Equities are down marginally as the struggle for momentum goes on. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
Sports Direct (SPD) has said it received a report from its lawyers RPC regarding the group’s own working practices. The full report is available on the company’s website, but it only covers an initial 90-day period. In that regard, the group has said it has asked RPC to conduct a more thorough review, findings from which will be announced next year. We remain bearish. Sell.
Somero Enteprises (SOM) this morning posted the kind of results investors dream about. Almost every key metric was up in the six months to June, including revenue, operating income, earnings per share, net cash flow and investment. At the same time, management found sufficient free cash to reward shareholders with a 2.5¢ interim dividend, up nearly a third on last year’s payout. Our profitable recommendation is under review.
Shares in OMG (OMG) climbed 3 per cent after the imaging technology group’s infrastructure arm, Yotta, won a five-year expansion to its contract with Amey, a leading UK provider of public and regulated services. The deal - worth an estimated £1.13m - enables Amey to roll out Yotta’s visualised asset management platform, Horizons, to subscribers in Australia, New Zealand and Spain. Buy.
KEY STORIES:
Craneware (CRW), whose software helps US healthcare providers to accurately charge for medicines and medical procedures, signed contracts worth a record $82m (£62m) in the first half of 2016. Strong demand drove sales up 11 per cent, pushing adjusted cash profits up a tenth to $15.9m.
A first quarter update from Halfords (HFD) revealed a 1.2 per cent uplift in like-for-like sales following a successful summer thanks to launches of new bike ranges from Olympic champions Bradley Wiggins and Laura Trott. Cycling sales, which struggled to find much momentum last year, are up 1.9 per cent, with motoring sales up 0.6 per cent comparatively. All in all this helped lift group sales by 4.8 per cent during the opening period.
The weak pound is still causing a headache for some, including Irish forecourt retailer Applegreen (APGN) which today announced interim results. The group reported a 15 per cent improvement in total, adjusted cash profits. But that progress was largely credited to the Irish-based sites. In the UK, revenues remained flat reflecting the impact of lower fuel prices and weak sterling. Full-year results are expected to reflect ongoing currency pressures.
Ireland’s largest hotel operator, Dalata Hotel (DAL), continues to march on with purchases of more hotels and extensions at others. Management spent €38.9m (£32.6m) on the leasehold of four Choice Hotels in March and €34.5m on the freehold of three other hotels. This meant there was an increase in room numbers at owned and leased hotels to 6,601 at the end of June. Revenue per available room (RevPAR), a key performance metric, rose 11 per cent to €74.90 thanks to a small increase in occupancy rates and an 11 per cent rise in average room rates to €94.78.
After a very quiet period around the referendum, Berkeley Group (BKG) announced at its Annual General Meeting that activity in the generally quiet month of August is back to levels seen in the first five months of the year, although reservations are around 20 per cent down from a year earlier. However, some of this reflects a sensibly cautious approach taken by the London focused housebuilder to scale back on the number of new site releases. However, the group remains in a very strong position, and is on target to deliver pre-tax profits of £2bn over the three years to April 2018. Land purchases have slowed, but the group holds around 42,000 plots in its land bank, equivalent to 10 years of output at current levels. With no gearing and forward sales of £3.25bn, the shares, trading at 1.6 times net asset value and yielding 7.3 per cent remain a must for income seekers.
Shares in Gamma Communications (GAMA) climbed 4 per cent after the business communications specialist grew sales by 13 per cent in the first half of 2016, driving adjusted cash profits up a quarter to £16.3m. The number of installed SIP Trunks, one of the group’s key offerings, rose 15 per cent to 360,000 in the six-month period. Management also grew its base of channel partners to 906 - a 9 per cent rise.
Learning Technologies (LTG), an e-learning technology and services group, grew sales by just over half in the first half of 2016, more than doubling adjusted cash profits to £3.2m. The group acquired industry peer Rustici and invested $3m (£2.3m) in Watershed, which provides analytical tools that can assess the impact and effectiveness of learning programmes.
