Daily Mail and General Trust set to maintain full-year outlook
Daily Mail and General Trust (LON:DMGT) released a trading update of Thursday outlining its first-quarter results. Its 2019 outlook remains unchanged and in line with market expectations.
Group revenue increased by 2% on an underlying bias. Reported revenue, however, declined 2% compared to the year prior.
Net cash at 31 December 2018 was reported as £203 million. This compares to £233 million as of 30 September 2018, reflecting seasonal cash flows. In December, £219 million of its bond debt matured and as of the 31 December, the remaining bond debt was £207 million.
The company’s consumer media division saw an underlying revenue growth of 1%, as well as a reported revenue growth of 3%, matching its expectations.
In the trading update, Daily Mail and General Trust said:
“Circulation revenue declined 3%, with volume reductions partly offset by the cover price increase of the weekday editions of the Daily Mail from 65p to 70p in September 2018. Underlying advertising revenue growth of 4% was achieved across dmg media; a 1% decline in print was more than offset by 10% growth from digital. The Mail Newspapers titles grew their market shares and we remain confident in the future growth opportunities at MailOnline, driven by increasing engagement with the direct audience.”
Digital advertising grey 10%, counterbalancing the 1% decline in print advertising as more consumers opt for digital copies.
For its Insurance Risk division, underlying revenue grew 1%. Modest growth in subscriptions was partially offset by an unexpected decrease from one-off projects.
Property and Information also saw a 1% underlying revenue growth. According to the company, this reflects continued growth from the US businesses.
EdTech saw its underlying revenue jump 13%, driven by the strong performances of Naviance, Intersect and Starfish.
Energy Information underlying revenue increased by 1%. This was driven by continued growth from its oil and natural gas businesses. However, this was impacted by the weaker revenues from its power businesses.
Daily Mail and General Trust has business-to-business and consumer media operations.
At 08:48 GMT today, shares in Daily Mail and General Trust plc (LON:DMGT) were trading at +1.21%.
Trouble, Trouble halve then Double: 2 Tips from the OMG newsletter
Below are the second two recommendations for our 2019 10 2 Double Opportunities. Both have been much more than twice the recommended price but have missed expectations. Yet….. we think the business opportunities are well worth a good doubling from here.
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CyanConnode (LSE: CYAN)
8.25p (8.1p-8.5p)
Mkt Cap: £15m
Next Results: Finals RNS April
CyanConnode have closed almost $20m of contracts as it commercialises its world leading technology. For the year to December, turnover is expected to be 400% higher and a further significant increase is anticipated for the current year. January’s Trading Statement, for the year-end to December 2018, anticipates revenue of £4.7m with a much-reduced loss. India and Sweden are performing well and have increasing pipelines.
Orders to the value of $18.9m have been received to date for its Omnimesh product with only around $4m delivered so far against these orders. The revenue from its first licensing deal, which was in China, will be recognized over the next two years and further deals seem likely. There are legislative changes in India supporting Smart metering and further orders seem likely in this substantial world market as smart meters reduce payment fraud. There is also a contract to provide its software to the UK Smart Metering Programme and rollout will gain momentum in the first half of 2019.
The business model includes revenues from hardware, software licensing support and maintenance. Additional revenue streams include royalty licensing (white label in own name) and licensing of hardware which would include a one-off upfront payment and ongoing royalty payments. Profit margins range from 30% on hardware sales to over 90% for licensing deals.
In October, £5.6m of equity was raised at 10p in which the management invested £1m. There is no debt and the management’s focus is on converting the sales pipeline into cashflow. The shares at below the placing price seems worth buying.
One Media IP Group (LSE: OMIP)
5p (4.8p -5.4p)
Mkt Cap: £7m
Next Results: Finals March
One Media P Group plc (LSE: OMIP) has around £8m available to pursue an acquisition strategy. The plan is to acquire publishing rights which can generate a robust earnings stream, from the expanding digital music and video streaming market. In December 2017 two heavyweight company directors; Lord Michael Grade and Ivan Dunleavy joined the board and in August 2018 raised £8m, comprising £2m in shares at 6p and a £6m loan facility from the BGF (British Growth Fund).
