Markets Live: Tuesday, 30th July, 2013 This is the transcript of the Markets Live session ending at 12:03 on 30 Jul 2013. We'll get to Barclays and the other banks in a minute First,our portrait for today Never focused much on this long standing CNBC clown in the past. That's his publicity shot. A little out of date clearly and you can see from this mad little vid So this guy is dissing Alphaville's choice for the next Fed chair Actually, it's Cardiff's call. He's been way ahead of the curve on this Yellen for Fed Chair Well, how about we start with a public service. Specifically, I wish to help the FCA intern who monitors these sessions. Because I think I've detected some suspicious activity in Barclays shares ahead of today's news. Now, usually, when a 7% shareholder slots out immediately before a cash call, the FCA takes an interest. Details of that sale here, of course. So I expect the call will be going in to Etihad Stadium this afternoon. Just to check all was above board, of course. No impropriety suggested. Surely the Sheikh was simply demonstrating his clairvoyant skills Asymmetric information in markets robs them of their legitimacy and undermines confidence. So clearly that hasn't happened. Anyway, in terms of the news .............. 185p per share on a 1 for 4 basis Underwritten, hilariously. And bigger than expected. Much bigger. If you have a big IB you have to offer good underwriting terms to other IBs, otherwise you undermine your own model Fair point. And you don't want to knacker your chances of getting the call the next time the cap's being passed round. It's true that the underwriters on the hook for longer than usual here - an extra month while the regulators do their bit Barclays PLC (BARC:LSE): Last: 287.96, down 21.09 (-6.82%), High: 298.70, Low: 287.25, Volume: 55.35mBlock The problem, it transpires, is that the balance sheet's a lot weaker than anyone suspected. PRA leverage ratio of 2.2% at June 2013 2.5% previously flagged. But the price drop this morning probably has more to do with the weaker than expected first half - rather than the actual cash call But then I'm the one who's been saying this thing is going to four quid The numbers are, let's emphasise this, surprisingly bad. TNAV/share of 336p, down from 344p in March. Fully loaded CT1 ratio at end June of 8.1%, against 8.4% respectively. Just take a bit longer than i previously thought PPI and Swaps mis-selling provisions of £1.35bn and £650m respectively. We - by which I mean I - waffled for a time yesterday about how a rights issue was the nuclear option. I was wildly wrong. It's the only option. Oh, and Barcap (or whatever it's called now) is looking rubbish as well. underlying PBT of £1.1bn ex restructuring That's about 7% below where the consensus was. FICC revenues of £1.4bn, down 37% qoq yeah, much weaker than the americans US peers were down 22% on average. There really is nothing to like here. Let's chuck in some comment. Hmm - few analysts restricted this morning - cos of the conflicts True. A lot of dull, state-the-facts comment around. Ian Gordon not conflicted But has a slightly wounded tone this morning Having been a buyer (which he stil is) Barclays (Buy, TP 345p cum-rights) Weak Q2 results and £5.8bn capital capitulation u/l PBT £1.93bn was a £0.14bn (7%) miss vs a sharply upwardly-adjusted consensus. Although the "miss" could be entirely attributed to a one-off £0.14bn jv hit in Europe RBB, disappointingly, IB also had a weak quarter vs US peers. FICC -22% Q2/Q2 was particularly poor, offset by strength in Equities. £2bn of misselling top-ups was worse than expected and with the (inequitable) imposition of a June 2014 deadline to meet the PRA's new 3% adj leverage ratio, there's a £5.8bn 1-for-4 rights. Obvious weakness today. IB Q2 revenues of £3.0bn were flat yoy. However, benefitting from non-recurrence of the 2012 LIBOR settlement and lower pay, costs fell 8% to £1.7bn. Despite higher impairments (£0.2bn vs £0.1bn), u/l PBT improved by 6% Q2/Q2 to £1.1bn, 58% of group u/l PBT. Within IB revenues, the FICC performance was notably disappointing, and there was also a one-off £259m Lehman release benefit within Principal Investments which more than offset the higher £209m impairment charge (primarily a single-name exposure). The PRA has imposed a June 2014 deadline to comply with its new CET1 3% adjusted leverage ratio. Additionally, changes in the CRD IV calculation methodology adds £85bn to Barclays" leverage exposure. As such, it has decided to raise £5.8bn new equity. We expect incremental returns attributable to the holding of this additional "surplus" equity to be low, hence the potential for downward revision to our existing 2015e RoE forecast of 10.4%. £5.8bn 1 for 4 rights at 185p (40.1% discount), implies a TERP