FTSE 250 movers: Softcat indisputable leader of the gang; TP Icap woes weigh
Broardroom troubles and rising costs at interdealer broker TP Icap saw the company's shares plunge 35% on Tuesday as chief executive John Phizackerley was fired.
The move came as TP ICAP warned full year earnings would come in slightly below the bottom end of market expectations, due to an extra £10m of costs from Brexit, Mifid II regulatory changes, legal fees and IT security.
Costs will rise to £25m in the 2019 financial year, it said.
The company, formed from the £1.6bn merger of Tullett Prebon and Icap two years ago, added that the synergy savings target from the deal would be cut to £75m from £100m.
There were also woes for Equiniti shares as broker Peel Hunt issued a long and severe note calling the stock "materially overvalued using multiple methodologies".
"We review collapsing cash generation and disappointing organic growth; net accrued income has grown 24x faster than sales since IPO; factoring is flattering cash flow and associated reported metrics; deferred income shows limited growth; the cash margin is trending down to single-digit levels; software capitalisation leads to multiple concerns; returns are lower than WACC; endlessly recurring “exceptional charges”; the four IPO "objectives" each appear to have been missed; the proportion of revenues that "recur" may be falling; reclassifications/ re-presentations of the income statement; gearing more than 3x EBITDA when all financing liabilities are included; goodwill = 60%+ of EQN’s market capitalization post the WFSS acquisition and directors have been net sellers of the shares in recent months."
On the positive side, Softcat shares rose after the company said it expects 2018 adjusted operating profit to be "materially ahead" of its previous expectations thanks to favourable market conditions.
In a very brief trading update, the FTSE 250 provider of IT infrastructure products and services said it has continued to perform "exceptionally well" following its third-quarter statement in May.
"Market conditions have been very favourable and growth against prior year has accelerated," it said, hence the upgraded full-year expectations.
Keir Group was also a gainer as the infrastructure services, buildings and developments company updated the market on its trading following the end of its financial year on 30 June on Tuesday, reporting that underlying profit and earnings were forecast to be in line with expectations.
The FTSE 250 firm said year-end net debt was expected to be between £170m and £190m as forecast, with average month-end net debt of around £375m, which the board said reflected reduced volumes due to bad weather affecting the construction business over the winter.
Construction volumes had since returned to levels in line with management's expectations, Kier said.
It also reported increased construction and services order books of more than £10bn, providing a 90% secured revenue position in those businesses for the 2019 financial year.
Ted Baker shares were also higher as the company was started at 'buy' by HSBC.
Market Movers
FTSE 250 (MCX) 20,833.59 0.06%
FTSE 250 - Risers
Softcat (SCT) 761.00p 7.03%
Ted Baker (TED) 2,321.92p 5.45%
Ascential (ASCL) 451.00p 4.40%
Coats Group (COA) 79.41p 4.35%
Drax Group (DRX) 358.00p 4.19%
Provident Financial (PFG) 628.00p 4.18%
Kier Group (KIE) 971.50p 3.90%
Safestore Holdings (SAFE) 547.50p 3.50%
Daejan Holdings (DJAN) 5,840.00p 3.36%
Wood Group (John) (WG.) 649.80p 3.11%
FTSE 250 - Fallers
TP ICAP (TCAP) 272.80p -35.08%
Equiniti Group (EQN) 229.00p -5.76%
Pennon Group (PNN) 754.60p -4.24%
Mediclinic International (MDC) 528.60p -2.90%
IntegraFin Holding (IHP) 383.00p -2.79%
RHI Magnesita N.V. (DI) (RHIM) 4,496.00p -2.68%
BCA Marketplace (BCA) 225.00p -2.17%
Bank of Georgia Group (BGEO) 1,829.00p -2.09%
CYBG (CYBG) 337.60p -1.97%
Playtech (PTEC) 515.60p -1.90%