Benchmark in talks to end JV in salmon breeding facility
Veterinary services provider Benchmark Holdings PLC (LON:BMK) have announced that they are holding discussions with partner AquaChile to dissolve the joint venture the two companies started in June 2018, and potentially assume full control of their currently joint operations.
Aveva delivers growth amid strong demand for industrial software
Aveva (LON:AVV) published its results for the year to the end of March on Wednesday.
The multinational information technology firm reported a 11.9% rise in revenue to £775.2 million, alongside a 19.8% growth in adjusted earnings to £184.5 million.
Meanwhile, recurring revenue as a percentage of overall grew to 54.3% up 51.6% the year before.
This was attributed to the move towards digitalisation which had in turn boosted demand for industrial software.
The firm also it also planned to raise its final dividend by 7.4% to 29p per share.
Overall, the company said that its outlook ‘remains positive’, and they expect to be on-track to meet medium-term targets.
Chief Executive Officer, Craig Hayman said:
“AVEVA delivered a strong performance in its first full year as a combined company and integration has progressed well across all functions of the business. Digitalisation is accelerating in the industries we serve, driving ongoing growth in demand for industrial software. AVEVA is well placed to capture this demand by working with its customers to turn opportunities into business value, delivering solutions across the asset and operations lifecycle.
We remain confident in the outlook and in meeting our medium-term targets of delivering revenue growth at least in-line with the industrial software market, increasing recurring revenue as a percentage of overall revenue to 60% and improving AVEVA’s Adjusted EBIT margin to 30%.”
Aveva develops industrial and engineering software.
The firm is based in Cambridge and is a constituent of the FTSE 250 Index on the London Stock Exchange.
Shares in Aveva are currently down -2.39% as of 12:21PM (GMT).
ValiRx loss on the back of cancer treatment development
Biotechnology and cancer therapy development group ValiRx Plc (LON:VAL) reported a loss for the full-year through December, which the company attributed to investment in new treatments.
ValiRx investing and losing
The company stated that the full-year loss could largely be pinned on expenditure on developing and proving its cancer treatment candidates. It is advancing its clinical trials of the VAL201 prostate cancer treatment and said it was in the pre-clinical stage for other treatments.
For this round of results, the firm booked a pre-tax loss for the full-year of £4.8 million, deepening from £3.6 million on-year.
In a statement to investors, Company Chairman Oliver de Giorgio-Miller said, “Given the risk-averse funding climate in the reporting period, we sustained momentum in terms of adding value to our assets by advancing VAL201 in the UCLH prostate cancer clinical trial and progressing the pre-clinical advancements of the VAL101 and VAL301 compounds, to bring these closer to the Phase I ready stage.”
“We are also pleased to report post period, that ValiSeek has secured a robust solution and strategy for the advancement of VAL401 and that it has agreed letters of intent with two partners to progress VAL401 into its next proposed clinical trial.”
Trading update
ValiRx shares are currently trading down 0.39% in morning trading, a dip of 0.001p to 0.25p a share 29/05/19 10:25 GMT.
easyHotel swings to half-year loss
easyHotel reported its interim results on Wednesday, swinging to a loss amid the temporary closure of its Old Street location and higher depreciation at new hotels.
The budget hotel operator revealed a loss before tax of £0.12 million for the six months to March-end, down from £0.09 million.
The company also said it had invested £14.2 million in new hotel development, alongside £30.3 million in cash.
eaasyHotel also confirmed £33.9 million of bank financing headroom at the end of the period.
Guy Parsons, chief executive commented on the latest figures:
“easyHotel has delivered a market outperformance and good profitable growth in the first half of the year against a challenging market. The tactical decisions taken early in the period to drive market share through our OTA strategy has underpinned this, and we have continued to benefit from the impact of our ambitious opening programme.”
Parsons also noted that the company added a total of 18 hotels to its portfolio of the last two years, expanding across the UK and Europe.
With regards to the current trading climate, Parsons also said:
“The hotel market outlook remains uncertain, particularly in the UK where the ongoing Brexit negotiations continue to dampen consumer confidence. We are by no means immune, but the maturing profile of our hotels and our strong development pipeline will support continued growth and enhance our earnings profile. Combined with the careful control of our central costs, these efforts give the Board confidence in meeting its expectations for the year ending 30 September 2019.”