Ivan Dunleavy is 58 and has been operating in the media industry for more than 35 years, including 17 years as CEO of Pinewood, Europe’s largest provider of stage and studio space, which he and Lord Grade acquired from Rank in 2000 for £62m. Lord Grade of Yarmouth, aged 75, has a distinguished career as a television executive, businessman and Director of Charlton Athletic FC.
OMIP distribute high margin streaming music through over 600 digital stores, as well as through dominant content distributors such as Spotify, Amazon, Deezer and Apple. These big sites prefer to deal with fewer and more diligent suppliers such as OMIP, which is driving consolidation. OMIP have also developed a high quality and robust IT platform and process for content discovery and a new policing software service ‘Technical Copyright Analysis Tool’ (TCAT) for record companies, publishers and law firms searching information of artist and tracks on legitimate digital stores. This can be used to maximise the return from acquired rights
The interims to April reported a 43% increase in PBT to £213k on a mere 5.1% increase in turnover to £1.02m as streaming is higher margin. The directors have confirmed that momentum will have been maintained in the Finals to 31 October 2018, which are due to be reported in March. They recently announced the receipt of a signed contract to recoupable advance against future digital earnings in the amount of US$1m. In the meantime, the team are seeking earnings-enhancing acquisition. Buy at below the placing price and we hope you double your money!
OMG! Opportunity for Massive Gains ! is a Premium Newsletter distributed by ADVFN
WH Smith shares rise on sales increase
Following a focus on its travel arm, WH Smith has reported a rise in sales over the Christmas trading period.
In the 20 weeks to 19 January, the retailer revealed a total growth in sales by 6%, with sales in the travel arm rising 16%.
WH Smith is focusing on growth opportunities within its travel arm, which is performing strongly. The group will shut a number of high street stores.
Despite the fall in high street sales, the WH Smith chief executive Stephen Clarke said that the group enjoyed the third best quarter in the past 15 years.
“The Group has delivered a strong trading performance with total sales up 6% and like-for-like sales flat. Our Travel business continued to grow across all channels. This was driven by our ongoing investment in the business, including the rollout of our new concept stores at Heathrow, and growth in air passenger numbers. InMotion delivered an impressive sales performance over the Christmas period and integration into the Group is progressing well,” he said.
Following the trading update, shares rose almost 2%.
Jonathan Pritchard, who is a retail analyst at Peel Hunt, said: “Trading has remained decidedly solid through the first half. We continue to believe that the InMotion deal in the States is a complete game-changer, opening up a massive new market to WH Smith.”
Shares in the group (LON: SMWH) are currently trading +2.24% (1231GMT).
Burberry warns on the impact of a no-deal Brexit
Burberry (LON:BRBY) has warned on the impact of a no-deal Brexit on the company, as the deadline for the UK’s departure from the EU draws closer.
“The biggest concern is the disruption to the supply chain,” chief operating and financial officer Julie Brown told reporters.
“Burberry imports and exports significant volumes of raw materials, samples and finished goods between the UK and the EU, and it is the logistical delays that would impact design, product development and customer fulfilment.”
Ms Brown’s comments follow Burberry’s third quarter update. The firm reported a 1% rise in sales across the Christmas period, boosted by strong demand in China.
This proved behind analyst expectations of 2%, as a slowdown in US markets weighed down growth.
Burberry is most well-renowned for its infamous check pattern and iconic trench coats.
The luxury British brand is in the midst of an extensive turnaround initiative however, after years of weakened sales.
As part of the brand regeneration, long standing Creative Director Christopher Bailey left Burberry back in 2017.
In a widely celebrated move, Bailey was replaced by former Givenchy designer Ricardo Tisci.
Whilst Tisci’s debut Burberry collection was well received by the fashion set, Burberry are yet to harvest the results of his creative vision, with the collection set to hit stores in late February.
Nevertheless, Burberry said it remained pleased with the ‘brand heat’ generated from through its Christmas campaigns, Vivienne Westwood collaboration and B-Series product drops.
Marco Gobbetti, Chief Executive Officer commented on the third quarter:
“I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry. Excitement is growing ahead of next month’s launch of Riccardo’s debut collection. We will continue to manage the business dynamically as we reposition the brand. We confirm our outlook for the full year.”
Shares in the company are currently trading +1.52% as of 12:32AM (GMT).
Metro Bank shares tumble on missed expectations
Shares in Metro Bank fell on Wednesday morning after underlying profits in 2018 missed analyst expectations.
