After a couple of days of selling, shares in London's main indices are steady today despite a downgrade to global growth expectations by the IMF. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Student accommodation landlord Unite (UTG) has revealed that its portfolio of student beds is 98 per cent let for the 2018/19 academic year. Seven new residences were opened in September providing an additional 3,074 beds, while 13 properties were disposed of, raising £84.7m for Unite. It has also issued a £275m 10-year unsecured bond with a coupon rate of 3.5 per cent. Buy
Shares in Robert Walters (RWA) are up 5 per cent this morning after yet another strong performance. The share price has fallen back 15 per cent since the interims, but it appears investors fears were unfounded. Net fee income was up 13 per cent to £101m in the third quarter of the year, yet another record. The group’s net cash position has grown to £41.3m, from 12.6m at the same time last year. Management refused to rule out a special dividend but said their preferred method of returning money to shareholders was by ramping up the core dividend and buying back shares. Buy.
Castleton Technology’s (CTP) revenues and cash profits for the first half to September have grown more than 10 per cent organically, in turn supporting guidance of a full-year performance in line with market expectations. Net debt declined from £6.3m as at March to £5.3m, helped by good operating cash conversion. The public-sector software company also obtained shareholder approval for a capital reduction process, which remains subject to court approval. This could allow Castleton to make distributions to its investors. We remain buyers.
Yesterday afternoon, Learning Technologies (LTG) announced that chief executive Jonathan Satchell, Annabel Carol Lea – a person closely associated with chief strategy officer Piers Lea – and chief innovation and product officer Tim Martin are collectively selling 31.3m shares at 130p each, via a secondary placing. Post-completion, Jonathan Satchell will hold 75.1m shares, representing 11.3 per cent of LTG’s share capital; Annabel Carol Lea will have no shares, and Piers Lea will hold 8.7m shares, representing 1.3 per cent of the share capital. Tim Martin will hold 3.8m shares, representing around 0.6 per cent. The proposed sales relate to personal finance arrangements – estate planning and portfolio diversification. LTG won’t receive any proceeds. The shares were down 8 per cent this morning; we’re still buyers.
KEY STORIES:
Third quarter sales for high street bakery chain Greggs (GRG) grew by 3.2 per cent, slowing from a growth rate of 5 per cent this time last year. But the shares still rocketed in early trading, as management said its drinks range and new focaccia-style pizzas proved particularly popular over the summer months. Year-to-date Greggs has also opened 93 stores, helping to lift total sales by by 5.9 per cent, and still expects around 100 net openings by the year-end. Investment in the supply chain continues, with the commissioning of new consolidated manufacturing platforms at the Newcastle, Leeds and Manchester sites expected to progress in the fourth quarter.
OTHER COMPANY NEWS:
Legal and professional services company Knights Group (KGH) has acquired Spearing Waite LLP, Leicester’s largest independent law firm, for a maximum amount of £8.5m – including deferred payments subject to conditions. For the year to March 2018, Spearing Waite saw revenues of £7.1m and profits distributable to members of £3.2m. On a restated basis, this would represent “illustrative” adjusted cash profits of £1.1m, or a 15 per cent margin. Knights expects Spearing Waite to see a cash profit margin of around 20 per cent post-integration and post-synergies. The group’s shares were up 4 per cent this morning.
Spirits and liqueurs maker Stock Spirits (STCK) reported that trading during the nine months to 30 September was in line with expectations, with growth in both volume and value terms in its two key markets of Poland and the Czech Republic. Net debt has been reduced from €53m to €32m. The company is changing its reporting period to a new 30 September accounting year-end date, so this is to be taken as a pre-close update. Shares were up 1 per cent in early trading.
Shares in Ceres Power (CWR) are up 2 per cent this morning, as its order book surged tenfold to £30m, from £3m previously. The group has been taking on new investments in the year from companies like Weichai Power in China and Bosch in Germany, leading to a net cash position of £49.3m. Yesterday the group unveiled plans to build a £7m manufacturing facility in the UK, expanding its production capabilities.
