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Craneware record; Paddy Power, Betfair deal; RSA

Craneware shares

Craneware (click to enlarge) LSE

Tue close: Record revenue and Ebitda profits for software billing company Craneware gave the shares a lift as brokers looked towards further growth opportunities.

Turnover at the US-focused Edinburgh firm rose from $42.6 million to $44.8m and adjusted Ebitda  increased by 10% to $14.4m from $13.1m. Profit before tax rose from $11.3m to $12.5m.

The company is proposing a final dividend of 7.7p per share giving a total dividend for the year of 14p per share (2014: 12.5p).

Keith Neilson, chief executive, “We are confident that our position as a trusted financial performance partner will strengthen. We look to the future with confidence.”

Speaking to Daily Business he said the company had benefited from substantial growth in new customers and from selling more products to existing ones.

“This is far more than steady as you go. It is a real step chance in terms of opportunity,” he said.

Mr Neilson said earlier this year that the country needed to encourage immigration to fill skill shortages and he highlighted 22 vacancies at the company that require filling.

Alexandra Jarvis at Peel Hunt believes the company could benefit from in-fill acquisitions.

“We see increased prospects for M&A given the strength of the company’s balance sheet and a number of clear opportunities to fill in the portfolio,” she said.

Betting companies Paddy Power and Betfair have reached an agreement on a £5 billion all-share merger.
The merged entity will be called Paddy Power Betfair and Paddy Power shareholders will own 52% of the group, while Betfair shareholders will own the rest, if both sets of shareholders approve the deal.

Betfair shareholders will be entitled to receive 0.4254 Paddy Power Betfair shares in exchange for each Betfair share. In addition, immediately prior to completion, Paddy Power shareholders will receive a special dividend of €80m.

Insurer Amlin surged 33% after Japanese group MS&AD Insurance said it was in talks to buy the company.

RSA Insurance ticket up after selling its operations in Latin America to Suramericana for £403m in cash ahead of its probable takeover by Swiss rival Zurich for £5.6 billion.

Zurich had been told about the sell-off when the two sides negotiated takeover terms and the sale will not affect the deal.

Stephen Hester, chief executive of RSA, said: “This sale is expected to be strongly accretive to capital for RSA, enhancing operational flexibility. This is the largest remaining disposal we have under way and is consistent with our stated target to substantially complete RSA’s strategic refocus by the 2015 year-end results announcement.”

United Utilities was at the top of the FTSE 100 amid reports that it could attract takeover interest due to its current valuation. Bernstein upgraded the stock to ‘outperform’, saying it is “an attractive acquisition target for a pension or infrastructure fund”.

Whitbread fell back as the owner of Premier Inn and Costa coffee shops reported a slowdown in sales in the second quarter and noted added costs from the new National Living Wage.

UK stocks gained on Tuesday after trade data showed Chinese exports fell less than expected in August.
China’s exports dropped 5.5% in August from a year earlier in dollar terms after a 8.3% drop in July, according to the General Administration of Customs, better than the 6.6% decline that was expected by analysts. However, Customs said China exports will continue to face “relatively big pressure” in the fourth quarter amid a slowing economy.

Imports last month decreased 13.8% in August in dollar terms compared to a year ago, more than the 7.9% dip that was forecast, after a 8.1% fall in July.

The FTSE 100 closed up 71.58 points at 6,146.10.

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