China hints at resuming negotiations, markets lift

Jamie Gordon
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China hints at resuming negotiations, markets lift
Comments from China’s commerce ministry today have shown China is once again searching for diplomatic resolution of ongoing Sino-US tensions. Markets reacted positively during Thursday morning trade, all shaken by this year’s political tensions and ready to break down should the world’s parent countries continue arguing. Speaking on the market’s behaviour this morning, Spreadex financial analyst Connor Campbell commented,

“The markets managed to muster some rebounding energy on Thursday, clinging to any positive hints regarding the trade war.”

“While Trump’s team weren’t particularly enthusiastic in their most recent comments – Stephen Mnuchin said that Washington is ‘planning’ for a Chinese visit at some indeterminate point in the future, while Peter Navarro was keen to state that ‘it’s unlikely anything quick will happen’ considering the ‘structural basis of the problems – investors appear to have taken heart from the morning’s commerce ministry briefing from Beijing.”

“China reiterated that it is opposed to further trade war escalation, and that the two sides remain in contact with the aim of continuing negotiations, perhaps in September. That seems to have been enough to cause some decent growth; the DAX and CAC rose half a percent-plus apiece, while the FTSE added 0.3%.”

“Plunging on Wednesday as Boris Johnson upped his attempts to strong arm the country into a no-deal Brexit, the pound didn’t exactly steady on Thursday, but managed to keep its losses at the lower end of the spectrum. Falling 0.2% against the dollar and euro, sterling is under $1.22 against the former and €1.1001 against the latter. The currency is now going to be watching those opposed to the Prime Minister’s plans to see if they can come up with a cohesive, effective way of trying to avert disaster.”

The world will continue to hold its breathe. Leaders and citizens alike will hope Boris Johnson can pull a One-Nation Conservative triumph out of the hat, and pray he doesn’t use a Brexit scenario as a cheap and narrow-sighted opportunity, that benefits only a small number of individuals and companies. Other market and macro financial updates have come from; Parliament being prorogued, No-Deal Brexit preparations, UK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), the US-China currency manipulation debacle, and analysts’ outlook for markets and currencies.

Goals Soccer Centres up for sale

Dina Caruso
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Goals Soccer Centres up for sale
Goals Soccer Centres was put up for sale on Thursday following accounting issues. Owner of Sports Direct (LON:SPD) Mike Ashley holds a significant stake in the soccer centre operator. Shares in the soccer centre operator were suspended back in March. Earlier this month, it was revealed that the accounting issues were much deeper than expected – a £12 million tax accounting scandal that stems back at least a decade. “It has become very recently evident that there has been improper behaviour within the company,” Goals Soccer Centres said at the beginning of August. Goals Soccer Centres said on Thursday in a company statement that it has commenced a process to invite offers for the business and its assets. “This process is being conducted by Deloitte LLP, and follows their previous appointment as advisors to assess future corporate options for the company, announced on 18 June 2019,” Goals Soccer Centres said. “There is no certainty as to the timetable or outcome of this process. Shareholders will continue to be kept informed of developments as appropriate,” the company added. In July, Mike Ashley’s Sports Direct faced some issues with the publication of its preliminary results, sending shares in the business crashing. Sports Direct blamed the complexities surrounding the integration of House of Fraser, which it purchased last year, for delaying the publication of its results. According to the BBC, one analyst called the delay of results “an utter shambles”. Sports Direct was also involved in a back and forth chess game with Debenhams earlier this year. Goals Soccer Centres employs roughly 700 people and had a market value of £20 million when shares were suspended, according to Sky News. Shares in Sports Direct International plc (LON:SPD) were trading at +1.65% as of 12:35 BST Thursday.

