Adsure Services, the specialist business assurance provider, is about to reward shareholders with a dividend that equates to 5% of the current share price.

Having been approved at yesterday’s AGM, a 0.99p final dividend will be paid to shareholders on the register as of the ex-dividend date 17th October.

With Adsure Services shares trading at a mid-price of 20.5p, the 0.99p final dividend alone will provide investors with a 5% yield.

The company paid an interim dividend of 0.49p so the total dividend for the full year was 1.48p, implying a historic yield of 7.2%.

In addition to rewarding shareholders with a very respectable dividend, Adsure Services is rich with growth potential as it expands into new markets and develops proprietary Generative AI technology.

The company posted a robust set of full year result in July revealing a 33% increase in EBITDA and 72% jump in profit before tax.

“Our outlook is promising, and we have excellent visibility over our revenue in the years to come due to the long-term nature of our contracts, which deliver us recurring revenues,” said Kevin Limn, CEO of Adsure Services.

“We look forward to expanding our relationships with existing customers by providing them with additional services, while welcoming new customers. We are identifying new markets and expect to execute plans to enter these markets in the upcoming period.”

The FTSE 100 was marginally higher on Wednesday as defensive names provided support for the index amid softness in commodity companies.

It would be a little dramatic to label today’s move into defensive companies a broad rotation into safe havens away from cyclicals, but there is definitely a mild risk off tone within the FTSE 100 index.

Utility and pharmaceutical companies were among those heading up the leaderboard while banks and mining companies were having a weaker session.

The defensive nature of the FTSE 100 meant it looked set to outperform peer indices amid a slowdown in the China rally and questions about growth and interest rates creeping back into the narrative.

“The wave of enthusiasm which greeted the kitchen sink stimulus from the People’s Bank of China is ebbing away, given the lack of detail for further fiscal stimulus. Banks in China might be ready to lend, with lower rates and deposit requirements on offer, but if the demand isn’t there, it’s still set to hold back an economic rebound,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Investors had been hoping for more details on an expected fiscal stimulus, hoping tax breaks would reinvigorate consumers and companies to borrow, but the vague plan put on the table yesterday by authorities disappointed.”

Mondi was the top riser after announcing an acquisition of a Western European-focused Schumacher Packaging which is thought to increase Mondi’s capacity by over 1 billion square meters.

“Mondi has wasted no time in expanding its empire since pulling out of the race to buy rival packaging firm DS Smith earlier this year,” said Russ Mould, investment director at AJ Bell.

“It’s struck a deal to buy European assets from Schumacher Packaging, boosting its capacity to make sustainable packaging which is increasingly in demand from customers taking a more environmental approach to their business. The deal put Mondi near the top of the FTSE 100 leaderboard.”

Investors may be rubbing their eyes today with Rio Tinto also announcing an acquisition in a welcome change to the onslaught of overseas entities swooping in on UK companies.

Rio Tinto is bolstering its exposure to lithium through the acquisition of Arcadium Lithium in a $6.7bn deal.

“This is a classic attempt to buy the dip for Rio, snapping up some high-quality Lithium assets when spot prices are around 80% down on their highs,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown

“It’s a good time to shop for counter-cyclical assets, and this deal helps propel Rio’s lithium portfolio to new heights, with it already having exposure through its Rincon and Jadar projects. This so-called white gold, a key component in the energy transition with uses in areas like electric vehicles, is the material that differentiates Rio from key rivals like BHP.”

The Trading Update issued by the Greencore Group (LON:GNC) yesterday showed continued strong momentum in the convenience foods maker’s final quarter of its year. 

As well as upping its market guidance, it was positive enough in its content to see its shares close up nearly 9% better at 196p. 

And I believe that there is even more upside to go for. 

The Business 

As one of the leading manufacturers of convenience foods in the UK, it supplies all of the major supermarkets in the UK, as well as supplying convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.  

The Dublin-based Greencore Group has strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings. 

CEO Dalton Philips stated that: 

“The Greencore team delivered an outstanding performance with our FY24 results now expected to exceed current market expectations.  

