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Ian Pollard: Aveva In Either A Profit Or Loss Situation – You Choose

Aveva Group AVV There are now so many ways of calculating profits that the figures have become almost meaningless and companies have the freedom to chose between  profit before tax, on a diluted, adjusted, normal or  statutory basis and the difference between these four can be and often are enormous. Companies can elect the headline for their results as ranging from a whopping loss to a thumping big profit. For the year to the 31st March Aveva has chosen to present them on a combined basis which shows an 8.6% rise in revenue and profits slumping by 34.3% unless you prefer the statutory figure with a rise of 8.8% or, even better, a rise of 23.3% on an adjusted basis. Thus Chairman and CEOs are left with complete freedom as to how they can best describe the company’s performance. Aveva decides the year as being transformational and promises that the years ahead are going to be even more exciting. Nobody can agree or disagree with these comments when all we know is that the company is either making a loss, or if not, then it is making a profit.

Majestic Wine WINE returned to profit and describes itself as making headway in headwinds in the year to the 2nd April. Last years loss of 1.5m was turned into a profit of 8.3m, with Naked Wines, where sales rose by 11.8%, being the key driver. UK retail remained challenging. Reported revenue rose by 2.3% but the final dividend reflects the transformation into profit with a rise  from 3.6p to 5.2p. More important for the future is the fact that 20% of the business is now in the growth markets of the US and Australia.

PZ Cussons PZC has given plenty of notice of the bad times from which it is suffering in Nigeria and the UK and it now updates that trading in both these countries has continued to be difficult, with Nigeria actually getting worse. In other markets results have been robust and profit before tax for the full year is now expected to just scrape into the bottom end of the previously forecast range. Still worrying though to see how many of these household name companies are being dragged down by poor UK performances.

NWF Group NWF updates that it has delivered an outstanding performance, especially in fuels in the year to the end of May. Trading has been significantly ahead of both current market expectations and the previous year.

 

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Ian Pollard – Majestic Wine Celebrates With a 33.3% Dividend Hike

Majestic Wine plc WINE Moved into profit in the half year to the 2nd October and the interim dividend is to be increased by 33.3% to 2p. The Chief Executive says he is now ready step on the gas and accelerate growth with a team which has worked like demons and made him “dead proud” of every one of them. After breaking even in the first half, momentum continued through into the second half producing a profit of 6.8m.On a statutory basis last years loss of 4.4m was turned into a profit before tax of 3.3m. Sales rose by 5.7%

Centrica CNA admits  that it is not only disappointed with its performance but also with the delivery of that performance. The usual excuses are trotted out the main one being that trading conditions have been highly competitive which is really an admission that it is not managed well enough to beat the competition. Then of course there is the weather which is blamed for being warmer in the UK than Centrica expected. The UK is now only expected to break even, on top of which there is downward pressure in North America.

Severn Trent plc SVT Ongoing momentum is reflected in the results for the half year to the 30th September which saw a reduction of 48% in sewer floodings, which appears to illustrate after all these years of privatised utilities, just how bad they had allowed their infrastructure to become. The latest policy craze is now “customer first” which begs the question as to where in the pecking order have customers been for the last 25 years or so? As for the statistics, half year turnover rose by 3.7%, reported profit before interest and tax fell by 0.2% by and like for like reported basic earnings per share were down by 20.2%, in response to all of which the interim dividend in the true spirit of customer first, was increased by 6.2%

Cineworld CINE delivered revenue growth of 10.6%  between the 1st January and 19th November, spurred on by the expansion and refurbishment programme. The Rest of the World led the way with a 24.6% rise in retail revenue (13.3% on a  constant currency basis). Dunkirk took pride of place as the highest grossing film in the second half and for the rest of the year we have old favourites to look forward to with another Star Wars epic and Paddington 2.

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Majestic Wine Reaps The Rewards

Image result for majestic wine logoMajestic Wine  WINE claims it is reaping the rewards of its transformation plan with second half profits up by 51%  and the restoration of a final dividend being proposed with a payment of 3.6% compared to zero last year. Both operationally and financially it claims it is past the tipping point but the figures still have to be taken in context. The company has made a loss for the year of £1.5m compared to last years profit of £4.7m and on an underlying basis adjusted profit before tax on a year by year basis fell by 29.2% and  EBIT by 28.4%.

