Financial Planning

Paddy Power Betfair, Micro Focus keep the FTSE 100 steady

Financial Planning
Published: 16 May 2018

The FTSE 100 (INDEXFTSE:UKX) was flat after a small rise in early trading but good results from Micro Focus and the miners have added support to the index. There was more M&A activity as Paddy Power Betfair announced discussions to merge its US operations with FanDuel.

The blue chip share index dipped 0.01%, down 0.7 of a point at 7,722.19 by 10.49 GMT.

Shares in Micro Focus (LON:MCRO) jumped 8.9% as the software company said that firs-half revenue was above previous guidance and reaffirmed its forecast for the financial year. Micro Focus closed a $40mn licensing deal earlier than expected to boost first-half revenue but without the deal the company was still at the top end of its guidance. Investec analysts said: “We see this as positive for sentiment, but only helping to reduce the extent to which H2 had to improve versus H1 to meet full-year guidance, rather than placing any upward pressure on numbers.”

Paddy Power Betfair (LON:PPB) shares rose 5.6% as the bookmaker said it was in talks to combine its US business with fantasy sports site FanDuel. The announcement follows a lifting of a ban on sports betting in New Jersey by the US Supreme Court. Paddy Power said in a statement: “Discussions are ongoing and there is no certainty as to whether agreement will be reached, or as to the terms or timing of any transaction.”

Burberry (LON:BRBY) shares gained 2.0% as the luxury goods retailer reported a rise in annual profit despite a dip in revenue to beat analysts’ forecasts. Fiona Cincotta, Senior Market Analyst at City Index said: “The company, now headed by former Givenchy rising star Riccardo Tisci, said full year adjusted profit rose 2% to £467 million. Group revenue slipped 1% to £2.73 billion in what the company called a year of transition. Burberry maintained its guidance for both 2019 and 2020 and started a £150 million share buyback.”

In the mid-caps, pub chains Mitchells & Butlers and Marston’s fell sharply after results. Mitchells & Butlers (LON:MAB) shares dropped 5.7% as it reported a fall in profit despite revenue growth for its first half. Pre-tax profit fell to £69mn from £75mn the year before. Marston’s (LON:MARS) shares fell 6.2% as it reported a loss for its first-half following the acquisition of Charles Wells Brewing & Beer Business for £55mn. Although, the company also reported double-digit revenue growth for the same period. Guy Ellison, head of UK equities at Investec said: “Anything consumer-facing that’s having to pay UK wages and UK rates is facing cost inflation.”

On the currency markets, sterling fell 0.19% against the dollar to $1.3472 and was steady, up 0.01%, against the euro at €1.1421.