Providing high-quality, fresh and healthy food to our customers every day is at the heart of what we do.  

As we enter the new financial year, our focus remains on making really great food, rebuilding our profitability, and positioning Greencore to be the UK’s leading convenience foods manufacturer.  

We’ll share more detail at our FY24 results in early December and will use our Capital Markets Day in early 2025 (5^th February) to outline our medium-term growth strategy.” 

The Trading Update 

Ahead of publishing its Final Results on Tuesday 3^rd December, the group stated that its like-for-like revenue growth for Q4 was up 3.7% year-on-year driving the year’s revenue growth up 3.4%.  

The group guided the market that it expects to report FY24 revenue of around £1.8bn.  

“Q4 LFL volume performance was encouraging given some of the seasonal factors encountered, with almost all categories experiencing some LFL volume growth. 

Profit conversion during Q4 was ahead of our expectation and the Group now anticipates FY24 Adjusted Operating Profit will be ahead of current market expectations and in a range of £95m-£97m. 

This was as a result of continued strong focus on improving returns across our portfolio, other commercial initiatives and enhancing operational efficiency for key areas, such as labour and waste, across our network.” 

Analyst Views 

Sector analysts Clive Black and Darren Shirley, at Shore Capital Markets, raised their estimates on the group, by 5% for the 2024 year and by 6% for the current year. 

They state that they are:  

“most excited by what management may speak to the medium-term direction of the Group; with the change programme costs in tow.  

Ongoing, such delivery implies further earnings progress, a new dividend policy to come and maybe some ideas to build the business too.  

There could be a lot to like, which should also support and maybe further expand its rating.  

Pleasing stuff.” 

Their estimates for the end-September 2024 year are now for revenues of £1,799m (£1,914m), with adjusted pre-tax profits of £74.0m (£55.5m), lifting earnings to 11.6p (8.9p) and paying a 3.9p (nil) dividend for the year. 

For the current 2025 year they see £1,835m sales, £78.5m profits, 12.6p earnings and a 4.2p per share dividend. 

The duo has figures for 2026 showing £1,873m revenues, £85.0m profits, 13.7p earnings and a 4.6p dividend. 

In My View 

In late March this year, I considered that this group was a real generator of value, and at 112.90p, that its shares were under-rated and offered a bargain to new investors. 

In late July, I commented that this group’s shares rated as being a very attractive medium-term growth investment, they were then 180p. 

Now at 196p the group is valued at £886m, that is up over 73% in just over six months. 

The dimensions of this group really are very impressive. 

On the basis of the analyst estimates, I am predicting that they will soon be trading in the 200p/225p price range – possibly within the next six months, before breaking even higher in price. 

Rio Tinto is seeking to bolster its lithium portfolio with the acquisition of Arcadium Lithium in an all cash deal after a period of weakness Arcadium shares.

The $5.85 per share deal presents a 93% premium to Arcadium Lithium’s share price 4th October.

Arcadium has built an attractive vertically integrated lithium business with assets ranging from the Salar del Hombre Muerto lithium salt brine facility in Argentina to the Naraha facility in Japan that converts lithium carbonate feedstock into purified battery-grade lithium hydroxide.

Although some may see the deal as opportunistic, it is fascinating in as far as Rio Tinto is one of very few diversified miners to make big in roads into lithium.

“This is a classic attempt to buy the dip for Rio, snapping up some high-quality Lithium assets when spot prices are around 80% down on their highs. It’s a good time to shop for counter-cyclical assets, and this deal helps propel Rio’s lithium portfolio to new heights, with it already having exposure through its Rincon and Jadar projects,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“This so-called white gold, a key component in the energy transition with uses in areas like electric vehicles, is the material that differentiates Rio from key rivals like BHP. 

“The price will be scrutinised, at a touch under 20% of where Arcadium was trading when the company was formed in January, it’s not quite a bargain, and investors in the commodity world tend to take a dim view of M&A at the best of times. Arcadium is currently free cash flow negative, due to low prices and high investment in new projects, so Rio will have some work to do if it wants to turn this into an accretive buy – and that won’t happen immediately.”

