Anglo American see diamond sales fall across second 2020 sales cycle
Anglo American plc (LON:AAL) have told the market that diamond sales have fallen across its’ second sales cycle in 2020.
The firm noted that the ongoing wave of coronavirus may have played a part in the declining sales, however shares have seen a lift on Wednesday.
Across their second 2020 cycle, Anglo American said that the value of rough diamond sales totaled $355 million.
This figure notably sees a 28% fall from $496 million versus a year ago, and down 36% from $555 million for the first cycle of 2020.
Bruce Cleaver, CEO of De Beers Group, said: “Following an improvement in demand for rough diamonds during the first sales cycle of 2020, we recognised the impact of COVID-19 Coronavirus on customers focused on supplying the Chinese market and put in place additional targeted flexibility to enable customers to defer allocations of the relevant rough diamonds.”
Sustainable Investment vs Coronavirus: stay the course & think long-term
Coronavirus hasn’t yet had its fill of using equities, assets and national economies as chew toys, and will almost certainly weigh on people and capital the world-over, for a good chunk of 2020.
One asset class I can’t help but feel sorry for (in the midst of the biggest dips since 2008) are sustainable and ethical investments, for instance in renewables.
These fields have enjoyed consistent success, especially over the last five or so years; as renewable assets, ESGs and Impact Investment funds have all become mainstream structures and business vernacular. What Coronavirus represents, perhaps, is the first reckoning for this asset class (if you’ll let me clumsily incorporate them under one umbrella).
Bringing up the spread of the illness in a conversation with JLEN Environmental Assets (LON:JLEN) Co-Lead and Investment Advisor, Chris Tanner, his hollow chuckle was palpable.
Tanner was by-and-large positive about the position of renewable assets, at least in comparison to forecasts for other assets and equities. Overall, he saw the challenges posed to renewables coming by way of supply-side issues – as opposed to the value of commodities, which directly correspond to market sentiment and risk.
For JLEN, perhaps these supply-side challenges come in the form of materials and manufactured hardware for their portfolio – which is largely UK-based. However, this is not the case with all sustainable investment offerings.
Impact Investment app Tickr, for instance, enables users the chance to invest in renewables assets based all over the world (among other asset classes). Their users have felt the heat of COVID19 more acutely, with some of the companies they support having operations in high-risk countries such as China.
Acknowledging the challenges posed by Coronavirus, and being wary of the substantial hit to its users’ earnings, Co-Founder Matt Latham offered the following words of comfort via a letter to investors:
“Seeing your money drop in value can feel uncomfortable. But with long-term investing it’s important not to focus too much on the short-term noise.”
“The market goes up and down each day. No one knows where it will be tomorrow. However, what history can tell us is that so far, 100% of corrections and crashes have always been followed by a recovery that comfortably offsets those losses.”
“[…] Even if you had invested in the US Stock Market (the S&P 500 to be exact) in the weeks prior to the 2008 crash (the largest financial crash since 1930), in the 10 years following you would’ve netted a +7-8% average annual return. That’s not bad going seeing as the 2008 crash wiped out ~50% of value from the S&P 500.”
What we can perhaps take away from this, is that we should perhaps temper our emotions and stay the course.
Sustainable investment is facing challenges like every other sector, but its natural tendency towards long-term holdings gives investors the opportunity to sit tight for now, and wait for sunnier skies in the months and years to come.
After enjoying impressive returns of around 7.12% over the three months to February, I’ve personally seen my Tickr portfolio’s growth narrow to 1.12%. Clean Energy is down 11.31% and Global Water by 11.64% this week alone, as the Coronavirus tightens its grip.
Regardless, I will echo Chris Tanner’s optimism, and Matt Latham’s advice. I think we need to be patient. It is better, in my opinion, to weather the storm in a long-sighted asset class, then flock worriedly to one investment or another, or capitalise on others’ losses.
Can investing in fine wine see us through market uncertainty?
