Barratt Developments show slow sales in update
Barratt Developments (LON: BDEV) reported lower sales and a fall in the value of homes sold in their trading update.
The midlands based home developers struggled to achieve medium-long term as forward sales were down in value.
With this change, Barratt Developments have swung in delivering low cost homes to recover ground lost.
Shares in Barratt Developments fell by 1.76% trading at 671p 16/11/19 12:26 BST.
David Thomas Chief Executive commented “We have started our new financial year well, with a good sales rate and a healthy forward order book. As the only major housebuilder to be awarded a 5 Star rating for customer satisfaction for ten years in a row, we continue to lead the industry in quality and customer service.”
Thomas added “Whilst there is economic and political uncertainty, we continue to be disciplined and have a strong balance sheet and cash position which we believe provide us with the resilience and flexibility to react to potential changes in the operating environment in FY20 and beyond. We maintain our focus on the delivery of operational improvements across our business, and our commitment to deliver the highest quality homes across the country.”
Once again, the property market has been hit by shocks amidst tensions with Brexit negotiations, and future speculation is hard to comment on.
UK House Price Growth has been leveling out for months as buyers worry about longer term shocks following Britain’s position with Brexit.
Efforts have been made by Barratt Developments to reduce costs, including changes of design of the houses they build, reduction of roof pitch and height houses along with reduced exposure to London.
Russ Mould, investment director at AJ Bell (LON: AJB) said “Barratt is still talking about achieving ‘margin improvements’, crucially without compromising quality – or in other words without building lower calibre houses
“Either Barratt has found an approach that has eluded its rivals or it seems likely shareholders will face disappointment at some stage” Mould concluded.
Barratt have said they expect the volume of house sales to grow toward the end of the of their medium-long term target range of 3-5% annually.
Total sales rose to 12,963 units from 12,903 earlier this year.
However, this was offset by a fall in the value of these homes by 2.4% to £3.07 billion.
Interest rates are still low by historical standards, giving an opportunity for new homeowners to pounce on this opportunity.
However, the low interest rates can only promote demand if the supply of housing were to increase in the UK, where evidently there is a massive shortage.
Despite political tensions, Barratt seem focused achieving their medium-long term goals, by riding out this slip due to Brexit.
In other current affairs, there have been updates. These include, London Stock Exchange (LON:LSE), Fuel Prices, Amazon (NASDAQ: AMZN), the collapse of Thomas Cook (LON: TCP) and Facebook (NASDAQ: FB)
Tekcapital shares climb as Salarius succeeds
Intellectual property investor Tekcapital (LON: TEK) have expanded their portfolio company Salarius Ltd (NASDAQ: SLRX) has secured a new customer for patented MicroSalt, causing stock prices to soar.
Shares in Tekcapital rose during Wednesday trading by 10.66% at 6.53p per share.
Tekcapital owns 97.5% of the share capital of Salarius ltd. In Salarius portfolio update, consumers were given an insight into Microsalt stating “Salarius, is the developer and manufacturer of a proprietary low sodium salt called MicroSalt. Salarius is passionate about improving lives with healthier food and is taking the lead in the industry by providing the best low-sodium salt solution, based on the mechanical transformation of the salt particle itself”
A major selling point was the amount of reduced sodium, amidst a shift in importance to health guidelines. “The technology produces salt crystals that are approximately one hundred times smaller than typical table salt, delivering a powerful saltiness as the micro-grains dissolve in the mouth, with approximately 50% less sodium consumption”
Salarius have worked an agreement with a diversified snack manufacturer to include Microsalt in the production of company snacks. However, no financial terms of the contract have been published.
Tekcapital’s executive DR Chairman Clifford Gross added “We are glad to see Salarius’ continued market traction as it expands its customer base and believe that MicroSalt has the potential to empower consumers worldwide to enjoy full-flavour snacks with reduced sodium,”
Salarius Chief Executive Victor Manzanilla said “The snack food market is highly competitive, with snack food manufacturers competing for shelf space with competitor brands at small, mid-size and large leading retailers. One way these snack food manufacturers are differentiating themselves in such a crowded market is by having a heathier alternative version of their most popular brands, and they are learning they can do this with MicroSalt without sacrificing the taste of their products.”
The patented Microsalt has been a product development funded by Tekcapital, and the success has paid off after landing this huge contract.
Tekcaptial have seemed to tap into an exciting market with the development of Microsalt.
The low sodium ingredients market is estimated to reach $1.76 billion by the end of 2025, with a compound annual growth rate of 11.7%.
