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Everyman's plans to open a cinema in the heart of the City welcomed by the City

Companies featured today: Babcock, Be Heard, dotdigital, Everyman, Goals Soccer Centres and Sopheon
Cinema tickets
The company expects to open a three-screen cinema next year in Broadgate in the heart of London's financial district

A trading update for Everyman Media Group PLC (LON:EMAN) sent the shares 23p higher to 227p.

The cinemas operator said it had performed in line with expectations in the first 27 weeks of 2018 and the board is confident of a successful outcome for the full year.

That's probably not what got the City excited; what may have been the impetus for the share price gains was news that the company has recently exchanged contracts for venues in Cardiff (four screens) and London Broadgate (three screens), both of which are expected to open in 2019.   

Babcock battered after it cuts full-year revenue guidance

Babcock International Group PLC (LON:BAB) shed 12% at 717.2p after lowering sales guidance today, making it the worst performing mid-cap stock.

“Babcock has been a frustrating business for a number of years. It is highly skilled and works on some very important projects yet struggles to achieve decent earnings growth,” declared Russ Mould, the investment director at AJ Bell.

READ: Babcock Intl. cuts full-year revenue growth target due to temporary slowdown in defence, marine work

“Investors are increasingly worried about funding pressures at the Ministry of Defence, which is Babcock’s biggest customer. There have also been concerns about regulatory moves reducing profits allowed on defence deals,” Mould continued.

“The latest trading update only adds to the frustration with reduced guidance for low single digit underlying revenue gains for the full year, which analysts take to mean 1% to 2%,” Mould said.

If any holders of Babcock stock were looking for some upside, Mould said there are signs of encouragement amid news of a £1bn increase in the pipeline of bids in progress to £14bn.

“You also have to consider that Babcock provides services that maintain essential infrastructure, so a lot of its work falls under non-discretionary expenditure,” he added.

Mind you, that did not seem to save Carillion.

Nevertheless, Liberum Capital Markets kept the faith.

Based on Liberum's projected earnings for 2019, Babcock is trading on an earnings multiple of 9.1, which the broker says is roughly a 34% discount to the sector average of 13.8.

It rates the stock a 'buy' and has a target price of 1,100p.

Goals Soccer Centres still bemoaning "Beast from the East" while Be Heard warns on earnings

Football's not coming home but neither is it going out, it seems.

Goals Soccer Centres PLC (LON:GOAL) took a heavy kicking on Thursday morning after warning that it still hasn’t recovered from the impact of the ‘Beast from the East’ earlier in the year.

Like many UK businesses, the five-a-side football pitches operator was hit hard by the extreme weather conditions earlier in the year and told the market as much in its full-year results in March.

Like many teams in the recent World Cup, it expects a better second half.

Also like a lot of teams in the World Cup, it may be disappointed; we shall see. In the meantime, news that the chief financial officer, Bill Gow, has resigned and stepped down from the board with immediate effect to join his family business will not have comforted the market; one broker cut its full-year profit before tax forecast to £5.5mln from £6.5mln and now expects zero growth in like-for-like sales.

The shares were down 22%.

Digital marketing outfit Be Heard Group PLC (LON:BHRD) was certainly heard this morning when it issued a profit warning, sending its shares plummeting.

The stock lost a third of its value after the company said impressive revenue growth would not lead to a concomitant increase in earnings.

The board said it now expects adjusted underlying earnings (EBITDA) for 2018 will be in the range of £3.0mln to £3.3mln on revenue of around £29mln.

Prior to this morning's profit warning, the market had been expecting profit before tax – admittedly, not the same as EBITDA, but close enough – of £3.47mln on revenue of £30mln.

A 33% fall in the share price on a 13% downgrade to profit expectations may turn out to be an over-reaction

READ:Be Heard resets earnings guidance as it invests for expected upturn in marketing expenditure

“We expect our margins to reflect the increased costs associated with winning new business, uncertainty around contract timing and moreover, client spend volatility. To mitigate this, we have begun a process of reducing costs, streamlining our business and centralising group functions where appropriate,” the company said.

Be Heard expects to see some benefit from these actions in the second half of this year but more so in the next year.

Two tech plays - Sopheon and dotdigital - make the early running

The market fell back in love with dotdigital Group PLC (LON:DOTD) this morning after the marketing automation platform operator's trading update.

