Monday’s Stock Market Report featuring WPP, Centamin, RBS and Finsbury Food

The Markets

The heads of the Greek and German governments have met this afternoon to discuss the terms of Greece’s bailout and fears that the country is running out of cash. Angela Merkel has promised that there will be no further cash without reforms, despite a recent EU pledge offering €2 billion to help resolve what it called a “humanitarian crisis”.

At the London close the Dow Jones had increased by 48.48 points to 18,176.13 and the Nasdaq had fallen by 3.24 points to 4,455.30.

In London the FTSE 100 closed up by 15.16 points at 7,037.67 and the FTSE 250 rose by 13.61 points to 17,551.23. The FTSE All-Share had increased by 7.35 points to 3,795.61 while the FTSE AIM Index shrank by 0.28 points to 719.17.

Broker Notes

Westhouse Securities reiterated its “add” position on advertising and public relations giant WPP (WPP) following a positive set of preliminary results. The broker said that the firm promised good medium term revenue growth prospects and earnings could be bolstered by acquisitions and share buybacks. WPP shares dropped by 7p to 1,573p.

Northland Capital has maintained its “buy” rating and 35p target price on APC Technology (APC) despite expecting operating profits for the first half of 2015 to fall by 68% as the firm invests heavily in its Minimise division. The broker believes that revenues will improve by around 20% as the firm has won more business outside its key contracts with Morrisions. The shares fell by 0.125p to 21.625p.

Beaufort Securities recommended a “buy” on pharmaceutical outfit GlaxoSmithKline (GSK) after the FDA voted in favour of the efficacy and safety of its BREO product for use in treating adult asthma. The broker said that the decision was a positive step towards building a more balanced portfolio and that the stock was attractively valued relative to its peers. The shares declined by 19.5p to 1,615.5p.

Blue Chips

On a quiet day for the blue-chips Royal Bank of Scotland (RBS) announced its intention to sell part of its stake in US subsidiary Citizens Financial in a public follow-on offering. If the offering is fully subscribed then RBS would retain a 49.3% interest in the firm, having disposed of 21% of the issued common stock. Shares in Royal Bank of Scotland dropped by 2.2p to 354.1p.

Mid Caps

Metals exploration and extraction firm Centamin (CEY) produced 377,261 ounces of gold during 2014, a 6% increase on the prior year due to expanded facilities and fresh drilling programmes. Profits before taxation dropped from $183.9 million (£123.4 million) to $81.5 million (£54.7 million) due to the weaker gold price environment. Centamin shares grew by 8.65p to 62.4p.

Construction and facilities management outfit Interserve (IRV) has reached financial close on a joint venture deal to design and build seven secondary schools in Luton, Reading and Hertfordshire. The arrangement has a value in excess of £135 million and Interserve Kajima will also be responsible for maintaining the premises over the next 25 years. Shares in the company rose by 0.5p to 604.5p.

Utilities infrastructure firm Pennon Group (PNN) has said that its overall financial performance for the last six months has been in line with prior guidance and management announced that annual dividend growth would be at least 4% above RPI until 2020. The company’s South West Water arm hit targets and is currently in the process of finalising delivery of its 2010-2015 regulatory contract. Pennon shares climbed by 19p to 849.5p.

Small Caps

Financial advisor Frenkel Topping (FEN) recorded revenues of £5.69 million during 2014, a 3.3% increase on the prior year driven by improvements in recurring revenues. Pre-tax profits grew by 12.7% to £1.57 million as it increased its numbers of fee earning consultants across the United Kingdom. Management expect growth to continue through 2015. Shares in the firm increased by 1p to 42p.

Leather specialist Pittards (PTD) saw revenues decline by 3% to £34.7 million in 2014 due to adverse foreign exchange conditions, weak orders for military leathers and mild weather conditions dampening demand for winter gloves. Management said that currency rates and materials prices in early 2015 appear more favourable and Pittards are considering a number of expansion prospects. The shares fell by 6.5p to 135p.

Lighting manufacturer PhotonStar LED Group (PSL) posted revenues of £7.2 million for the year ended 31st December 2014, in line with previous guidance and £2.2 million lower than in 2013. Management expect an improved performance in the current year following the launch of a new range of products in the final months of 2014. Shares in PhotonStar closed flat at 2.75p.

Baker Finsbury Food Group (FIF) increased revenues for the six months ended 27th December by 24.7% to £107.6 million following the acquisition of the Fletchers Bakery Group in October. Improved margins led to a 95% rise in pre-tax profits for the period and the firm expects this growth to continue through the remainder of the year despite difficult market conditions. The shares climbed by 4p to 73.5p.

Building materials outfit Michelmersh Brisk Holdings (MBH) has reinstated dividend payments for 2014, with management proposing 0.5p per share after operating profits for the year doubled to £2.8 million. The company’s net debt was reduced to £2.1 million at the 31st December from £4.2 million 12 months earlier. The shares rose by 2.5p to 71.5p.