Mrs May's Defeat
As Mrs May licks her wounds after last night’s humiliating defeat what matters now is how hard she tries to build a consensus on the basis that a large majority in the Commons including half her ministers (and possibly herself but she is not saying) are determined to avoid ‘no deal’. She has her work cut out as nobody really trusts her competence or veracity any more (ironically, rather like Mr Trump, whom she no doubt fastidiously disdains as her mirror image). She may genuinely be taken aback by the intensity of division both in Parliament and amongst voters but as Prime Minister she has to deal with it responsibly in order to limit the economic and social damage.The scale of the defeat means there is little point in her persisting with the current deal as Europhile MPs who loyally supported her yesterday will now feel able to go their own way. This, in turn, means that Brexit will not take place on 29 March, if at all. The big question is whether she can offer Mr Corbyn, who is surely as desperate as she to avoid either A General Election or Referendum on Brexit, enough to win his backing for an even ‘softer’ deal. Mrs May also has to decide whether to withdraw Article 50 Notice (which can be done unilaterally and would provide more flexibility at the cost of apoplexy amongst Tory Brexiters) or merely extending it (which requires the unanimous consent of the other 27 EU members, which could opening Pandora’s Box). Some argue that nothing has been settled and others that No Deal is more likely but traders think otherwise. Even this first limited reduction in uncertainty is helping the pound move out of the range in which it has been languishing since October. UK equities should start to attract new interest, even if some FTSE 100 stocks may at first be held back if the pound rises quickly through the $1.30s.
The Highway to Growth | SigmaRoc PLC
The former cash shell Messaging International has become SigmaRoc Plc (SRC.AIM). It started a buy and build strategy in building materials a year ago with two good-sized acquisitions. The first was the £45m purchase of Rone, a fully-integrated producer of construction materials and operates quarries in Jersey and Guernsey providing aggregates, concrete products, asphalt and cement. The £9m acquisition of Topcrete brought a precast concrete supplier (posts, barriers, paving and balustrades) operating predominantly in London and the Midlands.These were the first in a pipeline of value accretive deals by the experienced big company management team, who were backed in a £50m placing at 40p by institutions such as Legal & General, Slater, M&G and Nigel Wray. The most recent acquisition is Foelfach Quarry in South Wales, a producer of high polished stone, which is in short supply in the UK. Only 8% of UK quarries can produce this stone, which is used on roads because of its skid resistance. Foelfach had an estimated 1.8m tonnes of stone when acquired and work is underway to increase the resource to 4m tonnes and quadruple production to 80,000 tonnes a year. The finals for the 12 months to December 2018 are due to be reported in April and should show acquisitions making meaningful contributions, with more to come. We expect the net debt to be £12m, including a £10m 6% CLN. The Mkt Cap is £54m with the shares trading on just over ten times prospective 2018 earnings.
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