Brexit: Prepare for a confrontation
No-deal preparations on both sides represent a predictable escalation in tensions
UK PM Theresa May has survived the confidence vote triggered by her own party. A further proposed House of Commons confidence vote is also destined to be defeated. However, PM May’s continued premiership does not mean there will be no change in Brexit tactics. She faces the same unresolved conflicts as before. In order to deliver her deal, she may shift towards a more confrontational position with the EU in order to obtain increased leverage. Investors should not confuse this with actively seeking a no-deal Brexit. However, the road to amending the Withdrawal Agreement and winning UK Parliamentary approval now seems paved with market volatility. While UK markets are now trading at valuation levels which discount a significant degree of Brexit disruption, declining earnings forecasts in both the eurozone and UK suggest that it is too early to materially increase equity exposure to these markets.
Read more...Asos (ASC); posts profit warning after an ‘unbelievably bad’ November
Asos have revised full year guidance for sales growth to 15% (previously 20-25%)
The significance of the warning by ASOS, one of the leading online retailers, could hardly be higher for the consumer sector. Coming at the end of its first quarter, it entails a substantial judgement call for the rest of the year to August 2019 – a call that management has made negatively.
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INVESCO Asia Trust (IAT); releases half year report: NAV returns of -10.5%
Over the period, the share price discount to NAV spread slightly to 12.2%
For the six months ended 31 October 2018, INVESCO Asia Trust posted NAV return per share (combining capital and income) of -10.5%, better than the benchmark MSCI AC Asia ex Japan Index returns of -11.0%.
Read more...Custodian REIT (CREI); acquires Volkswagen car dealership for £2.36m
The 14,926 sq. ft. Volkswagen car dealership is situated on Belton Road
Custodian REIT funded the acquisition from existing debt resources, increasing net gearing to 25.7% loan to value. The property is let on a lease to the Lister Group, which expires on 30 November 2038.
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SCISYS Group (SSY); secures €11.2m contract with Thales Alenia Space France
The contract will commence this month and will continue up to June 2020
SCISYS Deutschland secured a contract with Thales Alenia Space France worth €11.2m. The contract is for the continuation and further enhancement of four Galileo Ground Mission Segment (GMS) elements. Galileo is Europe’s own global navigation satellite system, providing a highly accurate, guaranteed global positioning service under civilian control.
Read more...Low & Bonar (LWB); trading update: sales growth increases 2% LFL to £432m
The board expects to recommend paying a reduced final dividend for the year
Market conditions have remained tough for Low & Bonar’s Q4. Although self-help initiatives have been beneficial in H2, raw material costs continue to have a negative impact. In its trading update for the year ended November 2018, the company announced that it expects an underlying profit before taxation and amortisation of £17m.
Read more...ReNeuron Group (RENE); reduces loss to £5.32m from £9.57m
The business development activity has increased reflecting a third party interest in core therapeutic programmes
ReNeuron announced its interim results for the six months ended 30 September 2018. At the period-end, cash consumed by operations declined to £7.54m, while total cash fell to £30.67m (vs. 31 March 2018: £37.41m).
Read more...Sports Direct (SPD); acquisition of house of Fraser starts to show results
Total revenue was up 4.5% to £1,792m, despite a flat picture in UK Sports Retail
The enormity of Sports Direct’s House of Fraser acquisition starts to show through in its results. The 59 stores acquired on 10 August were only included in the first half for 11 weeks, but in that time posted an EBITDA loss of £31.5m, dragging down Sports Direct’s underlying interim pre-tax profit to £64.4m, a 27% decline. That was despite the success of the rest of the business, which grew its EBITDA by 15.5% to £180.3m.
Read more...Serco Group (SRP); underlying trading profit to grow 30-40% in 2018
Outlook for 2019 is in line with market expectations
Serco Group provided an update on its financial performance for 2018 and outlook for 2019. Underlying trading profit for 2018 is likely to grow 30-40%, in line with guidance that was revised upwards in late September. Closing net debt is expected to be lower than previously expected, at around £200m, with leverage improving to 1.2-1.3x.
Read more...OnTheMarket (OTMP); reports on listing agreements with over 12,000 agent branches
The offering of short-term introductory trials has largely contributed to growth in agency branch base
As of 12 December, OnTheMarket has signed listing agreements with UK estate and letting agents with more than 12,000 branches. It has added over 6,500 branches since admission to AIM in February.
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