The FTSE100 broke back through the 7,000 level in early trading today before some of the excitement waned. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in online white goods retailer AO World (AO.) found momentary relief this morning after a better than expected third quarter update. The group said it performed particularly well over Black Friday, resulting in sales growth of 4.4 per cent across the UK during the period. Growth across Europe continues to be faster - up 31.3 per cent - while, towards the end of the period, the group acquired Mobile Phone Direct for £32.5m. We await further detail before changing our view. Sell.
Shares in platinum-chrome miner Tharisa (THS) are off 6 per cent this morning, after a trading update revealed a decrease in quarter-on-quarter output in the final three months of 2018. The South African group said operations have been affected by processing of commissioning tailings, a reduction in run-of-mine material, reduced availability of equipment, and ongoing planned maintenance of the mining fleet. Consequently, Tharisa has lowered its full-year guidance for annual output to 150-160,000 ounces of of PGMs, and 1.4-1.5Mt of chrome concentrates, down from 160koz of PGMs and 1.5Mt of chrome. Chief executive Phoevus Pouroulis is “confident that the processes currently underway will see an improved performance in the months to come”. Under review.
In the late morning yesterday, Castleton Technology (CTP) announced its acquisition of Deeplake Digital for £1.8m. Deeplake provides digital technology for landlord and tenant communications – specifically in the social housing sector. The business brings additional annualised revenues of £0.8m, and normalised cash profits of £0.3m based on the year to June 2018. 80 per cent of its revenues are recurring, and it is expected to be earnings-accretive for the year ending March 2020. Buy.
KEY STORIES:
Shares in Grafton (GFTU) rose nearly three per cent after the builders’ merchanting and DIY group revealed that profits for the year to December 2018 will be slightly ahead of earlier expectations. Revenue grew by 8.7 per cent to £2.95bn, including £40m raised from the disposal of two small non-core businesses.
Whose turn for a profit warning this morning? Quiz (QUIZ) clothing. The retailer issued its second profit warning in three months today after revealing that Christmas sales - despite increasing by 8.4 per cent - failed to meet management’s expectations. Bosses said that “given the continued uncertainty with regards to consumer demand” it was prudent “to revise revenue forecasts for the remainder of the year to reflect recent trading patterns”. The board now expects revenues of £133m this year which, coupled with increased levels of discounting, will bring cash profits into the region of £8.2m excluding the previously announced £4m provision made in respect of last year’s House of Fraser collapse.
Shares in Flybe (FLYB) fell 85 per cent in early trading after Connect Air, a joint venture between Stobart Group (STOB), Virgin Atlantic, and DLP Holdings through Cyprus Capital, made a 1p per share or £2.2m offer for the struggling airline. The trio will provide Flybe with an immediate £20m bridging loan, and a further £80m once the acquisition is complete. Stobart Group will also sell some of its aviation division to Connect Air for a total of £40m. DLP Holdings has also taken a 4.65 per cent stake in Stobart Group for £24.7m. Shares in Stobart Group were up more than 7 per cent in early trading.
OTHER COMPANY NEWS:
In a mad twist of events, shares in prospective uranium miner Berkeley Energia (BKY) surged yesterday on a Reuters report that Spain’s nuclear watchdog has endorsed two company studies for a project to build Europe’s only open-cast uranium mine near Salamanca. Shares in the group sunk in October when the same news agency reported that the national government would refuse the permits needed to open the mine. The stock is up a further 12 per cent in early trading this morning, despite the company cautioning that it is yet to receive formal notification from the watchdog.
Yesterday afternoon KCom (KCOM) announced that Anna Bielby has been appointed as chief financial officer with immediate effect – having been the group’s interim chief financial officer since 1 July 2018, and having previously held various senior roles within KCom’s finance team.
Legal services group Rosenblatt (RBGP) has appointed Robert Parker as chief financial officer with immediate effect. He has been acting as interim finance director since last August. He has more than two decades of experience with international businesses. His recent roles have included interim chief financial officer at Tantalum Corp and CLA Limited, and permanent roles at Ubisense Plc and Immedia (IME). Shares in Rosenblatt were up by around 5 per cent this morning.
Moss Bros (MOSB) fared better than many had expected over the festive trading period having, as management claims, “fully resolved all of the stock issues that the business faced with its supplier consolidation in the first half of the year”. Despite the challenging consumer backdrop, total sales improve year-on-year, with an improving trend into the fourth quarter too. But gross margins haven’t totally escaped from the period unharmed as bosses admitted to continuing discounting post-Black Friday. Physical stores were also said to have underperformed, although online sales rose by nearly a third across the same timeframe.
