FTSE 250 movers: Asos back in fashion; Bank of Georgia slumps

(Sharecast News) - FTSE 250: 19,159.66, -0.59% Asos shares shot higher on Wednesday after Mike Ashley's Frasers Group lifted its voting rights to 7.4% from 5.1%.

At 1210 BST, the shares were up 7.2% at 427.80p.

Asos shares slumped last week after it reported wider interim losses as shoppers continued to tighten their belts amid the cost-of-living crisis, even though the company said it was confident of a return to profit in the second half.

The company posted a loss before tax of £291m, compared with a loss of £15.8 a year earlier. On an adjusted basis, losses were £87.4m in the six months to February against a profit of £14.8m. Revenue fell 10% to £1.84bn on a constant currency basis.

The shares then tumbled again at the start of this week amid worries about the potential for a cash call.

Broker Shore Capital - which rates the stock at 'sell' - said in a note on Monday that "given the ongoing restructuring and cost savings initiatives, it is becoming increasingly evident that Asos will need to seek further capital infusion to support its long-term viability".

Auction Technology Group (ATG) reported significant first-half growth on Wednesday, with revenue rising 17% to £67.3m.

The FTSE 250 company put that growth down to robust gross merchandise value (GMV), and a 5% organic revenue increase.

ATG said it experienced accelerated organic revenue growth as it concluded the annualisation of a strong performance from the prior year, which was impacted by the Covid-19 pandemic.

Reported revenue growth was further boosted by the acquisition of EstateSales.Net (ESN), as well as a favourable movement in the foreign exchange rate.

ATG achieved adjusted EBITDA of £31.5m, making for an 18% increase compared to the same period in the previous year.

The board said the adjusted EBITDA margin improved to 47% from 46%, with the growth driven by an increase in high-margin commission and fixed fee revenue.

ATG said its operating profit came in at £9.8m, surpassing the £9.2m recorded during the same period last year.

The operating profit figure took into account exceptional items related to the ESN acquisition, share-based payments, and intangible asset amortisation.

Adjusted diluted earnings per share for the first half stood at 16p, up from 13.4p in the same period year-on-year.

The board said the growth in adjusted EBITDA partially offset higher net finance costs.

Basic earnings per share reached 9.9p, a significant improvement compared to the prior year comparative of 1.8p, primarily driven by a deferred tax credit.

ATG said its adjusted net debt remained stable at £132.4m, consistent with the end of the 2022 financial year.

While strong cash generation offset some of the financing required for the ESN acquisition, the adjusted net debt-to-adjusted last 12 months EBITDA ratio stood at 2.3x.

"ATG has delivered another robust set of results with solid revenue growth, margin expansion and strong cash generation, against an uncertain macroeconomic environment and exceptional growth in the prior year," said chief executive officer John-Paul Savant.

"We have made great progress against each of our six strategic growth drivers including the strong adoption of value-added services, expansion of our addressable market, bidder base and potential network effects with the acquisition of ESN, and the creation of unique timed auction format opportunities for auctioneers with the launch of our integrated bidding service.

"As expected, organic revenue growth accelerated across the half and this rate of growth has continued into the start of the second half."

Savant said that momentum, combined with strong traction against the firm's key strategic initiatives, left the board confident that ATG would deliver a higher rate of organic revenue growth in the second half, and into the 2024 financial year.

"ATG has an exciting future ahead, with unparalleled scale in the curated auction space, plus the reach, product offering, and impact to truly make a difference for our customers, whether they be auctioneers ensuring they achieve the highest asset sale price for their consignors, or bidders seeking unique or specialised secondary goods.

"Many growth opportunities exist as we lead the transformation of the auction industry and follow the well-trodden path of online marketplace development."

UK pub group Mitchells & Butlers on Wednesday said its medium-term cost outlook was improving, despite a fall in half-year profits.

Year-on-year sales growth in the most recent six weeks of the year was 8.9% on a like-for-like basis, the company said on Wednesday.

"The trading environment for the hospitality sector remains challenging with inflationary costs putting pressure both on the industry's margins and disposable income of our guests," said chief executive Phil Urban.

Adjusted operating profit fell to £100m for the half year ended to April 8, compared with £120m a year earlier. On a pre-tax basis they declined to £40m from £57m.

