Further tariffs imposed on China by the US have failed to rattle London investors this morning with indices showing positive gains. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Scisys (SSY) were up 4 per cent this morning, on the news that it has signed a contract worth around £2m with Trapeze Group. This is to provide software design, development and support services to TfL (Transport for London), in relation to timetabling and scheduling for its Future Bus Systems scheme. Buy.
Focusrite (TUNE) said revenues, profits and cash continued to grow in the second half against the previous financial year. It expects revenues for the 12 months ending August to be in line with market expectations, at around £75m – up from £66.1m. Net cash came in at £22.8m, up from £14.2m. Chief executive Tim Carroll noted the group is well-positioned to continue to grow, but that it remains “mindful and cautious” of major macro-economic factors in the US and in the UK and Europe. Buy.
Paragon Banking (PAG) confirmed underlying profits for year to September were in line with expectations, although the Idem disposal will have a favourable one-off impact of around 7p per share on reported earnings. The buy-to-let pipeline is expected to be up by around a quarter on last year, with professional applications accounting for 90 per cent of the total. Buy.
Revenues for Keywords Studios (KWS) rose 72.4 per cent over the half-year to June, to €110m, including the benefit of acquisitions. On a like-for-like basis, as though acquisitions had been owned for the same period in 2017 as they had been in 2018, revenues grew 2 per cent – or 8.6 per cent at constant currencies, reflecting the weakening of the US dollar. Statutory pre-tax profits climbed 96.5 per cent to €10.8m. We also learnt this morning that Hollywood sound designer Scott Gershin and his Sound Lab team have joined Keywords. And, the group has acquired TrailerFarm – a producer of video-games trailers – for up to £2m. The shares were down slightly this morning; we’re still positive. Buy.
KEY STORIES:
Newly-listed JTC (JTC) grew revenue almost a quarter during the first-half, but reported a £5.6m cash loss due to IPO-related expenses and acquisition costs. However, after stripping those out underlying cash profits were up more than half to £10.5m. Some of the proceeds of the IPO were also used to repay debt, with net debt almost halving to £23.7m. Meanwhile management declared a maiden dividend of 1p a share.
XPS Pensions (XPS) has disposed of its healthcare business to Punter Southall Health and Protection for £1.25m in cash and agreed to acquire the assets of Kier (KIE) Pensions Unit from Kier Business Services for £3.5m. Kier Pensions provides third-party administration services to public sector clients, including Middlesbrough Borough Council.
Recently-listed African forecourt and fuels business Vivo Energy (VVO) is to restructure its acquisition of Engen’s sub-Saharan business, after failing to reach terms on the transfer of the Democratic Republic of Congo subsidiary. All nine other Engen businesses will now be acquired by Vivo, which will transfer over on 1 March 2019 for $204m, paid for by a combination of Vivo shares and $62.1m in cash. Shares in the group are up 4 per cent in early trading.
Though the timing of oil and gas shipments meant first-half cash flow and revenue came in below market expectations, interim results for Faroe Petroleum (FPM) highlight lower-than-expected exploration and appraisal charges, the £40.4m booked from the sale of the Fenja stake. There was no mention of the company’s potential encirclement by DNO, though chief executive Graham Stewart told us that it is “ultimately for shareholders to take a view”, if and when any bid arrives.
OTHER COMPANY NEWS:
Mercia Technologies’ (MERC) shares were up 4 per cent this morning on the news that Aston EyeTech, in which it holds an 18.7 per cent equity stake, has secured a multi-million-pound product design, development and manufacturing contract with one of the world’s largest optical retailers. Aston EyeTech, trading as Eyeto, was a spin-out from Aston University in 2013 and offers a range of hardware and software products for ocular care.
Shares in Ocado (OCDO) remained fairly static in early trading after a third quarter trading statement simply met market expectations. Retail revenues grew by 11.5 per cent, while the Erith warehouse is now up and running. As a result the number of average orders are up - last week Erith processed over 20,000 customer orders 14 weeks after opening, a number which took Andover 15 months to achieve - but the average value of those orders is flat at £106.
BBA Aviation (BBA) has acquired Firstmark Corporation, an aerospace focused aftermarket service provider, for $97m (£74m). The business will become part of BBA’s Ontic aftermarket services business, and should improve BBA’s exposure to the commercial and military aerospace markets. The deal values Firstmark on 11.1 times cash profits before acquisition expenses of $1.6m, which analysts at Liberum called “full at first glance” but reflects the acquisition of a business with growth potential, rather than just licences. Shares were up 3 per cent in early trading.
Sales at stevia producer Purecircle (PURE) were up 10 per cent to $131m (£99.7m) during the year to June, while operating profit was flat on last year at $17.9m. The alternative sweetener company launched the fourth generation of its stevia offering, called Starleaf, which is meant to taste better than previous version and still contain no sugar or calories. Purecircle also announced today that it’s filed a complaint against two competitors in California for infringement on one of its patents. Shares were up 1 per cent in early trading.
