Member Info for jange

Negative Points: The group said its operating costs increased 20% to £5.19 billion from £4.34 billion as the company was strongly hit by the expected end of deferral income recoveries at its US subsidiary Niagara Mohawk, as well as higher US system implementation costs. National Grid's UK regulated businesses is highly dependent on the outcome of regulatory reviews, which, to an extent, are outside of management control. The group is susceptible to exceptional weather conditions. In the past, Hurricane Irene previously caused damage and provided for unexpected costs at its US business, with super storm Sandy more recently impacting. National Grid has currency exposure, in particular to the US dollar. As at 30 September, group net debt stood at £21.4 billion, a position that remains unchanged from 31 March.

Financial Highlights: National Grid reported a pre-tax profit of £979 million, 7% lower than a year ago. The company said this reflected the additional cost of pre-financing asset growth at attractive interest rates. The company said its overall revenues were up 11% to £6.72 billion, from £6.08 billion as its UK operations achieved positive sales from the implementation of new RIIO price controls. (RIIO stands for Revenue=Incentives+Innovation+Outputs and is the framework used by UK energy regulator Ofgem for setting price controls for network companies). The company said it had spent £1.7 billion in capital expenditure this year to date, and expected to spend £3.5 billion in the full year. The group's net debt position remained unchanged from 31 March at £21.4 billion.

Interim results: National Grid reported the business was performing in line with its expectations under a new price controls regime in the UK, after reporting a 7% drop in its half-year pre-tax profit. Profits before tax fell to £979 million for the six months to 30 September, the first period the company had operated under the new formula for controlling National Grid's UK prices which are in force until April 2021. The company, which owns and operates gas and electricity transmission and distribution networks in the UK and north-eastern US, maintained its outlook for operating performance, asset growth and earnings for the full year. Steve Holliday, Chief Executive commented he was pleased with the "solid start" to the year the company had made and said the results were in line with expectations, both operationally and financially. He added that the eight-year price controls that were introduced this year, which covered National Grid's principal UK regulated activities, "provide us with the long-term framework and clarity to continue to invest for the future"

Positive Points: The Chief Executive noted that "over the medium term, our confidence that our 'Core' businesses and newer growth opportunities will drive an increase in sustainable earnings is reflected in the increased interim dividend." A dividend payment of 1.4 pence per share was declared, up from 1.1 pence for the previous half year. EMEA Services (formerly UK Services) was reported as generating a "robust performance." "Stabilising" trends were highlighted for the company's US Services division. Management previously announced a strategic review of its US business. Rival Babcock International Group last year sold its US operations following a similar strategic review. A management initiative to broaden the attraction of the group's products to non-defence related industries continues to be pursued. The group's UK services division was previously selected to provide data security services to the UK Government's smart meter programme. The group continues to try to expand its international business. At 30 September 2013, the group had £120.5 million net cash, compared to £74.0 million net cash at 31 March 2013. A progressive dividend policy is now being pursued. A dividend payment of 1.4 pence per share was declared, up from 1.1 pence for the previous half year.

Negative Points: The group again noted that "the short-term range of possible outcomes remains wider than usual, particularly in Global Products." Underlying operating profit decreased to £59.2 million (H1 2013: £95.3 million) due to the impact of US military drawdown on product sales. Statutory pre-tax profit fell to £72.6 million (£80.0 million). The group's Global Products division reported a fall in conflict-related sales. QinetiQ operates in a highly competitive marketplace. The company has exposure to foreign exchange fluctuations.

Financial Highlights: Total group revenue declined to £599.6 million (H1 2013: £685.5m). Underlying or adjusted profit before tax fell to £52.3 million (H1 2013: £85.8 million). Half year dividend increased to 1.4 pence per share (H1 2013: 1.1 pence).

Half year results: In the wake of more downbeat comments from sector rivals, the announcement generally pleased investors, with the share price up over 7% in early stockmarket trading. The Chief Executive noted that "the board is maintaining its expectations for overall group performance in the current year absent any material changes in customer requirements. Over the medium term, our confidence that our 'Core' businesses and newer growth opportunities will drive an increase in sustainable earnings is reflected in the increased interim dividend." A dividend payment of 1.4 pence per share was declared, up from 1.1 pence for the previous half year. Management went on to note that "we continue to reshape the Group through our Organic-Plus strategy. Of the 'Core' businesses, EMEA Services (formerly UK Services) has generated a robust performance with encouraging order intake and is expected to remain steady this year. Despite heightened market uncertainty, US Services is stabilising and the strategic review of this division will determine the path to maximum value.

