Ebiquity shares surge 25% as its debts narrow consistently

Jamie Gordon
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Ebiquity shares surge 25% as its debts narrow consistently
Ahead of its preliminary results expected towards the end of March, marketing and media consultancy firm Ebiquity (LON:EBQ) has seen its shares bounce on Wednesday following an update for the year ended 31 December 2019, which showed that it had continued to improve its debt position.

The company said it traded in line with the Board’s expectations, with performance trends consistent between the first and second halves. Ebiquity said it continued to see revenue growth in its Advanced Analytics, AdTech and Contract Compliance practices, though its Media practice revenues dipped ‘slightly’ year-on-year.

The real talking point was that the company’s net debt position at the year’s end was £5.8 million, down from £7 million at the half year and representing an impressive turnaround from the £28 million debt position at the end of the previous year.

Ebiquity said the bulk of the improvement came from the disposal of its Advertising Intelligence division, and added that the significant improvement in its net debt had increased its financial flexibility and ability to support future developments, such as its recent acquisition of Digital Decision BV.

Ebiquity opportunities and outlook

Its statement continued: “We believe that the announced closure of Accenture’s media auditing practice highlights the need for independence in our sector and will provide opportunities for Ebiquity as the leading independent, global media consultancy to capture market share over the next year or so.”

“We remain confident that Ebiquity will be able to fulfil its potential and deliver improved performance in the medium term.”

Responding to the update, the company’s Interim CEO Alan Newman, said: “We are pleased to have met expectations in the last year in terms of profitability and grown high potential areas of our business. We continue to re-engineer the business to deliver profitable growth and seize market opportunities that reinforce our position as the leading, independent global media and marketing consultancy, including those arising from the closure of Accenture’s media auditing practice.”

Investor notes

Following the update, Ebiquity shares rallied 24.98% or 6.49p to 32.50p per share 19/02/20 11:54 GMT. The Group’s p/e ratio is 7.03, and their dividend yield is modest at 2.22%.

Puma and Adidas issue warnings over coronavirus impact

Ishen Patel
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0
Puma and Adidas issue warnings over coronavirus impact
Two of the biggest names in the sportswear industry in Puma (ETR:PUM) and Adidas (ETR:ADS) have issued warnings on their trading following the outbreak of the coronavirus. A few weeks back, it seemed that the coronavirus was spiraling out of control. Millions had been wiped off global equities, stock prices and indices. Many countries had faced business slumps, and many firms had even closed operations following concerns over the spread of the coronavirus. Today, Puma announced that the coronavirus will impact sales and profits within the first quarter of its financial year. The German sportswear firm also announced that it was forced to close more than half its stores in China following the outbreak of the coronavirus. The decline of Chinese tourism into other global markets has also hindered Puma’s trading, however the firm has taken an optimistic stance saying that they hope to hit 2020 targets despite ongoing issues with the coronavirus. On a better note, Puma said that fourth quarter sales had surged 18% to €1,=.48 billion, as earnings before interest and tax climbed 47% to €55 million. Puma chief executive Bjorn Gulden said: “The business in China is currently heavily impacted due to the restrictions and safety measures implemented by the authorities. Business in other markets, especially in Asia, is suffering from lower numbers of Chinese tourists. “Given the current uncertainty around the virus it is of course impossible to forecast its impact on the business”. Fellow rival, Adidas also gave a similar warning by saying that its business had been hampered by the coronavirus outbreak. Adidas said on Wednesday that its business in the greater China region had fallen 85% year-on-year in the period since Chinese New Year. China is one of Adidas’ and Pumas’ biggest markets, and China accounts for 20% of global adidas sales since 2018. The coronavirus is continuing to take its toll on global business – however developments are being made and the number of cases are leveling off. There is still much to do to stop the complete spread of the coronavirus, however the future does seem brighter than what was initially expected, when the first few cases were reported.

