FCA advises to keep retail and institutional investors separate
Financial Conduct Authority (FCA) chief executive Andrew Bailey said in an interview with the Times that he did not think mixing institutional and retail investors in funds is ‘“is necessarily a good idea” and the matter will have to be examined “when the dust settles” after the saga.
Woodford’s flagship Equity Income Fund (WEIF) was frozen in June after becoming overwhelmed by investor withdrawals.
The nail in the coffin appeared to be Kent County Council attempt to withdraw £263m of pension investments from the £3.7 billion fund.
This was unable to meet the redemption request because of the large proportion of illiquid assets in its portfolio.
Bailey commented “That’s why I raise the question of mixing retail and non-retail. That was a relatively big part of the residual fund. Even if technically you could have liquidated holdings to meet that order, you are not satisfying the collective investment test,” he added.
Bailey said the matter will have to be examined “when the dust settles” after the saga. “It has caused me to think, I don’t think [mixing retail and institutional investors] is necessarily a good idea.”
Bailey also defended the FCA’s stance in the Woodford scandal, saying: “the suggestion we did nothing was wide of the mark”.
As a result of the scandal, Woodford closed his investment company earlier this month after being fired as head of WEIF by the fund’s administrators.
In a speech given in the City last week, Bailey said “part of the criticism” faced by the watchdog “is justified”. “The public needs to receive clear meaningful disclosure on the risks they are taking,” he said.
Responding to Bailey’s speech, Investment Association head Chris Cummings said the organization wants “to see the investment management industry and the regulator striking the right balance between investment risk and investor protection”.
In current affairs, there have been updates. Facebook’s (NASDAQ: FB) Libra currency is still facing stern tests, the London Stock Exchange (LON : LSE) reported strong third quarter trading figures and Just Eat (LON: JE) have been caught up in a bidding war between Prosus NV (JSE: PRX) and Takeaway.com (AMS: TKWY).
Hastings Group revenue falls, despite increase in GWP
Hastings Group Hldg PLC (LON: HSTG) have reported that revenue has fallen, despite increase in Gross Premium Writing as a trading update for the year was reported.
GWP for the nine months to 30 September 2019 was £753.1m. This was an increase of 2% from £738.5m in the same period a year prior.
However, reported revenue fell 2% from £574.1m to £563.8m.
Toby van der Meer, CEO at Hastings Group Holdings, commented: “The market remained competitive in the third quarter, with market premium inflation continuing to lag claims inflation. We maintained focus on pricing discipline, applying rates ahead of the market, in line with our stated targets and strategy.”
Hastings group had claimed that it continued to to prioritize pricing by applying rates in line with H1 2019 claims inflation.
However, there was an acknowledgment that Hastings had become less competitive due to claims inflation lagging behind premiums.
The trading update claimed claims inflation rose to between 7% and 8% in Q3.
Additionally, the trading update showed strong growth in home policies to 200,000 saying the group’s in-house underwriting team continued to be embedded.
Analyst Ming Zhu, of Panmure Gordon, commented: “We continue to think that Hastings should focus on its underwriting rather than chasing topline growth.” She suggested that the company could see its competitive edge in the price comparison website market erode over time due to market shifts as new competitors entering the sector.
Hastings have pledged to continue their technological strategy as reported showed a 15% fall in customer service calls per live customer policy.
Van der Meer added “We have successfully transitioned to our new repair partners to benefit customers. The ongoing digitalisation of the business has been continued by the increasing popularity of our mobile app, with 430,000 downloads since its launch.”
Along with Hastings, in the financial services sector there have been updates. Lloyds shares are looking like a good investment (LON: LLOY), Integrafin (LON: IHP) have seen their annual funds rise and Georgia Capital (LON: CGEO) have seen their shares drop.
Shares in Cairn Energy drop as double blow hits
Shares in Cairn Energy PLC (LON: CNE) have fallen on Monday as the disputes over tax claims against the Indian Government continue to stutter.