Amigo changes annual expectations, shares plunge

Dina Caruso
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1
Amigo changes annual expectations, shares plunge
Guarantor loans provider Amigo said on Thursday that it will be “resetting” expectations for its current financial year. Shares in Amigo (LON:AMGO) were sent crashing on the announcement. The company said in its results for the three month period ended 30 June that loan book growth is expected to be broadly flat. Additionally, it said that impairment to revenue ratio will be low to mid 30% and cost to income ratio is expected to be in the low 20% range. Its net debt/tangible equity remains unaffected, as does its dividend. “The change in economic outlook, and the potential for regulatory change, means we are taking a more cautious approach to lending and have increased provisioning,” Amigo said in its results. Amigo said that given the deteriorating economic outlook, it expects impairment to remain at a higher level than it previously expected. Amigo’s warning of deteriorating economic conditions comes just after the pound took a hit yesterday when news broke that Boris Johnson had asked the Queen to suspend parliament ahead of the extended Brexit date. “New customers continue to choose Amigo as we provide a valuable product that improves their lives by giving them fair and transparent access to credit – to buy a car, to put down a rental deposit or to consolidate expensive debts,” Hamish Paton, CEO of Amigo, said in the results. “Our guarantor loan product occupies a space in society that is making a real difference to the lives of our customers, many of whom cannot access credit from their bank or building society,” the CEO continued. “Amigo is both a responsible and profitable lender. We are focused on our future returns and building a sustainable business for the long term.” “We are accelerating investment in our operations to enable continued delivery of best in class customer service and further enhancing credit and conduct policies.” Amigo is based in Bournemouth and provides loans of up to £10,000 to those with poor credit histories. Shares in Amigo Holdings PLC (LON:AMGO) were down 36.69% as of 10:14 BST Thursday.

UK car production declines 14th month in a row

Dina Caruso
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1
UK car production declines 14th month in a row
British car manufacturing output dropped 10.6% in July, new data from the Society of Motor Manufacturers and Traders (SMMT) revealed on Thursday. This marks the 14th successive month of decline for UK car manufacturing output. Performance was affected by ongoing weakness in major EU and Asian markets, alongside some key model changes, the SMMT said. Production for export dropped 14.6% in the month, but demand from overseas remained the primary driver of overall volumes contributing to 8 in 10 cars made, the SMMT added. In the year-to-date, the number of cars made in Britain dropped by 18.9% – 774,760 cars have been made which is 180,864 less than in the same period a year prior. “Another month of decline for UK car manufacturing is a serious concern. The sector is overwhelmingly reliant on exports and the global headwinds are strong, with escalating trade tensions, softening demand and significant technological change,” Mike Hawes, SMMT Chief Executive, commented on the data. “With the UK market also weak, the importance of maintaining the UK’s global competitiveness has never been more important so we need a Brexit deal – and quickly – to unlock investment and safeguard the long term future of a sector which has recently been such an international success story,” the SMMT Chief Executive continued. The future of the industry is looking spooky as the Halloween Brexit date approaches. News emerged only yesterday detailing that Boris Johnson had asked the Queen to suspend Parliament. This move sparked a wave of backlash because it limits MPs’ ability to block a no-deal exit from the European Union. Uncertainty looms as the UK braces itself for its final departure date from the European Union – will a deal be secured over the next few weeks?

Sativa Group makes progress on its CBD Wellness Store in Bath

Jamie Gordon
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0
Sativa Group makes progress on its CBD Wellness Store in Bath
The UK’s ‘leading’ CBD Wellness and medicinal cannabis company Sativa Group plc (NSX: SATI) today announced the completion of the initial phase of its third and final proof-of-concept Goodbody CBD wellness store. The Group posted today’s updates after its other two stores were revealed in Bath and Cirencester respectively, and after it announced partnerships with Cenkos and Alponics SA.

Sativa Group comments

Chris Jones, Managing Director of Goodbody Wellness, said, “It was a great launch weekend with customer feedback echoing the sentiments given about the first two stores. The customers really appreciate a prestige high-street brand which they can trust. It’s all about traceability, product testing, and balance. “ “A welcome surprise was that the store opened for business a day early. We hadn’t even switched on the digital display boards and customers were knocking on the door. That gave the team an early chance to put their extensive training in to practice. Our fellow traders in the Clifton Triangle have been highly complimentary about our store design and quality of product and Goodbody is already viewed as a further boost to local high-street retail.”

