European indices bounce back despite Trump’s threat to France

Jamie Gordon
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European indices bounce back despite Trump’s threat to France
After a sore start to December, the Eurozone were keen on forgetting yesterday’s losses. After the bell, indices across the continent looked determined to live by the mantra of ‘it can’t get any worse’, and subsequently decided to shake off Trump’s overnight threats to implement a series of tariffs on $2.4 billion worth of French goods. And shake off the threats they did, somewhat successfully even. Most of the markets saw some form of rebound, and the French bourse didn’t even end up being the worst-hit casualty of morning trading – that coveted spot was reserved for the FTSE. Perhaps then, while uncomfortable and disruptive, Trump’s threats are just something indices will learn to live with and get used to, and with time, hopefully ignore. Speaking on Trump’s attempts to ruin markets’ fun, Spreadex Financial Analyst Connor Campbell commented,

“Severely stung by Trump restoring tariffs on Brazil and Argentina on Monday, the markets coped surprisingly well with the President’s overnight threat to France.”

“The Trump administration has proposed new tariffs on $2.4 billion of French goods, including typically Gallic fare like cheese and champagne, in retaliation to the country’s new digital services tax, one that quite rightly would hit the wallets of American tech monoliths Amazon, Google and Facebook.”

“Instead of suffering another round of serious losses, the Eurozone markets broadly rebounded. And, to be fair, they have plenty of ground to recover – Monday was a nasty, nasty start to December. The DAX jumped 80 points as it pushed back past 13000, with the FTSE MIB rising 1% and the IBEX up 0.5%. The notable, obvious exception was the CAC, which could only eke out a 0.1% increase; not bad, however, given the situation between the US and France.”

“The French bourse wasn’t even Tuesday’s worst performing major index. The FTSE sank another 0.4% after the bell, falling to a one and a half week low as it was hurt by the troubled state of its commodity stocks and a bounce from sterling.”

“The pound added 0.2% against dollar and euro alike, leaving it at a near 7-month peak against the former and back above €1.171 against the latter. This despite the Tories’ ever-shrinking lead in the polls and the prospect of a terrible, if improved, construction PMI.”

Elsewhere this morning; Nokia Corporation (HEL: NOKIA) announced it would transform Finland’s national grid to support renewables, Solid State plc (LON: SOLI) boasted significant profit growth during the half-year, Centamin PLC (LON: CEY) rejected a merger approach, and retail sales were down during November in a year-on-year comparison.

Ferguson shares dip despite growing US revenue

Ishen Patel
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Ferguson shares dip despite growing US revenue

Shareholders of Ferguson PLC (LON: FERG) have seen their shares in red on Tuesday morning, despite a positive update from the firm.

Ferguson plc is a Jersey registered multinational plumbing and heating products distributor with its head office in Winnersh Triangle, United Kingdom. Ferguson has approximately 35,000 employees across three regions. Its brands include Ferguson Enterprises, Wolseley and William Wilson.

Ferguson told shareholders that revenue was up in the first quarter, as it impressed shareholders about expanding market share in the US.

The plumbing and heating products distributor recorded $5.21 billion of revenue in the three months to October 31, up 5.3% on the $4.95 billion seen the year before.

The FTSE100 listed firm saw its group trading profit rise 9.2% to $451 million in the first quarter, with underlying trading profit which excludes a $18 million accounting boost – rising 4.8% to $433 million from $413 million.

“Ferguson continued to take market share against a backdrop of flat US markets, and we remain firmly focused on maximizing organic revenue growth, while tightly managing gross margins and costs,” said Chief Executive Kevin Murphy.

“We are pleased that this disciplined approach enabled us to grow US trading profit in line with revenue growth in the quarter. Cash generation in the quarter was good and our balance sheet remains strong. We will continue to invest organically in our businesses and in selective bolt-on acquisitions which will be integrated into our network.”

