Another gain for sterling has hampered progress for the FTSE100 but other London indices are performing positively. Click here for The Trader Nicole Elliott's latest thoughts on the global markets.
IC TIP UPDATES:
Vitec (VTC) has announced that Kath Kearney-Croft – group finance director – is leaving the company to pursue other opportunities. The board has agreed that she will resign as director and relinquish her responsibilities with immediate effect, but will stay for a handover period until 30 September 2019. Executive director Martin Green will become acting group finance director with immediate effect, and Vitec is starting to look for a permanent replacement. Buy.
Gateley (GTLY) has agreed a £1.25m earn-out payment to Kiddy and Partners, the human capital consultancy business acquired in July 2018. Citing an “excellent” performance that has generated £3m of fees since acquisition, the amount will be split equally between cash and shares, with 389,608 ordinary shares of 10p each due to be issued on 18 September. Should Kiddy continue to meet performance targets for the year to 30 April 2020, Gateley could pay out a maximum £364,676 under the terms of their acquisition agreement. Shares are up almost 2 per cent this morning. Buy
Shares in The Character Group (CCT) are down 7 per cent this morning. The toy company’s sales were harmed by the liquidation of its largest customer in Scandinavia, which, combined with the ongoing weakness in Sterling driven by Brexit uncertainty, have led management to lower profit guidance for the full year to £11-11.5m. At the half-year results in May, broker Panmure Gordon was forecasting adjusted pre-tax profits of £15.9m for the full-year. Sell.
A third quarter trading update from SThree (STHR) indicates net fees have increased by 4 per cent year-on-year at constant currencies to £87.8m. With 86 per cent of net fees now generated from international markets, the group saw 5 per cent growth in both Continental Europe and the USA. Not unexpectedly given the Brexit backdrop, net fees from the UK and Ireland have declined 7 per cent to £12.1m. Accounting for 75 per cent of the group total, contract net fees have risen 7 per cent. Whilst permanent is down 5 per cent, the group’s largest region for permanent recruitment, ‘Germany, Austria and Switzerland’, remained stable. Shares are up over 2 per cent this morning. Buy.
KEY STORIES:
JD Wetherspoon (JDW) remained true to form this morning, using its latest results release as an opportunity to take a swipe at politicians and the media over the protracted Brexit process. Like-for-like sales for the year were up 7 per cent, but pre-tax profits fell by 4 per cent, as finance costs, including those linked to the interest payable on bank loans, overdrafts and swaps, rose.
SSE (SSE) has agreed to sell its energy services business to OVO at an enterprise value of £500m, comprising £400m cash and £100m in loan notes. The net proceeds will be used to address net debt. Subject to regulatory approval, the deal is expected to complete in late 2019 or early next year, with a long-stop date of 31st May 2020. As the division was already held for disposal, RBC Capital Markets has made no changes to its forecasts. Analyst John Musk says that despite the price being below their recently lowered valuation of £840m, “it leaves SSE with a cleaner structure allowing it to focus on two core segments of networks and renewables”. Shares are up over 1 per cent in early trading.