Last week the UK Investor Magazine attended the OenoFuture investor evening, which treated guests to a wine tasting, masterclasses and a seminar on fine wine investment delivered by wine expert and Oeno CEO, Daniel Carnio. Set against the jolly backdrop of aperitivo and the City skyline, the message at the core of the event was entirely serious. We ought to think more about wine as part of a healthily diversified portfolio, and appreciate its potential as a tool to circumvent market dips.
General notes on fine wine investment
Giving attendees a rough overview of the investment wine space, Daniel told us only 1% of all wine globally contains the necessary characteristics to be considered investment wine. While naturally trying to create a positive impression of the field, he described fine wine as an ‘alternative investment’. Not a field to be invested in exclusively, but rather as one part of a healthy spread of investments. He then reiterated the advice of renowned business magnate Warren Buffett, who said at least 1% of everyone’s portfolio should be in wine. At the end of his presentation, Daniel reminded us of the very real demand for fine wine investment, and the presence of high net worth individuals ready to pay a premium for the right bottles. He cited the sale of one bottle in particular: a 1777 Chateau Lafite from the Jefferson collection, which sold for over a quarter of a million pounds.Why does wine investment attract sophisticated palates?
According to OenoFuture, the main attractions of wine investment are threefold. First – wine collection lets you keep more of your gains. Unlike some other forms of investment, wine collections aren’t taxed, and the profits accrued from collecting wine are exempt from tax in many countries. Second – it has offered reliable growth in recent years. Aside from the bounce caused by high-net-worth Chinese investors entering the market at a rapid pace, the last decade or so has seen fine wine investments appreciate by around 10% per annum. During 2018, OenoFuture reported that its Private Investor accounts yielded average returns of 11.93%. Third – it lets us escape the risks that affect most equities and conventional asset classes. Now more than ever, this characteristic makes wine investment appear like a particularly virtuous asset. While other sectors are dragged or fuelled by market corrections and rallies, the success of fine wine is dictated by the simple tenets of supply and demand. It might seem intuitive, then, to think that consistent appreciation in fine wine prices over time is only natural. Save for a sudden decline in demand for wine consumption or collectability, the steady decline in stocks of any particular bottle of wine correlates directly to an increase in its respective value. In a succinct summary on its website, OenoFuture states: “Against a backdrop of market turbulence and uncertainty, the fine wine market has performed exceptionally in recent years. Since 2005 fine wine has seen growth of 198%, making it a very attractive safe haven for investors keen to diversify their portfolio.”Being on the nose: what is the OenoFuture user experience?
The company stated that its standard investment ranges sit around the £10k, £25k and £50k marks, for different sizes and time frames of wine collections. At the lower threshold, the company said £10k covers an entry level diversified portfolio. The aim of this kind of undertaking would be to provide returns over the short-to-medium term, which Daniel Carnio estimated would be between one to three years. At the £25k and £50k levels, Daniel said the company would look to introduce ‘iconic’ wines to an investor’s portfolio. At this level, we can assume there is scope for long-term holdings, with offerings targeted towards attracting buyers willing to pay above market rates for the right bottle of wine. Regarding the nitty gritty practicalities of the company, OenoFuture said all wine collections are stored in a bonded warehouse, and should any misfortune befall your bottles, insurance payouts cover the cost of the wine at the point of damage (with price appreciation), not the original purchase price. Finally, Daniel outlined the company’s attractive fee structure. OenoFuture takes no upfront fee. In exchange for its individually tailored advisory services it only takes 10% of any profits made at the point of liquidation. Coming away from the evening, I got the impression that wine investment isn’t just a quaint idea, but an effective way to diversify a portfolio and counteract the risks posed by mainstream market mechanisms. Investing with OenoFuture means we only pay fees when we win, and even if we’re faced with abject failure, drinking your investment will at least help us forget momentarily.Impromptu Fed rate cut compensates for lack of G7 Coronavirus action plan
Best satirised by the FT, the G7 meeting today was all bun and no filling. Some of the brightest and best minds in economics convened to devise a plan of action to deal with the crippling effect Coronavirus has had on equities and national economies the world-over. It’s fair to say the outcome was about as underwhelming as the Reuters preliminary reports (TSE:TRI) had anticipated, and J. Powell fired an unoriginal shot in anger, by way of a Fed rate cut.
