After a slow and negative start to the day equities in London have begun to tick upwards again, but only marginally so. Click here for The Trader Nicole Elliott's latest take on the markets.
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Luxury retailer Burberry (BRBY) has issued a first quarter trading update just a matter of hours after it revealed chief executive and creative head Christopher Bailey would step aside to make way for Marco Gobbetti next year. Mr Bailey has served in both roles since Angela Ahrendts left the business two years ago. However, first quarter retail sales of £423m were flat at constant currency, with all three operating regions experiencing a low single digit percentage decline. The market seems optimistic though about fresh blood at the top - the share rose more than 3.5 per cent in early trading. We remain buyers.
The outspoken chairman of discount pub chain JD Wetherspoon (JDW) has been exactly that this morning. The pro-leave publican said all the official bodies and politicians who warned of doom and gloom in the wake of Brexit were either “dishonest, or they have a poor understanding of economics”. He believes the UK’s prospects will improve now it is free of the shackles of the EU - and in the here and now, trading at the pub group has strengthened slightly in recent weeks leading Mr Martin to “anticipate a modestly improved outcome” this financial year. That said, Mr Martin warned against extrapolating this trend out into future years. A key point here is that margins for this financial year will be 6.8 per cent compared to 7.4 per cent last year. Sell.
The house definitely still seems to be winning over at gambling operator GVC (GVC) with its core business and its Bwin acquisition notching up double-digit net gaming revenue growth in its second quarter on a constant currency basis. Revenue for the first half on a pro forma basis (which assumes Bwin was acquired on 1 January) was €439m (£366m), up 8 per cent. The group’s previously announced tie-up with Betfred will improve the amount of business-to-business contracts it has and management said its licence in New Jersey has been reconfirmed following regulators’ mandatory checks on Bwin. Management also added it was on track to secure €125m of synergies by the end of 2017. Buy.
Acquisition-hungry Playtech (PTEC) has once again turned dealmaker after snapping up Best Gaming Technology (BGT) for €138m. BGT is headquartered in Vienna but provides proprietary software for self-service betting terminals for many of the UK’s high-profile betting companies, such as Betfred, Codered, Coral, Ladbrokes, Paddy Power Betfair and William Hill. Such terminals are becoming increasingly important money spinners for the bookies’ retail estates. The purchase was made using Playtech's considerable existing cash resources. Buy.
Aim-listed antibiotic specialist Motif Bio (MTFB) has this morning announced its intention to raise $60m from US investors through the listing of American Depository Shares on the tech-savvy index Nasdaq. The fundraise would effectively double the size of the company with the proceeds being used to help fund the final stage of the group’s trial into its novel antibiotic iclaprim. UK investors have responded well sending the share price up 15 per cent in early trading. Buy.
GW Pharmaceuticals (GWP) is also looking stateside to help with its next phase of its growth. The UK’s big biotech hopeful intends to list more American Depository Shares via its Nasdaq listing in order to raise a minimum of $150m. GWP has recently received positive data from two of its clinical trials so it is likely it will need extra funds to help with the roll-out of new products. The share price is down 2 per cent in early trading, but we continue to see upside in the shares as the company gets closer to commercialisation. Buy.
Bosses at Marshall Motor Holdings (MMH) say the group has had a record first half performance, although there’s little given away in terms of financial detail. With the company’s interim results due in early August, management has only gone as far to say sales across new vehicles, used vehicles and aftersales are all up, both on a total and underlying basis. Profitability at the licensing division has also shown an improvement on the prior year. Despite a referendum-related wobble in the share price, we remain buyers.
Shares in Bloomsbury Publishing (BMY) rose 3 per cent after the Harry Potter publisher revealed a new sales and distribution deal in Australia that promises to generate £0.5m in annual profits from FY2018. Brisk demand for children’s books drove revenue up 9 per cent in the first quarter to 31 May, while sales of digital resources nearly doubled. Buy.
Manx Telecom (MANX) told investors that first-half sales would be slightly lower due to fewer sales of low-margin kits, but cash profits were flat. It also expanded high-speed broadband to 91 per cent of its customer base, driving adoption among broadband customers up to 35 per cent. Under review.
Barratt Developments (BDEV) is the latest in a line of housebuilders delivering a strong trading performance for the year to 30 June. Return on capital rose 3 percentage points to around 27 per cent, while completions rose 5.3 per cent to 17,319. Crucially, the forward order book on wholly owned units grew by 18.7 per cent to £1.76bn, while cash balances at the year-end stood at £590m. Buy.
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Big news of the day comes from discount chain Poundland (PLND) which has finally agreed terms of a takeover offer with South African group Steinhoff. The latter has been on the warpath this year trying to find a foothold in the European retail market, and despite initial jitters around the Brexit vote and Poundland’s recent trading figures, it seems to have done just that. It’s offering Poundland shareholders 220p apiece - a 13 per cent premium to the closing share price yesterday. That values the group at £597m.
Speedy Hire (SDY) revealed that it has seen a positive start to the year, after lowering overheads, and it now anticipates full year results slightly ahead of previous expectations. Utilisation rates increased to 50 per cent by the end of the period.
Xaar (XAR) said it traded in line with its expectations in the first half of 2016. The digital inkjet company expects to report revenues of £44mn for the half year to end-June, compared to £47.8m a year earlier.
