Quartix rallies on meeting full-year earnings expectations

Jamie Gordon
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Quartix rallies on meeting full-year earnings expectations
Commercial GPS tracking manufacturer Quartix Holdings Plc (LON: QTX) said that it was to ‘at least’ meet market expectations for full-year earnings and cash flow. This news comes with the company posting its latest trading update, which confirms increased sales and installations of tracking equipment on-year, alongside development of its new 4G telematics system and a continued reduction of its lower-margin insurance tracking operations.

Trading update

“Management expects to report revenue, adjusted EBITDA and free cash flow for the First Half of approximately £12.6m, £3.5m and £3.0m, respectively. This has been delivered alongside a continuation of the increase in investment in sales and marketing activity which commenced during the last financial period.” said the company in its update.

“As a result, management’s expectations for the full year are that revenue will now be at least £25m and that adjusted EBITDA and free cash flow will at least meet market expectations* for the year.”

Comments regarding fleet expansion,

“This increased investment has driven strong growth in the Company’s core fleet business: total new installations are approximately 45% ahead of the same period last year, and excellent progress has been made in each of the Company’s existing markets (UK, France and USA). Fleet revenue in the First Half is expected to have grown by £1m to just over £10m.”

“The fleet subscription base is expected to reach 137,000 vehicles by the end of the First Half and the value of the base (which is an indicator of future revenues) has also shown accelerated growth.”

In response to the positive update, Company Chief Executive Officer Andy Walters, said,

“We are delighted with the expansion of our fleet subscription base in the First Half. We significantly increased investment in customer acquisition and achieved a substantial improvement in growth, and are now confident of at least meeting expectations for revenue, profit and cashflow for the year.”

“We are well positioned for future growth in our fleet business and continue to review the opportunities to invest in this further. We look forward to updating shareholders on our progress on 24 July.”

Quartix investor update

On the posting of the update, the company’s shares rallied 10.59% or 27p to 282p a share. Analysts from finnCap have reiterated their ‘Corporate’ stance on Quartix stock.

IAG orders 200 Boeing 737 Max planes

Nicole Jeary
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IAG orders 200 Boeing 737 Max planes
British Airways owner IAG has signed a letter of intent to place a large order for 737 Max planes, in a massive boost to Boeing. Boeing is currently developing a software fix for its 737 Max planes, after two deadly crashes led to the planes to be grounded worldwide. In March, an Ethiopian Airlines flight crashed, killing 157 people. Just five months before, 189 people were killed on a Lion Air flight when a Boeing 737 Max also crashed. The order for 200 planes from the IAG group will be a welcome show of confidence in the embattled aviation manufacturer. Alongside British Airways, IAG operates Aer Lingus, Iberia and Vueling. Should the deal go ahead, the planes would be delivered between 2023 and 2027. The order of 737-Max 8 and 737-Max 10 planes would cost $24 billion at list prices, however it is understood that IAG have negotiated a substantial discount. IAG chief executive Willie Walsh said: “We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months having received approval from the regulators”. Nevertheless, it could still be a long way until regulators allow the 737 Max to return to the skies. The US Federal Aviation Administration official said that Boeing 737 Max aircraft could be grounded until the end of the year, until faith is fully restored in the safety of the plane. Boeing shares (NYSE:BA) were boosted by the news. Shares are currently +5.37% as of 11:53AM (GMT). Meanwhile, shares in IAG fell, suggesting investors prove less confident of the airline group’s decision to add the controversial plane to its fleet. IAG shares are down 3.76%.    