The rate cut came as something of a post facto justification for yesterday’s absurd Dow Jones rally (absurd in its scale, and its lack of empirical basis) and acted as something of a lukewarm salve for today’s G7 meeting. The interesting thing to note, in particular, was the fact the cut had such a proportionately underwhelming effect, which would lead us to believe it was more about trying to cement the ground already gained, rather than trying to auspiciously search for a second, similar rally.
Powell’s hand was likely forced by Trump, and while most indices were happy to at least cling on to some of their gains, the FTSE continued to giddily recover from last week’s horror show.
Speaking on Coronavirus and the afternoon’s movements, Spreadex Financial Analyst Connor Campbell commented,
“It looked like the G7’s brightest and best financial minds had failed to deliver – and then the Federal Reserve went and announced an impromptu rate cut.”
“After a conference call between its central bankers and finance ministers – they daren’t actually meet in person, duh – the G7 issued a statement, via Jerome Powell and Steven Mnuchin, reaffirming the group’s commitment to combating the coronavirus without actually announcing any concrete measures.”
“It looked like that was all the markets were going to get – disappointing, yet pointing well enough in the right direction to broadly preserve the day’s gains.”
“But Powell had an ostensible ace up his sleeve. His arm no doubt twisted by a dovish Donald Trump, the Fed slashed interest rates by half a percentage point to 1%-1.25%, taking the number of FOMC cuts to 4 since July last year.”
“The Dow Jones didn’t actually move that much higher after the announcement. Instead it largely just reversed its triple digit decline, at best climbing another 0.3%. That’s because the rate cut is more justification for yesterday’s record-breaking rebound than an impetus for a fresh surge this Tuesday.”
“As for Europe, the region’s indices remained off their intraday highs despite the Fed intervention. It might simply be that anything other than a co-ordinated action plan from the G7 was going to disappointment, especially following the Dow’s insane gains on Monday night. Then there’s the fact the pound and euro are now both up around 0.4% against the dollar.”
“The rate cut may have also acted as a reminder of just how serious the coronavirus situation is, with multiple stats – worst week since 2008, first emergency cut since 2008 – that harken back to the dark days of the financial crisis.”
“Regardless the FTSE rose 1.9%, leaving it around 70 points shy of its 6850 peak. The DAX was up 200 points, half of its morning rise, while the CAC added 1.8%.”
Craneware books strong first half led by 30% growth in ‘new sales’
Value Cycle software solutions for the US healthcare market Craneware (LON:CRW) saw its earnings jump during the first half of 2020, led by a 30% year-on-year rise in ‘new sales’.
Despite the fact that its revenues were almost flat at $35.9 million, its adjusted EBITDA bounced 10% on-year, to $12.7 million, and its PBT rose 3% to $9.6 million.
Likewise, Craneware shareholders enjoyed similar progress during H1 2020. Its adjusted basic EPS increased 3% to 31.1 cents per share, while its interim dividend grew by an impressive 5% year-on-year, up to 11.5p per share.
The company added that operationally, its new cloud Trisus solutions accounted for 10% of new sales. It also said that it saw an increase in the total value of renewals and that it enjoyed, “strong sales activity and opportunities across all classes of hospital providers”. It finished, saying its investment in research and development had risen from $9.1 million to $10.3 million on-year for the first half.Craneware reaction
Responding to the company’s performance, company CEO Keith Neilson commented:“We are pleased to report on a positive sales performance in the first half of the financial year, with new sales over 30% ahead of the first half in the prior year, reflecting the considerable amount of activity that has taken place across the business since the summer. Whilst this increase will take time to flow through into our reported financials, we are confident that momentum is now back in the business and the size of the opportunity ahead of us remains intact.”
“Importantly, the level of Trisus sales grew in the half, with sales of all four of our current Trisus solutions and the pipeline for these products increasing. The transition of our existing product suite onto the Trisus platform is progressing and paves the way for long-term growth, as we provide our customers with the data-driven solutions they require to address the move to value-based care.”