Additionally, the global savory snacks market is continually evolving. As it is a considered a highly competitive market, the expected growth will peak $108 billion by 2021.
Victor Hugo Manzanilla, CEO of Salarius said: “We are very excited with this new customer collaboration. The snack food market is highly competitive, with snack food manufacturers competing for shelf space with competitor brands at small, mid-size and large leading retailers. One way these snack food manufacturers are differentiating themselves in such a crowded market is by having a heathier alternative version of their most popular brands, and they are learning they can do this with MicroSalt® without sacrificing the taste of their products.
Many companies are making the shift to healthy alternatives to differentiate themselves from market competition.
By using Microsalt, firms are given the flexibility of creating the same snacks with less sodium content, without giving up quality and taste.
In the health sector, there have been updates on Ra Pharmaceuticals Inc (NASDAQ: RARX), OptiBiotix Health Plc (LON: OPTI) and Yourgene Health Plc (LON:YGEN)
Augean’s shares soar after strong profit figures
Augean Plc (LON: AUG) have beaten market expectations for profits for the second time this year, causing their stock price to soar.
The firm specializes in waste and resource management, with an emphasis on the hazardous waste sector, the oil/gas industry and the nuclear sector operating all across the UK.
The company also published details about a subsidiary company “Our subsidiary company Augean North Sea Services (ANSS) specialises in the development of innovative solutions to manage all waste streams derived from North Sea exploration, production and decommissioning activities”
The group provides strong commercial and compliance led solutions. Additionally in the company bio, “The Group provides a wide range of services through its treatment, transfer, industrial services, landfill disposal, recovery and recycling capability”
Augean have said that 2019 statistics will show a 20% rise in landfill volumes across all waste sectors, with landfill prices also increasing by 20%.
The company benefitted particularly from increased profits on radioactive waste operations, along with strong figures in waste treatment and North Sea businesses.
Augean saw an adjusted pretax profit of £16.5 million, and that 2019 annual profits were set to exceed expectations at the start of the year.
Jim Meredith, Executive Chairman said “The Group has delivered strong results in all areas of the business with cash generation especially pleasing. We remain confident in the Group’s prospects for a full year result and anticipate results ahead of market expectations”
In 2018, pretax profit amounted to £10.6 million, following adjustment this rose 69% from 2017 totaling £11.4 million.
Earlier in the year, Augean faced a battle with tax authorities after facing a £4.6 million tax bill from HMRC.
In Augen’s six month interim publication, they stated “Based on the legal and other advice received by the Group over several years, Augean is confident that the Group has met its obligations in respect of landfill tax, consistent with the law and official guidance at the time. Accordingly, it has appealed both the Augean South and Augean North assessments and the tax tribunal is expected in 2020. HMRC has agreed to the deferment of the payment of total tax assessed against the relevant group entities until the outcome of the tax tribunal has concluded. HMRC is considering whether penalties may be appropriate and there may be other final assessments for other time periods for both Augean North and Augean South”
Shares rose by 16.27% to 137.20p per share, which reflects a strong trading period.
Both shareholders and senior authority will be pleased after massively exceeding the markets expectations.
In the mining and energy sector there have been updates to Serabi Gold (LON: SRB), Kavango Resources PLC (LON: KAV), Glencore PLC (LON: GLEN) and Resolute Mining Limited (LON: RSG).
CMA set to discuss Amazon Deliveroo Merger
The CMA (Competition and Markets Authority) have begun enquiries into the proposed merger of Amazon (NASDAQ: AMZN) and Deliveroo.
The UK based competition regulator stated that investigations have been opened in the acquisition, amidst worries that this merger would stifle competition.
In May, Amazon claimed its interest in Deliveroo with a $575 million investment at a Deliveroo fundraiser into parent company Roofoods Ltd. This was a strange move following the closure of Amazons’ food chain, Amazon Restaurants last year.
Deliveroo also faced donations from T Rowe Price (NASDAQ: TROW), Fidelity (NYSE: FIS) and Greenoaks Capital.
The news comes following speculation that the investment by Amazon was a foundation to launch a merger campaign.
Analysts have questioned whether this move was driven by the employment nature of Deliveroo drivers.
As Deliveroo drivers are effectively self-employed, this would allow the ability to deliver Amazon parcels along with food deliveries.
Amazon said in a statement ““We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service.”
In June, the CMA released a statement which barred any approaches to integrate the two firms.
