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News & Tips: Earthport, Walker Greenbank, Topps Tiles & more

Equities in London are down marginally
October 4, 2017

Momentum is seriously lacking in the London markets with shares off only marginally in early trading today. Click here for The Trader Nicole Elliott's latest views. 

IC TIP UPDATES:

Earthport (EPO), the cross-border payments specialist, announced a share placing after markets closed on Tuesday. The results were published on Wednesday morning: the oversubscribed placing garnered interest from current investors and new institutional shareholders. 125m placing shares have been conditionally placed, each priced at 20p, raising gross proceeds of £25m before expenses. The new shares will comprise approximately 20 per cent of the enlarged share capital. The placing will need to be approved at the next general meeting; the proceeds will be used to “drive additional growth”, allowing the company to expand its presence and extend its reach into new geographies, engage in further product development and invest in its operational platform. Shares in Earthport fell 16 per cent in early trading. Recommendation under review.

Interior furnishings group Walker Greenbank (WGB) reported that sales were up by  a third during the first half to £54.3m, driven in part by Clarke & Clarke, which the group acquired in October last year. A weak period in the UK was offset by sales growth in overseas brands, along with the contribution from Clarke & Clarke, and so adjusted underlying pre-tax profits were up around 55 per cent to £5.9m. The results include the final £1.3m insurance payment from the 2015 flood at its Standfast & Barracks site. Shares were up 3 per cent in early trading. Buy.

Helical (HLCL) delivered an update on its portfolio, stating that it has now let a number of spaces at its One Creechurch Place development and has placed further space under offer at 25 Charterhouse Square EC1. At the latter, tenants Anomaly and Peakon are in occupation of the top three floors and it has also now agreed terms on the ground and first floor and have good interest in the remaining two floors of office space. Buy.

In yet another piece of bad regulatory news for International Personal Finance (IPF), the Polish tax authorities have drafted proposals that would increase the amount of corporate tax payable by the sub-prime lender. It would prevent the group deducting tax on expenses relating to related-party transactions. In 2016 that would have resulted in a £2m increase in the amount of tax charge to £14m, and could mean a one-off charge of up to £30m in 2017. Sell.  

KEY STORIES:

Challenging market conditions have prompted Topps Tiles (TPT) to warn that adjusted pre-tax profits for the year to September will be at the lower end of market expectations. Like-for-like revenues at the ceramics retailer fell by 2.9 per cent over the year compared to a 4.2 per cent improvement the year before. Management tried to reassure shareholders that the company maintained good control over gross margins and effective cost management over the year, but shares still fell about 3 per cent in early trading.

OTHER COMPANY NEWS:

Shares in Learning Technologies (LTG) rose 2 per cent, after the company announced that the financial impact of a major contract will be “accelerated” in 2017, so that results for the year will be ahead of management’s current expectations - though this will have a knock on effect in 2018.

Shares in fuel cell company Ceres Power (CWR) were down 1.8 per cent in early trading after the release of its results for the year to June 2017. Revenue growth beat expectations, rising 140 per cent to £4.1m and the order book grew to £3.2m, from £1.7m in 2016. However, the group continued to make a cash loss, though this fell 11 per cent to £10.3m.