Grafton Group boosted by GBP520mln sale of merchanting business

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Grafton Group PLC (LON:GFTU) has built up a good rise after disposing of its traditional merchanting business in Great Britain.


The building materials distributor and DIY retailer behind Selco has sold the business for an enterprise value of GBP520mln to Huws Gray, one of the UK’s largest independent builders’ merchants which is controlled by equity funds managed by Blackstone.


Assets of the business – which comprises a range of brands including Buildbase, The Timber Group and Bathroom Distribution Group – were GBP497.2mln as of last December.


Grafton is retaining freehold properties with development potential that have a market value of around GBP25mln.


After a strategic review Grafton decided that exiting this segment of the building materials distribution market in Great Britain would enable it to optimise shareholder value.


The move will allow it to focus on Selco and its other specialist distribution and manufacturing businesses, as well as on its international development strategy which it said would be a key priority over the coming years.


Chief executive Gavin Slark said: “This is an attractive outcome for Grafton and is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns.”


Its shares have added 54p or 4.71% to 1201p.


3.16pm: Ormonde Mining climbs after it postpones annual meeting to discuss investor request


Ormonde Mining PLC (LON:ORM), which dissolved its last annual meeting after failing to get enough votes to issue new shares, has now delayed its next get-together.


The last meeting failed to get the support of a key shareholder for the move, and ultimately a deal to buy two licences in the Republic of Congo – what it called a transformational deal – fell through.


It did not name the shareholder but veteran investor Thomas Anderson has 22.3% of the business.


Now Anderson has put forward two resolutions for the latest annual meeting to nominate two people to the board as directors, Brendan McMorrow and Tom Barry.


The company says it is reviewing the request with its advisors, but meanwhile it has postponed the AGM due to take place on 16 July.


Ormonde’s shares, which fell sharply after the last annual meeting upheaval, have jumped 23.53% or 0.2p to 1.05p.


2.19pm: Rank rises as business improves and an GBP80mln VAT refund is in sight


Rank Group PLC (LON:RNK), the company behind Grosvenor casinos and Mecca bingo halls, has seen its number come up after a positive update.


The gaming group said trading in the first six weeks after the re-opening of its venues had been in line with expectations, albeit with total revenues down 19% compared to 2019 levels.


Its venues were trading above cash breakeven and it expected the performance to continue improving as social distancing and international travel restrictions were eased, and when the current 10.30pm curfew was removed in Scotland.


In Grosvenor, like for like net gaming revenues in venues outside of London were close to 2019 levels.


But in the capital revenues were down 38% on 2019 levels due to the lack of international tourists and a significantly reduced number of office workers in the city.


It said Mecca was performing best where it was trialling improvements to its offering, including enhancements to the mainstage bingo game. In Spain, trading improved as regional restrictions on capacity limits and opening hours have gradually been relaxed.


It is also optimistic on its claim for a refund for VAT paid on slot machine income between April 2006 and January 2013 after a tribunal yesterday ruled in its favour. HMRC has 56 days to lodge an appeal.


Rank expects to receive around GBP80mln if it all goes ahead.


The company’s shares are up 4.05% or 6.8p at 174.6p.


11.51am: Cambridge Cognition climbs after spinning off drug development business


Cambridge Cognition Holdings PLC (LON:COG) has seen its shares climb after it completed the spin off a business it has been developing.


Cambridge Cognition, which specialises in digital solutions to assess brain health, has been incubating Monument Therapeutics Ltd since 2018, supported by two Innovate UK grants.


Monument is a drug development company with a pipeline including treatments for cognitive impairment in schizophrenia and for post-operative cognitive dysfunction.


Now it has received GBP2.6mln of funding from a consortium of investors led by Catapult Ventures and Neo Kuma Ventures. After the spin-off, Cambridge Cognition will keep a 36.9% shareholding in Monument and has agreed a licence for the use of a number of its cognitive assessments. When Monument successfully commercialises its drug development programmes, it will pay royalties to Cambridge Cognition.


Cambridge Cognition chief executive officer Matthew Stork said: “[The Monument move] leverages Cambridge Cognition’s intellectual property and provides the potential for considerable royalty payments in the future. In addition, it gives the company greater focus on the development and commercialisation of its cutting-edge digital health technologies.”


Cambridge Cognition shares are 7.4% or 12.4p higher at 179.9p.


10.59am: Broker boosted by equity market recovery and corporate deals


Stockbroker Arden Partners PLC (LON: ARDN) is seeing its own shares snapped up by investors.


