Maitland Morning Monitor – Tuesday 13 March 2018
The FTSE is expected to open down this morning; while the CAC and the DAX have both opened up.
Asian stocks rose overnight following gains on Wall Street.
In the news
- US turns up heart on Broadcom over relocation aspect of Qualcomm battle (Financial Times)
- Labour ideas to nationalise utilities under fire from CBI (Daily Telegraph)
- May accuses Russia over attack on spy and threatens reprisals (Financial Times)
Top Financial Announcements* Maitland Client
Legal & General Group PLC L&G Capital acquires full ownership of CALA Homes
- Legal & General Group announces today that its Legal & General Capital division has acquired the 52.1% of CALA Homes which it did not previously own. Transaction announcement and completion occurs simultaneously.
- The total valuation of 100% of the equity in CALA Homes was £605m.
- Kerrigan Procter, CEO, said: “Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well. It has a strong management team with proven experience of managing a housebuilding business across business cycles, and has delivered great returns for shareholders since its acquisition in 2013, having tripled in revenue during this time. I am excited to be working with the team as CALA Homes continues to develop and grow under our continued ownership.”
- Revenue up 31.1% to $4,749.4m (2016: $3,621.7).
- EBITDA up 59.1% to $2,586.6 (2016: $1,626.1).
- Dividend per share up 176.6% to 50.9c (2016: 18.4c).
- Iván Arriagada, CEO, said: “We have continued to invest through the cycle while maintaining our focus on cost discipline and operating performance. As a result, as copper prices rose in 2017 Antofagasta had another successful year completing the development of Encuentro Oxides, meeting our safety target of zero fatalities and achieving both our production and cost guidance. Our priorities for 2018 are continued capital discipline and the next phase of our growth – notably the review and expected approval of the Los Pelambres Incremental Expansion project and progressing expansion plans at Centinela.”
- Revenue of £1,757m (2016: £1,687m).
- Operating profit of £263m (2016: £240m).
- Basic EPS of 33.3p (2016: 34.0p).
- John Phizackerley, CEO, said: “Our integration is progressing well as we accelerated synergy savings from 2018 into 2017. As a result we achieved £27m of synergy savings in 2017, ahead of our initial £10m target. The next phase of the integration will focus on delivering our IT plan and ensuring that the organisation is fit for purpose in a rapidly changing environment. We remain committed to achieving our £100m synergy saving target by 2020. So far in 2018 we have seen an encouraging start to the year, with a pick-up in volatility and interest rates. Although it is too early to tell whether these conditions are sustainable, our diversified business model and position as the world’s largest interdealer broker leave us well-placed for future growth.”
- Normalised revenue up 48% to £119.8m (2016: £81.1m); reported revenue of £107.8m (2016: £72.8m).
- Combined loan book up 30% on a like-for-like basis to £247.9m before fair value adjustments (£259.8m after fair value adjustments) at 31 December 2017.
- Reduced rate of impairment for the Group as a whole of 24.0% of normalised revenue1 (2016: 29.2%).
- 34 new offices opened and over 650 new staff and self-employed agents added.
- John van Kuffeler, Group Chief Executive Officer, said: “2017 was a year of delivery with significant organic loan book growth whilst impairment reduced from 29% to 24% of normalised revenue. I am pleased to say that these trends have continued into the current year. With strong market positions in each of our chosen segments, a clear plan for growth and long-term funding in place, we remain confident in the full year outlook and are pleased to recommend a final dividend to 1.70p per share making 2.20p for the year as a whole (2016: 1.2p), an increase of 83% over the prior year.”
- On 21 February 2018, the boards of Fidessa group and Temenos Group, announced that they had reached an agreement on the terms of a recommended all cash acquisition by Temenos.
- Fidessa, Temenos and Temenos Bidco will be sending details of the proposals being made to participants in the Fidessa Share Plans to those involved as necessary.
- Just Group announces that its Deputy Chairman, Tom Cross Brown, will retire at the next AGM on 17 May 2018. Tom has been a Board member of the Group and its legacy companies since December 2006.
- Chris Gibson-Smith, Chairman, said: “On behalf of the Board, I would like to thank Tom for his long service and contribution to Just during which he served as Chairman to the predecessor companies and more recently following the merger as my Deputy Chairman.”
- The acquisition of Peacock Foods in December 2016 greatly enhanced the scale, operational capabilities and financial performance of Greencore US.
- In its FY17 results and FY18 Q1 trading update, the Group noted continued low capacity utilisation at some of the original Greencore US sites. The Group is now restructuring its US network to reflect the commercial pipeline and to address these utilisation challenges.
- Outlook: In the UK, the Group continues to anticipate good organic revenue growth and a modest improvement in operating leverage in FY18, notwithstanding softer volume growth in Q2 primarily due to poor weather. In the US, the core CPG business has continued to perform in line with expectations.
- The group reported a good performance for the first half, with a 6% increase in adjusted operating profit to £142.3m.
- Banking delivered an adjusted operating profit of £128.5m, up 5% year on year. The loan book grew by 1.7% to £7.0bn, up 7% year on year.
- Winterflood’s strong performance continued with operating profit of £14.7m, 2% up year on year.
- Asset Management delivered a significant increase in adjusted operating profit to £11.4m, up 25% year on year.
- The interim dividend per share of 21.0p is up 5% on last year.
- Preben Prebensen, Chief Executive, said: “All our businesses have achieved a good performance year to date, and we remain well positioned for the full year. Longer term, we are confident that the consistent application of our business model, along with our strong customer relationships, the expertise of our people and the quality of our service will allow us to continue performing well in all market conditions.”
- Revenue from oil sales of $19.9m.
- Major cash outflows during the year arose on the continued spend on the Group’s development projects of US$146m and exploration and appraisal spend of US$187m, of which US$103m related to Senegal.
- Group cash at 31 December 2017 US$86m.
- Outlook: “Our portfolio provides exposure to high impact exploration drilling whilst the group’s production assets provide the cash flow to sustain exploration and development activity. The strategic development and progress of the Cairn business has been achieved whilst maintaining balance sheet strength and funding flexibility.”
- Revenue up 16.9% to £3,793.4m (2016: £3,245.4).
- Adjusted profit before tax up 22.9% to £106.2m (2016: £86.4m).
- Dividend per share up 17.6% to 26.1p (2016: 22.2p).
- Mike Norris, CEO, said: “The growth rates we recorded in 2017 meant we achieved record Group revenues, adjusted profit before tax and adjusted diluted EPS, and set ourselves a high bar to outperform in 2018. However, with a tailwind from the Return of Value completed in February 2018, we expect 2018 will be a year of progress in our primary measure of adjusted diluted EPS. The UK business should return to operating profit growth in 2018, helped by recent contract wins and solid market conditions. In France, where we have experienced strong operating profit growth for the last two years, we expect 2018 to be challenging as we have significant contract renewals and we will not have the benefit of a particularly successful project that finished at the end of 2017.”
- NAV total return of 19.0%, outperforming the benchmark’s return of 15.1% by 3.9%.
- Share price discount to NAV reduced to 1.6% at year-end (2016: 4.0%).
- Dividend increased by 10.5% to 21.0p, more than double the level in 2007 and the 43rd consecutive annual rise.
- Outlook: “018 seems set to be another year of broadly-based, steady but not especially rapid, global economic growth. Whilst this should be supportive of growth in profits, bond and equity markets may be vulnerable if currently benign inflation assumptions are disappointed. There are several potential risks.”