After a mixed week, shares in London are positive in morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
WPP’s (WPP) revenues fell 1.3 per cent to £15.6bn in 2018, with revenues less pass-through costs down 2.6 per cent to £12.8bn. The latter figure was down just 0.4 per cent on a like-for-like basis – at the upper end of guidance given last October. Reported pre-tax profits fell 30.6 per cent to £1.46bn, reflecting restructuring and transformation costs and goodwill impairment charges. The full-year dividend was flat at 60p per share. As previously signalled, WPP expects 2019 to be “challenging”, with “stronger headwinds” in the first half because of 2018’s client losses. Like-for-like revenues less pass-through costs are expected to be down 1.5-2 per cent. But, the year started with fewer clients under review than in 2018. The shares were up by around 7 per cent this morning; buy.
William Hill (WMH) reported a £722m loss before tax during 2018, compared to a £145m profit last year. The company took exceptional charges of £921m, £883 of which was a non-cash impairment to its retail business following the decision to cut the maximum stakes on fixed odds betting terminals from £100 to £2. Chief executive Philip Bowcock said regulatory decisions in the UK and US have given “much needed clarity”, and the bookie is committed to double profits by 2023. Shares were up 1 per cent in early trading. Buy.
Logistics company Wincanton (WIN) announced that it has renewed contracts for its industrial and transport business with Valero Energy and Marley. It will provide fuel distribution services for Valero for another five years and manage transportation from Valero’s UK terminals. Wincanton will distribute Marley’s roofing products until late 2023. Shares were up 1 per cent in early trading. Buy.
KEY STORIES:
The Dutch Public Prosecutor’s Office is preparing to prosecute Royal Dutch Shell (RDSB) for criminal charges related to the 2011 settlement of disputes over the OPL 245 license in Nigeria. The case, which is already subject to litigation in Nigeria and Italy, centres on whether Shell and joint venture partner Eni were involved in the syphoning of a massive bonus to then-oil minister Dan Etete.
OTHER COMPANY NEWS:
Manufacturer Essentra (ESNT) reported its first growth in profit and margins since 2015. This was very much led by the components division, which delivered 6 per cent like-for-like growth - packaging was flat on this basis, while revenues in filters and specialist components fell. Shares were flat on the full-year results, as chief executive Paul Forman likened the company to a patient “tottering out of the recovery ward”.
Even though motor retailer Vertu (VTU) has confirmed this morning that full-year results for the year ending 28 February will report in line with market expectations, the shares still fell in early trading. Broker Liberum called the update “hugely reassuring” amidst a difficult new car market, while cash generation has remained “very strong”. Chief executive Robert Forrester admits the future looks “uncertain” but believes the group’s “strong balance sheet”, which is “underpinned by a property-rich asset base with low levels of debt” should leave the group well positioned to deal with near-term challenges. The group has also confirmed the appointment of Karen Anderson - previously company secretary - as chief financial officer, replacing Michael Sherwin with immediate effect.
Coats Group (COA) shares fell 5 per cent in morning trading as pre-tax profits fell over the past year. The industrial thread manufacturer managed to grow revenues, and completed the disposal of its North America crafts business last month. But profits were hit by $22.8m (£17.2m) in reorganisation costs and a $10.2m contribution to the UK pension scheme following a court ruling last year that has required all UK pension schemes to equalise male and female members' benefits for the effect of guaranteed minimum pensions.
IMI (IMI) shares rose 4 per cent in morning trading following the news that statutory pre-tax profits grew 18 per cent. The company’s first half outlook is soft as it expects organic revenues to be lower than the comparable period in 2018, owing to the phasing of its critical engineering division’s order book and slowing market demand in industrial automation. In related news, chief executive Mark Selway is to be succeeded by Roy Twite, who currently divisional managing director of IMI Critical Engineering.
Finally, Vivo Energy (VVO) has completed its acquisition of Engen, adding 230 petrol stations to its pan-African network. The transaction was revised last September after regulatory hurdles scuppered the transfer of stations based in the Democratic Republic of Congo, but now means Vivo has a presence in Gabon, Malawi, Mozambique, Reunion, Rwanda, Tanzania, Zambia and Zimbabwe, and a larger foothold Kenya.
Shares in Revolution Bars (RBG) fell 14 per cent in early trading after the bar owner reported a £3.1m operating loss during the first half of its financial year, downgraded its profit guidance for the year, and put its new site openings on pause. Management said the second half is off to a “slow start” and so full year adjusted cash profits are now expected to be between £11m and £12m.
Future (FUTR) is acquiring Mobile Nations – a US-based digital publisher focused on consumer electronics – for an initial cash consideration of $55m, with a further $5m to stem from the issue to the vendors of 615,166 new shares. A further variable deferred consideration of up to $60m will be paid upon meeting certain financial targets for the year ending March 2020. Mobile Nations saw $16.4m in revenues for the year to December 2018, with organic revenue growth of 31 per cent. Cash profits of $8.2m were up 52 per cent year-on-year. It is expected to be earnings-enhancing in the current financial year, and “materially” earnings-enhancing in the first year post-completion. Shares in Future were up more than a tenth this morning.
Stobart Group (STOB) has appointed David Blackwood as non-executive director with effect from March. Mr Blackwood currently sits on the board at Dignity and Scapa Group, and was previously chief financial officer at Synthomer.
