AB Foods maintains full year outlook
Associated British Foods said on Monday that its full year outlook for 2018-19 remains unchanged, highlighting a strong profit performance this year from Primark.
AB Foods added, however, that the strong performance is expected to be offset by the anticipated decline in AB Sugar.
Its full year results are scheduled to be announced at the start of November.
The company said that sales at Primark for the full year are expected to be 4% ahead of last year at constant currency and actual exchange rates. Additionally, AB Foods described early trading of the new autumn/winter range as “encouraging”.
“Primark has performed well in the UK where sales in the total clothing, footwear and accessories market have been weak,” AB Foods said in a trading update.
“We continued to deliver a significant gain in market share, with sales growth of 3% and a like-for-like sales decline of 1%. Sales growth was driven by a strong contribution from new selling space. We have been encouraged by our customers’ reaction to our new store in Birmingham High Street which showcases our full product range and new food and beverage and beauty services,” AB Foods continued.
Earlier this year, Primark unveiled a megastore in Birmingham – the five-floor building has three food outlets, several beauty services and a Hogwarts Wizarding World zone.
However, AB Foods warned that, for retail, “the strengthening of the US dollar during this year and the recent weakening of sterling will increase the cost of goods for next year. We anticipate achieving some mitigation from reduced materials prices, the favourable effect of exchange rates in sourcing countries and better buying.”
“Combined with a more typical level of markdown, we expect a reduced margin next year.”
As for the next financial year, France and Spain will see the most space added as it expects to open 19 new stores.
Primark’s first store in Poland is expected to open in Warsaw next year, allowing the brand to enter its thirteenth country.
Earlier in July, AB Foods posted a trading update, revealing that it expected a full year climb in revenues on the back of growth in Primark profits.
Shares in Associated British Foods plc (LON:ABF) were trading at -2.68% as of 11:02 BST Monday.
ProPhotonix shares dive with light shined on dampened profits
LED and laser module designer and manufacturer ProPhotonix Ltd (LON: PPIX) saw their shares dip today, following a disappointing set of first half fundamentals.
The Company’s revenues dipped 18.9%, from $8.8 million to $7.2 million in a year-on-year comparison for the first half. This led a decrease in gross profit of 21.7%, down from $3.4 million to $2.7 million.
Further, ProPhotonix swung from $0.1 million operating income fro H1 2018, to $0.6 million operating loss for H1 2019. Additionally, the Group noted that their order bookings narrowed from $9.0 million, to $7.5 million on-year.
ProPhotonix comments
Tim Losik, President & CEO, stated,
“The cash position of the Company has reduced due to operating losses incurred and will likely continue, though at a slower rate as the cost reduction measures take effect, through the balance of the year. The Directors are investigating securing new sources of capital as well as other strategic initiatives and options.”“Decreased revenue has occurred in nearly half of 2018 customers offset by increases in about 25% of customers, albeit we take some reassurance that during the first half our largest laser customer and several large LED customers resumed and/or increased both the volume and value of orders placed with Prophotonix. Overall however, the volume of orders were down 17% in the half despite these customers increasing orders, and continue to be sluggish early in the second half. Currently, we are not able to accurately estimate full year sales, but the Board currently envisage they will be no more than $15.0 million.”
“As noted above, we are now forecasting revenues in the second half will broadly approximate those achieved in the first half. Whilst we expect to see the financial benefit of the cost savings initiatives enacted in the first half, the Board believes the Company will continue to be loss making and is committed to strengthening the Group’s balance sheet. The Board is therefore reviewing all funding and strategic options available, both to ensure the short-term working capital needs of the Company continue to be met, as well as maximizing shareholder value over the longer term.”
Investor notes
After a slight recovery, the Company’s shares are down 26.98% or 0.85p to 2.30p a share 06/09/19 15:10 BST. Neither a p/e ratio nor a dividend yield are available, their market cap is £2.09 million. Elsewhere in the tech sector, there were updates from; Frontier Developments PLC (LON: FDEV), Gamma Communications PLC (LON: GAMA), Maintel Holdings plc (LON: MAI), Bigblu Broadbend PLC (LON: BBB), Avanti Communications Group PLC(LON: AVN), Maestrano Group (AIM: MNO) and Vitec Group plc (LON: VTC).SIG bears brunt of reduced construction activity, sales fall
British-based international supplier of construction materials SIG plc (LON: SHI) has today seen its share price dip on a meek set of fundamentals for the first half of full year 2019.
