Maitland/AMO Morning Monitor – Wednesday 2 October 2019

2nd October 2019

Market Information

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

In Asia, the Nikkei, Hang Seng and Shanghai Composite are down after weak US manufacturing data has surfaced.


In the news

  • Prime Minister Boris Johnson is due to present a final offer to Brussels to end the Brexit deadlock
  • Hong Kong protester is shot as violence continues to escalate
  • North Korea has fired two missiles days before talks with the US are schedule to commence

The political day

  • The Conservative Party is to conclude its Annual Conference in Manchester today with the Prime Minister
  • Foreign Secretary Dominic Raab is due to answer Prime Minister’s Questions in Mr Johnson's place, as the Prime Minister delivers the closing speech at the Conservative Party Conference

Top Financial Announcements

* Maitland Client

Tesco PLC Interim Financial Report
  • Group sales: £22.4bn (UK and ROI), £2.8bn (Central Europe), £2.6bn (Asia).
  • Revenue (statutory) rose 0.6% to £31.9bn (2018: £31.7bn).
  • Operating profit (statutory) rose 12.6% to £1,134m (2018: £1,007m).
  • Interim dividend per share rose 58.7% to 2.65p (2018: 1.67p).
  • Retail free cash flow rose 105.0% to £814m (2018: £397m).
  • Dave Lewis, CEO, said: “Despite challenging external conditions we have delivered a very good start to the year. I’m very pleased to say that we have now delivered every element of the turnaround plan and from this position of strength, the transformation of our business continues at pace. The Capital Markets Day in June laid out many opportunities for further, profitable growth and I’m delighted to share today the plans to step up our store opening programme, to increase our online capacity, the introduction of Clubcard Plus in the UK and the acquisition of Best Food Logistics as the next step in our Booker growth strategy.”
Tesco PLC Dave Lewis to step down as Chief Executive next year
  • We are today announcing that Dave Lewis has decided to step down as Group CEO of Tesco.  He will leave the business next year and will be succeeded by Ken Murphy
  • Dave Lewis, CEO, said: “My decision to step down as Group CEO is a personal one. I believe that the tenure of the CEO should be a finite one and that now is the right time to pass the baton.  Our turnaround is complete, we have delivered all the metrics we set for ourselves. The leadership team is very strong, our strategy is clear and it is delivering. The Tesco brand is stronger and customer satisfaction is the highest it has been for many years. Colleagues are doing an extraordinary job and their expertise shows in every store and channel every day. With these firm foundations and a competitive, sustainable growth strategy in place, I have no doubt that Tesco will kick on again under new leadership next year. When that time comes, I will watch progress from outside with interest, deep affection and pride. In the meantime, you can be sure that I will give the job everything I have until my very last day.”
QinetiQ Group plc QinetiQ more than doubles size of US operations with acquisition of MTEQ
  • QinetiQ announces that it has entered into an agreement to acquire Manufacturing Techniques Inc. on a cash-free, debt-free basis for $105 million to be paid in cash on completion and an earn-out of up to $20 million payable in cash and shares dependent on delivering stretching financial targets over three years.
  • MTEQ is a leading US provider of advanced sensing solutions with a strong reputation for mission-led innovation, rapidly developing and fielding operationally relevant solutions to deliver information advantage to the warfighter.
  • In the 12 months to 31 August 2019, MTEQ generated $167.4m of revenue, $11.4m of EBITDA, and $11.0m of EBITA on an unaudited basis.
  • Will enhance QinetiQ’s earnings per share in the first full financial year.
  • Acquisition evaluated through our rigorous capital allocation methodology; returns expected to exceed QinetiQ’s cost of capital in year three.
  • Steve Wadey, CEO, said: “The acquisition of MTEQ is a significant step towards achieving our ambition to build an integrated global defence and security company, more than doubling the size of our operations in the largest defence and security market in the world. MTEQ is a growing business that is thriving because of its ability to apply state-of-the-art sensing technology to enhance information and intelligence that are so critical to modern warfare. I am excited that MTEQ will be joining QinetiQ as its core proposition of rapidly creating new and disruptive capabilities to respond to emerging threats is so well aligned to our own. I look forward to welcoming MTEQ expert employees and high quality leadership team to QinetiQ.”
Sirius Real Estate Limited Trading Update and Extension of Banking Facility
  • Continued strong occupier demand, with total annualised rent roll of €78.5m.
  • Completed Titanium joint venture with AXA Investment Managers – Real Assets – pipeline of opportunities.
  • Major extension to banking facility with BerlinHyp to total €180.2m, fixed at 0.9% to October 2023.
  • Total firepower of €170m to invest into new assets on the balance sheet, capex investment programme and further equity into the Titanium JV.
  • Attractive acquisitions including €66m of assets notarised and €22m completed.
  • Trading in line with management expectations for the full year.
  • Andrew Coombs, CEO, said: “It has been another encouraging six months for Sirius, during which we have completed the Titanium joint venture transaction with AXA, secured a new debt package at a historic low fixed interest rate for the Company of 0.9% and made considerable progress on identifying and securing earnings enhancing acquisitions. While our like-for-like annualised rent roll is broadly flat for this period, we are pleased at the speed we have been able to secure enough new income to replace that lost from the known move-outs that we highlighted in our Annual Report. The foundations have been set for a strong second half to this financial year.”