Shares across the board in London are up again, with the FTSE100 leading the way. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Half-year results to 31 March from RWS (RWS) indicate 23 per cent revenue growth to £172.3m whilst statutory pre-tax profit has soared by 51 per cent to £27.6m. Comprising over 40 per cent of group sales, Moravia - which specialises in localisation services - saw revenue increase by 36 per cent to £71.1m, although has encountered a reduction in volumes from a top client. Language solutions also saw reduced sales to key clients, particularly in the German automotive and renewable energy sectors. With a strong sales pipeline, including several promising cross-selling opportunities and prominent new clients for IP services, the group expects to maintain momentum for the rest of the year. Recommendation under review.
Frontier Developments (FDEV) has signed a publishing partnership with developer Haemimont Games, the first under its Frontier Publishing initiative. The deal will allow Frontier to use external development partnerships to expand its portfolio. Haemimont is based in Bulgaria and has a team of over 60 people, building titles in the strategy and management genres. Buy.
Iomart’s (IOM) revenues grew by 6 per cent to £104m for the year to March 2019 – surpassing £100m for the first time. Pre-tax profits grew by 9 per cent to £16.2m. Within the cloud-computing group’s larger business, cloud services, sales climbed by 8 per cent to £90.6m. A quarter of this growth was organic; this lower rate reflected lower new customer orders in FY2018 and FY2019, but the group has reorganised its sales and marketing function, and March was the highest revenue month of the year. The rest of cloud services’ growth stemmed from acquisitions. Over the respective 12 months, Iomart bought two companies – Bytemark and LDeX. Buy.
Revenues for Oxford Metrics (OMG) grew 12.6 per cent to £16.1m over the year to March 2019, while pre-tax profits edged down 1.5 per cent to £1.2m. For the group’s larger business, Vicon – which specialises in high-precision motion measurement analysis – revenues grew 13.6 per cent to £16.1m, buoyed partly by its engineering market segment. Yotta – which provides cloud-based infrastructure asset-management software - saw revenues rise 6 per cent to £3.5m, with annualised recurring revenues up by around a tenth to £5.9m. Overall growth here was “muted” by a slightly lower retention rate. Yotta’s pre-tax losses widened from £0.8m to £1m. The group says its second-half outlook is promising. Buy.
KEY STORIES:
Shares in Ted Baker (TED) have plunged 26 per cent this morning, after the group said “extremely difficult trading” meant pre-tax profits for the year to January 2020 would be in the £50-60m range. For reference, broker Liberum was forecasting £70.7m back in March. The group has seen its share price fall over the last year due to a combination of anxiety over the UK retail environment, and allegations of misconduct by chief executive Ray Kelvin. Chief executive Lindsay Page said management was focusing on efficiency and product initiatives to help kick the group back into gear.
Shaftesbury (SHB) has been officially served with legal proceedings by shareholder Samuel Tak Lee over its 2017 share placing, with Mr Tak Lee seeking damages of £10.4m. The claimant contends that the placing was not for the purpose of raising further equity for the group but “rather for the improper purpose of diluting his stake in the company and increasing the cost of any potential takeover bid by him”. Shaftesbury considers the claims to have no merit and intends to defend the allegations robustly.
Crest Nicholson (CRST) reported a 270 basis point contraction in its operating margin during the first-half as it continued to reposition itself towards lower price houses in the wake of a weakening housing market in London and the South East. An increased proportion of pre-funded, pre-sold homes meant the total forward sales position rose 15 per cent to £625m. The dividend was also maintained at 11.2p a share.
Advertising technology group Taptica (TAP) has learned that Uber Technologies has filed a complaint in the Superior Court of the State of California (US), county of San Francisco, against Taptica Ltd. and Taptica, Inc, as well as four unaffiliated companies and various (up to a further 100 “John Doe”) companies. The complaint alleges fraudulent concealment, negligence and unfair competition. Taptica said that based on the information available to it so far, “the claims appear to be without merit”. Taptica Ltd. and Taptica, Inc. “will aggressively defend against these claims”. Shares in the group had plunged by around 18 per cent at the time of writing.
Following its announced bid for the minority shares in paper company Cartón de Colombia in March, Smurfit Kappa (SKG) has disclosed that “valid acceptances” have been received concerning 29,945,394 Cartón shares, representing around 92.5 per cent of the shares under offer. The bid, valued at around €81m, is expected to complete this week. Smurfit will go from having held a 69.94 per cent stake in Cartón to 97.7 per cent.
Saga’s (SAGA) shares are up 3 per cent this morning after Goldman Sachs announced plans to team up Marcus, its consumer bank, with the later life specialist. Saga will be the bank’s long-term savings partner, and the two will begin launching products together in Autumn 2019.
OTHER COMPANY NEWS:
Halma (HLMA) lifted its dividend by 7 per cent at its full-year results, representing its 40th consecutive dividend raise of 5 per cent or more. The group secured record revenue and profit for the 16th consecutive year, with strong performance across its four divisions - process safety, infrastructure safety, environmental & analysis, and medical. But the safety equipment manufacturer anticipates a cash payment of around £16m following an April European Commission ruling on state aid, which Halma is judged to have benefitted from. The company is weighing up an appeal, while the UK government may also contest the ruling.
NCC (NCC) expects to report full-year results to May 2019 in line with current market expectations. It added that it is making good progress on its transformation programme. Revenues in the assurance division grew at similar rates to those seen in the first half. Global headcount in the technical teams has reached sufficient levels to satisfy future demand. Sales in the escrow division declined “slightly” in the UK; the group said a focus on recruitment means its UK sales team have entered the new financial year “at full strength”. Net debt came in at around £21m at the period-end, down from £27.8m.
Oxford Instruments’ (OXIG) 2019 full year results came in above expectations, with revenue up 12.4 per cent to £334m and adjusted operating profit up 6.9 per cent to £49.7m. The supplier of research products continues with its ‘Horizon’ growth strategy, with margins falling beneath 15 per cent owing to associated investment, something that management is looking to overturn over the next 12 months.
Trifast (TRI) defied the slowdown in the global automotive market to grow sales by 6.4 per cent in its automotive division. But the supplier of industrial fasteners saw pre-tax profits fall 11.1 per cent. Asian growth was affected by the closure of a customer’s electronics factory in China, while the Sino-US trade war has also affected some customers.
Compass Group (CPG) is set to acquire Nordic consumer goods company Frazer Food Services for a €475m (£423m) enterprise value. Compass will initially pay €420m via a combination of cash and credit, with the rest of the paid within seven years. Over the 12 months to April 2019 Frazer Foods reported €593m of revenue with cash profits of €39.8m. The deal is still awaiting approval from the EU Commission. Shares in Compass fell 1 per cent in early trading.
