Maitland/AMO Morning Monitor – Thursday 29 July 2021

29th July 2021

In the news

  • Facebook has reported its fastest quarterly growth in 5 years with overall revenue hitting $29bn due to a boom in online advertising.
  • The National Infrastructure Commission has said that household bills will have to pay up to £400m more a year to cover the cost of the 2050 net zero target.
  • The UK’s economic recovery stalled last month due to supply issues and the ‘pingdemic’ causing staff shortages.

Politics today

  • Boris Johnson is speaking at the Global Education Summit in London on the impact of COVID-19 in young talent.

Stock market moves

  • In the US, the S&P 500 dropped -0.02%.
  • In Asia, markets finished up with the Nikkei and Shanghai Composite indexes gaining 0.73% and  1.49% respectively.
  • In Europe the Stoxx 600 and FTSE100 are trading up in early hours.

Corporate announcements

* Maitland Client

Inchcape PLC Half-year Report
  • Group revenue of £3.9bn: up 37% on an organic basis and 30% reported; underlying 3% below 2019 levels.
  • Statutory profit before tax of £61m (1H20 £188m).
  • 1H21 free cash flow of £184m further strengthening our financial position: net cash of £435m (Dec-20: £266m).
  • Duncan Tait, CEO, said “Looking ahead, whilst there continues to be a high level of uncertainty, both in terms of the pandemic and widely reported issues relating to supply, we expect that the strong first half performance – which in part reflected pent-up demand – will underpin our full year results and expect to deliver FY21 profit before tax of at least £260m. Our ambition is to become the undisputed distributor of choice for OEMs. We will achieve this by further strengthening our OEM relationships and with more emphasis on capturing the lifetime value of both customers and vehicles.”
Lloyds Banking Group PLC Acquisition of Embark Group
  • Lloyds Banking Group today announces that it intends to acquire the Embark Group, a fast growing investment and retirement platform business.
  • The acquisition will see the Group acquire c.£35bn of assets under administration on behalf of c.410,000 consumer clients.
  • A consideration of c.£390m will be paid for the entire share capital of Embark upon completion.
  • Antonio Lorenzo, CEO, said: “Through Embark’s technology, we will be able to increase the reach of our investment offerings for customers who are happy to manage their own portfolios, through modern, easy to use technology. We will also be able to enhance our intermediary proposition, strengthen our offering in Retirement and modernise the way Scottish Widows works with advisers, recognising the continued value of advice.”
Diageo PLC Preliminary Results
  • Reported net sales of £12.7bn increased 8.3%.
  • Reported operating profit £3.7bn increased 74.6%.
  • Increased net cash from operating activities by £1.3bn to £3.7bn.
  • CEO, Ivan Menezes, said: “While our business has recovered strongly in fiscal 21, with net sales growth on a constant basis ahead of fiscal 19 in three of our five regions, we expect near-term volatility in some markets. However, I remain optimistic about the growth prospects for our industry, with spirits continuing to gain share of total beverage alcohol globally and premiumisation trends remaining strong. I believe Diageo is very well positioned to capture these exciting opportunities to drive long-term sustainable growth and shareholder value.”
Elementis PLC Half-year Report
  • Revenue up 17% (up 12% on an underlying basis).
  • Adjusted operating profit up 29% (21% on an underlying basis).
  • Net debt ($415m) in line with 31 December 2020 ($408m).
  • Paul Waterman, CEO, said: “Elementis is focused on developing high quality businesses that have enduring competitive advantages in structural growth markets. In the coming years, as end markets continue to recover and our Innovation, Growth and Efficiency strategy continues to be successfully executed, we are well positioned for material performance improvement that will support the delivery of our medium term financial ambitions.”
