After a good recent run, equities in London are flat in morning trading as Brexit deadlines loom. Click here for the latest views of The Trader Nicole Elliott.
IC TIP UPDATES:
Yesterday was a day of change for clothing chain Superdry (SDRY). At a general meeting, shareholders voted by an extremely narrow margin to bring back one of the company’s founders - Julian Dunkerton - who reckons he can turn the company’s ailing fortunes around. Following months of board in-fighting, most of the remaining directors had promised to resign on Mr Dunkerton’s return - which they promptly did shortly after market close. That included chairman Peter Bamford, chief executive Euan Sutherland and chief financial officer Ed Barker. Peter Williams - an ally of Mr Dunkerton and former Boohoo (BOO) chairman - will step in as Superdry’s new chairman. UBS and Investec both resigned as financial advisors. For now, ahead of any details on a new strategy, we remain sellers.
AA (AA.) reported trading cash profits in line with previous guidance at £341m for the year to January 2019, but that was down on £391m in 2018. That followed an increase in expenditure in the roadside and insurance businesses, as management tried to boost membership retention. Membership of the core roadside business declined a further 2 per cent last year, while retention also dipped to 80 per cent. Management also announced a three-year deal with Admiral (ADM), which will offer AA’s roadside assistance services to the insurer’s customers. Sell.
Time Out (TMO) has entered into a management agreement with Emaar Malls, the shopping malls and retail business majority owned by Emaar Properties PJSC, to open a Time Out Market in Dubai. This will be the group’s first Time Out Market to open outside of Europe and North America. The opening is expected at the end of 2020, and Time Out Market Dubai will occupy 30,000 sq. ft. – comprising around 670 seats. Buy.
dotdigital’s (DOTD) non-executive chairman Richard Kellett-Clarke has offered his resignation to the board – which has been accepted – because of “private matters in his other directorship”. Tink Taylor is to become interim chairman until a full-time appointment can be made. The group said it will “accelerate its search for a new Chairman and will provide an update as soon as practicable”. Buy.
StatPro (SOG) has signed a contract extension with a major fund administrator for its StatPro Revolution offering, worth $1.2m over the next three years. The fund administrator in question has won a new client requiring StatPro’s platform. StatPro said fund administrators are an “ increasingly important distribution channel” for it as the asset management industry seeks to “outsource key data management functions”. The shares were up by around 3 per cent this morning. Buy.
KEY STORIES:
Dechra’s (DCH) chief financial officer Richard Cotton is leaving the company with immediate effect. Although Mr Cotton will relinquish his current duties, he will “be available” to the rest of the board until the end of June. Until a suitable successor can be found, DVP EU finance director Paul Sandland will step in as acting chief financial officer. Meanwhile, bosses have confirmed that trading since the half-year end has continued in line with expectations.
Wealth management specialist JTC (JTC) reported revenue growth of more than a quarter during 2018, with underlying cash profits up two-thirds. The group acquired two businesses during the period - Minerva and Van Doom - and a Luxembourg-based fund administration Exequitive, after the period-end. Organic growth came in at 8.7 per cent.
CMC Markets (CMCX) has revealed that challenging market conditions during the fourth quarter and the impact of the European Securities and Market Authority’s regulation means spread-betting revenue will be around 37 per cent lower in 2019 than the prior year. However, it reiterated confidence in meeting 2020 market consensus guidance. Chief operating and financial officer Grant Foley also announced his resignation to pursue other opportunities but will remain with the group for the next six months.
Stagecoach (SGC) has raised it expectations for adjusted earnings per share for the year to April after “strong trading and positive progress” in UK rail. Like-for-like revenue growth in UK rail, excluding Virgin Trains East Coast, in the financial year to date is up 1.4 per cent and “ahead of expectations”. The company stated that it has made progress in “achieving favourable outcomes” from concluding industry charges and contractual matters associated with the expired South West Trains franchise, and so additional profit will be recognised in the current financial year. Shares were up 7 per cent in early trading.
Photo-Me International (PHTM) warned that pre-tax profits for the year to April will be “slightly below” previous guidance of £44m, but will be at least £42m, net of restructuring costs in Japan. The photo booth and self-service laundry machine operator had previously expected delays to UK orders from the first half to come through in the second half. But overall trading in the UK has become “more challenging than expected” in the second half of the year due to the slowdown in consumer activity as a result of continuing uncertainty around Brexit negotiations. Order levels are now not expected to recover until the following financial year. Shares fell more than 3 per cent in early trading.
OTHER COMPANY NEWS:
Topps Tiles (TPT) shares rose in early trading following a better than expected first half trading update which revealed a 0.2 per cent increase in like-for-like revenues. The retail chain bounced back strongly in the second quarter, aided by an easy comparative from the prior year, where like-for-like sales rose 1.8 per cent amidst a difficult market - also a distinct improvement on a sluggish opening quarter.
In a trading update for the half-year to March 2019, ITE (ITE) said performance has been in line with management’ expectations. Revenues were up 42 per cent to around £107m, helped by acquired events, along with strong organic growth from core events. Like-for-like sales were up 6 per cent. Ignoring Acetech Delhi, where ITE has “temporary venue capacity constraints” as previously indicated, like-for-like sales were up 8 per cent. Net debt as at 31 March came in at around £114m, up by around £31m from the September 2018 year-end, in line with bosses’ expectations. Forward bookings as at 28 March were around £191m of revenue for FY2019, representing around 89 per cent of current market expectations for the full year.
Babcock (BAB) has announced its new board chair. Ruth Cairnie, a former executive vice president at Royal Dutch Shell (RSDA), will replace Mike Turner, the group’s current chair. Turner announced his departure back in January following the introduction of the UK’s corporate governance code relating to the length of chair appointments - he has been in the role for more than a decade. Turner’s role at the company came under fire in the controversial Boatman Capital Research report that surfaced late last year, so Cairnie’s appointment could be taken as a positive step.