A decision over its long-running $1.4 billion (£1.09bn) tax claim against the Indian government is now unlikely to be made until next summer.
This acted as a double blow in short succession for one of Europe’s biggest oil and gas exploration firms.
A firm of such size is bound to have international operations, and problems in Mexico and India have seen share prices fall during Monday trading.
Cairn earlier reported that there was a second dry well as operations in Mexico produced no tangible results.
In Mexican operations, the oil and gas exploration and development company said the Alom-1 well will now be permanently plugged and abandoned.
RBC Capital Markets said Alom-1 was a key well in an important new basin for Cairn that could have added around 30p to its valuation.
The bank also said: “The additional clarity on timing on news from India is welcome, as the delay to summer 2020 should enable investors to focus their attention fully on Cairn’s high-impact H2/19 drilling campaign, which started with a well on Chimera in the UK North Sea and continues with a three-well campaign offshore Mexico.”
In a stock market update Cairn said the tribunal has said that while it is not yet able to commit to a specific date “it expects to be in a position to issue the award in the summer of 2020”. Cairn said it continues to have a high level of confidence in the merits of its claims in the arbitration and is seeking full restitution for losses.
The dispute between Cairn Energy and the Indian government dates back to2014. The Indian government froze Cairn Energy’s stake in Cairn India following breaches and changes to tax legislation.
The Tribunal has expected this case to be concluded in June 2020, which halts some operations in India, causing worries for shareholders.
For shareholders, hopefully the Mexican disruptions will only be short term as investors look to gain ground on previous losses.
With the India Tax case, there will be a delay in verdict and operations which could see revenue growth fall and operations slowing.
Currently, shares of Cairn Energy are trading at 174.2p per share, observing a 9.83% drop during the early hours of Monday. 28/11/19 11:26BST
In the energy sector updates have been added. Hurricane Energy (LON: HUR) have exceeded expectations after their interim results, IGAS Energy (LON: IGAS) shares have rallied and Baron Oil (LON: BOIL) shares have dipped following high costs, loss and a reduced cash balance.
Water intelligence shares rise as market predictions are beaten
Water Intelligence PLC (LON: WATR) have announced that 2019 revenue so far has beaten market forecasts, and profits will remain ‘comfortably in line’.
The company also announced figures for the third quarter of 2019. Here, figures were ahead of market expectations showing revenue growth of 34% in the third quarter of 2019 to $24.7 million from $18.5 million.
Within the growth to $24.7 million American Leak Detection franchise royalties increased 4.1% to $5.1 million from $4.9 million.
Look at sales based growth, these were also impressive observing a 45% increase to $6.1 million in the third quarter from $4.2 million the year before.
Water Intelligence reported its net cash at $2.7 million.
Executive Chair Patrick DeSouza said: “Global market demand for solutions to water loss from leakage is strong and continues to grow. We are accelerating our growth plan by building on our base of customers and adding more business lines such as municipal sewer and wastewater diagnostics and consumer sales of water / home services-related products and services via e-commerce. We are confident and have produced another strong set of numbers for both franchise and corporate-run operations across all of our key performance indicators.
DeSouza added “”Moreover, we believe strongly that our technology investments will enable us to sustain our growth trajectory in 2020 and beyond. Given our installed base of service operations, especially across the US, and the strength of market demand for both potable and non-potable water infrastructure solutions, we have a considerable opportunity for realizing significant value for our shareholders.”
Internal US corporate operations increased 47% year on year to $10.7 million from $7.3 million.
International operations increased additionally, to $2.8 million from $2.2 million, seeing a 27% rise.
These include UK municipal operations, UK-managed municipal operations in the US, and full-service operations in Ontario, Canada and Sydney, Australia.
Currently, shares of Water Intelligence are trading at 286p per share. With this news, shares have seen an appreciation of 7.52%. 28/10/19 11:05BST.
