The Great British Sauce Company releases more equity
The Croydon based sauce company has released more equity following discussions with key investors.
The details of the 40% increase in the equity offered were detailed in a note on the Crowdcube platform. The equity release shows that potential investors felt the Great British Sauce Company were overvaluing themselves in the initial valuation.
The recent change in equity now values the business at £1 million with a price-to-earnings ratio of 13.47 using 2018 estimates from their financial snapshot.
This valuation may still seem a little rich for some investors given that Premier Foods, who own a number of established household brands, are valued at only PEe 5.12 based on next year’s earnings.
That said, the potential for growth is significant and their revenue projections are strong. There is little debt in the business which is comprised of a £18,000 loan from the directors.
The background of the directors bodes well for the company, a solid mix of food production and marketing provides strength in the key areas this company needs to be successful.
www.gbsauce.com
Greek banks open after three weeks of closure
Banks in Greece are reopening today after three weeks of closure, as the government initiates repayment of its loans to the ECB and IMF.
Capital controls are still in place however, with the daily withdrawal limit of 60 euros being raised to a weekly one of 420 euros. Foreign transfers are still banned, and cheques still cannot be cashed. Security has been stepped up at branches and opening hours extended to accommodate for the large numbers of customers trying to use services.
Greece has begun making a €4.2bn payment due to the European Central Bank today, as well as €2.05bn due to the International Monetary Fund.
Mina Andreeva, a spokeswoman at the European Commission, confirmed Monday that the 7.16 billion-euro three-month loan has been sent to Athens so it can repay the ECB and also to clear arrears with the International Monetary Fund.
Andreeva said she was confident Greece will make the payments “in the course of today.”
The stock market in Greece will remain closed. Cash is something the Greeks will be needing from Monday, as new taxes come into effect; VAT is set to rise from by 10%, from 13% to 23%.Is the era of banker bashing over?
The Tory government were instrumental in the creation of ‘banker bashing’, mainly as a political instrument to attack the opposition Labour party who were in charge during the global economic meltdown.
Although the financial crisis wasn’t directly the fault of the Labour government – it was more the creative US bankers who were responsible, failing to keep a lid on the CDS market – the concept of banker bashing took hold and became a popular subject used by the main stream media, who played on the public’s lack of understanding of why they were in a recession.
Banker bashing began shortly after the 2007-2008 financial crisis and reached its peak when the former boss of RBS, Fred ‘The Shred’ Goodwin, was stripped of his knighthood on the recommendation of the government.
Fred the Shred oversaw RBS during the financial crisis that led to the bank having to be bailed after it purchased Dutch firm ABN Amro in the midst of the turmoil.
Increased regulations and watchdog investigations threw up various scandals and poor practise by the banks such as PPI, LIBOR manipulation and FX rigging, which led to years of banker bashing by the government and media.
As these cases drew to close the media diverted their attention; but after recent revelations of HSBC’s Swiss banking activities and the facilitation of tax avoidance by high profile individuals, banker bashing has become a popular pastime of politicians and journalists once more.
After the scandal was uncovered HSBC bore the brunt of the media’s attack; they hadn’t had the chance to publish a good old banker bashing story for a while. The timing of the scandal was also to the detriment of HSBC, as the UK was preparing for a general election and political point scoring was rife.
Since then, the central point of banker bashing has been not so much the rhetoric of politicians or journalists tapping into the public’s disgust of the rich, but more the policies of George Osborne and the Tory government who have begun to soften their stance on the UK’s banking giants.
UK listed banks, growing weary of constant changes to levies, new regulations and political pressure, were in danger of losing their competitiveness and some were considering quitting the UK altogether.
Both HSBC and Standard Chartered had threatened to shift their headquarters from London if bank levies stayed their course.
If they were to exit London, it would be a major dent to the City of London and its reputation as a major global financial centre, so in the emergency summer budget, George Osborne took the opportunity to announce a gradual cut to the banking levy to be replaced by an 8% surcharge on banking profits.
The move was interpreted as a retraction of previous attempts at punishing the banks for their misbehaviour, as well as an effort to show the banks that they really were a valued component of the economy.
The loss of major banks from the City of London would be catastrophic to the UK economy, and that realisation by the government is likely to be the foundation for a new approach towards the UK’s main channel of business lending.
