Football followers will know what I mean. You go to a match, read the report in the following morning’s newspaper and wonder whether you and the sports writer were at the same match.
The Match Report
I had that feeling when I read an online report suggesting that results from Topps Tiles (TPT) were really bad and it was down to Brexit uncertainty. I really didn’t get any of that from the figures and update. In fact, I’ve written far more damning comments on Topps several times in this column compared with the one I am writing now.
Revenue and profits held up pretty well in the 52 weeks to 28 September compared with the previous 12 months and margins were slightly better. The dividend was maintained. The best bit was a sharp reduction in debt.
It is not Brexit but the calling of a general election that has caused sales to drop off since the financial year end; it’s happened in the run-up to previous elections too. Assuming we have a definite outcome, as current opinion polls indicate, that effect will disappear in two week’s time.
I’m less convinced than the board about Topps Tiles’ ability to “deliver sustainable growth over the medium and long term." But if you’ve ignored my advice to stay well clear in the past you will not want to cave in at this point.
Of course, that’s just my opinion. If you saw a completely different picture in the results, you must make up your own mind. Just like you did after last night’s football match.
Virgin on the Ridiculous
Now this is just plain daft. Virgin Money (VMUK) scraps the dividend and the shares leap 40p to 183p. That’s a gain of 28%. The excuse is one-off costs but that doesn’t really wash as Virgin offers only a lukewarm indication of when the payout will be resumed and at what level, merely saying that it “will reconsider dividends for FY20 in line with normal practice”.
Virgin has been hit harder than expected by PPI claims but so have other banks, the very banks that Virgin claims it is going to “disrupt” - and they haven’t scrapped the dividend.
Virgin has great plans for the future, of which we read a great deal in the statement, but that is all talk at this stage. If you believe it now you believed it when the shares were 143p. This statement doesn’t offer anything that justifies revaluing the shares by 28%. If you are interested, wait to see if they fall back further before buying the dream. They were only 105p last month.
Cross Purposes
This column does not take sides on political issues so I leave readers to make their own minds up on how to vote. However, I can set my own prejudices aside and comment on the likely outcome. Investors should work on the basis that the Conservatives will win a clear overall majority and that we will leave the European Union.
While opinion polls can be wrong and there is still time for voters to change their minds, we are not seeing the gradual but inexorable erosion of the Conservative lead that we witnessed two and a half years ago. Nor are we seeing a surge from the Liberal Democrats, the keenest remain party, that would seize Conservative-held seats in remain voting constituencies.
If that isn’t what you want, at least be pleased as an investor that we will have some sort of stability and the chance to move forwards. That should be better for the economy, and shares, than continuing in limbo.
