Equities in London have slipped into the red as investors take a breather. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Shares in Marks and Spencer (MKS) have risen 4 per cent this morning, despite chief executive Steve Rowe expressing disappointment in the group’s performance. Profits were down 17.1 per cent, and Mr Rowe said the clothing and home division was “maybe 18 months” behind schedule. Management said the group’s turnaround plans are “running at a pace and scale not seen before”, but we remain sceptical. Sell.
Redrow (RDW) reported a 2 per cent increase in the value of private reservations during the first 18 week of the financial year, excluding a £119.5m PRS sale at Colindale Gardens. The combination of constrained outlet growth and the timing of block completions in London, will result in revenue, profit and cash generation being “considerably more weighted than usual” to the second-half. This resulted in a record overall order book of £1.3bn, an 8 per cent increase on this time last year. Buy.
The long-awaited launch of Frontier Development’s (FDEV) zoo simulation title Planet Zoo finally arrived yesterday, and it appears to have been a success. The game was ranked number 1 on gaming platform Steam, sending shares in the Frontier up 3 per cent so far this morning. Alongside this, the group has signed the second partnership agreement for its Frontier Publishing initiative, through which it is forming external development partnerships to supplement its internal projects. Buy.
A third quarter trading update from Restore (RST) indicates trading has been in line with expectations with continued net box growth in records management. Despite “robust operational performance”, wholesale paper prices in the datashred business remain below prior years. The office relocation business Harrow Green has seen a strong performance in the key London region. Three small acquisitions were made during the period, one in records management and two in technology. Shares are up 1 per cent this morning. Buy.
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Intu (INTU) raised expectations that it would need to carry out a rights issue to shore-up its balance sheet after management said it was “likely to form part of the solution”, along with disposals. The retail landlord reported a 3 per cent decline in new rent relative to previous passing rents during the third quarter, while occupancy also reduced to 95.1 per cent, from 97 per cent the same time the prior year. Chief executive Matthew Roberts said company voluntary arrangements were slightly worse than expected.
Morgan Sindall (MGNS) has upgraded its outlook, now expecting full year performance will be slightly above expectations. Construction and infrastructure is expected to show further margin improvement over last year, whilst a strong second half performance is anticipated from Fit Out based on its visible workload. Average daily net cash from the start of the year to 31 October was £109m and the full year figure is expected to exceed £100m, ahead of previous guidance. The total secured workload as at 30 September was £7.3bn, up 10 per cent from the year end position although down 2 per cent from the half year stage. Shares are up 2 per cent.
Ceres Power (CWR) has announced the successful development of its first zero-emission combined heat and power (CHP) system, designed exclusively for use with hydrogen fuel. Simpler than the group’s existing flexible fuel system, the hydrogen CHP delivers an equivalent performance with fewer components, a reduced size and up to a 40 per cent cost reduction. There is growing interest in the potential of hydrogen as a low-carbon option for power and heat generation, especially in Japan and South Korea, two countries where Ceres has existing customer relationships.
Connect Group (CNCT) has seen revenue decline by 4.3 per cent to £1.47bn in 2019, whilst its statutory pre-tax loss has widened by 5.9 per cent to £37.6m. Despite a decline in newspaper and magazine sales, cost cutting helped push adjusted operating profit at Smiths News up 12.1 per cent to £43.6m. Tuffnells saw its adjusted operating loss more than double to £14.1m and a strategic review of the division has been announced. Free cash flow has plunged by 59 per cent to £8.3m whilst net debt is up 11.3 per cent to £73.9m. The dividend has been cut from 3.1p to 1p. Chief executive Jos Opdeweegh stepped down yesterday and is succeeded by Jon Bunting, chief executive of Smiths News, on an interim basis. Shares are down 3 per cent.
Sound Energy (SOU) shares were down a third in early trading after the announcement of a non-binding heads of terms agreement of 51 per cent of its share of the onshore Moroccan project Tendrara. It has not revealed the name of the buyer, only describing it as a private UK company specialising in energy asset development. The $113m (£88m) price is split into $54m in cash and $59m carry on future capex requirements. Sound, which has seen its valuation fall from over 30p a year ago to the current 6p level, said the deal would provide “early monetisation” of its gas resources. Panmure Gordon analyst Colin Smith said investors were right to be sceptical of a “highly conditional” offer from an anonymous buyer.