Forecasting further, Murphy said: “We expect to make further good progress in the year ahead. While US market growth is currently broadly flat, we remain confident of outperforming our end markets and our order books support continued modest revenue growth in the months ahead. This strong focus on growth with continued cost and margin discipline gives us confidence in our expectations for the full year which remain unchanged.”

In the United States, revenue rose year on year by 6.1% to $4.89 billion, while revenue in Canada fell 5.8% to $315 million.

Ferguson’s UK revenue dropped 2.2% to $541 million, with trading profit down 17% to $15 million. The company said its UK demerger is progressing as planned, and is expected to be completed in 2020.

The company blamed the disappointing quarter in the UK on a backdrop of “uncertainty” in repair, maintenance and improvement markets, where the majority of Ferguson’s UK revenue is generated.

Shares in Ferguson fell 2.79% despite the update, which reflected the appetite from shareholders.

Shares now trade at 6,480p. 3/12/19 10:41BST.

Solid State boasts 61% profit growth during the first half

Jamie Gordon
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Solid State boasts 61% profit growth during the first half
AIM listed manufacturer of computing, power and communications products, and value added distributor of electronic components, Solid State plc (LON: SOLI) boasted significant progress in its fundamentals during the six month period ended 30 September. The Group’s revenue for the period was £33.6 million, up 43% on a reported and 11% on a proforma basis in a year-on-year comparison. This led a 140bps bounce in the Company’s reported operating profit margin, which was up to 7.1%, alongside a staggering 61% hike in adjusted profit before tax, which shot up to £2.67 million. Solid State shareholders fared similarly well, with the Group’s interim dividend rising 25% on-year to 5.25p per share, and their adjusted diluted EPS spiking 64% to 27.8p.

The Group went on to laud its ‘significant contract wins’ for an order book of £37.8 million as Halloween came around, up 5.3% on-year.

It also added that it had and would continue to benefit from securing an enlarged Microchip franchise, investing in its Weymouth facility and investment in Business Development resources.

Elsewhere in the tech sector, IMImobile PLC (LON: IMO) posted strong half-year results, Wirecard AG (ETR:WDI) secured a partnership with Yeepay, AdEPT Technology Group PLC (LON: ADT) revenues bounced and Infineon Technologies AG (ETR: IFX) enjoyed financial progress.

Solid State comments

Adding insight on the Company’s results and prospects, Tony Frere, Chairman, said,

“I am very pleased to present a strong set of results which will be my last as Chairman of Solid State. In the five years of leading the Board we have worked very hard to build a resilient business with key points of difference in its industry. These record results vindicate our strategy and ensure a strong platform for future growth.”

Investor notes

Following the announcement, the Company’s shares rallied 9.11% or 43.00p to 515.00p per share 03/12/19. Analysts from finnCap reiterated their ‘Corporate’ stance on Solid State stock. The Group’s p/e ratio is 12.90, their dividend yield stands at 2.43%.

