Grafton profits fall on weaker post-Covid demand and cost of living crisis

Natasha Doris
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0
Grafton profits fall on weaker post-Covid demand and cost of living crisis

Grafton shares fell 2.3% to 707.2p in early morning trading on Thursday after the firm reported a 4.4% adjusted operating profit drop to £151.1 million in HY1 2022 compared to £158 million in the previous year.

The company announced a revenue growth of 12.2% to £1.1 billion against £1 billion and a 7% slide in adjusted operating profit before property profit to £132.6 million against £142.6 million, alongside a 2.4% decline in adjusted operating profit margin before property profit to 11.5% from 13.9%.

Grafton confirmed a 3.6% adjusted pre-tax profit fall to £143.4 million compared to £148.8 million, and a 7.9% statutory pre-tax drop to £132.4 million against £142.9 million.

The firm noted a strong comparative year in 2021, which saw a surge in customers purchasing DIY and gardening products over lockdown, along with rising building materials costs and a weaker outlook in HY1 2022 as the cost of living crisis looked primed to dampen consumer demand.

The group highlighted net cash of £520.5 million at 30 June 2022 before IFRS 16 lease liabilities.

Grafton said it expected a FY adjusted profit in line with current analyst expectations.

The firm noted an adjusted EPS decrease of 1.9% to 49.5p from 50.5p the year before and a basic EPS slide of 5.5% to 45.8p compared to 48.5p.

“Our first half performance saw a significant normalisation of activity levels following exceptional pandemic related spikes in trading in the first half of 2021.  While inflation remains a continuing feature in our markets, we saw improved supply chain consistency as trading patterns normalised and building materials shortages eased,” said Grafton CEO Gavin Slark.

“Though potential macro-economic headwinds remain, Grafton is uniquely placed to outperform given its leading market positions, geographic diversity and the relative resilience of its core repair, maintenance and improvement market.”

“Given the strength of our brands and their market positions together with an exceptionally strong financial position, our focus remains on delivering a strong financial outcome for the year despite the uncertainties in our markets.”

Grafton hiked its dividend 8.8% to 9.25p per share against 8.50p year-on-year.

Hays fees climb 32%, breaks records across 24 countries

Natasha Doris
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0
Hays fees climb 32%, breaks records across 24 countries

Hays shares rose 4.3% to 119.7p in early morning trading on Thursday, following a reported 32% climb in net fees to £1.1 billion in HY1 2022 against £918.1 million in HY1 2021.

Hays confirmed record fee performance across 24 countries, linked to strong client and candidate confidence, management actions and continued improvement in fee margins.

Fees rose 24% in Australia and New Zealand, a record 34% in Germany, 31% in the UK and Ireland and 36% in the rest of the world.

The recruitment company announced an operating profit surge of 121% to £210.1 million compared to £95.1 million the last year.

Hays mentioned a cash generated by operations growth of 40% to £182.9 million from £130.8 million.

“Performance in all regions was excellent. Our actions to capitalise on long-term structural opportunities, acute skill shortages and strong markets, supported by our ability to increase fee margins and the benefits of wage inflation, delivered record Group fees, 24 country records and 128% operating profit growth. Germany, our largest business, was the biggest absolute contributor to our profit growth, while the UK&I and RoW divisions delivered strong profit recoveries,” said Hays CEO Alistair Cox.

“With macroeconomic uncertainties increasing, we are closely monitoring our activity levels and KPIs, which remain broadly stable overall at strong levels. Our focus is now on leveraging the investments we have made and increasing our already strong consultant productivity.”

“We have a clear strategy to continually build market-leading positions in the most attractive structural growth markets, which are characterised by ongoing skill shortages. Our global network, financial strength and highly experienced management teams give me confidence that we can navigate current uncertainties and remain highly focused on delivering our long-term objectives.”

Meanwhile, the company also noted an increase in its share buyback programme to £75 million after adding an additional £18.2 million over the period.

