The FTSE 100 continued to rise in morning trading, following the pattern set by yesterday's strong bounce. Meanwhile, the South Korean central bank has cut its interest rate in response to a public health crisis. The Trader Nicole Elliott reports.
IC TIP UPDATES:
Home Retail Group (HOME) suffered from weak sales of electrical products in the three months to May. Like-for-like sales at Argos fell 3.9 per cent, which was only partially offset by store openings. Management expect the first half to remain tough. Homebase performed better, with like-for-like sales growth of 5.4 per cent supported by store closure promotions. We are reviewing our buy recommendation.
Electrical cable specialist Volex (VLX) consolidated its recovery story with a solid set of results, showing underlying operating profit almost doubling to $8.8m (£5.7m). Operating costs barely rose despite 6 per cent top-line growth. However, management warned that growth slowed in the second half and that "market developments" and the company's "customer concentration" might lead to "short term volatility in our revenues", sending the shares down 4 per cent in morning trading. We are reviewing our buy recommendation.
Care home specialist CareTech (CTH) grew its underlying pre-tax profits by 11 per cent to £9.4m in the six months to 31 March, despite a dip in revenues. Management said it was making "good progress" on a number of bolt-on acquisitions, following February's £21m placing. Buy.
Engineering consultancy WS Atkins (ATK) revealed full-year pre-tax profits of £122m, modestly ahead of consensus at £119m. Organic sales were up 5 per cent at constant currencies, boosted by an exceptional year in the Middle East. Buy.
First Property (FPO) saw its shares leap 9 per cent on news that its pre-tax profits jumped 22 per cent last year. Together with the funds it manages, the company made six investments in Poland and Romania that should yield profits of about £6m a year, replacing the income lost from the USS fund management contract. Buy.
Real Estate Credit Investments (RECI) confirmed a total return of 12 per cent for the year to March 2015. The company, which lends money against property, has been aggressively growing its portfolio of mortgage assets. Its commercial and residential portfolio rose from £51m in drawn loans to £90m over the year - with £102m now committed. Buy.
KEY STORIES:
Niche engineering group Halma (HLMA) posted full-year figures, revealing 10 per cent growth in adjusted pre-tax profits to £154m - a record number for the 12th consecutive year. The company made three acquisitions for a total cost of £84m, but even organic constant-currency sales growth was 5 per cent.
Imperial Leather soap maker PZ Cussons (PZC) lost only a few trading days in last month's presidential elections in Nigeria, its largest market. But management warned in a pre-close update that the naira - the Nigerian currency - was at risk of further devaluation following its 25 per cent fall in the second half of the financial year to 31 May, with consumer spending power likely to be impacted by the imported inflation.
Greene King's (GNK) offer for rival landlord Spirit Pub Company (SPRT) has passed another hurdle: the takeover is no longer conditional on approval by the Competition and Markets Authority. Trading in Spirit shares is now likely to be suspended on 23 June.
Luxury bag maker Mulberry (MUL) has seen a second-half recovery following its decision in November to cut prices. Retail sales were down 9 per cent in the first half, but up 9 per cent in the second half and are now running 17 per cent ahead of last year's low comparatives. But margins have taken a hit: adjusted pre-tax profit was £4.5m for the year to March, down from £17.4m.
OTHER COMPANIES NEWS:
Shares in Adgorithms (ADGO), a software company specialising in online advertising, started trading on the Alternative Investment Market today. The group's technology platform, called Albert, helps clients automate and better target their online advertising campaigns. The company raised £27m to invest in Albert, giving a market capitalisation of £82.1m.