Like-for-like sales dropped 3.8%, which pulled revenues down to £1.26 billion, down from £1.32 billion on a year-on-year comparison for the first half. Their situation deteriorated after IFRS 16. After narrowing, their net debt widened significantly, from £176 million to £449 million on-year, with their rate of net leverage widening from 1.8x to 2.5x.
Further, the Company’s operating profit for the same comparison dipped from £27.9 million to £17.8 million, their basic EPS also contracted from 2.5p to 0.2p.
However, on an underlying basis, their operating profit grew 10.6% to £36.5 million, and their underlying EPS rose 23.3% to 3.7p. SIG dividend per share remained flat on-year, at 1.25p per share.
SIG comments
Meinie Oldersma, Chief Executive Officer, said,
“We made further progress in H1 2019, demonstrating our ability to deliver a sustained improvement in the operational and financial performance of SIG. Underlying profit, return on sales and return on capital employed all improved, and we further reduced net debt and headline financial leverage.”
“We continue to deliver increases in gross and operating margins in our UK businesses and have largely completed the transition to a smaller, more focused base of business in SIG Distribution. We continue to roll out transformational initiatives across our businesses in Mainland Europe, which we expect to result in further upside over the next twelve months. We remain on track to deliver our medium term targets.”
“In addition, we continue to strengthen our balance sheet. We have almost halved net debt since the start of 2017, with further improvement anticipated in the second half from continuing reductions in levels of working capital and the receipt of proceeds from the previously announced disposal of WeGo FloorTec. There remains one further business, previously identified as peripheral, under review. Accordingly, we believe our medium term target of headline financial leverage below 1.0x is within reach.”
“Our previously announced review of strategic options for the Air Handling division is well advanced. A further update will be provided when appropriate.”
“The significant improvements in the business during the first half of 2019 have been made against a backdrop of challenging trading conditions in many of the Group’s end markets. There has been a marked deterioration in the level of construction activity in the UK as the year has progressed and a number of key indicators are pointing to further weakening of the macro-economic backdrop, notably in the UK and in Germany.”
“We continue to see benefits from transformational initiatives across the Group’s businesses. Coupled with the Group’s normal seasonality, these are expected to deliver further upside in the second half of the year. However, political and macro-economic uncertainty continues to increase as we enter the traditionally strongest trading months of the year. We continue to monitor trading conditions closely and we are taking actions in anticipation of further market weakness.”
Investor notes
After a slight recovery, the Company’s shares are down 4.96% or 6.40p to 122.70p a share 06/09/19 15:16 BST. Both Peel Hunt and Shore Capital analysts reiterated their ‘Buy’ stances on SIG stock. The Group’s p/e ratio is 13.88, their dividend yield is 3.03%. Elsewhere in building and development news, there have been updates from; Alumasc Group plc (LON: ALU), Somero Enterprises Inc (LON: SOM), Barratt Developments Plc (LON: BDEV), Wincanton plc (LON: WIN) and Travis Perkins Plc (LON: TPK).Baron Oil shares dip on loss, reduced cash balance and high costs
Oil and gas exploration and development company Baron Oil PLC (LON: BOIL) saw its share price dip on a disappointing set of fundamentals for the first half of full-year 19.
The Company made a net loss after finance costs and tax of £307,000, narrowing in comparison to a net loss of £405,000 for the same period of FY18. This represented a loss of 0.02p per share, narrowing from 0.03p on-year and 0.181p at December 31 2018.
Baron Oil also announced that the costs of the Colter and Wick wells were a net £2.4 million, ‘significantly higher’ than originally projected. Further, the Company’s cash balance has declined consistently; declining from £3.2 million, to £1,7 million, to £0.6 million, for each six month period ended 30 June 2019.
The Group said a review was underway on its Colter South and Purbeck Prospect projects, and that it had been awarded ‘significant’ new exploration blocks in Inner Moray Firth. It added that it was exploring funding options in Peru and was looking into ‘potential developments’ in South East Asia.
Baron Oil comments
Malcolm Butler, Executive Chairman, added the following to their first half insights,
“Following our modest drilling success during the period, we have made significant, high potential additions to the Company’s UK exploration portfolio. Despite our capital constraints, we have also been looking at ways of getting involved in other international opportunities, targeting larger interests in assets that combine high potential impact with relatively low risks and costs. Your Board continues to seek to give shareholders access to near-term drilling with the potential to produce substantial returns.”
