Yet another crushing Parliamentary defeat for Theresa May's Brexit plans last night has failed to move the needle for investors in London equities in morning trading with all the main indices broadly flat. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Prudential (PRU) reported a 6 per cent rise in group operating profit, with Asia new business profit up 10 per cent on a European Embedded Value basis. However, the asset management operations suffered £11.5bn in net outflows, £9.9bn of which came via M&G Prudential. The Solvency II ratio rose to 232 per cent, from 202 per cent, encouraging management to raise the dividend by 5 per cent. Buy.
At this point, it’s not quite clear what Kenmare Resources (KMR) has to do to win over investors. This morning, the miner posted a 162 per cent rise in post-tax profits, a swing to net cash and another year of record shipment volumes for the 12 months to December 2018. Plans to expand the Moma plant in Mozambique are underway and under budget, a dividend has now been promised for later this year, and the price environment for ilmenite and zircon remains robust for 2019. And yet the share price reaction is once again negative. Nonetheless, we remain buyers.
Marshall Motor Holdings (MMH) shares were unmoved after full-year results that revealed a 8.2 per cent fall in like-for-like total new vehicle unit sales, which management attributed to the roll-out across Europe of stringent new emissions standards and challenges in diesel. Used cars fared better, with like-for-like sales up 2.3 per cent. A 33 per cent rise in the dividend to 8.54p is welcome, but the medium term outlook for car sales not looking particularly strong and the business dealing with cost headwinds, we place this tip under review.
Shares in Manx Telecom (MANX) soared 14 per cent in morning trading after the Isle of Man-based business announced that it was recommending to shareholders a £256m bid for the group from private equity group Basalt Infrastructure Partners. Manx, which listed in 2014, has backed an offer that will see shareholders receive 215p in cash per share, which is comprised of an offer price of 207.1p and a 7.9p interim dividend. Full-year results revealed a fall in underlying cash flow, owing to last year’s “exceptionally high” levels, according to management. Await documents.
Somero Enterprises (SOM) said it saw a record year for revenues and profits in 2018. The top line grew by a tenth to $94m, while pre-tax profits rose 13 per cent to $29.1m. Growth was largely driven by North America and the group’s rest of world markets. By product, sales of boomed screeds rose 9 per cent to $39.2m, and sales of ride-on screeds rose by over a fifth to $22.9m. Net cash improved by nearly a half to $28.2m. Somero has lifted the full-year ordinary dividend to 19¢ per share – up 23 per cent – and proposed a special dividend of 11.7¢, up from 3.6¢ a year earlier. The shares were up by around 3 per cent this morning. Buy.
Imperial Tobacco Canada, a Canadian subsidiary of British American Tobacco (BATS), has been granted protection under the Companies' Creditors Arrangement Act by the Ontario Superior Court of Justice. This gives the business temporary reprieve after a Quebec court judgment had held the industry liable for a maximum of C$13.6bn ($10.2bn). The lawsuit was in regards to damages to compensate smokers for health problems. Shares fell more than 1 per cent in early trading. Buy.
Software systems company StatPro (SOG) reported an 11 per cent increase in revenue to £54.8m during 2018, with adjusted pre-tax profits up 49 per cent to £4.96m. Annualised recurring revenue (ARR) was up 5 per cent to £55.7m, driven by flagship service StatPro Revolution ARR and cloud services. Chief executive Justin Wheatley said the new 2019 divisional structure is “already making a difference, releasing considerable entrepreneurial drive across the business”. Shares were up 10 per cent in early trading. Buy.
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Dixons Carphone (DC.) is to be fined £29.1m by the Financial Conduct Authority (FCA) after an investigation into insurance selling processes at The Carphone Warehouse between December 2008 and June 2015 found that the company did not meet expected standards. Dixons has confirmed its co-operation with the FCA, and admits that in the past its practices “fell short”. Work has now been done to improve standards - something the FCA has included as part of its findings. The company had already taken provisions in its last set of financial statements and thus, guidance from a January trading statement is unaffected.
