Maitland/AMO Morning Monitor – Wednesday 15 May 2019

15th May 2019

Market Information

The FTSE 100, German DAX and French CAC are all set to open up this morning.

Shares in Asia Pacific were higher across the board in afternoon trade with the Shenzhen component showing strongest gains, up 1.45%.

In the news

  • WhatsApp hit by hack, and Intel reveals flaw making the company's chips vulnerable to hackers
  • British Steel requests emergency government funding as it fights to prevent collapse
  • Bank of England warns prosecuting Barclays could destabilise the lender

Top Financial Announcements

* Maitland Client

Compass Group PLC Interim Results
  • Revenue increased 6.6% to £12.5bn (2018: £11.7bn).
  • Operating profit increased 5.8% to £951m (2018: £899m).
  • Free cash flow increased 14% to £530m (2018: £465m).
  • Dominic Blakemore, Group CEO, said: “We have continued to invest in the business to support the exciting long term growth opportunities. During the first half we spent £370m on bolt-on acquisitions, principally in North America. We have made further progress with our disposal programme and have now exited c. 2% of revenues of non-core businesses. This active portfolio management had a positive impact on the margin in the first half. Following the very strong first half performance we now increase our organic revenue growth guidance for the full year and expect to deliver organic revenue growth and margin progression similar to 2018.”
Kingfisher PLC Q1 Trading Update
  • Total Group sales increased 1.7% in constant currency to £2.835bn.
  • UK & Ireland sales increased 5% in constant currency to £1.284bn.
  • Véronique Laury, CEO, said: “This year we are focused on completing the building of our ‘engine’ and making our innovation more visible to customers. Our new outdoor range was rolled out to all markets in the quarter alongside a globally coordinated marketing campaign. We are also excited to be launching several new ranges this year which are unique to us and will further differentiate us from our competitors, including surfaces & décor and bathrooms across the Group, and kitchens in B&Q. In addition, we are piloting a new convenience store concept which we look forward to demonstrating at today’s Kingfisher Innovation Day. At this early stage of the year our expectations for the full year are unchanged, and we remain confident in our ability to deliver significant financial benefits over time.”
Hargreaves Lansdown PLC Trading Statement
  • Net new business of £2.9bn in the period.
  • Assets under administration of £97.8bn as at 30 April 2019.
  • Year-to-date total net revenue increased 8% to £395.9m.
  • Chris Hill, CEO, said: “We are pleased with the strong tax year end, delivering net new business of £2.9bn and welcoming another 53,000 net new clients despite the market backdrop. It is also pleasing to see the benefit of our investment coming through with  Active Savings continuing to gather momentum and the announced transfers of clients and assets from Witan Investment Services, JP Morgan and Baillie Gifford. Whilst political and macro-economic uncertainty remains, we are confident that our continued focus on the needs of UK investors and savers means that we are well positioned to deliver attractive growth.”
TUI AG* Half Year Results 2019
  • Group turnover up by 1.7% to €6.68bn.
  • Underlying EBITA including one-off effects -€300.6m (H1 2018: -€169.7m).
  • Year-on-year earnings performance characterised by overcapacities to Spain, the late timing of Easter and the non-repeat of gains from hotel divestments.
  • Fritz Joussen, CEO, said: “2019 will be another solid year for TUI. We have a clear compass: We will continue to consistently focus on hotels, ships and the expansion of digital platforms and emerge stronger from consolidation. TUI is economically sound and has a strong strategic and operational positioning. Moreover, all medium- and long-term growth forecasts for the sector are intact.”
British Land Co PLC Final Results
  • Underlying EPS decreased 6.7% to 34.9p.
  • LFL rental growth of £15m; more than offsetting the £14m impact of Retail CVAs.
  • Portfolio value decreased 4.8%; Retail down 11.1%, Offices up 1.1% and developments up 10.8%.
  • Chris Grigg, CEO, said: “We sold £1.5bn of assets and leased more space than in any of the last five years, securing future income and de-risking our developments, which are now 76% pre-let. Looking ahead, retail is likely to remain challenging as structural change continues but there are early signs on parts of our portfolio, that some of the short-term operational headwinds impacting retailers are easing. We expect the London market to remain active, as occupier demand for the highest quality space continues to be firm and supply is relatively constrained. We are mindful of the ongoing Brexit uncertainty, but our business is well positioned and financially strong. We remain focused on delivering operationally and being thoughtful and commercial in what we do every day while at the same time progressing our long term strategic goals.
Experian PLC Preliminary results for year ended 31 March 2019
  • Revenue increased 6% to $4.861bn (2018: $4.584bn).
  • Operating profit increased 11% to $1.162bn (2018: $1.051bn).
  • Profit before tax increased 1% to $950m (2018: $957m).
  • Brian Cassin, CEO, said: “We have strengthened our prospects and expanded our opportunities; both our B2B and Consumer Services businesses delivered strongly. With another year of continued investments, FY20 is expected to deliver further strong performance, with organic revenue growth in the 6-8% range, Benchmark EBIT growth at or above revenue growth and strong progress in Benchmark earnings per share.”
