The UK's major stock indices climbed in morning trading as newly appointed prime minister Theresa May buckled in for her flight to Berlin. She will meet with German chancellor Angela Merkel, undoubtedly to discuss the timeline for the UK's exit from the EU and begin hashing out new terms of trade.
IC TIP UPDATES:
Online food delivery service Just Eat (JE.) has sold a couple of acquired businesses to its Brazilian joint venture IF-JE for approximately $11m (£8.4m). The sales include hellofood Brazil and a 49 per cent stake in Just Eat’s wider Mexican business - which includes SinDelantal and hellofood Mexico. The shares nudged up in early trading. We remain buyers.
A strong second half of trading at Clinigen (CLIN) has sent revenues for the whole year up 87 per cent, while gross profit is expected to almost double. In this morning's trading update, management attributed this growth to the two acquisitions made towards the end of 2015 as well as a good organic performance. It is also good to see net debt fall £9.2m to £67m, and with the two acquisitions almost fully integrated, this is expected to continue to come down rapidly. The share price rocketed 12 per cent in early trading, and we think there is still further to go. Buy.
The 62-strong Revolution Bars Group (RBG) has notched up like-for-like sales growth of 2.3 per cent to £119.5m, according to its pre-close trading update for the year to 30 June. The group opened Revolución de Cuba bars in Milton Keynes, Nottingham and Leeds in the first half and another in Liverpool’s Albert Dock in the second. This brings that brand to nine sites, alongside the 53 which are under the Revolution format. Management said the group’s results should be in line with expectations. Buy.
Shares in IQE (IQE) soared 19 per cent after the manufacturer of ‘wafers’ - advanced semiconductors used in microchips - pegged sales growth at 15 per cent or higher in the first half of 2016. It expects double-digit growth in photonics revenues to contribute to a significant rise in profits as well. Buy.
KEY STORIES:
Global personal goods giant Unilever (ULVR) has snapped up California-based male grooming business Dollar Shave Club. The target, which owns brands including Big Cloud skin care products and Boogies hair styling products, boasts 3.2m customers and in 2015 turned over $152m (£116m). Unilever said Dollar was on its way to exceeding $200m in revenue this year. Terms of the transaction have not been disclosed and it is set to complete in the next few months.
Miners BHP Billiton (BLT) and Anglo American (AAL) are two of the biggest fallers in the FTSE 100 today, thanks to mixed production reports. BHP, down 3 per cent, set a company record for Western Australia iron ore production, though this fell short of guidance and the company now expects to book an additional charge of $175m in the half-year to June 2016. Meanwhile, Anglo American has slashed its copper production target after bad weather hit its operations in Chile.
The planned sale by palm-oil focused MP Evans (MPE) of its cattle operator North Australian Pastoral Company, known as Napco, has gone ahead. Management said it would receive A$107m (£61m) shortly. The proceeds will be used to invest in unplanted land it owns in Indonesia and potentially to buy new land too. Some potential new projects are “closely under review”, the group said. The sale represents the group’s exit from Australia and also great focus on palm oil as well as some property business in Malaysia.
Cash-rich budget airline Wizz Air (WIZZ) now has €707m (£592m) free cash on the balance sheet after putting in a record first quarter in terms of profitability. Reported net profit (IFRS) was a record €50.7m in Q1, a year-on-year increase of 54.2 per cent. Ticket revenue rose 3 per cent while income from in-flight services such as drinks and snacks leapt 20 per cent. Total unit costs fell by 10 per cent to 3.19 cents per available seat kilometre (ASK) in the first quarter. But if fuel is excluded, unit costs rose 2.3 per cent year on year to 2.26 cents per ASK “entirely due to foreign currency gains in the prior year on prepayments returned on aircraft deliveries”. It will also halve its intended UK growth following the result of the EU referendum and redeploy this capacity elsewhere.
Shares in Cape (CIU) are off 5 per cent this morning after the energy services specialist said it would have to set aside an additional £9.7m in provisions held against industrial disease claims. The company is also facing a separate claim from insurers Aviva and RSA regarding historical and current payments they have made as providers of Cape’s employer liability insurance.
Shares in document-storage specialist Restore (RST) rose 6 per cent after management revealed its decision to acquire document-shredding business PHS data solutions from Personal Hygiene Services for £83.1m. The group plans to raise £35.2m to finance the acquisition via a placing with institutional investors. In its half-year trading update the group also reported increased margins for the records management business. However, as expected net box growth was down reflecting the loss of a major customer from Wincanton.
TalkTalk Telecom (TALK) posted a marginal decline in sales in the first quarter to 30 June, as higher corporate and data revenues offset lower voice revenues and declines in the number of TV and broadband customers. Management continues to expect modest top-line growth for the full year, and predicts adjusted cash profits will rise at least 31 per cent to between £320m and £360m.
Shares in Man Group (EMG) fell 4 per cent after it announced chief executive Emmanuel (Manny) Roman will step down from the board from September, to be replaced by president of the group Luke Ellis. Mr Roman will become chief executive at PIMCO.
OTHER COMPANY NEWS:
An AGM statement from car retailer Vertu Motors (VTU) reveals total revenues for the four-month period ending 30 June 2016 rose by more than a fifth, or 8.4 per cent on a like-for-like basis. Higher sales, along with improved margins, led to gross profits growing 23.6 per cent, or 8.7 per cent on an underlying basis.
Britain’s fourth pharma giant Hikma (HIK) have this morning announced they are launching an un-branded version of cancer drug Xeloda. Bad news for Swiss group Roche which make the expensive branded version, but good news for Hikma as last year Xeloda made sales of $493m.
On the other end of the pharmaceuticals market, micro-cap pharma investment group PureTech Health (PRTC) has also announced good news. One of the group’s biotech companies, Akili, has received extra funding from the investment arms of US pharma giants Amgen and Merck. This could hint at the potential for acquisition.
Shareholders in Gulf Keystone Petroleum (GKP) wanting to be present at the company’s proposed capital restructuring can do so, providing they book a ticket to Geneva. The debt-laden oil producer has scheduled a special general meeting, during which shareholders can expect to be diluted by 95 per cent, at the luxury Movenpick hotel on 5 August.
