Game of Thrones finale and the next chapter for HBO

So, the biggest show in television history has just concluded and there was no avoiding it. Much to the chagrin of HBO big wigs, Netflix breezed past the Game of Thrones platform to claim the number one spot as the best outlet for original content, but that will not be the greatest concern as far as sentiments are concerned. Love it or loathe it, Game of Thrones is a piece of history. The show brought together an international following and consistently grabbed the media’s attention. As Tyrion Lannister would tell us with his astute observation in the final episode, stories are one of the most compelling forces in the world, and society can be successfully brought together by sharing the best and most enveloping tales.  

Game of Thrones Controversy

  Note: No spoilers, but skip past this section to avoid more GoT ranting. At the very least, GoT was successful in its ability to act as an escape from reality, while playing on some very real tropes surrounding the frightful and recurring frailties of human nature. Within the show, these manifest themselves in our feverish struggle for dominance and our attempts to materialise and secure our own machinations for the world around us and the world at large. Not to emulate the ham-fisted efforts of writers Benioff and Weiss, I will quit my vague ramblings and talk controversy. As many will already be aware, willingly or otherwise, the eighth season of Game of Thrones received – at best – mixed reviews. A petition to have the final series of the epic saga remade was started by ‘Dylan D’ and two weeks later, the petition has been signed by little short of 1.5 million disgruntled fans. This backlash has triggered a response from many of the actors who spent over a decade struggling to disseminate the rest of their careers from their involvement in the unforgettable show with its forgettable final season. First, we have the measured response of Hollywood actor Sophie Turner, who, no longer pining for the validation of the North in GoT, will play the role of angsty mutant in the next instalment of X-Men. Turner told the New York Times, “So many people worked so, so hard on it, and for people to just rubbish it because it’s not what they want to see is just disrespectful.” A less controlled reply was given by Kit Harrington – famous for his role as GoT tactical mastermind Jon Snow (sort of). Harrington told Esquire, “I think no matter what anyone thinks about this season — and I don’t mean to sound mean about critics here — but whatever critic spends half an hour writing about this season and makes their judgement on it, in my head they can go f**k themselves. “Because I know how much work was put into this.” “Because they cared about it so much. Because they cared about the characters. Because they cared about the story. Because they cared about not letting people down.
“Now if people feel let down by it, I don’t give a f**k. That’s how I feel.”
So that’s us told. Of course, the show should be credited for the great piece of television it is. The expectations put on it, the lore, its trending status and the simple fact that its cast and creators were ready to finish, all fed into how it ended. It shouldn’t be slammed, and we should appreciate the relationship we were allowed to build with the characters and to some extent, by proxy, everyone involved. If you want it to emulate the quality, style or story set out by its original author George RR Martin, the final season will leave you dissatisfied. But in response to that point I’d posit two suggestions. (I stole this first one from somewhere, I can’t remember the source sadly) As a compromise, picture George RR Martin’s rendition as the story as documented and exquisitely transcribed by maesters, and the show as the sketchier, more personalised performance by word-of-mouth at a bar or around a camp fire. Failing that; if you want a good story, read the books. As stated by the author himself when asked about the comparison of the show to his books, “I am working in a very different medium than David and Dan (Benioff and Weiss, co-creators and showrunners), never forget. They had six hours for this final season.”  

Is HBO on the ropes?