of 284.24p. Barclays has taken £2bn additional misselling charges: £1.35bn PPI, £0.65bn int. rate swaps. This reads negatively for Lloyds (Sell) and RBS (Hold). Buy rec and 345p cum-rights RoE-g/CoE-g derived TP reaffirmed, although we continue to prefer Standard Chartered (Buy) - our top pick. Ian was a bull, of course, partly on the argument that they could avoid the cash call. Sandy chen is not conflicted either Barclays (BARC LN, mkt cap £40bn, 309p, Sell) - A 1-for-4 rights issue at a 40% discount gives a TERP of 285p - 8% lower than yesterday's close; that's probably the bulk of the bad news. The good news is that the £5.8bn raised should enable BARC to close nearly half the £12.8bn gap to the 3.0% leverage ratio requirement (with the PRA leverage ratio standing at 2.2% as at end-1H13); other measures (CoCos, retained earnings) should enable to BARC to close this gap by mid-2014 without additional equity issuance. It should also boost BARC's fully-loaded Basel 3 CET1 ratio from a relatively weak 8.1% to a good 9.3%. So, good for market (and regulatory) perceptions of BARC's capital strength, but of course, not so good for ROE targets - management have pushed back their target of ROE COE from 2015 to 2016 (whilst upping dividend payout guidance from 2014). On the 1H results, the additional provisions for PPI (£1.35bn) and swap mis-selling £650m are behind the pbt miss, but also a 65% cost-income ratio (with a 38% comp ratio) doesn't indicate much progress on cost-cutting; we think this will get harder with investment banking competitors signalling that they may start paying up for bankers again. Tangible NAVPS dropped again, from 344p at end-Q1 to 336p at end-Q2; RWAs were flat in the half at £387bn. At first glance, these look like a relatively clean, albeit uninspiring set of figures. The big news is obviously the rights issue, which is priced to go. We need to do some number-crunching, but although this will go a long way towards addressing capital concerns about BARC, the underlying operating performance trends might not be showing the big upticks that some had been hoping for. Maintain Sell. Shares still falling as we type. Down 10% since the news was dripped out over the course of yesterday. Carla Antunes-Silva restricted madrugada - my default view is that all men on CNBC are clowns - it just comes out when i type their names "He is one of CNBC's best people" is so damning by faint praise it's perhaps more offensive than anything we've said. Um .... who else. Canaccord? We were unconvinced by the Q113 strategy presentation, arguing that the leopard hadn't really changed it's spots. Today's announcement on the dividend payout ratio marks a sea change, in our opinion, to BARC's attitude to value creation for shareholders. While there is a lot of detail to work through in relation to earnings potential our initial view is that today's rights issue - and the accompanying commitments on capital usage - are far more fundamental than the February strategy review. We suspend our earnings estimates pending adjustment for the rights issue. ("Its" not "it's." Grr.) We need to update our earnings estimates for the rights issue. The market will need to get comfortable on BARC's earnings potential at c.£5-6bn of net income. While guidance on ROE has softened - as shareholders" equity has increased - guidance on cost income ratios and absolute costs has remained unchanged. Global bank dividend yields suggest a dividend of c£3bn would be valued by the market at around 4.0% or a market capitalisation of c.£75bn. Even allowing for today's dilution that implies very material (potential) upside (once we've worked through the numbers). In terms of the sector ............. The extra provisions are clearly rather bad news Had been argued - including here - that people were getting the figures wrong on PPI Because they weren't working in all the people who had never taken PPI in the first place, but had been hustled by some cold caller into making a spurious claim. So, when it was "60% of claims processed" or whatever, it was actually "60% of 250% of the total claims." Barclays has utilized 58% of its PPI provision Lloyds 73% and RBS 68% So ... we've got extra charges to come. How big? Similar, probably. Lloyds Banking Group plc (LLOY:LSE): Last: 67.48, down 1.22 (-1.77%), High: 68.64, Low: 67.38, Volume: 70.17mBlock Royal Bank of Scotland Group PLC (RBS:LSE): Last: 318.60, down 7 (-2.15%), High: 325.00, Low: 316.40, Volume: 4.62mBlock Befoer we move on from banks just draw attention to this report from Kiran Stacey My account was scammed a few years back - and i wish i had had time then to investigate it fully The bank (Halifax) simply refused to investigate, Siad they'd support me if i decided to go to the police, but they would