Yu Group shares collapse following profit warning
Yu Group shares plunged as much as 80% on Wednesday morning, after the company warned on profits.
The energy supplier warned that profits for the financial year would be down by £10 million, signalling a loss.
According to the company statement, Yu Group flagged historic accrued income and higher levels of trade debt as key concerns.
The company cut its profit guidance after a series of accounting issues, which meant it had invoiced for more money than energy it had actually supplied.
As a result, the firm said it did not expect to return to profitability until 2019.
Nevertheless, the company affirmed that it has “significant cash reserves” of £11.5 million, with no outstanding debts.
Bobby Kalar, Chief Executive Officer, commented:
“As founder and majority shareholder, nobody is more disappointed in this development than me. Our booked revenue from new sales remains strong and contracted revenue for 2019 is already GBP67 million as at the end of September 2018. We have improved internal controls around working capital management and the Board is absolutely focused on restoring the profitability of the business.”
Russ Mould, investment director at AJ Bell commented on the announcement: “Coming hot on the heels of the scandal at cake seller Patisserie, accounting problems at small-cap gas and electricity supplier Yü Group will do little to improve investor sentiment towards AIM, London’s junior stock market.”
He added: “It is worth saying the issues at Yü do not look as serious as those at Patisserie where finance director Chris Marsh was arrested and released on bail as part of a probe into potential fraud.
“However, it will be difficult for Yü’s management to regain their credibility as fixing problems with the way ‘historic accrued income’ is recognised and higher than expected non-payments from trade debtors are set to hurt reported earnings.
“You have to question why companies aren’t prepared to be very conservative with their accounting as, if they are not, it seems inevitable that at some point an event like this will arise.”
Yu Group is an independent supplier of gas and electricity. It is currently listen on the AIM sub-market of the London Stock Exchange.
Shares in Yu Group (LON:YU) are currently trading -78.54% as of 12.51AM (GMT).
The company was the largest faller in the London Stock Exchange during Wednesday trading.
Barclays profits hampered by misconduct fines
Banking firm Barclays Plc (LON:BARC) have had their profits hit by fines for alleged malpractice, with the bulk of payments going out to the US Department of Justice.
Despite statements of confidence in the face of Brexit woes, expansion of its Irish operations and profits on target – Barclays has today reported the hits it has suffered as a result of misconduct fines.
The fines amount to some £2.1 billion, with £1.4 billion going to the US DoJ concerning the bank’s mortgage charges, and charges of £400 million due to Payment Protection Insurance in the first quarter of 2018. Remaining PPI provision to September, which would cover claims up until August 2019, stands at £1.1 billion.
Excluding litigation, the group’s profits before tax are up 23% to £5.3 billion, with its UK division seeing profits jump 18% to £794 million.
Barclays Group CEO, James Staley, said, “Our Group RoTE for the nine months of 11.1%, and 10.2% in the third quarter, excluding litigation and conduct, demonstrates we are well placed to meet our targets of a greater than 9% Group RoTE for 2019, and greater than 10% for 2020, based on a CET1 ratio of c.13%,”
“During the third quarter our Corporate and Investment bank outperformed peers again in Markets, with a 19% increase in income, and, in Banking, while we saw a dip in income, we have seen strong completion activity in October. Barclays was advisor on three of the largest M&A transactions executed in the period. Barclays UK PBT, excluding litigation and conduct, grew 18% in Q3 to £794 million, on revenues up 2% to £1.9 billion compared with last year, resulting in positive jaws of 1%.”
“In spite of macro-economic uncertainty, and particularly concerns over Brexit which weigh heavily on market sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays.”
Analysts from UBS, Shore Capital and HSBC have reiterated their ‘Buy’ stance on Barclays stock, while Berenberg analysts have upgraded their stance from ‘Hold’ to ‘Buy’.
Antofagasta lowers guidance but molybdenum booms
Mining firm Antofagasta Holdings (LON:ANTO) have announced a downgrade in their full-year output guidance for copper, following an on-year production and grade dip in copper and gold.
Despite a 15.4% quarterly jump in copper production and a 21.2% jump for gold from the second to third quarter, and predictions of “particularly strong” production in the final quarter for copper, the firm have downgraded their full year guidance following a 4% dip in copper production in the first nine months, and a dip of 30.1% for gold.
