Credit card borrowing surges at fastest annual rate in 17 years

Natasha Doris
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Credit card borrowing surges at fastest annual rate in 17 years

Credit card borrowing surged at its fastest annual rate in 17 years, the Bank of England reported on Tuesday.

The Bank of England highlighted that consumers borrowed an extra £1.4 billion in consumer credit, with £700 million of new lending added on credit cards as the cost of living crisis continued to swallow consumer wallets whole.

“Brits borrowed another £1.4bn in April to help keep themselves afloat during the cost of living crisis,” said AJ Bell head of personal finance Laura Suter.

“It marks the third consecutive month where borrowing has been higher than £1bn. Another £700m was borrowed on credit cards in April, an 11.6% rise in consumer credit – its highest level in more than 16 years, since November 2005.”

The institution mentioned that large non-financial businesses’ borrowing from banks grew to £2.7 billion in April compared to £1.8 billion in March, alongside repayments from small and medium-sized businesses of £500 million in bank loans.

Private non-financial companies redeemed approximately £1.9 billion in net finance from capital markets.

The Bank added that the net flow of sterling money decreased to £1.5 billion in April from £24.4 billion in March, while households’ holdings of money saw net flows of £5.7 billion in April against £6.6 billion in March.

Meanwhile, the net flow of sterling lending to the private sector or companies decreased to minus £3.4 billion in April, compared to £21.1 billion month-on-month.

However, UK consumers were also saving at a higher level than before the pandemic, with £5.7 billion saved by households in April and £600 million with NS&I, representing a 15% growth against the pre-Covid-19 average.

“What the figures show is a divided nation, with many households still managing to save cash despite prices rising around them,” said Suter.

“It’s a far cry from the bumper savings the nation was making during lockdown, but with the prospect of tougher times ahead lots of households have tightened their belts and saved some cash in their emergency funds.”

Inflation is far beyond the Bank of England’s aim of 2%, with the figure currently at 9% and estimated to hit 10% in October. The cost of living looks set to rise, which will make saving even harder for struggling families and will most likely see the rate of credit card borrowing continue to climb.

Silverbullet Data widens pre-tax loss to £8.5m as 4D sales record slow start

Natasha Doris
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0
Silverbullet Data widens pre-tax loss to £8.5m as 4D sales record slow start

Silverbullet Data Services Group shares tumbled 28.5% to 100p in late afternoon trading on Wednesday, following a widened reported pre-tax loss of £8.5 million in FY 2020 compared to £5.2 million in FY 2021.

The group announced a gross profit climb to £2.7 million against £1.9 million in the previous year, alongside a revenue increase to £3.8 million from £2.7 million.

Silverbullet Data also noted a loss per share of 0.73p against 0.75p year-on-year, and did not issue a dividend payout for the period.

The company secured 26 new services clients across the year, including ITV, Venture Crowd and Edyn. It also consolidated its existing services clients due to additional contract wins with Channel 4, Heineken and Dolce & Gabbana.

The group confirmed progress in its 4D contextual outcomes engine, including the delivery of a YouTube video solution. However, 4D revenue saw a slower start than anticipated as a result of Google’s delay in phasing out its third party cookies by 12 months.

Silverbullet reported that it had completed a £4.5 million fundraise to drive 4D product sales growth and boost its balance sheet FY 2022.

“2021 was a transformational year for Silverbullet, with the completion of our IPO in June 2021. The Company has delivered strong performance in marketing services and is continuing to gain traction with our 4D offering,” said Silverbullet Data CEO Ian James.

“We are operating in a very exciting and relevant space. The value of 1st party data to clients and benefits of 4D, our contextual outcomes engine designed for a world without third-party cookies, gives us confidence that our prospects are very encouraging.

“Trading for 2022 has started well, with new customer wins and extensions of existing contracts, as well as the new joint venture with Making Science which will create new improved solutions for the privacy-first era. I look forward to the remainder of 2022 with optimism and we will be updating the market on progress in due course.”

Impax Asset Management shares fall 9.3% as green investments lose their lustre

Natasha Doris
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0
Impax Asset Management shares fall 9.3% as green investments lose their lustre

Impax Asset Management shares fell 9.3% to 735p in early afternoon trading on Wednesday, despite a reported revenue growth to £88.6 million in HY1 2021 compared to £60.6 million in HY1 2022.