Hays recommended a core dividend of 2.85p per share from 1.22p the year before, along with a 7.34p special dividend per share against 8.93p in HY1 2021.

CRH sales grow 14%, margins increase despite inflationary challenges

Natasha Doris
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0
CRH sales grow 14%, margins increase despite inflationary challenges

CRH shares climbed 4.3% to 3,267.5p in early morning trading on Thursday after the group announced a 14% sales growth to $14.9 billion in HY1 2022 against $13.1 billion the last year.

The company reported a 21% EBITDA rise to $2.2 billion, as a result of commercial and operational initiatives which offset cost inflation, alongside a 0.9% EBITDA margin increase to 14.7% despite inflationary challenges.

CRH confirmed $2.8 billion spent in acquisitions across the financial period, including the acquisition of Barrette Outdoor Living.

The company mentioned net debt of $4.3 billion at 30 June 2022, representing a $1.7 billion fall from its $6 billion debt in HY1 2021, linked to proceeds from the divestment of Building Envelope exceeding the HY1 acquisition spend.

CRH highlighted $6.8 billion of cash with sufficient liquidity to meet all maturing debt obligations for the coming 5.4 years.

CRH noted a basic EPS of $2.74 compared to $1 the year before.

The firm announced an anticipated FY EBITDA in the range of $5.5 billion, against $5 billion in the previous year, assuming normal weather patterns and no further major upsets in the macro-economic environment.

“CRH has delivered another strong performance with further growth in sales, EBITDA and margin despite a challenging and volatile cost environment,” said CRH CEO Albert Manifold.

“This performance reflects the continued execution of our integrated and sustainable solutions strategy.”

“Looking ahead, despite some continued cost headwinds, the strength of our balance sheet and resilience of our business leaves us well positioned to deliver superior value for all our stakeholders.”

CRH hiked its interim dividend 4% year-on-year to 24c for the HY1 2022 financial term.

Investing In Real Estate With Lottery Winnings

UK Investor Magazine
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7
Investing In Real Estate With Lottery Winnings

Every year staggering amounts of money are won in lotteries in the UK and worldwide. You can ask any lottery winner, and they will have a list of dreams they want to experience from having a considerable windfall. One thing they have in common is the dream of their money lasting forever. For that to happen, you must find a way to invest your money that is self-sustainable. This article will provide tips for investing a fortune so that if your windfall comes in, you will know how to make it last a lifetime.  

The real estate market in 2022

2022 and 2023 will be good years to invest in property in the UK and globally. You have many options. Whether you invest in residential property, commercial property, new construction, or rental properties, you stand to make a good return. When investing in real estate, there are various and sometimes complicated factors to consider.

It is not enough to buy a property based on its current value. The expected value is usually based on where the property is purchased. Before sinking your windfall into a property, hire a professional. Understanding how property grows in value, government regulations, and banking principles are essential. Only a skilled, educated, experienced realtor can help you build a successful real estate portfolio.

Credit: Frans Ruiter

Do you want do be a landlord?

For some lottery winners, the idea of being a landlord and all that it entails is a deterrent to property investment. The basic idea of investing in real estate is earning more money on a property than you paid for it. That can mean rental property. But, there are property management firms that can handle the day-to-day business of being a landlord. These firms collect the rent, arrange for repairs, pay taxes, and provide reports directly to you. 

Property investment options

  • Buy-To-Rent

As the title implies, buying a property to allow others to pay you a fee to occupy the property is “buying to rent.” In this situation, you purchase the property, and as the owner, you are responsible for the property’s maintenance, taxes, insurance, and mandatory upkeep. The tenant is responsible for paying the rent on time and keeping the property in good repair, clean, and unaltered. Good communication is key whether you deal with the tenant personally or through a management company. A tenant must inform the owner of any minor issues before they become costly, major repairs. This type of investment is handled through a lease or rental agreement that explains the conditions of the agreement and protects all parties involved. 

