This company reported mixed Interims to June 2021 yesterday, while revenues improved a not stellar 13.4% to £6.4m its recurring and repeat revenues represent an impressive 93.9% of total revenues. The gross profit (GP) marginally increased to an attractive 81%. CloudCall (Aim:Call) is a leading cloud-based communications software integrator with a Customer Relationship Management (CRM) platform. It brings all types of messaging, conversations, and contract data bases together from any devices which enables its clients to leverage their customer data for more effective commu...
Investors often ‘buy the rumour sell the fact’ when it comes to Apple shares
The Apple share price was subdued in response to CEO Tim Cook‘s launch of the iPhone 13, as well as updated versions of its watch and iPad.
The Apple share price even closed down by 0.96% yesterday after Cook divulged some of the new exclusive features of its latest release.
One of the key features of the iPhone 13 is its ability to film “portrait mode” videos with a depth of field effect.
It is only the Apple smart phone which allows users to edit this effect after filming.
This seems to be a common theme for Apple when it releases new products and “as much the result of the old formula of ‘buy on the rumour sell on the fact’ as anything else,” says AJ Bell investment director Russ Mould.
Announced
Product
Launched
6 Months Before
3 Months Before
3 Months After
6 Months After
12 Months After
09-Jan-07
iPhone 1
29-Jun-07
43.8%
30.2%
25.8%
63.7%
39.4%
09-Jun-08
iPhone 3G
11-Jul-08
(0.1%)
(5.9%)
(43.9%)
(47.5%)
(19.7%)
08-Jun-09
iPhone3GS
19-Jun-09
55.0%
37.3%
32.7%
40.1%
96.5%
07-Jun-10
iPhone 4
24-Jun-10
28.7%
17.3%
8.7%
20.3%
21.3%
04-Oct-11
iPhone 4S
14-Oct-11
23.7%
18.1%
(0.5%)
43.4%
49.2%
12-Sep-12
iPhone 5
21-Sep-12
16.2%
69.9%
(25.8%)
(35.3%)
(33.2%)
17-Sep-13
iPhone5GS
20-Sep-13
3.4%
12.1%
17.5%
13.1%
51.2%
09-Sep-14
iPhone 6
19-Sep-14
29.1%
6.7%
14.1%
8.1%
15.8%
09-Sep-15
iPhone 6S
25-Sep-15
(7.0%)
(10.0%)
(5.8%)
(7.9%)
(0.1%)
07-Sep-16
iPhone 7
16-Sep-16
9.1%
18.5%
(0.3%)
(8.3%)
51.3%
12-Sep-17
iPhone 8
22-Sep-17
18.1%
7.1%
7.9%
12.7%
38.5%
12-Sep-17
iPhone 8-plus
22-Sep-17
18.1%
7.1%
7.9%
12.7%
38.5%
12-Sep-17
iPhone X
03-Nov-17
8.9%
2.4%
11.4%
4.2%
37.5%
13-Sep-18
iPhoneXS, XSMax, XR
26-Oct-18
28.2%
19.0%
(22.6%)
(11.0%)
(3.4%)
10-Sep-19
iPhone 11
20-Sep-19
25.0%
14.8%
21.1%
31.7%
109.5%
13-Oct-20
iPhone 12
23-Oct-20
60.8%
30.0%
5.2%
8.1%
14-Sep-21
iPhone 13
24-Sep-21
22.4%
13.5%
AVERAGE
22.5%
16.9%
3.3%
9.3%
32.8%
However, a lot does ride on the latest iteration of the iPhone and shake-up of Apple’s product range.
“The firm continues to encounter anti-trust pressure from regulators regarding its App store – and its monster $2.4 trillion market capitalisation means that any slip or loss of earnings momentum could leave shareholders with a problem,” Mould said.
A forward price/earnings ratio of nearly 27 times prices in a lot of future growth – and analysts have pencilled in just 5% sales growth and 2% earnings per share growth for the year to September 2022.
“Hard to believe as it may be, this leaves Apple with something to prove, in terms of its ability to keep regulators sweet, persuade customers to upgrade to 5G mobile devices and shareholders that expected 70% surge in earnings per share in the year to September 2021 was not just a one-off, owing to the pandemic, lockdowns and a surge in working from home – sales growth in Mac computers and iPads showed marked signs of a slowdown in the last fiscal quarter, to June.”
Apple has already suffered four induced profit slides in the past decade
The first three were largely related to the iPhone’s product cycles and its functionality, price points and demand in China (the early stages of the pandemic contributed to the last one), according to Mould.