As George Osborne tiptoes away from the punitive engagement with banks, the banks are taking his retreat as a signal to begin shifting attention back to making money as opposed to fretting over regulations.
Barclays are showing signs of turning their backs on the utility banking concept that focusses on retail banking and again returning to businesses that yield a higher profit.The recent sacking of CEO Anthony Jenkins was partly down to his failed cost cutting campaign, but mainly due to his lack of investment banking expertise, an area of traditionally higher profits.
Barclays and the rest of London’s listed banks are likely to adopt revenue generation activities at a higher rate, without the level of attention they may have received two years ago.
Many will argue that the recent removal of FCA Boss Martin Wheatley further demonstrates that George Osborne wants the banks back in business.
Martin Wheatley was brought in as an ‘enforcer’ of banker bashing; his job was to tear out the darker areas of the financial services industry, including overseeing the consumer focused PPI scandal and the LIBOR rigging investigation which highlighted serious misgivings in major banks. He did so successfully, however, in the process he reduced the risk taking capabilities of the banks; something that is integral to future economic growth.
As the banks lick their wounds from heavy fines and plan for future profit generation, banker bashing is beginning to fade; giving the UK’s major financial institutions space to focus on revenue generation and lending once more.
Huawei report 30% revenue rise
Chinese telecoms giant Huawei has reported a 30% rise in revenues for the first six months of the year.
This is an advance on last year, when the firm reported a 20% rise in revenue.
The company attributed the rise to solid smartphone sales. Huawei is the third biggest smartphone seller in China, behind Apple and Xiaomi, according to research firm IDC. In a statement on Monday, they announced that sales reached 175.9 billion yuan ($A38.6 billion) on an unaudited basis in the January-June period.
‘Huawei’s mid-range and high-end smartphones have made solid progress, helping us guarantee quality and sustainable growth in the consumer business,’ Chief Financial Officer Meng Wanzhou said.
“We are confident that we will maintain effective growth and steady and healthy development in all business segments in 2015.”
Gold prices fall to lowest level since 2010
The price of gold fell 4% to as low as $1,088.05 (£697) an ounce in Asian trade, its lowest price since March 2010, after China indicated that its gold reserves were at half the level expected.
The price of platinum also fell 5% to its weakest since the global financial crisis.
According to Gnanasekar Thiagarajan, director of Commtrendz Risk Management, the drop in price is a sign of a large fund selling its gold holdings: “This kind of sharp drop during early Asian hours is a strong indication that a big fund is selling their holdings of gold.”
Investors generally buy gold during times of uncertainty, but the bullion’s safe-haven status has also taken a fresh knock from mounting expectations of a US rate hike.
“The market looks very technically weak and the biggest buyer of all, China, is now selling gold as opposed to buying it on price dips. That’s a recipe for weaker prices,” said Victor Thianpiriya, an analyst at ANZ Bank in Singapore.
Travelodge seek advice on sale
The owners of Travelodge have reportedly appoint Deutsche Bank to advise them on a £1 billion sale or stock market flotation of the hotel chain.
Investment bank Goldman Sachs and hedge funds GoldenTree Asset Management and Avenue Capital have owned Travelodge since rescuing the business in 2012, when it had £500m in debts.
This morning, the hotel chain reported an 18% rise in half-year revenues to £261m after the completion of an £100 million investment programme. They also saw a 63.5% surge in underlying profits to £66.2m in 2014, with revenues up 14.9% to £497.2m.
Travelodge chief executive Peter Gowers told BBC Radio 4’s Today programme the hotel chain’s owners were “not natural long-term holders” of the business, pointing out that when they took over the company in 2012 they restructured its debts and invested in the business to get it back on track.
AVEVA Group up 30% after aquisition agreement with Schneider
AVEVA Group are one of the biggest movers this morning, after it was announced that a non-binding agreement had been reached on the key terms and conditions of an acquisition of selected Schneider Electric industrial software assets.
If the plans go ahead, AVEVA will acquire Schneider Electric on a debt-free cash-free basis and receive from Schneider Electric upon completion £550 million for consideration of new AVEVA shares to be issued to Schneider Electric. The Transaction will be classified as a reverse takeover of AVEVA under the Listing Rules of the UK Listing Authority.
