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FTSE 250 movers: Chemring up on EU funding; Bytes Tech slumps as CEO goes

15:28, 18th March 2024

FTSE 250 (MCX) 19,495.60 -0.09%
UK electrical retailer Currys lifted guidance as it reported stronger-than-expected sales since the busy Christmas period.

The company, which also confirmed that it no longer faced takeover threats from Elliott Advisors and China's JD.com, said pre-tax profit was now expected to be at least £115m, compared with previous guidance of £105-115m and would start the year with positive net cash.

"We've been working to get the Nordics back on track, while keeping up the UK & Ireland's encouraging momentum," said cjief executive Alex Baldock.

"Both are progressing well, despite still-challenging markets, and we now feel confident to raise this year's profit expectations to at least the top of our previous guidance. Stronger trading, selling more of the solutions and services that boost margins and build customers for life, and strong cost discipline have all been important."

US investment group Elliott last week ended its bid to buy Currys, after two offers were rejected. China's JD.com revealed on Friday it will not make a bid, sending Currys shares lower.

UK defence contractor Chemring said it had received €66.7m (£57m) from the European Union as part of a €513m funding round to enhance ammunition production capacity.

The EU aims to increase the bloc's annual output of shells to two million by 2025 to help counter a shortage in Ukraine as it continues to fight invading Russian forces.

The funding awards are part of the Act in Support of Ammunition Production (ASAP) programme - a direct response to the European Council's call in March 2023 to urgently deliver ammunition, and missiles if requested, to Ukraine and to help Member States refill their stocks by introducing targeted measures, Chemring said on Monday.

It added that it had also received 428 million Norwegian kroner (£32m) from the Norwegian government of Norway.

Bytes Technology Group updated the market on the sudden recent resignation of its former chief executive officer Neil Murphy on Monday, confirming it came following revelations of undisclosed share transactions.

The FTSE 250 company said it launched an investigation after the Financial Conduct Authority (FCA) issued a voluntary request for information to Murphy, indicating potential undisclosed transactions.

Murphy's resignation on 21 February came as a surprise, it said, coinciding with the scheduled meeting to discuss his response to the FCA's inquiry.

Subsequent investigations unveiled undisclosed trading of its ordinary shares by Murphy over 66 trading days between 6 January 2021, and 10 November 2023.

Additionally, Murphy conducted 15 transactions on behalf of his wife during the same period.

That had prompted Bytes to revise its director shareholding information for the 2021 to 2023 financial years, revealing inaccuracies in disclosures despite Murphy's representations.

In response to the FCA's inquiry, the company said it was fully cooperating, having provided a detailed response regarding its processes and procedures.

The incident followed a prior investigation earlier in the 2024 financial year concerning a share purchase by a person closely associated (PCA) to a former non-executive director, leading to revisions in the company's policies and disclosures.

At the same time, Bytes signalled a record financial year ended 29 February, with double-digit growth in gross profit and adjusted operating profit.

The company's cash position stood at £89m, reflecting solid performance amidst macroeconomic uncertainties.

Strong demand for software and IT services from corporate and public sector clients contributed to gross invoiced income growth of over 25%.

Looking ahead, Bytes said it was confident in its ability to sustain double-digit growth, supported by vendor partnerships, customer relationships, and dedicated employees.

An independent committee was appointed to investigate Murphy's resignation and share transactions, with outcomes expected to inform future disclosures and financial reporting.

"Our board, management and staff should be very proud of the performance delivered last year and celebrating a record year for the group," said interim chief executive Sam Mudd.

"We remain committed to our successful strategy of delivering great customer service to our existing customers, acquiring new customers and increasing our share of their IT expenditure.

"This strategy is underpinned by our strong vendor relationships and the commercial skills of our people and means we are well-placed to capture the significant growth opportunities ahead of us."

Bytes said it expected to release its preliminary results for the 2024 financial year in late May or early June, pending the completion of the investigation.

Marshalls downgraded its profit and revenue outlook for 2024 on Monday and posted a slump in full-year profits and revenue as the landscape products manufacturer was hit by "challenging end markets".

In the year to the end of December 2023, adjusted pre-tax profit fell 41% to £53.3m on revenue of £671.2m, down 7% on the previous year.

The company declared a total dividend for the year of 8.3p a share, down from 15.6p.

Marshalls said it had been a "challenging" year for the group as a weak macroeconomic backdrop impacted key end markets, leading to a drop in sales volumes, revenues, and profitability.

"Macro-economic pressures and uncertainty have continued to impact the construction industry in 2023, with significant cost inflation in the UK economy and progressive base rate increases by the Bank of England, leading to falling real wages, which has put unprecedented pressure on household budgets, and resulted in reduced demand in the housing sector," it said.

"The impacts have been exaggerated by economic uncertainties and weak consumer confidence, which also saw reduced investment in the non-housing and infrastructure sectors although these remained more resilient in 2023."

Marshalls said the CPA estimated that output in the UK construction industry contracted by 6.4% last year, with reductions of 17% and 11% in new build housing and private housing repair, maintenance and improvement (RMI), respectively, which are key end markets for the company.

"These factors resulted in a reduction in demand for the group's products, which had a significant impact on its profitability."

Revenue in the first two months of the year has been lower than 2023, reflecting continued weakness in the second half of last year, it said.

"In line with recent sentiment of UK economic and industry forecasts, the board expects activity levels to remain subdued in the first half of the year followed by a modest recovery in the second half as the macro-economic environment progressively improves," it said.

"The start of this recovery is now expected to be slower and more modest than previously assumed. Therefore the board believes that revenues in 2024 will be lower than previously expected and that profit will now be at a similar level to 2023."

Hipgnosis Songs Fund fell after a further fall in the valuation of its portfolio due to an accounting error by investment adviser Hipgnosis Songs Management (HSM).

Market Movers

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 168.00p 5.33%
Chemring Group (CHG) 364.00p 4.90%
Currys (CURY) 59.15p 4.51%
Lancashire Holdings Limited (LRE) 642.00p 4.31%
Future (FUTR) 601.50p 4.25%
Bridgepoint Group (Reg S) (BPT) 271.00p 4.23%
PPHE Hotel Group Ltd (PPH) 1,390.00p 4.12%
Morgan Advanced Materials (MGAM) 288.00p 3.78%
Telecom Plus (TEP) 1,556.00p 3.46%
Renishaw (RSW) 4,118.00p 2.74%

FTSE 250 - Fallers

Bytes Technology Group (BYIT) 510.00p -10.05%
Marshalls (MSLH) 266.60p -8.26%
FirstGroup (FGP) 175.10p -6.71%
W.A.G Payment Solutions (WPS) 72.00p -4.00%
Hipgnosis Songs Fund Limited NPV (SONG) 59.80p -3.86%
Mobico Group (MCG) 67.00p -3.46%
Pennon Group (PNN) 665.00p -3.13%
Wizz Air Holdings (WIZZ) 2,084.00p -2.84%
Genus (GNS) 1,744.00p -2.84%
Darktrace (DARK) 470.00p -2.63%

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