Daily Stock Market Report (Thur 19 June 2025) - JNEO, ANP, HSW, XPS, CAPD, HAYS, REVB, MEGP

Good morning!

The Federal Reserve did as expected, keeping interest rates unchanged, and continuing to indicate two rate cuts later this year.

And I've published an article to provide an overview of the PE investment trust sector - here's the link.

Spreadsheet accompanying this report: link.

Let's wrap it up there, thank you.

---

Companies Reporting

Name (Mkt Cap)	RNS	Summary	Our view (Author)
Whitbread (LON:WTB) (£4.9bn)	1st Quarter Results	Q1 LfL sales -1%, total sales -4%. “On track to deliver incremental profit of >£300m by FY30”.
Assura (LON:AGR) (£1.6bn)	Offer Updates	Only one regulatory condition is outstanding. Copies of takeover loan agreement published online.
Hays (LON:HAS) (£1.1bn)	Y/E Trading Update	PW. Adj. op profit for FY 6/2025 c. £45m, v. £56.4m consensus. Low client and candidate confidence.	BLACK (AMBER/RED) (Graham) Downgrading this on the basis that profit warnings tend to be followed by other profit warnings. Mark correctly noted that there was risk associated with an H2 EPS weighting here. That risk has now materialised. The EPS forecast trend was miserable anyway. What's really disappointing as far as I'm concerned is how badly this sector has performed even though the major economies are not in recession. Either they are extremely economically sensitive, or something structural has happened to the permanent recruitment business model.
ME International (LON:MEGP) (£867m)	Response to media speculation (yest. afternoon)	Evaluating options, including seeking potential offerors.	PINK (AMBER/GREEN) (Graham) [no section below] CEO Serge Crasnianski (age 82) owns 36% of the company, having bought an additional 7.7% back in 2022. He made an offer to buy the rest of it then, for the cheap price of £180m. I’m not sure what has brought on these rumours, and I also don’t know which is more likely - could it be that Mr. Crasnianski is again hoping to increase his ownership, or instead might he be thinking about cashing out? Perhaps the latter is more likely? Either way, this is a stock we like and I’ll leave our AMBER/GREEN unchanged. We reviewed its most recent trading update earlier this month.
XPS Pensions (LON:XPS) (£783m)	Full Year Results	Revenue +18%, adj. PBT +34% (£59.5m). EPS of 20.6p is 6% ahead of FY25 exps. Outlook in line with recently upgraded expectations. Canaccord estimates: FY26E EPS 21.1p (prev 21.0p), FY26E EPS 22.8p (prev 22.5p).	AMBER/GREEN (Roland) XPS has deserved its High Flyer status and has issued another strong set of results today. But the company acknowledges that a one-off boost from the McCloud project will make comparisons tough in FY26 and earnings growth is expected to be limited this year. I respect the group’s strong profitability and growth record, but think the valuation is starting to look a little more challenging. For these reasons, I’m leaving our moderately positive view unchanged.
Cordiant Digital Infrastructure (LON:CORD) (£743m)	Full Year Results	NAV per share +8% to 129.6p, also paid dividends. 40% gearing ratio. Outlook: confident.
Henderson European Trust (LON:HET) (£587m)	Result of Board Review	Both PMs left Janus Henderson. Proposes merger with Fidelity European Trust (LON:FEV). Cash exit alternative of up to 33%.	PINK
Syncona (LON:SYNC) (£541m)	Strategy Update & Full Year Results	NAVps return of -9.5%. Volatile conditions persist. New strategy: orderly realisation of assets.	PINK
NCC (LON:NCC) (£520m)	Interim Results	PBT doubles (£16.6m) thanks to a one-off profit. FY25 adj. EBITDA in line. Revenue to fall marginally.
NextEnergy Solar Fund (LON:NESF) (£410m)	Reduced Investment Management Fee	New fee based 50% on NAV, 50% on market cap. Assessing options to improve shareholder value.
Mountview Estates P.L.C. (LON:MTVW) (£383m)	Full Year Results	PBT -17% (£31m). “Some figures are disappointing… can look fwd to years of profitable trading.”
Kenmare Resources (LON:KMR) (£351m)	Termination of Offer Discussions with Consortium	Consortium was only willing to proceed with an offer substantially below the Initial Proposal.
