Small cap round-up

Online trading company CMC Markets said on Thursday that net operating income and pre-tax profit for the year to the end of March 2020 are expected to be "marginally" ahead of the upper end of analysts' ranges.

In its first-quarter trading update back in July, CMC said the imposition of limits by the European Securities and Markets Authority (ESMA) had resulted in a period of transition during which clients adjusted their trading behaviour to the new environment and the company adjusted its model accordingly.

"Following the stabilisation noted in the Q1 update, the board is pleased to see that net operating income has performed strongly through the summer," it said.

As a result, it now expects to exceed analysts' forecasts for net operating income of between £149.2m and £159.6m and pre-tax profit of £23.4m to £263m.

CMC's update came as it responded to an announcement by the Australian Securities and Investments Commission (ASIC), in which the regulator proposed changes similar to those already implemented in other jurisdictions, such as ESMA.

"In its consultation paper, ASIC are seeking industry comment on the proposed introduction of regulatory changes, covering binary options, leverage ratio limits, margin close-out, negative balance protection, inducements and disclosure," CMC said. It added that the regulator is required to consult with the industry before making a product intervention order.

"Fair outcomes for clients have always been a focus for CMC. Benefitting from its proprietary technology and focus on targeting higher valued experienced clients, CMC is well prepared to respond quickly and manage any regulatory changes as required," it said.

In the year to the end of March, the Australian business made up 31% of CMC's net operating income. Within that, contracts-for-difference net revenue constituted 20% of group CFD and spread bet net revenue and 17% of net operating income.

IG Group also noted the announcement by ASIC and said it still expects to return to revenue growth in 2020.

"The group has previously set out that it expected that product intervention measures would be introduced in Australia, and this consultation paper does not change the group's previously stated target revenue growth for its core business of around 3-5% per annum over the medium term," it said.

Laura Ashley said on Thursday that it swung to a full-year loss as sales fell amid weakness in the home furnishings business.

In the year to 30 June 2019, the retailer swung to a pre-tax loss of £14.3m from a profit of £100,000 in 2018 as total group sales declined to £232.5m from £257.2m. Total like-for-like retail sales were down 3.5%, while fashion LFL sales were 9.2% higher. Meanwhile, online revenue dropped to £51.2m from £59.7m.

Chairman Andrew Khoo said it had been a "difficult" year for the group and the sector as a whole. He attributed the drop in profit to the performance of the home furnishings business and the website following a re-platforming exercise which took place in November 2018.

Sales of furniture, the group's most expensive product category, fell 10.1% over the same period last year, with LFL sales down 9%. Laura Ashley said there was some impact from weak consumer confidence, particularly at higher price points.

Decorating sales were down 15% during the year, with LFL sales 13.7% lower, while home accessories sales for the year fell 0.8%, with LFL sales up 1.1%.

"We have focussed on the reasons why Home Furnishings have underperformed and have taken necessary steps to mitigate this, including adding new contemporary product to our ranges," said Khoo.

"We have taken active steps to listen to our customers and now believe that we are on an appropriate recovery path. We continue to invest in our website and are working with our online service providers to ensure that it is optimised to deliver an enhanced customer experience and to achieve the desired growth.

"We are pleased with the continued resurgence of our fashion business, achieving like-for-like growth of 9.2%. This is the result of the improved design of our ranges."

The company did not recommend a dividend for the year.