Investor notes
The Company’s shares had dipped over 14% to circa 0.60p at around 06/09/19 12:30 BST a share, before being suspended. They previously closed at 0.70p a share. Elsewhere in the oil and gas sector, there have been updates from; Cabot Energy PLC (LON: CAB), Reabold Resources PLC (LON: RBD), Eco Atlantic Oil and Gas Ltd (AIM: EOG), Valeura Energy Inc.(LON: VLU), President Energy PLC (LON: PPC) and Mosman Oil and Gas Limited (AIM: MSMN).Berkeley remains confident in South East housing market ahead of AGM
British property developer Berkeley Group Holdings Ltd (LON: BKG) announced it is holding its annual general meeting today, and stated it remained confident in the London, Birmingham and South East housing market, despite a challenging political and macroeconomic backdrop.
To prepare for the risks associated with the ‘disruptive Brexit’, the Company said it would continue to work with its supply chain, and attempt to accelerate the delivery of materials and components.
Berkeley announced a dividend of 20.08 pence per share, to be paid on 13 September 2019; the remainder of the £139.2 million return for the six months ending 30 September 2019 has been ‘satisfied’ through share buy-backs. The Company added that the six monthly return of £139.7 million will be made by 31 March 2020, and the amount to be paid as dividend will be announced at by the end of February 2020.
Berkeley Group statement
In its release today, a Company spokesperson said,“In the first four months of this new financial year, market conditions in London and the South East have remained robust and consistent with those reported with the full year results in June. Pricing has remained stable and the Group’s forward sales position remains above £1.8 billion.”
“There is good underlying demand for new homes built to a high quality that are well located and properly priced to meet the local housing need, supported by good availability of mortgages. The wider market remains constrained by high transaction costs and the uncertainty in the macro political and economic environment.”
“Berkeley’s is a long-term business. We are currently working on over 20 of the largest residential development opportunities in London and the South East, which will be delivering homes up to and, in many cases, beyond the end of the next decade. These carry a high level of complexity and risk, requiring extensive capital, patience and expertise to deliver. Berkeley has continued to invest its resources in bringing forward the next generation of these sites into development but, like all responsible businesses at this time, has remained cautious in investing in new opportunities. As a consequence, Berkeley anticipates net cash at the half year to be at a similar level to the full year position of £975 million, subject to the volume of any share buy-backs and investment in new land in the intervening period.”
“With the land in place for the next phase of its business plan and continued robust trading, last year Berkeley announced the extension of its £280 million (£2.22 per share) annual shareholder returns programme to 2025, with a targeted pre-tax return on equity of at least 15% over this period.”
“The long-term nature of the business, with an unrelenting focus on the customer and communities, coupled with the complexity associated with delivering tall buildings, means that Berkeley has always focused on long-term value creation, as opposed to annual profit targets. Over the six years to 30 April 2025, we are targeting the delivery of £3.3 billion of pre-tax profit, with the profit in any one year ranging between £500 million and £700 million, depending upon the timing of delivery.”
Investor notes
The Company’s shares are up 2.22% or 86.00p to 3,959.00p a share 06/09/19 13:09 BST. Peel Hunt analysts reiterated its ‘Add’ stance, while Shore Capital reiterated its ‘Hold’ stance on Berkeley Group stock. The Group’s p/e ratio is 8.05, their dividend yield ratio is modest at 0.69%. Elsewhere in property development and estate agency news, there have been updates from; Redrow plc (LON: RDW), U+I Group PLC (LON: UAI), Hunters Property PLC (LON: HUNT), GCP Student Living plc (LON: DIGS), Barratt Development Plc (LON: BDEV), Belvoir Group PLC (LON: BLV) and Intu Properties plc (LON: INTU).Alien Metals shares surge 80% on further precious metal mineralisation
Precious metals mining and development company Alien Metals Ltd (LON: UFO) saw its share price bounce significantly on Friday morning as it identified further precious metal mineralisation at its three projects in Mexico.
At its San Celso site, the Company identified ‘highly anomalous’ silver mineralisation, with a maximum assay of 1,275 g/t of silver – this came from 18 anomalous samples yielding an average sample of 272 g/t.
Its Los Campos project yielded a positive maximum assay of 547 g/t, with an average of 185 g/t taken from 14 anomalous samples.
The Company added that at its Donovan 2 site, it identified further gold mineralisation, with a sample yielding 2.68 g/t of gold.