Informa PLC 2021 Half Year Results Statement
  • Statutory revenues of £688.9m (H1 2020 £814.4m).
  • Adjusted Operating Profit of £69.2m (H1 2020: £118.6m).
  • Statutory operating loss of -£58.0m (H1 2020: -£739.9m).
  • Stephen A. Carter, CEO, said: “Looking ahead over the next three years, a Growth Acceleration Plan will focus on delivering further growth in Subscriptions and Services, progressive recovery in Physical Events and continued expansion of our range of Digital Services, to meet growing customer demand for data-led, digital solutions in all our businesses.”
Pets At Home Group PLC* Trading Statement
  • Revenue growth of 25.7% to £377.8m, with Group LFL revenue up 30.2%.
  • The Group anticipates that full-year Group underlying pre-tax profit will be £130m, at the top end of the current range of analyst expectations, representing a £42.5m (+49%) increase on the prior year.
  • There is continued growth across the business with the number of active VIPs increasing 17% YoY to 6.6m.
  • The Group continues to invest to grow the business with an 18 month digital transformation programme and a new storage and distribution facility in Stafford.
  • Peter Pritchard, CEO, said: “It is pleasing to note that many of the positive trends from our last financial year have accelerated in the current quarter. Key indicators point to continued growth in pet ownership, providing a supportive backdrop to long-term growth across the underlying market and our business, and we continue to see strong growth in new customers, subscription plans and veterinary clients.”
Rentokil Initial PLC Interim Results
  • 18.3% growth in Ongoing Revenue, 11.7% Organic (Q1: 15.4%, Q2: 21.2%).
  • Statutory profit before tax up 141.2% to £148.8m (at AER).
  • Cash Flow of £222m in H1 (151% conversion).
  • Andy Ransom, CEO, said: “Very strong Free Cash Flow of £222.0m in H1 (151% conversion): customer collections remain strong, no material escalation in bad debts or major insolvencies.”
Lloyds Banking Group PLC 2021 Half-Year Results
  • Statutory profit before tax of £3.9bn (H1 2021). 
  • Net income of £7.6bn (H1 2021), up 2% from H2 2021.
  • Sustained cost discipline with operating costs of £3.7bn, up 1% from H2 2020.
  • William Chalmers, Interim CEO, said: “During the first six months of 2021, the Group has delivered a solid financial performance with continued business momentum, bolstered by an improved macroeconomic outlook for the UK.”
RELX PLC RELX 2021 INTERIM RESULTS
  • Revenue £3,394m (£3,501m), constant currency growth +4%.
  • Adjusted operating profit £1,023m (£990m), constant currency growth +11%.
  • Adjusted profit before tax £953m (£909m), constant currency growth +13%.
  • CEO, Erik Engstrom, said: “RELX delivered a strong first half with underlying growth trends across almost all market segments returning to the improving trajectory that we saw in the early part of 2020. We believe that this improvement is a reflection of our continuing strategy of focusing on the organic development of increasingly sophisticated analytics and decision tools that deliver enhanced value to our customers across market segments. Recent acquisitions, which have supplemented our organic growth strategy, have continued to perform well.”
AstraZeneca PLC AZN: H1 2021 Results
  • Increase Product Sales of 24% (19% at CER) to $15,302m.
  • New medicines Total Revenue improved by 31% (27% at CER) in the half to $8,332m.
  • Globally, new medicines represented 54% of Total Revenue (H1 2020: 50%).
  • Pascal Soriot, CEO, said: “Following the successful acquisition of Alexion, we are today updating our full-year 2021 guidance; our long-term goals to accelerate scientific discovery, invest for sustainable growth and deliver more benefits for patients remains unchanged.”