Elsewhere in the technological services sector updates have been provided. EVR Holdings (LON: EVRH) have reached a partnership with 02 (NASDAQ: OIIM), Facebook’s (NASDAQ: FB) Libra Currency is struggling to be passed and Blue Star Capital (LON: BLU) are expanding into the Esports market.
Ferrexpo Chief Executive Zhevago set to step down temporarily
Ferrexpo Plc (LON: FXPO) Chief Executive Officer Kostyantin Zhevago will step down temporarily to handle personal matters. Zhevago, said he will need to attend to business in Ukraine about one business he owned till 2015.
The Swiss based mining and commodity trading company has specialized in iron ore trading based in Ukraine.
According to reports, Zhevago holds a 50% stake in Ferrexpo and will take time away from the company within the coming weeks.
However, he will will remain on the board as a non-independent, non-executive director as stated by the company.
FTSE 250-listed Ferrexpo said Chief Financial Officer Chris Mawe has been appointed as acting chief executive.
Earlier this month, Zhevago had made Bloomberg news headlines.
Zhevago was added to an international wanted list after failure to attend for questioning about business commitments.
According to Bloomberg, Ukrainian investigators believe he has committed “large-scale” money laundering and embezzlement.
Zhevago “strongly denies any allegations of wrongdoing”, the company had said in response.
Ferrexpo Chair Steve Lucus said on Monday: “The board, including Zhevago, believes that this temporary change of leadership is necessary and in the interests of all shareholders to enable Zhevago to focus on on-going matters in Ukraine without impacting the company’s operations. Zhevago continues to have the full support of the board.”
This is not the first time that Ferrexpo has been plugged into allegations of unethical corporate practices.
In response, Ferrexpo set up an independent committee to look into allegations that payments made by the company to Ukrainian charity Blooming Land were misused.
The decision to appoint Mawe as a replacement comes swiftly. Ferrexpo have now become very aware of the bad public media image that these allegations cause.
Currently, shares of Ferrexpo Plc are trading at 130.6p per share seeing a 2.2% fall during Monday trading. 28/10/19 10:53BST.
In the mining sector, there have been updates. Hochschild Mining (LON: HOC) have remained confident after a mixed quarterly update, Centamin (LON: CEY) have remained confident on 2019 revenue and Antofagasta (LON: ANTO) are facing supply disruptions.
Sosandar shares rise as interim growth is expected
Sosandar Plc (LON: SOS) are expected to publish their interim results in the next few weeks, seniority are confident for strong revenue figures causing shares to climb.
In the early hours of Monday trading, Sosandar released a statement which stated that sales orders had increased and that this would return strong revenue growth.
For the six months leading up to September, revenue is expected to rise by 53% to £2.8 million.
This would be a significant increase from the previous figure of £1.8 million in the period a year prior.
The numbers of orders rose by 47% year on year from 43,979 to 64,709. While Sosandar’s customer database grew by 76% to 148,884 from 84,500 the prior year.
“Our ability as an online retailer to employ an agile strategy resulted in us focusing our customer acquisition activity on the important Autumn months towards the end of the period and carrying into current trading. As expected, the accelerated investment into marketing and product is producing strong results with record months in September and October,” said Ali Hall and Julie Lavington, joint chief executive officers.
Hall and Lavington added “”We are delighted with the success of our new advertising activity and the board is confident that accelerating our future growth by increased investment in marketing (especially via TV) in this financial year is the right decision for our business,”
Sosandar noted that sales across all sectors had grown even though average order value had decreased due to average unit price falling.
Sosandar have also increased their product offering and in the first half of 2020 plan to bring out some more lines of women’s clothing.
Additionally, with these extra product lines there has been a pledge to increase television advertising, which will drive up marketing costs.
Speculating further, Sosandar expects the average order value to increase on expectations of the cold weather to raise the sales of higher price points items such as outwear.
In the fashion sector, there have been updates. Laura Ashely’s (LON: ALY) Finance Chief has stepped down, Superdry (LON:SDRY) have appointed a new CEO and Boohoo Group (LON:BOO) have seen profits soar.