The CMA also added it had ““reasonable grounds for suspecting” Amazon and Deliveroo had “ceased to be distinct”, or that “arrangements are in progress or in contemplation”
Nicole Kar, head of law firm Linklaters’ commented “This type of deal is right in the CMA’s area of interest at the moment — large tech incumbents like Amazon investing in smaller rivals, so-called “killer acquisitions. Please use the sharing tools found via the share button at the top or side of articles”
Kar also noted, “The key questions for the CMA are first whether the investment Amazon has made give it rights to determine Deliveroo’s strategy and investment and/or insights into what innovation and expansion it is working on. This [Amazon] deal plays right into the sweet spot for the CMA at the moment. Anything connected to what Amazon, Facebook and Google do at the moment is really high on the agenda,””
The June statement stops Amazon and Deliveroo operating as a ‘merged entity’ as well as stopping the transfer of key staff or commercially sensitive information, pending this formal investigation.
This is the latest plan of action in the retail market following its decision to stop the proposed £7.3 billion merger of J Sainsbury (LON: SBRY) and Asda in February 2019.
The CMA commented “This is consistent with a more activist and interventionist role taken by the CMA since the new chairman and chief executive took hold,” said Mr Black, adding that the approach had been “most dramatically revealed in the evisceration of the Asda Sainsbury’s deal and the clinical destruction of their attempt to merge”.
The CMA has placed a deadline of 11th December for this investigation to conclude.
To note, shares in Amazon have increased 1.78%, trading at $1,767.38.
In retail news, there have been changes to the stock prices of Laura Ashley (LON: ALY), Dunelm (LON: DNLM) and N Brown (LON: BWNG).
Firms struggle to meet PPI handling times
News emerged on Wednesday that firms are struggling to meet their normal PPI complaint handling times as a result of a significant spike in complaints during the month of the final deadline.
The Financial Conduct Authority said that though firms have measures in place to handle the PPI complaints, several have informed the regulator that some complaints may not receive a final response until summer 2020.
The deadline for customers to claim mis-sold PPI was 29 August.
The Financial Conduct Authority had launched a nationwide communications campaign to raise awareness of the approaching mis-sold PPI complaints deadline.
At the start of September, Lloyds Banking Group (LON:LLOY) said it would dedicate an additional £1.8 billion in order to settle any claims of mis-sold PPI.
Meanwhile, the Royal Bank of Scotland warned at the start of September that it expects a hit of up to £900 million after a rise in PPI claims.
“We are challenging firms to deal with these complaints as quickly as is reasonable, given the very large volumes. It will take time for some consumers to receive their response but it is important to us that these complaints are handled fairly and accurately,” the Financial Conduct Authority said in a statement.
“If following your complaint, you are entitled to compensation, you will receive interest on the amount you are due (typically 8%), which will include the length of time it took to respond, so you won’t lose out financially from any delay,” the Financial Conduct Authority added.
Shares in Lloyds Banking Group plc (LON:LLOY) were trading at +0.074% as of 11:04 BST Wednesday.
Shares in the Royal Bank of Scotland Group plc (LON:RBS) were trading at +0.84% as of 11:06 BST Wednesday.
Falling fuel prices keep inflation rate lowest since August 2016
The inflation rate in Britain did not rise from last month as petrol prices fell at the quickest rate in three years, giving a renewed boost to consumers before Brexit.
Consumer Prices, as per the CPI (Consumer Price Index) rose at rate of 1.7% annually, matching the rate in August. This was the lowest recorded since August 2016.
Prior to this, the Bank of England had forecasted a inflation would average 1.6% in the final quarter, and this looks to be accurate.
ONS Statistician Mike Hardie said “Motor fuel and second-hand car prices fell, but were offset by price increases for furniture, household appliances and hotel rooms,”
Hardie added “Inflation remained unchanged into September at its lowest rate since late 2016”
Fuel prices fell significantly by 2.1% compared to a year earlier, the biggest drop since August 2016.
Adding to this, the price of motor fuel saw a slight decrease with a 0.7% drop, putting heavy downward pressure on inflation.
The Bank of England have stated that inflation pressures may mean rises to interest rates in the medium/long term, as Brexit still looms.
This monthly figure will decide the annual increase in rates for businesses.
Pensioners will also see an increase by 4% in state pension, more than double the current rate of inflation. The triple lock rule means the payout figure is the highest figure in the CPI index.
Dominic Curran, a property policy advisor at the British Retail Consortium said “the CPI figure means that “retailers will have to cough up an extra £137 million from April. Already, while retail accounts for 5% of the economy, it pays a massive 25% of all business rates.The chancellor must take action on rates in the forthcoming Budget and scrap ‘downwards transition’, which takes £1.3 billion from retailers and uses most of it to subsidise rates in other industries”
The fact that the inflation rate is lower than expected is not of surprise, there is still uncertainty in the British economy as consumers look to hold off purchases still a concrete Brexit plan is formulated.