“The positive sales performance in the first half has continued to date, and our pipeline continues to grow, underpinned by the o ngoing transition of the US healthcare market to value-based care. The Board’s expectations for the full year remain unchanged and we look forward to a return to increased rates of growth in future years. We are focused on execution and with strong operating margins, healthy cash balances and a growing sales pipeline, we continue to be excited by the opportunity ahead.”
Investor notes
Despite seemingly positive results, the company’s shares dropped 3.14% or 61.00p, to 1,879.00p per share 03/03/20 15:18 GMT. Analysts from Peel Hunt reiterated their ‘Buy’ stance on Craneware stock. The Group’s p/e ratio is 39.12, their dividend yield is modest at 1.39%.
Three FTSE 100 listed firms that provide a measurable impact on the environment
Environmental policies have never been so important for businesses. Issues such as climate change and global warning are now becoming increasingly more avid as firms look to shift their operating strategy to combat climate change.
I have picked out three FTSE 100 listed firms, who I feel are providing a measurable impact on the environment through their policies, actions and responsibilities.
Sainsbury’s
The supermarket industry is often cited as one of the biggest contributors to carbon dioxide and greenhouse gas emissions – however Sainsbury’s have taken the lead to cut down their environmental impact. Sainsbury’s (LON:SBRY) have made a concerned effort over the last few years to ensure that they cut their use of plastics and reduce company emissions. The firm has boasted some interesting statistics on their environmental policies – notably the British supermarket brand has zero waste to landfill since 2013. 7,992 tonnes of carbon dioxide have been saved through their colleague behavior change project ‘Greenest Grocer’ and the firm has used one billion litres of water less than the equivalent in 2005/2006. Sainsbury’s have signed up to Courtauld 2025, which is an ambitious voluntary agreement to ‘make food and drink production and consumption more sustainable’. The FTSE 100 listed firm has made an active effort to work with farmers, to reduce food waste across the whole supply chain, and when surplus food supply occurs – these are sent to charity food donation partners. An interesting statistic to note is that 1,164 food donation partnerships have been agreed across Sainsbury’s entire store portfolio.BT
BT (LON:BT.A) are another high profile firm who have been put under the spotlight over recent years for environmental issues. As a telecommunications firm, BT are looking to set the trend within the industry – to set an example for all telecommunications firms to cut down energy and wastage. BT are one of the first firms in British industry to really focus on environmental policies. In 1992, they were the first big name to set a carbon reduction target – and since then their policies and ambitions have only grown. The British firm add that environmental policies form part of the firms’ responsibility and they have a significant impact on the environment. To manage this impact, BT now have installed the Environmental Management System (EMS). Here, issues such as energy consumption and carbon emissions are considered. The telecommunications giant have also expressed their stance in saying that they want to help customers reduce their carbon footprint by at least three times the end-to-end carbon impact of their business by 2020, which is called the “3:1 Ambition”. Through these actions, the company promises the responsible use and disposal of plastics throughout their business operations through the plastics policy within their EMS.Unilever
Unilever plc (LON:ULVR) have already owned the implications of their activity on the environment and climate change. Following this acknowledgement, Unilever derived their environmental vision which is: “To grow our business, whilst decoupling our environmental footprint from our growth and increasing our positive social impact.” As Unilever are a major multinational firm, and operate within a range of markets including food and health products – there is more a generic focus in terms of their environmental policy. Unilever now refresh their materiality assessment periodically, which considers current and future climate issues. Along with this, there is an emphasis within their environmental policy to set targets for continuous improvement and put in place safety and sustainability programs. The firm also engages with suppliers to reduce environmental impact, which is derived from their ‘Responsible Sourcing Policy’. This allows the addressing of issues which affect farmers within the agricultural market. These issues include improvements in supply chains, legal compliance, no deforestation, soil and water management, pollution and biodiversity. Finally, looking at product use – Unilever consider their environmental impact through designing of products, which makes recycling easier. The firm are also currently working with global governments to ‘create an environment that enables the creation of a circular economy’ – which includes the necessary resources to collect and recycle materials.Rotork shares rally on boosts to its profits and dividend cover
British industrial flow control equipment Rotork (LON:ROR) saw its shares bounce during the Tuesday session, following the publication of its positive full-year results.
