Scisys finds space in Dublin to stay within EU’s orbit. A British software business that provides space communication services and the BBC’s newscasting systems is moving its headquarters to Dublin to avoid the “potential adverse consequences” of Brexit. Scisys (SSY) will set up an Irish holding company to ensure that it will continue to be considered for contracts funded by the European Union after Britain leaves the bloc. It will retain its place on London’s junior stock market and also will list on Euronext Dublin, Ireland’s main stock exchange. The IT software and services group, which assists the Environment Agency with the transmission of weather data, was founded in 1980 and has public and private clients in the media, defence and space sectors. It has 580 employees in Britain and Germany and generated revenues of £57 million last year.
New set of headwinds set to send Flybe to another full-year loss. The combined £29 million impact from higher fuel costs, a weaker pound and less demand is set to send Flybe Group (FLYB) spinning to a full-year loss. The low-cost airline’s profit warning yesterday immediately sent its shares down by more than a third to a record low. In a trading update, the Exeter-based Flybe said that it expected to make a full-year, pre-tax loss of £22 million, far more than analysts had forecast. However, it said that a £10 million gain from the end of an onerous lease means that the overall loss would be closer to £12 million.
Crest Nicholson to build new strategy after profit warning. Crest Nicholson Holdings (CRST) took its shareholders by surprise yesterday when it issued a profit warning for the third time in two years and parted ways with its finance director. Stephen Stone, executive chairman, and Patrick Bergin, chief executive, two veterans of the housing sector, have taken control of a strategic rethink at the company after it suffered a sharp sales slowdown in London and the home counties. Robert Allen, a former British American Tobacco executive who joined as finance chief in February 2017, has stepped down from the board and will leave the group after a short handover period.
New orders give Barratt some home comfort. Britain’s biggest housebuilder shrugged off the paralysis gripping the property market to record a healthy increase in advance orders for its new homes. Fifteen weeks into its new financial year, Barratt Developments (BDEV) told investors at its annual meeting yesterday that its book of forward sales had risen by 12.4% against the same point last year to stand at nearly £3.15 billion. That equated to orders for 12,903 Barratt homes as of October 14, against bookings for 12,277 properties worth a total of £2.8 billion this time last year. Barratt reported strong demand for its properties between the beginning of July and the middle of this month, boosted by the Help to Buy scheme and cheaper mortgage loans.
Segro clears space for the relentless rise of Amazon. Amazon is poised to become the largest customer at SEGRO (SGRO) as the warehouse operator rides on the coat-tails of the irresistible rise in internet shopping and online deliveries. As Segro published an upbeat assessment of trading during the third quarter, David Sleath, chief executive, said that the American online shopping company was likely to overtake DHL, the parcels delivery group, in terms of the amount of space it rents from Segro to store goods in transit. “Three years ago Amazon was nowhere as a customer for us; now they’re the second largest and likely to become the largest,” Mr Sleath said, adding that Fedex and UPS also were among its biggest users. He added that Segro was increasingly letting out space to big data centres that store material for companies such as Youtube and social networks.
Swiss health warning is big blow to Mediclinic. The value of a leading international private hospital group fell by more than a fifth on the London stock market at one point yesterday after it said that pressures in its key Swiss business would hit forecasts. Shares in Mediclinic International (MDC) hit new lows after it warned that its first-half results were likely to fall short of expectations and as it cut its full-year outlook. The update before its half-year results next month comes after a difficult year for Mediclinic, which was demoted from the FTSE 100 in June amid a downturn in trading in Switzerland, which accounted for almost half of group revenue last year.
A medical devices disinfectant company whose products are used in almost every British hospital has begun increasing stockpiles and has urged customers in Europe to follow suit to avert potential disruption from Brexit. Tristel (TSTL) warned yesterday that the “only certainty is that we will experience turbulence this year and our normally predictable pattern of trade will be disrupted to some extent”. Its foams and wipes disinfect medical devices such as endoscopes and ultrasound instruments and are used in various hospital departments, including accident and emergency.
Go-Ahead gets right signal from Norway. After the storm over its Thameslink and Southern railway services, Go-Ahead Group (GOG) has sought a calmer transport environment abroad. The FTSE 350 company, which has had chronic problems with industrial relations and the failed implementation of Network Rail’s new timetable, has won an eight-year contract, with a two-year extension, to run Norway’s inter-city services on the Sorlandet line to Stavanger, as well as local services. Go-Ahead will receive about NKr1·5 billion (£140 million) over ten years. Go-Ahead has a 65% stake in Govia Thameslink Railway, Britain’s biggest rail franchise, which operates Thameslink, Southern, Great Northern and Gatwick Express, and also runs regional bus services. The company has 28,000 employees and total annual revenue of £3.5 billion. “We are delighted to be given this opportunity to deliver Norway’s first contracted rail services,” David Brown, chief executive, said.
