London's blue chip FTSE100 is up this morning but elsewhere the picture is more mixed as the oil shock and continued UK political uncertainty continue to dampen confidence. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Central Asia Metals (CAML) reported gross revenues of $89.9m for the year to June 2019, down from $102m. This measure is reported before off-takes and silver purchases. The cash profit margin was maintained at 63 per cent, and pre-tax profits landed at $35.5m – down slightly from $38.4m. The group said it was on track to achieve its 2019 base metal production guidance of 12,500-13,500 tonnes of copper, 22,000-24,000 tonnes of zinc and 28,000-30,000 tonnes of lead. The dividend was held flat at 6.5p. Buy.
As expected, Personal Group (PGH) reported a slower pace of new business wins for its core insurance business during the first-half, following a review of its strategy aimed at revamping its sales and marketing function. The employee benefits specialist managed to offset a weaker performance there by growing Software as a service revenue fourfold and salary sacrifice income more than three-quarters. However, we place our buy recommendation under review.
Springfield Properties (SPR) grew private completions more than a third during the year to May and expanded its presence in the Edinburgh commuter belt by acquiring Walker Group. Together with a 2.7 per cent rise in the average selling price, that boosted operating profits by more than two-thirds. Buy.
KEY STORIES:
Things were looking bad for Sirius Minerals (SXX) after the prospective polyhalite producer pulled its bond offering earlier this summer. But today’s update on second-stage financing and development will nonetheless come as a blow. Blaming Brexit and “global market conditions”, a $500m note issuance is not believed to be possible, the government has declined to provide an emergency $1bn of guaranteed support, and construction activities at the Woodsmith mine will be scaled back amid a strategic review. In essence, the miner now has six months and £100m of uncommitted cash to find a solution.
Ocado (OCDO) has bounced back strongly from the fire at its Andover customer fulfilment centre earlier this year. The online grocery retailer saw retail sales climb 11.4 per cent in the 13 weeks to the beginning of September, while average weekly orders were up 12.1 per cent, due to the increased availability of delivery slots. The average order size declined by 0.8 per cent, but management said this reflected an increased frequency of purchasing.
Shares in Quixant (QXT) have plummeted 46 per cent this morning after the group warned on profits for the full year. The group’s interims were in line with expectations, but the gaming technology group warned that its traditional second-half weighting would be weaker than usual, due to lower-than-expected demand for its customers’ gaming machines. Profits are now expected to come in at between £12-13m, compared with house broker Finncap’s previous forecast of £22m.
OTHER COMPANY NEWS:
Revenue at cash equities trader Aquis Exchange (AQX) surged 165 per cent in the six months to June, as trading member numbers increased and a pick up in trading volumes from existing members. The cash pile has dipped slightly to £11.2m, though a loss before interest, tax, depreciation and amortisation of just £0.16m suggests the firm is gradually moving towards profitability.
Smart Metering Systems (SMS) saw annualised recurring revenue from its installed meters rise by 14 per cent to £85.9m in the six months to 30 June, driven by the smart portfolio. The total number of metering and data assets under management has increased by 11 per cent to 3.46m with the number of smart meters now exceeding 1m. But with depreciation costs increasing by almost three-quarters to £17.2m and £5.2m in exceptional charges, the group has swung to a pre-tax loss of £1.7m. Shares are down 12 per cent this morning.
Shares in Staffline (STAF) have plunged by over a fifth this morning after the group reported a £7.7m pre-tax loss for the first half of 2019, down from a £10.5m profit at this point last year. The delay in publishing its 2018 full year results has been blamed for a slowdown in new contract momentum, whilst Brexit uncertainty has created a “challenging trading environment”. Driven by deferred payments on acquisitions made last year, net debt has more than doubled to £89.2m. Having posted £39.1m last year, the group has revised its guidance for full year adjusted operating profit down from £23-28m to around £20m. The dividend remains suspended.
JTC (JTC) has continued its trend of strong organic growth, boosted by heavy acquisition activity. The group’s interims combined organic sales growth of 8.2 per cent with acquisitions growth of 23.8 per cent, giving 32 per cent overall. However, broker Numis now expects margin expansion to happen at a slower rate, and so has reduced its cash profit forecasts for the years 2019-2021 by 6-8 per cent. The shares were down 2 per cent in response.