  • Real estate investment trusts

Real estate investment trusts (REIT) are a popular way to invest in property. REIT was first presented to the UK in 2007. Individual investors and companies can pool their funds to buy property assets when investing in a REIT. Each investor benefits equally when the property increases in value or when they collect rental income on the property. With this investment, a minimum of 75% of the net profit comes from rental earnings. This is an attractive option for inexperienced investors as the rent is usually predicted far into the future. 

Investors in real estate investment trusts are paid faster and earn substantially more than traditional property investments because 90% of the rental income is distributed to the investors as dividends. 

There are various kinds of properties to consider. They include the following:

  • Residential property
  • Commercial offices
  • Warehouses
  • Manufacturing facilities
  • Shopping areas (malls and mini-malls)
  • Free-standing shops

This is not an all-inclusive list. Consult with your financial advisor and realtor. Understanding the future profits of the location is critical. Neighborhoods, business districts, and shopping areas change as a city grows. E-commerce may make remote and inexpensive locations extremely profitable.

Source: Sandy Millar

Personal property fund

Some investors want the gain from real estate growth but do not want to work the market to profit.  An attractive option to that investor is becoming part of a  “personal property fund.” They combine their investment funds with other investors and shop for land. The investments are managed by a team, which is paid an investor’s fee and a portion of the profit. The return on this investment is reliable, but it is slow. Only investors willing to contribute a substantial amount of money and are willing to wait for it to grow will find success. 

Conclusion

Lottery winnings and other unexpected windfalls are usually “once-in-a-lifetime” events. Finding a way to let your money work for you is the only way to ensure you will maintain your wealth. Real estate is a good way to make that happen in the UK. Speak to a financial advisor today and be ready for the future. 

Schneider Electric considers AVEVA bid

Andrew Hore
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0
Schneider Electric considers AVEVA bid

Majority shareholder Schneider Electric is considering a bid for industrial software supplier AVEVA (LON: AVV), but no proposal has been made yet.  

There were previously bid talks in 2016 and that pushed the share price up to the equivalent of 1488p. In 2017, AVEVA and Schneider Electric decided to combine their industrial software businesses and the deal was completed in March 2018. As part of the deal there was a distribution of 1015p a share to AVEVA shareholders, which was a total payout of £650m. That is why Schneider Electric has a 58.9% stake in AVEVA.

The share price peaked at 4264p in February 2020, and it rose 598p to 2781p on the news of the bid approach. That values AVEVA at £8.4bn.

In the year to March 2022, annualised recurring revenues were £768.7m. Total revenues were £1.19bn and the pre-amortisation profit was £219.6m, up from £132.3m the previous year.

A transition to subscription and SaaS revenues will hold back reported revenues this year. Ceasing business in Russia will also hold back progress – it was 2% of revenues last year.

Schneider Electric says that whether or not it makes a bid it is committed to AVEVA and its future progress.

Greatland Gold raising £25m

Andrew Hore
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0
Greatland Gold raising £25m

Greatland Gold (LON: GGP) is raising £25m ($30m) at 8.2p a share following Newcrest Mining’s decision not to take up the option to buy a further 5% stake in the Havieron gold project in Western Australia. The fundraising was announced as the market was closing. There are also plans for an ASX-listing in the next 12 months.

Tribeca Investment Partners is putting up $13.8m of the new cash and it has agreed to provide $27.6m of additional funding to finance the development costs of Havieron. Bank debt is also being sought.

Greatland Gold retains a 30% stake in Havieron. The price for the 5% stake had been set at $60m and much of that cash was earmarked to pay off loans from Newcrest Mining.

Greatland Gold management said that it is happy to retain the larger stake, but the Newcrest Mining decision hit the share price, which was 10.4p before the announcement and had fallen to 9.3p ahead of the placing.

The money raised will help to fund Greatland’s share of further drilling and development expenses at Havieron. Greatland Gold will also spend some of the cash on other exploration activities in the Paterson region.