CMC Markets PLC Q1 2022 Trading Update
  • Monthly active client numbers remain at similar levels as reported in 2021, which were up around a third from pre-pandemic levels.
  • Client income retention remained in excess of 80%, but below the levels reported for FY 2021.
  • Q1 2022 operating costs track moderately higher year over year.
  • Lord Cruddas, CEO, said: “I remain confident in the outlook for CMC as we continue to make progress with our strategic initiatives as set out in our recent full year results and I look forward to updating the market further on these at our half year results later this year.”
Spectris PLC 2021 half year results
  • 14% like-for-like sales growth.
  • Adjusted operating margin of 12.8%, up from 11.0% in 2019.
  • Strong adjusted cash flow conversion of 122% and divestment proceeds result in net cash position of £272.8 million. 
  • Andrew Heath, CEO, said: “Through the great support of our people, we delivered a strong financial performance in the first half. All our businesses made great progress and we also completed the acquisition of Concurrent Real-Time in July. Our cash position provides us with notable balance sheet optionality for future acquisitions. With good momentum in our businesses and a very robust balance sheet position, we are well positioned to deliver long-term, sustainable financial progress.”
Smith & Nephew Plc Half Year Report
  • Revenue increased 27.8% to $2,599m.
  • Operating profit at $239m (2020: operating loss of -$5m).
  • The Group is targeting underlying revenue growth in range of 10.0% to 13.0% and trading profit margin in range of 18.0% to 19.0%.
  • Roland Diggelmann, CEO, said: “Looking ahead, we believe we are well positioned to deliver on our guidance for this year. We also remain focused on setting ourselves up for sustainable success in the medium-term, prioritising revenue growth from our R&D pipeline, unlocking further value from acquisitions, and driving commercial and operational excellence.”
Weir Group PLC Half Year Report
  • Orders increased 17% to £1,090m.
  • Revenue increased 3% to £900m.
  • Adjusted operating profit increased 12% to £143m.
  • Jon Stanton, CEO, said: “Looking to the full year, we continue to expect to deliver growth in constant currency profits and margins in line with our, and current market expectations.”
Johnson Matthey PLC Johnson Matthey Q1 AGM trading update
  • Continuation of demand seen in the second half of 2020/21.
  • Strong demand seen in the second half of 2020/21 was maintained.
  • Sales growth in the first quarter was strong in comparison with a weak Q1 2020/21.
Vesuvius Plc Half-Year Results
  • Revenue of £808.1m, an increase of 18% on an underlying basis.
  • Trading profit of £73.3m, an increase of 54% on an underlying basis.
  • Net debt/EBITDA to 1.1x at June 2021, versus 1.2x at December 2020, and refinancing of our revolving credit facility in early July which was increased in size from £300m to £385m.
  • CEO, Patrick André, said: “We remain confident that we will deliver further meaningful improvement in our financial performance in the coming years, based on our optimised manufacturing footprint, our ongoing R&D investment and new product pipeline, as well as our entrepreneurial and decentralised business model.”
Drax Group Plc Drax Group PLC
  • Adjusted EBITDA from continuing and discontinued operations up £7m to £186m (H1 2020: £179m).
  • Acquisition of Pinnacle Renewable Energy Inc. for cash consideration of C$385m (£222m) (enterprise value of C$796,) and sale of gas generation assets for £186m.
  • £666m of cash and committed facilities at 30 June 2021.
  • CEO, Will Gardiner, said: “We have had a great first half of the year, transforming Drax into the world’s leading sustainable biomass generation and supply company as well as the UK’s largest generator of renewable power by output. The business has performed well, and we have exciting growth opportunities to support the global transition to a low-carbon economy.”
Indivior PLC Half-year Report
  • H1 2021 total net revenue of $381m increased 26% (H1 2020: $303m).
  • H1 2021 reported operating profit was $130m (H1 2020 operating loss: $165m).
  • H1 2021 reported net income was $142m (H1 2020 net loss: $145m).
  • Cash at the end of H1 2021 was $1,000m (FY 2020: $858m).
  • CEO, Mark Crossley, said: “Looking forward, our number one priority continues to be capturing the full transformational value of SUBLOCADE, and it is gratifying to see further uptake of this key asset in targeted Organized Health Systems (OHS), including a $7 million order from a criminal justice system that we believe is pioneering treatment of incarcerated individuals suffering from opioid use disorder (OUD). Additionally, we are seeking to strengthen our leadership position in substance use disorder by securing an exclusive agreement with Aelis Farma for their leading mid-stage asset (P2b) targeting cannabis-related disorders.”
Mitchells & Butlers plc Third Quarter Trading Update
  • Total sales year to date are at 35% pre-Covid levels.
  • Cash balance of £203m, with undrawn unsecured facilities of £150m.