Alien Metals also said it was continuing to assess further opportunities to progress it Mexican projects, which it said included a joint venture.
Alien Metals comments
Bill Brodie Good, Technical Director, added the following insights to today’s results, “[The] Company’s San Celso and Los Campos projects continue to show significant potential for high-grade silver mineralisation. This recent round of sampling has confirmed historic surface and underground work on these projects and that there remain significant mineralised in-situ ore bodies to be developed.”Investor notes
After a modest dip, the Company’s shares have spiked 80.73% or 0.089 to 0.20p per share 06/09/19 12:30 BST. Neither a p/e ratio nor a dividend yield are available for this stock, their market cap is £2.64 million. Elsewhere in the mining and minerals sector, recent updates have come from; 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), Polymetal International Plc (LON: POLY) and Glencore PLC (LON: GLEN).Connect Group new Telegraph contract to contribute £100m revenue annually
Media consumables distributor Connect Group PLC (LON: CNCT) announced that its subsidiary, Smith News, had secured a long-term contract with The Telegraph.
The agreement covers all of the Smith News existing distribution arrangements with The Telegraph. The contract goes from October 2019 and extends to September 2024. which will bring in annual revenues of £100 million at current market value – making up 15% of its newspaper sales.
After other recently secured arrangements, Smiths News has secured 80% of its total media distribution revenues under new long term contracts until 2024.
Connect Group comments
Jos Opdeweegh, Chief Executive Officer, stated,
“I’m delighted that we have agreed a new contract with the Telegraph. The accelerated renewal of our publisher contracts has been a strategic priority this year, and since September 2018 we have successfully renewed over £900m of annual revenues, underpinning the long-term sustainability of Smiths News and its contribution to the Group as whole.”
Investor notes
The Company’s shares dipped 2.05% or 0.80p to 38.20p a share 06/09/19 09:55 BST. Analysts from Peel Hunt reiterated their ‘Hold’ stance on Connect Group stock. The Group’s p/e ratio is 4.19, their dividend yield is inviting at 8.12%. Elsewhere in media and broadcast news, there have been updates from; STV Group Plc (LON: STVG), ITV (LON: ITV), Netflix Inc (NASDAQ: NFLX) and the BBC.Halifax: UK house prices rise 1.8% in August
UK house prices increased by 1.8% in August, new data on Friday showed.
Halifax’s House Price Index revealed that for the month of August, house prices were 1.8% higher than in the same month a year prior.
On a monthly basis, Halifax said, house prices rose by 0.3%.
Additionally, the data revealed that, for the month of August, the average house price was £233,541.
“There was no real shift in house prices in August as the average property value grew by just 0.3% month on month. This further extends the predominantly flat trend we’ve seen over the last six months, with the average house price having barely changed since March,” Russell Galley, Managing Director at Halifax, commented on the data.
“While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong,” Russell Galley continued.
“Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should also not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.”
Indeed, as the Halloween extended Brexit deadline approaches, the only thing that is certain for the nation at this point is additional uncertainty.
News emerged only yesterday that Jo Johnson quit the Conservative party as he found himself “torn between family loyalty and the national interest”.
After Boris Johnson asked the Queen to suspend parliament over a week ago now and news emerged of a potential election, the question remains – what will the future hold for the United Kingdom?
The GBP/USD dropped to three-year lows at the start of the week, but witnessed a turnaround as fears of a no-deal Brexit diminished.
Redrow signs off strong financial year with completions growth
British house builder Redrow plc (LON: RDW) booked a strong set of fundamentals for the full-year, with growth across profit indices and operational progress.
The Company posted revenue growth of 13% on a year-on-year comparison for the full year ended 30 June 2019, up to £2.1 billion. This pushed operating profit up 8% on-year and profit before tax up 7%, to £411 million and £406 million respectively. The Group’s headline fundamental though, was its 13% on-year growth in legal completions, up to 6,443.
There was similar progress for Redrow shareholders, with EPS up 8% to 92.3p, a final dividend of 20.5p and 0.5p cash return per share, up 116% on-year.
The Group added that it had added 7,379 plots to their current land holdings, and delivered 1,712 affordable homes, up 55%.
Redrow comments
Executive Chairmain, John Tutte, stated,
“I am delighted to report that Redrow for the sixth consecutive year has delivered record results. The Group completed 6,443 homes, 13% up on the previous year and passing the 6,000 milestone for the first time. Revenue reached £2.1bn and pre-tax profit increased by 7% to £406m.”