Investor notes

The Group’s shares are currently trading at 6.50p 27/08/19 and their market cap is £32.35 million. Elsewhere in cannabis-related developments, there has been news from; Freyherr International Group PLC (NSX: FREY) and Aurora Cannabis (NYSE: ACB). The UK Investor Magazine is coordinating the Cannabis Investor Forum as a means for sativa, CBD and cannabidiol companies to connect with prospective investors, and will host guest speakers from organisations such as the Adam Smith institute, hoping to offer insight into the growing industry. The event tickets are available on the CIF website, where an online forum and conversation is also available.

Bigblu Broadband swings to profit with 22% revenue jump

Jamie Gordon
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3
Bigblu Broadband swings to profit with 22% revenue jump
Satellite internet provider to rural areas Bigblu Broadbend PLC (LON: BBB) booked improved fundamentals during the first half of 2019, with results pushing into the green and the Company expecting to narrow their net debt going forwards. The Company’s revenues bounced 21.9% on a year-on-year comparison, up to £30.5 million. Meanwhile, their adjusted revenue jumped 56.4% to £4.3 million in a comparison of the same periods.

Bigblu debt did expand by £5.0 million to £16.90 million during H1 2019. However, between the end of H1 2018 and H1 2019, there was a £5.4 million positive turnaround in operating profit, with the Company managing to swing to positive £0.7 million by the end of the period.

The outlook for the Company’s shareholders remained mixed, but certainly improved on-year. Adjusted EPS hiked from 0.5p for H1 2018, to 2.7p for H1 2019. Losses Per Share narrowed from 12.1p to 1.2p during the same period.

Bigblu Broadband comments

Andrew Walwyn, CEO of BBB, said,

“This was another period of expansion for the Company as we successfully developed our routes to market and customer base. The combination of our technology agnostic product portfolio and strong distribution partnerships ensured that we remained at the forefront of the rapidly growing global alternative super-fast broadband industry. Importantly, given the relationships and product sets we now have in place, we are clearly demonstrating strong organic growth. As such, we are extremely excited by the recent extension of our agreement with EBI, which has performed strongly to date, and the funding now in place to accelerate Quickline’s fixed wireless network roll-out.”

“This means that we are well placed to grow our customer bases across our products and territories and benefit from increasing margins due to the improved infrastructure and proven partnerships already in place.”

“We therefore expect strong organic growth to continue for the remainder of the current financial year following the EBI extension and believe the Quickline funding will result in a significant increase in our UK fixed wireless customer base.”

“We are extremely excited by the growth opportunities ahead and expect the strong demand for our solutions to increase further as we adopt new products with faster broadband speeds and unlimited download limits whilst driving down the cost of customer acquisitions and churn during the second half of the current financial year.”

Investor notes

The Company’s shares rallied 2.27% or 2.35p and closed at 105.85p a share 28/08/19 15:55 BST. Numis analysts reiterated their ‘Buy’ stance on Bigblu Broadband stock. Elsewhere in the tech sector, there were updates from; Avanti Communications Group PLC (LON: AVN), Maestrano Group (AIM: MNO), Vitec Group plc (LON: VTC), TT Electronics (LON: TTG), SDL plc (LON: SDL), Dialight Plc (LON: DIA) and Seeing Machines (LON: SEE).

The Queen consents to proroguing Parliament

Jamie Gordon
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The Queen consents to proroguing Parliament
The Privy Council meeting took place at Balmoral, with Jacob Rees-Mogg, Natalie Evans and Mark Spencer in attendance as the Queen consented to PM Boris Johnson proroguing Parliament. https://platform.twitter.com/widgets.js “It is this day ordered by Her Majesty in Council that the Parliament be prorogued on a day no earlier than Monday the 9th day of September and no later than Thursday the 12th day of September 2019 to Monday the 14th day of October 2019, to be then holden for the despatch of divers urgent and important affairs, and that the Right Honourable the Lord High Chancellor of Great Britain do cause a Commission to be prepared and issued in the usual manner for proroguing the Parliament accordingly.” the key Privy Council text read today. Following what has been described as a ‘constitutional outrage’, legal professionals and constitutional experts have stated they believe it is only a matter of time until legal challenges are presented to the incumbent government, particularly in regard to the length of the Parliament shut-down (five weeks, the longest proroguing since 1945).The first of these challenges is expected to come from Scotland.