Currently, shares of Sosandar Plc are trading at 20p per share, seeing a 25% rise. 28/10/19 10:32BST.
California faces the largest planned power outage of history amid wildfires
Wildfires in California forced thousands of evacuations this weekend. At least 90,000 fled their homes to run away from the disaster.
Power Cuts
The wildfires destroyed dozens of buildings. More than two million residents in California face power cuts as winds expected. Forecasters predict the strongest winds of California’s history in the region. The largest planned power outage in the region aims to prevent the spread of further wildfires. Pacific Gas & Electric notified customers that it will cut power until noon on Monday. The public safety power shutoff impacts 940,000 households and businesses across 36 counties of Northern California.Evacuations
More than 2,000 people evacuated the state’s upmarket wine country as an electricity tower caught on fire. Investors who invested in upmarket wine in this region will likely face negative outcomes. Electricity equipment often catch on fire amid strong winds in California. Pacific Gas & Electric company seeks bankruptcy protection following lawsuits over last year’s Camp Fire. Damaged electricity equipment owned by Pacific Gas & Electric company sparked the Camp Fire which killed 85 people in California. The fire near Geyserville, a town famous for its hot springs, burned more than 50 buildings. The county ordered residents to evacuate the area. Tourism sector in this area may suffer the consequences of evacuations.Businesses in California
The fire burned more than 30,000 acres of land. Businesses in the region face the negative effects of the fire and the power outage. Companies need to rebuild damaged and destroyed properties before they can function after the wildfires. Some unaffected regions of California face power outage as well as the affected regions. Even if there is no wildfire near some regions, businesses in these regions will still face the consequences of the power outage. Businesses relying on agricultural goods coming from California might face a lack of supply.State of Emergency
Los Angeles and Sonoma counties declared a state of emergency. Effects of wildfires will likely be long lasting. After efforts to contain wildfires succeed, projects to rebuild the region will follow.NEX Growth Market’s Cannabis companies
Patrick Birley, chief executive of NEX Exchange, is one of the speakers at todays Cannabis Investor Forum (www.cannabisinvestorforum.co.uk) in London. The London-based NEX Growth Market, which in stockmarket terms is the equivalent of AIM, offers a selection of companies that are involved, or seeking to become involved, in cannabis products.
AfriAg Global (LON: AFRI)
www.afriagglobal.com AfriAg Global started out investing in African agricultural logistics businesses and one year ago the remit was widened to include medicinal cannabis-related investments. AfriAg made its first medicinal cannabis investment last year. It was a £61,000 investment at $146.439 a share in 546 Tilray Inc. AfriAg has taken a small stake in Apollon Formularies, which plans to open a licenced retail medicinal cannabis dispensary and processing facility in Jamaica. The six-week pilot opening of a medicinal cannabis therapy centre to treat patients went well. AfriAg plans to acquire the rest of Apollon.Ananda Developments (LON:ANA)
www.anandadevelopments.com Medicinal cannabis-focused investment vehicle Ananda Developments joined NEX on 4 July 2018 having raised £930,000 at 0.45p a share. The pre-money valuation was £500,000. The first investment was $200,000 in convertible loan notes in iCAN Israel-Cannabis Ltd, which focuses on medicinal cannabis. iCan has subsidiaries involved in organising cannabis symposiums and cannabis-based research services, plus a 5% stake in CannRx Technology Inc, which has developed liquid soluble cannabinoids for use in treatments, and a 20% stake in CMTREX, which is developing a trading platform for cannabis. Ananda also bought 15% of UK-based Liberty Herbal Technologies Ltd, which is the owner and developer of hapac, a technology for vaping cannabis. Hapac has been refined and sales of the device and Hapac sachets are growing. However, legal uncertainty in Italy means that Hapac has been removed from sale while a court case over labelling and cannabis content is heard in Parma. There are plans to launch Hapac in other markets. Earlier this year, Ananda amended its investing strategy to include the cultivation of medicinal cannabis and acquired Tiamat Agriculture, which is applying for a UK controlled drug cannabis cultivation and supply licence. Ananda and Anglia Salads each own 50% of DJT, which will apply for a licence to cultivate and supply cannabis. DJT has applied for a licence to grow >0.2% THC cannabis and has been registered with the Drugs Licensing and Compliance Unit of the Home Office. DJT has acquired Aristaeus Elements, which is setting up as a cannabis extraction and processing facility, for £1 and assumption of debt of £51,000 – the deposit paid for the equipment for the plant. The plan is to finance the investment in the facility through debt secured against offtake contracts.Block Commodities Ltd (LON:BLCC)
