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Persimmon and Non-Standard Finance looking to sweep recent history under the carpet

Tuesday's corporate news includes results from Persimmon, Non-Standard Finance, Finablr, Wood Group and BHP

Scancell Holdings PLC -

Half-year results from Persimmon on Tuesday are another opportunity for the housebuilder to rebuild its reputation and a share price that has materially underperformed sector peers this year.

As well as lingering investor discontent over boardroom pay, Persimmon has fielded a wave of customer complaints about poor build quality and, along with grievances about punitive leasehold terms, this fed worries and rumours that that government could curtail its ongoing participation in the lucrative Help to Buy scheme.

In a trading update last month, the FTSE 100 group revealed it had sold fewer houses than last year so far in 2019 as management look to hold back sales until later in the construction process to try and improve customer satisfaction levels.

Investors will be keen to see further progress around this issue under new chairman Roger Devlin and chief executive David Jenkinson, who took over after ex-boss Jeff Fairburn stepped down last November after condemnation of his £75mln bonus, but this is coming at a price of squeezed profit margins.

Having already announced sales volumes down 6% to 7,584 and average selling prices just above flat at £217,000, Persimmon is expected to reveal first-half margins just below the 31% achieved in 2018, despite slightly higher selling prices.

“It won't be an overnight fix but Persimmon is a well-run business, which has not had its priorities in the right order in the last few years,” said broker Peel Hunt.

“Inevitably, fixing the problems will cost the group some money but with industry leading margins it can afford to do so. Arguably, it can't afford not to do so if the Government gets tough on quality in return for the use of Help to Buy.” 

UBS analysts have pencilled in a pre-tax profit of £509mln (H1 18: £520mln), adding that sales and margin guidance will be “key”.

NSF investors await to hear next steps after failed Provident Financial takeover

Non-Standard Finance will also be focusing firmly forward at its interim results on Tuesday, trying its best to sweep its failed hostile takeover bid for Provident Financial PLC (LON:PFG) under the rug.

The sub-prime lender’s shares have halved this year as it abandoned a months-long battle to buy its rival due to resistance from shareholders.

A key focus for investors in the first-half numbers will be on one-off costs related to the deal, which are expected to come to £10.0-10.5mln, plus any remarks about what the company plans to do next.

As for the financials, Peel Hunt expects NSF to post a 45% rise in adjusted pre-tax profit to just over £8mln, reflecting a strong ongoing loan book growth in guarantor and branch-based lending while home collected credit is expected to be more modest.

Finablr posts first results since IPO

Tuesday will see the maiden interim results from Travelex owner Finablr, which floated on the main market in May.

The UAE-based payments and bureau de change group was forced to slash the pricing of the initial public offer to 174p per share from the initial 210p-260p range.

Since the IPO, the company has put out a first-quarter trading update for Travelex, where revenue grew 3% to £174.5mln, amid a “strong” performance for the Middle East and Turkey.

Underlying earnings (EBITDA) from the core Travelex business, excluding disposed operations, gained 79% to £2.9mln.

“Travelex's revenue is generally lower for the first quarter of the year because a significant part of its business serves the leisure segment of the travel industry, which is particularly active during the summer season in the Northern hemisphere,” management said.

JPMorgan Cazenove, which was a sponsor on the IPO, is estimating that the group can generate compound annual EBITDA growth of 19% for the period from 2018 to 2021.

With the shares having hit a low as 140p and rallied but still below the IPO price, Barclays, which was a joint co-ordinator on the IPO, said it expects “it will take time and a number of positive data points for the market to attribute fair value to the stock”.

Blue-chip miners in shadow of global slowdown

BHP Group’s share price has been under pressure this month amid concerns over global growth, the US-China trade spat and a slowdown in Chinese construction activity.

Earnings forecasts for the group have already been revised down after a mixed production update in July, so future production levels for the company’s various commodities, particularly iron ore, will be closely watched by investors when the group reports its finals on Monday.

Wood investors await restructuring and dividend news

Not dissimilarly, recent volatility in the oil price has caused issues for many companies in the oilfield services sector, and John Wood is likely to be no exception when it reports its interims.

The FTSE 250 group's results will be watched for any news on how its restructuring programme is progressing, as well as whether it still expects a 25% increase in operating profits as it guided back in June.

Investors will also be hoping for any news on increased dividends as the company’s cash flow has steadily improved this year, raising hopes of a higher pay-out.

Tuesday August 20

Finals: BHP Group PLC (LON:BHP), Scancell Holdings PLC (LON:SCLP)

Interims: Non-Standard Finance PLC (LON:NSF), Empiric PLC (LON:ESP), Finablr PLC (LON:FIN), Global Ports Holding PLC (LON:GPH), Kenmare Resources PLC (LON:KMR), Persimmon PLC (LON:PSN), John Wood Group PLC (LON:WG.)

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