Mystery new approach at Playtech
The battle for Playtech has taken another surprising turn after the gambling group received a mysterious new approach just hours after the collapse of its £2.7 billion takeover.
Playtech has been approached by a Hong Kong advisory group representing a group of unknown investors considering a bid for the business. TTB Partners, a Hong Kong firm founded by two former Goldman Sachs partners, is advising the group which is in the process of being formed. The identities of those involved have not been disclosed.
FTSE 100 steady, Virgin Wines slides after update
Shares in Virgin Wines tumbled more than 20% today as the subscription business revealed it has become harder to convert new customers to doorstep wine deliveries.
The recently-listed AIM stock also highlighted the impact of Omicron labour disruption, including a £800,000 blow to sales from having to bring forward its Christmas cut-off by two days in order to ensure all customers received their orders.
Half-year revenues of £40.5 million were still in line with last year’s lockdown-fuelled performance as Virgin benefited from strong repeat levels of business.
But guidance for the year to June is marginally below the City’s estimates, partly the result of customer acquisition becoming more challenging as lower visitor numbers are generated through coupons and business partnerships.
Shares fell 45p to 155p and rival Naked Wines dropped 35.5p to 480.5p.
AJ Bell’s investment director Russ Mould added: “Headlines that the price of wine is set to soar by 20% means Virgin Wines and its rivals will have to work hard to get customers to keep spending on the good stuff rather than downgrading to a cheap bottle of plonk.”
There was cheer elsewhere on the London market as the FTSE 100 index continued its record of outperformance by edging just 1.69 points lower at 7581.73.
That was much better than the showing in Europe after Wall Street sentiment was knocked by last night’s weaker-than-expected results from Facebook business Meta Platforms.
The update put further strain on London-listed tech stocks including Scottish Mortgage Investment Trust and Aveva, but their declines of 3% were more than offset by the impact of results-day gains for caterer Compass and oil giant Shell.
The FTSE 250 index was down 79.98 points at 22,169.98, with Trustpilot and Auction Technology Group among those 4% or more lower.
Investors took shelter in more traditional industries, with precision engineering firm Renishaw up 6% or 294p to 4886p after posting record half-year profits and lifting its interim dividend by 2p to 16p a share.
Revenues growth of 27% to £325.2 million reflected a strong recovery across key market sectors and a particularly robust performance in semiconductors and electronics.
Future bright on digital ad market
Future, the magazine group behind titles ranging from Metal Hammer to Marie Claire, is benefiting from a revival in advertising.
Britain’s biggest magazine published reaffirmed its full year forecasts today, saying an uptick in ads was offsetting declines in e-commerce revenues and audience.
CEO Zillah Byng-Thorne said: “Good momentum in digital advertising is being driven by the strength of our trusted content which continues to attract a high value audience making us a partner of choice for advertisers.”
Future bought Dennis Publishing, behind titles such as The Week, for £300 million last year and said today it was on track to complete integration of the business by March. Shares slipped 184p, or 5.4%, to 3224p.
Compass shares sweeten as recovery continues
Catering giant Compass sent its shares 7% higher today after revealing that revenues are back close to pre-Covid levels.
Compass said all sectors traded well apart from business and industry, where the reopening of workplace canteens has been delayed by Omicron.
Revenues surged 38.6% in the quarter to 31 December, taking the figure to 97% of 2019 levels. The recovery has been particularly strong in North America, especially in sports and leisure and education.
Compass continues to expect revenues growth of 20%-25% in the year to 30 September, adding that three out of the five biggest contracts won in the quarter were from clients outsourcing for the first time.
Shares rose 113.5p to 1767p in the FTSE 100, their highest since the start of the pandemic.
Hargreaves Lansdown analyst Steve Clayton said: “This was a strong end to the year for Compass. The group has recovered well and looks likely to end up stronger post-pandemic than before.”
Shell “awash with cash” after oil price surge
Oil giant Shell has reported its strongest quarter since 2014 as the energy giant cashes in on the surge in energy prices.
The better-than-expected performance meant full-year adjusted earnings rose fourfold to $19.3 billion (£14.2 billion). It has expanded its share buyback target to $8.5 billion (£6.3 billion) and raised the dividend.
Richard Hunter, head of markets at Interactive Investor said Shell finds itself awash with cash.
He said: “These elevated levels of cash generation, in part helped by disciplined capital expenditure but mainly made possible by Shell’s ability to capitalise on higher energy prices, have enabled several financial boxes to be ticked.”
The figures come with oil majors under pressure to accelerate the move to renewable energies.
Some activist investors have called for Shell to split itself in two, with the oil and gas operations separate from a new “green” business.
The company has rejected these calls, pointing out that the green business would not be financially sustainable and that oil and gas income is needed for the significant investment to come.
Shell shares were 1.5% higher today.
BT launches fresh sports venture with Discovery
BT is launching a new sports venture with US entertainment giant Discovery, the latest sign of ambition under CEO Philip Jansen.
That link up would spring BT Sport together with Eurosport UK, giving UK customers access to Discovery’s content.
That would seem to bring an end to talk that the telecom giant will offload BT Sport – at least for now. A sale latter remains a possibility, with Discovery plainly in pole position.
That’s a blow to sport streaming business DAZN, which had hoped to grab BT Sport.
Thumbs down for Facebook owner
Results from Meta Platforms failed to impress investors last night after the Facebook owner produced weaker-than-expected profits in the fourth quarter.
Shares were 23% lower in after-hours trading as the company behind Instagram, Messenger and WhatsApp reported an 8% drop in net income to $10.3 billion (£7.6 billion).
The decline followed a 38% jump in costs, partly due to a rise in R&D spending as Meta develops augmented and virtual reality products under its new Reality Labs division.
Facebook’s number of daily active users was 1.93 billion on average in December, an increase of 5% year-over-year. Ad impressions increased by 13% in the quarter and the average price per ad lifted by 6%.
Meta founder and chief executive Mark Zuckerberg called it a “solid quarter” but investors were troubled by the results, made worse by headwinds such as uncertainty about advertising budgets.
Laura Hoy, Hargreaves Lansdown equity analyst, said: “Ultimately investors gave the social media stalwart a thumbs down and that negative sentiment was only amplified by existing tech-sector jitters.
“Facebook’s massive size and impressive reach coupled with a rock-solid balance sheet means there’s potential in the longer term, but the next year looks like it will be a bumpy, and expensive, ride.”
Meta results hit tech sentiment
Disappointing results from Facebook owner Meta Platforms are set to trigger a downbeat session for US and European markets, reversing strong gains earlier in the week.
Meta’s shares dropped 22% in after-hours trading on Wall Street, with US futures pointing to a 2% decline for the tech-laden Nasdaq at this afternoon’s opening bell. Rival social media platforms Snap and Twitter were also sharply lower last night.
After an improved performance this week, the update from Meta will reignite fears over the outlook for tech and other high growth stocks at a time of rising interest rates.
The FTSE 100 index rose 47 points to near a two-year high yesterday but is forecast to be flat when trading resumes today.
The main focus will be on the outcome of the Bank of England’s latest two-day meeting. With a rise in interest rates to 0.5% looking certain, traders will be interested to see by how far the bank lifts its projections for inflation in this year and next.
Inflation stood at 5.4% in December and is forecast by City experts to reach 7% once the increase to Ofgem’s energy price cap takes effect in April. Markets are pricing in five rate hikes for this year.
Today’s meeting could also see the Bank stop reinvestment of bond purchases, which according to Deutsche Bank would mean £38 billion falling out of the Bank’s balance sheet this year.