Positive Points: The company declared that its first half performance exceeded its expectations and added that its performance in the second half will be in line with that of the first six months. The group saw a very strong first half year within Emission Control Technologies, with sales up 13% and underlying operating profit 16% with sales growth in all regions, but particularly in Europe for heavy duty diesel vehicle catalysts ahead of the new Euro VI legislation which comes fully into force from 1 January 2014. With Process Technologies, the division which makes speciality catalysts, sales climbed 15% and underlying operating profit rose 17% helped by the acquisition of formaldehyde producer Formox in March. The Board of Directors proposed an increase the interim dividend by 10% to 17p per share.

Negative Points: The group's long standing arrangements with Anglo American Platinum Ltd will expire on 31 December and this will impact profitability in the fourth quarter, reported management. Johnson Matthey's performance is closely linked to the automotive industry. A stalling of the recent recovery in the US and European autos volumes would negatively impact sales estimates. The group has exposure to foreign exchange fluctuation.

Financial Highlights: Johnson Matthey reported underlying profits before tax of £212.9 million, up 13% from a year earlier. Overall revenues improved by 31% to £6.41 billion. Net debt at 30th September decreased by £43 million (since the year end and was) £792.6 million. The board have proposed a 10% increase in the interim dividend to 17p per share.

Interim results: The multinational chemical and precious metal company declared a strong half year, driven by its Emission Control Technologies (ECT) division. The division, which encompasses light duty vehicle and heavy duty diesel catalyst businesses, benefitted from increased global car and truck production. That helped improve divisional sales by 13% to £815 million, with underlying operational profits of £94.2 million, up 16%. Process Technologies which provides licensed technologies, catalysts and other services to the chemicals, oil and gas sectors performed well in the period with sales up 15% and underlying operating profit up 17% due to strong catalyst demand and the contribution from Formox which was acquired in March 2013. Elsewhere, within Precious Metal Products, which had a poor first half last year, saw sales improve in line with a year earlier. Results from Fine Chemicals were in line with last year. In the second half, the group said its long standing arrangements with Anglo American Platinum Limited (Anglo Platinum) will expire on 31 December 2013 and this will impact profitability in the fourth quarter, however the company would also benefit from tighter European truck legislation

Positive Points: AMEC stated its pipeline of acquisition opportunities remains strong. It added that "depending on the progress made, additional cash returns to shareholders will be considered before the year end". Acquisitions remain a key component of the company's growth strategy with AMEC declaring the pipeline in 2013 for acquisition remains strong. To build on its US nuclear position, the group acquired Automated Engineering Services Corp (AES) for $29 million on 4 November. Currency movements can work in the company's favour. Diversification in both business type customers and geographies operated in is currently enjoyed. The company completed a £400 million share buyback programme in February 2013, and final dividend of £73 million for the year ended 31 December 2012 was paid to shareholders in July.

Negative Points: Engineering firms rely heavily on their implementation track record to win new business. Association with an industrial accident or faulty implementation could impair AMEC's ability to compete for new business. AMEC operates in areas which can be politically sensitive such as nuclear, oil sands, and unconventional oil and gas. While AMEC's broad client base provides diversification, a sharp shift in policy may impact on future profits. Currency movements continue to pose potential headwinds. The group is exposed to project risk in the form of poor cost projections or project delays that could impact earnings.

