I was fortunate to get out in April. I have not been following it since but looked at it yesterday and was also surprised by the big drop, not sure if this is bottom but started to pick some up again as they should benefit with more tourism - even those staying in the UK and Northern Europe will be buying sunglasses this year!
The next set of accounts should also be 'cleaner' with the main takeovers behind them.
That is rather harsh. Pittsburgh opened last week, it may have slipped slightly from the original 'end of Spring' but they said why and even then it was only 12 weeks to opening after the contracts were signed. In the context of a three year agreement a months slippage is not too bad. Milwaukee opened on time and looks a far better offering than I was expecting. They have also increased headsets in aquaria.
I was never expecting much from the discontinued elements of the business once they stated they will focus on LBE although the UV cabinets side may have some value.
Not sure what else you can expect unless you want a capital raise so that they have more cash to expand instantly. Personally I would rather they got through this year, lined up orders and then did a raise next year to push the business forward off the back of a solid years trading (and higher share price).
Not surprised.
It is looking more like Truss will win the leadership which should reverse the 5p reduction Greencoat imposed at year end due to Corporation Tax increases. It is also very likely that there should be at least another 4p increase in nav accruing due to increased revenue in the next quarter.
As a consequence I think that they will use this to issue some more equity before year end, they can do it at this price - so only at, or marginally over, nav but with an almost certain rise in the nav to over 160 baked in. With the increasing income plus an equity rise they would move into the FTSE100 (something they mentioned again in the conference call) which would further bolster the share price and help underpin a raise.
With Truss at the top it would seem more likely that the government will just let the REMA consultation play out which means any changes would not be until near 2025 which is the year UKW used as an end for the elevated electricity prices used as a basis for their increased nav (and this is based on very conservative pricing).
It is not without risks but I think it is looking less likely we will see any downgrade to the nav and more likely that UKW will soon be in the FTSE 100 with an increasing gav/nav.
Agree re-US, but they did mention energy costs...
Rolling hedging of fuel costs have restarted and they are 100% fixed for this year and 75% for next at a price comparable to 2021.
Not sure that geopolitical risk will have much of an impact on school buses in the US or regional transport in Spain and Morocco . The main consequence is more likely to be positive, car use has become expensive and higher unemployment will increase the supply of drivers and repress wage rises.
The data for June wind speed has just been released - Q2 comes in at 95% of the 10 year average - UKW production was 1% above budget which I assume reflects the geographic location of their turbines relative to the average wind speed across the UK.
It's very early days but it looks like there will another el nina event this winter which should see a similar weather pattern to last winter.
Busy morning - too many companies reporting today!
Seems to be going OK - US school buses is clearly the biggest problem (it was bolstered by CERTS funding now finished) but this is in one of the least discretionary areas of their operation, ultimately the kids have to get to school and driver shortages/wage inflation will equally apply to competitors. It may be a headwind in the short term but longer term profits will recover.
Interesting conference call. They do not seem to be too concerned about the REMA consultation. It will not report until late next year with an implementation in the mid 20's (by which time the prices are likely to have dropped anyway?).
They have enough cash + RCF to cover forward commitments provided they generate 1x divi cover for the next half - in practice it is likely to be nearer to 4x and so they would be looking at £300M drawn on the RFC by next March (or possibly less?).
RPI is factored in at 3.5% for next year so if you believe it will be higher then there is a chance of an uplift there. They are also being very conservative with the level of discount applied to forward electricity price predictions.
There was a comment near the end that there are 'assets on the market' so for all the talk of covering commitments from cash flow I would not rule out an equity raise if the sp goes to a premium!
A good set of results. They have done better than their US competitor (Rollins) in holding up profits with the inflationary headwinds.
Nice to see their Pest Connect picking up momentum as this is a good differentiator from other pest control companies for rodent control and should offer wage savings going forward.
H1 results tomorrow.
These should be very good and (by my calculations) they should have already easily covered the divi's for the whole year.
Todays next day prices back are over £300MWh and they have averaged around £200MWh for H1. Wind speeds are down bit in Q2 but not by any thing as much as last year. SSE results looked OK for this.
Will they try and play down how well they have done? I assume that they will target paying off debt with the profits (as an alternative to an equity raise?) this year- it sounds better to say reduced debt than increased profits...