The mining group planning to open the only open-cast uranium mine in the European Union suffered a 40% slump in its value yesterday amid reports that it had been denied permits. Only two days earlier Berkeley Energia Limited (DI) (BKY), which is listed in Britain, Australia and Spain, had issued a positive update insisting that it was working closely with legal advisers to resolve two outstanding licensing issues for the mine near Salamanca, in Spain. However, Spanish media said that the country’s government had decided not to award it the two permits necessary to open the mine, despite having granted it preliminary approval in early 2013. It was awaiting a building licence and government authorisation to handle radioactive waste. “The government will wait for the ongoing proceedings to go through, but it will say ‘no’,” a government source told Reuters. Berkeley said that it had “received no official notice in this regard from the nuclear safety council nor any other government department to date”. It added that it had sought “immediate clarification” from the council and the the environment ministry.
Recent sales may have been purring, but Softcat (SCT) struck an unexpectedly cautious note about its prospects for the coming year yesterday, prompting an 11.5% fall in its share price. The company, one of Britain’s biggest computer and software resellers, said that revenue growth would slow from its present strong levels, with uncertainties around Brexit potentially putting the brakes on business confidence. Investors reacted by sending the share price down 91p to 700p, valuing the company at about £1.4 billion. Softcat floated at 240p three years ago.
Asos is sitting pretty on £102m profits despite spending spree. Profits at ASOS (ASC) soared by 28% last year, even as the online fashion retailer ploughed hundreds of millions of pounds into the business. It recorded a pre-tax profit of £102 million, up from £80 million, in the year to August 31, on the back of revenues that jumped by 26% to just over £2.4 billion. Nick Beighton, chief executive, said that the strong showing was down to a “standout” performance in Britain, despite competitive trading conditions and heavy investment in the business. He added: “It is worth pointing out that we fund our investment from our internal resources and we have never had to ask investors for money on our journey and nor do we intend to.”
Client assets under management at Rathbone Brothers (RAT) have risen to just over £47 billion after the wealth manager completed the acquisition of Speirs & Jeffrey. Reporting its third-quarter results, Rathbone said that total funds under management were £47.3 billion at the end of September, up from £39.9 billion three months earlier, largely as a result of the £6.7 billion of assets it gained from the deal in August. Rathbone bought Spiers & Jeffrey for £104 million in cash and shares, although the cost could rise if performance targets are met.
Inchcape (INCH) was relegated to the slow lane after analysts at HSBC warned that weaker consumer demand for new vehicles would put pressure on the car retailer’s earnings. Sales of new cars in Britain fell by 20.5% in September to 339,000 compared with the same month last year. Crucially, sales of Volkswagen’s Audi and VW-branded vehicles, which represent about 30% of Inchape’s new car sales, fell between 53% and 55% in September. Analysts said that the slowdown had been driven by a shortage in new models related to the introduction of a new emissions test.
easyJet (EZJ) fell to the bottom of the index amid a wider travel sector sell-off driven by a profit warning from Flybe, the regional airline, and gloomy forecasts around the impact of a hard Brexit on carriers from Ryanair Holdings (RYA). Easyjet closed down 60p at £11.51; Flybe spiralled down almost 13p to 18¾p.
Spire Healthcare Group (SPI) fell 10p to 118½p after Mediclinic, which owns a 29.9% stake in the private hospitals operator, said that it was reviewing the carrying value of its holding in Spire. Shares in Spire have fallen 53% since the start of the year amid declining NHS admissions, disappointing growth in private admissions and planned investment in clinical quality and consumer engagement.
Fevertree Drinks (FEVR) edged down 11p to £28.83 after Deutsche Bank initiated coverage of the posh tonic maker with a “hold” rating and a target price of £30, saying that an expected slower rate of growth made its valuation at 50 times earnings look “a bit stretched”. The stock market darling has fallen by 20.8% since the start of the month amid a consensus rotation out of “growth” stocks towards “value” plays and after figures from Nielsen showed Fevertree’s growth in Britain had slowed from 75.2 per cent in the four weeks to August 12 to 37.7 per cent in the subsequent four-week period.
Babcock claims get short shrift. Jefferies came to the defence of Babcock International Group (BAB) after a previously unknown short-seller issued a report over the weekend claiming that the outsourcer had “a particularly challenged” relationship with the Ministry of Defence, its largest customer. Analysts at Jefferies said that their talks with the Cabinet Office, which oversees the estate of the Ministry of Defence, had provided “no support” for the assortment of allegations, which also included £200 million of cost overruns related to delayed construction of a new dry dock at Devonport, Plymouth.
Tempus – Netflix: Buy. Netflix has allayed concerns that subscriber growth is slowing and is pulling even further ahead of its rivals
Tempus – Pearson (PSON): Hold. Recovery is on track and sustained growth should come
