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Wincanton on the right road as strong cash flow whittles away debt

A look at the day's poppers and droppers, including JD Wetherspoon, Gattaca, Renewi, AdEPT, The Works, Coca-Cola HBC and Micro Focus
The dividend was hiked by 10%

Logistics group Wincanton PLC (LON:WIN) founds its way higher after its half-year results.

The supply chain firm said revenue in the six months to the end of September was virtually unchanged year-on-year at £581.8mln.

Underlying earnings before interest, tax, depreciation and amortisation rose 4.8% to £33mlon from £31.5mln the year before.

Underlying profit before tax rose 7.1% to £24.1mln from £22.5mln while statutory profit before tax – which includes exceptional items – shot up 48.3% to £30.1mln from £20.3mln.

The company enjoyed “strong free cash flow generation” of £33.5mln in the reporting period, leading to its debt declining to £24.2mln from £43.5mln.

The company said it saw improved profitability in its industrial & transport operations as a result of actions taken to address the cost base and performance.

Dear old Spoons – that’s J D Wetherspoon PLC (LON:JDW) if you are being formal – has bounced back after yesterday’s negative reaction to its trading statement.

Among the ranting from chairman and founder Tim Martin was a brickbat aimed at those who claimed during the EU referendum that there would be an immediate economic downturn in the aftermath of a “Leave” vote.

"About 500,000 jobs have been created since, rather than the loss of 500,000,” Martin said.

On a completely unrelated note, it was revealed in the conference call with analysts that the group was being cautious on full-year profits because of rising wage costs.

Recruitment, possibly because of those 500,000 jobs that have been created according to Martin, is said the be “challenging”.

“JD Wetherspoon has said, in no uncertain terms, that labour costs are weighing on profits. Estimates are being cut by around £5mln,” reported financial advisory firm, Langton Capital, which specialises in covering the leisure industry.

The shares were nevertheless up 47p at 1,185p – or €13.59 if you prefer, which Martin clearly does not.

On Tuesday, before yesterday’s trading statement, the shares closed at 1,311p.

1.15pm: Gattaca battered as it takes a huge non-cash impairment charge

Gattaca Plc (LON:GATC), the recruitment firm focused on the specialist engineering and technology (information technology & telecoms) sectors, lost one-ninth of its value after reporting a loss for the year just ended.

The statutory loss before tax was £24.9mln, compared to a profit of £11.5mln the year before.

Stripping out the £33mln write-down – a non-cash charge – of the value of goodwill and intangibles associated with the acquisition of Networkers, where the company closed some of its international operations, made the bottom line look better; even so, the underlying profit before tax fell to £12.7mln from £16.1mln the previous year.

The company’s dividend policy targets a pay-out of 50% of profits after tax “through the cycle” - presumably a rolling 12-month period – subject to a sustained reduction in net debt from the 2019 financial year onwards.

As such, no final dividend was declared, leaving the full-year pay-out at 3p. In the previous financial year, the company had paid 23p per share.

11.35am: Eventful week for Renewi takes a turn for the worse

Its been an eventful week for Renewi PLC (LON:RWI), the waste-to-product business, which saw its chief executive officer (CEO) hand in his resignation this week.

Renewi’s boss Peter Dilnot is on his way to take up the role of chief operating officer at FTSE 100 company, Melrose Industries PLC (LON:MRO), which is undeniably a step-up but he may be leaving at an opportune time, given the reaction to today’s results from Renewi.

The shares lost a tenth of their value after the company said it had traded “broadly in line” with management expectations in the six months to the end of September.

The market took fright at developments at ATM, its Dutch hazardous waste treatment unit, where the resumption of full soil production is not expected this year.

"We have been working closely with regulators in order to resume full production at ATM and the supply of our cleaned soil into the market; however, yesterday, we received notification from the regulators requesting further analysis of our treated soil ahead of future shipments. As a result, we will limit production until the situation is resolved and this will reduce expected profit for the current financial year,” said Dilnot (who is staying on as CEO to the end of the financial year).

10.30am: AdEPT in textbook acquisition; The Works wanted after first trading update since its IPO

AdEPT Technology Group PLC (LON:ADT) saw its shares jump in early trading Thursday after it announced one of its archetypal bolt-on acquisitions.

The communication and information technology services provider signed an agreement to acquire UK-based unified communications services provider ETS Communications Holdings Limited for an initial consideration of £2.5mln.

The shares were up 9.9% at 390p on the news.

Ian Fishwick, chief executive of AdEPT, said the acquisition of ETS would build on the capabilities of AdEPT’s specialist Avaya IP Office operation in Northampton while also extending its reach to Yorkshire and Lincolnshire.

The acquisition follows closely behind the firm's purchase of IT services provider Shift F7 in a £7.9mln deal in August.

