With UK government borrowing figures looking more promising, equities are up marginally this morning. Click here for The Trader Nicole Elliott's latest views on the markets.
IC TIP UPDATES:
Shares in Lloyds (LLOY) received a 4 per cent boost during early morning trading after more than doubling its pre-tax profits for 2016. Provisions for payment protection insurance were a quarter what they were in 2015 at £1bn. However, net interest income for the core retail bank was 3 per cent lower at £6.5bn. The good news was that the banking net interest margin received an uplift to 2.71 per cent. More to follow.
Shares in Hotel Chocolat (HOTC) jumped more than 4 per cent in early trading following a solid set of interim results. Revenues climbed 14 per cent higher to £62.5m during the six months ended 25 December 2016, while pre-tax profits moved up by more than a quarter. Chief executive Angus Thirlwell labelled the Christmas trading period a “success” and credited the company’s vertically integrated business model as the reason for consistently good stock availability during the crucial festive period. Buy.
Shares in product manufacturer McBride (MCB) also moved up this morning following the release of half-year numbers. Chief executive Rik de Vos described trading conditions are “challenging”, although that didn’t stop the group from reporting a 4.8 per cent improvement in revenues and growing operating profits by more than a third at reported exchange rates. However, Mr De Vos said there was “uncertainty” over raw material inflation and changes to foreign exchange rates in the second half, which meant that there could a “lag effect” between higher input costs and margin recovery. Our recommendation is under review.
UBM (UBM) has impressed the market with its full year results. Shares are up 5 per cent in early trading, building on the excellent growth reported throughout 2016. Revenues and adjusted operating profits beat broker expectations and the outlook for the current financial year is upbeat. Buy
KEY STORIES:
NCC’s (NCC) attempt to hide its second profit warning in six months 40 minutes before the markets closed on Tuesday did not fool investors. News that the group’s full year adjusted cash profits will now be 20 per cent below previous guidance sent shares down 30 per cent in late trading yesterday and another 27 per cent so far this morning. The problems remain in the assurance business and management have now launched a strategic review.
Metro Bank (MTO) continued to grow its deposit base during 2016, which was up more than half to £7.96bn. That helped fuel a rise in lending by two-thirds to £5.87bn, increasing its loan-to-deposit ratio to 76 per cent. However, the challenger bank still booked a pre-tax loss of £17.2m, although this was down from £49.2m in 2015.
Shares in Serco (SRP) dropped 14 per cent following its full year results announcement. The outsourcer reported a 13 per cent drop in revenues, closer to 18 per cent when the beneficial effect of currency movements is stripped out. Underlying trading profit fell £14m to £82m on the back of discontinued operations.
OTHER COMPANY NEWS:
Net revenues from Indivior (INDV) came in slightly behind expectations, but overall it has been a good year of growth for the specialty pharma company. Federal initiatives to improve patient access to Indivior’s key medicine, Suboxone Film, helped the group increase its market share to 61 per cent. But the outlook is conservative as the group’s patent trial is still ongoing and costs are expected to ramp up in 2017. This is news which investors have not taken well, shares are down 13 per cent in early trading.
Just a few weeks after reporting excellent full year results, Blue Prism (PRSM) has impressed the market again. Since the group’s year end in October it has secured 83 new software deals meaning revenue for the full year is now expected to be “materially ahead of expectations”. Shares leapt 11 per cent in early trading.