Impax Asset Management announced a pre-tax profit jump to £32.7 million from £14.4 million year-on-year, along with an adjusted operating profit climb to £34 million against £20.7 million.

The investment group confirmed an increase in assets under management (AUM) to £38 billion from £30 billion, driven by net inflows of £2.5 billion which were reportedly well diversified by channel and geography.

However, net inflows were offset by a decline of £1.7 billion as a result of market movements, investment performance and the impact of foreign exchange.

“Impax has delivered a solid first half to its financial year, with revenue up 46% and adjusted operating profit up 64% on the comparable period in 2021,” said Impax Asset Management CEO Ian Simm.

“We have benefitted from net inflows of £2.5 billion that were well diversified both geographically and across a wide range of sales channels.”

“Our investment approach, with its careful attention to risk and resilience, continues to attract asset owners that are seeking to build robust portfolios with attractive returns, focused on the transition to a more sustainable economy.”

Going green loses its sheen

Following a strong performance in the first three months of the term, the sustainable investment group suffered after value-oriented stocks which Impax lacked exposure to, such as fossil fuel energy companies, took off on the Ukraine war.

Meanwhile, Impax noted declining returns on its Water, Sustainable Food and Climate Strategy sectors, which all lagged behind the MSCI All Country World Index by 5.5%, 5.7% and 9.4%, respectively.

Its Sustainability Lens strategies saw its US Large Cap strategy trail the S&P 500 by 2.5%, with the US Small Cap strategy falling behind the Russell 2000 Index by 0.2% and Global Opportunities trailing the ACWI by 4.8%.

Positive Outlook

Impax commented that it had a positive outlook for the coming period, despite geopolitical market volatility.

The company noted that it believed green and sustainable investment opportunities remained attractive for investors, with the heightened awareness around energy security after the Intergovernmental Panel on Climate Change reinforcing the drivers behind several of the markets in which Impax invests.

The investment group said its outlook was optimistic based on the emergence of green taxonomies by governments, sparking attractiveness for investments linked to a sustainable economy.

“Amid considerable market volatility surrounding recent geopolitical events, we continue to be pleased with the long-term performance of our investment strategies,” said Simm.

The company reported a diluted EPS climb to 21.5p against 11.8p, along with an interim dividend per share growth to 4.7p compared to 3.6p the year before.

Sovereign Metals kicks off major PFS drill program at Kasiya

Natasha Doris
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0
Sovereign Metals kicks off major PFS drill program at Kasiya

Sovereign Metals shares were up 3.8% to 32.2p in late morning trading on Wednesday, after the firm announced the start of its major pre-feasibility study (PFS) drill program at Kasiya.

Kasiya is the largest discovered rutile deposit in the world, and boasts a Mineral Resource Estimate (MRE) of 1.8 billion tonnes at 1.01% rutile, which confirmed the operation as a Tier one deposit and a potential significant source of low CO2 footprint natural rutile and natural graphite.

Sovereign Metals reported that its 1,200 metre drilling programme at Kasiya had commenced to upgrade higher-grade Mineral Resource areas to underpin conversion to Reserves, in line with its planned PFS.

Drill Programme

The programme is set to include deeper drilling to target extensions to Indicated zones at depth to the base of saprolite at 25 metres, from the current 14 metre average drill depth.

The schedule consists of a 10,000 metre aircore (AC) programme on a 200 metre by 200 metre grid to target Indicated classification, which is projected to convert to Probable Reserves as part of the PFS.

The company added that it was also commencing a core drilling programme across Inferred sections of the MRE, targeting nearer-surface, high grade sectors for conversation to Indicated and Measured resources.

Sovereign Metals further added that the expansion of the overall mineralised footprint via extensional and regional hand-auger drilling would continue with multiple drill teams, in a move to expand the overall mineralised footprint and record additional high-grade rutile zones.

The mining group said the low cost and low impact of the hand-auger drilling technique had proven an incredibly useful exploration tool in the initial delineation of the Kasiya project’s rutile and graphite MRE.

