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FTSE 250 movers: Digital 9 tanks on divi cut; Babcock guidance pleases

By Frank Prenesti

Date: Thursday 28 Sep 2023

(Sharecast News) - FTSE 250-listed Digital 9 Infrastructure has decided to scrap its second-quarter dividend after a tough first half, as it continues to look for investment partners in its Verne Global data centres in Iceland, Finland and the UK.
The company, which invests in subsea fibre systems and data centres, swung to a loss of 6.63p per share in the six months to 30 June, compared with earnings of 3.43p a year earlier.

D9's IFRS net asset value stood at £866m, down from £950m a year earlier, as it was hit by adverse foreign exchange movements and higher interest rates.

As such, the company reported a pre-tax loss of £57m, compared with a profit of £27m previously, due to property valuation movements.

"Whilst cognisant of the dividend target set out at IPO, the high interest rate environment and therefore the critical importance of prioritising liquidity and sustainable balance sheet management have compelled the board to not declare the Q2 2023 dividend and withdraw the dividend target for the year," said chair Phil Jordan. "In light of this, the board will be commencing a formal consultation with shareholders."

Meanwhile, D9 said it has "significantly progressed the syndication" of Verne Global, and has received "several" offers to either a co-controlling or majority stake in the business.

Due to sustained and accelerated customer demand for its facilities, the growth capital expenditure pipeline for Verne Global has jumped from £493m in January to £610m.

D9 said it is looking to use any funds from a Verne Global stake sale to pay down a significant portion of the its drawn revolving credit facility and cancel part of it, thereby reducing costs. At 30 June, some £356m was drawn under the £375m RCF.

William Hill owner 888 Holdings lowered its earnings guidance for the full financial year on Thursday after a weaker-than-expected third quarter.

The FTSE 250 gambling and betting operator said it was expecting a decrease of about 10% in third-quarter revenues, estimating a figure close to £400m, with its full-year EBITDA margin now set to come in at between 18% and 19%.

It put the weakness down to a significant influence from the compliance modifications introduced in dotcom markets, which saw a more gradual resumption of customer engagement and earnings than initially projected.

Babcock backed its full-year expectations on Thursday as it said trading since the start of the financial year has been "encouraging".

In an update for the first five months of the year ahead of its annual general meeting, the defence contractor hailed good organic revenue growth, an improved operational performance and higher cash flow compared to the same period a year earlier.

Babcock said that including the impact of contract phasing in the marine segment and further growth in nuclear infrastructure programmes, organic revenue growth is offsetting the impact of disposals in the previous year.

"New programme wins, contract renewals and progress on the group's opportunity pipeline remain strong, supporting the board's unchanged expectations for another year of organic revenue growth, further underlying margin expansion, improved free cash flow and progress towards the group's medium-term guidance," it said.

Operating profit also benefitted from the earlier-than-expected receipt of initial licence fees associated with the Polish MIECZNIK frigate programme, Babcock said.

Pub and restaurant chain Mitchells & Butlers said it expected full-year earnings would be at the top end of expectations after a strong rise in sales and easing of cost headwinds.

The company said strong trading had continued through the fourth quarter, bringing year to date like-for-like sales growth to 9.1%, with total sales growth now of 10.5%.

"Cost headwinds are abating and remain at the bottom end of the range previously identified. We remain mindful of the challenging macroeconomic environment and pressures on the consumer however, as trading continues to be strong, we have confidence that the current year outturn will be at the top end of consensus expectations, with momentum into FY 2024," M&B said in a trading update.

Market Movers

FTSE 250 (MCX) 18,092.04 -0.70%

FTSE 250 - Risers

NCC Group (NCC) 108.20p 5.05%
Babcock International Group (BAB) 407.40p 4.89%
Mitchells & Butlers (MAB) 223.60p 4.19%
Ithaca Energy (ITH) 184.30p 3.77%
Hill and Smith (HILS) 1,710.00p 2.64%
Bank of Georgia Group (BGEO) 3,650.00p 2.24%
Mobico Group (MCG) 85.65p 2.21%
Softcat (SCT) 1,429.00p 2.07%
Coats Group (COA) 71.80p 1.70%
Man Group (EMG) 219.80p 1.57%

FTSE 250 - Fallers

Digital 9 Infrastructure NPV (DGI9) 33.35p -39.80%
888 Holdings (DI) (888) 93.10p -15.75%
CAB Payments Holdings (CABP) 232.25p -6.16%
Crest Nicholson Holdings (CRST) 173.50p -5.81%
PureTech Health (PRTC) 183.80p -5.74%
Pennon Group (PNN) 566.00p -4.47%
Foresight Group Holdings Limited NPV (FSG) 450.00p -4.46%
Watches of Switzerland Group (WOSG) 519.50p -4.06%
Supermarket Income Reit (SUPR) 75.50p -3.94%
Helios Towers (HTWS) 72.90p -3.83%


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