The lender reported a 138% rise in profits to £50 million in the year to 31 December 2018, however, profits were £9 million lower than expectations.
Following the news, shares in Metro Bank tumbled over 28% to 1,581p – the lowest since the company was listed in 2016.
The chief executive Craig Donaldson said: “2018 was another strong year of growth for Metro Bank as we continued to invest in both new stores and digital capabilities to win customers, deposits, assets and to create fans.”
“Metro Bank remains well positioned to support our growth strategy as we navigate an uncertain period for the UK,” he added.
In the fourth quarter of 2018, the lender saw 100,000 new customers and opened six new branches.
The group said that in the past year, loans grew 48% to £14.2 billion. Assets grew 32% to £21.7 billion and deposits in the bank increased 34% to £15.7 billion.
Shares in Metro Bank (LON: MTRO) are currently trading down 30.59% at 1.528,50 (1135GMT).
AJ Bell blames “negative market movements” as assets fall
AJ Bell (LON:AJB) said assets fell in the three months to December 31, according to a trading update published on Wednesday.
The online investment platform said that ‘negative market movements’ of £2.7 billion led to a 4% decline in assets to £44.2 billion since 30 September 2018.
Meanwhile, platform customer numbers rose by 7,285 to 190,498, marking an increase of 4%. Underlying Platform inflows increased 20% to £1.2 billion, compared to £1.0 billion during the same period a year before.
The update is the first since AJ Bell floated on the London Stock Exchange in December, valuing the firm at £651 million.
Chief executive Andy Bell commented:
“Trading in the first quarter of our financial year continued in line with the growth story we outlined ahead of our IPO and remains on track. We continued to attract new customers and inflows to the platform in the face of volatile investment markets, which demonstrates the strength and resilience of our business model as we approach our busiest period of the year. Our low-cost and easy-to-use investment platform continues to appeal to both retail customers and financial advisers, and providing high quality service to them remains our top priority.”
Looking ahead, Mr Bell said that platforms are set to remain “one of the main beneficiaries of defined pension transfers.”
He added: “Our competitive pricing model and service proposition means we are well positioned to benefit from anticipated developments in these areas.”
AJ Bell is an online investment and broker platform. The firm was founded in 1995 and is headquartered in Manchester.
Shares in AJ Bell remain flat as of 11:00AM (GMT).
Santander to close 140 branches
Santander (BME:SAN) is set to close 140 branches in the UK, placing 1,270 jobs in the firing line.
The Spanish bank said that this was in response to changes in how customers bank, with the number of transactions carried out via branches falling by 23% over the past three years.
Conversely, transactions via digital channels have grown by 99% over the same period, with customers increasingly turning to the ease of online banking.
Susan Allen, Head of Retail and Business Banking, said:
“The way our customers are choosing to bank with us has changed dramatically in recent years, with more and more customers using online and mobile channels. As a result, we have had to take some very difficult decisions over our less visited branches, and those where we have other branches in close proximity.
“We will support customers of closing branches to find alternative ways to bank with us that best suit their individual needs. We are also working alongside our unions to support colleagues through these changes and to find alternative roles for those impacted wherever possible.”
In addition, Santander said 100 branches will be refurbished over the course of the next two years with an investment of £55 million.
Santander is not the only bank moving towards branch closures.
Last year, HSBC (LON:HSBA) announced the closure of 62 of its UK branches, citing changes in customer banking habits.
Similarly, in September, RBS (LON:RBS) revealed plans to cut 54 branches, resulting in the loss of 258 jobs.
Shares in Santander are currently trading +0.78% as of 10:45AM (GMT).
Sony to move Europe HQ out of London
Sony (TYO: 6758) is set to move its Europe headquarters out of the UK to the Netherlands, in light of Brexit.
The electronics firm said the move will help the company avoid any issues involving customs once the UK officially leaves the European Union.
However, Sony have said the move will have a limited impact on existing operations in the UK.
In a statement, the company said that the relocation will ensure that “we can continue our business as usual without disruption once the UK leaves the EU. All our existing European business functions, facilities, departments, sites and location of our people will remain unchanged from today.”
News of Sony’s move comes after Dyson also announced a move out of the UK to Singapore.
On Tuesday, the company announced it is shifting its headquarters out of Malmesbury in Wiltshire to Asia.