  • £30m is currently drawn from the Liquidity Facility within the securitisation.
  • CEO, Philip Urban, said: “”The continuing uncertainty relating to the pandemic still makes forward guidance difficult, and is likely to do so at least until into the Autumn. However with our diversified portfolio of well-known brands and largely freehold estate, and our continued focus on efficiency though our Ignite programme, supported by a strengthened balance sheet, we are in a strong position coming out of the pandemic as restrictions ease further.”
BT Group PLC 1st Quarter Trading Update
  • Revenue £5,071m, down 3%.
  • Reported profit after tax £2m, down £446m.Normalised free cash flow £(43)m, up 12%.
  • CEO, Philip Jansen, said: “Our operational performance remained strong and our EBITDA grew during the first three months of the year, reflecting improved trading across most of our business and the positive benefits of our plans to modernise BT. Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global’s markets. We’re powering ahead with our network build programmes: Openreach has now built full fibre broadband to more than 5m premises with growing customer demand; EE has set out plans for 5G on demand anywhere in the UK by 2028. We’ve also reached a partnership agreement with our largest trade union, the CWU1, allowing us to keep our modernisation plans on track. We continue to invest in new strategic growth areas and have also today announced a strengthened strategic partnership with Microsoft that will see us accelerate co-innovation across all areas of our business, including enterprise voice and cyber security, supporting our growth strategy. With trading conditions expected to see some improvement through the year, we have confirmed our outlook and remain confident that BT is on a path to growth.”
Compass Group PLC Trading Statement
  • The third quarter organic revenue grew by 36.4%.
  • Defensive sectors of Healthcare & Seniors and Defence, Offshore & Remote continued to grow.
  • The operating margin increased by 80bps from 4.2% in Q2 to 5.0% in Q3.
Evraz PLC EVRAZ Q2 2021 TRADING UPDATE
  • In Q2 2021, the Group consolidated crude steel output remained almost flat QoQ.
  • Total sales of steel products climbed by 6.1% QoQ, driven primarily by higher sales of finished products in Russia amid favourable market conditions and an increase in slab sales following the completion of repairs of basic oxygen furnaces at EVRAZ NTMK in Q1 2021.
  • Total raw coking coal production dropped by 21.5% QoQ, a reduction caused primarily by scheduled longwall movements at the Raspadskaya and Alardinskaya mines.
  • Sales of vanadium products fell by 3.6% QoQ, mainly due to changing the regional sales and product mix to support the increased FeV demand, resulting in longer lead times.
Airtel Africa PLC Q1 22 Results
  • Q1’22 Reported revenue grew by 30.7% to $1,112m, with constant currency growth of 33.1%.
  • Strong revenue growth was recorded across all regions: Nigeria up 38.2%, East Africa up 32.8% and Francophone Africa up 24.9%; and across key services, with revenues for voice up 26.0%, data up 37.4% and mobile money up 53.7%..
  • Operating profit was $352m, up 67.6% in reported currency and 73.9% in constant currency.
  • Raghunath Mandava, CEO, said: “We continue to see huge potential across voice, data and mobile money due to the low penetration levels in Africa, as we continue to partner the nations in bridging the digital divide and enhancing financial inclusion. We remain committed to continue to efficiently and effectively deliver services that help to improve the lives, communities and economies we serve.”
Schroders PLC Half-year Report
  • The Group delivered strong results with profit before tax and exceptional items of £407.5m in the first six months of 2021.
  • Client investment performance remained strong with 87% of assets outperforming their relevant comparator over one year, 75% over three years and 82% over five years, demonstrating the value of the Group’s active investment management approach.
  • Given the strong performance of the business, the Board has recommended an interim dividend of 37 pence per share, which represents a 6% increase.
  • Peter Harrison, CEO, said: “Markets have benefitted from a combination of low interest rates, quantitative easing and a belief that inflationary pressures are transitory. If these pressures persist, or indeed the recovery in economic growth disappoints, we would expect increased market volatility.”
Morgan Advanced Materials PLC Half-year Results
  • Adjusted operating profit margin was 12.8%, up by 170bps, driven by the acceleration of the benefits from our restructuring programme and volume leverage.
  • Strong first-half cash flow, with free cash flow of £36.5m driving a further reduction in leverage, with net debt/ EBITDA excluding the impact of IFRS 16 Leases of 0.5x.
  • Adjusted earnings per share of 12.7p, up to 10.4% on the year.
  • Pete Raby, CEO, said: “We have good momentum going into the second half of the year and we expect to see an acceleration of organic growth and a further improvement in margins as we continue to execute against our strategic priorities.”