Scoping Study

Sovereign Metals mentioned that its updated Scoping Study with the incorporation of the current resource was scheduled for completion in the coming weeks, which is set to build on its initial Scoping Study announced in December 2021.

The updated Study will apparently incorporate the significant increase in the MRE tonnage as reported in April 2022, including the assessment of higher grade output, increased production rates and longer mine life.

Alien Metals ‘on track’ to begin Hancock iron ore production next year

Natasha Doris
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0
Alien Metals ‘on track’ to begin Hancock iron ore production next year

Alien Metals shares surged 22.3% to 0.8p in early morning trading on Wednesday, after the mining firm announced it was “on track” to begin iron ore production in Hancock next year.

Alien Metals confirmed the completion of its metallurgical test work programme and added that its flow sheet had been finalised, with the results highlighting the high-grade and low impurity nature of the Hancock resource.

The company reported that it was in advanced discussions with potential offtake partners as a result of the ratio of fines to lumps, and low impurities of direct shipping ore (DSO) material at the project.

Alien Metals mentioned that the discussions had led to the delivery of marketing samples.

The mining firm said it believed there was significant potential to grow the size of its DSO grade resource at its Hancock project, with three high grade targets at least 1,400km long on ridge F, and two targets on ridge G of 900m and 600m.

It delivered an initial maiden JORC compliant inferred Mineral Resource Estimate at Hancock of 10.4mt at 60.4% iron on 22 September 2021.

Alien Metals further drew attention to the 6.5km of additional ridges to test along the central and eastern regions of the resource.

The exploration group commented that it was in preliminary discussions with a selection of potential funding partners, with a range of funding options currently under consideration, including equity and debt to ensure optimum financing structure and minimal dilution.

The firm added that it had started engagement with key stakeholders over the development and mining stages, and that its key approvals and permitting for Hancock were advancing on schedule, with the oversight of Greenvalues consultants.

“The development aspects of the Hancock Iron Ore Project to be shovel ready for early 2023 are progressing very well,” said Alien Metals CEO and Technical Director Bill Brodie. 

“We are on track to have all the permitting in place, and will soon be in a position to commence mining next year.”

“Additionally, in-depth discussions with third party contractors and potential offtake partners to enable us to get into production in 2023 are continuing”.

Dr Martens revenues climb 22% to £908.3m, prices rise on inflation

Natasha Doris
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0
Dr Martens revenues climb 22% to £908.3m, prices rise on inflation

Dr Martens shares soared 26% to 272.3p in early morning trading on Wednesday, following a 22% climb in revenue to £908.3 million in FY 2022 compared to £773 million in FY 2021.

The company highlighted strong performance in the Americans and Europe, Africa and Middle-East (EMEA) as its core revenue drivers, with reported revenues increasing 29% and 19%, respectively.

However, Dr Martens mentioned a slight dip in its Asia-Pacific market of 10%, representing £127.1 million, as a result of Covid-19 restrictions.

The fashion company reported an EBITDA climb of 18% to £263 million against £222.9 million, alongside a post-tax profits jump of 422% to £181.2 million from £34.7 million the last year.

The group noted a gross margin increase of 2.8 points to 63.7% on the back of climbing direct-to-consumer (DTC) sales, alongside an EBITDA margin of 29%.

The firm also noted a 101% rise in cash to £228 million compared to £113.6 million.

“Today’s strong results have been driven by our proven DTC-first strategy and continue to build upon our track record of volume-led growth,” said Dr Martens CEO Kenny Wilson.

“When we listed, we committed to deliver high-teens revenue growth, and today we are pleased to report 22% constant currency growth and EBITDA ahead of market expectations.”

“Our results were achieved against unprecedented Covid-19 disruption in our supply chain, which our teams navigated with flexibility and dedication.”

Guidance for 2023

Dr Martens added 24 news stores to its portfolio in FY 2022, and confirmed increased FY 2023 store opening guidance spurred on by accelerated US store rollout.

The group said it projected high mid-teens revenue growth, with price increases on products set to drive income higher despite inflation, with no change to volume growth.

The company added that its factory prices had been locked in for the coming year, with a 6% year-on-year climb and good visibility over other operating cost lines.