Immediate thoughts

Reacting to the news, former Tory deputy PM Michael Heseltine commented, “On hearing the news whilst on holiday in Montenegro, I am appalled by the government’s announcement,” “The government’s decision is a constitutional outrage. A government which is frightened of parliament is frightened of democracy. I hope that every member of parliament, in feeling this humiliation, will use every legal and constitutional weapon to obstruct a government proposing to force on the British people a historic change for which they have long since lost any mandate.” MPs Jo Swinson and Ana Soubry are among the first members of the House who have written to the Queen, requesting a meeting to discuss today’s passing of the ‘undemocratic proposal’. Labour leader Jeremy Corbyn weighed in with a better late-than-never attempt at opposing the Conservative-led government, lamenting Boris’s actions as ‘a smash and grab’ on democracy.

Looking forwards

Today’s move was largely foreseeable. Boris needed a majority to pass his topsy-turvy secondary legislation (No-Deal preparations) as primary legislation, that could stand up to judicial review. He was never going to get a Parliamentary majority and thus proroguing Commons was the only was he could get his motions passed; once he sought Royal approval he was likely to get his way, lest the Queen risk bolstering the Republican case. Boris’s big brother, Mr Trump, also weighed in on the UK situation in the coming month. https://platform.twitter.com/widgets.js We’ll no doubt bore you with further updates and opinions as they emerge. For now, is my No-Deal with pluses prediction becoming more likely by the hour (not smug, but probably right)? Other market and macro financial updates have come from; No-Deal Brexit preparations, UK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), the US-China currency manipulation debacle, and analysts’ outlook for markets and currencies.  

Boris Johnson plans to suspend parliament: reactions

Dina Caruso
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1
Boris Johnson plans to suspend parliament: reactions
News emerged on Wednesday that Boris Johnson will attempt to block parliament until 14 October. The Prime Minister has asked the Queen to suspend parliament ahead of the Halloween Brexit deadline. The GBP/USD took a hit, sinking to around 1.2200 following the announcement. The move was met with backlash because it limits MPs’ ability to block a no-deal departure from the European Union. Below are a collection of reactions to the Prime Minister’s actions. Nicola Sturgeon, current First Minister of Scotland, took to Twitter to comment: https://platform.twitter.com/widgets.js Philip Hammond, British Conservative politician, said that the move was “profoundly undemocratic”. https://platform.twitter.com/widgets.js British Labour Party politician David Lammy said on Twitter that “Boris Johnson wants to suspend democracy to force through a No Deal Brexit against the will of Parliament and the country.” https://platform.twitter.com/widgets.js British Author Carole Cadwalladr addressed citizens across the pond: https://platform.twitter.com/widgets.js British Labour Party politician Andrew Adonis said that “a kind of coup is taking place” and that: https://platform.twitter.com/widgets.js In addition to the reactions shared on the social media platform Twitter, Nigel Green, Chief Executive and Founder of deVere Group, provided a comment. “It could be argued that Boris Johnson’s decision to ask the Queen to suspend parliament, and therefore to prevent democratically elected representatives of the people doing their job, is deeply unconstitutional and has the hallmarks of a tin-pot dictator,” Nigel Green said. “It is likely to be a tactic to spook negotiators into making concessions to the Withdrawal Agreement. Whether it will work remains to be seen. It will almost certainly be challenged in the courts.” “What we do know for sure though is that this step will inflict further unnecessary economic damage on an already extremely vulnerable UK economy,” Nigel Green warned. “Depressingly, recession is looming for Britain and Johnson’s highly controversial tactics seriously increase the uncertainty which will further drag on investment and trade.” “In addition, it will further batter the beleaguered pound, which reduces people’s purchasing power. Weaker sterling means imports are more expensive, with rising prices typically being passed on to consumers.” “Brexit has plunged Britain into an existential crisis that will last for generations.”