  Not really. Sure, Game of Thrones wrapping up is a loss, and they could have milked that franchise for a few more years, but it is hardly a time of strife for the network. First, we should consider that there are other shows on HBO currently claiming the spotlight, with my personal top pick being Chernobyl. Three episodes in and the show has stunned viewers with its insights, grit and its largely British cast, who are giving some of the most notable performances of their careers. The show treads the fine and delicate line between history and drama, and to-date the sensitivity with which it has managed to achieve this balance is a credit to the versatility of a network, which to-date, has been known for dragons and ill-conceived gestures towards social politics. Caroline Framke of Variety, wrote on Chernobyl, “Sometimes, their explanatory scenes can get a bit more technical than the show can quite sustain, but for the most part, their collective curiosity and growing astonishment carries them through. Together, the formidable trio of Harris, Skarsgard, and Watson give the series its bleeding heart, untangling their characters’ respective inner conflicts and ultimate determination to tell the truth in the face of extraordinary opposition from their own country with expert ease.” However, the current shows aren’t the only reason not to pity HBO. You know that bit where I said they, “could’ve milked that franchise for a few more years”? Well, ta-da. Valar Morghulis (All Men Must Die) That may be the case, but the temptation of a cash cow never will. The old guard are gone but a fresh, new batch of actors have already begun filming a GoT prequel. The actor playing the prolific dragon queen Daenerys, Emilia Clarke, pleaded to the creators to “just let it lie”, in regard to the existing show which is barely cold in the ground. If the Star Wars, Lord of the Rings or Harry Potter franchises are anything to go by, the best stories will not be allowed to end. Corporate bodies will thrash storylines with a cane of inter-generational, profiteering megalomania until there is no love left. Or maybe that’s just pessimism, none of those franchises have as yet failed, and maybe the art of modern stories is that they never end.  

Cursory note on HBO stock

  HBO is owned by giants AT&T (NYSE:T) and WarnerMedia (NYSE:TWX) and as such cannot be tracked as a stock in its own right. The merging of Time Warner and AT&T was a contentious issue which spanned the course of 2018, and sparked an Anti-Trust Case against what many viewed as the formation of a monopoly which would not be in the interests of consumers or market competition.  

Intermediate Capital shares rally with AUM rise

British specialist asset management firm Intermediate Capital Group plc (LON:ICP) saw its share price rally during Wednesday trading following the company’s announcement that its assets under management had risen by 29%.

International Capital performance

Thankful not to have as difficult an outlook as their asset management counterparts Babcock (LON:BAB), ICG booked an impressive growth in assets under management, which the company attributes to an influx of net fund flows amid strong demand across a broad range of its investment strategies. During the year ending 31 March, AUM grew 29% to €37.1 billion. Inflows were €10 billion and fee earning assets under management from third parties were up 41% at €29.6 billion. Pre-tax profits spiked 65% on-year to £278.3 million for the full year,and fund management company profits jumped 51% to £143.8 million. Fund management company earnings were up to 49p from 44.9p a share the year before, though this was offset by a drastic fall in Investment company earnings from 43.9p to 14.4p on-year. Overall, earnings per share were down to 63.4p, from 88.8p a year earlier.

Intermediate Capital comments

“This has been an excellent year for ICG. Our disciplined investment processes and consistent investment performance have generated strong demand across a broad range of our investment strategies. Our local teams continue to originate attractive investment opportunities, while locking in returns by realising existing assets where appropriate,” said Benoit Durteste, CEO. “While our most successful strategies continue to attract higher asset flows, we are putting in place the foundations for future growth, incubating new strategies and building out our pool of talent, and remaining alert for the opportunities any market dislocation may present.”

Portfolio considerations

The company’s final dividend climbed 67% to 35p a share, which lead total ordinary dividends for the full year up 50% to 45p per share. Following their investor update, the company’s share price rallied 93p or 7.77% during trading on Wednesday, with shares trading at 1,290p as of 22/05/19 14:58 GMT. Shore Capital analysts have reiterated their ‘Hold’ stance on Intermediate Capital stock, while Numis (LON:NUM) reiterated their ‘Buy’ stance.

British Steel collapses, 5,000 jobs at risk

1
British Steel entered liquidation on Wednesday, after failing to secure a loan from the government. The collapse places 5,000 jobs at risk, alongside a further 20,000 in the supply chain. Earlier this month the government granted British Steel a £120 million to cover an EU carbon bill. The company had been after additional funds to avoid calling in administrators. However, the government Business Secretary Greg Clark MP concluded that it had to turn down the request as it would not be lawful. He released the following statement earlier today on the matter: “The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel. We have shown our willingness to act, having already provided the company with a £120 million bridging facility to enable it to meet its emissions trading compliance costs. The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made. This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities. In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.” Despite commencing the wind down process, British Steel will continue to operate as normal, as it looks to locate a potential buyer. EY has been tasked as the administrators to oversee the procedure. According to reports, employees wages have been paid, and the government is set to cover the remainder of the costs. Nevertheless, there is continued worry over the future of the thousands of jobs that may be lost.