Financial Highlights: The group's order book was £4.0 billion at 31 October (June 2013: £3.9 billion; October 2012: £3.6 billion). A strong financial position was conveyed by management, with a net cash position at the end of October 2013 of approximately £6 million. The final dividend of £73 million for the year ended 31 December 2012 was paid to shareholders in July

Interim management statement: Engineering group AMEC said it was continuing to perform in line with expectations, aided by a strong performances in the North Sea and its US renewable markets. The group said its "pipeline of acquisition opportunities remains strong", and its order book stood at £4 billion (June 2013: £3.9 billion; October 2012: £3.6 billion). Notable contract wins saw activity in the North Sea remaining high, the continuation of an 11 year contract with EDF supporting new build nuclear power stations in the UK, and Middle East operations attracting new business. Elsewhere, the acquisition of Automated Engineering Services Corp (AES) for $29 million was announced on 4 November will build on AMEC's nuclear position in the US. CEO Samir Brikho said: "AMEC has continued to perform in line with expectations. Our record order book reinforces our confidence as we look forward to 2014"

Management has reiterated its growth targets since they were formulated last winter, which was before a UK economic recovery started to emerge. And disposable income is likely to start rising again at some point. The current squeeze is unprecedented, after all. Most importantly, 522p looks an undemanding entry price

There are risks to Mr Atkins' vision. Rising swap rates may hamper the finance department's efforts to reduce borrowing costs. And with real incomes still falling, the economic recovery has yet to put extra spending money into consumers' pockets. Hammerson's third-quarter update was bullish in tone, but contained few hard signs of recovery: tenant sales were flat during the period and new leases are being signed at a discount to valuers' estimates. Yet while the volatility of large-cap property shares since May reflects valid fears about 'tapering' and rising interest rates, we're inclined to think it represents a good long-term buying opportunity. In the case of Hammerson, the shares are down from a 557p May high. Any negative pressures should be offset by improving investor confidence and, eventually, a recovery in shop rents. Hammerson's valuations sagged in 2012 and in the first half of the current year despite ever cheapening debt rates. They could equally rise even as debt rates climb.

That's because the company currently generates less cash than it could. David Atkins, who took over as chief executive after the 2007-09 crash, wants to shift Hammerson's focus away from making super-profits (and occasionally super-losses) from development towards delivering regular income returns. This has involved reducing the company's cost base, which has historically been among the highest in the sector. It has also involved reducing its average borrowing rate. Both these initiatives have further to run. At 5 per cent, the company's average interest rate is still above today's marginal cost of debt for prime property owners. It will fall as old, expensive debt packages mature. Efforts to reduce operating costs as a share of rental income was hampered last year by the sale of the London office portfolio, which shrunk the income base. But progress on this front should be easier now that rental income is due to increase. Unusually for a property executive, Mr Atkins has set out a formal forecast for Hammerson's growth. He announced alongside annual results in March that net rental income would rise from £259m in 2012 to £320m in 2015. He expects just under half the growth from developments and extensions - above all the company's huge Terrasses du Port mall in Marseilles - with the balance coming from last year's acquisitions and organic rental growth. Combined with cost savings, this underpins expectations that earnings growth will average about 8 per cent a year out to 2015, which should feed directly through to dividend growth.

Rising property valuations will boost the company's book value and underpin its share price. This is particularly true as the shares already trade at a 9 per cent discount to expected year-end book value and a 15 per cent discount to 2014 forecasts. True, this is not wide by the (unusual) standards of the past five years - when Hammerson featured as our 2012 Value Tip of the Year (Buy, 362p, 5 Jan 2012), the equivalent discount was 31 per cent. But in a normalising economic world such a discount does signal value, particularly when the other blue-chip Reits (Land Securities and British Land) trade at a premium. The prospect of a recovery in property valuations leaves investors in a position to enjoy Hammerson's dividends - the main attraction of most property companies - without worrying about the value of their capital. Admittedly, these dividends are less generous than some in the sector. For example, British Land is currently yielding 4.3 per cent even though its shares trade at a tighter discount to book value. But Hammerson's payout has greater scope to grow.

Retail landlord Hammerson's (HMSO) has set ambitious yet realistic growth targets for the next few years and signs of a recovery in the retail property market means the group could soon also be experiencing a tailwind from rents and property values. But despite the increasingly attractive trading backdrop, which is expected to fuel strong dividend growth, the shares trade on the widest discount of all blue-chip Reits. We believe this represents an excellent starting point for an investment. Commercial property values have turned a corner and are now growing at their fastest rate since 2010, according to index-provider IPD. There's no reason to think Hammerson - which owns 20 shopping centres, 22 retail parks and a share of discount-luxury landlord Value Retail - shouldn't also benefit.