The FTSE100 is only just hanging on to the 7,000 level. Click here to see what The Trader Nicole Elliott makes of the markets.
IC TIP UPDATES:
Booker (BOK) announced the acquisition of the Londis and Budgens convenience store chains for £40m alongside strong annual results. The food wholesaler also unveiled a 3.5p return of capital. Together with the annual dividend of 3.66p - up 14 per cent - that takes the shares' yield to 4.3 per cent. Buy.
Royal Mail Group (RMG) posted full-year results, showing cost control making up for weak top-line growth. Overall, underlying revenues were up 1 per cent, but operating profit after transformation costs rose 5 per cent. Turnover in the key letters, international and parcels business was flat, with 1 per cent growth in parcels making up for a 1 per cent decline in letters. We are reviewing our sell recommendation.
Smiths Group (SMIN) issued an uninspiring third-quarter update. With organic sales growth at its medical devices and Flex-Tek businesses offset by declines in Detection (which makes high-tech scanners) and John Crane (oil and gas), the engineering conglomerate maintained its guidance for the full year. Sell.
In final results, waste-management group Shanks Group (SKS) revealed the financial impact of a "challenging year", with revenue up 1 per cent at constant currencies but cash profits 10 per cent down. Management maintained their guidance for underlying results in the coming year, but hinted the weak euro would hit the reported numbers. We are reviewing our sell call.
United Utilities (UU.) delivered reassuringly predictable full-year numbers, with the total dividend of 37.7p in line with the policy set out in the wake of the recent regulatory review. We continue to view it as the most attractive of the water companies. Buy.
Travel snack group SSP (SSPG) posted eye-catching interim numbers, with operating profit up 35 per cent at constant currencies and like-for-like growth of 3 per cent. But management warned such strong margin improvement would be harder to acheive in the second half. Buy.
Shares in InternetQ (INTQ) rose 3 per cent in early trading following an upbeat trading statement. First-quarter cash profits were 28 per cent higher than in 2014 thanks to strong top-line growth and better-than-expected margins. Buy.
Dairy Crest (DCG) offered further vindication of its decision to sell the dairy business in its full-year results. Profit from cheese and spreads - the business it is keeping - rose 19 per cent to £66.9m, but dairy profit plunged 90 per cent to just £1.8m. Buy.
Henry Boot (BHY) said trading since the start of the year had been "encouraging" across all three of the land-planning group's business. The election held up some transactions, but management now expects a "quick return to normalised activity levels". Buy.
CLS Holdings (CLI) bought an office building in Bracknell for £21.7m, giving a rental yield of 8 per cent. The anchor tenant is Honda, which recently relocated its European headquarters to the site. Buy.
Assura Group (AGR) reported results for a "transformational year", showing 50 per cent growth in underlying profit. That was largely thanks to acquisitions funded by a £175m fund-raising. We expect more of the same this year. Buy.
IC tip and Simon Thompson favourite Tristel (TSTL) upgraded its profit expectations for the year. The hygiene specialist's pre-tax earnings are now expected to be above £2.5m. The shares leapt 12 per cent in morning trading. Buy.
KEY STORIES:
West-end retail landlord Shaftesbury (SHB) continues to perform very strongly, with adjusted book value up 8.7 per cent in the first half and 30 per cent over the past year. The rental value of its properties continues to climb and is now 29 per cent above the current rents being paid.
Online takeaway food specialist Just Eat (JE.) has announced plans to raise up to £445m through a placing and open offer with the proceeds earmarked to pay for the proposed acquisition of Australian online takeaway specialist Menulog. A deal was announced earlier this month valuing the Australian business at A$855m.
Power transmission giant National Grid (NG.) has reported on a ‘successful’ year to 31 March during which it grew adjusted operating profits by 5 per cent to £3.9bn at constant currencies although pre-tax profits dipped by 4 per cent after adverse currency movements were taken into account. The full year dividend is increased in line with inflation, which is management’s policy, up 2 per cent to 42.87p.
Continued tough trading conditions in the North American market held back defence specialist Qinetiq’s (QQ.) full year performance. Overall revenues dipped by 2 per cent to £763.8m and underlying operating profits by the same margin to £111.3m. Operations outside of the US performed well as did the core Air, Maritime and Weapons businesses. The full year dividend is hiked by 17 per cent, in line with a new progressive dividend policy and more than three quarters of the current year revenues have already been secured.
Tougher trading in the consumer business and investment in the B2B division dampened Daily Mail & General Trust’s (DMGT) half year figures. Adjusted profits for the period dipped by 6 per cent to £150m with underlying revenues rising just 1 per cent. Dmg media saw revenues dip by 2 per cent but cost efficiencies meant profits in the division rose 22 per cent.
Mothercare’s (MTC) continued restructuring in the UK saw total sales in the country dip by 0.9 per cent but like for like sales rose 2 per cent at stable margins and the online business enjoyed strong growth. The international business grew floorspace by 9 per cent and now comprises 1,273 stores in 60 countries with like for like sales in this part of the business up 5.6 per cent. Overall, group underlying profits rose by 37 per cent to £13m.
Online gambling specialist Bwin.Party Digital (BPTY), which is the focus of a bidding war, has posted first quarter trading figures showing a 6 per cent rise in revenues against the previous three months, but this was 6 per cent lower than the same quarter last year.
International motor retailer Inchcape (INCH) has enjoyed a solid opening to its financial year with revenues up 4.1 per cent at £2.19bn on a constant currency basis, but down 0.9 per cent at actual currencies.
Electronics retailer Darty (DRTY) has outperformed its markets of France, Belgium and Netherlands with revenue growth of 3.5 per cent in the fourth quarter of its financial year. Like for like sales dipped 0.5 per cent but this was hampered by a ‘material calendar impact’, presumably Easter, during the period while web sales rose by 13 per cent on a like for like basis.
Recruiter Staffline (STAF) has said that it continues to trade well and has won a record 30 new ‘OnSite’ deals so far this year. Its involvement in the government’s Welfare to Work programme has also been boosted by the recent acquisition of A4e Limited.
Brewer Young’s & Co (YNGA) has posted strong results for the year to 30 March in which it grew revenues by 7.7 per cent and adjusted operating profits by 12.7 per cent to £37.4m. A 6.1 per cent increase in the dividend seals an 18th consecutive year of dividend increases. Meanwhile, trading since the year end has remained positive with revenues up 5.6 per cent on a like for like basis and 8.1 per cent overall.
Bingo operator Rank (RNK) is performing well with like for like revenues up 5 per cent in the 20 weeks to 17 May and by 4 per cent for the first 46 weeks of the year.
OTHER COMPANY NEWS:
Phoenix IT (PNX) says it is in advanced talks with Daisy Group and investor Toscafund Asset Management after receiving an approach which is likely to result in a 160p a share formal offer. Management has indicated it would be willing to recommend such an offer.
Electrocomponents (ECM) grew sales by 3.5 per cent in the year to March but reported profits dipped by 5 per cent to £96.1m. The dividend is held at 11.75p.