Dr Martens commented that its wholesale order book already had 85% of its confirmed FY 2023 expectation, alongside DTC trading which has fallen in line with expectations so far.

The firm mentioned that its medium-term guidance remained unaltered, with an expected EBITDA margin of 30% in the medium term, with across the board potential to expand in the long-term.

“We have a unique, iconic brand and thousands of passionate people globally, who act as brand custodians every day. I would like to thank each and every one of them for their hard work – these results are a testament to them,” said Wilson.

Dr Martens confirmed an EPS increase of 21% to 17.4p against 14.4p, and reintroduced its dividend payouts with a 5.5p dividend per share.

Possible bid for PCF

Andrew Hore
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Possible bid for PCF

Bank and finance provider PCF Group (LON: PCF) is in discussions with Castle Trust Capital, a bank that received a banking licence even more recently, concerning a potential share offer for the company.
Existing PCF shareholders are likely to have a small minority investment in the enlarged group if the bid goes ahead.
PCF owns PCF Bank and provides asset finance for small businesses, consumer motor finance, broadcast equipment finance and property bridging loans.
PCF has finally published its figures for the year to September 2021, which show small underlying profit following a loss in the pr...

XP Factory revenues soar £163% as demand grows post-Covid

Natasha Doris
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0
XP Factory revenues soar £163% as demand grows post-Covid

XP Factory shares were up 8.2% to 26.2p in late afternoon trading on Tuesday, following the company’s reported 163% revenue growth to £7 million in FY 2021 against £2.7 million in FY 2020.

The escape room firm announced an adjusted EBITDA of £2.7 million from a loss of £1.4 million last year, alongside a pre-IFRS 16 adjusted EBITDA of £500,000 for the six months to 31 December 2021 compared to a loss of £900,000, representing the group’s achievement of critical mass.

XP Factory also narrowed its group operating loss to £500,000 against a loss of £6.4 million in the previous year, helped by strong H2 trading and £2.6 million in research and development credits.

The group reported £16.1 million net of expenses raised through an equity placing and open offer to fund its acquisition of Boom Bottle Bar in November 2021, with cash at the end of 2021 at £8.2 million from £2.7 million in 2020, and £6.9 million on 30 April 2022.

“2021 was an important year in our journey. It marked the inflexion point at which we delivered sufficient critical mass to become profitable and was the year where we best set ourselves up to become a key player in the leisure space with the acquisition of Boom,” said XP Factory CEO Richard Harpham.

“With the Escape Room category becoming much more a part of the mainstream consumer psyche, and with competitive socialising being such a fast growing sub-sector within the leisure market, we feel that XP Factory is perfectly positioned through its operating brands Escape Hunt and Boom respectively.”

“With such a well-developed pipeline of sites, such encouraging demonstrable unit economics in both brands, and such a well-positioned business in terms of customer demand, we have reason to be highly optimistic about the future for XP Factory.”

FTSE 100 gains on stronger commodities and Unilever activist investor action

Natasha Doris
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0
FTSE 100 gains on stronger commodities and Unilever activist investor action

The FTSE 100 was up on Tuesday after the EU announced a ban on the bulk of Russian oil, and the Netherlands’ supply of Russian gas was cut off after the country refused to pay for supplies in Roubles.

Mining firms rose higher as easing Covid-19 restrictions in China saw the reopening of economic hubs and an increase in commodities demand.

Anglo American shares gained 1.6% to 3,914p, Antofagasta saw an uptick of 1.7% to 1,545p, Rio Tinto increased 1.5% to 5,825p and Glencore rose 0.7% to 530.3p.

Meanwhile, the price of oil climbed higher beyond the $120 mark, with Brent Crude at $123 per barrel as Russia’s spear-rattling drove scarcity fears across Europe.

Shell shares increased 1.2% to 2,403p and BP shares rose 1.3% to 439.3p as a result of the rising oil prices.

Unilever soared over 8% following its decision to give Trian Fund Management CEO and billionaire activist Nelson Peltz a seat on its board. Trian-managed funds currently have a 1.5% stake in Unilever, amounting to 37.4 million shares.

