Shares in London are down in morning trading as investors book some recent gains on the back of poor German economic data. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
In a trading update for the year to March 2019, Entertainment One (ETO) said performance is in line with management’s expectations. Net debt as at the period-end was around 1.8 times. Underlying cash profits were up by more than a quarter within the family and brands business. Meanwhile, within the film, television and music business, the shift to production within film (and away from third-party distribution) has “been largely completed as planned”, with fewer – but more profitable – films, lifting underlying cash-profit margins. Average revenue per release rose by 44 per cent, despite box-office revenues being broadly flat. The reduction in the number of films released drove lower revenues across the division year-on-year. Buy.
IMImobile’s (IMO) revenues for the year ending March 2019 are “ahead of market expectations” with cash profits “marginally ahead”. Revenues are expected to be around £142m, up by 28 per cent. Gross profits are expected to be around £62m, up by a fifth – or by around 7 per cent on an organic basis. As previously indicated, the group endured “headwinds” with one customer in the Middle East and Africa; excluding this, underlying organic growth in group gross profits was around 13 per cent. Adjusted cash profits are expected to rise by over 30 per cent to more than £17.8m. Net debt of £7.9m reflected the completion of the Impact Mobile acquisition. The shares were up by around 8 per cent this morning. Buy.
Almost every financial metric moved in the right direction for Spanish copper producer Atalaya Mining (ATYM) last year. Working capital dropped 62 per cent, all-in sustaining costs fell 1.7 per cent, operating cash flow jumped 81 per cent, and earnings increased by 64 per cent to 25.4¢ per share. The Riotinto mine also produced ahead of expectations, while the copper price ticked up 11 per cent. Guidance for 45-46,500 tonnes of copper in 2019 is also ahead of analyst expectations. Shares are up 4 per cent in early trading. Buy.
AO World (AO.) shares took a dive this morning on the back of a full-year trading update, which revealed adjusted cash profits for the year ending 31 March 2019 would be towards the lower end of expectations. Management has guided for the figure to land somewhere between £2m or a -£0.4m loss, with consensus currently balanced at £0.7m. That’s despite decent top-line acceleration of roughly 13 per cent, helped by the recent acquisition of Mobile Phones Direct. That deal is expected to incur exceptional costs however, as is a deal that the group is unable to exit in Germany. Sell.
KEY STORIES:
Saga (SAGA) has warned that underlying pre-tax profits for 2020 are expected to be around a third lower than those revealed today for the year to January 2019, at between £105m and £120m. Management blamed lower margins in insurance, a change in approach to renewal pricing, lower reserve releases and investment in new products and has also cut the final dividend to 1p a share, from 6p in 2018, reducing the annual dividend to 4p a share, from 9p. Goodwill associated with the insurance operations has been reassessed and the group has taken a £310m non-cash impairment charge, resulting in a pre-tax loss of £135m.
Versarien (VRS) shares fell by as much as 8 per cent in morning trading after the graphene specialist announced that Patrick Abbott, whose appointment as vice president North American operations was only confirmed on 21 March, is the subject of an active criminal proceeding brought by the State of Texas. For now, the board has decided that Mr Abbott, who is a former US Marine Corps officer, will continue in his position. The company has been contacted for comment.
OTHER COMPANY NEWS:
Alfa Financial Software’s (ALFA) chief financial officer Viv Maclachlan has informed the board of her intention to step down in order to pursue other opportunities. She is due to leave the board with effect from the AGM on 26 April 2019. The board is to commence a search for a successor to the position.
Gordon Dadds (GOR) has announced that the Ince Gordon Dadds group is expanding to include 12 offices in seven countries after five former Ince & Co network firms in Hong Kong, Singapore, Dubai Greece and Germany have agreed to enter new arrangements. Revenues for these operations is more than £23m alongside Gordon Dadds’ annualised revenues of £77m. The international firms will continue to be separate legal entities owned by the local partners, operating under the Ince name. The new arrangements don’t include the requirement for any consideration to be paid.
A trading update from Electrocomponents (ECM) revealed like-for-like profit growth across the business’s regional activities, both over the fourth quarter and year to March 2019. Shares were flat on the news that delivered £4m of savings from the second phase of its performance improvement plan in 2019 and remains on track to deliver cumulative annualised savings of £12m by March 2021. Electrocomponents has invested an additional £26m in inventories in advance of Brexit.
Mothercare (MTC) shares fell heavily after the stricken retail chain reported an 8.8 per cent worldwide sales decline during its fourth quarter. For now, management has left FY2019 guidance unchanged, with analysts at Numis also leaving forecasts untouched. An 8 per cent fall in UK like-for-like sales reflects the ongoing store closure programme and a significant effort to clear excess stock.
Reneuron (RENE) share have jumped up nearly a fifth after the drug development minnow updated investors on its Phase 1-2 clinical study in the US. The group is trialling a new hRPC cell therapy candidate to treat the blindness-causing disease, retinitis pigmentosa. So far, the positive effects seen in the first phase of the study have been sustained in the second part, that is, “a rapid and significant improvement in vision, on average equivalent to reading an additional three lines of five letters on the EDTRS eye chart”.
