Friday, 28 February 2014

Coventry BS - 2013 Results

I like this mutual building society and have been a saver with them for many years.

They are the third largest BS in the UK (behind Nationwide and Yorkshire) and have assets of £28 billion.

The Society have today issued their full year results for 2013(link via Investegate)

Profits before tax are up once again by £41m to £132m - an increase of 45%. As a holder of their PIBS in both my sipp drawdown and ISA accounts, the item I always look for is their core tier 1 ratio which is an indicator of the strength of the company. This ratio has increased to 24.3% and continues to be the highest of any UK financial institution (bank or building society). They have maintained their high credit rating throughout the financial crisis and are the only major high street bank or building society not to have been downgraded over recent years.

CEO, David Stewart, commented on the results:

'Our results for 2013 demonstrate that Coventry Building Society remains in good shape, continuing the track record of strong financial performance and genuinely member-focused service established before the onset of the current financial crisis'.

The PIBS are currently priced around the 102p - 103p mark and current yield, paid gross June and December, is 6.0%. They are due to be called (repaid) at 100p in June 2016.

I am happy to continue holding to redemption.

Thursday, 27 February 2014

Law Debenture - 2013 Final Results

The objective for this investment trust is to achieve long term capital growth in real terms and steadily increasing income. The aim is to achieve a higher rate of total return than the FTSE All-Share Index through investing in a portfolio diversified both geographically and by industry.

Although this is catagorized as a global trust, 77% of the portfolio are UK listed equities. The rationale for this is that most of these companies derive a significant proportion of their profits from overseas operations. The remainder of the portfolio are comprised of Europe (7%), N. America (8%) and Asia/Japan (mainly via funds) (8%).

The trust has today issued results for the full year to 31st December 2013 (link via Investegate). Net Assets total return for the year was 28.6% compared to 20.8% for its benchmark FTSE All Share Index. Revenues increased 7.5% to 16.3p per share and the proposed full year dividend will be increased 5.3% to 15p (2012 14.25p). The trust has either held or increased the dividend in each of the past 40 years.

3 yr comparison -v- FTSE All Share
(courtesy of Digital Look - click to enlarge)

In addition to the investment trust, it also has a fiduciary services business which contributes to overall profits but the value of this business is not accounted for in the trusts NAV.  Earning from this business were 7p per share - if a fairly conservative p/e of 10 is applied, this would value the fiduciary business at 70p per share.

The costs remain low with ongoing charges at just 0.45% and with the added benefit for investors of no performance fee. Also portfolio turnover rate is low at around 10%.

I’m very happy to continue holding  LWDB in my SIPP drawdown portfolio and as I said last year .. " it may well become another of my long term buy and hold core holdings".

As ever, please DYOR.

Friday, 21 February 2014

First Year Anniversary

Well, that year went past in a flash! I started this blog on 21st February 2013 - shortly after finishing my ebook 'DIY Pensions'. A month later I wrote a short piece (here’s the link) mainly about the stats so thought I would update at the 12 month stage.

Page views has now just reached the 63,000 mark which far exceeds my initial expectations. The average per month is currently running at around 4,500 - which works out around 150 per day. Of course, that may be the same 30 individuals each visiting the site 5 times each day!

Around 70% of page views are, not unexpectedly, from the UK. Which leaves 30% from all parts of the world - USA (11%), France, Russia and Germany (all 2%) other countries include Poland, China, Australia, Ukraine, Ireland, Indonesia, Morocco and Qatar.

The most popular pages (tabs) viewed over the year have been ‘portfolio’ and ‘useful sites’ both with around 22% followed by 'basics' (16%), 'about' (13%) and ‘books’ (9%)

The main sources of referring sites continue to be Retirement Investing Today (no posts from RIT for a while?), Google, DIY blogspot and Money Saving Expert - many thanks!

The first couple of months last year started off with a flurry of articles mainly on ‘basics’. My intention is to keep this section fairly simple so I have deliberately avoided adding too many posts.

The majority of posts in recent months have been related to the results of individual shares or investment trusts - these can be a little repetitive and its sometimes difficult to know how to make them more interesting.