Shares in easyHotel (LON:EZH) are currently up +3.71% as of 11:47AM (GMT).
Telford Homes profits slide amid London property slowdown
Telford Homes reported its final results for the year ending 31 March, sending shares downwards on Wednesday.
The house builder said that revenue for the year was up 12% to £354.3 million, compared to £316.2 million.
This was attributed to a strategic increase in build to rent developments from 21% to 31%.
However, profits for tax fell to £40.1 million from £46 million the year before.
Telford Homes also announced a final dividend of 8.5 pence per share, resulting in a total dividend for the year at 17.0 pence per share, unchanged from the previous year.
The company said it had completed and handed over in excess of 300 build to rent properties, with an additional 1,422 underway.
It also said that it had entered ‘strategic build to rent partnerships’ with Invesco and M&G Real Estate to boost growth.
Looking ahead, the firm said that it has a development pipeline of 4,900 homes, with a total expected gross development value of £1.59 billion.
The results come amid a slowdown in property price growth in the capital, as economic and political uncertainty continues to deter buyers.
Jon Di-Stefano, CEO of Telford Homes, commented on the results: “Our business model is increasingly focused on build to rent housing and the reduced risk and lower capital requirements it brings. Despite some challenges, our performance in the year to 31 March 2019 represents a great achievement for Telford Homes with revenue at an all-time high due primarily to an increased proportion of build to rent contracts.
Over the last three years we have made substantial progress against our objective to increase our output of build to rent homes to meet demand from institutional investors and to deliver high quality rental properties in the capital. There remains a long-term structural imbalance between housing supply and housing need in London. Our recently announced partnerships with Invesco and M&G signal our reputation as a trusted build to rent partner, and as such are a significant step as we continue to develop our profile at the forefront of this burgeoning sector.”
Shares in Telford Homes (LON:TEF) are currently down -3.47% as of 10:40AM (GMT).
XLMedia rallies on share buyback announcement
Digital performance marketing services provider XLMedia Plc (LON:XLM) have seen their share price rally in the early knockings of morning trading on Wednesday, as the company announced that it intended to continue its share buyback programme which it began in December 2018.
The company added that its trading has been in line with its expectations for the financial year, and that its focus remained on increasing its exposure to high margin publishing activities and opportunities.
XLMedia describes itself as, ‘Operating globally across a variety of verticals including online gambling, personal finance and more, the Group uses proprietary tools and methodologies to generate high value users for customers in return for performance based payment models.’
XLMedia comment
‘Over the past decade, the group has both created and acquired a leading portfolio of assets in the publishing division,’ said chairman Chris Bell in his speech notes for the company’s AGM. ‘We are now focusing our efforts to fully leverage this core expertise to build a more comprehensive footprint across regulated gambling markets, in addition to our growing presence in the financial services vertical in North America.’ ‘XL Media continues to be a highly cash generative business with a strong cash balance.’ ‘Therefore, the board continues to evaluate the group’s allocation of capital policy in order to both support our growth ambitions and to maximise shareholder value.’ ‘As a consequence of the current weakness in the company’s share price and pending approval at today’s AGM granting the company authority to buy shares, we intend to continue the share buyback programme that was initiated in December 2018.’ ‘I would also like to reiterate our commitment to maintaining a progressive dividend policy.’ ‘We also continue to evaluate selective publishing acquisition opportunities, which could potentially accelerate earnings growth.’ ‘We appreciate the ongoing support of our shareholders and remain focused on delivering on our full year numbers for 2019.’Investor considerations
The company’s shares are currently trading up 1p or 1.96% since trading began, at 52p a share. Berenberg analysts’ most recent update was that it ‘Reiterates’ its ‘Buy’ rating on XLMedia stock.Rare Earth Minerals – China’s bedrock in trade war with US?
China has announced it is “seriously” considering restricting rare earth exports to the US, according to the editor-in-chief of the Global Times.
https://platform.twitter.com/widgets.jsBased on what I know, China is seriously considering restricting rare earth exports to the US. China may also take other countermeasures in the future.
— Hu Xijin 胡锡进 (@HuXijin_GT) May 28, 2019
What are rare earths to the US?