MTI Wireless Edge 16% sales growth leads profit

Israel-based communications and frequency specialists MTI Wireless Edge Limited (LON:MWE) have posted an on-year increase in Q1 profits led by an increase in sales.

Results summary and company comments

MTI revenue was up 16% to $9.1 million, which saw pre-tax profit jump on-year from $0.25 million to $0.56 million for the three month period through March. “We are very pleased with the first quarter’s results, which showed double digit year-on-year growth in revenue and profits,” said MTI chairman Zvi Borovitz. “As previously announced, since the beginning of 2019 we have seen significant growth in the company’s order book as we have won four new large contracts that amount to over $6m.” “We continue to see many more opportunities in the pipeline across all segments of the business, and this alongside the long term trends of: demand for broadband; efficient water management solutions; and increased defence budgets, supports our business proposition and provides us with confidence in meeting our goals of increasing revenue, profits and free cash flow.”

MTI Wireless Edge today

The company’s shares are currently trading 0.5p or 2.22% following the posting of their results this morning. Shares were trading at 23p per share as of 11:50 GMT 22/05/19.  

NetScientific investments lead to annual loss

Commercial healthcare technology group NetScientific PLC (LON:NSCI) have posted a full-year loss, which the company said reflected ongoing investment activity in its portfolio companies, which was part of its business strategy.

NetScientific update summary and comments

The firm posted a pre-tax loss for the full year throigh December, of £4.1 million, which narrowed from £4.4 million on-year. “Our strategy remains to maximise shareholder value from our portfolio companies”, said Chief Executive Ian Postlethwaite. “With the disposal of our Vortex and Wanda interests, we can focus using the remaining cash resources on extending the anticipated lifespan of the company.” “Glycotest and PDS require no further funding at this stage and, whilst ProAxsis does need a small additional injection of £0.1m to meet operational requirements as it nears cashflow breakeven, this will be repayable within 2019.” “All three companies have continued to make good progress during the year and we remain confident in their prospects.” “In addition, we have taken measures to reduce our central function costs to extend the company’s cash runway and it is therefore expected that the company has sufficient cash to operate until the end of 2020.”

Portfolio considerations

The company’s shares rallied in morning trading, up 0.22p or 2.38% to 9.47p per share.

Babcock meets guidance but headwind worries persist

UK-based asset and infrastructure management firm Babcock International Group PLC (LON:BAB) stated that they had met their full-year guidance despite adverse conditions, and the firm was candid about the ongoing and future potential of headwinds weighing on revenues.

Performance and expectations

The company, which does business with notable partners such as the UK Ministry of Defence and Network Rail, met its guidance in despite a fall in pre-tax profit, which was attributed to the sell-off of assets and lower activity in the short cycle parts of its business – both of which weighed on performance. Posting its recent round of results, the firm stated that pre-tax profit fell 39.9% to £235.2 million, and revenue dipped 4% on-year to £4.66 billion. However, underlying revenue was in line with its February guidance at £5.2 billion, with underlying operating profit making a modest increase of 0.7% and finishing at £588 million. The company’s combined order book and pipeline was stable at £31 billion. Regarding its dour outlook, Babcock noted that for the year ending March 31st 2020, performance would be adversely affected by a ‘number of step downs’, which would decrease operating profit by £63 million and revnue by £410 million. It also stated that it anticipated underlying revenue of approximately £4.9 billion, underlying operating profit of between £515 to £535 million and free cash flow in excess of £250 million. Further, it said that it expected to maintain its underlying margin at a range of 10.7% to 11%.

Babcock’s comments

“We have delivered a robust performance this year, operating profit is in line with our expectations, we have sustained our strong margins and we have improved our cash generation,” said Chief Executive Archie Bethel. “More importantly for the delivery of our strategic goals and our future performance, we have sharpened our focus on our three key markets of defence, aerial emergency services and civil nuclear. We have strengthened our position in these areas with some important contract wins that partially offset the upcoming completion of the QEC contract and the loss of the Magnox contract and we have delivered further growth in our international businesses. In addition, we have exited low margin businesses outside of the three focus markets, which do not have synergy with the rest of the Group, and we have reshaped our oil and gas business.” “As we begin the new financial year we do not expect the wider market environment to be any less challenging than we have experienced this past year.”