Mulberry posts £5 million annual loss

Dina Caruso
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Mulberry posts £5 million annual loss
Mulberry posted a loss before tax of £5 million on Wednesday for the 53 weeks ended 30 March. In 2018, the luxury handbag maker revealed a profit before tax of £6.9 million, now swinging to a £5 million loss. Mulberry’s revenue amounted to £166.3 million, decreasing from the £169.7 million figure a year earlier, with international up 7% and UK down 6%. Its global digital revenue continued to experience strong growth, rising by 27% to £36.9 million. This was driven by Mulberry’s strategic partnerships in the second half of the period, including johnlewis.com. Mulberry said that in the UK, performance was materially affected by House of Fraser entering into administration during August 2018, in addition to the wider weakness of the UK retail environment, causing revenue to decline. The difficult trading conditions to hit the UK high street have been highly reported by several brands, with store closures and staff cuts prevailing. “The Group has delivered results in line with expectations and is making good progress in advancing its International strategy and direct to customer model whilst managing a challenging UK market,” Thierry Andretta, Chief Executive Officer of Mulberry, commented on the results. “We have established new subsidiaries in Japan and South Korea and introduced important digital partnerships in China. International and omni-channel sales, driven by our customer centric focus, are increasing as a result,” the Chief Executive Officer added. “Looking ahead, we anticipate that International and Digital sales will continue to grow whilst UK retail trading conditions are expected to remain uncertain. The Group plans to invest further in its new Asian entities during this development phase, enhance its global digital platform and optimise the UK network.” Mulberry was founded in Somerset in 1971 and has 103 owned stores and 22 franchise partner stores across 25 countries. Shares in Mulberry Group plc (LON:MUL) were up 4.67% as of 09:06 Wednesday.

Whitbread’s Premier Inn hotels hit by Brexit uncertainty

Dina Caruso
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Whitbread’s Premier Inn hotels hit by Brexit uncertainty
The owner of the Premier Inn brand, Whitbread, revealed in a trading update on Wednesday that it is cautious of the impacts of Brexit on market conditions. The British multinational hotel and restaurant company said that weaker business and leisure confidence has continued, coinciding with continuous political and economic uncertainty in the UK. The uncertainty surrounding Brexit has had an impact on domestic hotel demand, particularly in the regional business market, where most Premier Inn hotels are located, Whitbread added. This weaker demand has caused Premier Inn’s UK total accommodation sales to drop by 1.5% for the first quarter. The company, which sold Costa to Coca Cola, added that though it is difficult to predict how business confidence and business investment will evolve over the next year, it continues to closely observe the impacts this will have on the market. “Our expansion into Germany is firmly on target. Our new hotel opening in Hamburg is performing above our expectations and our hotel in Frankfurt continues to perform well. We will open another two organic sites during this financial year and complete the first tranche of the 19-hotel Foremost Hospitality acquisition, with 13 being rebranded to Premier Inn in the first half of next year,” Alison Brittain, Chief Executive of Whitbread plc, commented. “Whilst we are cautious about short-term market conditions, we are confident in our plans given the significant growth opportunities in the UK and internationally,” the Chief Executive continued. “Given our strong balance sheet, efficiency programme and robust business model, we are in a strong position and we will continue to invest in order to maintain Premier Inn’s competitive advantages and to capitalise on our structural growth opportunities.” In addition to its update concerning market conditions, the company also said that it expects to add between 3,000 to 3,500 rooms in the UK and over 2,000 in Germany. As of 09:49 Wednesday, shares in Whitbread plc (LON:WTB) were trading -0.8% lower.

AstraZeneca shares rally after securing EU approval for Lynparza

Nicole Jeary
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AstraZeneca shares rally after securing EU approval for Lynparza
AstraZeneca shares rallied on Tuesday after company revealed it had received approval from the European Union for its Lynparza drug. The British-Swedish pharmaceutical company said the drug, which has been developed to treat advanced ovarian cancer, will become available in the EU thanks to the approval. Dave Fredrickson, Executive Vice President, Oncology Business Unit, commented: “This approval sets the stage for a new standard of care in the EU for women with ovarian cancer and a BRCA mutation. The goals of front-line therapy have always been long-term remission and even cure, yet currently 70% of patients relapse within three years of initial treatment. The progression-free survival benefit of Lynparza observed in SOLO-1 represents a major step forward in our ambition to help transform patient outcomes.” AstraZeneca is listed on the London Stock Exchange, as well as the New York Stock Exchange and the OMX Exchange. The firm was formed following the merger of Astra AB, a Swedish company and UK-based Zeneca Group. The company develops various pharmaceutical drugs to treat gastrointestinal issues as well as cancer and respiratory issues. It is a constituent of the FTSE 100 Index. Shares in AstraZeneca (LON:AZN) are currently trading +2.48% as of 13:59PM (GMT).

