Shares in London are mixed with the FTSE100 up a little but mid and small caps in arrears. Our Trader writer Neil Wilson says: 'Stock markets are in a bit of a muddle right now. On the one hand there are signs of economies emerging from stasis. New York governor Cuomo says three regions of the state will reopen this weekend. England has moved from ‘stay home’ to ‘stay alert’, Europe is reopening: there is light at the end of the tunnel, and markets are always first to move. Massive stimulus from central banks and governments helps, too.' For Neil's full article, click here.
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WM Morrison (MRW) first quarter sales (excluding fuel) rose 5.7 per cent, rising to 10.8 per cent in the final two weeks of the period. It has more than doubled its home deliveries, while its reach into homes has been boosted by the recent formation of its partnership with Deliveroo. Morrisons expects its estimated business rates relief of £228m to “broadly offset” its rise in costs linked to coronavirus. Buy.
Standard Life Aberdeen (SLA) has seen “only a modest impact” on client and customer service from the Covid-19 pandemic, according to chief executive Keith Skeoch, who said net outflows for the first four months of 2020 are estimated at £24bn. However, strip out the £25bn of withdrawals related to Lloyds’ mandate, net flows were slightly positive for the period. Mr Skeoch added that some synergy targets may knock “the phasing of some of our activities” this year, but re-affirmed SLA’s intention to pay the full dividend for 2019. Shares, up 3 per cent in early trading, are a sell.
A trading update from Marlowe (MRL) indicates revenue for the year to 31 March jumped 44 per cent to £185m. Organic growth of 7 per cent came amid improved customer retention and successful cross-selling. Cash profits (Ebitda) are guided to be in line with expectations on an improved margin. Eight acquisitions were completed during the year, broadening the group’s capabilities in human resources and employment law compliance. Excluding lease liabilities, net debt is set to come in at £32.4m. Regarding the Covid-19 pandemic, difficulty in accessing client sites has begun to improve. Marlowe expects to recover the majority of work deferred by customers in the months ahead given their non-discretionary nature. Buy.
Music and audio products group Focusrite (TUNE) saw revenue climb by a quarter at constant currencies, to £49.9m, in the six months to 29 February. Excluding the acquisitions of ADAM Audio and Martin Audio, underlying sales fell 5.1 per cent to £38.4m. A 28 per cent jump in gross profit to £23m benefitted from increased prices on new items and a shift towards higher margin products. But statutory operating profit more than halved to £3m on the back of higher administrative expenses. This came amid acquisitions-related costs and higher marketing spend. Supply chain issues in China thanks to the Covid-19 pandemic delayed around £2m of orders during the period. While retail store closures and a lack of live music events is impacting demand, Focusrite says it is seeing more e-commerce activity. Buy.
Diversified Gas and Oil (DGOC) has raised $85.8m (£69.4m) in a capital raise announced on Monday, to part-fund two acquisitions worth a total of $235m. The raise was done at 108p, with 64m new shares issued. DGO said the Carbon Energy and EQT purchases would add 20 per cent to its 2019 production level. Buy.
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Landsec (LAND) reported a heavy fall in the value of its assets for the 12 months to the end of March, led by a reduction in retail of more than a fifth, which meant pre-tax losses surged to £837m. The commercial landlord also reported a 6 per cent decline in revenue profit after taking a £23m provision against anticipated lost rent for the first quarter of the 2021 financial year. Rent collection within the 10 days after rent for the second quarter fell due was 63 per cent, compared with 94 per cent the same time the prior year and management expects collections for the third quarter, in June, to be even worse. It does not anticipate a full economic recovery to pre-Covid 19 levels until 2022.
Ryanair (RYA) will resume 40 per cent of its flights from 1 July, subject to government limits on intra-EU flights being lifted. The airline, which has operated 30 flights every day since lockdown restrictions came into force in March, plans to conduct almost 1,000 flights a day .
Short-seller Muddy Waters has issued its latest report on Burford Capital (BUR), a fortnight after the latter published full-year results for 2019. The hedge fund accused the litigation finance group of re-classifying and re-defining its financials to “inflate cash receipts, operating profit” and mislead investors. “By constantly changing its segment reporting, Burford is hiding the ball from investors and making it difficult to do true apples-to-apples comparisons between periods,” Muddy Waters said.
McCarthy & Stone (MCS) chief financial officer Rowan Baker is stepping down on 1 August to take up the same position at Laing O’ Rourke. She will be replaced by Martin Abell, former Clingen (CLIN) chief financial officer and finance director for Hays (HAS).
OTHER COMPANY NEWS:
Kingfisher (KGF) first quarter sales fell 24.8 per cent on a like-for-like basis despite the reopening of the retailer’s stores, with 95 per cent of Kingfisher’s outlets now operational. The group did, however, return to sales growth in the UK and Ireland in the first week of May, registering a boost of 18.9 per cent after weeks of contractions since March.
Rachel Lawrence will join Secure Trust Bank (STB) as chief financial officer on 7 September, after the lender completed an executive search process to replace Neeraj Kapur – who joined Provident Financial (PFG) on 1 April. STB group financial controller Stephen Heeley is currently serving as interim CFO.
Shares in investment bank Numis Corporation (NUM) are up 5 per cent in early trading, after results for the six months to March revealed an increase in annualised revenue per head and an 11.2 per cent uptick in earnings per share. Co-chief executive officers Alex Ham and Ross Mitchinson said near-term performance “will likely be determined by the frequency” of equity fundraisings among its 209-strong corporate client base, now that much M&A and IPO activity has dried up.