In other current affairs, new stories have been about the London Stock Exchange (LON:LSE), Thomas Cook (LON:TCP), Facebook (NASDAQ: FB), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).
ASOS profits crash 68%
ASOS saw its profits crash following warehouse issues, the online fashion retailer revealed on Wednesday.
Shares in the company (LON:ASC) were up during trading on Wednesday morning.
In its final year results to 31 August, the online fashion retailer announced a 68% crash in profit before tax, amounting to £33.1 million in comparison to the £102 million figure recorded the year prior.
However, retail sales were up 13% on the previous year.
The online fashion retailer said that performance in dresses was strong, particularly with animal print, broderie and satin styles “really resonating”.
As for menswear, trends such as neon and utility were successful, as well as the return of the casual trouser through cargo pants.
ASOS posted yet another profit warning in July, as well as a shock profit warning last December in the run-up to Christmas.
“This financial year was a pivotal period for ASOS, where we have invested significantly and enhanced our global platform capability to drive our future growth,” Nick Beighton, CEO of ASOS, commented on the results.
“Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them,” the CEO continued.
“Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year,” Nick Beighton said.
“Our focus now shifts to ensuring that we enhance our capability to drive an improved customer experience and leverage the benefits from the investments we have made. With over 60% of our revenue coming from international customers and a strong global logistics platform with capacity to grow, we are well positioned to take advantage of the global growth opportunity ahead of us.”
ASOS added that its recent collaboration with Ovie from Love Island was particularly successful. The Love Island star provided both an ASOS Design style edit of his favourite pieces and also a design collaboration on an exclusive range, ASOS said.
https://platform.twitter.com/widgets.js Shares in ASOS plc (LON:ASC) were trading at +18.44% as of 10:25 BST Wednesday.❗️Message: it’s National Ovie Day❗️ We’ve enlisted @OvieSoko to put together an edit full of his fave ASOS AW19 pieces, from utility gilets to smart tailoring. Check out his picks and keep an eye out for more news – it’s not Ovie yet… pic.twitter.com/TULp9YvYtP
— ASOS (@ASOS) September 16, 2019
dotDigital omnichannel AI and customer data offerings lead profit surge
Software and cross-channel automated marketing services provider dotDigital Group plc (LON: DOTD) boasted strong progress across its fundamentals during the full-year ended June 2019.
The Group’s revenues rose 19% to £51.3 million, alongside 15% organic revenue growth to £42.5 million, and average revenue per user up 14%, to £966 per month.
This sales progress led adjusted EBITDA growth of 24% and a 25% hike in adjusted operating profits, to £14.7 million and £11.8 million respectively.
Further, dotDigital saw its cash balance widen from £15.0 million to £19.3 million year-on-year, while adjusted EPS jumped 33% to 3.88p, which it said was ahead of market expectations.
The Company also noted strong progress across its core offerings; 19% of of customers using more than one channel demonstrated the ‘value’ of its Comapi technology, while its Magneto partnership recorded 27% revenue growth.
Going forwards, the Company remains confident in its performance in 2020, with contracted recurring revenues already factored into its core business. However, it is worth noting that AI and data-led offerings are currently in their ascendancy. As such, expansion in the short-term are inevitable.
As time goes on, public and academic pressure to more closely manage – or at the very least provide direction – for data technology and AI offerings, will likely push regulatory bodies towards the direction of more stringent legislation.dotDigital Group comments
Milan Patel, CEO, stated,
“The Group is very excited about its financial performance and our growth opportunities, driven by investment in technology innovation, geographic expansion and strategic partnerships. With the additional investments in people across all regions it sets the foundations for scalable growth in AI infused marketing and data driven cross channel Marketing Automation. The Group is especially pleased with our international performance.”
“Although relatively early on, Q1 of the 2019/20 financial year has started well with trading in line with expectations. With 89% of our revenues recurring, a high proportion under contract and strong client relationships we continue to have good visibility into our earnings. We are confident in delivering continued organic growth across our core organic growth pillars.”
“We remain focussed on delivering against our strategy and are confident for the year ahead.”