Portfolio considerations

The firm’s full-year dividend was 30p per share, an increase of 1.7% on-year. Following the update, the company’s share price dipped in morning trading, down 34.7p or 6.84% to 472.5 per share. There was some consensus on forecasts of Babcock stock, with Peel Hunt and JP Cazenove both downgrading their ratings from ‘Add’ to ‘Hold’ and ‘Overweight’ to ‘Neutral’ respectively. Further, Liberum Capital and Shore Capital both retained their ‘Buy’ stance.

Bovis Homes’ ‘strong performance’ continues

House building firm Bovis Homes Group plc (LON:BVS) have posted their latest round of updates, and the general tone appears similar to previous updates this year and throughout last year. The Kent-based company commented on continued ‘strong performance’ which it attributed to ‘good’ levels of demand for new homes during the course of the year so far.

Performance and prospects breakdown

Bovis are enjoying a starkly different year to some British property-oriented businesses such as online estate agency Purplebricks (LON:PURP). Though the company did not comment on revenues and profits, they did comment that for the year to date, the average private sales rate per site per week was up 17% on-year from 0.52 to 0.61. The firm added that efforts to control costs were ongoing with an attempt to continue offsetting the impact of limited sales price inflation and a rise in build costs at a rate of 3 to 4%. It continued, saying that it had, “excellent visibility on land with 98% of our land for our 2020 completions secured and 68% secured for 2021 (excluding strategic land contributions).” For the year to-date, it has opened seven new developments, and is operating from 87 active sites. It expects to open 16 new sites over the course of the year and is working towards equalling the same number of active sites as last year.

Bovis’ comments

“The current market fundamentals remain strong and we continue to see good levels of demand for new homes across all of our operating regions. We have a strong forward sales position and are confident of delivering completions in line with our expectations for the year,” Bovis Homes said in its statement. “The Group set out its medium term targets to be achieved by 2020 to return Bovis Homes to being a leading UK housebuilder and significantly improving returns to our shareholders.” “We continue to make good progress against these targets with several already achieved. We expect to make further progress on the Group’s operational and financial performance in the current year.”

Portfolio considerations

The company confirmed that the full-year dividend for 2018 was raised to 57p a share, up form 47.5p per share in the year before. However, when the special dividend of 45p a share was paid last November, this brought the total payout for the 12 month period to 102p per share. Despite the positive update, the company’s share price dipped in morning trading, down 12p or 1.15% to 1,033p a share 22/05/19 12:05 GMT. Analysts’ forecasts have varied, with the only consensus being witnessed between Liberum Capital and Peel Hunt, both of whom reiterated their ‘Hold’ rating. Numis (LON:NUM) reiterated their ‘Buy’ stance on Bovis stock while Shore Capital downgraded their rating from ‘Buy’ to ‘Sell’.

Superdry appoints interim finance chief, shares rally

0
Superdry announced the appointment of its interim chief financial officer on Wednesday, sending shares soaring as much as 12% on the back of the announcement. The clothing retailer have appointed Nick Gresham, who is currently chief financial officer at Wiggle, the online sports retailer. Gresham is set to take up the role as of June 3rd later this year. Superdry is set to report its preliminary results on July 4th. Peter Williams, Chairman of the Board of Superdry, commented on the news: “I am delighted to have secured an interim CFO of the calibre of Nick, who has extensive experience in senior finance roles across the retail sector. This is an important step for Superdry as we continue to focus on rebuilding the board and putting the right leadership and corporate governance structure in place.” Earlier this month the firm issued a fresh profit warning for they year amid weaker online and wholesale performance over the quarter. Superdry recently narrowly re-appointed its founder Julian Dunkerton back to the board, despite some opposition from shareholders. The brand was founded by Dunkerton in Cheltenham back in 1985. He left the company in 2014, before making his return five years later. Superdry is hoping to revive its profits, amid an increasingly difficult trading environment for the UK’s retailers. Just this week Jamie Oliver’s restaurant empire collapsed into administration after failing to find a buyer, placing 1,000 jobs at risk. Shares in Superdry (LON:SDRY) are currently trading +12.45% as of 11:44AM (GMT).

