Shares in London are up solidly in morning trading as investors look forward to the G20 summit starting tomorrow. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Superdry (SDRY) has delayed the release of its full-year results for the year to 27 April 2019 by six days. The group will taking provisions against onerous leases and store impairments, and said the complexity of the work on the provision coupled with the recent management change necessitated the short delay. Profits are due to be in line with the £41.3-48.6m forecast range. Sell.
Shares in Greene King (GNK) were up more than 4 per cent after the pub group announced a 1.8 per cent rise in group revenue to £2.22bn during the year to April, with adjusted pre-tax profits up 1.6 per cent to £247m. Pub company sales were ahead of the market, up 2.9 per cent, with the operating margin flat year-on-year at 15.2 per cent. The company has so far managed to mitigate £35m in cots, and so cost inflation was limited to £14m. This ongoing mitigation programme is aiming to limit cost inflation to between £10m and £20m in FY2020. This is the first set of results presented by Nick Mackenzie, who took over as chief executive around two months ago. Buy.
Despite a testing period for equities, Liontrust Asset Management (LIO) posted record inflows of £1.8bn in the 12 months to March. That accounted for the lion’s share of the 21 per cent uptick in asset under management in the period, though as of yesterday, this figure has grown a furher 10.5 per cent to £14bn. The strong business performance fed through to the income statement, too, as pre-tax profit jumped 55 per cent to £19m. Shares in the asset manager climbed 4 per cent to an all-time high of 750p on the news. We remain buyers.
M&C Saatchi’s (SAA) AGM takes place today. Chairman Jeremy Sinclair will say in a statement that 2019 has started well. Because of the number of new businesses started last year, the group has opened relatively few in the first half of 2019. Its brand design company Re opened in Shanghai and its insight consultancy The Source opened in LA and KL. The new businesses opened in 2018 and the first half of 2019 have started to attract new business already, including from companies such as P&G in Brazil, Unilever in the UK and Pfizer in Sydney. Management is confident that 2019 will be successful. Buy.
Time Out (TMO) Market Boston opens to the public today, occupying 25,000 sq. ft. This is the third to open in North America, and the group’s fourth Time Out Market worldwide. Other markets currently exist in Lisbon, Miami and New York. The group says it is focused on the continued global roll-out of this format, with market launches planned this year in Chicago and Montreal. Next year, it has scheduled openings in Dubai with London-Waterloo to follow in 2021 and Prague in 2022. Buy.
KEY STORIES:
Staffline’s (STAF) long-awaited FY2018 results have arrived and sent shares down 22 per cent this morning. Although revenue increased by 17.7 per cent to £1.13bn, the group swung to a pre-tax loss of £9.6m on the back of £45.6m of non-underlying charges. This includes a £15.1m provision for non-historical compliance with national minimum wage regulations. With £49.6m spent on acquisitions, restructuring costs and an increase in working capital, net debt has surged by 46.5 per cent to £63m. Net debt for the first half of 2019 is expected to be £89-94m. Consequently, the group is now seeking to raise up to £41m, with £34m from a placing and £7m from an open offer at an issue price of 100p. The 2018 final dividend has been cancelled.
OTHER COMPANY NEWS:
A trading update from Serco (SRP) indicates revenue growth of around 6 per cent during the first half of 2019, with 4 per cent organic growth driven by the Americas and Asia Pacific. Revenue is expected to be around £1.5bn. Underlying trading profit has increased by over 20 per cent to approximately £50m. The group’s order intake was more than £3bn, the third successive year this has exceeded revenue. Excluding the proceeds from the placing to fund the NSBU acquisition, adjusted net debt is anticipated to be in the range of £210-230m. Half-year results are due on 31 July. Shares were up 7 per cent in early trading.
Kingfisher (KGF) announced that Thierry Garnier will replace Véronique Laury as chief executive, with a start date that is yet to be finalised. Mr Garnier has spent 20 years in senior roles at Carrefour, the French multi-national retailer. Chairman Andy Cosslett called Mr Garnier a “highly talented international retailer and proven business leader”. Shares were up 3 per cent in early trading.
Premier Oil (PMO) has upped the gross resource at its Zama field in Mexico “significantly”, continuing a run of positive news in recent months. The explorer and producer said the estimate of the structure is now 670-810-970m barrels of oil equivalent (mmboe). Premier’s share price climbed 3.5 per cent at market open to 81p but levelled out to 79p mid-morning. The company said the two appraisal wells and vertical side track at Zama had shown the reservoir had a “higher net-to-gross ratio, better porosity and increased hydrocarbon saturation” than expected. The company is still yet to make a final investment decision on the project.
Go Ahead Group (GOG) announced that Andrew Allner will step down as non-executive chairman and retire from the board following the company’s annual general meeting in late October, and will be replaced by Clare Hollingsworth. Ms Hollingsworth has been non-executive chairman of Eurostar International since July 2013, having first joined the board as a non-executive director in 2010, and leaves the business at the end of June.
The year to March was “a very busy and enjoyable one” for pensions consultancy XPS Pensions (XPS), according to co-chief executive Ben Bramhall. Numbers were also respectable. Statutory profit more than tripled to £9.7m, despite a series of exceptional and non-trading costs. Notwithstanding a small earnings downgrade for the year ahead brought about by one-off costs, the board expects “mid-single digit percentage” revenue growth. Despite this, shares in the group are off by 38 per cent in early trading, apparently due to a lack of trading liquidity.
Maiden results for Manolete Partners (MANO) help to show why many retail investors have flocked to the insolvency litigation funding outfit since it listed in December. New core insolvency cases doubled to 59, while new case investments climbed from 49 to 61. Furthermore, the business remains remarkably profitable: the return on investment for all completed cases since inception now stands at 180 per cent. Manolete shares, which have more than doubled in value since the group’s IPO, are down 11 per cent in early trading.
Pendragon (PDG) has announced chief executive Mark Herbert - who only took up the role in April - will be leaving the company on 30th June. The auto-retailer has begun a process to appoint a successor, but in the meantime will be run by chief operating officer Martin Casha and chief financial officer Mark Willis - who only took up his current role on 8th April this year. Shares in Pendragon fell 5 per cent following the announcement, hitting a new 52-week low just a few weeks after management warned challenges in the auto retail market, combined with a range of operational challenges, would lead the group to be “significantly lossmaking” in the first half of the year.
