Maitland/AMO Morning Monitor – Wednesday 16 October 2019

16th October 2019

Market Information

The FTSE, CAC and DAX are all expected to open up this morning.

Asia Pacific markets were mixed on Wednesday. The Hang Seng and Nikkei were up while the Shanghai Composite closed down.


In the news

  • Brexit talks enter their last day before EU summit on Thursday
  • EU regulators are to announce interim measures to force Broadcom to suspend alleged anti-competitive behaviour during an investigation
  • JP Morgan shares reach record high following a strong third quarter earnings report

The political day

  • Brexit Secretary Stephen Barclay is to be questioned on the progress of Brexit talks by the Exiting the European Union Committee
  • Boris Johnson is to address the 1922 Committee of Tory MPs
  • The debate in the House of Commons over the contents of the Queen's speech is to continue

Top Financial Announcements

* Maitland Client

Sainsbury(J) PLC 2018/19 Financial Statements - restated for IFRS 16
  • As previously announced, J Sainsbury plc is adopting the fully retrospective approach to the new IFRS 16 lease standard, effective for the Group for the 52 weeks ending 7 March 2020.
  • IFRS 16 will have no economic effect on the business or cash. It does however impact the way assets, liabilities and the income statement are presented.
  • In line with prior guidance, restated underlying profit before tax for 2018/19 reduces by £34m and statutory profit before tax reduces by £37m.
  • Underlying profit before tax therefore reduces from £635m to £601m, and statutory profit before tax reduces from £239m to £202m.
  • This restatement comprises £747m reduction in rent, £(470)m increase in depreciation, £(323)m increase in underlying net finance costs and £12m reduction in other costs.
  • 2018/19 Net debt to EBITDAR of 3.1 times compares to previously reported adjusted Net debt to EBITDAR of 3.2 times
Segro PLC Trading Update
  • Signed contracts worth £15.3m (Q3 2018: £12.6m) of new headline rent during the third quarter, taking the total for the nine months to 30 September 2019 to £48.6m (9M 2018: £52.0m).
  • Rent roll growth from existing space, net of take-backs was £2.1m (Q3 2018: £5.5m), taking the nine-month figure to £10.6m (9M 2018: £6.9m).
  • Signed £7.7m (Q3 2018: £3.7m) of new, unconditional pre-let agreements and lettings of speculative developments prior to completion.
  • Remain on course to invest around £600m in our development pipeline (including land, infrastructure and construction) in 2019 as a whole.
  • Net debt (including share of debt in joint ventures) at 30 September 2019 was £2.7bn (30 June 2019: £2.4bn).
  • David Sleath, CEO, said: “The third quarter has seen another period of strong operational delivery from Segro. We have continued to secure high levels of new rental income both from our existing portfolio and from our active development programme, in which we have over 1m sq m of new space under construction or in advanced discussions. During the period we also added further land and assets in our core urban markets, including in London and Paris to support further growth.”
Barratt Developments PLC AGM Trading Statement
  • Sales rate in the period was 0.72 net private reservations per active outlet per average week.
  • Progressing as expected on site openings, with 26 (2019: 53) new developments launched in the period (including JVs). Operated from an average of 374 (2019: 365) active outlets (including JVs).
  • In the period there has been 3,252 (2019: 2,852) home completions (including JVs), up 14.0% on last year.
  • Total forward sales (including JVs) as at 13 October 2019 are strong, comprising 12,963 homes (14 October 2018: 12,903 homes) at a value of £3,070.2m (14 October 2018: £3,146.5m).
  • David Thomas, CEO, said: “We have started our new financial year well, with a good sales rate and a healthy forward order book. As the only major housebuilder to be awarded a 5 Star rating for customer satisfaction for ten years in a row, we continue to lead the industry in quality and customer service. Whilst there is economic and political uncertainty, we continue to be disciplined and have a strong balance sheet and cash position which we believe provide us with the resilience and flexibility to react to potential changes in the operating environment in FY20 and beyond. We maintain our focus on the delivery of operational improvements across our business, and our commitment to deliver the highest quality homes across the country.”
Rio Tinto PLC Third quarter production results
  • Rio Tinto’s flagship iron ore business in Western Australia bounced back in the third quarter, reporting a 10% increase in production of the key steel-making ingredient.
  • The company said it produced 87.3m tonnes of iron ore in the three months, up from 79.7m in the previous quarter.
  • In Tuesday’s trading update Rio said it had recovered from the problems that it had experienced earlier in the year. Pilbara iron ore shipments reached 86.1m tonnes, a result that was ahead of market forecast.
