The resumption of dividends has helped to offset lower-than-expected financial results from motor retailer Pendragon (PDG), pushing up the shares 3.6% to 21.75p. The Nottingham-based car dealer grew pre-tax profits 18% to £36.4 million last year in a recovering UK car market, slightly below the £37 million level expected by several analysts. Operating under the Stratstone prestige brand and Evans Halshaw volume offering, Pendragon pleased with a positive update on its internet strategy. Online visitors now having risen by 87% over the past three years.
Pendragon, whose balance sheet was rehabilitated by a £75.2 million rights issue in 2011, is proposing a 0.1p final dividend. Having raised its price target from 20p to 31p, broker Jefferies, with a 'buy' stance on the stock, writes: 'With net debt to EBITDA at two times and the resumption of a dividend signalling confidence in the outlook, we believe investors should focus on, and enjoy, the resilient trading.'
The importance of dividends to investors was also highlighted by the market's reaction to Morgan Sindall (MGNS). The small cap construction group has cut its dividend in half after reporting a 15% drop in pre-tax profit to £34.2 million. Liberum Capital, which maintains a 'hold' rating on the stock, approved of the dividend reduction. It says: 'We see this as a necessary first step in improving the balance sheet strength (we do not believe Morgan Sindall should operate with net debt) and restoring cover to a sustainable level of 2.5-3 times.'
Power group Drax (DRX) advanced 4.6% to 632p,as investors welcomed a 10.9p per share second-half dividend. That adds up to a 25.3p payout for the full year, putting the FTSE 250 stock on a 4% dividend yield. Drax is also close to flicking the switch on its first coal-to-biomass combo fuel conversion, a clean air regulatory move that market commentators suggest could make Drax a takeover target.
Structural steel firm Severfield-Rowen (SFR) crashed 7% to 73p after its third profit warning in as many months. The £65 million cap engineer indicates it may seek to raise up to £50 million through a share placing. We discuss the situation in more depth here.
InterContinental Hotels (IHG) was subject to profit taking after reporting a robust set of full-year results. Click here to view Shares' story on the Holiday Inn-to-Crowne Plaza owner which has dipped 1.9% to £19.52.
Cheese, spreads and milk producer Dairy Crest (DCG) edged up 2.5p to 423.5p after renewing a contract to supply Sainsbury's (SBRY) with liquid milk until 2017. The terms of the contract could result in downwards pressure on prices and margins because of tough competition. Yet the dairy foods firm insists 'ongoing cost reductions are expected to offset any financial impact on our business.' Retention of the Sainbury's business is a good result for Dairy Crest, claims broker Panmure Gordon, sticking with its 'Hold' stance and 430p price target. It comments: '… (the contract win) removes a key risk to its plan to return the Dairies business to an acceptable level of profitability.'
Dairy Crest has also unveiled management changes. Well-regarded finance director Alastair Murray is departing after 10 years in the role. He will be replaced by Tom Atherton, who has been director of financial control for four years.
An operational update from oil explorer Chariot Oil & Gas (CHAR:AIM) received frosty reception from the market, the shares down 15.7% at 25.3p, as the company indicated it expects no fresh drilling offshore Namibia before 2014 at the earliest. Broker Merchant Securities notes the company's cash pile was more modest than it expected. It says: 'The company’s cash position at year-end was $68.3 million, substantially lower than the $86 million we had anticipated, due to higher capex (capital expenditure) spend and G&A (General and Administrative) burn.
Minimally-invasive surgery specialist Surgical Innovations (SUN:AIM) suffered after reporting lower-than-expected figures for 2012. It fell 10.34% to 6.5p after reporting flat revenues of £7.6 million due to the late shipping of a £1 million order. This follows disappointing first-half results. Cantor Fitzgerald analyst Robin Campbell does not share management’s optimism for 2013. He says: ‘We believe that the headwinds of European austerity, tough competition in the US, manufacturing bottlenecks and potential delays in new product regulatory approval remain, to a large extent, in place.'
It has been a good year for Bank of Georgia (BGEO) which has beaten expectations with a 32.3% rise in net profit to GEL179.6 million with its full-year results. It has a tier 1 capital adequacy ratio of 22% but the highlight is the 114% increase in dividend to GEL1.5 per share, or 4.2%. Sadly it was another stock subject to profit taking after a strong run over the past few months. The bank has today fallen 1.8% to £13.55.
Kalimantan Gold (KLG:AIM) jumped 22.2% to 4.12p on positive drill results from its KSK copper project in Indonesia. Oil & gas minnow Egdon Resources (EDR:AIM) ticked up 1.3% to 9.5p after ISDX-listed Union Jack Oil agreed to acquire a 10% interest in its onshore UK Petroleum Exploration and Development Licence PEDL201.
Small cap metals producer Arian Silver (AGQ:AIM) tried for the second time this year to break out of a long share price decline. The shares jumped 9.9% to 15.25p after an operations update on its San Jose mine in Mexico.
Diagnostic screening and testing specialist Akers Biosciences (AKR) jumped 11.4% to 1.22p after announcing the launch of its disposable breathalyser in France today. It will be only one of four products bearing the NF Mark which France’s 34 million vehicle owners must possess under rules which came into force last summer.