deVere Group CEO predictions ahead of general election

Dina Caruso
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deVere Group CEO predictions ahead of general election
The Founder and Chief Executive of deVere Group has predicted that the pound will fall to 1.20 against the U.S dollar if the UK election delivers a hung parliament. The GBP/USD is currently trading close to 1.30 as President of the US Donald Trump heads to London. With just over a week to go until the general election, parties continue to campaign to win over voters. Nigel Green, the Founder and Chief Executive of deVere Group, has made a prediction for the outcome of the pound following the results of next week’s election: “The overwhelming majority of polls tracking the UK election clearly suggest growing support for Labour,” Nigel Green said. “The surge for Labour in the recent polls, which raises the spectre of another hung parliament, has been reflected by the dip in the pound against the dollar, the euro and other major currencies.” “Sterling fell 0.2 per cent to $1.29 on Monday with the odds on a hung parliament being delivered next week narrowed to as low as 7/4 – down from 9/4 last week,” the Founder and Chief Executive of deVere Group continued. “I think we can expect the pound to fall to $1.20 in the event of another hung parliament.” “Should a Conservative majority be delivered, I believe the pound will reach $1.35.” “A hung parliament is likely to lead to another EU referendum and another Scottish independence referendum.” “This would intensify uncertainty perhaps into 2021. Uncertainty is something financial markets loathe and this is why the pound has dipped on the news of Labour closing in on the Conservatives ahead of this crucial Brexit election.” “The uncertainty would also serve to continue to dampen business investment which, of course, will drag on economic growth.” Nigel Green continued: “The significant drop in the value of the pound could contribute to reducing people’s purchasing power and a drop in UK living standards. Weaker sterling means imports are more expensive, with rising prices being passed on to consumers.” “A low pound is also bad news for British expats who get a UK pension or UK income – plus it’s bad for holidaymakers and travellers abroad – with trips to Europe and the U.S. becoming increasingly more expensive. Even destinations such as Dubai and China are more expensive as their currencies are pegged to the U.S. dollar.” Nigel Green continued: “While it is most likely that a Conservative majority will be delivered, next week’s election is looking like it will be closer than many had expected at the beginning of the campaign.” “Should Mr Johnson’s Conservatives win the election, the pound and UK financial assets stand to gain with immediate effect.”

Centamin shares spike following rejected merger approach

Ishen Patel
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Centamin shares spike following rejected merger approach

Centamin PLC (LON: CEY) have seen their shares spike on Tuesday morning after it was reported that the firm rejected a merger approach from Endeavour Mining.

Shares of Centamin spiked 7.68% to 120p. 3/12/19 10:23BST.

Centamin plc is a gold mining company focused on the Arabian-Nubian Shield. It has offices in London, UK; Mount Pleasant, Western Australia; and Alexandria, Egypt. Its registered office is in Jersey

Centamin have seen a mixed time of financial 2019, and the firm has been confident throughout the year. In October, the FTSE250 listed firm saw its shares dip after the firm saw its output levels decline.

Today, Centamin updated shareholders by saying that it had rejected a hostile approach from an industry rival, which saw shares in green.

Gold miner Centamin PLC on Tuesday said the combination proposal made by Canadian peer Endeavour Mining Corp would provide greater benefit to Endeavour’s shareholders than to its own shareholders and does not reflect the contribution that would made by Centamin to the merged entity.

In a response to the £1.47 billion, all share combination proposal, Centamin said that it is ‘better positioned’ to deliver shareholder returns on a stand alone basis than a combined entity, leading to a unanimous board rejection.

The offer values Centamin at £1.47 billion and proposes a share-exchange ratio of 0.0846 Endeavour share for each Centamin share. Were the merger offer to go ahead, Endeavour shareholders would own just shy of 53% of the new company, while Centamin shareholders would have just over a 47% stake.

The deal represents a 13% premium to Centamin’s closing price on Monday of 112.20 pence, Endeavour said.

Endeavour explained: “As meaningful engagement has still not been forthcoming, Endeavour is today announcing the terms set out in its proposal in an effort to encourage the Centamin Board to engage in discussions.”

Endeavour added: “On November 28, Centamin responded to the proposal with a continued refusal to discuss the prospects for a merger or its terms prior to the execution of a standstill agreement and non-disclosure agreement.

“Mindful of Centamin’s response to Endeavour’s proposal in October 2018, Endeavour believes that Centamin’s insistence on a standstill agreement as a pre-condition to discussing the prospects for the Merger, or even preliminary terms which would be subject to reciprocal due diligence, risks denying Centamin shareholders a voice in the compelling strategic merits of a combination.”

A combined Endeavour and Centamin would have a pro-forma 2019 gold production of 1.2 million ounces in 2019, making one of the top 15 gold producers in the world, Endeavour said.

In the minerals and mining sector, Monday was a busy day. FTSE100 (LON: FRES) listed saw their shares in red, after the firm gave a pessimistic outlook on their 2019 production estimate guidance.

Additionally, KEFI Minerals and Ariana Resources gave positive updates to shareholders, which saw their shares in green.