Commenting on the Transaction, Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric said:
“Working on a combination of AVEVA and selected Schneider Electric industrial software assets represents a promising opportunity for the stakeholders of both companies. The combination will create a global leader in industrial software, with a unique portfolio of asset management solutions from design & build to operations and will address customers’ requirements along the full asset life cycle in key industrial and infrastructure markets. It will also create the right environment for the software teams to develop aggressively their business, while benefiting from the multiple commercial access of Schneider around the world.
We believe that through increased scale, complementary footprint and joint R&D capabilities, the transaction will generate synergies that will benefit customers and shareholders alike.”
AVEVA have been the world’s leading engineering software provider to the plant, power and marine industries for over 45 years. Schneider Electric SE are a European multinational corporation that specializes in electricity distribution, automation management and produces installation components for energy management.
Varoufakis condemns Greek bailout package, says reforms are bound to fail
In an interview with the BBC, former Greek Finance Minister Varoufakis said the latest Greek deal will “go down in history as the greatest disaster of macroeconomic management ever”.
Varoufakis made a surprise departure from the Syriza government following the ‘No’ victory in the referendum on whether to accept harsh austerity measures.
Many of these economy destroying reforms were accepted a few days later in what many see as a complete capitulation by the Greek PM.
Varoufakis, the game theory expert, has been vocal in his continued distrust of the so-called ‘Troika’ since his departure. His latest comments are echoed by some of his recent replacements, some of whom are showing the first signs that the latest deal may not be as watertight as some would hope.
“Our aim is to negotiate hard for the terms of the agreement, not just to seal it, but on how it will be implemented. There are many vague terms in the text,” said newly-appointed Labour Minister George Katrougalos.
Greek banks have been closed for a number of weeks but are set to reopen on Monday after being order to do so by the government.
It will be a tense time for the whole of Europe, if Greeks continue to pull their money from the banks as they had been prior to capital controls, the last three weeks of talks, counter offers and humiliation may have been for nothing.
Broker ratings: upgrades, downgrades & reiterations 17/7/15
Today’s Analyst Ratings
UBS: Ocado Neutral (Buy)Deutsche Bank:
SKF Hold (Buy)
Credit Suisse Hold(Buy)
Goldman Sachs:
Fresenius Neutral (Buy)
HSBC:
Terna Reduce (Hold)
Altice Buy (Hold)
Centrica Buy (Hold)
Investec:
ARM Holdings Buy (Hold)
JP Morgan Cazenove:
Millicom International
Cellular Overweight (Neutral)
CGG France Overweight (Underweight)
Jefferies:
Henderson Group Hold (Underperform)
Nomura:
Restaurant Group Neutral (Buy)
J.D. Whetherspoon Reduce (Neutral)
Chinese P2P lending increases with volatile markets
The online peer to peer lending sector is growing in China as much as anywhere else, however enticements to get involved may spell bad news for naive investors.
China’s alternative finance platforms are marketing themselves as a haven from the volatile stock market, encouraging people to invest in the midst of an unpredictable market; the Shanghai Composite Index surged 150% from July last year, before tumbling 25% last week. The government have recently put into place measures designed to stimulate and control the markets.
Online platform Jimubox.com sent a message to clients saying that equities are going “insane” and offering cash incentives for investment, describing the alternative market as a safe investment.
However, the peer-to-peer lending sector is very lightly regulated and the Yingcan Group estimates 1,500 of the platforms may go bankrupt or have difficulty paying dues, up from 275 in 2014. They estimate that an unprecedented 275,000 people put money into online lending firms in June, bringing the number of total users to 1.5 million.
Shao Yifei, a finance-industry worker in Shanghai, bought into the haven argument, cashing out of the equity market halfway through its crash on June 26 and investing 50,000 yuan in a Web finance product funding small companies.
“The online platform I use promises an annual return of as much as 9 percent,” said Shao. “I wasn’t confident the government would be able to stem the stock rout.”
However, these online lending platforms come with risks that may not be sufficiently advertised, tempting thousands of people into investments that will ultimately tank.
“The P2P industry is unhealthy and one can’t say investing in online lending products is safe,” said Ma Jun, chief researcher of Internet finance at Yingcan’s consulting unit. “Some irresponsible companies use high returns as a lure but don’t inform investors of the high risks. That forces some good firms to start providing similar risky products.”