www.blockcommodities.com Block Commodities is a trader in African commodities, which has launched a blockchain system called Farmer 3.0 that connects participants in the commodities market. Separately, Block decided to move into medicinal cannabis. The plan is to produce cannabis products in Africa to supply the European market.Eurocann International (LON:BUD)
www.eurocannintplc.com Valiant Investments has changed its name to EuroCann International and reinvented itself as a medicinal cannabis-focused investment company. It disposed of its investment in Flamethrower to one of its own directors and raised £263,000 at 1.5p a share. Valiant had £4,251 in the bank at the end of May 2019, prior to the fundraising. New chief executive Jeremy Ross is a former director of Speakeasy Cannabis Club, which grows cannabis in British Columbia.Freyherr International Group (LON:FRYR)
www.freyherr.com Slovenia-based Freyherr International Group joined NEX on 13 August 2019. The admission price was 170p a share, but no cash was raised. The market value was £43.8m. The directors still own nearly three-quarters of the shares, and if the two other major shareholders are included then six investors own nearly 89%. Pro forma net assets were €1.06m, while net debt was €697,000. The underlying business was founded in 2015. It cultivates and acquires hemp and cannabis, then produces CBD products from these ingredients. A subsidiary designs packaging and dispensers. The strategy is to invest €5.5m in upgrading the company’s extraction facility and it still needs to raise cash to do this. Freyherr generated revenues of £1.17m in the first half of 2019 and they should reach more than £2m for the full year. There was a small profit in the first half, which was before Freyherr joined NEX.Imperial X (LON:IMPP)
www.imperialminerals.com Imperial X is seeking investments in the medicinal cannabis sector. This strategy commenced at the beginning of the year. Imperial X had previously been a mining investment company. The products involved, such as nutraceuticals and cosmetics, would contain less than 0.2% tetrahydrocannabinol (THC). Canadian corporate financier Kyler Hardy has been appointed chief executive. There was nearly £70,000 in the bank at the end of 2018 and since then £46,150 of convertible notes have been swapped for shares at 1p each by family interests of non-executive director Melissa Sturgess. Palace Trading Investments, which is beneficially owned by Melissa Sturgess, sold the same number of shares at 2p each and retains a 1.86% stake. Canadian corporate financier Kyler Hardy has been appointed chief executive. He appears to have bought the shares that were sold, and he owns 12.5%, while new non-executive director Emma Priestley owns 5.42%.Sativa Group (LON:SATI)
www.sativagroup.co.uk Sativa Group floated in March 2018 as a new investment company with a medicinal cannabis focus and raised £1.1m at 1p a share. That took cash in the bank to £1.5m. The company was launched by Geremy Thomas, the founder of former AIM company PNC Telecom The initial acquisitions were George Botanicals, which supplies cannabidiol (CBD) products, such as CBD oils, and PhytoVista, which operates a laboratory that tests cannabis oils and hemp products. Both were owned by Sativa boss Geremy Thomas. The Home Office has awarded Sativa a controlled drug licence to grow medicinal cannabis. This covers cannabis with a THC content of greater than 0.2%. Sativa already has a low-THC industrial hemp licence.Sativa has a research agreement with King’s College London on the impact of cannabinoids on inflammation and respiratory diseases. Sativa will supply specific strains of cannabis. Sativa has opened its third Goodbody CBD Wellness store in Bristol, following store openings in Bath and Cirencester. There are also talks with vets about using medicinal cannabis in animal health. Sativa has appointed Cenkos as its corporate adviser and broker, replacing Peterhouse. Henry Lees-Buckley has become chief executive and Geremy Thomas has moved to deputy chairman. Interim revenues were £588,000, while the loss was £1.56m. Sativa had £2.23m of cash at the end of June 2019.Almost three quarters of Brits turn off heating to save money
Almost three quarters of Brits put off turning the heating on in their home as a result of concerns surrounding energy costs, new data revealed on Thursday.