not take the lead about five grade was nicked Andy Welch's piece yesterday in the New Statesman about how he was scammed is fascinating. Ah, will have a read Ingenious, organised and cunning, particularly for people who can spend £95 in one night in Chicken Cottage. So we have too many results today. We'll do requests but won't try to cover them all. @Swedes: I believe so yes. BP the other obvious casualty. BP PLC (BP.:LSE): Last: 447.40, down 20 (-4.28%), High: 460.00, Low: 447.25, Volume: 16.88mBlock Which is holding back the FTSE from doing anything interesting. Up 12 points at 6572 at the moment. So BP Q2 net income of $2.7bn was 20% below the consensus Underlying, it's relatively weak But the big impact is a lower than expected contribution from Rosneft Along with an effective tax rate of ..... wait for it ............ 45% Underlying, it's about a 6% miss. Which is largely on the downstream side. How have they got a 45% tax rate? I have no idea. 36% was what the market had been expecting. Outlook rather downbeat as well. North sea problems. Alaska maintenence, etc etc. @anthrax: that really is tempting fate, isn't it? Fred Lucas at JP Morgan throws lots of numbers at us but, as always with Fred, they're numbers worth reading. BP has reported Q2 2013 earnings of $2,712m - this is 21% below the consensus (all consensus data sourced from BP) of $3,410m and 26% below our forecast of $3,650m. EBIT is 9% light, the bottom line is thrown by a much higher than expected tax rate of 45%. Cash conversion is weak and Macondo provisions will be increased in Q3. In truth, there is very little to be positive about. Measured in %, this is BP's largest quarterly earnings miss on our database which runs back to 1999. Core EBIT (E&P plus Downstream) of $5,707m is 9% below the consensus of $6,255m and 16% below our forecast $6,763m. Key consensus variances to this line - Rosneft $ (442) m and downstream $ (129) m - weak Fuels and Petrochemicals. BP has a Q2 positive earnings surprise trend of +2%, so these results are well adrift from that trend beat. BP takes the "wooden spoon" in the Q2 2013 earnings surprise pool as follows: GALP +13%, TOTAL +4%, BG +2%, Repsol +1%, Statoil -3%, BP -21%. YTD 2013 BP shares have generated a total £ return of +13.5% - thus outperforming the European sector (+9.4%) and RD Shell (+8.5%), but underperforming ExxonMobil (+17.2%) and the FTSE All Share (+15.2%). BP's (RD Shell) headline 2013 valuation metrics remain very supportive - PER 8.7x (9.0x), dividend yield 5.2% (5.1%), PBV 1.1x (1.1.x), EV/DACF 5.0x (5.4x). BP's discount to our SOTP is 42% - almost double RD Shell's discount of 22%. BP also trades on a much lower 1P EV per boe of $10.4 ($19.8) and downstream adjusted 1P EV per boe of $6.9 ($7.9). We maintain our O/W recommendation but, even though these results were expected to be "messy" and weak, we expect the shares to surrender their YTD outperformance today as FY consensus EPS are reduced by 4-5%. Jeepers, this is a real miss. hadnt appreciated how big a miss As I say, Rosneft's the main problem, which is a one off. And note BP's left tax guidance unchanged for the full year, so that's probably a one-off too. full-year tax rate at 36-38% once the FX nasties drop out. Barclays not convinced. We continue to believe that investors will have to wait for the strategic progress made by BP to be matched by its financial and operational performance. This is well demonstrated by what was a disappointing set of 2Q results, with earnings down 26% y/y and 20% below consensus. Whilst we would acknowledge much of this reflects one-off impacts - namely a weaker-than-expected contribution from Rosneft and deferred tax losses - for us it highlights the broader risks to consensus expectations associated with the anticipated turnaround in 2014. This, combined with the continued uncertainty in the US, a less attractive upstream portfolio than its peers, and an unattractive valuation, leads us to continue to rate the shares Underweight with a price target of 475p. (nichoman - yes, quite possibly. But with Barc we started this deep value stuff when the stock was trading under 2 quid) (The time to buy BP was when it was poisoning the US eastern seaboard. Looks like dead money now, in my non-advisory opinion.) it's sitting there, at the top of the board GKN PLC (GKN:LSE): Last: 345.60, up 18.5 (+5.66%), High: 349.40, Low: 334.50, Volume: 2.83mBlock They're not commenting on Spirit. You'll remember the brief kerfuffle last week on a rumour that they were about to spend $5bn or so on the former bit of Boeing. Looks more likely, it transpires, that they'll buy a factory or two. Though, to be clear, the company's not commenting beyond "we like aerospace acquisitions" In terms of the numbers, they're good against