There have been quite a few changes for me on a personal level - the main one being a house move last November to be closer to family - especially new grandchildren. I suspect this will take up more and more of my spare time over the coming months and years. However I enjoy my investing and keeping track of various portfolios so, as long as people keep reading, I will carry on with the blog.

Thanks to all out there (all 30 of you!) for reading and feel free to leave a comment from time to time to pass on your own thoughts/experience etc.

As ever, slow & steady steps….!

Thursday, 20 February 2014

Centrica - 2013 Final Results

Centrica is a top 30 FTSE 100 company with a market cap. of around £16bn. It operates predominantly in the UK (British Gas) and USA (Direct Energy) and has 35,000 employees serving 30 million customers.

I purchased Centrica for my shares ISA last November - here’s a link to the post

They have today reported results for the full year to 31st December 2013 (link via Investegate). The group reported that basic EPS over the year was unchanged at 26.6p as CNA declared a 2% reduction in residential customers at 15.25m (2012 15.6m). The loss of customers coupled with high costs for wholesale gas and transmitting energy resulted in operating profits having declined 2% to £2.69bn (2012 £2.74bn). They completed a £500m cost cutting programme during the year.

Centrica said it expects earnings per share (EPS) to decline over the coming 12 months “Market conditions look set to remain challenging for our gas-fired power stations with no sign of material recovery in 2014," the Company said in its results statement.

As we all know, the big 6 energy companies have been in the spotlight in recent months. Firstly, Labour are promising to freeze energy prices if they get elected next May. Secondly, all have recently announced above-inflation energy price rises for 2014 although this has recently been mitigated by a reduction in prices following changes to the ECO programme.

Chairman, Rick Haythornthwaite has been exploring the issues leading to the Company being perceived in a negative light and said :
“Centrica recognises the need to reaffirm and demonstrate its commitments to treating customers well, working constructively with policy makers and conducting its business in the most transparent manner possible. I have found such a response to be instinctive within the company and very much the focus of attention – as evidenced by the pace at which savings from recent UK Government policy changes were passed on to customers.”

“But this alone is unlikely to be sufficient to completely turn the tide. So, in parallel, I have been using my early independence to explore some of the issues to find a way to accelerate the restoration of trust and collaboration.
First, I have been looking into the various criticisms that have been directed towards the industry and am conducting my own independent fact finding review of some of the issues that are most important to our customers and seeing for myself whether we are truly living by the Business Principles we espouse.
Secondly, I have been meeting our customers to discuss what they need from their energy supplier, the trade-offs involved in fulfilling these needs and what it will take to re-establish a sense of mutual partnership. My early impression is that, while there are issues around customer trust and service levels, the reputation of British Gas in the eyes of our customers is vastly better than one would be led to believe from the media and political commentary, particularly when it comes to our service engineers helping customers in their homes.”

Although the share price weakness could continue for some time, I believe the long-term outlook is not as bleak as is currently being painted. Centrica is a large, solid company with a well diversified operation.

I am not anticipating much, if any, increase on the current 17p dividend .The results are possibly a little better than analysts expectations and by midday the share price was up 1.5% at 319p. The current yield is 5.3% with a cover of 1.5x adjusted earnings.

I will be happy to take the income for a while and wait for a turn around in sentiment.

Tuesday, 18 February 2014

BHP Billiton - Interim Results

As the largest mining company in the world, BHP Billiton is essentially a one-stop commodity shop.

BLT makes over half of its profits from mining commodities - particularly iron ore, coal and copper so it is extremely exposed to demand connected to manufacturing and infrastructure e.g. airports, railways and housing, particularly in emerging-market economies such as China.

Despite slowing global demand for base metals, particularly China, and the ongoing crisis in the euro zone, BHP Billiton remains one of the world's most powerful companies.

The interim  results announced today showed underlying profit increased 31% from $5.9bn for the same period last year to $7.8bn, which beat analyst expectations of $6.9bn.(link via Investegate)

Iron ore is BHP’s most lucrative commodity and production increased by 19% for the half-year. Full-year production guidance remains unchanged at 192m tonnes and the group is on track to meet this target.

BHPs net debt has been reduced by $422m to $27bn and the company expect to reduce this by a further $2bn by the end of June.