Conducted by the comparison site Moneyexpert.com, the research revealed that 72% of British people admit to restricting their use of heating because of concerns about energy costs.
Moreover, the research found that a quarter of people wear extra jumpers and a third wrap themselves in a blanket to keep warm.
Meanwhile, 1 in 4 Brits argue about whether or not the heating should be turned on, the research found.
Additionally, the cost of winter preparations was calculated, amounting to an average of £402.99 per household. The figure takes into consideration the extra costs associated with the colder months, such as warmer clothing, extra spent on energy, budgeting for Christmas, and any seasonal household expenses.
“It’s alarming to see that the vast majority of people are restricting the heating in their homes due to cost concerns, and with 74% expecting their bills to rise this winter, it’s more important than ever to shop around to find a better gas and electricity deal,” Jason Smith, CEO of Moneyexpert.com, commented on the data.
“If you’ve been paying a fixed monthly rate and you are one of the 60% of Brits whose energy plan is in credit at this time of the year, switching supplier now means you will also benefit from a reimbursement, which could go to help with all those extra or unbudgeted for winter costs,” the CEO of Moneyexpert.com continued.
Earlier this year, Ofgem implemented a price cap on default energy tariffs to limit customers from overpaying for energy.
Elsewhere, it was reported at the beginning of October that the market dominance of the Big Six energy companies continues to weaken. These are Centrica, E.ON UK, Scottish and Southern Energy, RWE npower, EDF Energy and ScottishPower; they supply most of the energy to domestic households in Britain.
Fresnillo reports low output at the end of Q3
Fresnillo Plc (LON: FRES) have reported poor trading and output figures at the end of the third quarter, as a result their shares have fallen as investors lose confidence.
The precious metals miner reported that gold and silver production on an annual scale would be at the lower end of its target.
In the three months to the end of September, silver production fell 14.5% from the third quarter of last year to 13,283 kilo ounces and gold production was down 6.9% to 209,752.
Fresnillo said that the low production rates for silver was due to expected lower ore grade at the Saucito mine and lower ore grades at Fresnillo and San Julián.
Subsequently, the lower gold production was attributed to lower grade and volume of gold produced at both Herradura and San Julián veins, and a lower volume of ore processed at Noche Buena.
The company have issued a statement saying that total production should be around 55-58 million ounces and 880-910 koz, for gold and silver respectively.
Chief executive officer Octavio Alvidrez said: “We continued to implement the performance improvement plan for our Fresnillo District mines during the third quarter. This programme includes intensive infill drilling to improve the geological model, dilution control and raising development rates, whilst also taking actions to address maintenance performance, contractor productivity and equipment availability. As a result, while grades remain variable, we are now processing higher volumes of ore on a more consistent basis at Fresnillo.
Alvidrez added “Our development pipeline is progressing well. Construction of our next major mine Juanicipio is moving forwards. The second phase of the pyrites plant project and the optimisation of the beneficiation plant to deal with higher lead and zinc grades at the Fresnillo mine remain on track. Both are due to be commissioned in the second half of 2020.”
In the mining sector, there have been updates. Hochschild Mining (LON: HOC) have remained confident after a mixed quarterly update, Centamin (LON: CEY) have remained confident on 2019 revenue and Antofagasta (LON: ANTO) are facing supply disruptions.
Currently, shares of Fresnillo are trading at 634p per share, seeing a 2.37% drop. 23/10/19 14:35BST.