Sotheby’s sold for $3.7bn to French billionaire

Nicole Jeary
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Sotheby’s sold for $3.7bn to French billionaire
Sotheby’s (NYSE:BID) has been sold for $3.7 billion to French billionaire Patrick Drahi, it was announced on Tuesday. The art auction house has been publicly listed on the New York Stock Exchange since 1977. Mr Drahi made his fortune in telecommunications and media, having found the Altice group. Drahi is also known to be an avid art collector. the takeover comes at a time when the art investment market is on the up, despite a period of downturn in the midst of the financial crisis. In a statement, Tad Smith, Sotheby’s CEO, commented on the takeover: “Patrick Drahi is one of the most well-regarded entrepreneurs in the world, and on behalf of everyone at Sotheby’s, I want to welcome him to the family. Known for his commitment to innovation and ingenuity, Patrick founded and leads some of the most successful telecommunications, media and digital companies in the world “He has a long-term view and shares our brand vision for great client service and employing innovation to enhance the value of the company for clients and employees. This acquisition will provide Sotheby’s with the opportunity to accelerate the successful program of growth initiatives of the past several years in a more flexible private environment.” Sotheby’s is the world’s fourth old art auction house. It brokers fine art, jewellery, real estate and various collectable items. Its rival, Christie’s, which is also London-based, is likewise owned by a French billionaire, François Pinault, the chairman and CEO of Kering brands. Shares in the auction house are currently +58.60% as of 12:19PM (GMT).

Old Mutual fires CEO Peter Moyo

Nicole Jeary
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Old Mutual fires CEO Peter Moyo
Old Mutual announced that it had terminated the contract of its chief executive Peter Moyo on Tuesday. Explaining the decision in a statement, the company referenced a conflict of interest involving NMT Capital, an investment group which was co-founded by Mr Moyo. In the meantime, chief operating officer, Iain Williamson, has been appointed as interim CEO. In a statement, the financial firm said: “There is a duty on directors of all institutions to be vigilant regarding the management of conflicts of interest. The importance of this duty has been highlighted by a number of recent corporate governance breakdowns within both the private and public sector.” “The Board has not been provided with an acceptable explanation why, in clear contravention of the relevant preference share agreement with Old Mutual as well as Mr Moyo’s employment obligations, ordinary dividends were declared whilst debt to Old Mutual was outstanding.” The company added that this led to “a material breakdown in trust and confidence in Mr Moyo.” Old Mutual is listed on the Johannesburg Stock Exchange, as well as in London, Malawi and Namibia. It specialises in Insurance services across Africa. Old Mutual (LON:OMU) shares are currently trading +2.71% as of 11:54PM (GMT).  

Facebook set to launch cryptocurrency

Nicole Jeary
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Facebook set to launch cryptocurrency
Facebook (NASDAQ:FB) is set to launch a cryptocurrency in 2020, it was announced on Tuesday. The currency, which is set to be called Libra, will be available for use on Facebook apps such including WhatsApp and Instagram. It will be stored in a digital wallet named Calibra, which is set to be available as an App next year. Facebook said the currency will be aimed at the 1.7 billion individuals without a bank account. However, concerns have been raised over data privacy and the security of the currency. Facebook said that Libra will be managed independently by the Libra Association. The group includes MasterCard, PayPal, eBay, Spotify, Uber and Vodafone. Stefano Parisse, group director of product and services at Vodafone, commented on Libra: “As a Founding Member of the Libra Network, Vodafone will extend its commitment to digital and financial inclusion by supporting the creation of a new global currency and encouraging a wide range of innovative financial services to be developed through its open-source platform. “This has the potential to be truly transformative and will benefit those who have never used, or are struggling to access, financial services around the world.” Last week, Facebook announced it was expanding its presence in the UK, with the creation of 500 new tech jobs in the capital. The social network said it will create new jobs focusing on Artificial Intelligence, as it looks to address personal safety and security across its various apps. Shares in Facebook are currently up +4.24% as of 10:39AM (GMT).