The FTSE 100 dropped on Tuesday as investors trimmed their positions in mining companies as a China-induced rally in commodity companies paused for breath.

London’s leading index was down over 1% at the time of writing, with the lower end of the leaderboard dominated by mining companies and other China-focused companies.

“Beijing’s ‘whatever it takes’ economic stimulus programme continued to drive a strong rally in Chinese shares. Shanghai’s CSI 300 index jumped another 5.6% as trading resumed after a week-long holiday, with healthcare, technology and industrials leading the charge,” said Russ Mould, investment director at AJ Bell.

However, Mould continued to explain that while mainland Chinese stocks were in full-blow euphoria, there were doubts evident in Hong Kong indices, which were too much for UK investors to handle, and China-focused miners were dumped on Tuesday.

“The market wants firm details on fiscal stimulus which hasn’t been forthcoming. It explains why some cracks were starting to appear in the China euphoria, with Hong Kong’s Hang Seng index slipping back 7% as investors trimmed positions in consumer-facing companies, real estate and financials,” Mould said.

“You can tell some scepticism is already creeping in, given how the mining sector was firmly in the red on Tuesday. Metal producers have been keeping their fingers crossed for stronger demand from China following a miserable time for industrial commodity prices of late. However, the negative share price performance of Antofagasta, Rio Tinto and Anglo American would imply that China’s latest economic stimulus measures might not live up to the initial hype. Or it might simply be canny investors locking in some of the recent gains on the stocks just in case we see a broader pullback.”

Anglo American was down 5% while Antofagasta dropped 4.9%.

Vistry

Vistry was the FTSE 100’s top faller after the group issued a disappointing update on costs, which has rocked shares on Tuesday. Vistry shares were down 22% on the news it was lowering its profit forecasts due to the miscalculation of build costs at several of its development sites.

“Vistry announced its first major misstep this morning since changing its strategy away from traditional housebuilding. Its new Partnerships model focuses on teaming up with local authorities to provide affordable housing, which has seen the group buck the trend of a housing market slowdown in recent times,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“But it’s come to light that total costs at 9 of its roughly 300 developments have been understated by around 10%. That may not sound like much, but as a result, Vistry’s underlying pre-tax profit expectations have been wound back by £80mn, £30mn and £5mn for the current and following two years respectively. That marks a nearly 20% hit to what market forecasts had pencilled in for this year, and Vistry now expects underlying pre-tax profits of around £350mn for the full year.”

Imperial Brands share were higher on Tuesday after the tobacco and tobacco alternative group demonstrated it is still a reliable source of income for investors. 

Despite a broad decline in the number of smokers in the western world, Imperial Brands is managing to pivot and realign its business to maintain very attractive shareholder distributions.

Investors will also be pleased to see Imperial Brands can offset the impact of lower combustibles volumes with higher prices.

The company has prepared for a rapid reduction in the number of people who smoke traditional cigarettes by building a presence in alternatives such as vapes. 

Traditional cigarettes still make up a large proportion of the group’s revenues, but a 20-30%% forecast increase in the sales of new-generation products shows where the business is going. 

“Imperial Brands is managing to drive growth not only in its fledgling next generation brands, but also in ‘legacy’ tobacco products which still make up the lion’s share of the business,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“In aggregate, tobacco volume pressures have eased across the company’s focus markets, and despite slowing price hikes for the pleasure of lighting up, pricing has been strong. However, market share declines in Germany and the UK remain a source of concern. 

“In Next Generation Products, net revenue growth is expected to land between 20-30%, suggesting a significant acceleration over the second half, boosted by a swathe of new product launches in vapes, non-tobacco options and oral pouches.

“Imperial’s execution and narrowed focus on core markets are helping it keep organic growth moving when larger rivals have been going in reverse. It’s confident of meeting expectations for the year just ended, with underlying operating profit growth firmly in the mid-single digit range.”