After starting the day off in the red, London shares were flat by lunchtime on mixed signals from Asia and Europe. Click here for The Trader Nicole Elliott's latest thoughts.
IC TIP UPDATES:
International Personal Finance (IPF) has sold its Bulgaria business to Easy Asset Management at a £5m loss. This is part of management’s strategy to focus on larger home credit operations and grow its digital business. The shares are up 1 per cent on the news but still down 38 per cent on our sell tip. Sell.
Shares in Stagecoach (SGC) fell 10 per cent after the transport operator announced that it has had to take an exceptional pre-tax charge of £84m on its Virgin Trains East Coast franchise to provide for expected losses under the current contract, but the business is expected to be profitable from 2019. Although group revenue was up slightly to £3.9bn, the charge resulted in an 82 per cent fall in pre-tax profits to £17.9m. Sell.
KEY STORIES:
Outsourcer Bunzl’s (BNZL) long standing strategy has been to combine organic growth with a healthy appetite for acquisitions, and going by the group’s pre close statement this morning it’s continuing to pay off. The group expects to report revenue growth of 7 per cent in constant currencies, with between 3-4 per cent coming from organic growth and a similar amount from acquisitions. The group has made eight acquisitions so far this year with a committed spend of around £290m so far. Three of these deals were announced today. Tecnopacking is a Spanish distributor of industrial and disposable packing products, while AMFAS and Western Safety are distributors of first aid and safety supplies in Canada. Shares are up 4 per cent this morning.
Shares in newly listed pension specialist Xafinity (XAF) fell 4.6 per cent this morning following the release of the group’s first full year results announcement. The costs of the initial public offering weighed on the group, pushing it to a loss after tax of £12.8m, from a profit of £3m in 2016. Revenues were more or less flat, growing 1 per cent over the year to £52m from £51.8m.
"The UK consumer environment seems to be holding up for us,” was the comment from Dixons Carphone (DC) chief executive Seb James, as his company’s full-year pre-tax profits of £498m largely met consensus forecasts. Compared with the recent pain seen at DFS and Debenhams, this amounts to something of a positive result. Electricals proved resilient, while the mobile market continues to prove tricky. All up, adjusted net profits rose 12 per cent to £389m, while like-for-like sales in the core UK & Ireland segment were 4 per cent to the good. The total 2016/17 dividend was up 15 per cent to 11.25p.
Pallinghurst’s nil-premium bid for Gemfields (GEM) has secured “sufficient acceptances…for cancellation of the admission of Gemfields shares to trading on AIM”, according to the coloured stones miner. As a result of the offer going “wholly unconditional”, a higher, all-cash counter bid from Fosun Gold has now lapsed.
Shares in Petra Diamonds (PDL) were marked down 7 per cent this morning, after the company said a slower than expected build-up of its expansion programme would bring full year production 8 to 9 per cent lower than the 4.4mcts initially guided. This has also forced the company into discussions with its lender group over potential shortfalls in its production-linked covenants.
OTHER COMPANY NEWS:
DP Eurasia (DPEU), the franchiser of Domino’s pizza in Turkey, Russia, Georgia, and Azerbaijan, has priced its IPO at 200p per share, giving the company a market cap of £291m. The offer size of 74.1m shares equates to an offer size of £148m, representing 51 per cent of share capital. Money raised will go towards expanding the business in Russia and investing in innovation. Conditional dealings have started today, but regular trading will begin on 3 July.
Air Partner’s (AIP) new chairman Peter Saunders has taken over from Richard Everitt, who spent 12 years as non-executive director and five years as chairman at the company. Mr Saunders joined the board in 2014 and was most recently senior independent non-executive director. Chief executive Mark Briffa said at the annual general meeting that trading has so far been in line with expectations, and that the group continues to consider acquisition opportunities. Shares rose 2.4 per cent in early trading.
