Interim Results Updates For Two FTSE stocks – JDG and KGF

Judges Scientific Plc

Judges Scientific Plc (JDG), incorporated in 2002, is a United Kingdom based company that engages in the acquisition and development of a portfolio of businesses of scientific instruments. The group’s companies have worldwide operations in areas and spaces like higher education institutes, scientific community globally as well as manufacturing companies and regulatory bodies. The company’s primary model is to acquire businesses that can generate sustainable profits and cash.

Its business divisions are – Armfield Limited, involved in the design of electronic and electrical equipment and research equipment. Fire Testing Technology Limited, which is engaged in the design, manufacturing and service of equipment that measure the reaction of an array of substances to fire, Scientifica Limited, manufactures and distributes high precision scientific equipment for use by electrophysiology and imaging researchers. Quorum Technologies Limited, which manufactures scientific equipment majorly applied in electron microscopic sample preparation. Sircal Instruments (UK) Limited, which is involved in designing and manufacturing rare gas purifiers as well as distributing them.

JDG Financial Performance (Interim Results for the six months ended 30 June 2019)

On 18 September 2019, JDG announced its interim results for six months ended 30 June 2019. The company reported a year on year revenue growth of 9 per cent from £37.0 million in H1 2018 to £40.2 million in 2019. The company reported that the revenue was robust in North America, where it was up by 33 per cent year on year. The primary factor for the revenue growth was management’s efforts to reduce customer delivery lead times. This had an impact on the order book, which reduced as sales moved ahead of the order intake in the first half. The Adjusted Profit before Tax (PBT) increased to £8.4 million in H1 2019, a jump of 27 per cent year on year from £6.6 million in H1 2018. The growth in Adjusted Pre-tax profit was a result of the increase in the revenue in the first half and also the favourable foreign exchange environment. This also flew into return on total invested capital (ROTIC) which grew to 31 per cent for the last twelve months (LTM) ended 30 June 2019 from 24.2 per cent as on 30 June 2018. The adjusted diluted earnings per share (DEPS) was reported at GBX 107.0 per share in H1 2019, an increase of GBX 24.9 per share from H1 2018 figure of GBX 82.1 per share.

The company reported cash from operations for the first six months ended 30 June 2019 at £8.5 million, a jump from £6.3 million reported in H1 2018.

Due to the excellent performance in H1 2019 and in line with the progressive dividend policy of the company, the board announced an interim dividend of GBX 15.0 per share, a 25 per cent increase from H1 2018 dividend at GBX 12.0 per share. The company announced that the dividend would be paid on 1st November 2019, Friday and the Ex-Dividend date will be 3rd October 2019, Thursday. The company reported that the interim dividend is covered seven times by the adjusted earnings, which is the same as of the previous year.

JDG Share Performance

On 18th September 2019, at 08:01 AM GMT, while writing, JDG traded at GBX 3705.0 per share; an increase of 7.70 per cent or GBX 265.00 as compared with the previous day’s closing price at GBX 3440.00 per share. Judges Scientific Plc rocketed to its 52-week high of GBX 3720.00 in the day’s trade. The company’s Market Capitalisation was around GBP 213.96 million.

2,360 stocks of the company have been traded by the time of writing. The average volume of trading per day for last one year has been 7,890 shares. The stock has surged 33.45 per cent in the previous one year from the price of GBX 2760.00 per share.

The beta of the stock was at 1.0035, showing that the share price movement is as volatile as the benchmark market index.

Outlook

According to the first half trading update, the group’s overall performance has been in line with the expectations, even though there was a minor dip in the performance in the second quarter. A challenge faced by the company in the first half was sales accelerating ahead of the order intake, which resulted in the reduction of the order book. As per the company, post reporting, the order intake has recovered, maintaining a healthy order book. Another challenge facing the company is the uncertain geopolitical circumstances, notably the Brexit, which may affect the future performance of the group. Albeit all the challenges, the company, on the back of a robust financial performance in the first half, believes that Adjusted Profit Before Tax and the EPS will exceed the consensus of the market for the full year.

Kingfisher Plc

Kingfisher Plc (KGF) Incorporated in 1982, and based in London United Kingdome, is a home improvement company with presence in Europe, Russia and Turkey. The company’s transformation plan, which commenced in FY 16/17, has centred around benefitting from the scale of the Group by creating a unified company for the advantage of its customers and expanded business. The transformation process has focused on creating a single, unique and leading home improvement service offering, factoring in digital operations and optimising operational efficiency. The company is engaged in the provision of Home improvement products and services through its brick and mortar retail stores as well online through its website and app-based presence. The company has more than 1300 stores across Europe which it operates in the name of its six brands, which are: B&Q – Largest home improvement and garden centre retailer in the UK, Castorama, Brico Depot – Operates a low-cost format offering, ScrewFix – UK’s largest multi-channel supplier of trade tools used in plumbing, kitchen, etc., Koçtaş – Number one home retailer in Turkey and GoodHome – Provides more simple ways for home improvement.

KGF Financial Performance (Interim Results for the half-year ended 31 July 2019)

The company announced its results for the half-year ended 31 July 2019 on 18th September 2019. The company reported the sales for H1 2020 at £5.99 Billion, a marginal decline of 0.9 per cent (CER Basis) year on year from the sales reported in H1 2019 at £6.08 Billion. The company reported retail profit at £466 million in H1 2020, a decline of 4.8 per cent (AER basis) year on year from £490 million in H1 2019. The company’s transformation activity continued, which led to the rollout of further capabilities in the unified IT platform, resulting in some disruption impacting sales in Castorama France and B&Q. This was partly offset by decent sales performances in Screwfix, which continued to increase its market share. The company also reported an increase in the Adjusted Pre-Tax profit (PBT) by 3.7 per cent year on year from £325 million in H1 2019 to £337 million in H1 2020, reflecting £16 million of transformation P&L costs, £36 million lower than H1 2019.

Statutory Profit Before Tax (PBT), which includes the transformation P&L costs and exceptional items, declined to £245 million in H1 2020, a change of 12.5 per cent year on year from £280 million in H1 2019.

The board declared an interim dividend of GBX 3.33 per share, same as that of the last year in reflection of the flatlined performance in H1 2019. The company reported that the interim dividend is covered 2 to 2.5 times as of the adjusted basic earnings per share. The company announced that the dividend would be paid on 8th November 2019, Friday and the Ex-Dividend date will be 3rd October 2019, Thursday.

KGF Share Performance

On 18th September 2019, at 08:47 AM GMT, while writing, KGF traded at GBX 199.05 per share; a decline of 1.22 per cent or GBX 2.45 in comparison with the previous day’s closing price at GBX 201.5 per share. As of the last trade, Kingfisher Plc traded above its 52-week low of GBX 186.15, on August 21, 2019. The company’s Market Capitalisation was around GBP 4251.9 million.

2.47 million shares of the company have been traded by the time of writing. The average volume of trading per day for last one year has been 7.09 million shares. The stock has plunged 24.39 per cent in the previous one year from the price of GBX 263.60 per share.

The beta of the stock was at 0.8965, showing that the share price movement is less volatile compared to the benchmark market index.

Outlook

The company’s financial performance was consistent in the first of the year but slightly below the expectations of the market because of the reduction in sales in France. But the company continues to focus on its strategy of launching a diverse range of new product and services. The company expects FY 20 Gross Margin percentage after clearance to be flat, and hence the performance expectations are in line to the market consensus.