Investor notes
After a slight dip, the Company’s shares are currently up 7.69% or 7.00p, to 98.00p per share 15/10/19 14:41 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on dotDigital Group stock. The Group’s p/e ratio is 28.80, their dividend yield is modest at 0.65%. Elsewhere in the tech sector, there were updates from; ProPhotonix Ltd (LON: PPIX), Universe Group plc (LON: UNG), Microsaic Systems PLC (LON: MSYS), Petards Group plc (LON: PEG), SCISYS Group PLC (LON: SSY), Pebble Beach Systems Group PLC (LON: PEB) and ULS Technology PLC (LON: ULS).Capital Drilling taps quarter-on-quarter growth and busy end to 2019
Mining company Capital Mining Ltd (LON: CAPD) recorded progress during the third quarter and gears itself up for a busy end to FY 2019, with revenues currently lagging behind on a year-on-year comparison.
Company revenues grew 6.1% compared to the previous quarter, up to US $29.4 million. However, on-year revenues contracted 5.2% from $31.0 million for Q3 2018. This trajectory was cemented by its average monthly revenues per operational rig, which dipped 4.4% during the quarter to $174,000, and 12.1% year-on-year for Q3, down from $198,000.
While these results aren’t too encouraging, the Group made significant operational progress during the period, including being awarded its first comprehensive mining services contract with Allied Gold Corp at its Bonikro Gold Mine in Côte d’Ivoire.
The Company added that its, “Extension of services to incorporate load and haul enables Capital Drilling to offer clients a fully integrated mining service, providing the ability for Capital Drilling to pursue transformational growth opportunities with a broader base of long-term mine site based clients.”
It finished by boasting continued operational profitability and development driven by ten new exploration contract awards in 2019, alongside a 17% in its interim dividend paid at the end of the first half, up to 0.7 cents per share.
Capital Mining comments
Responding to teh update, Executive Chairman Jamie Boyton said, “In the first nine months of 2019 Capital Drilling has positioned itself for further growth, which is now bearing fruit with strong exploration contracting and mobilisation activity and, as recently announced, broadening our service offering with the award of our first comprehensive mining services contract with Allied Gold Corp at their Bonikro gold project. Our West African growth strategy continues to pay dividends, with a record number of contracts commencing in Q4. During the quarter, we have invested to support the new contracts, and we are confident that Capital Drilling is building a stronger, broader revenue base as a result. With increasing activity levels already seen in Q4, underpinned by high quality long term contracts, we are optimistic of a solid performance for the remainder of the year as well as into 2020.”Investor notes
The Company’s shares rallied modestly by 0.39% or 0.24p following the update, up to 63.74p per share 15/10/19 08:54 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on Capital Drilling stock. The Group’s p/e ratio is 14.05, their dividend yield stands at 2.56%. Elsewhere in the mining and minerals sector, recent updates have come from; Griffin Mining Ltd (LON: GFM), Alien Metals Ltd (LON: UFO), Highland Gold Mining Ltd (LON: HGM), Kavango Resources PLC (LON: KAV), URU Metals Ltd (LON: URU), Resolute Mining Limited (LON: RSG), Bisichi Mining PLC (LON: BISI).FCA to put the brakes on interest-based car retail commissions
UK regulatory body The Financial Conduct Authority (FCA) announced on Tuesday that it is planning to ban the awarding of commission on the basis of interest rates paid by customers, in the motor finance sector.
Currently, car retailers and other motor finance brokers earn commission which corresponds to the interest rates they can get their customers to agree to paying. As part of this practice, brokers are able to set the interest rate on motor-related transactions. The FCA have found that this practice,
‘creates an incentive for brokers to act against customers’ interests.’
Making this change will not only remove this incentive for motor brokers, it will give lenders more control over the prices customers pay for their motor finance, and will save customers an estimated £165 million per year.
FCA Comments
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said,
“We have seen evidence that customers are losing out due to the way in which some lenders are rewarding those who sell motor finance. By banning this type of commission, we believe we will see increased competition in the market which will ultimately save customers money.”
The regulator’s statement concluded by saying,“The FCA is also proposing to make changes to the way in which customers are told about the commission they are paying to ensure that they receive more relevant information. These changes would apply to many types of credit brokers and not just those selling motor finance.”
“The FCA is consulting on the new rules until 15 January 2020 and plans to publish final rules later in 2020.”
Other news has come from; Elsewhere in political and macro economic news, there have been updates from; Michel Barnier saying a deal is still possible, UK economy looks likely to avoid recession, Hong Kong protester shooting and China’s strategy, the Supreme Court’s ruling, the collapse of Thomas Cook (LON: TCP), the bid for the London Stock Exchange (LON: LSE), Lloyds Banking Group PLC (LON: LLOY), Barclays (LON: BARC) and Deutsche Bank (ETR: DBK).