed more quickly than a vaccine and we believe that the likelihood of success would be high.”
“I look forward to updating the market further on this and on the development of a COVID-19 antigen rapid saliva test with Cytiva which continues apace.” Novacyt shares take a breather after 2020 outlook released
Novacyt (LON:NYCT) shares fell on Thursday after the clinical diagnostics company provided outlook for 2020 and reported a strong increase in cash levels through 2020.
Novacyt shares were down 11% on Thursday but are up over 2,600% in 2020.
The Novacyt share price closed out 2019 trading at just 12p and have reached intraday highs above 500p in the last month.
The astronomical rise was sparked by Novacyt’s provision of testing kits for COVID-19, having won approval from the FDA and secured orders from Public Health England.
The outlook for 2020 was included in the full year results which highlighted a £6.5m loss for 2019. However, the loss was for the 12 months to 31st December, and doesn’t represent any activity from COVID-19 testing.
Investors may have been disappointed with the outlook as there wasn’t any guidance on potential sales in revenue terms, although the company did say they expected to be producing at an ‘output rate of more than ten million tests per month’ from June 2020.
As an indication of the impact of the COVID-19 testing kits on Novacyt’s business so far in 2020, cash had increased from €1.8 million at the end of 2019 to €9.2 million at the end of April 2020.
“2019 was a year of consolidation as we completed the refinancing and restructure of the business, positioning Novacyt to resume its three-pillar growth strategy of organic, R&D and acquisitive growth,” said Graham Mullis, Group CEO of Novacyt.
“Following the rapid development and successful launch of one of the world’s first molecular tests for COVID-19, we expect 2020 to be transformational for the business in almost every way based upon visibility of current sales and continued significant demand for the test,” Mullis continued.
“Supported by Novacyt’s core strengths of in vitro diagnostics product development, commercialisation and contract manufacturing, we believe the Company’s stronger financial position and enhanced reputation will be the catalyst in creating a leading global clinical diagnostics business in infectious diseases.”
“I would like to extend my sincere gratitude to all of our employees for their ongoing hard work and dedication, as well as our partners and suppliers for their loyalty throughout 2019 and so far in 2020 in the fight against COVID-19. Finally, I would like to thank our shareholders, long- standing and new, who continue to support Novacyt.”
As an indication of the impact of the COVID-19 testing kits on Novacyt’s business so far in 2020, cash had increased from €1.8 million at the end of 2019 to €9.2 million at the end of April 2020.
“2019 was a year of consolidation as we completed the refinancing and restructure of the business, positioning Novacyt to resume its three-pillar growth strategy of organic, R&D and acquisitive growth,” said Graham Mullis, Group CEO of Novacyt.
“Following the rapid development and successful launch of one of the world’s first molecular tests for COVID-19, we expect 2020 to be transformational for the business in almost every way based upon visibility of current sales and continued significant demand for the test,” Mullis continued.
“Supported by Novacyt’s core strengths of in vitro diagnostics product development, commercialisation and contract manufacturing, we believe the Company’s stronger financial position and enhanced reputation will be the catalyst in creating a leading global clinical diagnostics business in infectious diseases.”
“I would like to extend my sincere gratitude to all of our employees for their ongoing hard work and dedication, as well as our partners and suppliers for their loyalty throughout 2019 and so far in 2020 in the fight against COVID-19. Finally, I would like to thank our shareholders, long- standing and new, who continue to support Novacyt.”