“We have held extensive and constructive discussions with [Nelson] and the Trian team and believe that Nelson’s experience in the global consumer goods industry will be of value to Unilever as we continue to drive the performance of our business,” said Unilever Chair Nils Andersen.

Mould commented: “Unilever has given in to the pressure and handed activist investor Nelson Peltz a seat on its board.”

“The consumer goods firm has been struggling in the wake of the failed takeover of GSK Consumer Health and investors have welcomed the move warmly.”

GSK shares were up 0.2% to 1,732p on the report that it had acquired US biopharmaceutical group Affinivax for up to $3.3 billion in a move to expand its vaccines pipeline going forward in 2022.

“The proposed acquisition further strengthens our vaccines R&D pipeline, provides access to a new, potentially disruptive technology, and broadens GSK’s existing scientific footprint in the Boston area,” said GSK Chief Scientific Officer Hal Barron.

B&M shares tumbled 11.2% to 406.9p on the back of poor FY 2022 results, with a 2.7% decrease in total group revenues to £4.6 billion compared to £4.8 billion the last year, and warnings over inflationary pressures on the retailer’s FY 2023 profits.

The announcement of CFO Alex Russo as the new CEO did little to calm investor nerves as the stock dropped.

“The retail industry is facing inflationary pressures whilst our customers are having to cope with a significant increase in the cost of living, making spending behaviour in the year ahead difficult to predict,” said departing CEO Simon Arora.

B&M commented that it aimed to drive customer growth using its discount offerings as the cost of living continues to rain down blows on retail groups in FY 2022-2023.

“Longer term there looks a decent chance B&M can emerge from the current cost of living crisis in better shape than it entered it,” said Mould.”

“The company enjoys the kind of scale, allied with a strong balance sheet, which should help see it through tough times and come out the other side with its market position bolstered.”

Mortgage approvals fall to 66,000 in April as interest rates spike

Natasha Doris
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5
Mortgage approvals fall to 66,000 in April as interest rates spike

A report from the Bank of England issued today revealed that net borrowing of mortgage debt by individuals fell to £4.1 billion in April compared to £6.4 billion in March this year.

The institution reported that mortgage approvals for house purchases also dropped to 66,000 against 69,500 month-on-month, indicating the concerning trend that borrowing is primed to fall further going forward.

The Bank commented that both measures were slightly below their 12-month pre-pandemic averages to February 2020.

The surprising 36% slide has been linked to rising 9% inflation and the crushing cost of living as macroeconomic volatility wrecks havoc on the markets.

“This data could be taken as the latest sign that nervousness over inflation and household finances is starting to drag on what has been an overheated sellers’ property market,” said Bestinvest financial analyst Adrian Lowery.

“Online portal Zoopla revealed this week that one in 20 listed properties reduced their asking price by 5% or more in April to mid-May, more than in previous months.”

“It added that buyer demand remains high but there are now signs that the market is softening, and price growth is set to slow. And it estimated that the average price reduction across the UK is 9%.”

In addition, the Bank of England’s interest rate hike to 1% has resulted in a knock-on effect on mortgage rates, with data revealing a nine basis-point rise to 1.82% on the effective interest rate for newly-drawn mortgages.

“Further hikes to the Bank Rate are expected in coming months as the Bank of England seeks to rein in soaring inflation,” said Lowery.

“And fears of further mortgage rate rises have been pushing more and more homebuyers and remortgagers to look for longer-term fixed-rate mortgages.”

Demand for 10-year mortgage deals

There has been a notable surge in 10-year deals, with comparison site MoneySupermarket reporting a jump in searches for 10-year mortgages to 14.2% from 2.9% of all customer results.

“The lure of the 10-year fix is also strong because they are not much more expensive than the five: 3.21% compared with 3.17%, according to data analyst Moneyfacts,” said Lowery.

However, the concern should be highlighted that a 10-year deal risks locking a home owner into a mortgage that prevents the customer from shopping around or using a mortgage broker for additional borrowing.

“While locking in at current low rates makes very good sense for many borrowers, care must be taken to get the right home loan for your circumstances,” said Lowery.

“If you are intending to move in the coming few years, your fixed-rate mortgage may well be ‘portable’ to your new property, but you will be restricted to your current lender for any extra borrowing you might need if you are upsizing.”

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