The latest mineral resource for the Havieron deposit announced by Newcrest is 5.5 million ounces of gold and 223,000 tonnes of copper. There has been further drilling success since the data used for this figure. The feasibility study should be published by the end of the year.

TUC advocates for £15 minimum wage as cost of living crisis bites

Natasha Doris
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0
TUC advocates for £15 minimum wage as cost of living crisis bites

The TUC announced its case for a £15 minimum wage for UK workers today, as the cost of living crisis continues to bite.

Soaring 10.1% inflation has sent the price of goods from food to fuel beyond the reach of many consumers across the country. The trade union advocated for higher wages to be “at the heart of the UK’s economic strategy.”

“We need to transition the economy to high-wage, high-skilled and secure jobs. And shift our economic model away from a reliance on low-paid and insecure work,” said the TUC.

The organisation added the minimum wage should be updated in October 2022 as opposed to its next scheduled update in April 2023.

The minimum wage was introduced in 1999 against opposition from businesses and the Conservative party, who argued the implementation would lead to job losses across the country.

However, there has been no evidence to back up the claim in the last two decades. The TUC argued a higher minimum wage would result in higher wages overall rather than a cut in employment availability.

The institution also advocated to raise the target for the minimum wage from 66% of the median wage by 2024 to 75%.

The TUC said since its introduction in 1999 as 47% of the median wage, the country has seen a trend of the minimum wage rising as a percentage of the median wage having a positive impact on wages, without evidence of job losses.

UK reports no fuel imports from Russia for first time on record

Natasha Doris
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0
UK reports no fuel imports from Russia for first time on record

The UK reported no fuel imports from Russia for the first time on record, according to the National Office of Statistics (ONS).

The historic announcement marked a fall of £499 million from the monthly average for the 12 months to February 2022, after the UK government said it would phase out all Russian oil imports by the end of 2022.

The government is set to follow its end to oil imports with an end to Russian liquified gas soon afterwards.

Russia was recorded as the UK’s largest refined oil supplier before the Ukraine invasion, accounting for 24.1% of all imports, alongside 5.9% of the UK’s crude oil imports and 4.9% for gas.

The country has since turned to alternative supplies of refined oil from Saudi Arabia, the Netherlands, Belgium and Kuwait over the past six months.

The organisation also confirmed imports of Russian goods declined to £33 million in June 2022, currently at the lowest level since records began in January 1997.

The ONS commented the fall was linked to economic sanctions against the country due to the war in Ukraine, however it said self-sanctioning by traders voluntarily sourcing alternatives to Russia goods might be an extra factor.

Imports of all commodities from Russia dropped against the monthly average for the 12 months to February 2022, and although exports to the country rose slightly in June 2022, their levels fell by 66.9% (£168 million) from the monthly average for the period.

The organisation mentioned exports of most commodities to Russia fell significantly by June this year, with a remarkable 91.3% plummet in machinery and transport equipment.

Chemicals were reportedly the only commodity with a higher level of exports to Russia, driven by a 61.8% increase in exports of medical and pharmaceutical products, which have not been sanctioned by the UK government.

Two Global Equity Income Funds to consider

Natasha Doris
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0
Two Global Equity Income Funds to consider

The current cost of living crisis threatens an economic downturn and potential market volatility. During such times, equity income funds can provide stability and compensate for waiting for markets to recover.

Guinness Global Equity Income and JPM Global Equity Income boast a selection of diversified equities, heavily weighted towards the US market and popular names with reliable shareholder distributions.

Guinness Global Equity Income

Guinness Global Equity is a $2.9 billion fund launched in 2010 with a current yield of 2.61%.

The fund has beat the IA Global Equity Income benchmark consistently over the last five years, with Guinness returning 77.3% against the benchmark 43.2% five years ago, 11.9% compared to 28.1% one year ago and 10.4% against 5.7% six months ago.