“The subsequent share price surge may mean that January 2020’s crunching profit warning is but a distant memory, but it does not mean it cannot happen again in the latest set of product features fail to capture consumers’ imaginations,” Mould said
Over 2,000 businesses created each day between April and June
More British businesses were set up between April and June than any Q2 in history, research has revealed.
From the beginning of April to the end of June this year, 190,639 firms were incorporated at Companies House, according to a study by tax app Ember.
This amounts to over 2,000 new businesses per day.
It is the first time ever that a Q2 has seen in excess of 190,000 companies created in the UK.
The previous high for Q2 was last year, when despite the damage caused by the pandemic, 176,115 businesses were formed in the period.
In total, 402,007 businesses have been created in the first six months of 2021, which is already close to surpassing the 440,638 new companies incorporated in the whole of 2011.
The calendar year of 2020 saw the number of new businesses totalling 768,777, an average of 192,194 per quarter, or 2,106 each day.
Commenting on the study, Ember co-founder Daniel Hogan said: “July of 2020 seems to have been the starting point for a new business boom in the UK – the third quarter of 2020 saw the highest number of business incorporations in British history. That has been followed by three more quarters of impressive growth, and it’s great to see so many new companies being created.”
The £11m campaign by the FCA will cut the number investing in high-risk assets
The FCA has set out a plan for 2021/22 to allow consumers to make “effective investment decisions”.
“We want to see a consumer investment market in which consumers can invest with confidence, understanding the risks they are taking and the regulatory protections provided,” the regulator said.
“We do not want to restrict consumers if they want to invest, but we do want them to be able to access and identify investments that suit their circumstances and attitude to risk.”
8.6m people have £10,000+ in investable assets and the FCA wants to reduce this by 20%.
The £11m campaign by the FCA will cut the number investing in high-risk assets.
This could equate to £9.8bn of additional returns for savers.
Long-term social and economic changes have made the consumer investment market more important than ever.
“Consumers are increasingly responsible for making complex decisions about their financial future, including whether and how they invest,” the FCA says.
“The regulator is taking a two-prong approach – on the one-hand trying to get more people to invest their money rather than leave it in cash and on the other trying to shield inexperienced investors from risky investments.”
“The FCA’s plan is to get almost two million more people to invest, as its research shows 8.6 million people currently have over £10,000 investable assets in cash and it wants to reduce that by 20%. If 1.7m people invested £10,000 in the stock market, that represents a £17bn influx of money to the investment market,” said Suter.
“The pandemic has boosted lots of people’s savings pots but most of it is idling in current accounts getting paltry returns, when in reality much of it could be invested. The issue is that lots of these people feel unable or ill-equipped to start investing. Anything the regulator can do to make taking that leap into the stock market for the first time easier and to allow providers to offer more hand-holding should be applauded.”
Alan Green joins the UK Investor Magazine Podcast for our regular instalment of UK equities and global markets.
We explore the impact and causes of the UK’s highest inflation reading in nine years and what it could mean for the Bank of England.
There is also results to digest from casual dining company Restaurant Group. The group owns Wagamamas which enjoyed a 21% increase in activity over the period but with shares up nearly 5x since their lows in 2020, we look at the viability of an entry at this point.
We also discuss Cadence Minerals and the latest updates from their portfolio of investments and assets.
The FTSE 100 barely flinched on Wednesday, adding a mere 0.068%, despite headline-grabbing inflation numbers.
“Surging UK inflation figures and more volatility in Asian shares didn’t upset the apple cart too much on Wednesday morning as the FTSE 100 started more or less flat,” says AJ Bell investment director Russ Mould.
However, there are still some serious concerns among investors over the state of the wider economy.
“Weakness among airlines and Burberry, whose fortunes are closely tied to China, reflected a shift in investors’ concerns from the risks of the economy overheating to the recovery being knocked off course.”
“This follows some weak Chinese economic data as it, like many countries across the world, wrestles with the more infectious Delta variant of Covid.
“Helping to keep the FTSE 100 afloat were some more stodgy defensive businesses such as catering giant Compass, consumer goods firm Reckitt Benckiser and tobacco maker Imperial Brands.”
FTSE 100 Top Movers
Imperial Brands (1.88%), Lloyds (1.81%) and BP (1.48%) have made the most gains out of the UK’s top 100 companies.
At the other end of the FTSE 100, Just Eat (-4.22%), Rolls-Royce (-2.62%) and IAG (-2.36%), make up the bottom three.
Darktrace (LON:DARK) has increased its forecasts for the financial year as its user base and revenue levels continue to grow.