As transformation benefits work their way through, the target is still for sales of £500m by 2019 and analysts current profit forecasts are expected to be met, despite the continuation of difficult trading conditions.

Image result for system1 group logoSystem1 Group SYS1 Produced strong results for the year to the 3rd April December and, because of a change in the year end,also  for the 15 months to 31st March. The final dividend is to jump from 3.5p per share to  6.4p, on top of which there will also be a special dividend of 26.1p per share. The company formerly known as Brainjuicer won, for the sixth consecutive year, the award for being the most innovative company of the year.

For the 12 months to 21st December revenue rose by 24% on a constant currency basis, profit before tax by 38% and earnings per share by 33%. comparative figures are not provided for the 15 month period to the new year end. The first quarter of the new financial year has been a little slower than the company expected.

Image result for ws atkins logoAtkins WS. ATK claims a year of strong financial and strategic progress with significant growth in the US. Revenue  grew by 11.8% on a constant currency basis and underlying profit before tax for the year 31st March was up by 18.4% and diluted earnings per share by 26.1%.

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Majestic Wine -Testing Before Learning

Majestic Wine WINE  appears to have been so mismanaged that it has been forced to issue an update, warning that it will not even achieve its modest target of 1% sales growth for the current year. EBIT for the year to 3rd April 2017 will be £2m.less than market expectations as a result of the first half having been more challenging than expected. Sales growth is flat and gross margins % is down by 200 basis points. That dreaded event, an internal review, is said to be underway.

Naked Wines in the US will move back back into loss as a result of new initiatives which did not work and which are having to be abandoned. The company claims that test and learn in a market the size of the US, is expensive but most companies would learn, at least something first and test later. Majestic however did the opposite and then management wonders why it has got the company into a pickle. Perhaps there should be an internal review at a higher level.

Diageo DGE has started 2017 well and performance will be stronger than last year claims the company, with key drivers being scotch, US spirits and India.

SAGA plc SAGA Everything about Saga’s first half has been robust, especially the interim dividend which is being raised by  a robust 23%. Travel has put in a robust trading performance, the operational performance has been robust, as has the financial performance. Hopefully the CEO will be given a robust lesson in how to vary his adjectives a bit, next time round. Profit before tax rose by 8.5% for the six months to 31st July and like for like basic earnings per share were up by 8.2%. All this was achieved despite a competitive environment and the company is on track to meet its full year targets.

32Red TTR is raising its interim dividend by 18% for the half year to 30th June after profit before tax modestly surged by 2,630% following a 63% rise in total net gaming revenue. Both revenue and EBITDA rose to record levels, with strong growth across the business and its brands. Growth has continued into the second half and on a like for like basis it is up by 4%.

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Not So Majestic Wine

Majestic Wine WINE claims a 74.5 % fall in profits made 2015 a good year with encouraging progress. If you prefer your profits on an adjusted basis to make them look better, the fall of 30% to £15m is still fairly serious.  Basic earnings per share for the year to 28th March fell from 20.5p to 3.5p and cash of £10.9m was turned into debt of £25.5m. There are however some signs of an improvement on the way. Like for like sales rose by 4.8%, the first rise in four years and Naked Wines enjoyed record sales with a rise of 27.3%, helped by strong growth in the US. On the home front though, trading conditions in the UK are expected to remain tough.

Leni Gas Cuba Ltd CUBA is teaching BP and all the other big oilies, a lesson in how to invest wisely for the future and escape from the myriad problems of the oil and gas industries. The solution for Leni Gas is simple. Invest in premium coffee. It has just acquired for £27,300, a 10% share in The Cuban Mountain Coffee Company Ltd. based in the notorious but beautiful Guantanamo region of Cuba and will help CMC to promote its gourmet coffee on a worldwide basis. So who will be next. Can you expect Shell cocoa, BP premium  Darjeeling tea and Esso Horlicks to be appearing soon at a supermarket near you.

Referendum

The Italians have now joined the Europe wide rebellion against the establishment, which is terrifying the Brussels bureaucracy. Yesterdays second round of voting in mayoral elections saw a lawyer who was unknown only a few months ago and is the leader of the Five Star Movement, on course to become Mayor of Rome.

