Shares across the board in London have advanced by mid-morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Mark Gordon will continue to develop and produce content for Entertainment One (ETO) through a multi-year producing deal. He is moving from his role as president and chief content officer, film and television, to focus on developing and producing content for the group. Steve Bertram – eOne’s president of film and television – will take full leadership of the film and TV business. Mr Gordon came over to the group when The Mark Gordon Company was fully-acquired by eOne in 2018. Chief executive Darren Throop said, “[w]e believe our position in the market will be even stronger with Mark solely focused on creating content for eOne and look forward to working together for years to come”. Buy.
De La Rue (DLAR) staved off a major revolt at its AGM yesterday after 48 per cent of shareholders voted against the approval of the directors’ remuneration report. The group did, however, notch a victory against activist investor Crystal Amber Fund as 91 per cent of investors endorsed the re-election of chairman Philip Rogerson. We remain sellers.
Shares in Mulberry (MUL) are up 5 per cent after the retailer announced it had bought out the minority shareholder in its Korean business. Mulberry paid £1.3m to buy SHK Holdings’ 40 per cent stake in the business. The investment was made as part of Mulberry’s international development strategy. Sell.
With its share price riding high on the back of a strong set of results, Begbies Traynor (BEG) has announced plans to raise £8.3m in an equity placing. At 75p-a-share, the discount to yesterday’s trading price is slight at 3.8 per cent, though the insolvency practitioner says the pay-off will be firepower to fund “strong current of acquisition opportunities”. We remain buyers.
Charter Court Financial Services (CCFS) is to sell its residual stake in a mortgage-backed security for £6.2m, netting the online bank a £28.8m pre-tax gain on completion. As a result, the transaction will also lower the group’s gross- and risk-weighted assets, thereby boosting the common equity tier one capital ratio. Charter Court says it will re-invest the gain on sale in new lending.
KEY STORIES:
Vodafone (VOD) is creating Europe’s largest tower company. Its European tower infrastructure is to be legally separated into a new organisation (referred to as ‘TowerCo’) which will be operational by May 2020. This will comprise 61,700 towers in 10 markets, with potential proportionate cash profits of around €900m. Preparations are underway for various monetisation alternatives (subject to market conditions) including a potential IPO of TowerCo. The proceeds will be used to reduce group debt. Vodafone also released its first-quarter numbers. Revenues were down €0.2bn to €10.7bn (after exchange-rate effects). Organic service revenues dipped 0.2 per cent – better than the fourth quarter’s 0.7 per cent decline. Management said “[…]we expect the gradual recovery in our service revenues to continue, underpinning our financial outlook for the year”. The shares were up by around 7 per cent at the time of writing.
Foxtons (FOXT) revealed worsening losses during the first-half, as a weakening London housing market and increased operating costs pushed pre-tax losses up to £3.2m, from £2.5m the prior year. Sales revenue was down 10 per cent as flat volumes were offset by lower average revenue per unit. Combined with flat lettings revenue that led to a 3.5 per cent decline overall revenue for the lettings agency.
Rightmove (RMV) reported a 1 per cent decline in membership during the first-half as more low-stock agency branches went out of business. That was despite a 10 per cent rise in new homes development. However, average revenue per advertiser was £90 higher, partly due to more agency members using higher value enhanced and optimiser product packages and additional advertising packages being sold to developers. Operating profit was 10 per cent higher.
Sports Direct (SPD) is due to release its preliminary results today, but so far the group has delayed publication. The retailer had already pushed back its results announcement due to “the complexities of the integration into the Company of the House of Fraser business”. The group still expects to publish its results today, but the delay has created some volatility in the shares.
OTHER COMPANY NEWS:
Platform provider Nucleus Financial (NUC) saw its assets under administration grow 3.9 per cent quarter-on-quarter in the three months to June. Net flows of £111m were modest, however, meaning positive market movements of £468m provided the lion’s share of the total rise in assets. By comparison, the FTSE All-Share Index grew 2 per cent in the quarter.
Half year results from Pearson (PSON) indicate a 2 per cent increase in underlying revenue to £1.83bn, helped by good enrolment growth in its online programme management business. Adjusted operating profit jumped by 35 per cent to £144m, but accounting for higher restructuring charges and lower profit on disposals, the statutory figure plunged 84 per cent to £37m. As the group continues it shift from print to digital, it expects to “at least stabilise” revenue in 2019 and return to top line growth in 2020. Full year guidance for EPS has been upgraded from 57.5p to 63p. Shares are up over 5 per cent this morning.
IMI (IMI) shares were flat on half-year results that delivered in line with the engineering group’s outlook for the year, having previously signalled the expectation of lower first half revenues compared with H1 2018. Outgoing chief executive Mark Selway told Investors Chronicle in March that the phasing of its critical engineering order book and slowing market demand in industrial automation would dampen organic revenues. Statutory revenues in the end were only £4m down on last year’s first half turnover of £914m though, with pre-tax profits flat at £93m. Mr Selway’s successor Roy Twite expects a similar second half decline with profits in line with 2018.
North Sea explorer Independent Oil and Gas (IOG) has landed a major farm-out deal with Berkshire Hathaway-owned CalEnergy Resources for an immediate £40m in cash in exchange for 50 per cent of its upstream assets. CalEnergy will also take on 80 per cent of the development costs of the Core gas project in the deal (with a cap of £125m) and also has first dibs on the Harvey well following completion. Core is split into two phases, and Independent forecasts phase capex at £317m, including contingency. It will raise £70m through Euro-denominated senior secured bond to cover its share of the spending, with some headroom.