In a shocking development, a small retailer has released an upbeat trading statement.

The £88mln-valued PLC (LON:WRKS), which describes itself as one of the UK's leading multi-channel specialist retailers of value gifts, arts, crafts, toys, books and stationery, saw its shares rise 8.1% to 140p after it posted a 3.8% year-on-year gain in like-for-like sales in the 26 weeks to October 28.

READ: begins trading in London with marketvalue of £100mln

The sales performance was driven by growth in both stores and e-Commerce. It also reflected strong sales of 'Squishies' offsetting, in part, the tail-off in sales from 'Spinners', which was the hot trend of the previous year.

“As we enter the busy Christmas period, we remain focused on delivering for our customers through our unique multi-channel offering, which continues to buck the trend in retail,” said Kevin Kearney, the chief executive officer of The Works.

Coca-Cola products bottler delivers lip-smacking update; Micro Focus wanted as share buyback begins

Coca-Cola HBC AG (LON:CCH), which bottles drinks made by The Coca-Cola Company, saw its shares fizz higher after it reported “a quarter of solid growth”.

The shares, up 2.7% at 2,321p, sat atop the Footsie leader-board after the company revealed a 4.2% increase in volumes shipped in the third quarter of 2018 compared to the year before and a 4.5% increase in revenue on a constant currency basis.

Just behind it on the leader-board was legacy software specialist Micro Focus International PLC (LON:MCRO), which rose 2.4% to 1,285p after announcing it had bought back 239,883 shares at an average price of 1,246.42p per share.

The company only announced its US$400mln extended share buyback programme on Monday, so it has not hung about.

READ: Micro Focus raises revenue guidance for year just ended

Proactive news headlines:

Immotion Group PLC (LON:IMMO) has signed a revenue sharing deal with Rank Group PLC (LON:RNK) which will see it roll out its virtual reality (VR) machines at some of the casino giant’s sites.

NetScientific PLC (LON:NSCI) said its portfolio company, Vortex BioSciences, has presented a study demonstrating how its technology can combine with impedance spectroscopy to improve the analysis of circulating tumour cells (CTCs).

AdEPT Technology Group PLC (LON:ADT) has signed an agreement to acquire UK-based unified communications services provider ETS Communications Holdings Limited.

Financial services group Tavistock Investments PLC (LON:TAVI) saw funds under management (FUM) rise for the 16th quarter in a row in the three months to the end of September.

Pragmatism and conservatism continue to be key tenets for Anglo African Oil & Gas PLC’s (LON:AAOG) drill programme at the Tilapia field in the Republic of the Congo, where progress has paused in order to avoid risking damage to target horizons. The company told investors it has insisted upon the replacement of two rig parts – which were found to be worn – as they will be critical for the deeper sections of the TLP-103C well.

88 Energy Ltd (LON:88E, ASX:88E) revealed it aims to raise £5.9mln of new capital through a share placing, as it continues to countdown to new conventional oil exploration activities in Alaska. The placing follows on from a rights issue which raised £2.02mln, of a possible £7.96mln, and, will see the remainder of the new shares (around 593mln of them) sold to investors at a price of 1p each.

Plexus Holdings PLC (LON:POS) has described a period of “considerable progress” as it released full-year results. Significantly, in the year it sold its wellhead business for £42.5mln to TechnipFMC (with an initial £14.1mln received in the period).

Galantas Gold Corp (LON:GAL, CVE:GAL) has announced the results of the analysis of two channel samples taken from the Kearney vein at its Omagh mine. One channel sample returned a grade of 7.1 grams per tonne (g/t) gold, with 10.6 g/t silver over a true vein width of 1.8 metres and the other returned a grade of 10.4 g/t gold and 22.4 g/t silver over a true vein width of 3.2 metres.

Allergy Therapeutics PLC (LON:AGY), the fully integrated specialty pharmaceutical company specialising in allergy vaccines, has announced the appointment of Scott Leinenweber to the company's board as a non-executive director, nominated by Abbott Laboratories Inc. (NYSE:ABT) in replacement of Jeff Barton who retires from the Board, both effective after close of business on 7 November 2018.

Aggregated Micro Power Holdings PLC (LON:AMPH), the specialist provider of distributed heat, power and renewable fuels, said it has issued a call to commence the early redemption of its Convertible Loan Notes (CLNs). The group said the total number of CLNs currently outstanding is £10.01mln, with the directors and management of the company currently holding in aggregate, £2.22mln nominal, which they have committed to convert into new ordinary shares. It added that maximum potential cost of redemption at par is £7.79mln, plus expected interest due of approximately £0.13mln.

Tower Resources PLC (LON:TRP), the AIM-listed oil and gas company, with its focus on Africa, has announced that an updated corporate presentation will be available from today on the company's website.

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