Five Star, the movement founded by the comedian Beppe Grillo had other successes yesterday with another of its leading ladies, elected mayor of Turin.

The Democratic Party, which was struggling in many areas yesterday and the Mafia are not happy at the success of Italy’s new breed of politicians.

If more member states carry on like this, it may soon be well worth while being in the EU.

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Naked Wine on Cloud Nine

The CEO of Majestic Wine (WINE) is very excited about Naked Wines record sales of £100 m., already achieved in the year to 31st March 2016. For those who like their wine clothed and in a glass, Naked Wine is an online crowd funding platform and apparantly one of the best things since sliced bread.

Enterprise Inns (ETI) Reinvigoration of leased and tenanted pubs is continuing, leading to like for like net income growth of 1.5% in the 25 weeks to the 19th March.Its quality commercial property portfolio has seen rapid expansion and a new share buy back programme of up to £25 million is being initiated.

Science in Sport (SiS) is still running up losses despite revenue growth of 18% in the 9 months to 31st December. The underlying operating loss came in at £0.25m as against £0.19m for the previous 12 months due to investment in brand awareness and market entry costs in Australia and the US.

888 Holdings (888) has been hit by a triple whammy of Duties, VAT and adverse currency movements. Despite that it puts a brave face on things and claims that 2015 was a very good year with a like for like revenue rise of 12%, casino revenue leading the way with a rise of 18%. Unless one adjusts it, profit before tax has been halved from $67.9m to $32,5m and similarly with earnings per share which are down to 8.3 cents from the previous years 16.1 cents – gain, unless one adjusts it.  Total dividends for the year are being increased from 15 cents to 15.5 cents

Thomas Cook (TCG) claims to be going for margins rather than volume, which is perhaps as good an excuse as any whilst times are hard and summer bookings are falling. Conditions are challenging and volatile and confidence has been affected by disruption in key destinations.

Winter UK bookings are down 3%, continental Eurrope by 8% and only Northern Europe shows a rise.

Summer holidays are 40% sold which is 2% down on last year =, whilst summer bookings are down 5%.

Hang on to those margins Mr Cook at least until you have to start discounting later in the year, if things get worse.

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Has Majestic Wine (MJW) Lost its Bottle ?

It is amazing how CEOs and company directors prefer to make themselves look stupid, rather than admit to serious management errors which could reflect on their competence and suitability and in some cases the competence of their directors. MJW must have thought long and hard to try and shift the blame for the results of the last 2-3 years on to external causes.

For example the 2013 interim results showed like for like UK sales down by 0.4%. MJW claims they were impacted by Easter being at the wrong time of the year – personally I always thought Easter fell at er .. well at Easter. And then believe it or not the Queens Jubilee celebrations made a further impact later in the half year. Please note that in directorspeak “impact” is always a bad thing but is used widely as it enables directors & CEOs to try and blame external problems beyond their control.  An “impact” never affects a company favourably – all favourable happenings are a conseqence of the sagacity of the Board and the CEO.

In 2014 UK like for like sales fell by a further 0.1%.

Now for the big impact. Full year results for the year to the end of March 2015 showed a 25% fall in group profit before tax, down from 23.8m to £18.4m.

Several years ago MJW imposed on its customers a minimum limit of 6 bottles per order. The Chief Executive pronounced at least twice that this minimum order nonsense gave MJW a compelling proposition. It seemed ridiculous then and it seems even more ridiculous now. But MJW stubbornly stuck to its policy, until today

Today management woke up to the facts of retail life and announced that forthwith the 6 bottle minimum order is abolished. Customer will now be graciously allowed to buy just one bottle at a time..

And the reasons MJW gives for this sudden volte face ? Firstly it will make the shopping experience simpler and easier. In that case why did they make it difficult in the first place. Secondly customers told MJW they wanted an end to the 6 bottle limit. It took all that time for the directors to realise how unpopular it was ??. Most importantly the company now admits that the limit was a barrier for customers.  So why did they keep the barrier in place for so long??

I suspect that the real reasons are that interim results are due in November. Last week a major shareholder, AXA Investment Managers S.A., reduced its holding to less than 5%. MJW may have some explaining to do. An apology could perhaps be too much to expect. An apology may have some “impact”.

Oh and surprise, surprise.  The share price has collapsed by nearly 25% since August

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