According to the US Geological Survey, rare earth minerals can be defined as, “the minerals bastnasite, monazite, and loparite and the lateritic ion-adsorption clays. The rare earths are a relatively abundant group of 17 elements composed of scandium, yttrium, and the lanthanides. […] The rare earths’ unique properties are used in a wide variety of applications.” The materials are of vital importance to American Industry and in particular emerging and high growth industries such as electric vehicle manufacturing and renewable energies such as wind. Yi Zhu, Bloomberg Intelligence senior analyst, said, “The U.S. will continue to rely on importing rare-earth minerals from China, the materials used in key components for a wide variety of products including electronics, hybrid vehicles and energy-storage systems. Importing from China is cheaper than producing domestically in the U.S.” In 2018, the US Geological Survey identified these minerals as critical to the economy and national defence. Chinese mines make up approximately 70% of the global output of rare earths, and about 80% of the US’s supply of rare earths. What is even more worrying for the US, is that according to official Chinese statistics, Chinese production of rare earths has almost doubled in the last five years and 90% of all processing into useful oxides globally was done within China. US woes are compounded by the fact that the minerals it currently imports from other countries such as France, are originally mined in China, the one US company that does export rare earths to China is currently facing a 25% tariff and the meagre quantities it can access from Malaysia are being called into question because of the adverse effects of the mining process, which China is willing to bear.How real is the rare earth threat?
Well, it seems like China aren’t bluffing. The People’s Daily, a flagship paper of the Communist Party, used a rare Chinese phrase with historical significance to emboss the seriousness of the state’s intent, telling a metaphorical US listener, “don’t say I didn’t warn you”, and continuing, “those familiar with Chinese diplomatic language know the weight of this phrase”. The same language was deployed in 1962 before China’s war with India and before its conflict with Vietnam in 1979. Further, producers of rare earths in China have rallied behind the concept of weaponizing the minerals, and President Xi Jinping even visited a plant earlier this month with his chief negotiator with the US. The industry in China is run by a select few and increasingly valuable handful of players; China Northern Rare Earth Group (SHA:600111), Minmetals Rare Earth Co., Xiamen Tungsten Co. and Chinalco Rare Earth & Metals Co. Northern Rare Earth Group saw its shares rally 8.68% during trading on Tuesday, and has seen its share price bounce by a third this month. China Rare Earth Holdings Ltd (HKG:0769) saw its share price jump 23.53% yesterday, and its value has doubled during May. China could send the world into panic if it backed up these threats with action. Its not as if it wouldn’t do it either; it has good form in fulfilling its promises in regard to rare earth threats, as Japan learned after their 2010 conflict.https://platform.twitter.com/widgets.js Much like the response to that conflict, the international community – the US in particular – would scramble to recoup their flow of rare earth supply from alternative sources. However, the US have been nervous for a while and rightly so. Earlier this decade they headed a case at the WTO to force China to export more rare earth minerals during a global shortage (which they won), and in 2017 Trump attempted to reduce the nation’s vulnerability to external supply chains by signing an executive order to reduce the US’s dependence on external sources of critical minerals. One thing is for certain, coverage of the trade war may be more sparse than in 2018, but the conflict has not cooled down – we will report further developments as they arise.After #TrumpTariffs on China, blacklisting of its Huawei & other telecom firms, etc., US hints at action against Chinese CCTV, drone companies. China reacts, threatens to stop supply of #RareEarth minerals crucial for tech sector. US-China #HybridWar assuming very different form. pic.twitter.com/IZUugc1RaO
— Samir Dattopadhye (@samirsinh189) May 25, 2019
SVS Securities morning call and market round-up 29th May
- Potential for a NO Deal Brexit outcome rises.
- US stocks suffer badly in late trading as the yield curve inverts.
- Asian markets are mostly declining in Wednesday’s late trading, following Wall Street’s lead.
- Today’s UK financial updates are relatively limited, but still include finals from: AVEVA Group, Stobart Group and Telford Homes, with interims from Jadestone Energy Inc. and General Meetings scheduled for Oxford Biomedica, PureTech Health, Sports Direct, Vectura Group and Xeros Technology Group.
EU Elections 2019: Salvini’s League takes Italy
Matteo Slavini’s League has outright won the 2019 EU elections in Italy.
The League came in first with 34.3% of the vote, followed by the Democratic Party with 22.7% and the anti-establishment Five Star Movement third with 17.1%.