The interim dividend is 59c  - an increase of 3.5% on the previous year. The GB£ has strengthened against the US$ in recent months so I don’t expect any increase in the sterling payment when converted. .Dividend cover is currently 2.6x diluted earnings. Over the past 10 years, dividends have increased from 26 cents to 116 cents - a CAGR of 16%.

Commenting on margins and returns, the CEO Andrew Mackenzie said:

"The commitment we made 18 months ago to deliver more tonnes and more barrels from our existing infrastructure at a lower unit cost is delivering tangible results," he said.
"Annualised productivity led volume and cost efficiencies totalling US$4.9 billion are now embedded and this is expected to increase to US$5.5 billion by the end of the 2014 financial year.
"This sustainable increase in productivity supported a 9 per cent increase in the Group's Underlying EBIT margin to 38 per cent and a strong improvement in the Group's Underlying return on capital to 22 per cent."

BLT is a long-standing member of my ISA shares portfolio and, although the share price can be volatile, I am happy to continue holding for the income. The results have been well received by the market and the share price is up nearly 2% at 1945p.

More on this following the full year results.

As ever, please DYOR.

Thursday, 13 February 2014

AMEC - 2013 Full Year Results

Amec is a FTSE 100 company operating in the energy services and engineering sector, with major operations centres based in the UK and Americas and offices and projects in around 40 countries worldwide.

Its goal is to deliver profitable, safe and sustainable projects and services for their customers in the oil and gas, mining, clean energy, environment and infrastructure markets, including sectors that play a vital role in the global and national economies and in people’s everyday lives.

Customers, in both the private and public sector, are among the world’s biggest and best in their fields - BP, Shell, EDF, National Grid and U.S. Navy to name just a few.

They have today released results for the full year to 31st December 2013 (link via Investegate). At £3.9m, revenues were down 3% on the prior year, though margins were better, up 40 basis points, at 8.6%. Earnings (EBITDA) also improved 3% to £343m, and at 87.2p earnings per share(from continuing operations) increased 11% on the previous year.

Amec's balance sheet remains in a strong financial position, with net cash of £121m - up from £99m in 2012. Operating cash flow was £341m (2012 £312m).

CEO Sam Briko commented, "As expected, strong performances from our oil and gas businesses in UK North Sea and the Middle East and from US renewables offset weaker markets elsewhere.
We continue to expect good underlying revenue growth in 2014, with ongoing strength in the conventional oil & gas and clean energy market"

Amec have a progressive dividend policy and matching the rise of 15% in 2012, they are proposing to lift the current year from 36.5p to 42p. The dividend paid in 2004 was 11p which gives a CAGR (compound annual growth rate) over the past 10 years of 14.4% - very impressive!

In a separate statement AMEC confirmed investors it will be acquiring Foster Wheeler in a share and cash deal to the value of US$3.3bn. Sam Brikho said "I am delighted we have announced separately this morning the firm offer for Foster Wheeler. The combination with Foster Wheeler is financially and strategically attractive. I believe it is a compelling proposition for our shareholders, customers and employees."

The results have been well received and the share price is up 3% at 1125p and yield 3.7%.

I am happy to continue holding this one which replaced Petrofac in my ISA portfolio in 2011.

Temple Bar IT - 2013 Full Year Results

I hold this investment trust in my ISA - it was the 3rd best performing trust in 2013 from my portfolio of ITs behind Aberforth and Bankers.

TMPL has been managed by Alastair Mundy since 2000. He takes a contrarian view on the timing of buy and sell decisions, buying the shares of companies when sentiment towards them is thought to be near its worst and selling them as fundamental profit improvement and/or re-evaluation of their long-term prospects takes place.

They have this week published full year results for 2013 (link via Investegate).

Over the year, net assets have increased from £600m to £792m. The total return on these net assets was 31.4%, compared with a total return for the FTSE All-Share Index of 20.8%. The proposed increase in the dividend for the full year is 3% to 37.75p. This will be the 30th year of consecutive dividend increase. The trust has significantly outperformed the All Share index over both 5 & 10 years.

5 yr comparison -v- All Share index
(thanks to Digital Look - click to enlarge)

I note from the top 20 holdings that heading the list is short dated UK gilts which would suggest the manager is locking in some of the gains from equities and possibly expecting some correction.