“This excellent trading performance led to strong cash generation and we ended the year with net cash of £124m after making the ‘B share’ payout in April. As a result we are proposing a final dividend of 20.5p per share giving a full year dividend of 30.5p per share, 9% up on last year.”
“We are understandably cautious about the post-Brexit future and also the eventual impact of the impending changes to the Help to Buy scheme. We do however, have a clear strategy to continue to grow centred on our award winning Heritage Collection that is so popular across a broad range of buyers.”
“Since the start of the new financial year, trading has been encouraging and the demand for our homes is strong with reservations running ahead of last year. Notwithstanding the political and economic uncertainty we face, we have every reason to be confident that 2020 will be another successful year for the Group.”
Investor notes
The Company’s shares rallied 3.53% or 20.00p to 586.00p 09/08/19 16:35 BST. Analysts from Peel Hunt reiterated their ‘Buy’ stance on Redrow stock. The Group’s p/e ratio is 6.32, their dividend yield stands at 5.02%. Elsewhere in property development and estate agency news, there have been updates from; U+I Group PLC (LON: UAI), Hunters Property PLC (LON: HUNT), GCP Student Living plc (LON: DIGS), Barratt Development Plc (LON: BDEV), Belvoir Group PLC (LON: BLV), Tritax Big Box REIT PLC (LON: BBOX) and Intu Properties plc (LON: INTU).Jo Johnson quits – Sterling rallies, FTSE dips
So, another MP with integrity has taken the plunge. MP and minister Jo Johnson today quit the Conservative party and thereby relinquished his place in the government. While many have touted today’s news as another loss for the Conservative party, I regard it as a loss for the UK. A dedicated public servant decided he could no longer be part of the proceedings that pushed the country closer to a No-Deal Brexit, and in his place we’re left with deregulation hungry disaster capitalists, such as his brother Boris, and the Eton Slenderman Jacob Rees-Mogg (both of whom need to stop deluding the electorate on the meanings of the terms ‘national interest’ and ‘mandate’). In response to the news, Sterling rallied as hopes of Conservative capitulation rise. In my opinion these hopes are premature, as a nearing election gives Boris Johnson the opportunity to regain a majority in the House.
https://platform.twitter.com/widgets.js Speaking on afternoon movements by Sterling and FTSE, Spreadex Financial Analyst Connor Campbell said, “Though it might not be the biggest loss the Prime Minister has suffered this week, nor the most politically costly, he was dealt his most personal blow on Thursday as his own brother Jo Johnson resigned as minister and MP alike.”It’s been an honour to represent Orpington for 9 years & to serve as a minister under three PMs. In recent weeks I’ve been torn between family loyalty and the national interest – it’s an unresolvable tension & time for others to take on my roles as MP & Minister. #overandout
— Jo Johnson (@JoJohnsonUK) 5 September 2019
“And again, while not the sole or even primary reason for sterling’s surge, the younger Johnson’s exit nevertheless sweetened the session for a currency desperately hoping the government fails in its aims.”
“Against the dollar it was up 0.9%, sending cable to $1.232 for the first time since in more than 5 weeks. Against the euro it struck similar high, climbing 0.7% to hit €1.1145.”
“All this meant that the FTSE completely missed out on the day’s wider market rally. While the UK index sank 0.6%, slipping back under 7270, the likes of the Dow Jones were rocketing 450 higher. The Dow’s gains – which lifted it a one month peak of 26800 – stemmed from news that the US and China will be continuing their trade negotiations in mid-October, an announcement that also allowed the DAX and CAC to rise 1% apiece.”
“If one was feeling cynical, Thursday’s rally could be used to illustrate investors’ refusal to learn from their past mistakes, stung time and time again by a pair of superpowers who never manage to deliver on their trade talk promises (there are, of course, similarities there with the pound and Brexit). Nevertheless, the global indices were feeling giddy, giving way to a series of one month highs despite this being a very familiar part of the trade war market cycle.”
Nothing new, then. Regrading Sino-US tensions, we’ll believe there’s progress when we see it. Regarding Sterling and FTSE, same thing. Both situations are waiting games as far as markets are concerned, investors can either choose to ride out the storm or invest to make the most of the uncertainty. Other news and macro financial updates have come from; Hilary Benn’s Brexit delay bill, Parliament being prorogued, No-Deal Brexit preparations, UK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), and analysts’ outlook for markets and currencies.