Despite the fact its revenue narrowed 3.8% year-on-year, to £669.3 million, the company led a concerted cost-saving campaign and ended up booking healthy profits for the full year.
Its adjusted operating profit bounced 3.4% on-year to £151.0 million, while its adjusted PBT jumped 2.9% to £148.1 million. Alongside this, the company also reported a 160 bps rise in its adjusted operating margin, up to 22.6%.
The real headline for many though, was that Rotork improved its income-making potential for its shareholders. During FY19, its adjusted basic EPS per share grew 3.2%, to 13.0p, while its full-year dividend saw an impressive 5.1% on-year increase, to 6.2p per share.
Rotork response
Reacting to its positive results, company Chief Executive Kevin Hostetler, commented,“Our Growth Acceleration Programme is on track and progress in 2019 was very encouraging. The year was about margin improvement, cash generation and laying the foundations for sales acceleration. We made excellent progress on all pillars of the Programme, including sales force re-alignment to end markets, lean initiatives, purpose and values launches and our IT solution design. We remain committed to delivering sustainable mid to high single digit revenue growth and mid 20s adjusted operating margins over time.”
“Looking ahead, it is too early to assess fully the potential impacts of COVID-19. Absent these, we were planning for modest sales growth on an OCC basis and margin progress in 2020, driven by further benefits of our Growth Acceleration Programme albeit with margin progress more gradual, reflecting our investment plans.”
Investor notes
Following the company’s announcement, its shares rallied 7.40% or 20.70p during Tuesday trading, up to 300.60p per share 03/03/20 14:49 GMT. Analysts from Peel Hunt reiterated its ‘Buy’ stance on Rotork stock. The Group’s p/e ratio is 22.21, their dividend yield is modest at 1.96%.Serabi Gold give operational update on Sao Chico
Serabi Gold PLC (LON:SRB) have given an operational update to shareholders today which has led to shares receiving a boost.
Shares in Serabi Gold trade at 83p (+3.75%). 3/3/20 14:18BST.
The gold miner told the market today that it had begun a 9,600 metre step out drill programme in the fourth quarter of 2019.
This operation was to test the east and west continuity of the orebody at the gold project.
Serabi have remained confident that the results from this drilling program can produce results at the Sao Chico orebody.
On the west side, drilling has been undertaken 300 metres beyond the current western limit of the mine, and the intersections are indicative of being able to extend this mine limit
Notably, the CEO Mike Hodgson added: “To the east we have also intersected high grade mineralization with the most easterly hole returning an intersection of 11.7 g/t Au over 1.2 metres. This result is located 220 metres to the east of the current eastern limit of the mine and therefore the orebody remains open to the east and justifies additional step out drilling to test this eastern extension.”
The firm noted that they have completed forty percent of the planned drilling program – and that this will continue until mid 2020.
Hodgson concluded: “The results from this drilling campaign are very encouraging. When the Sao Chico orebody first went into production drilling had been limited to testing of the orebody directly below the original artisanal workings. Subsequent terrestrial geophysics programmes undertaken in 2017 and 2018, highlighted the potential to extend the orebody to the east and west.
“Perhaps the most encouraging result is, however, what is now the deepest intersection at Sao Chico, where hole 19-SCUD-333 has reported a gold grade of 25.37g/t over a width of 4.08 metres. This hole is approximately 200 metres below the current lowest development level in the mine and therefore nearly 500 metres from surface. An intersection of this quality provides us with strong encouragement of continuity of the Sao Chico orebody at depth and therefore potential further resource growth and extended life of the operation.
We have now completed approximately 40 per cent of the planned drilling programme which will continue until mid-2020 following which the Company intends to undertake a new mineral resource estimate during the second half of the year. Results from the remainder of the drilling campaign will be issued as they become available over the coming months.”
