Equities in London were marginally in the red mid-morning after stemming the worst of their early losses. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Pub group Marston’s (MARS) reported a 15 per cent increase in sales to £1.1bn during the year to September, with underlying pre-tax profits up 4 per cent to £104m, driven by good weather and the World Cup. Pub sales were up 3.2 per cent, or 0.6 per cent on a like-for-like basis, while taverns saw comparable sales growth of 3.8 per cent. Destination and food led pubs had a tougher year as snowy weather at the beginning of the year and World Cup football in the latter half discouraged punters from travelling to a pub. Like-for-like sales in these pubs fell 1.2 per cent. Marston’s acquisition of Charles Wells Brewing and Beer Business helped boost brewing volumes to 47 per cent. Shares fell more than 1 per cent in early trading. Buy.
Domino’s Pizza Group (DOM) has appointed David Bauernfeind as an executive director and the chief financial officer, effective immediately, after he had previously taken up the role on an interim basis. Prior to that he had been CFO at Connect Group (CNCT) until June this year. The pizza group has gone through four CFOs in as many years. Shares were flat in early trading. Sell.
City Pub Group (CPC) has completed a share placing of just over 2.8m new ordinary shares at 200p each, raising £6.2m in the process. In the process of the placing, executive chairman Clive Watson purchased 68,182 shares. The pub company is aiming to have around 66 pubs in its estate by 2020 – one year earlier than it has expected to reach this target when it went public in 2017. Shares were up more than 1 per cent in early trading. Buy.
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Shares in Patisserie Valerie (CAKE) have been suspended after bosses revealed that they had been notified of “significant, and potentially fraudulent, accounting irregularities and therefore a potential material misstatement of the company's accounts.” The mis-statement is said to have impacted the group’s cash position which “may lead to a material change in its overall financial position.” While the board conducts a thorough investigation, chief financial officer Chris Marsh has been suspended from his role.
Shares in east London focused housebuilder Telford Homes (TEF) fell 11 per cent after the developer blamed Brexit uncertainty for lengthening the time taken to sell apartments priced in excess of £600,000. To achieve its target of exceeding £50m in pre-tax profit for the year to March 2019, it needs to sell just under 90 homes alongside some built to rent contracts that it expects to exchange before then. Sales of apartments costing less than £500,000 remain solid, while the build to rent side of the business continues to improve. The share price fall means that the price/net asset value ratio falles to just 1.1 times, with a dividend yield of 4.8 per cent.
Shares in recruiter Pagegroup (PAGE) are up 2 per cent this morning after it beat profit expectations. The group reached a record headcount of 7,718 people, adding 561 in the year to date. The UK market, which has been subdued in the wake of the Brexit referendum, grew just 0.8 per cent, but gross profit was up 19.7 per cent overall, leading management to say operating profit for 2018 would be marginally ahead of expectations.
OTHER COMPANY NEWS:
Shares in Vertu Motors (VTU) fell in early trading following the release of interim results. Despite resilient revenue growth of 8 per cent on a like-for-like basis, group margins slipped from 11 per cent this time last year to 10.7 per cent this time around. Management has blamed the “continued depressed sterling levels weighing on the profitability of manufacturers supplying the UK market” which has put new car margins under pressure. Excluding the exceptional gain on a profit disposal last year, adjusted pre-tax profits still fell 13 per cent to £18.1m.
The Competition and Markets Authority has approved the final merger between SSE’s (SSE) household energy supply business and NPower, clearing the way for a new energy supply group to be spun out. The move will reduce SSE’s exposure to the UK household supply market, which has come under political pressure and increased competition in recent years. The group’s shareholders will retain a 65.6 per cent stake in the demerged supplier. Shares in SSE and rival Centrica (CNA) are flat on the news.
British American Tobacco (BATS) announced that its chief marketing officer Andrew Gray will step down form the role at the end of December, and will leave the company in March next year. He will be replaced by Kingsley Wheaton, who is currently regional director for the Americas and Sub Saharan Africa business at the tobacco company. Shares fell 1 per cent in early trading.