While much of this year’s bad news has come as a result of lower grades of gold at their Centinela site, the same site has been responsible for a boom in molybdenum, as it began production of the mineral during the last quarter. Similarly, higher grades and recoveries at the Los Pelambres site helped the firm’s molydenum output to spike 57.1% – to 4,400 tonnes – in Q3.
The firm’s production cost for molybdenum dropped 15.3%, to $1.27 a pound, between the second and third quarters. As a result, the firm are expected to finish well within their $1 billion expenditure forecast for the year.
While pointing out that it expected to share the fortune of its competitors, with an improved year for copper in 2019, Antofagasta have stated on its latest results,
“As expected, copper production increased 15% quarter-on-quarter, reaching 188,300 tonnes in Q3. Production volumes will continue to grow, with the fourth quarter expected to be particularly strong,’ said CEO Iván Arriagada.
“While we benefited from higher production in the quarter, our disciplined approach to costs has allowed us to combat inflationary pressures during the year which, combined with the strong molybdenum market, has contributed to a 15% fall in our net cash costs to $1.27/lb and for the full year guidance remains unchanged at $1.35/lb.”
The company’s share price has dipped 3.2p or 0.42% to 753.4p. Analysts from RBC Capital Markets have upgraded their stance on Antofagasta stock to ‘Outperform’, while UBS analysts were unchanged in their ‘Sell’ stance, stating that the firm offer inferior dividends to its peers.
Fresnillo updates output guidance for gold and silver
Precious metals mining company Fresnillo Plc (LON:FRES) have upgraded their output guidance for gold for the fourth quarter, whilst downgrading silver.
One of the London-listed go-to precious metal players has today announced that it has seen a 1.7 % on-year increase in gold output, as well as an on-year increase of 8.5% in silver output to date.
While guidance for gold has been upgraded from 900,000-930,000 to 920,000 to 940,000 ounces, silver has been downgraded from 64.5-67.5 million to 62.0-64.5 million ounces. This comes after a dip in output for gold in the third quarter, which saw the firm’s Q3 gold output drop 3.5% on-year, while silver output grew 6.3%.
Output has been boosted by strong performance from the firm’s Pyrites Plant and higher volumes of ore milled at the San Julian site. The firm’s current standing represents a return to form after its blip in June, but does not represent the same ground-breaking success enjoyed by other miners.
“Gold production continues to beat expectations and we are once again revising our guidance upwards following another strong quarter, in particular at our Saucito and Noche Buena mines where volumes exceed targets,” said Octavio Alvídrez, Fresnillo CEO.
“Though silver production is up against all comparable periods, we are revising full year silver guidance following continued challenges at the Fresnillo and Saucito mines. These are world class, tier one silver assets, and we remain both determined, and confident, given the actions we are taking, that we will deliver a better performance in the last quarter and in 2019.”
While year-to-date silver output is up 8.5%, ongoing concerns have seen the firm’s share price dip 1.9% or 18.6p in morning trading to 958.6p. RBC Capital Markets analysts have reiterated their ‘Top Pick’ stance on Fresnillo stock, having upgraded the stokc earlier in the month. Citigroup have reiterated their ‘Neutral’ stance.
Premier Veterinary Group shares fall over 30%
Premier Veterinary Group (LON:PVG) shares fell by more than 30% on Wednesday, after the company forecast a loss for the year.
Premier Veterinary Group said it expects group turnover for the year ending 30 September to be approximately £3.15 million, indicating growth of 24% from the previous year.
Nevertheless, PVG said earnings before tax, interest and amortisation (EBITDA) for the year is expected to represent a loss of £3.25 million.
Looking ahead, the company also said that it is in advanced discussions to finalise an agreement with a “leading UK corporate group to provide collection, administration and support services to facilitate the provision of animal health plans across all of that group’s outlets.”
Premier Veterinary Group said the contract would generate revenues of around £1 million, based on the current number of pets on plan, should the agreement be set into motion.
The firm said that should the agreement be completed, it is set to be implemented in the second half of the current financial year.
Consequently, any benefits generated from said agreement would not be fully realised until the financial year ending September 2020.
Earlier this year, shares in the veterinary group soared after the firm announced that it had completed a major US contract signing.
According to the agreement, PVG said that the contract would see the introduction of its preventative healthcare programme for pets to 15 of the customer’s animal hospitals.
Back in August, shares in the group rose as much as 10% on the back of the news.