expectations. Slightly ahead of forecasts, but it's a small beat across the board, which is reassuring. "A Spirited Performance" says Jefferies. See what they did there? The 1H13 trading profit appears significantly better than we expected. Organic growth in sales was 2% (1Q13 flat). Global light vehicle production remains volatile, but GKN's 2Q13 performance provides a sighting shot as to how strongly GKN can perform, in our view. Speculation about a possible acquisition of Spirit's Wing Systems division may, however, divert attention to some degree. The 1H13 results in brief. Management sales (including JVs) rose from £3,459m to £3,869m (Jefferies £3,809m) with net acquisitions/divestments contributing £325m. Management trading profit increased from £291m to £320m (Jefferies £298m). We note that a £25m charge for restructuring was made in 1H13. Management PBT rose from £264m to £278m, but Management EPS fell from 14.4p to 13.8p (Jefferies 12.5p), the latter reflecting an increase in the book tax rate from 17% to 20%. The dividend was increased from 2.4p to 2.6p (Jefferies 2.6p). Net debt at end 1H13 was £928m compared with £940m at end 1Q13 and £871m at end FY12. phil5 - got a link for that? Proof of the pudding. Global light vehicle production in 1H13 was around 1.4% higher than in 1H12. There was still some volatility across GKN's major end markets in 2Q13, although less marked than in 1Q13. In particular, China saw growth of 12.6% (1Q13, +10%), Brazil grew by 17.2% (1Q13, +11%), but Japan fell by 13.2% (1Q13, -16%), Europe fell by 3.8% (1Q13, -9%) and India fell by 6.2% (1Q13, -6%). Such a global market backdrop is not one against which we believe GKN can flourish, but there were encouraging portents in 2Q13, in our view. The organic changes in divisional sales during 1H13 were: Driveline +4% (1Q13, +1%), Powder Metallurgy +2% (1Q13, flat), Aerospace +3% (1Q13, +3%) and Land Systems -7% (1Q13, -8%), so GKN was getting back into its stride during 2Q13 although organic sales growth in 2Q13 remained subdued relative to FY12 (Driveline +7%, Powder Metallurgy +7%, Aerospace +8% and Land Systems +1%). One day, the overall trading backdrop will be more benign and we expect GKN will then perform very strongly. Funding and liquidity and Spirit. No comment is made about a possible acquisition of Spirit's Wing Systems division. We note that at end 1H13, GKN had undrawn committed UK borrowing facilities totaling £652m, with total UK committed bank facilities of £941m. The next major maturities of the committed bank facilities are £598m in 2016. All of GKN's committed credit facilities at end FY12 had a financial covenant requiring EBITDA of subsidiaries to be at least 3.5x net financing costs and for net debt to be no greater than 3x EBITDA of subsidiaries. The covenants are tested every six months using the previous 12 months" results. For FY12, EBITDA was 13x greater than net interest, whilst net debt was 1.2x EBITDA (FY12 EBITDA was £743m). We believe GKN has ample room for manoeuvre in the event that it is considering the acquisition of Spirit's Wing Systems division. Pensions. At the FY12 stage, GKN flagged that it would adopt IAS19 and that it would review the structure of the pension partnership arrangement, which could have then increased the reported deficit by £340m. At end 1H13, the accounting deficit on the UK pension schemes was £621m compared with £341m at end FY12, an increase of £282m that is more than explained by the end of the pension partnership and should be no surprise. We believe GKN's valuation still lies in that no-man's land between a peak-of-the-cycle valuation and that where one can reasonably anticipate steady - not strong - sustained growth in global light vehicle production. GKN's organic sales growth would significantly outpace the latter, in our view. In 2Q13, we believe there were signs that the latter will indeed be the case. We hope attention will focus on that. That's the evergreen Sandy Morris. Just catching up on this MG Rover stuff You know when I was at the Guardian we did a HUGE investigation into this Ian Griffiths went through the accounts of the Phoenix Four with a fine toothcomb And we published our stuff making all sorts of allegations The FT followed up with their own number crunching - and announced that our numbers were all completely wrong Well, that turns out not to have been the case Deloitte disputing the outcome here, i should add Will try and dig all this out later Was an outrageous scandal Right, where were we? Oh, Domino's being mentioned on the right. Domino's Pizza Group PLC (DOM:LSE): Last: 546.00, down 54 (-9.00%), High: 587.00, Low: 542.50, Volume: 1.44mBlock Typical story really ..... Was tremendously successful for ages ...... Most successful company in the FTSE, according