Royal Mail rebases dividend with profits at lower end of guidance

UK postal and courier service Royal Mail Plc (LON:RMG) has announced that it will downwardly re-base its dividend following its latest trading update, with postal revenue struggling and being offset by additional costs.

Basic rundown

The recent performance of this well-known UK household name, having been privatised in 2013, has been attributed to a decline in the volume of letters, with the strains of this decline being compounded by additional costs coming into play during the financial year. Adhering to the company’s preferred measurement of performance, adjusted operating profit before transformation costs fell 27% to £509 million. This figure is somewhat foreboding given that it falls within the lower end of the firm’s £500 to £530 million guidance, which was already a downwardly revised performance prediction. That being said, there are some positive takeaways. Despite decreasing volumes, revenue increased 2% to £10.58 billion, and pre-tax profit followed this trend, up from £212 million to £241 million during the full year through March. However, this rise was linked to a lower pension charge.

Royal Mail’s comments

“Our ambition is to build a parcels-led, more balanced and more diversified international business, delivering adjusted group operating profit mar gin of over 4% in 2021-22, increasing to over 5% in 2023-24,” said Royal Mail Chief Executive, Rico Back. “At the heart of our refreshed strategy is a UK ‘turnaround and grow’ programme.” “In 2018-19, after a challenging year, we delivered productivity improvements and cost avoidance in line with our revised expectations.” “Over the next five years, through a focus on new ways of working and extending our network, we will ensure a contemporary UK Universal Service.” “The investment in the UK, and expected lower cash flow in the early years, means we are rebasing the dividend and changing our dividend policy.” “This is not a decision we have taken lightly as we know how important the dividend is to our shareholders.” “We have sought to find an appropriate balance between sustainable shareholder returns, and investing in the future.” “GLS is a key part of our strategic plan and will make a major contribution to our product and geographical diversification.” “By combining the best of Royal Mail and GLS, we will enhance our cross-border proposition in this large, growing and global market.”

Portfolio considerations

The company increased its full-year dividend from 24p to 25p a share on-year. It also said that it would have a full-year dividend underpin of 15p per share, which could be supplemented by payouts during years with substantial excess cash flow. Despite the mixed update, the company’s shares rallied 13.4p or 6.34% in morning trading, up to 224.8p a share at 22/05/19 11:22 GMT. Analysts were unable to reach a consensus in their forecasts, with Liberum Capital reiterating their ‘Sell’ rating, Barclays Capital (LON:BARC) reiterating their ‘Sell’ rating and JP Cazenove reiterating their ‘Overweight’ stance on Royal Mail stock.

Pets At Home shares rise despite 38% fall in profits

1
Pets At Home (LON:PET) reported its preliminary full-year results for the year to 28 March 2019. The pet supplies retailer revealed that profit before tax dipped 37.7 per cent year-on-year to £49.6 million. Nevertheless, underlying profit before tax rose 6.1% to £89.7 million, compared to 84.5 million the year before. Ultimately, despite the fall in profits, Pets At Home said that performance proved ‘ahead of expectations’. Moreover, the company said that cashflow improved 14% to £63.6 million. Peter Pritchard, Group Chief Executive, commented on the results: “We are trading strongly and taking share across the pet market. Customers are loving our lower prices, the convenience of subscription packages, high quality veterinary care and pet healthplans. We launched our pet care strategy last year and we’re already making good progress, bringing our Retail and Vet businesses closer together. Our commitment is to make sure pets and their owners get the very best advice, care and products, and we’re able to join this up for customers in a way that competitors just can’t. I’m pleased with our progress and the results we have delivered, but there remains plenty to do. I’m confident we will successfully reposition our Vet Group so that, with the strong performance in Retail, we will be well placed to deliver our strategy.” The firm’s full-year dividend remained unchanged from the year before at 7.5. Shares in Pets At Home are currently up +12.84% as of 11:10AM (GMT).