IC TIP UPDATES:
Just Group (JUST) has deferred declaring an interim dividend until the outcome of the Prudential Regulatory Authority’s consultation into the use of lifetime mortgages to back annuities becomes clearer. The life assurer also announced that it had been increasing prices in the lifetime mortgage and defined benefit derisking businesses and was considering reinsuring part of the in-force book, as preemptive measures. Adjusted operating profits rose 85 per cent to £124m during the first-half, while the Solvency II coverage ratio was 150 per cent, or 142 per cent after allowing for a notional transitional measures for technical provisions impact. We place our buy recommendation under review.
Sirius Minerals (SXX) is off 14 per cent this morning, after the prospective potash miner said stage two financing requirements would be $400-600m higher than previously forecast. That timing of that financing has also been pushed back, from late 2018 to the first quarter of 2019. And to compound matters, Sirius has pushed back the timing of its long-term ramp up by a year. On the flip side, long-term operating costs have been re-set at a lower base, “more than 3Mtpa” of binding offtake agreements are about to be signed with Brazilian and European buyers, and design and build contracts for the mineral transport system drives have been signed. Under review.
William Rucker, chief executive of investment bank Lazard, will join Marston’s (MARS) as chairman from October. Chief executive Ralph Findlay said Mr Rucker’s skillset will “further strengthen our existing board” and add significant value in helping Marston's to deliver its future growth ambitions. Shares were flat in early trading. Buy.
Budget airline easyJet (EZJ) carried 8.68m passengers during August, a 5.6 per cent increase on the year before, with load factor up 0.1 percentage points to 96.4 per cent. Over the rolling 12 months easyJet carried 84.1m passengers, up 5.8 per cent on the year before, with a load factor 1.2 percentage points higher at 93.6 per cent. Shares were flat in early trading. Buy.
Buy tip SSE (SSE) and sell tip Centrica (CNA) are both up this morning following regulator Ofgem’s publication of a consultation document for the energy price cap. The document proposes a price cap of £1,136 annually for those on the standard variable tariff, more or less in line with the consensus average of £1,130. We are reviewing our sell recommendation on Centrica.
KEY STORIES:
Shares in Dixons Carphone (DC.) managed to nudge up in early trading after group managed to confirm current-year forecasts for pre-tax profits of £300m, having previously issued a profit warning in May this year. Growth in the UK & Ireland remained flat, but online sales grew strongly over the first quarter. The group also performed well internationally, particularly in the Nordic region and in Greece. Interim results are due in early December.
Redde (REDD) reported an 11.6 per cent rise in sales during the year to the end of June, supported by a 19.3 per cent increase in credit hire cases and credit hire days rising by almost a quarter. Adjusted pre-tax profits rose 15 per cent to £46m, while the adjusted operating margin was up marginally to 8.8 per cent.
Self-invested personal pension provider Curtis Banks (CBP) grew operating revenue almost 8 per cent during the first-half to £23m, with assets under administration rising 9 per cent to £25.1bn. The adjusted operating margin also increased ahead of analyst expectations by 1.5 percentage points to 26.2 per cent.
Melrose Industries (MRO) has reported a statutory post-tax loss for the first half of 2018. That was to be expected: the takeover of GKN involved both “significant acquisition related charges”, and a mere 78 days of trading contribution. The good news, for backers of the GKN turnaround plan at least, is a management assertion that “no black holes” have been found so far in the business, and trading and the balance sheet is within board expectations. The interim dividend has also been increased by 11 per cent.
Morocco’s ministry of energy has awarded Aim-listed Sound Energy (SOU) and its partners a production concession, for the development of the Tendrara gas discovery. The award, covering an area of 133.5 square kilometres, is for a field development plan that includes the drilling of up to five new horizontal wells, the construction of a gas treatment plant, and first gas in two years’ time.
Shares in Go-Ahead Group (GOG) were up 16 per cent in early trading after the company reported full-year results that beat expectations. Sales were flat at £3.46bn, while operating profit before exceptional items fell 9.8 per cent to £136m. pre-tax profits improved 6.5 per cent to £146m. Chief executive David Brown said the bus division “performed resiliently” despite a challenging market, while rail profits fell after the London Midland franchise expired in December.
PPHE Hotel Group (PPH) reported a 5 per cent increase in revenue to £149m during the first half, or 4.4 per cent to £148m on a like-for-like basis. Cash profits increased 1.7 per cent to £40.6m, while revenue per available room was up 2.5 per cent to £85.70. Construction has begun on the development of art'otel London Hoxton, having acquired full ownership of this project earlier in the year. The company also launched a “glamping” site in Croatia following an investment of £6.5m.
OTHER COMPANY NEWS:
McCarthy & Stone (MCS) expects full-year revenue to the end of August 2018 to be around £670m against £661m a year earlier, supported by a 10 per cent increase in average selling prices to £300,000. The rise reflects a change in sales mix and higher quality locations. However, a slower secondary market meant that completions of retirement apartments were down from 2,302 at 2,134.Operating profit is expected to be between £65m and £73m, down from £96m a year earlier.
BCA Marketplace (BCA) has confirmed trading is in line with expectations ahead of its AGM today. Today, shareholders will vote to approve a final dividend of 5.95p per share, amounting to £47.5m, which will be paid on 28 September 2018 to those shareholders who were on the register at the close of business on 14 September 2018.
US oil and gas independent Hess Corporation has awarded Wood Group (WG.) a three-year non-exclusive agreement to provide operational, maintenance and support services in the Gulf of Mexico. The oil services group did not disclose a value for the deal, which sits under a “global enabling agreement” signed in 2017.
Vivo Energy (VVO), the pan-African forecourt retailer which listed in London in May, has made the quarterly reshuffle of the FTSE 250 Index. The group’s share will join the index on 24 September.
Ahead of the annual general meeting Dart Group (DTG) stated that leisure travel bookings have grown slightly ahead of the 25 per cent summer 2018 seat capacity increase and winter bookings have been “satisfactory”. The proportion of customers booking packaged holidays has been on the rise. Progress has been made at distribution and logistics business Fowler Welch. Management expect to meet full year expectations.
McBride’s (MCB) continuing revenues - excluding businesses that have been sold - rose 9 per cent to £690m for the year to June 2018. The top line benefitted from Danlind, which added £48.4m over nine months post-acquisition. Total revenues rose 7.1 per cent to £755m. Meanwhile, continuing adjusted operating profits fell 10.2 per cent to £37.7m, reflecting raw material and transport costs. Management remains focused on the “profitable delivery” of its anticipated volume growth, while continuing to mitigate input cost inflation. Sales for the start of the new financial year have been “satisfactory”. While some cost pressures remain, bosses still anticipate meeting full-year expectations.
Prepared food company Bakkavor (BAKK) has acquired company Haydens Bakery for £12m in an effort to expand its presence in the UK desserts market. During the first half of the year like-for-like sales at Bakkavor were up 2.8 per cent to £910m driven by growing in international sales. Adjusted cash profits increased 1.2 per cent to £78.6m, and margins held in an “inflationary environment”.