Pendragon appoint Bill Berman as new CEO

Ishen Patel
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0
Pendragon appoint Bill Berman as new CEO
Pendragon PLC (LON:PDG) have announced that they have appointed a new chief executive officer on Wednesday afternoon. The motor retailer said that Bill Berman would be taking up the chief executive officer role, which would take place with immediate effect. Berman is currently interim executive chair of Pendragon, and has held his role since October 2019. He joined the firm as a non-executive director in April lsat year, and has a variety of experiences in the industry and wider business, Pendragon said: “Prior to joining Pendragon, Bill served as President and Chief Operating Officer of AutoNation, the largest automotive retailer in America, where he was responsible for AutoNation’s 26,000 associates and the operational performance of the company’s 300+ new vehicle franchises, including new and used vehicle sales and aftersales. He has over 30 years’ experience in automotive retail.” Bill Berman, Chief Executive Officer, commented: “In my relatively short time with the business, it is already clear to me that Pendragon is a company with great potential and a talented team. As Chief Executive Officer, I look forward to building on strong relationships with our team members, customers, suppliers, our OEM partners and investors as we move forward together in a period of rapid change and innovation in the automotive retail sector.”

Pendragon change their senior management board

In December, Pendragon announced that they had appointed a new Non Executive Director. The firm has announced the appointment of Brian Small to their senior board with immediate effect. Small will serve on the board’s nomination committee, the remuneration committee, and will take over as audit committee chair from Richard Laxer from January 2 next year.

Need for change at Pendragon?

The car retailer has seen a mixed few months of trading, and the question rises as to whether this change was enforced. The firm saw a decline in total revenues by 8%, as like for like revenue dropped 3.6% and used car revenues dropped 19.6% in October. Total revenue from new car sales was strong however, and this climbed 4.5%. Additionally, new car like for like sales increased by 11%. Pendragon said overall sales volumes were lower as it focussed on rebuilding both the quantity and quality of the age-profile of the stock during the period. Pendragon held £458m worth of used car stock at the end of 2018, compared to £372m a year ago. A couple of new changes at Pendragon should allow the firm to fully assess their future strategy – whilst looking to suffice shareholders. The new board should give Pendragon a sense of optimism going forward, and shareholders will be keen to see what the firm can do over the next few months of trading. Shares in Pendragon trade at 12p (-0.64%). 19/2/20 12:43BST.

Supermarket Income REIT acquires Sainsbury store for £34 million

Jamie Gordon
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3
Supermarket Income REIT acquires Sainsbury store for £34 million
UK supermarket real estate investor Supermarket Income REIT (LON:SUPR) announced on Wednesday that it had agreed to acquire Sainsbury’s (LON:SBRY) store in Hessle for a consideration of £34.0 million. The site has been bought from Reassure Limited, and excluding acquisition costs, represents a net initial yield of 5.5%.

The 13 acre site was developed in the 1980s and has since hosted Sainsbury’s, with a ‘substantial’ refurbishment taking place in 2011.

The space is comprised of 50,000 sq feet of sales area, alongside 584 parking spaces and a 12-pump petrol filling station.

It has “purpose-built online fulfilment docks and supports Sainsbury’s online grocery fulfilment for the surrounding area” and has been acquired with an unexpired lease term of 14 years with annual, upward-only, RPI-linked rent reviews.

Supermarket Income REIT added that,

“Included in the purchase price is an adjoining Homebase store comprising 21,000 square feet net sales area with an unexpired lease term of four years. Sainsbury’s guarantee the Homebase rent for the duration of the lease. Consequently, the combined total net initial yield on this purchase of the Sainsbury’s in Hessle, including the rental income from the Homebase, will be 6.3%.”

Supermarket Income REIT comments

Responding to the update, Ben Green, Director of Atrato Capital, the Investment Advisor to Supermarket Income REIT, said:

“This Sainsbury’s superstore is ideally located for both online and offline grocery sales and adds to Supermarket Income REIT’s growing portfolio of omnichannel stores.”

Investor notes

Following the update, the company’s share price rallied 0.40% or 0.43p to 107.43p per share 19/02/20 11:59 GMT. The Group’s p/e ratio is 20.19, their dividend yield is 5.26%.  