Guinness Global Equity Income portfolio

Guinness invests the majority of its fund in US equities at 58.3%, with 9.5% in UK equities, 7.2% in Swiss equities, 5.3% in French equities and the remainder in a selection of international equities and cash.

Its major holdings include Johnson & Johnson at 3.1%, Pepsico with 3% and Blackrock at 3%, displaying some heavy duty investments with reliable shareholder payments.

Johnson & Johnson hiked its dividend to $1.13 in Q3 2022 compared to $1.06, and has paid a consistent dividend each quarter for the last five years.

Pepsico reported a $1.15 dividend in its past quarter, alongside a $1.5 billion share buyback scheduled for FY 2022.

Blackrock recommended a $4.88 dividend per share in the three months to 30 June 2022, hiking its shareholder payout from $4.13 the year before.

JPM Global Equity Income

JPM Global Equity Income is a £401.1 million fund, and has a slightly lower, yet still attractive, yield of 2.24%.

It similarly invests in a wide array of global equities, with over 50% of its resources invested in US companies including a selection of well-known firms under its belt.

JPM Global Equity also uses the IA Global Equity Income benchmark, and has beat that benchmark consistently over the last five years, returning 81.5% against the IA Global Equity Income at 41.9% five years ago, 13.4% compared to 6.3% one year ago and 9.9% against 6% six months ago.

JPM Global Equity Income portfolio

The fund is weighted 58.5% in US equities, 18.5% in international equities and 6.5% Japanese equities, with the remainder of its investments split across a selection of international equities and 1.5% stake in Money Market.

JPM Global Equity shares several notable investments with Guinness, including AbbVie with a 2.2% stake and Johnson & Johnson at a 2.7% holding. JPM also has notable slices in companies including Microsoft at 4.8% and UnitedHealth at 2.1%.

Microsoft announced a dividend of 62p per share for its Q4 2022 from 56c in Q4 2021, and has hiked its dividend consistently quarter-on-quarter over the last 18 years.

UnitedHealth increased its dividend to $1.65 last quarter from $1.45 year-on-year, with the company’s payout rising reliably each year for the past 30 years.

AbbVie paid a $1.41 dividend per share declared in its recent quarter, marking an increase from $1.30 year-on-year.

Comparison

Guinness Global Equity Income and JPM Global Equity Income have a selection of similar investments, and yields at a rather close level to one another.

However, JPM Global Equity has beat the same IA Global Equity benchmark at a higher rate than Guinness, and despite similar weighting in US equities and even some shared company investments, JPM Global Equity has clearly exceeded the mark at a higher level than its competition, marking it out as the more rewarding investment in a time of market volatility.

essensys reports FY 2022 trading in line with management expectations

Natasha Doris
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0
essensys reports FY 2022 trading in line with management expectations

essensys shares rose 2.6% to 62.1p in early afternoon trading after the company announced trading in line with management expectations for FY 2022, including renewed multi-year contracts with its largest UK and US customers.

The company reported growth in client numbers, and expansion within its biggest customers which underpinned its revenues across the FY period.

essensys confirmed revenue and adjusted EBITDA in line with market expectations, with the group contracting business at year end expected to deliver £1.6 million in annual recurring revenue once live.

The firm also noted a robust pipeline of business opportunities going forward in FY 2023.

essensys closed FY 2022 with £24 million in cash, coming in ahead of management expectations. The company noted no debt, and confirmed it would use its strong cash balance to support its strategic plans.

“I am pleased to report good strategic progress against our long term plan despite continued challenging conditions,” said essensys CEO Mark Furness.

“It is clear that hybrid working arrangements are here to stay and that the structural drivers that are changing the commercial real estate industry – flexibility, digitalisation and sustainability are becoming ever more embedded; underpinning our long-term growth plans as the impact of the Covid-19 pandemic recedes.”

“We continue to invest in our product pipeline and we are seeing evidence that larger flexible workspace operators have resumed their expansion plans and traditional real estate operators are making positive steps to implement flexible workspace offerings following some rationalisation.”

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