"We have been encouraged by the strength of trading throughout the first half of the year with the return to office working continuing, city centres becoming stronger, tourist numbers recovering and guests across the country continuing to enjoy the hospitality sector," the company said.

"There are indications that cost inflation headwinds across the supply chain are starting to abate, although they continue to present a challenge in the near-term. Energy prices have fallen back materially from earlier market highs and early evidence suggests that cost increases in other areas, notably food, will soon start to slow."

Current-year cost guidance remained in line with expectations as the company anticipated an inflationary cost headwind across its £1.8bn cost base at the lower end of the 10-12% range before mitigation.

Geotechnical specialist contractor Keller said trading in the first four months of the year had been better than expected, both in terms of profit and cash.

North American underlying operating margins continued to improve as a result of good operational performance in the foundations business, coupled with the easing of inflationary and supply chain pressures, the company said on Wednesday.

At its Suncoast unit, trading performance was strong and better than expected, despite the anticipated slowdown in the residential sector.

Performance in Europe was in line with expectations.

Bank of Georgia Group reported a significant increase in first-quarter operating income on Wednesday, as well as robust bottom-line growth, and strong asset quality.

The FTSE 250 company said its operating income, before the cost of risk, soared 55.2% year-on-year to reach GEL 399.6m (£126.06m).

Its overall operating income rose 42.4% to GEL 563.5m, with the growth driven by strong performance across core revenue lines, with net interest income increasing 37% and net fee and commission income surging 90.9%.

The firm's net interest margin also experienced an upward trend, rising by 70-basis points quarter-on-quarter, and 110-basis points year-on-year, reaching 6.4%.

It put the increase down to higher loan yields across the lending portfolio.

The bank reported strong asset quality, with the cost of credit risk ratio at 1.0% in the first quarter, in line with the bank's normalised through-the-cycle level.

Non-performing loans (NPLs) to gross loans decreased to 2.4% as at 31 March, driven by reduced NPLs in the corporate and investment banking (CIB) segment.

Bank of Georgia said it achieved robust bottom-line growth, with a profit of GEL 301.3m in the first quarter, marking a 25.3% year-on-year increase.

However, profit was down 7.5% on the quarter compared to the adjusted profit for one-off items.

Profit before income tax expense remained flat quarter-on-quarter, but the income tax expense nearly doubled on the quarter due to tax rate changes announced in December.

As a result, the bank's profit for the first quarter decreased compared to the prior quarter, while its return on average equity (ROAE) stood at 27.9% for the period.

Loan growth picked up, with the loan book expanding by 4.3% year-on-year, and by 15.1% on a constant currency basis.

Additionally, client deposits and notes grew by 26.1% on the year, and by 42.4% at constant exchange rates.

Bank of Georgia said it maintained a strong capital and liquidity position, with its capital adequacy ratios comfortably exceeding minimum regulatory requirements.

As at 31 March, the bank's Basel III common equity tier 1, tier 1, and total capital adequacy ratios stood at 19.5%, 21.4%, and 23.3%, respectively.

The bank's IFRS-based NBG liquidity coverage ratio also exceeded the 100% minimum requirement, reaching 129.8%.

In terms of capital distribution, the board announced an increase in its share buyback and cancellation programme.

Since the programme's announcement in June last year, the bank had repurchased 2,684,436 shares, with 2,501,936 shares already cancelled by 11 May.

"I have mentioned previously that we believe Georgia's role in the region will continue to strengthen, bringing in additional investments and economic activity in the energy, transport, and logistics sectors over the next few years," said chief executive officer Archil Gachechiladze.

"We now see increased resilience of the economy, with reduced leverage, high levels of reserves, GEL strength and declining inflation.

"We continue to expect strong and profitable growth of our business and are on track to deliver a good performance in 2023."

Estate agent Savills said on Wednesday that the first half will be "materially impacted" by "the ongoing recalibration of global investment markets".

In an update ahead of its annual general meeting, Savills said that as capital values adjust to higher interest rates, global capital transaction volumes for the year to date are at their lowest levels in a decade, impacting its commercial transaction business in the early part of the year.

"As a result, at this early stage, the range of outcomes for the year as a whole has widened, however our prime commercial leasing, residential, consultancy and property management businesses all continue to trade in line with expectations," it said.