Moody’s lower Renault’s long term outlook

Ishen Patel
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0
Moody’s lower Renault’s long term outlook
Moody’s (NYSE:MCO) have lowered Renault’s SA (EPA:RNO) outlook long term ratings to Ba1, and short term ratings to non prime. The french car firm have seen a tough year of trading across 2019, but this has been evidenced by the wider automotive industry – where big names have also seen slumps. Renault shares have dipped on the announcement, despite Moody’s retaining a stable outlook for the automotive firm. Moody’s said the downgrade was triggered by Renault’s “substantially weakened operating performance, reported for the year 2019, “to a level no longer commensurate with the Baa3 rating category”. “Based on the company’s 2020 guidance anticipating a further decline in the group’s operating margin and the continuing weakness of the market environment, we do not expect that Renault will be able to restore healthy operating margin levels in the medium term,” Moody’s said.

What has happened in Renault’s last few months?

At the end of November, the car maker cut their guidance as they saw their shares plunge. Renault said it now expects its group revenue to decline between 3% to 4%, “due to an economic environment less favorable than expected and in a regulatory context requiring ever-increasing costs”. Meanwhile, group operating margin is expected to be around 5%, the automobile maker said. Renault added that its revenue for the third quarter amounted to €11.3 billion, down by 1.6% from the €11.5 billion figure recorded in the third quarter of 2018. The car manufacturer continued to add that “the Automotive operating free cash flow should be positive in H2 while not guaranteed for the full year”. Moreover, Renault said that is management will review the “Drive the Future” mid-term plan targets introduced in 2017. The car market is tough for Renault, and the downgrade by Moody’s today will worry shareholders. However, some optimism has to be carried forward. The global economy and demand for cars is slipping, and there has been a massive shift towards electronic vehicles and environmentally friendly car usage. This market seems to have been captivated by Tesla (NASDAQ:TSLA) – whose demand continues to surge fueled by CEO Elon Musk. Renault will hope that this year can be one of recovery, and the firm should be keen to show that they can weather the storm to produce results in a tough operating market. Shares in Renault trade at €30 (-0.048%). 19/2/20 12:28BST.

FTSE leads the rebound against sour Apple Tuesday

Jamie Gordon
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2
FTSE leads the rebound against sour Apple Tuesday
Ahead of the inflation data released on Wednesday, the FTSE led the early morning rally in global equities, bouncing 1.0% following a Tuesday hampered by Apple‘s (NASDAQ:AAPL) bleak Coronavirus outlook and ZEW-based sentiment. The FTSE can celebrate this small victory, having also led the rally yesterday, but should brace itself for a turbulent few days. Inflation data will likely offer – at the very least – pause for thought, and Friday’s oncoming manufacturing PMIs are already making onlookers hold their breath. Later on Wednesday, Dow Jones futures anticipate a slow start for the world’s largest index, which over the last few weeks has reminded investors how much it acts as a lynch pin for any rally in global equities. Should this modest movement come to fruition, European markets could see their progress halted during the afternoon. Speaking on the morning’s movements, Spreadex Financial Analyst Connor Campbell stated,

“Quickly brushing aside the fears sparked by Apple’s revenue warning on Tuesday, the markets immediately got back on the horse on Wednesday, attempting to resurrect last week’s rally.”

“With its commodity stocks in rebound mode the FTSE was the morning’s best performer, leaping 1% higher to near 74507400.”

Among the main developments in this sector have come from Hochschild Mining Plc (LON:HOC), who have seen their shares bounce 7% on a strong set of full-year results, and Tower Resources PLC (LON:TRP), who announced their plans to spud the NJOM-3 well.

“A 0.6% increase from the DAX pushed it above 13740, leaving it around 40 points shy of its recent record peak. The CAC, meanwhile, added 0.5%, as it hovered 20 points below 6100.”

“The Dow Jones, however, is currently facing a less excitable increase of just 0.1% when the US session starts – something that could sap the energy from its European counterparts later this afternoon.”

“The markets are arguably in a transition period between focusing on daily new case and death toll figures, to data that will show the economic impact of the coronavirus. Already on Tuesday they got a taste, not only with the Apple statement but a drastic drop in the German and Eurozone-wide ZEW economic sentiment. Friday will be the biggie in this regard, bringing with it a wave of flash manufacturing PMIs. Until then, however, it seems like investors are content to ignore the warning signs for as long as possible.”