Italy’s League was particularly popular in the north, which is no surprise given that it only recently changed its ideologies that exclusively targeted the north of the peninsula, whilst the Five Star Movement was strong in the south.
In the 2018 elections, Salvini’s League finished third with the Five Star Movement coming out on top as most popular. In a situation of political deadlock, the two parties reached an agreement and formed a coalition.
Salvini’s populist party is renowned for its euroscepticism and its particularly strong stance against immigration. It originally had an anti-southern Italian ideology and discriminated against the south, opposing the migration of southerners to northern Italian cities.
Salvini thanked voters in a tweet that reads “one word: thank you Italy,” whilst holding up a banner with the writing “1st Party in Italy THANK YOU”.
https://platform.twitter.com/widgets.js Home to the third-largest economy in the Eurozone, it was announced that Italy had slipped into its third recession in a decade at the end of January. It spent months quarrelling with Brussels last year over its ambitious budget plans. The government’s original deficit plans breached rules on government borrowing. The 2.4% figure may have been below the EU’s deficit limit of 3%, but It remained far too high for a country whose debt is as large as Italy’s, posing a threat to the Eurozone. “Salvini is the true leader of a dangerous government,” said the head of the Democratic Party, Nicola Zingaretti, according to the Local Italy. “Now the government is even more fragile,” he continued. The left-wing Italian newspaper La Repubblica read “Dark shadows” in its main headline following the results. What does the triumph of the eurosceptic populists mean for the future of Italy and its relationship with the EU?Una sola parola: GRAZIE Italia! 🇮🇹 pic.twitter.com/PEmaNvCpNJ
— Matteo Salvini (@matteosalvinimi) May 26, 2019
Sports Direct £120m sale of Shirebrook HQ
The UK’s largest sports retailing outlet Sports Direct International Plc (LON:SPD) announced on Tuesday that it had agreed the sale of a logistics centre in Shirebrook for a sum of little under £120.1 million to Kwasa Sportivo.
Sports Direct property
After closing down its warehouse in Wigan, the company said it would offer the 300 employees currently based at that site positions at Shirebrook. The Company intends to take out a 15 year lease at the Shirebrook site and continue its distribution, office and retail operations there. Following the sale, the company still maintains its 670 stores worldwide. In a statement to investors, Company Secretary Cameron Olsen said,“Further to the announcement on 17 May 2019, the Company announces that it has, through its wholly owned subsidiary Sportsdirect.com Retail Limited, agreed to dispose of the freehold property of Units A, B, C, D and F Brook Park East, Shirebrook, NG20 8RY (the “Property”) to Kwasa Logix Sportivo Limited for a cash consideration of £120,050,000.”
“Sports Direct will, on completion, take a 15 year lease of the Property and intends to continue to operate the Property as a distribution centre, offices and retail. The Company intends to use the proceeds of sale towards the working capital of the Company and its group operations.”
“Completion is expected to occur on or before 21 June 2019.”
The company completing the sale and subsequent lease, Kwasa Logix Sportivo, is owned by the Employees Provident Fund. The company manages the pension savings of seven million individuals and owns one of the new developments at the Battersea Power Station.The Company’s wider strategy
The sale of the property comes only three days after announcing further buyback of its own shares from its broker Liberum Capital.“Sports Direct announces that on 24 May 2019 it purchased 51,698 of its ordinary shares from Liberum Capital Limited (acting as the Company’s broker) on the London Stock Exchange at an average price of 281.89 pence per share, as part of the Company’s buyback programme announced on 26 April 2019. The purchased shares will all be held as treasury shares.” said Cameron Olsen.
“Following the above purchase, the Company holds 105,231,954 ordinary shares as treasury shares. The total number of ordinary shares in issue (excluding shares held as treasury shares) is 535,370,415.”
Further, tycoon Mike Ashley’s Company has attracted further speculation over claims that it is looking to make bids for more struggling high street retailers. Within the last year, Mr Ashley has taken over House of Fraser (LON:HOF), Sofa.com and Evans Cycles, while selling off his 4.8% stake in online firm MySale (LON:MYSL) last week and having two takeover bids for Debenhams (LON:DEB) rejected after the company went into administration. Mr Ashley is also in talks to sell Newcastle United football club, having ‘agreed terms’ with Dubai Sheikh Khaled Bin Zayed Al Nahyan.