Castleton revenue jumps on organic growth and key acquisitions

UK Investor Magazine
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Castleton revenue jumps on organic growth and key acquisitions
Social housing solution provider Castleton Technology (LON:CTP) released preliminary full year results on Tuesday that revealed a 13% increase in revenue and 24% jump in adjusted EBITDA to £6.3 million. Revenue growth was driven by a combination of both organic growth and a number of acquisitions. Organic revenue growth represented 7.3% as Castleton successfully cross-sold their suite of products to their some 591 housing association clients. Castleton reported an increase to 50% from 40% in the number of the clients taking more than one product. These agreements are typically providing multi-year revenue sources from ongoing service provision. An example of this is a 4-year contract with Dumfries and Galloway Housing Partnership, worth £1.2m. Key to revenue growth going forward will be the ability of Castleton to guide existing customers towards the sweet spot of customers taking eight or more of their products. Currently just 7% of clients are taking eight or more products providing significant cross-selling opportunities in 2020FY.
Acquisitions
Castleton are demonstrating a focus on delivering enhanced technology solutions with the acquisition of an Indian service provider who previously supplied the group with additional development capacity. The Indian acquisition was one of three notable acquisitions in the period that included technologies for delivering financial modelling and communication tools. Dean Dickinson, CEO of Castleton, said: “It has been another year of significant progress for Castleton, delivering strong organic growth at both revenue and EBITDA level underpinned by healthy cash generation. This has not only resulted in the continued reduction in net debt, but it has also enabled operational growth through the acquisition of Deeplake, the perpetual licence for our modelling solution, the launch of new digital solutions and expanded development capabilities with Castleton India.” “A number of milestone projects are now fully-live and operational with three early adopter sites for integrated solutions. These combined customer references have been a major contributor to us winning the new integrated solutions contract in January with Connect. The early adopters and this new contract demonstrate the strength of our proposition, our ability to cross-sell and the trust our customers have in our capabilities to deliver on their vision for complete digital transformation.” finnCap issued a note following this morning’s results which forecast revenue of £28.5m for 2020, rising to £30.5m in 2021. finnCap have a 140p price target on Castleton.

Kier Group shares sink on strategic review and dividend suspension

UK Investor Magazine
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0
Kier Group shares sink on strategic review and dividend suspension
Kier Group (LON:KIE) shares sank on Monday as the group announced a strategic review and the suspension of its dividend. The group said it would shift focus to regional building, infrastructure, utilities and highways by selling or exiting its non-core businesses such as Kier Living and environmental services. Shares in Kier Group were down over 14% in Monday afternoon, trading at a little over 110p. Shares in Kier Group have fallen from highs around 1,400p in 2017. The company now has a market capitalisation of just £183m, the lowest in the FTSE 350. The strategic review is the result of debt levels the group today said were ‘too high’ and low levels of cash generation accentuating the companies debts. Andrew Davies, Chief Executive of Kier, commented: “Since becoming Chief Executive on 15 April, I have visited many of our key locations and spent time with all of our businesses, meeting the leadership teams and many of our dedicated people in the process. I have also met with many of our clients. Kier has a number of high-quality, market-leading businesses, in particular Regional Building, Infrastructure, Utilities and Highways. I believe that these businesses will deliver long-term, sustainable revenues and margins and are inherently cash generative.” “As previously announced, I have been leading a strategic review which has resulted in the actions being announced today. These actions are focused on resetting the operational structure of Kier, simplifying the portfolio, and emphasising cash generation in order to structurally reduce debt. By making these changes, we will reinforce the foundations from which our core activities can flourish in the future, to the benefit of all of our stakeholders.” The problems that led to the collapse of Carillion will be fresh in the minds of investors and there are significant similarities with the problems Kier Group are facing. Kier Group will be aware of this and have taken drastic steps to reduce head count by 1,200 – whether this provides a base to rebuild is to some extent out of Kier’s hands and will ultimately depend on government contracts.
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