Chief Executive Jim Rowan was keen to emphasise that the move had nothing to do with ongoing Brexit negotiations.
He said: “It’s to make us future-proof for where we see the biggest opportunities.”
He continued: “We have seen an acceleration of opportunities to grow the company from a revenue perspective in Asia. We have always had a revenue stream there and will be putting up our best efforts as well as keeping an eye on investments.
“We would describe ourselves as a global technology company and in fact we have been a global company for some time. Most successful companies these days are global.”
Founder Sir James Dyson has been a vocal advocate of Brexit, thus, the company’s pivot towards Asia may raise questions in the UK.
The UK is set to formally leave the EU in March, however, as it stands Parliament have yet to have agreed upon a deal.
Various companies have expressed concern over the possibility of a no-deal and the chaos it could create for business.
Sony is just the latest company to announce a move in light of continued Brexit uncertainty.
Shares in the Japanese firm are currently trading -0.056% as of 10:14AM (GMT).
ZOO Digital shares plummet on profit warning
ZOO Digital shares (LON:ZOO) plunged on Tuesday after the company warned that its annual earnings would fall behind expectations.
The company said that revenues associated with DVD and Blu-ray titles in the second half of the year would prove “significantly lower than anticipated” as “the overall market decline in this area has accelerated more quickly than envisaged.”
As a result, the firm said it expects revenues for the second-half of the year to be 10% below expectations.
Stuart Green, Chief Executive of ZOO Digital, commented:
“Whilst we are disappointed to fall short of expectations, albeit primarily due to one off occurrences, we are encouraged that we have seen year on year growth across our key service lines being dubbing and subtitling, as well as having successfully delivered projects for a number of new clients. We remain confident that the Company’s strategy is correct and will enable us to capitalise on the long-term opportunity. We are now enjoying a growth in orders from our largest clients and expect to add significant new accounts during the remainder of the second half.
“With several major media companies recently announcing their intention to launch OTT services, there is no doubt that the market will continue to expand significantly and with it the growing demand for the premium services offered by ZOO. Our excitement for the future remains undiminished.”
ZOO Digital is a provider of subtitling and digital distribution. The company was founded back in 2001 in Sheffield.
It has production facilities in El Segundo, Los Angeles, London and Sheffield as well as in Dubai.
Shares in ZOO Digital are currently -46.59% as of 14:14PM (GMT).
Elsewhere across the markets, shares in cyber security provider ECSC (LON:ECSC) rallied on the back of a promising trading update.
In the retail sector, Pets at Home shares (LON:PETS) ticked up after the company posted a promising set of results for the Christmas period.
Conversely, embattled department store chain House of Fraser revealed a sharp fall in sales in the run up to Christmas, down 60%, as the UK high street continues to suffer.
Google fined record £44m by French data watchdog
Google (NASDAQ:GOOGL) has been fined £44 million (€50 million) by the French data regulator CNIL for breaching European privacy laws.
CNIL dealt Google with the record fine after finding that Google had breached the rules of the recently passed GDPR regulations.
This is the first fine that the regulator has dealt a penalty since the enforcement of new EU privacy laws in 2018.
Firstly, the French watchdog found that the tech company did not make information on data collection clearly accessible for its users.
Specifically, CNIL said information on data storage or data processing often took several steps for users to reach, sometimes involving as many as 5 or 6 clicks.
Secondly, CNIL concluded that Google also violated EU restrictions regarding personalised ads.
Whilst Google obtains consent from its users, CNIL said this was not valid as users were not sufficiently informed with information often proving ‘diluted’ and not ‘unambiguous’.
In a statement, Google said: “People expect high standards of transparency and control from us. We’re deeply committed to meeting those expectations and the consent requirements of the GDPR. We’re studying the decision to determine our next steps.”
The European Parliament passed GDPR last year after a string of controversies hit the headlines, involving data collection and the misuse of user information by social media platforms.
Specifically, incidents such as the exposure of the Cambridge Analytica Facebook scandal, led to the enforcement of the more stringent restrictions upon businesses and their respective data collection procedures.
As such, GDPR is one of the most far reaching privacy reforms ever passed by the EU, with the 99 articles legally binding and applicable to all member states.
Back in October, Facebook (NASDAQ:FB) was dealt the maximum fine of £500,000 by the UK’s data protection watchdog, the Information Commissioner’s Office (ICO) for the data breach.