Spirax-Sarco Engineering PLC AGM Statement - Trading Update
  • Despite the softening macro-economic environment, organic sales growth for the Group in the first four months of the year remained at similar levels to the second half of 2018.
  • Our business remains highly cash generative and we maintain a strong balance sheet.  At 30th April 2019 net debt was £203m.  There has been no material change in the financial position of the Group during the period.
  • While organic sales growth in the first four months of the year has been strong, the lowering of forecasts for Industrial Production growth rates for 2019 mean that our overall expectations of organic growth and trading margins for the full-year are unchanged to those set out in our preliminary announcement in March.
  • Provided there is no material deterioration in trading conditions the Board has confidence that the Group will make further progress in 2019.
OneSavings Bank PLC Trading Update
  • Loan book growth of 5% for the three months to 31 March 2019 with net loans and advances growing by £448m to £9.4bn during the quarter (31 March 2018: £368m and £7.7bn, respectively).
  • Organic originations of £799m in the first three months of 2019 (Q1 2018: £689m).
  • Asset pricing remains stable, however as previously guided we continue to see marginal NIM dilution.
  • Andy Golding, CEO, said: “Our lending and retail savings franchises remain strong and we have seen a good start to the year, with lending exceeding expectations. I am particularly pleased by the strong growth in our commercial and residential propositions.  However it is still early in the year, and given the continued uncertainty surrounding Brexit, there is no change in our outlook for 2019. We continue to believe strongly in the rationale for creating a leading specialist lender in the UK through the proposed recommended combination with Charter Court Financial Services Group plc (CCFS).”
Cineworld Group PLC Trading Statement
  • Group trading in line with expectations.
  • Total Group revenue decreased 9.4%.
  • Record-breaking performance over past three weeks driven by Avengers: Endgame with strong film slate scheduled for remainder of the year.
  • Mooky Greidinger, Group CEO, said: “The relatively slow start to the year in the first four months has come as no surprise as the comparative period in 2018 was extremely strong. Our strategy is unchanged and its implementation continues, with an exciting refurbishment programme, further installation of new technologies. We are confident that the strong film release line up in the balance of the year, which includes highly commercial titles, such as “Lion King”, “Frozen 2”, and the most anticipated movie of them all “Star Wars: The Rise of Skywalker” will enable us to achieve results which meet our expectations for the full year.”
CYBG PLC Half-year Report
  • Pro forma underlying profit before tax decreased 5% to £286m due to the anticipated increase in impairments.
  • Pro forma profit before tax of £9m impacted by significant acquisition and integration costs.
  • Customer lending growth increased 2.4% to £72.7bn.
  • David Duffy, CEO, said: “As previously announced we have increased our forecast of the total cost synergies available by £30m to a minimum of £150m by the end of FY 2021. We have already realised £33m of annual run-rate cost synergies in the first six months. As expected, profit before tax has been impacted by the significant Virgin Money acquisition and integration costs. We remain on track to deliver 2019 performance in line with guidance and look forward to updating the market in June on our refreshed strategy and the significant opportunities for our combined business.”
William Hill PLC Trading Statement
  • Group net revenue increased 2%.
  • Online net revenue increased 8%.
  • Retail Sportsbook net revenue increased 2%.
  • The Group successfully refinanced its seven-year bond due to mature in 2020 with a new 4.75% seven-year £375m bond maturing in 2026.
  • Philip Bowcock, CEO, said: “Online continues to show good momentum as we focus on growing our mass market customer base, while Retail has begun to adapt to the new £2 machine gaming stake limit. Just one year on since PASPA was overturned William Hill has doubled the sports wagering it handles in the US, seen record performances at the Super Bowl and March Madness, is live in all seven states to have allowed sports betting and expects to enter further states soon, with Indiana and Iowa the most recent states to pass bills to legalise sports betting. The impact of the introduction of the £2 stake limit has been in line with our expectations. We are confident in our plan to manage this major change, and will update more fully at the half year.”
Energean Oil & Gas PLC Trading and Operational Update
  • Revenues decreased to $0.4m (2018: $1.3m).
  • On track and budget to deliver first gas from the Karish and Tanin development project in 1Q 2021.
  • At 31 March 2019, Energean had cash and undrawn debt facilities of $1.2bn.
TP ICAP PLC AGM Statement and Trading Update
  • Revenue in the three months to March 2019 of £469m was 1% higher than the prior year on a reported basis and 2% lower at constant exchange rates.
  • There was contrasting performance in the business divisions, with good growth in Energy & Commodities, Institutional Services and Data & Analytics, offset by Global Broking which was impacted by a weak market environment that saw sustained periods of lower volatility and volumes.
  • Global Broking saw a 6% reduction in revenues to £333m.