“Receiving a post-jobs report boost against the euro, but unable to maintain its gains against the dollar, the pound gets another test this Wednesday in the form of the latest inflation data. Analysts are expecting a sharp bounce, from 1.3% to 1.6% month-on-month.”

Tower Resources set to commence spudding of NJOM-3 well in Cameroon

Ishen Patel
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0
Tower Resources set to commence spudding of NJOM-3 well in Cameroon
Tower Resources PLC (LON:TRP) have told the market that they are planning to spud the NJOM-3 well. This well is located on the Thali licence, which is in Cameroon. Tower have said that these operations are set to commence in June, however the date is still flexible as it could take longer than expected. The oil and gas exploration firm said that long lead items are already at its base in Douala. However, some testing equipment needs to be moved before the well is spudded, along with the relevant personnel. Tower Resources said: “The Company has made considerable progress in farm-out discussions with a number of parties regarding some or all of the well funding, including exchanging draft term sheets, following a pause in discussions that took place while the Company was waiting for formal confirmation of the extension of the current exploration period of the Thali PSC. The Company believes that it will be able to complete a farm-out within its desired timeframe for the NJOM-3 well although there can be no certainty as to timing or eventual outcome of such discussions.”

Tower Resources’ joint venture

In October, Tower Resources announced that they had pursed a joint venture with an undisclosed oil major. The Company stated that it had given technical and commercial information to an ‘international oil company’ with a view to spark discussions of a potential joint venture. The announcement follows preliminary discussions held earlier in the year, and is focused on prospective co-operation on Tower Resources’ Namibian Blocks venture. “This process is at a very early stage, and may not lead to any agreement. However, it does provide a timely reminder that, in addition to our Cameroon appraisal and development project, the Company has two extremely attractive exploration opportunities in Namibia and South Africa.” Tower are certainly making progress in Cameroon, which is a country which might not have as much focus when it comes to oil and gas exploration. Tower Resources should remain confident and with the backing of the joint venture – shareholders will hope that exploration can result in high yield. Shares in Tower Resources trade at 0.48p (-9.14%). 19/2/20 12:08BST.

Starcom shares jump on supply and support agreement with CubeMonk

Ishen Patel
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1
Starcom shares jump on supply and support agreement with CubeMonk
Starcom PLC (LON:STAR) have signed a three year supply and support agreement with US shipping serviced provider CubeMonk Inc. The wireless solutions and technology firm said that the agreement would allow the supply and support of Kylos Air technology units. The Kylos Air technology will be used as part of CubeMonk’s tracking service for air containers. Starcom expressed that they had been working with CubeMonk over the last year to implement Kylos Air technology for shipping solutions. The firm noted that the trial had been successfully completed, and had produced pleasing results – adding that it had seen “very positive feedback from the end users in the trial.” Avi Hartmann, CEO of Starcom, commented: “Following the successful trial, we are proud to have reached this important milestone in our relationship with Cubemonk in the USA. This contract, along with others under active negotiation, demonstrates the significant opportunity for Starcom to expand its OEM strategic partnerships with companies that will benefit from our proven technology to enhance their respective businesses.” The Kylos Air units are connected through Starcom’s online control software, and will monitor key container parameters including location, internal temperature and shocks experienced. The units are automatically shut off during the take off and turn on immediately after the landing of the aircraft in order to comply with aviation regulation – which shows their practical use.

Starcom’s rising profit expectations

At the start of the month, Starcom reinstated their strong expectations following a strong period of trading. The firm that it expects to swing to an annual profit following strong revenue gains tied in with stable gross margins. Adjusted earnings before interest, tax, depreciation and amortization are expected to be around $300,000, swinging from a loss of $8,000 the year prior. Gross margin remained stable at 41% compared to 40% for 2018. The wireless solutions for remote tracking and monitoring of assets and people firm said that it strengthened it product offering and created its own opportunity for accelerated growth. Looking forward, the firm said that in 2020 it will be looking to delivery up to $2 million worth of Lokies, which will give a great chance for the firm to expand its horizons. Looking ahead, Starcom said it will build on its collaborations with companies such as Zero Motorcycles Inc, Israel Chemicals Ltd and WIMC Solutions Inc. Shares in Starcom trade at 1p (+4.39%). 19/2/20 11:57BST.