James Fisher and Sons shares dip despite revenue and dividend hike

Jamie Gordon
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0
James Fisher and Sons shares dip despite revenue and dividend hike
Marine engineering services company James Fisher and Sons plc (LON: FSJ) booked a mixed set of financial results during the first half of FY19, which saw their share price dip during trading on Wednesday. The Group’s revenues jumped 10% on a year-on-year comparison for the same period, up to £286.90 million. The Company’s dividend per share paid during the period increased by the same margin, up 10% to 11.30p per share. While James Fisher and Sons statutory operating profit rose fractionally by 1%, both its underlying profit before tax and underlying diluted EPS dipped by 4% on-year, to £20.9 million and 33.20p.

James Fisher and Sons comments

Chief Executive Officer, Nick Henry, said,

“The Group has made good strategic progress in the first half with the acquisition in Brazil and the purchase of two dive support vessels. We remain well positioned across all four of our divisions with significant growth opportunities ahead. As previously advised, the phasing of projects has made the year more weighted to the second half, which will also begin to benefit from the investment committed to in the first half. The Group remains well placed to deliver an improved financial performance in the year and to continue to provide future value to its shareholders.”

Investor notes

The Company’s shares have widened through the day, down 5.88% or 125.00p to 2,000.00p per share 28/08/19 14:23 BST. Analysts from Jefferies International reiterated their ‘Hold’ stance on James Fisher and Sons stock. The Group’s p/e ratio is 23.74 and their dividend yield is 1.55%. Elsewhere in the oil and gas sector, there have been updates from; Eco Atlantic Oil and Gas Ltd (AIM: EOG), Valeura Energy Inc.(LON: VLU), President Energy PLC (LON: PPC), Mosman Oil and Gas Limited (AIM: MSMN) and Nostrum Oil and Gas PLC (LON: NOG).    

Loungers revenues and profits bounce over 20% during the full year

Jamie Gordon
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2
Loungers revenues and profits bounce over 20% during the full year
Food and drink outlet operator Loungers PLC (LON: LGRS) booked healthy growth across financial performance indices during the full year ended April 31 2019. The Group’s revenue jumped 26.4% on a year-on-year basis, to £153.0 million, and adjusted operating profit bounced 23.3% to £12.4 million. Loungers also reported adjusted EBITDA growth of 23.7% to £20.6 million and their adjusted EBITDA margin dropped slightly by 0.2% on-year. Further, the Company’s like-for-like sales grew 6.9% and cash generated from operations hiked 13.5% to £22.4 million. The Group added that it added 25 sites over the course of the year, taking its total number to 146 cafes, bars and restaurants. Loungers shares were admitted to the AIM post year end and raised £83.30 million.

Loungers comments

Nick Collins, Chief Executive Officer, said,

“These results represent a strong performance for the financial year ending 21 April 2019 and are in line with both our, and the market’s, expectations. Our revenue and profit growth not only reflect the continued success of the roll-out, but also our unwavering focus on our customers, the evolution of our proposition and how we support and invest in our teams.”

“Our admission to AIM post the FY19 year-end has meant almost 600 employees have had the opportunity to become shareholders in Loungers plc and it is fantastic that their hard work and commitment can be rewarded in this way.”

“Our new financial year has started well and our roll-out strategy for both brands is on schedule. I remain confident about the outlook and future growth prospects for the Group.”

Investor notes

Despite the positive update, the Company’s shares dipped 0.49% or 1.00p to 205.00p a share 28/08/19 12:37 BST. Analysts from Peel Hunt and Liberum Capital both reiterated their respective ‘Buy’ stances on Loungers stock. Elsewhere, there have been updates from other food and drink retailers; The Coca-Cola Co (NYSE: KO), Devro plc (LON: DVO), Greencore Group plc(LON: GNC), NWF Group plc (LON: NWF), Cranswick plc (LON: CWK) and Nestle SA (SWX: NESN).
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