Shares in London were relatively becalmed in morning trading with the main equity indices up marginally. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Stagecoach (SGC) reported a 30 per cent rise in pre-tax profits to £101m despite a decline of a third in revenue during the year to April. Statutory earnings per share fell from 12.3p last year to 3.8p, while the final dividend has been maintained at 7p. The sale of the North American business has now completed, and the company will now focus on its UK bus business. Stagecoach is in the middle of a legal dispute with the Department for Transport after its bids for rail franchises were disqualified. Shares were up 1 per cent in early trading. Sell.
Ryanair (RYA) has changed the terms of its €700m (£627m) share buyback programme to limit the number of shares held by non-EU shareholders in the case of a no-deal Brexit. The share are planned to be bought back between May 2019 and May 2020. EU rules currently require more than half of shares in European airlines to be owned by EU citizens, to which UK shareholders will not count following Brexit. Shares were flat in early trading. Sell.
A pre-close trading statement from Bunzl (BNZL) indicates that revenue for the half year to 30 June is expected to have increased by around 2 per cent at constant currencies with an even split between organic and acquisitions driven growth. The total committed spend for acquisitions so far this year is approximately £100m. With overall trading consistent with the slower underlying revenue growth flagged in April, expectations for FY2019 remain unchanged. Buy.
Reflecting commodity price inflation, Wynnstay’s (WYN) half-year revenue has increased by almost a fifth to £261m. However, with an abnormally warm winter reducing feed demand and more cautious farmer spending, statutory pre-tax profit has fallen by 16 per cent to £4.12m. Accounting for three-quarters of overall turnover, revenue in the agriculture division increased by 22 per cent to £195m whilst operating profit declined by 13 per cent to £1.79m. Completing the acquisition of Stanton Farm Supplies in April, the group has strengthened its presence in South West England. Net debt has more than doubled to £14.7m. Recommendation under review.
A trading update from RPS (RPS) has sent shares tumbling more than 37 per cent this morning – the group has warned that FY2019 results will be “materially lower” than the expected consensus fee income of £594m and pre-tax profit of £49.9m. This is on the back of weak trading conditions in Australia where there has been a hiatus in infrastructure spending, a slower release of major defence projects and subdued property sector. Elsewhere, whilst the recovery in energy continues, political uncertainty continues to impact the UK and Ireland consulting market. Under review.
Inland Homes (INL) has secured planning permission for a new "urban village" comprising 1,725 homes, 19,000 sqm of commercial space together with the provision for a new primary school. The scheme - which is equally owned with the brownfield developer’s joint venture partner has an estimated gross development value of £620m. Buy.
Shares in Lookers (LOOK) fell by close to a quarter yesterday afternoon, before bouncing back 5 per cent this morning. The group announced the Financial Conduct Authority is carrying out an investigation into its sales processes from the start of 2016 until 13th June this year. The announcement is light on specific details, noting that there were “some control issues with the sales process” in the group’s regulated activities and that it is investing in its internal capabilities and external advice. We are reviewing our buy recommendation.
Sumo (SUMO) is trading in line with expectations so far in the 2019 financial year. Management for the design and development group released a trading update ahead of the group’s AGM this morning. The group is continuing to execute its organic growth strategy, and said it is actively exploring acquisition opportunities, given the fragmented nature of its market. In January, it acquired Red Kite Games, a work-for-hire studio it had worked alongside for many years. Buy.
OTHER COMPANY NEWS:
Ahead of its planned Capital Markets event today, STV (STVG) has announced initiatives targeted at accelerating digital and production growth. It has bought a majority stake in the producer Primal Media, which does not entail any upfront consideration payable by STV. The agreement includes the option for STV to acquire remaining shares in future. STV’s productions wing has confirmed new commissions and a first pilot format for STV. The group has also announced enhancements to its digital platform STV player, and new subscription video on demand service, STV Player+.
Biffa (BIFF) has been found guilty of breaching the law on overseas exports, sending household waste to China that was labelled as waste paper. The export of unsorted household recycling waste from the UK to China has been banned since 2006 – paper can be legally exported but heavily contaminated waste cannot. Sentencing has been deferred until 27 September.
