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.Portfolio considerations
The Company’s shares closed at 290.8p a share on Tuesday, up 9.2p or 3.27% during trading 28/05/19 16:35 GMT. Peel Hunt analysts’ most recent review concluded that it ‘Reiterated’ its ‘Hold’ stance on Sports Direct stock.
Flybe boss announces departure
Flybe announced the departure of its chief executive Christine Ourmières-Widener on Tuesday.
Christine Ourmières-Widener will stand down as chief executive on 15 July following Flybe’s sale to Connect Airways, a consortium founded by Virgin Atlantic, Stobart Aviation and Cyrus Capital Partners.
The airline was sold to the consortium for £2.8 million after weeks of speculation.
It has been struggling in recent years amid a tough trading environment for the aviation industry.
In particular, rising fuel prices, increased competition and currency movements have impacted the low-cost airline’s margins.
Many rival carriers such as Monarch and Primera Air both fell into administration amid these mounting pressures.
Ourmières- Widener commented on her departure: “It has been a privilege to lead Flybe over the past two years and to work with such an outstanding and dedicated team of professionals.
“Together, we have been able to secure the jobs of our loyal Flybe employees with the sale to Connect Airways and provide our customers and the UK with the vital transport and travel infrastructure they rely on, while preparing Flybe for a bright future under its new ownership.”
Flybe flies to 85 airports in the world and has a fleet size of 76. It has two hubs in the UK including Manchester and Birmingham.
Highlands Natural Resources announces cannabinoid collaboration
Highlands Natural Resources announced today it is collaborating up with analytical chemist Stephen Goldman to develop its cannabinoid business, Zoetic.
The company said that it is teaming up with Goldman to ‘examine, develop and file patents and other intellectual property on behalf of Company’ relating to agricultural genetics, pharmaceutical and wellness products based involving cannabinoids.
The collaboration will relate to the company’s CBD focused venture, Zoetic, which it is seeking to expand.
Back in April Highlands announced it would be advancing its strategy for the company, in light of particularly strong demand for cannabis-based products.
Robert Price, Executive Chairman and CEO of Highlands Natural Resources, said: “Our progress at Zoetic continues at pace and we remain on track to achieve our first revenues in June from deliveries to Schrader Oil convenience stores and the launch of our own direct sales website.
“Our collaboration with Stephen Goldman significantly advances our expertise in seed development and agricultural genetics and underpins our strategy to develop high quality feminised seeds for sale to hemp producers, a strategy which has significant revenue potential.”
Shares in the natural resources company (LON:HNR) are currently +3.62% as of 12:27PM (GMT).
Galliford Try rejects £950m Bovis takeover bid
Galliford Try has rejected a £950 million takeover bid from rival housebuilder Bovis, sending shares soaring on the back of the news.
The house builder confirmed it had received a bid from Bovis, however it said it had rejected the offer after concluding that ‘it does not fully value the Linden Homes and Partnerships & Regeneration divisions and is not in the interests of all shareholders.’
Earlier this year, shares in Galliford Try plummeted after the company issued a profit warning.
At the time, the firm said it expects profits to be £30-£40 million lower than previously expected.
As a result, Galliford Try said it was putting its construction unit under “strategic review”.
The house builder was formed in 2000 and it has gone on to be a constituent of the FTSE 250 Index on the London Stock Exchange.
Its construction projects have included the restoration of the London St.Pancras Renaissance hotel, the centre court of Wimbledon and the recently completed Aberdeen Western Peripheral Route.
The Aberdeen Western Peripheral Route had been delayed amid to weather issues and the collapse of Carillion last year.
Shares in the firm (LON:GFRD) are currently trading +3.53% as of 11:50AM (GMT). Meanwhile, Bovis shares (LON:BVS) are trading broadly flat on the announcement.