Premier Veterinary Group is a provider of independent veterinary care operating in the UK, Europe and USA.
The company was founded in 1969 and has been listed on the London Stock Exchange as of 2015.
Shares in Premier Veterinary Group are currently trading -35.70% as of 10.36AM (GMT), as investors react to the trading update.
Metro Bank profits jump 197% in third quarter
Metro Bank (LON: MTRO) has released impressive results for the third quarter of 2018, with profits jumping 197%.
Profits in the bank jumped from £13.2 million in the same period last year to £39.2 million in the past three months,
Metro Bank also added 102,000 new customers in the most previous quarter, bringing the total number of new customers added just this year to 300,000.
The total number of customers has now passed 1.5 million and the lender has 60 stores.
“Nine month and third quarter 2018 results demonstrate continued growth across Metro Bank,” said the bank.
“Recent competitive trends in the mortgage market, however, have persisted despite the base rate increase in August as we have continued to focus on high quality growth of low-risk assets,” it added.
The group’s chief executive Craig Donaldson said: “The first nine months of 2018 show another strong performance from Metro Bank.”
“We delivered double-digit growth in deposits, record lending growth year-on-year and for the fourth successive quarter exceeded £1 billion in net lending.”
“Profit trebled to £39.2 million and we welcomed over 300,000 new customer accounts.”
However, the lender’s net interest margin fell from 1.94% to 1.77%. Investors did not take this news lightly and shares fell over 11% lower to 2,276p.
Barclays (LON: BARC) also posted strong results for the third quarter, with profits up to £1.5 billion in the three months to September 30, which is up from £1.1 billion in the same period a year previously.
Deutsche Bank (ETR: DBK) had less impressive results, with profits falling by 65%.
Octavio Marenzi, chief executive of consultancy Opimas, said: “There was weakness right across all lines of business and the return on equity achieved of only 1.3% is pretty awful.”
“It does seem that Deutsche Bank is starting to look at headcount reductions more seriously, particularly at the bank’s troubled Corporate and Investment Bank, with headcount down 3%, but this kind of reduction looks homeopathic at a time when more radical surgery is needed.“
Deutsche Bank posts 65% fall in profits
Deutsche Bank (ETR: DBK) has reported a slump in third-quarter results, with profits falling by 65%.
Following three years of losses and failed stress tests, investors are calling on the lender to have a “radical surgery” to treat the bank’s problems.
Previously, Deutsche Bank said it was on track to make a profit this year but under the restructuring from the new chief executive, Christian Sewing, the bank continued to make losses.
The share price fell 4% in early trading and have fallen 43% this year.
“We have our costs under control and sufficient capital to grow. We are on track to be profitable in 2018, for the first time since 2014,” said Sewing.
The bank’s net profit was €229 million (£202.2 million), which is down from the €649 million posted a year ago.
Octavio Marenzi, chief executive of consultancy Opimas, said: “There was weakness right across all lines of business and the return on equity achieved of only 1.3% is pretty awful.”
“It does seem that Deutsche Bank is starting to look at headcount reductions more seriously, particularly at the bank’s troubled Corporate and Investment Bank, with headcount down 3%, but this kind of reduction looks homeopathic at a time when more radical surgery is needed.“
In attempts to save money, the lender is carrying out a series of cost-cutting drives including plans to axe 7,000 of the 97,000 global workforce.
Whilst Deutsche Bank has posted significant losses for the third quarter, Barclays ( (LON: BARC) had more promising results and posted £1.5 billion in profits for the three months to September 30.
“In spite of macroeconomic uncertainty and particularly concerns over Brexit, which weigh heavily on market sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays. We remain focused on generating improved returns and on distributing a greater proportion of excess capital to shareholders over time,” said Jes Staley, the chief executive.
Barclays is “100% prepared” for Brexit
Jes Staley, the lender’s chief executive, has said that Barclays (LON: BARC) is “100% prepared” for a hard Brexit.
Barclays profits were up to £1.5 billion in the three months to September 30, up from £1.1 billion in the same period a year previously.
The group has expanded the Irish subsidiary by 150-200 jobs, to make Ireland the lender’s main base to continue trade within the EU.
“At Barclays we are well on our way to being prepared for a hard Brexit,” Staley told Bloomberg TV.
