Shares in London began the week with decent gains. Click here for The Trader Nicole Elliott's latest views on the market.
IC TIP UPDATES:
Pearson’s (PSON) financial situation is looking increasingly desperate. The education company has this morning announced the disposal of Wall Street English - a business which teaches English to around 180,000 adults in China - to a consortium of funds for a mere $300m. Pearson itself will only add $100m to its balance sheet after the completion of the deal as tax and transaction costs will absorb $50m and the business will hold on to $150m. Sell
There were two interesting, and related updates from South32 (S32) today. First came confirmation that $301m will be invested to extend the Klipspruit mine life for “at least another 20 years”, second was an announcement of the miner’s intention to manage the South African energy coal business as a stand-alone business from April 2018. One this has happened, South32 will seek to “broaden ownership” of the division, through a sale to employees, communities and broad-based black economic empowerment entities – and possibly a listing on the Johannesburg Stock Exchange. The shares are off 1.5 per cent this morning, but we view any reduction in exposure to South African coal as a positive. Buy.
Non-executive director Nick Backhouse will step down from the board of Marston’s (MARS) in January next year after six years with the company. Matthew Roberts will take up the role of chairman of the audit committee. Senior independent director Carolyn Bradley will also join the audit committee at that time. Shares were up 1 per cent in early trading. Buy.
KEY STORIES:
Shares in Patisserie Holdings (CAKE) are up 6 per cent in early trading after the owner of Patisserie Valerie reported that sales were up 9.7 per cent to £114m over its financial year to September with pre-tax profits up by nearly a fifth. The company opened 20 new stores in 12 new geographical locations, and is aiming to open another 20 during the year to September 2018. The record sales and profit were achieved against a “backdrop of a challenging economic and operating environment”, according to chief executive Paul May.
OTHER COMPANIES NEWS:
Shares in Kainos (KNOS) were up 4 per cent this morning, after the software group reported a 2 per cent rise in revenues, 5 per cent increase in pre-tax profits, and an improved net cash position. Revenue diversification was boosted by international expansion: international revenues now account for 26 per cent of the overall top line. Commercial revnues also increased to 36 per cent of total revenue.
Shares in Gateley (GTLY) were up 2 per cent at the time of writing, after a first half trading update from the law firm. Activity levels during the six months to 31 October have been “robust”. Particularly strong growth in the corporate and property service lines has led to a 10 per cent uplift in revenues. Management continues to invest in the business; total staff numbers have climbed to 763 from 717 as at 30 April, and the group’s cash profits for the first half are “in line” with last year. Bosses expect full-year performance to be in line with market expectations.
Shares in Keystone Law (KEYS) were admitted to trading on Aim today, marking the challenger law firm’s first day of dealings. Based on a placing price of 160p per share, the company was expected to have a market cap of £50m on admission, following an oversubscribed £15m fundraising. This entailed £10m being raised for the firm, with £9.4m by way of the placing and £0.6m via subscription shares. The additional £5m was raised for selling shareholders. Keystone was originally established in 2002. It delivers legal services across 23 service areas and 50 industry sectors. Its clients generally include SMEs and individuals.
Beeks Financial Cloud (BKS) joined Aim today. The group successfully raised £7m through a placing of 9m shares and the sale by existing shareholders of 5m shares, at a placing price of 50p. Among other objectives, the company expects to use the proceeds of this placing to accelerate growth, enter new geographical markets, and add more cross connects between brokers and trading venues.
Earthport (EPO) announced this morning that it has partnered with BRAC Saajan Exchange - the payments division of Bangladesh’s BRAC Bank - to deliver cross-border payment services in Bangladesh. Shares were up 4 per cent at the time of writing.
Mytrah Energy (MYT) provided an update on the results of the comprehensive independent review that followed the unauthorised loan to company chairman Ravi Kailas. (This was repaid in full with interest). The conclusions of the review, which was carried out by lawyers and a ‘big four’ auditor, found that Mytrah had policies in place to prevent this unauthorised loan. But, there was a “a lack of awareness amongst certain members of senior management and the Board” regarding the group's reserved matters and articles of association. The review also found “certain weaknesses in the company's payment processes”. No evidence was discovered of any prior incident involving similar unauthorised payments. The review gave a number of recommendations to the company, including improved payment processes, as well as senior management and board training regarding payment processes, reserved matters and the articles of association.
Trakm8 (TRAK) reported 12 per cent revenue growth and 157 per cent pre-tax profit growth in the first half to 30 September, with 17 per cent growth in recurring revenues. The telematics and data insight company also reduced its net debt from £4.4m a year earlier to £2.32m.
Jackpotjoy (JPJ) will see a reduction in interest payments going forward after it secured a £388.5m senior secured term and revolving credit facility. The new debt will be used to pay existing loans and invest in future growth. Shares were up nearly 4 per cent in early trading.