Serabi Gold see positive few weeks
In January, the firm told the market that it had seen a productive fourth quarter. Production in Q4 was up to 10,223 ounces, which topped off annual production at 40,101 ounces, which represented a 7% improvement year-on-year, from 37,108 ounces during 2018. The company added that during the quarter, it mined a total of 44,092 tonnes of gold at 6.69 g/t of gold, as well as completing 2,908 metres of horizontal development. Operationally, it stated that it had undertaken electrical and mechanical testing of an ore sorter, which was in the ‘final stages’ of installation between the Group’s crushing and milling sections. Serabi’s year-end cash holdings stood at US $14.3 million, it anticipates full-year production in the region of 45,000 and 46,000 ounces.Begbies Traynor rallies 10% with trading in line with expectations
Business recovery, financial advisory and property services consultancy Begbies Traynor (LON:BEG), saw its shares rally during the Tuesday session, as it reported healthy performance during its third quarter,
For the period ended 31 January, the company said it:
“continued to trade well in the quarter with results showing strong growth in revenue and profit compared to the prior year.”It said this performance, alongside its positive first half, left it feeling confident about achieving full-year results ‘at least in line’ with expectations.
Begbies Traynor said its property advisory, transactional services and new acquisitions had all been trading in line with expectations, and that the integration of the Ernest Wilson business sales agency was ongoing.
It added that its recovery and financial advisory business performed will, benefiting from both organic growth and contributions from its current year acquisitions. The company said the insolvency market remained favourable, with a year-on-year increase of 7%, to 17,196 for 2019.Begbies Traynor response
Executive Chairman of the company, Ric Traynor, reacted to the results:“The group has delivered strong organic growth, complemented by good performances from our recent acquisitions. This, combined with continuing favourable UK insolvency market conditions, gives us confidence in delivering results at least in line with current market expectations for the full year. “
“We continue to increase the scale of our business recovery practice and extend our property services offering, and our strong financial position leaves us well placed to further build upon our track record of organic and acquisitive growth.”
Investor notes
Following the update, Begbies Traynor shares bounced 9.96% or 7.77p to 85.77p per share 03/03/20 14:03 GMT. The Group’s p/e ratio is 15.92, their dividend yield stands at 3.04%.Ryanair and Wizz Air release February passenger figures
Budget airline carriers, Wizz Air Holdings (LON:WIZZ) and Ryanair Holdings (LON:RYA) hav released their monthly passenger figures.
2020 has been a tough year for the airline industry. The ongoing coronavirus epidemic has meant that many travel restrictions have been enforced, and rivals such as IAG (LON:IAG) have suspended flights both ways into China.
Following the updates on the coronavirus, this week’s news headlines reported that the pathogen had hit Italy. Interestingly, both Ryanair and Wizz Air have operations in Italy – and so both firms have speculated on results going forward.
Looking at February passenger figures however – both firms were not significantly affected by the coronavirus, as results have shown progress.
Ryanair noted that passenger numbers rose 9% year on year in February, with a total of 10.5 million.
Notably, performance from its Austrian subsidiary Lauda was noted – as this division saw a 67% rise to 500,000 passengers. Ryanair’s group load factor was 96%, with a 96% factor for Ryanair and 94% for Lauda.
Looking on an annual rolling basis, the Irish budget airline also added that group passenger numbers climbed 8% to 153.8 million with a 96% load factor.
Turning to Wizz Air, the FTSE 100 listed firm reported that passenger numbers rose 26% to 2.4 million, against a year on year basis.
Wizz Air saw their passenger numbers rise 20% on a yearly rolling basis, to 41 million. Additionally, load factor rose to 93.7% from 92.6%, with capacity up 18%.
The future looks rather speculative for the airline industry at the moment. The UK Government today announced plans that would be put in place to contain the spread of the coronavirus – however further travel restrictions could be enforced, which may further bruise trading within the airline industry.
For both these firms, the worrying thing could be that the coronavirus is now affecting countries in Europe. Yesterday, Italian health officials released figures that showed the number of coronavirus linked deaths rising from 18 to 52.
As both firms drum up revenue from short haul flights to and from Europe – as travel legislation gets passed, this could sent a pessimistic tone within both Wizz Air and Ryanair.
Following the crash that the FTSE 100 faced last week, it was no surprise that airlines were hit the hardest. However, in the short term both Ryanair and Wizz Air will remain cautious as the full scale of the coronavirus is yet to be fully understood.