Nokia to transform Finland’s national grid to support renewables

Jamie Gordon
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Nokia to transform Finland’s national grid to support renewables
Finnish multinational telecommunications, information technology, and consumer electronics company Nokia Corporation (HEL: NOKIA) today announced that it had been asked to build an IP/MPLS network to ‘support the transformation’ of the national electrical grid of Fingrid (Finland’s national transmission system operator). This, the Company said, would better enable Fingrid’s smart grid to support renewable energy. Summarising its goals, the Group said:
  • Nokia is installing a mission-critical IP/MPLS network to enable Fingrid to digitalize and automate the management of its national power grid.
  • The new smart grid will be better able to seamlessly integrate variable renewables such as solar, wind and micro-generation from bioenergy.
  • The Nokia network will also support all current and legacy grid control applications including SCADA, teleprotection and current differential protection.
The Company said Fingrid will use its new network to operate 120 high-voltage substations and control 14,600km of power transmission across the country, while aiding in the adoption of renewable alternatives. With Finland already being one of Europe’s leading renewables users, Nokia said that their power transmission network needs to keep of evolving. “Solar and wind generation, for example, require a much more agile and automated grid to manage the variable, two-way power flows by automatically ramping and balancing inputs and outputs”. The IPS/MPLS solution deployed by Nokia has been tried and tested ‘worldwide’; not only in these new grid applications but other critical operations, such as teleprotection, current differential systems, and supervisory control and data acquisition systems (SCADA). This latest project will be carried ourt in partnership with NetNordic. Elsewhere in renewables news, SIMEC Atlantis Energy (LON: SAE) made a series of operational announcements, JLEN (LON: JLEN) continues to gain momentum, Active Energy Group (LON: AEG) made an acquisition in North Carolina and Velocys PLC (LON: VLS) commercialised its alternative fuel offerings.

Nokia Comments

Speaking on the news, Kari Suominen, head of ICT for Fingrid, said, “We are committed to realising the potential of renewable energy generation and are embarking on an ambitious transformation of our national grid to make it smarter and more flexible. Nokia’s IP/MPLS solution plays an important role in the digital transformation of our distributed energy resource management by providing us with a reliable, secure and agile communications system that has the potential to support all of our power management needs.” Kamal Ballout, Global Vice President of Energy Practice for Nokia, said, “Fingrid joins our long list of transmission system operator customers who are modernizing their networks and transforming their businesses by embracing more distributed and renewable energy sources. Through continued investment in our IP portfolio, we are able to meet the specific requirements of today’s energy market, helping them evolve their infrastructure for a more sustainable future.”

Investor notes

Following the update, Nokia rallied but then steadied out, up 0.13% or 0.004 EUR to 3.14 EUR per share 03/12/19 12:02 EET. On the New York Exchange, Nokia (NYSE: NOK) shares are down 1.14% or 0.04 USD to 3.46 USD per share 03/12/19 04:16 GMT. The Group’s dividend yield stands at 3.21%, their market cap is $19.94 billion.