The business has reported a 118% jump in half year revenues to GBP5mln and a GBP0.9mln profit compared to a GBP1.5mln loss in the same period last year.


It said the recovery in UK equity markets, the dramatic increase in demand for capital triggered by the COVID-19 pandemic and improved investor appetite made for favourable trading conditions in the half year.


And since then, it has continued to trade profitably, with several corporate transactions completed and an encouraging pipeline.


Chief executive officer Donald Brown said: “The second half has started well with a number of transactions having already been completed, including an IPO.


“Market sentiment has remained positive, continuing the favourable trading environment.


“We have a very encouraging pipeline of transactions and remain confident of delivering a profitable result for the year as a whole, the scale of which will be determined by the delivery of these pipeline deals.”


The company has climbed 13.79% or 2p to 16.5p.


9.25am: Bars group cheered by demand after indoor trading restarted


Revolution Bars Group PLC (LON:RBG) is raising a glass to a successful reopening.


The company, which runs 66 bars under the Revolution and Revolucion de Cuba brands, said it now expected its full year performance to be better than forecast after strong trading in recent weeks despite continuing restrictions.


Since 17 May when it was allowed to open indoors again, it said trading was at 86% of the levels seen in 2019 before the pandemic hit. This was despite the fact that seating represented only 28% of total capacity, given the social distancing rules.


Given the pent up demand it has seen for drinking vodka with friends, it expects the strong performance to continue, especially when lockdown measures are completely lifted.


So it expects a better than anticipated full year loss of around GBP12.5mln and an improvement in net debt to GBP5mln, helped by the recent equity raising.


But it remains cautious about the coming financial year, with the continuing impact of COVID-19 remaining unclear, and it called on the government to stick to its roadmap to give businesses clarity.


Chief executive Rob Pitcher said: “As predicted we have continued to see huge pent up demand and a rapid recovery across the nation in our bars following indoors reopening.


“We were disappointed to see that the much anticipated ‘Freedom Day’ of 21 June was delayed but the new date of 19 July, when our bars will be able to trade without restrictions, looks more certain than ever.


“Following sixteen months of government-imposed restrictions on our business our customers are very keen to take advantage of our full guest experience. Whilst we anticipate strong demand for our late night offering, we continue to be cautious about possible restrictions on our business during the winter period.”


But the generally upbeat tone has pushed its shares up 10.19% or 2.15p to 23.25p.


8.26am: Drug development company in demand


Sareum Holdings PLC (LON:SAR) is soaring after encouraging results from its COVID-19 research project.


The drug development company said the research – funded by the UK Sustainable Innovation Fund for pandemic projects – was designed to investigate the effects of its SDC-1801 inhibitor on inflammation triggered by an overreaction of the body’s immune system.


It said project was completed on schedule and the final results confirmed the initial encouraging reports.


It said: “The results of the project found that SDC-1801 reduced the levels of cytokines associated with Acute Respiratory Distress Syndrome in human lung cells infected with SARS-CoV-2 and demonstrated a profile that was superior to the anti-inflammatory steroid dexamethasone and similar to baricitinib, a JAK1/JAK2 inhibitor.”


Subject to further studies, approvals and financing, the company plans to start phase 1 clinical trials in early 2022.


Sareum chief scientific officer Dr John Reader said: “The results from our COVID-19 research project are very encouraging and provide clear evidence of the potential of SDC-1801 to reduce the excessive inflammatory response seen in severe COVID-19.


“We are keen to progress this project to the next stage and will now explore our options to find the best way to fund these next steps. This could include the UK government’s AGILE clinical development platform, which was established to fund Phase 1 trials and fast-track the development of potentially ground-breaking COVID-19 treatments. These activities are expected to run in parallel with the broader SDC-1801 development plan targeting autoimmune diseases.”


Sareum’s shares have jumped 20% or 1.16p to 6.91p.


Elsewhere Logistics Development Group PLC (LON:LDG) has accelerated 23.83% or 2.8p to 14.55p.


The AIM investing company has sold its stake Greenwhitestar Acquisitions, the holding company for the Eddie Stobart, The Pallet Network, IForce, Eddie Stobart Europe and The Logistics People businesses.


It expects to receive a net cash inflow of not less than GBP120mln, compared to a fair value of GBP35.8mln in the books for its stake. This will give it available cash of not less than GBP127mln for new investments.


Logistics chairman Adrian Collin said: “We now have substantial resources to invest in new opportunities and we look forward to working with our investment manager DBAY Advisors Limited to identify investments that will create further value to shareholders.”

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