to one (slightly spurious) measure Then they tried to invade Germany. And it's not quite worked. Basically, we're looking at Germany not hitting breakeven until 2016 or 2017, rather than 2015 as previously stated. They've already had to rejig the franchise to owned model there, which contributed to the earlier profit warning. So why don't Germans like overpriced, rather too thick and overly damp pizzas? The results themselves are a horrible read so I'm going to default to Canaccord to take us through them. System sales are up 13.8% and despite operating margins rising 30bps, PBT growth has lagged sales growth at 10.3%. These growth rates exclude Germany and Switzerland which when accounted, has resulted in PBT falling 46%. The group has incurred exceptional charges of £12.3m relating to impairments of the German business. Whilst the headline UK and IRE LFL sales number will make for some positive reading at c6.5%, we are not seeing the expected profit flow through that one would expect. Greater clarity on the price, mix and volume dynamic is required as one should not lose sight that DOM Plc makes c75% of its revenues as a food distributor to its franchisees. Overall EPS (FD) is up 5.4%, DPS is up 7.6% but overall net debt is up 43% to £23.3m. Moreover the CFO, Lee Ginsberg is leaving the business at the 2014 AGM and a search for his successor will commence shortly The performance of the German business is of increasing concern. Whilst management highlight German LFL sales up 23.8%, at the same time there is a £12.3m write down of German assets. The CEO comments further on that there will be a longer path to profitability with breakeven in 2016 or 2017 rather than 2015. We are also concerned that the drivers of the +6.4% LFL sales in H1 are not sustainable, and could be impacting franchisee margins via an increase in overall system promotional activity. Whether this dynamic as well as the majority of new openings being area splits, could be hampering franchisee appetite to open more stores. This would represent the one main risk to the investment case. Comments that pressures on commodity prices are rising could also lead to higher prices being passed onto franchisees. The shares trade on a PE of 27x and EV/EBITDA of 16.6x for a business that is now delivering forecast and balance sheet downgrades. Our forecasts assume PBT growth of c15% in the UK & IRE business vs. the 10% delivered in H1, with the overall group c5% - forecast risk remains on the downside. Cash from operations of £15.5m (2012: £18.8m), significant working capital investment in Germany (increase in debtors) has resulted in higher debt. We feel the combination of multiple moving parts has resulted in higher risk suggesting a moderation to our Quest™ derived target price which we reduce to 500p. For what's basically a wholesaler of flour, water and sausage. Clearly, it's mainly results today. @Tom: three-quarters of sales as a wholesaler to franchises. But there is one rather late-to-the-party sellside downgrade. And it's our old favourite ..... Man Group PLC (EMG:LSE): Last: 80.10, down 2.6 (-3.14%), High: 82.10, Low: 79.90, Volume: 7.26mBlock Merrill's noted that AHL's still terrible, for what seems to be no good reason. AHL stabilised after the sharp falls caused by bond yields backing up in May. However, like other CTAs it has recently taken another leg down, albeit a modest one. Given our last set of numbers were struck before AHL reached the bottom of its post taper talk decline, this has led to material estimate cuts (as did the first AHL fall). Partly, this is due to negative performance eroding AUM, but also we have assumed somewhat higher net redemptions from AHL. We don't think that money will flood out of the fund; AHL's performance directionally mirrors the CTA style, it has a diversified investor base and the strategy itself is not monolithic. AHL Evolution, for example, strikes us as marketable now. However, we think our previous flow estimates are likely to be too optimistic. As a result, we have cut numbers for FY 13-15, by 33-36% for management fees. Our price objective has fallen in lockstep, and is now 96p, from 130p. This still provides some upside for Man, but not enough to recommend the shares, we think. We think the stock could fly given a fair wind from AHL. Equally, if AHL takes another leg down, once again we would be looking at increased outflows and more estimate cuts. Results Friday, of course. That may well be the capitulation of the last Man buyer. We should return to Barc Maybe my talk of the underwriters getting money for nothing was premature Sold off heavily again over the last few mins currently trading at 284.8 Chen at Cenkos (a seller, all the way up) has an update out Barclays (BARC LN, mkt cap £38bn, 295p, Sell) - Firstly, we