Markets have opened on a slightly weaker note in London, as traders tidy up their books ahead of the weekend amid a dearth of economic news. Sentiment is likely to remain fragile ahead of next week's US Federal Open Market Committee meeting. Futures contracts are pricing in a 30 per cent chance of a rate rise, with most people expecting the Fed to wait at least until it can give firmer guidance in order not to destabilise markets.
IC TIP UPDATES:
JD Wetherspoon (JDW) reported a 3.8 per cent drop in operating profits before exceptional items. Like-for-like sales were up 3.3 per cent but this was lower than the 5.5 per cent increase recorded a year earlier. Bar sales and food sales both showed weaker gains, while slot machine sales actually fell by 2.8 per cent. Inevitably, operating margins took a hit, eroded by higher staff costs, utilities and depreciation, and fell from 8.3 per cent to 7.4 per cent. Sell
Summit Germany (SMTG) which runs a portfolio of German offices, delivered a strong first-half performance that saw rental income up by 9 per cent. The company also announced a fundamental restructuring of its debt portfolio. A secondary placing raised €120m (£87m), and a new €33m 7-year debt facility was secured at 1.96 per cent. This allowed the repayment of a €50m shareholder loan, which meant that interest expenses in the first half fell from €12.3m to €5.3m. Buy
Great Portland Estates (GPOR) has pre-let the entire office space at its Rathbone Square development in London to Facebook, which will lease just over 227,000 sq ft on a 15-year term. The development is scheduled for completion in February 2017, and Facebook will be entitled to a 30-month rent free period and then an initial rent of £16.9m. It has also signed a conditional agreement on an additional 15,000 sq ft subject to Great Portland obtaining planning consent for a change in use from retail to office. One Rathbone Square is a 418,000 sq ft mixed use development which also comprises 142 apartments, of which only ten remain available. Following the Facebook deal, around 87 per cent of Rathbone Square by value will be either pre-let or sold. Buy.
KEY STORIES:
Management consultancy firm Marsh & McLennan (MMC) and broker Jelf (JLF) have reached agreement whereby Marsh will acquire the entire share capital of Jelf, valuing Jelf at 215p a share or £258m for the entire voting and non-voting shares. The price represents a 42 per cent premium on Jelf's share price ahead of the announcement. The addition of Jelf will strengthen Marsh's distribution platform across a broad range of risk, insurance and financial services. Marsh has already received irrevocable undertakings from Jelf shareholders equivalent to 60.6 per cent of the ordinary shares and all the Jelf non-voting shares. Await documents.
Victoria (VCP), which designs and supplies specialist flooring, is to acquire privately owned carpet underlay specialist Interfloor for £65m. At the same time, Victoria has announced a share placing designed to raise a total of £44.5m at a placing price of 1,230p against the current market price of 1,401p. In the year to May 2015, Interfloor recorded net sales of £72m and cash profits of £10m. Shares in Victoria rose nearly 13 per cent on the announcement.
OTHER NEWS:
Recruiter SThree (STHR) issued an upbeat third-quarter trading update, and now expects full-year numbers to beat market expectations. Business in the company's US operation was particularly strong, with volume up by a third, thanks to strong activity in Life Sciences, Banking and Finance. The overall performance would have been stronger without a weak energy sector, where volume fell 25 per cent year-on-year.