“We have increased the size of the bank’s subsidiary in Ireland. We have filed all the necessary applications to relicence our branches. We are fully prepared to be 100% operational in case of a hard Brexit.”
Despite the confidence, Staley also said he would like to see the government negotiate on the Brexit deal.
“We have been prudent. We are pretty well positioned for a hard Brexit. However, like everyone else we would like to see a negotiated Brexit that will not harm the economy in the UK,” he said.
“In spite of macroeconomic uncertainty and particularly concerns over Brexit, which weigh heavily on market sentiment, 2018 is proving to be a year of delivery on our strategy at Barclays. We remain focused on generating improved returns and on distributing a greater proportion of excess capital to shareholders over time.”
Earlier this year, Staley faced controversy when he was ordered to pay a £1.1 million fine after he attempted to unmask a whistleblower.
Mark Steward, the FCA’s executive director, said: “Mr Staley breached the standard of care required and expected of a chief executive in a way that risked undermining confidence in Barclays’ whistleblowing procedures. Chief executives must act with a high degree of care and prudence at all times.”
“Whistleblowers play a vital role in exposing poor practice and misconduct in the financial services sector. It is critical that individuals are able to speak up anonymously and without fear of retaliation if they want to raise concerns.”
St James’s Place: £100 billion assets under management
Wealth management firm St James’s Place now manages £100 billion worth of assets as a result of increased client inflows. But, despite this, shares in the company dropped by a considerable amount this morning.
The company offers advice concerning pensions, investments and tax. Indeed, there has been a growing demand of its services. This is despite a difficult market backdrop which has caused various investors to pull funds from a variety of money management firms.
Despite the increase in its portfolio, St James’s Place has seen a slowdown in quarterly growth.
It is true that total funds under management rose to £100.6 billion, which was assisted by net inflows of £2.5 billion and investment gains of £1.5 billion. However, growth in gross flows into its investments and tax-free savings products slowed down over the period. Panmure Gordon analyst, Barrie Cornes, has said to clients: “There has been a very slight – 3% – miss to gross flows consensus, but we believe that this is in part due to the very tough comparator from last year combined with the state market – SJP isn’t immune.” Chief Executive of St James’s Place, Andrew Croft, underline the company’s positive performance given broad market instability caused by increasing geopolitical concerns. Equally, he noted it remained on track to meet its medium-term objectives. Andrew Croft, Chief Executive of St James’s Place, has commented: “There remains growing demand for high-quality financial advice, notwithstanding the current macro and geo-political uncertainty.” By the end of September, 22% of the firm’s funds under management were invested in U.S equities, with 19.5% in fixed income. Moreover, 18.7% were invested in UK equities. At 16:39 BST today, shares in St. James’s Place PLC (LON:STJ) were trading at -5.25%. At the beginning of August, we reported that St James’s Place gave investors a boost by increasing its dividend by 20%, following a strong first half performance.McDonald’s shares rise on strong sales
McDonald’s has reported a rise in global sales for the third quarter of 2018, sending shares up 3% on opening.
The fast-food chain saw a growth in sales in the UK, Australian and Japanese markets.
McDonald’s president and chief executive officer, Steve Easterbrook, said: “In addition to achieving 13 consecutive quarters of positive global comparable sales, we have made substantial progress modernising restaurants around the world, enhancing hospitality and elevating the experience for the millions of customers we serve every day.”
“We remain confident that our strategy will drive long-term, profitable growth,” he added.
Revenue surpassed analysts expectations of $5.32 billion, reaching $5.37 billion.
Sales with the fast-food giant’s own US markets increased by 2.4% in the three months to the end of September. This is the slowest pace of growth in six quarters.
McDonald’s has partnered with Uber Eats to increase profits and is working on plans to revitalize sales.
Neil Saunders, who is the managing director of GlobalData Retail, in a statement: “This is a price that they are willing to pay so long as they see results in the form of better sales and profits. However, now these benefits are coming through more slowly, many are starting to question the strategy.”
“In our opinion, the changes McDonald’s is making are right and will pay dividends over time. Indeed, a failure to change would be disastrous. However, the challenge is to ensure that sales growth comes through at a faster pace and that costs are moderated to counterbalance the investment,” he added.
This month saw employees from McDonald’s and UberEats go on strike and protest over a pay dispute.
Shares in the group (NYSE: MCD) are currently trading up 6.40% at 177,29 (1539GMT).