After doubling in the previous two years the share price this year had tumbled from 104p at the end of 2017 to 73p last night but the shares were back on investors' buy lists after the company said revenues grew by around 35% to £43.1mln in the year to the end of June from £32.0mln the year before.

The company said the strong momentum seen in the final quarter of the financial year just ended has continued into the new financial year, giving management confidence that current market expectations for the full-year will be met.

READ dotdigital sees fourth quarter momentum continue into new financial year

Dotdigital shares rose 11.6% to 81.5p.

The shares were not the morning's best performers, however; that honour went to another tech play, Sopheon PLC (LON:SPE).

The product life-cycle software provider issued a very upbeat statement in early June at its annual general meeting and there was more effusiveness in this morning's trading update, with the company saying “we expect revenue, EBITDA and profit before tax for the first half of 2018 to be significantly ahead of prior year performance for the corresponding period”.

Sopheon shares surged 12% to 850p.

Other Proactive news headlines:

Live Company Group PLC’s (LON:LVCG) BRICKLIVE Animal Paradise show will begin a three-year, 20-city tour of China next month.

ECR Minerals PLC (LON:ECR) told investors that whilst it has focused on the Blue Moon project, in accordance with its new strategy, it has also evaluated a number of new opportunities. Earlier this month, the company landed new capital alongside its new strategy and it has now set aside a A$100,000 fund for the new opportunities, to support initial due diligence and licence application costs.

Amryt Pharma PLC (LON:AMYT) said strong progress had been made commercially and in the clinic in the first-half of 2018. The company, which develops and sells drugs for rare and orphan diseases, posted revenues of €7mln, up 14% on the year earlier. Based on the current run rate, the year-end result will be in line with forecasts. 

A boost from the World Cup helped pizza franchise owner DP Poland PLC (LON:DPP) to a bumper first half. The AIM-listed group saw total sales rise by 38% and like-for-like by 13% in the first six months of 2018. DP owns the franchise for Domino’s Pizza in Poland and achieved the sales growth despite unusually warm weather in May and June.

Be Heard Group PLC (LON:BRD) has adjusted full-year earnings guidance reflect investment in business development, service capacity and a provision for client spend volatility.

Allergy Therapeutics PLC (LON:AGY) is raising £10.6mln to fund the expansion of the Phase III clinical trial of its grass pollen-induced hay fever immunotherapy, PQ Grass.

Bacanora Lithium PLC (LON:BCN) has scrapped plans for a US$100mln placing to help fund the construction of a lithium mine at Sonora mine in Mexico. The placing was part of the funding for a 17,500 tonnes per annum lithium carbonate operation at Sonora.

Production costs tumbled at Tanzania-based gold miner Shanta Gold PLC (LON:SHG) in the last three months, with further savings expected over the remainder of the year. Shanta will shift operations at New Luika completely underground from the end of next month as sufficient ore has been stockpiled to enable the open pit fleet to ‘stand down’ from August, said chief executive Eric Zurrin.

Cello Health PLC (LON:CLL) said trading in the first six months of the year had been strong, adding it expects results for the year to be in line with market forecasts. The healthcare-focused advisory group said it saw “good growth” in revenues and earnings, while profit margins were slightly higher than the comparable period last year.

Highlands Natural Resources PLC (LON:HNR) told investors that its six-well drilling campaign at the East Denver project has now been completed successfully. The programme has been entirely funded by its partners and all six wells have now been cased, cemented and secured.

Kibo Mining PLC (LON:KIBO) told investors that the Tanzanian Mining Commission is now ready to consider an application for a special mining license (SML) for the Mbeya Coal to Power Project (MCPP).

Emerging markets-focused APQ Global Limited (LON:APQ) is comfortably on track to meet its target annual dividend yield of 6%.

Diversified Gas & Oil PLC (LON:DGOC) this morning confirmed the completion of its latest transformational acquisition, buying producing wells and midstream infrastructure in the Appalachian Basin. The US$575mln deal more than doubles the group’s output, daily production rates are set to increase by 115% to over 60,000 barrels oil equivalent per day.

United Oil & Gas PLC (LON:UOG) announced that it will be hosting an investor presentation evening on Wednesday 25 July 2018 at Prince Philip House, 3 Carlton House Terrace, St James', London SW1Y 5DG from 6-9pm. The company said its board will give an overview presentation followed by a Q&A session and informal meet and greet.


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