Greencoat UK Wind PLC Half Year Results, NAV & Dividend Announcement
  • Net cash generation (Group and wind farm SPVs) was £103.6m.
  • Issuance of further shares raising £198m.
  • The Company declared total dividends of 3.59pps with respect to the period.
  • Chairman, Shonaid Jemmett-Page, said: “Gearing remains conservative at 28 per cent of GAV and the Group is fully funded to execute our commitments to acquire Windy Rig, Twentyshilling and Glen Kyllachy as each commences commercial operation later this year, which will add a further 130MW of generating capacity to our portfolio of high quality assets.”
Dr. Martens PLC Trading Statement
  • Q1 Group revenue £147.3m, up 52% year on year (64% on a constant currency basis).
  • On a two-year basis (Q1 FY22 compared to Q1 FY20), revenue was up 31% (40% constant currency).
  • EMEA delivered 30% revenue growth (36% constant currency).
  • Kenny Wilson, CEO, said: “I am very pleased with the performance across our business in the first quarter of our new financial year. We achieved continued growth in ecommerce against a triple-digit growth rate last year and the reopening of our own-stores drove a strong retail recovery through the period. In addition, we saw a return to more normalised wholesale shipments over the period. The first quarter of the year is always our smallest period, being the end of the Spring/Summer season. Our larger Autumn/Winter season begins from Q2 and our performance to date gives us confidence for the remainder of the year. We will continue to take a long-term custodian mindset, investing into our business and making decisions to drive the brand for the decades to come.”
Intermediate Capital Group PLC ICG: Q1 Trading Statement for the three months ended 30 June 2021
  • Third-party AUM: $61.5bn at 30 June 2021, an increase of 10% ($5.4bn) during the period and 27% ($13.1bn) in the twelve months from 30 June 2020.
  • Fundraising: raised $8.2bn during the period, in line with our expectations that FY22 will be a peak year in our four-year fundraising cycle.
  • Balance sheet: liquidity of £652.2m at 30 June 2021
  • Benoît Durteste, CEO and CIO, said: “With responsible investing being an integral part of our investment process, we have put in place an ESG-linked fund-level financing facility for Real Estate Partnership Capital VI and have adopted an enhanced, thematic approach to our ESG engagement strategy within Europe VIII. These are important milestones in our ambitions around sustainability and people. Looking ahead, we are fully focused on delivering our ambitious growth strategy and developing further as a leading global alternative asset manager.”
C&C Group PLC Statement re Directorate Changes
  • Andrea Pozzi, COO and Jim Clerkin, Non-Executive Director, have each decided to step down from their respective Board roles, with effect from 1 September and 27 October 2021 respectively.
  • Andrea will remain with C&C and has agreed to take up the role of managing the combined GB businesses, aligning management structures and guiding the business through a significant change programme of simplification and integration.
  • Andrea Pozzi, COO, said: “I am excited with the opportunity to lead our enlarged GB business and it is with careful consideration that I felt this role requires my complete focus and dedication. I look forward to driving the next stage of C&C’s evolution in the GB market.”
BT Group PLC Q1 Trading Update
  • Revenue £5,071m, down 3%; revenue has grown in Consumer and Openreach, and remained flat in the SME sector.
  • Adjusted EBITDA £1,866m, up 3%.
  • Reported profit before tax £536m, down 4% despite higher adjusted EBITDA
  • Announced a strengthened strategic partnership with Microsoft to accelerate innovation across enterprise voice, cyber security and industry-focussed services.
  • Philip Jansen, CEO, said: ” With trading conditions expected to see some improvement through the year, we have confirmed our outlook and remain confident that BT is on a path to growth.”
Royal Dutch Shell PLC Q2 2021 and Half Year Unaudited Results
  • Q2 2021 income attributable to Royal Dutch Shell shareholders was $3.4bn (Q1 2021: $5.6bn).
  • Adjusted Earnings for the quarter were $5.5bn (Q1 2021: $3.2bn).
  • Corporate Adjusted Earnings are expected to be a net expense of approximately $600 – $700m in the Q3 2021 and a net expense of approximately $2,300 – $2,600m for FY 2021.
Segro PLC Half Year Results
  • Adjusted pre-tax profit up 19% at £168m.
  • Strong occupier demand and active management of the portfolio generated £38m of new headline rent commitments during the period.
  • Further growth in the development pipeline with 1.3m sq m of projects under construction or in advanced pre-let discussions equating to £96m of potential rent.
  • David Sleath, CEO, said: “SEGRO is well-placed to continue benefitting from the structural tailwinds driving the industrial property sector with our unique portfolio of prime warehouses, two-thirds of which are located in the most supply constrained urban markets, and an enviable land bank capable of supporting our profitable and expanding development programme.”