  • J-S Jacques, CEO, said: “We have delivered improved production across the majority of our products in the third quarter, with a solid result at our Pilbara mines driving increased sales of iron ore into robust markets. Our strong value over volume approach, coupled with our focus on operational performance and disciplined allocation of capital, will continue to deliver superior returns to shareholders over the short, medium and long term.”
Arbuthnot Banking Group* Third Quarter trading update
  • Continued good progress in developing and diversifying the business.
  • Completion and smooth transition of two residential mortgage portfolios at a 2.7% discount to par, adding £264.9m of mortgages to the Group loan book.
  • Overall loan balances have grown 33% compared to the prior year and have since exceeded £1.6bn.
  • Deposit balances increased 17% compared to the prior year and have since surpassed £2bn.
  • Sir Henry Angest, Chairman and CEO, said: “The Group remains well positioned to continue its strategy of diversification of its lending and deposit raising capabilities and the deployment of the surplus capital.  Our ability to maintain high levels of surplus liquidity has enabled us to take advantage of opportunities that present themselves over time, such as the acquisition of the mortgage portfolio.  As a result of this and notwithstanding the current geo-political uncertainties we remain confident of being able to continue to grow the businesses within the Group.”
Mediclinic International plc 2020 Half-Year Trading Update
  • On a reported basis, 1H20 revenue was up around 9.0% and pre-IFRS16 EBITDA was up around 5.0% (1H19 pre-IFRS16: GBP213m). The IFRS16 EBITDA margin was around 16.5%.
  • At the Group level, in constant currency, a solid first half performance was delivered with revenue up around 6.5% and pre-IFRS16 EBITDA up around 3.5% (1H19 pre-IFRS16: GBP213m).
  • Mediclinic Middle East 1H20 revenue growth was around 8.5% (1H19: AED1 495m). Inpatient and outpatient volumes in the division were up 9.0% and 5.5% respectively.
  • At Mediclinic Southern Africa, 1H20 revenue was up around 7.0% with an increase in inpatient bed days sold of 2.7%, in line with expectations.
  • Dr Ronnie van der Merwe, Group CEO, said: “I am encouraged by the first-half performance of the Group with trading in line with expectations. At all three divisions, our core acute care business is being supplemented by our continued expansion across the continuum of care. In Switzerland, Hirslanden delivered good revenue growth and a broadly stable EBITDA margin. At Mediclinic Southern Africa, patient volumes were in line with expectations and we continue to invest in initiatives to further enhance our clinical standards. At Mediclinic Middle East, there was a continued focus on efficiencies in operational delivery. Contributing to the division’s growth was the strong performance at the new Mediclinic Parkview Hospital in Dubai and the continued gradual improvement in the Abu Dhabi business where Mediclinic Airport Road Hospital delivered good growth.”
National Express Group PLC* Major €1bn bus contract caps summer of success
  • National Express is pleased to announce that its Spanish and Moroccan division, ALSA, has been awarded a €1bn bus contract in Casablanca, for up to 15 years.
  • The Company will operate more buses in Morocco than the UK from next year.
  • This follows a successful summer, including the renewal and significant expansion of our second largest US transit contract, with anticipated revenue nearly doubling to $420 million over 7.5 years.
  • Starting next month, this contract in Morocco’s largest city means National Express is now the sole operator in 5 of the country’s 6 biggest urban areas.
  • Dean Finch, Group Chief Executive, commented: “I am delighted we have secured this significant contract in Morocco. This nearly doubles our presence in Morocco, which had already doubled in August with Rabat’s successful start-up. We will now operate more buses in Morocco than the UK. We look forward to serving the people of Casablanca soon.”
Asos PLC Final Results
  • Retail sales up 13%.
  • UK sales growth +15%, EU +12%, US +9%, ROW +12%.
  • PBT £33.1m after substantial transition and restructuring costs (FY18: £25m, FY19: £50.5m).
  • Total orders placed of 72.3m, +14% year on year.
  • Net debt of £90.5m reflecting elevated capex investment in support of the global logistics platform. 
  • Nick Beighton, CEO, said: “This financial year was a pivotal period for ASOS, where we have invested significantly and enhanced our global platform capability to drive our future growth. Regrettably this was more disruptive than we originally anticipated. However, having identified the root causes of our operational issues, we have made substantial progress over the last few months in resolving them. Whilst there remains lots of work to be done to get the business back on track, we are now in a more positive position to start the new financial year. Our focus now shifts to ensuring that we enhance our capability to drive an improved customer experience and leverage the benefits from the investments we have made. With over 60% of our revenue coming from international customers and a strong global logistics platform with capacity to grow, we are well positioned to take advantage of the global growth opportunity ahead of us.”