Standard Life Aberdeen (SLA) has announced that Martin Gilbert will step-down as co-chief executive and become vice chairman of the group and chairman of Standard Life Aberdeen Investments, leaving Keith Skeoch with the top job. Profit from continuing operations was flat at £650m for 2018, although the asset manager reported net outflows of £40.9bn were higher than the £32.9bn reported the prior year.
Morrisons (MRW) shares were flat on the release of final results this morning, despite what analysts at Shore Capital called “a more than satisfactory” outcome for the year ended 3 February 2019. Pre-tax profits of £406m were slightly shy of Shore Capital’s own £407m forecast, but the broker has commended the supermarket for a resilient performance in a difficult year, which included the weather storm known as the Beast from the East, the summer heatwave and the World Cup.
OTHER COMPANY NEWS:
In its first set of full-year results since IPO last May, Avast (AVST) reported a 23.8 per cent rise in revenues to $808m, with operating profits up from $124m to $248m. On an adjusted like-for-like basis, revenues rose 8.3 per cent to $812m – buoyed by double-digit growth within the cyber-security group’s consumer desktop business. Management has proposed a final dividend of 8.6¢ per share. We also learnt this morning that two new non-executive directors have been appointed. And, chief executive Vince Steckler will retire this year – remaining in an advisory capacity until 30 June 2020. He is to be replaced by Ondrej Vlcek, currently president of the consumer business. The shares were down by around 5 per cent this morning.
Shares in Gem Diamonds (GEMD) are off 8 per cent this morning, despite the group posting a 370 per cent rise in earnings per share and a return to a net cash position in 2018. And though the Lesotho-based miner recovered a record 15 stones greater than 100 carats in the year, shareholders will again have to wait for dividends.
Could Royal Dutch Shell (RDSB) one day be the world’s largest electricity company? That’s apparently the oil and gas giant’s vision for the 2030s, according to a Financial Times interview with Maarten Wetselaar, Shell’s director of gas and new energies. He said the company could develop a customer-facing power business on a par with its oil or gas operations, and that incumbent utilities were “useless”, given their centralised business models and reliance on coal and nuclear energy.
Visa International gave an update this morning on its recommended cash offer for Earthport (EPO). Last Friday 8 March, rival bidder MasterCard said that its acceptance condition had not been satisfied as at 1pm that day, and that its offer had lapsed with immediate effect. Visa said today that its own offer – which remains subject to certain outstanding conditions set out in its offer document – has been extended to 1pm (London time) on 30 April 2019. It said “Earthport Shareholders who have not yet accepted the Offer are urged to do so as soon as possible” in accordance with procedures detailed by Visa. As at 12 March 2019, valid acceptances regarding this offer had been received in respect of around 41.02 per cent of Earthport’s issued share capital.
Final numbers from generic healthcare giant Hikma Pharmaceuticals (HIK) were exactly what analysts wanted to see, although the forward view into 2019 is looking a little more mixed. Last year, sales breached the $2bn mark for the first time, while two rounds of earnings upgrades saw cash profits rise by nearly a fifth. But management has warned that its generics division - as opposed to its stronger injectables business - faces a more difficult US market this year, which broker Numis warns could be enough to prompt earnings downgrades today.
In a pre-close update, Stobart Group (STOB) announced that it will move to twice-yearly dividend payments of 3p each, the first of which will be paid in July. London Southend Airport reported a 33 per cent increase in passengers to 1.5m, and Ryanair and Loganair will soon launch flights from the airport. During the period Stobart disposed of its regional airline and aircraft leasing businesses in return for becoming a 30 per cent shareholder, alongside Virgin Atlantic and Cyrus Capital, in a newly created private vehicle, Connect Airways, which bought Flybe.
Advanced Medical Solutions (AMS) saw a 6 per cent rise in revenues to £103m for the year to December 2018, with a a 12 per cent rise in branded revenues to £62.1m and a 3 per cent dip in original-equipment-manufacturer (OEM) sales to £40.5m. Pre-tax profits were up 12 per cent at £28.4m. Net cash rose by just over a fifth to £76.4m, and management has lifted the full-year dividend from 1.10p to 1.32p.