We should see a few pence on the nav for this.
Looking forward, I guess if Truss gets made PM then we would also see the unwind of the adjustment to nav made previously to account for the change in corporation tax (and we will likely see a consequential uplift because of higher inflation!)
It would be good to hear what they think would be the potential impact of proposed changes to marginal pricing on the nav. In the longer term they always viewed the link would be to H2 generation, but there would be a short/mid term impact on the price curve they have previously cited for their nav (2022-2026 av = £68MWh)- although this actually looks very cheap by todays prices. SSE and Drax rather skipped over it but it would good to see it addressed as it is the one thing holding the share price back.
The consultation document has just been released-
https://www.gov.uk/government/consultations/review-of-electricity-market-arrangements
I have just seen that Spain are going to be offering free rail travel from September to the end of December.
Whist Alsa's urban routes bus services are price protected their long haul /regional routes are not. As the intention of the subsidy is to reduce car use and help offset high fuel prices will they be offering the same for bus trips especially as many areas are not served by trains? What will be the impact on income for Nex on the routes around major cities served by rail? They had commentated that they had been recovering well on long haul despite increased competition from rail but that was before the free rail travel offer.
Not really what we wanted (although Spanish commuters are probably happy!)
We will need clarity of government intentions towards windfall taxes (or similar) for the broader energy sector before they will do a placing. There is supposed to still be a policy announcement midweek (hence the price drop back to 150) , however there is still likely to be uncertainty going forward until a new PM is installed.
12 month forward pricing is now £360MWh, and forward quarter is well over £400, without the spectra of a government tax grab the sp would be well into the 160's (even with a July that looks to be set to have quite low wind speeds).
However, long term the prices are set to fall significantly as the recent CfD auction set a strike price of £42.47MWh for onshore generation and £37.35 for offshore.
I thought that they had previously said that they would not need to issue more debt until 2023 so I don't think that their announcement of a 1,500,000,000 Euro Medium Term Note Programme on the 13th June has helped.
Well, given the fall in the S&P since the offer they clearly over payed for Terminix. Some of the cost of the takeover is for cash which is going to be more expensive in todays market. It is however noticeable that the sp has picked up since they launched the prospectus for the bonds to cover this. The costs are certainly higher than their last bond issue, their previous 600M 8 year bond (in 2020) had a 0.5% coupon but I guess their margins are such that they can make it work.
As a business that basically involves someone driving around most of the day they have labour and fuel inflation headwinds. These have been mentioned by Terminix (and Rollins in their last presentation).
Terminix still have outstanding Legal issues over historic termite lawsuits so although RTO were well aware of them it is another risk factor. Takeovers are also expensive, Terminix have already spent a lot on this and the cost to RTO will be even higher.
On the positive the takeover will put the company in a very strong leading position , it is a fairly defensive sector and they should be able to keep/rebuild? margins over time. I really like the Pest Connect offering which gives them a clear edge over competitors and will help to reduce labour and travel costs ( this has been held back by the chip shortage but this is now easing).
I though H1 results were originally due yesterday? so we should get a better idea of how things are when these come out.
On June 20, 2022 issuer Rentokil Initial released international bonds (XS2495087137, XS2494946820, XS2494945939).
• In the amount of GBP 400 mln with the coupon rate of 5% maturing in 2032. The issues were sold at the price of 98.37% at par with the yield of 5.213%. The bookrunners of the placement were Banco Santander, Bank of China, Barclays, BofA Securities, HSBC, ING Bank, SEB, Wells Fargo.
• In the amount of EUR 600 mln with the coupon rate of 4.375% maturing in 2030. The issues were sold at the price of 99.663% at par with the yield of 4.426%. The bookrunners of the placement were Banco Santander, Bank of China, Barclays, BofA Securities, HSBC, ING Bank, SEB, Wells Fargo.
• In the amount of EUR 850 mln with the coupon rate of 3.875% maturing in 2027. The issues were sold at the price of 99.586% at par with the yield of 3.968%. The bookrunners of the placement were Banco Santander, Bank of China, Barclays, BofA Securities, HSBC, ING Bank, SEB, Wells Fargo.