All in all, very happy with progress so far and happy to continue holding.

Wednesday, 12 February 2014

Reckitt & Benckiser - 2013 Full Year Results

Having been a stalwart of my sipp for several years during the build phase RB are now firmly entrenched as one of the cornerstones of my S&S ISA.

Reckitt have today reported full year results for 2013 (link via Investegate). Stripping out the pharmaceuticals arm RBP which is currently under review (announced last October) and which may be sold off, operating profits rose 7% to £2.19 billion on revenues of just over£10bn - an increase of 5% on the previous year.

Many emerging markets economies have come under pressure in recent months which, as we witnessed earlier this month with results from Diageo, is affecting margins for those companies with a significant exposure to this sector.

Reckitt chief executive Rakesh Kapoor said: “I firmly believe that the short-term story on emerging markets is overestimated as much as the long-term story is underestimated.” He added that, in the past year, India and China had put in “very strong results”, although overall, emerging markets continued to slow.

They are proposing a 1p reduction in the final dividend from 78p to 77p which is a disappointment. This will mean a full year dividend of 137p and yield of 2.8%. The dividend is covered 2x by adjusted earnings of 270p per sare.  In my post last March, I  pencilled in 145p for 2013, so quite a shortfall - I will retain the same figure as a target for the coming 12 months.

The results have been reasonably well received and at the time of posting the share price is up 1% at 4880p.

I said in my post last year “This is, in my opinion, a quality operation and one of my better investment decisions. I can imagine holding RB for quite a while - for me it would just about represent the epitome of a long term buy & hold share.”  Despite the modest dividend increase this year, I have no reason to change my opinion.

Sunday, 2 February 2014

Diageo - Interim Results

Diageo is the worlds largest producer and distributor of beers, wines and spirits. It is truly a global company, operating in 180 countries, with a whole barrel of famous brands, including :

Johnnie Walker - number 1 scotch whiskey sales worldwide,
Smirnoff - # 1 premium vodka,
Baileys - # 1 liqueur worldwide,
Captain Morgan - #2 brand rum worldwide,
Gordons - worlds best selling premium gin, and
Guinness - worlds best selling stout.

They have recently announced interim results for the 6m to 31st December 2013. Sales were slightly down on the same point last year at £5.9bn however profits were up 3% at just over £2bn.

Beijing’s anti-extravagance measures triggered a 66% decline in net sales at ShuiJingFang, the Chinese white spirits company in which Diageo holds a 40% stake. Beer sales also took a dive in Nigeria, as drinkers, under pressure from high inflation, opted for cheaper lagers over Guinness and Diageo’s Harp brand.

Earnings before exceptional items, increased 4% to 62.6p. The board have sufficient confidence in future earnings to increase the interim dividend by 9% to 19.7p. If the final dividend is increased by a similar amount, it will make a total of 51.4p for the full year which would put the shares on a forward yield of around 2.9% at the current price.

Commenting on his first 6m at the helm, new CEO Ivan Menezes said,

"We have continued to demonstrate the strength of our broad portfolio and diverse global business in a period which saw a more challenging emerging market environment. Sustained performance in the US and improved performance in Western Europe enabled Diageo to absorb the current challenges in some of our emerging markets. We reacted quickly to the changing emerging market environment, reducing inventory levels in several key markets, which led to a weaker Q2, and tightly managing our cost base to deliver improved operating margins in line with our expectations. We continued to invest in the business increasing marketing spend ahead of net sales growth and keeping our strong focus on innovation and route to consumer improvements.

We do expect some top line improvement in the second half and our focus across the business on the six key performance drivers means that even though some markets may remain challenging, this business is in good shape for the medium and long term and we remain committed to achieving our performance ambition."

Detailed plans will be developed to de-layer the organisation and deliver further operating efficiencies. The management are targeting savings of £200m a year by year ending 30 June 2017 and will fund future change programmes, investment in growth and improved margins.

The results were below analysts projections and the share price has lost around 5% - currently 1795p.

I am happy to continue holding and may be looking at a top up should there be significant further sp weakness over the coming months. Having said that, it is the top holding in my Finsbury investment trust as well as a popular holding in several more of my UK income trusts so just need to keep an eye on overall weighting.

As ever, slow and steady steps…