thank BARC for its improved disclosure on capital and leverage - and the relative absence of spin; it makes the bank far more analysable. That said, looking beyond the capital uplift from the rights issue, we see signs that the underlying operating performance may decline, especially in the core Investment Banking division. FICC income was down 37% 2Q13 vs 1Q13, with Credit Products income down 47% (to £508m in 2Q13) and Macro Products down 19% (to £900m). Management said that this shouldn't be considered the new base level, but we wanted to ask on the analyst call if we could take guidance from page 52 of the results announcement - which seemed to indicate that the volume of repo/reverse repo transactions would decline as a result of a stricter interpretation of leverage for securities financing transactions taken by the PRA. Given that BARC had £223bn of reverse repos and £259bn of repos on its balance sheet as at 30 June 13 (of a £1.47 trillion balance sheet), we think a reduction of leverage in this business could materially impact flows and thus income from it. As a more general observation, Barclays was clearly indicating that the balance sheet would shrink further, but that RWAs wouldn't drop correspondingly because of further regulatory measures, particularly in investment banking. In other words, a cap on income growth. As we have noted before, this implies that BARC needs to both improve margins and cut costs - but in investment banking in particular, the sector trend is moving in the opposite direction, particularly on cost-cutting, where comp ratios seem largely stuck around 40%. If BarCap want to cut their investment bankers" comp ratios to, say, 35%, we think it will run the risk of losing their "good" investment bankers to rivals willing to support higher comp ratios. Or in other words, a cap on achievable profitability. Bulls would probably argue that adjusting yesterday's consensus 2015 EPS of 50p for the 1-for-4 rights would give 40p of EPS, and with a 50% payout ratio, a 20p divi. We don't think BARC will get to that 40p of EPS by 2015, however - given the income/cost headwinds cited above, and the fact the divi payout will be from statutory earnings (i.e. including PPI, swap, LIBOR, SFO/FCA and other fines/charges). danrwl -didnt see, wil catchup Interesting to see if BARC rallies or keeps falling once the US wakes up. I suspect we may be in for a double-figure-percentage decline today ..... One minute. We don't have time to do Pace or IPF or Telecity in full, but here's some grey on the first one. Strong growth in demand for media servers from Pace's largest customers in the US has fuelled significant growth in revenues and profits in H1 2013. Operating profits were up 57% (14% underlying), 3% above our estimate. Strong FCF allowed Pace to reduce its net debt by 58%, setting it on course to be net debt-free by the end of 2013. Guidance has been upgraded and our EPS estimates rise by 6% in 2013E and by 5% in 2014E. This is JP Morgan Caz. Earnings significantly improved. First half operating profits were substantially (57%) higher than the prior year and 3% above our estimate. The prior year was impacted by the HDD supply chain disruption, normalising for which the YoY growth in operating profits was 14%. Underlying revenue growth was 22%, driven by high demand for media servers in the US market. At 7.3%, the operating margin was above last year's 6.1%, but lower than the prior year's ex-HDD issues margin of 7.8%. This reflects the high volumes of lower margin media servers sold to Pace's three largest customers in the US. We expect a shift towards higher margin products in H2 2013. FCF was $92.0m, taking net debt down to $68m from $163m at the start of the year. Second half will see margins rise. We expect lower volumes of media servers to the US market in H2 2013, which will prove positive for the operating margin of the overall sales mix. We expect margins to be further enhanced by growth in software and services. We forecast second half operating margins of 8.2%, giving 7.7% for the year.  Guidance upgraded. Pace has reiterated that it expects broadly flat revenue this year, but has increased its operating margin guidance from "approximately 7%" to "greater than 7.5%."  EPS estimates increased. We have increased our EPS estimates by 6% from 40.8¢ to 43.3¢ in 2013E and by 5% from 45.3¢ to 47.7¢ in 2014E. Our June 2014 price target increases from 290p to 302p on the basis of higher earnings estimates. We reiterate our Overweight rating. Pace looks like it's fighting off obsolescence, but I guess it's making a decent fist of it. And with that, I guess we should wrap up. And thank you Rabble I said I would come up with a date for the end of summer drinks But that will have to wait for tomorrow