Right, after all the excitement of HOME's positive Q2 trading statement is out of the way (bizarrely, the shares have gone down, so I've bought some more), we can carry on and have a look at some of the other results out today.
Eckoh (ECK) have once again put out a contract win statement with no financial details. This is poor stuff - it's PR froth, with no detail about the materiality of the contract (with Whitbread for Premier Inns). The danger with this type of announcement is that it builds investor expectations too high, which then leads to sell-offs when results come out.
Also logic would dictate that if you announce every significant contract win, then you should also RNS every time a significant customer declines to renew a contract. Have they ever done that? I'm not going to check back, but would be very surprised if they did (other than for a profits warning).
The RNS should only be for material trading items, not for spin. So Eckoh get another thumbs down for me on that front, for the second time in a few days.
Whoever does their PR needs to rein things in a bit, in my opinion. Sometimes, less is more. The RNS should be used for factual, material, information only. Expectations should not be artificially raised through repeated contract win announcements, unless they are materially improving the expected profits. Let the numbers do the talking every 6-months, not contract announcements in between, unless they are material to results (in which case that should be stated in the RNS, which it isn't here).
People who spotted Real Good Food (RGD) in early 2010 have done spectacularly well, with a 10-bagger on their hands. A lot of friends are in this stock, but it's never got me excited. I don't like the food production sector generally, as margins are too low & volatile. Also RGD has quite a bit of debt, hasn't paid a divi for years (according to Hemscott), and is now on a PER of 11. Can't get excited about that at all. Their AGM trading statement today sounds reasonable, with a strong Q1 and "a flatter second quarter", and expectations of an "exciting" Q3. On track to meet full year expectations.
I don't know why they announce results on the RNS, as they are not Listed, being a Partnership, possibly just to brag and say, this is how to do it! The John Lewis Partnership - the favourite shop of the middle class - reports sparkling interims to 28 July - revenue up 8.6% to £3.9bn, operating profit up 46.6% to £163.5m. Most of the profit comes from Waitrose.
This really IS how to do it - pay staff a decent wage, give them a profit share as owners of the business, results in motivated & long-serving staff, who want to give decent customer service as they feel involved & happy.
Whereas pretty much all other retailers are stuck on the treadmill of paying lousy wages to miserable staff, who then have to claim tax credits & housing benefit to survive, and the taxpayers expense!
We are long overdue a total re-think of the disastrous low-wage, state hand-out economic model here in the UK, designed to boost short term corporate profits, at everyone else's expense. You either close the borders, to prevent the large influx of cheap labour (simple supply & demand), and/or raise minimum wage to a level that people can actually live on. It will save money in the long run, as less support from the taxpayer will be needed for the low paid & more people will come off benefits.
The John Lewis model is perfect - I believe we need serious tax incentives for businesses which structure themselves either as partnerships, or hybrids where employees own say 50% of the business. I've always voted Tory, but find them now bereft of ideas. Belatedly the Labour Party are actually coming up with some sensible policies, even though they got us into this mess in the first place. You can't have open door immigration, and laissez-faire economics, or it just drives down wages & makes life miserable for millions of people. We need to protect & help the people at the bottom, by giving incentives & managing capitalism better so that wages are allowed to rise at the bottom.
£6m mkt cap tiddler, Universe Group (UNG) reports decent interims today - EBITDA up 31% to £950k. It's below my usual £10m minimum mkt cap, but it's mentioned because I'm meeting management tonight as one of the 4 companies presenting at Dave Stredder's "Mello Central" quarterly evening - see my Blog entry on Tuesday for details if you would like to attend - I think there are still a few places left. Shares in UNG are up 37% at 3.25p at the time of writing.
Interims to 31 July from Elektron (EKT) haven't gone down well, with shares down 17% to 16p at the time of writing, for a mkt cap of £19m.
Adjusted EPS seems to be running at about 1p per half year, so that puts them on a PER of 8. They have £4.6m of net debt. The outlook statement doesn't look great, and the interim divi has been passed, so nothing to inspire me here.
Yet another excellent set of figures from out-of-town homewares retailer, Dunelm (DNLM). LFL sales up 3.1% for the year ended 30 June 2012, and an impressive 20% rise in fully diluted EPS to 35.1p.
At 632p that puts the shares on a decidedly warm PER of 18. But they are increasing the divi, and paying a special divi of 32.5p a share.
Great company, but how much upside is there left in the shares? And what happens if something goes wrong? A high rating is always an accident waiting to happen in my view, which is why I tend to usually avoid them.
The market seems to like results for y/e 30 June 2012 from Centaur Media (CAU). Adjusted basic EPS is up 24% to 4.2p, but they do mention acquisitions, so not sure how much (if any) is organic growth. They moved from net cash to net debt of £7.2m in the year due to acquisitions. They also mention a significant acquisition after the year-end for £12m initial consideration, and further performance related consideration of up to £38m! Wow!! That looks a bit scary for a £58m mkt cap company, so think I might give this one a miss.
Retail stalwart Next (NXT) delivers a decent set of interims. Very reliable performer this one. Also bear in mind that their long-term strategy has been to pay divis and do large & continuous share buybacks, which constantly drives up EPS each year. A potentially risky strategy, but it works for them, and their shareholders, who've done very well out of it over the long-term.
Despite the good results, shares are down 6% at £33.51 each (time for a share split methinks!) due to stating that "August and early September sales have been disappointing during what has been an unusually quiet period".
This is probably causing read-across to other retailers today, e.g. HOME which is down a similar amount, despite reporting improving trends today.
Right that's all I can manage today, too many numbers spinning around my head! Hope to see some of you at Mello Central this evening, do come over and say hello if we haven't met before.
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