Retail sales down with later timing of Black Friday

Dina Caruso
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Retail sales down with later timing of Black Friday
New data revealed on Tuesday that total retail sales dropped by 4.4% in November compared to the same period in 2018. The British Retail Consortium said that like-for-like sales declined by 4.9% over the month. A major difference between this year’s data and that recorded in November 2018 is that last year’s figures included the Black Friday period. Indeed, retailers in the UK have experienced strong trading over the Black Friday promotional week. The successful trading period brings joy after the well publicised woes of the UK high street have dominated over recent months. “At first glance, November’s decline in like-for-like retail sales of -4.9% will leave retailers reaching for the smelling salts, but context is key. If adjusted for the later timing of Black Friday and Cyber Monday, sales are more likely to have increased by a more palatable 0.4% like-for-like,” Paul Martin, Partner, UK Head of Retail at KPMG, commented on the data. “Over the course of November, consumers will have held off making purchases in anticipation of discounts to come, despite many retailers spreading out promotions across several days, if not weeks. That said, consumers will also have put Brexit and political uncertainty to one side temporarily, focussing on promotions and the upcoming festivities instead,” Paul Martin continued. “The key question will be whether demand can rebound enough to make up for several disappointing months of trading this year. Grocers are likely to have weathered the storm better than most but Black Friday is key to many non-food categories.” “Retailers have their foot to the floor during this critical trading period, but it won’t be until Christmas trading reports land in January that we’ll truly know whether their strategies have proved fruitful.” Helen Dickinson OBE, Chief Executive at the British Retail Consortium, added that: “A No Deal Brexit has been pushed back to after Christmas, consumers were more prepared to open their wallets to a little extra festive spending.” “Politicians may be in the full swing of campaigning today, but the next Government must be ready to hit the ground running on December 13th. If the next Government wishes to see retail spending remain healthy in 2020 it is essential they clarify our future relationship with the EU as soon as possible. If consumers are to avoid price rises, and reduced availability, politicians must put frictionless, tariff-free trade at the top of their new agenda,” the Chief Executive continued. As Brexit discussions have been put on hold, parties are now campaigning for the general election later this month.

Omega Diagnostics slims losses and confirms HIV test orders

Jamie Gordon
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0
Omega Diagnostics slims losses and confirms HIV test orders
In-vitro diagnostics products provider Omega Diagnostics Group Plc (LON: ODX) showed improvement as it narrows its losses and boasts a large order for its HIV testing products.

The Group’s revenues from continued operations bounced 6% to £4.46 million year-on-year for the half-year ended September 30th.

This progress was matched by its gross margin, which was up 5.8% points on-year, to 67.5%. More importantly, the Company swung its EBITDA around from negative £0.22 million to positive £0.25 million, and its adjusted loss before tax narrowed from £0.51 million to £0.35 million. The direction of travel was similar for shareholders of Omega Diagnostics, with their adjusted loss per share trimming down from -0.5p to -0.2p. The progress listed in today’s update was then made sweeter by news that the Company had secured a second conditional order order for 200,000 units of its VISITECT® CD4 350 HIV test.

Talking its stakeholders through the order, the Company said,

“This order is in addition to the first purchase order for 50,000 tests announced on 16 August 2019. The combined order total for 250,000 tests remains conditional upon the Nigerian Ministry of Health (“MOH”) approving the Company’s VISITECT® CD4 350 test into its national HIV policy, a process which is still ongoing at present. A final delivery schedule will be confirmed once the MOH outcome is known with certainty.” Elsewhere in pharmaceuticals, Beximco Pharmaceuticals (LON: BXP), IMCD N.V. (AMS: IMCD), Amryt Pharma Holdings Ltd (LON: AMYT), Curetis NC (AMS: CURE) also boasted financial progress.

Omega Diagnostics comments

Speaking on the future, William Rhodes, Interim Chairman of the Company, offered the following insights,

“I am encouraged that we continue to make progress across all three divisions. Our financial performance was aligned to our expectations and is further indication that the restructuring we undertook in the prior year is having a positive impact. The recent fundraise also provides us with sufficient funding to implement our short term strategies, and I would like to thank all our shareholders who participated.”

“In summary, we have continued to make progress against our plans, and are well positioned for near term growth in both our food intolerance and CD4 business units.”

Investor notes

The Company’s shares rallied 4.00% or 0.40p to 10.40p per share 02/12/19 16:30 GMT. Analysts from FinnCap reiterated their ‘Corporate’ stance on Omega Diagnostics stock. Neither a dividend yield nor a p/e ratio are available for the Group, their market cap is £15.41 million.