Post Brexit immigration plans will not give visas to ‘unskilled workers’

Ishen Patel
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2
Post Brexit immigration plans will not give visas to ‘unskilled workers’
The British Government, led by PM Johnson has unveiled their plans for the post-Brexit immigration reform. PM Johnson still faces a lot of work to get Brexit ‘done’, however progress has been made since the December election – where he won the legitimate mandate to govern. One of the key themes of the Brexit campaign back in 2016 was the issue of immigration. The rise of disengagement with British Politics came down to the fact that the government were seemingly not taking a stance on EU immigration. Lies, rumors and propaganda on immigration dominated both Brexit campaigns – for both the ‘leave’ and ‘remain’ sides, however PM Johnson has made a commitment to deliver Brexit in the best interest of the British people. Today, the British Government said that low skilled workers would not get visas to work in the country under the post-Bret immigration plans. PM Johnson has urged businesses and employers to move away from cheap labour which has been found in Europe over many years. The Home Office said EU and non-EU citizens coming to the UK would be treated equally after UK-EU free movement ends on 31 December. Home Secretary Priti Patel told BBC Breakfast the government wanted to “encourage people with the right talent” and “reduce the levels of people coming to the UK with low skills”. She added that businesses could also recruit from among eight million “economically inactive” potential workers in the UK. There has been speculation over heavy reform of the British immigration system, with the Australian points based system variant being the ideal option. Under the post Brexit plans, overseas workers would have to reach a 70 point threshold to work in the UK. Speaking English, and having an approved sponsorship would give them 50 points – which in the view of the British Government would allow the most skilled workers to join the British workforce. With this system arises the worries of discrimination and prejudice – many would argue. For example how would EU nationals be able to work in the UK when they are coming here for the first time, or have no employment concretely confirmed. The post Brexit immigration system is a risky one – however it seems that PM Johnson and his newly appointed Cabinet are keen to put these actions in to plan. It will be interesting to see how events unfold from here …

Distil agree botanical drinks venture with British Honey

Ishen Patel
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1
Distil agree botanical drinks venture with British Honey
Distil PLC (LON:DIS) have signed a joint venture agreement with British Honey Co Ltd. The drinks manufacturer said that the deal will allow the production and marketing of a new range of botanical spirits. Both companies have agreed to contribute an initial £30,000 towards production and marketing of the new product range. An intellectual property rights clause in newly create brands and recipes will mean that these new products are jointly owned and that future revenues will be split evenly. Distil will have access to to British Honey’s distillery for production, and notably, the gin and vodka producing firm have pledge to assist British Honey with the marketing and distribution of their own brands. The new venture will start immediately, and Distil are expecting to incur additional costs in its current financial year. The firm have already told shareholders that profit for the year ending March 31 will fall below expectations, but should show a year on year rise. Don Goulding, Executive Chairman, Distil Plc commented: “I am very pleased to partner with BHC to facilitate an accelerated innovation agenda and more nimble product development capability. The joint venture will facilitate the creation and marketing of exciting new products and will improve Distil’s capability to develop and refresh its own brand portfolio. This new collaboration brings together complementary capabilities which will benefit both companies and we look forward to communicating our progress in the coming months.”

Distil’s strong festive trading

In January, Distil noted that they had reported a strong set of fundamentals across the Christmas period. The gin and vodka producer told shareholders that it had seen a good sales performance for the festive period, which was one aspect of the impressive update. Distil said that revenue for the third quarter, which ended on December 31 increased by 7% year on year which was supported by continued marketing investment. The firm did says that they saw a 13% drop in revenue despite maintaining its marketing investment spend. Shares in Distil trade at 0.85p (+3.03%). 19/2/20 11:31BST.
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