The company said leasing markets have remained more resilient across most sectors, although office take-up is heavily skewed to prime stock with strong sustainability credentials.

Although volumes are lower than last year, as expected, prime residential markets have performed well with a particular emphasis on the London market, it said.

In terms of regions, Savills said Asia Pacific, Japan and Korea have traded well and sentiment in mainland China has improved significantly since the New Year.

In the UK, its performance has been largely in line with expectations, driven mainly by good levels of activity in the prime residential markets and some recovery in retail.

"Other commercial capital markets have been severely impacted as pricing adjusts, however we have enjoyed an unusually high market share in prime transactional markets, which has partially mitigated the significant decline in volumes," it said.

In Continental Europe and the Middle East, volumes - particularly in the major markets of Germany and France - have been severely reduced during the period, with leasing momentum still subdued.

In North America, Savills has performed in line with its expectations, albeit individual transaction sizes are currently much reduced.

Savills also said that the investment management business has traded in line with its expectations.

Chief executive Mark Ridley said: "The strength of our less transactional businesses has helped underpin the group's performance overall. The anticipated market corrections in 2023 are happening largely as anticipated.

"As greater certainty over the future pattern of global interest rates is emerging, we expect progressive recovery through the third and fourth quarters of the year and into 2024."

Watches of Switzerland hailed a "strong" full-year performance in line with guidance on Wednesday, as it reported record revenue and profitability but warned of an expected sales decline in the first quarter.

In an update for the year to 30 April, the luxury watch retailer said group revenue rose 25% to £1.5bn, while adjusted pre-IFRS 16 earnings before interest and tax are expected to be between £163m and £167m, up from £130m a year earlier.

US revenue rose 52% to £653m, while the UK and Europe saw a 10% jump to £890m.

Luxury watch revenue was up 28%, driven by rise in average selling price and volume, while luxury jewellery revenue was 10% higher.

In the fourth quarter, group revenue rose 22% to £371m.

The company also said that due to product intake timing, which supported the final quarter of FY23, and strong prior year comparatives, it expects a "modest" sales decline in Q1 FY24 before a normalisation in the second quarter.

Chief executive Brian Duffy said: "Although, as expected, the second half of FY23 saw a more challenging trading environment, demand remains strong and continues to exceed supply, with client registration lists continuing to grow."

Watches said its FY24 guidance assumes revenue growth of 8% to 11% at constant currency, with EBIT margin in line with the prior year.

Industrial thread and global footwear component maker Coats held annual guidance, with results expected to be weighted to the second half.

In a trading update for the first four months of the year, Coats said revenues fell 7%, and 20% on an organic basis, against a "very strong" prior year comparator, adding that operating profit margins were "resilient", supported by strategic projects and tight cost control.

The revenue decline "reflects the continuation of the widespread industry destocking in apparel and footwear, together with previously disclosed customer contract in-sourcing in performance materials. This was partly offset by the annualised contribution from the prior year acquisitions in footwear.

FTSE 250 - Risers

ASOS (ASC) 429.10p 7.57% Auction Technology Group (ATG) 716.00p 6.87% Mitchells & Butlers (MAB) 203.40p 4.25% Keller Group (KLR) 653.00p 2.67% UK Commercial Property Reit Limited (UKCM) 55.90p 1.82% Wizz Air Holdings (WIZZ) 3,132.00p 1.72% Spirent Communications (SPT) 181.60p 1.51% Ascential (ASCL) 244.60p 1.49% RIT Capital Partners (RCP) 1,944.00p 1.46% Abrdn Private Equity Opportunities Trust (APEO) 450.00p 1.24%

FTSE 250 - Fallers

Bank of Georgia Group (BGEO) 3,150.00p -6.67% Watches of Switzerland Group (WOSG) 695.50p -6.08% Ninety One (N91) 162.50p -5.74% Savills (SVS) 888.50p -5.28% Coats Group (COA) 69.30p -5.07% Capricorn Energy (CNE) 195.72p -4.57% TP Icap Group (TCAP) 162.30p -3.96% Wood Group (John) (WG.) 134.20p -3.59% International Distributions Services (IDS) 223.70p -3.41% Ferrexpo (FXPO) 101.40p -3.34%