Festivities in short supply as Trump reimposes tariffs

Jamie Gordon
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0
Festivities in short supply as Trump reimposes tariffs
Continuing to push against his unwilling adversaries, today president Donald Trump kept on attempting to bring his economic machinations into being. His thinking of ‘low dollar, plus protectionism, equals good trade for US producers’, is as simplistic as his drive to bring such maxims into being is relentless. Alas, in the process, he has done done little more than antagonise everybody else – again. Lamenting the new round of tariffs imposed on Latin American countries by Trump today, Spreadex Financial Analyst Connor Campbell stated,

“With the markets having done their best to maintain a positive outlook on the US-China situation, despite Hong Kong becoming a political pawn between the two sides, Trump went and added another couple of enemies to his trade war portfolio.”

“Delivering the news via, where else, Twitter, the President said that ‘effective immediately’ he would be restoring tariffs on all steel and aluminium imports from Brazil and Argentina. This came as Trump claimed those countries had been ‘presiding over a massive devaluation of their currencies’ that was ‘not good’ for American farmers. Never missing a chance to attack Jerome Powell at the Federal Reserve, he ended the announcement by haranguing the central bank about lowering rates and loosening monetary policy to weaken the dollar.”

“It doesn’t take a genius to guess how investors reacted. Reversing their early gains, the Eurozone indices all sank into the red, joined by an irritated Dow Jones. The FTSE tumbled back towards a 10-day low of 7310 after shedding 50 points, while the Dow sank below 28000 as it shed 130 points.”

“The real big losses, however, were saved for the Eurozone. With the region’s total manufacturing PMI marginally better than initial estimates, and issues for the pound (political) and dollar (manufacturing), the euro rose 0.4% and 0.5% against sterling and the greenback respectively. That left the region’s indices in a bad way; the DAX was down 1.7%, with the CAC falling 1.5%.”

Reflecting on Monday’s stories outside of Donald Trump, other important updates came from; KEFI Minerals (LON: KEFI) getting the green light on their Tulu Kapi project, Hiscox Ltd (LON: HSX) looking set to drop out of the FTSE100 (INDEXFTSE: UKX) index, Trainline PLC (LON: TRN) dipping after Labour announcing its transport policies, and Christmas looking set to be be costly for British consumers.  

Beowulf Mining shares spike after third quarter loss shrinks

Ishen Patel
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0
Beowulf Mining shares spike after third quarter loss shrinks

Beowulf Mining plc (LON: BEM) have seen their shares spike on Monday afternoon following an optimistic update to shareholders.

Beowulf Mining plc is a UK registered Nordic focused exploration and development company listed on the AIM in London and Spotlight in Sweden. The CEO is Kurt Budge. The company was formed in 1988 as Beowulf Gold.

Shares of Beowulf Mining spiked 2.17% following the announcement, and now trade at 5p. 2/12/19 16:19BST.

Today, in the mining and natural resources sector there have been updates.

Additionally, KEFI Minerals and Ariana Resources gave positive updates to shareholders, which saw their shares in green.

Beowulf enlightened shareholders that they had narrowed their total loss in the third quarter, following a large exploration cost impairment one year ago which sparked shareholder appetite.

The miner, which is still in its development phase and has yet to generate revenue, reported that pretax loss shrank to £309,344 from £407,287 the previous year.

Share based payment expenses fell from £49,519 to £26,566 whilst administration expenses rose to £283,310 from £211,029.

Chief Executive Kurt Budge said: “It seems evident that the coalition government in Sweden has been struggling to reach consensus on Kallak and that politics is standing in the way of a decision being taken. We have heard before, from the government, that Swedish law is sufficient for assessing the Kallak application, and, that any assessment of Kallak should be ‘by the book’.”

Budge added: “At the beginning of October, Mr Baylan wrote to me of a ‘forthcoming government decision’ in our case. The company has made its case and now it is time for the government to decide.”

Certainly, shareholders should be pleased with the updated provided by Beowulf. As the market becomes increasingly competitive and saturated, the update should appease stakeholders in the short term.

Beowulf will now look to build on their positive update, and should look to swing into profit following revenue gains and business growth as long as they keep up their ensured efforts to expand and create new business opportunities.

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