The cybersecurity firm confirmed robust sales coming out of the financial period before, including a strong performance in June, as the company was operating close to the upper end of its expectations over recent weeks.
Darktrace is expecting its revenue to grow by between 35% and 37% this year, up from 29-32% before.
Adjusted underlying earnings (EBITDA) margin is anticipated to arrive at 2-5%.
“At our first full-year earnings, we are very pleased to report robust financial and operational performance, and strong growth, during the period,” chief executive Poppy Gustafsson said.
“In this new era of cyber-threat, Darktrace is helping organizations from every industry sector, including providers of critical national infrastructure, to protect their digital assets, and avoid the serious disruption that cyber-attacks can cause.”
Darktrace, a global leader in cyber security AI, delivers technology that protects over 5,600 customers worldwide from advanced threats, including ransomware and cloud and SaaS attacks.
The Restaurant Group’s trade was severely disrupted by lockdowns earlier in the year
The Restaurant Group has reported underwhelming results for H1, recording a statutory pre-tax loss of £58.8m.
The owner of Wagamama saw its sales fall by 4.5% to £216.8m when compared to the same time period in 2020.
The Restaurant Group saw a slight recovery in its EBITDA, which rose from a loss of £18.2m to a profit of £11.2m year-on-year.
The firm also confirmed its secured refinancing and recapitalisation, raising £500m from loans and a senior credit facility.
“Whilst there are some well documented sector challenges to navigate in the short-term, particularly around labour availability and supply chain, we believe the Group is well positioned for the long- term,” said Andy Hornby, Chief Executive Officer.
For the first six months of the year, trade was severely disrupted by restrictions on the hospitality industry, which was only able to do takeaways and deliveries for large periods.
Harry Barnick, Senior Analyst at Third Bridge, commented on the Restaurant Group’s results: “The casual dining sector has taken a Covid pummelling. Now as customers return the Restaurant Group is operating in a less competitive environment allowing for some breathing space during the recovery period.”
“That being said, we are hearing about aggressive expansion from smaller brands, such as Franca Manca, which could challenge The Restaurants Group’s dominant position in the market,” said Barnick.
“Given the reduction in operating costs during the pandemic, analysts will be hoping for improved margins post-Covid once trading normalises. This largely depends on how successful The Restaurant Group can be in reducing rental rates. However, testing labour and food shortages could drive up costs in the short-term which limits the margin upside potential.”
The rate has well exceeded the Bank of England’s target of 2%
Inflation increased to 3.2% in August, up from 2% in July, in what is the highest ever recorded increase according to the Office for National Statistics (ONS).
The consumer prices index (CPI) measure for last month was the highest it’s been since March 2012, although the ONS said much of the impact was likely only temporary.
The rate has again exceed the Bank of England’s target of 2%.
The ONS said the reason eating and drinking out was more expensive was because in August last year the Eat Out to Help Out Scheme was underway.
Additionally, businesses in the hospitality and tourism sectors benefitted from VAT discounts that were put in place to help some of the most severely impacted industries through the pandemic.
Jonathan Athow, deputy national statistician at the ONS, said: “August saw the largest rise in annual inflation month-on-month since the series was introduced almost a quarter of a century ago.
“However, much of this is likely to be temporary, as last year, restaurant and cafe prices fell substantially due to the Eat Out to Help Out scheme, while this year, prices rose.”
Martin Lawrence, director of investments at the Wesleyan Group, said: “Supply chain pressures have been one of the drivers behind this month’s spike in the rate of inflation to 3.2%, which is now well above the 0.7% rate recorded in January; however, the Bank of England still expects inflation to hit 4% by the end of the year.”
“Despite the headlines of wage growth, the climbing cost of living means that householders and savers are starting to feel the squeeze, which won’t be helped by the recently announced changes to National Insurance.”
“For those who have saved money during lockdown and are seeking to secure better returns on their savings, safeguarding their hard-earned cash is a must. With interest rates remaining at rock bottom, it’s essential that savers review all possible options to achieve real-term growth.”
Launching Equals Solutions is accelerating growth at foreign exchange and financial services provider Equals Group (LON: EQLS) and this is part of the increasing focus on B2B business with larger companies.
Equals Solutions is a multi-currency collection account that is connected to SWIFT and other UK networks. This is a B2B-focused service. One company can have multiple accounts for a single log-in.
The interims included £300,000 of revenues from Equals Solutions, which was launched in June, and during the third quarter they have already reached £1.2m.
Finance
Costs have been reduced and comb...