  • Nicolas Bretau, CEO, said: “The uncertainty created by Brexit, the softening of the Fed’s interest rate stance, and the potential for more QE in the Eurozone has impacted our traditional banking customers’ Q1 performance, weighing on market volatility and volumes. I am pleased with the performance of our Energy & Commodities division and the strong growth in both our Institutional Services and Data and Analytics businesses.”
SSP Group PLC Interim Results
  • Revenue increased 6.8% to £1,261.6m (2018: £1,177.8m).
  • Underlying operating profit increased 14.6% to £62.5m (2018: £55.2m).
  • Underlying profit before tax increased 11.3% to £54.2m (2018: £48.7m).
  • Kate Swann, Group CEO, said: “We have continued to grow our global presence, particularly in North America and Asia, and we have further expanded our operations in Latin America. These are high growth markets for SSP and present us with exciting opportunities. Given this positive momentum, we are today raising our expectations for net gains in the second half of the year. Looking forward, the second half has started well and whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets and our programme of operational improvements.”
Marshalls PLC Trading Statement
  • Group revenue for the four months ended 30 April 2019 increased 21% to £180m (2018: £149m).
  • Sales in the Public Sector and Commercial end market, which represented approximately 69% of Group sales, were up 26% compared with the prior year period.
  • Recent trading has been strong and underlying indicators in the New Build Housing, Road, Rail and Water Management markets remain supportive to our growth strategy and plans.
  • The Group continues to outperform the Construction Products Association’s growth figures and the Board is increasingly encouraged regarding the Group’s performance for this financial year.
Crest Nicholson Holdings PLC Trading Statement
  • Total sales value achieved to date and forward sold for FY19 including land and commercial of £792m, up 4.2% (HY18: £760m).
  • Sales per outlet week of 0.78 has proven resilient (HY18: 0.78).
  • Lower half-year net debt of £68.2m (HY18: £78.5m) and lower land creditors of £192.6m (HY18: £223.2m) represent a £40.9m reduction on last half year.
  • Chris Tinker, Interim CEO, said: “We welcome the Government’s increased grant funding and focus on delivering a broader tenure mix. As a consequence, we will continue to grow our partnerships with Registered Providers who are playing an increasingly important role in the diversification of tenures. This strategy trades an element of margin for reduced risk and improved cash flows. Overall, we remain confident in our ability to deliver returns in line with Board expectations. We maintain a strong balance sheet and operate a disciplined business model, generating good returns on our chosen investments. We have reduced debt in the half year and expect to be cash positive by the end of the year after paying ordinary dividends of 33 pence per share.”
Charter Court Financial Services Group PLC Q1 2019 trading update
  • Loan book up 17.9% year-on-year to £6.5bn at 31 March 2019 (31 March 2018: £5.5bn) or 28.1% to £7.1bn excluding the impact of structured asset sales in the quarter.
  • Record first-quarter new loan originations of £710m (Q1 2018: £668m) with strong performance across core buy to let, residential and short-term mortgage segments.
  • Customer deposits up 29.7% year-on-year to £5.6bn at 31 March 2019 (31 March 2018: £4.3bn).
  • Ian Lonergan, CEO, said: “Despite a challenging macroeconomic and market backdrop, the Group completed the sale of its residual interest in two securitisations in January for a pre-tax gain of £30 million, equivalent to a 5.3% premium on the underlying £564 million of mortgage assets. Our performance in the first quarter continues to reflect the resilience of our lending operations and demonstrates our ability to structure and execute complex transactions, even in difficult market conditions.”
TI Fluid Systems PLC Q1 2019 Trading Update
  • Group Revenue decreased 2.2% to $849.8m (2018: $869.0m).
  • Fluid Carrying Systems revenue decreased by 10.8% at constant currency and was impacted by the lower launch activity and mix in North America.
  • The 2019 outlook for the Group provided in the 2018 full year results announcement remains unchanged.
Vesuvius PLC AGM Statement
  • The net impact of average Q1 2019 exchange rates compared to 2018 averages has been a Q1 2019 headwind of approximately £0.2m.
  • Cash generation in the period remains strong.  Net debt has increased slightly since December largely due to CCPI acquisition costs of £33.1m and the impact of IFRS 16, which has resulted in £25.6m of lease obligations being included in net debt for the first time.
  • We continue to make good progress with our self-help and restructuring programmes and as a result, we anticipate Trading Profit (EBITA) for the full year to be in-line with expectations.
Playtech PLC AGM Trading Statement
  • In line with previous announcements, revenues from Non-regulated B2B Gaming are materially lower than in the same period last year due to our continuing shift to regulated markets as well as the drop in revenues in Asia. The backdrop in Asia remains highly competitive.
  • Playtech continues to make significant balance sheet progress, successfully raising a €350m 7-year bond at 4.25% in March 2019, the proceeds of which will be used to repay the convertible bond which is due to mature in November 2019 as well as for general corporate purposes.
  • Management reiterates its previous guidance for 2019 Adjusted EBITDA in the range of €390m to €415m.