Science (LON:SAG) (£227m)	Ricardo Investment and Share Buy-Back	Has sold all Ricardo (LON:RCDO) shares. Rec’d c.£56m after costs, £23.7m profit. Increased buyback limit.
Hostelworld (LON:HSW) (£151m)	Launch of Share Buyback	Launched £5m share buyback in line with recently announced capital allocation framework.	GREEN (Graham) [no section below] I pitched this at the Mello BASH in London as a stock that I’m finding very interesting right now. It offers a low valuation (P/E ratio 9.5x) but now benefits from a healthy balance sheet and competitively it commands a well-defined niche in the travel sector, being the top search result and the most highly-recommended site for hostel bookings (just ask chatGPT or Gemini AI!). Today’s announcement fulfils a promise made in April’s strategy update, when the company said that it would introduce a buyback programme “subject to market conditions and taking into account other investment opportunities”. Net cash was only €2m as of Dec 2024, but the company is very bullish on its ability to continue generating cash. Net debt was €12m a year earlier in Dec 2023.
Capital (LON:CAPD) (£148m)	Contracts Update	3yr borehole drilling contract at Reko Diq (Barrick). MSALABS & exploration drilling: demand +ve.	AMBER (Roland) [no section below] Today’s contract update seems to suggest recovering momentum within this business. However, with no figures provided, it’s hard to be sure of the potential impact on future revenue or profits. Unfortunately, updated broker forecasts are not available (to us) today. Existing forecasts suggest 2025 will be tough before a recovery in 2026. Exec chair Jamie Boynton owns 10% of the stock and appears to have been steadily fixing problems since taking charge again in March. This business has been significantly more profitable in the past, but much has changed over the last couple of years, as the group’s geographical scope has shifted. My feeling is that Capital shares probably offer value at prices below book value. But in the absence of any positive new guidance, I’m going to maintain Mark’s neutral view for a little longer.
Avacta (LON:AVCT) (£114m)	New Response in Phase 1b Trial	New partial response observed in patient with salivary gland cancer in FAP-Dox (AVA6000) 1b trial.
Anpario (LON:ANP) (£85m)	AGM Statement	SP -7% to 387p Strong H1 sales, agri market improved. Confident of achieving FY exps despite challenges. 31 May 25 net cash £9m. Shore Capital leaves FY25 forecasts unchanged (FY25E EPS 29.8p)	AMBER/GREEN (Roland - I hold) [no section below] Anpario says it had a strong H1 and remains confident of achieving FY results. Today’s update also flags challenges and geopolitical risks , highlighting continued disappointing trading in Brazil. I imagine US tariff risks and Chinese demand remain potential concerns, and I suspect the geopolitical comment may refer to the Middle East, which contributed nearly 20% of revenue (and much of the growth) seen last year. On balance, I can’t help sharing the market’s apparent view that this update increases the risk that earnings could fall short of expectations this year. Graham was GREEN in January, but the more cautious tone of today’s comments means I’ve decided to moderate our view slightly on this SIF stock.
Journeo (LON:JNEO) (£62m)	Purchase Order	$2.7m order from Outfront Media for NY Subway display systems. Installation in 4Q25 & FY26.	GREEN (Roland) [no section below] This order for station platform information screens appears to extend Journeo’s relationship with Outfront Media (NYQ:OUT), following a $2.5m order for subway car screens in April. There’s no mention of any change to expectations today so I assume forecast earnings are unchanged. But I think it’s positive for Journeo to be developing relationships with both a large customer and a high-profile end user. I’m happy to leave our positive view on this cash-rich NAPs stock unchanged.
Aurrigo International (LON:AURR) (£55m)	AGM Statement and Intended Board Change	FY25 to be in line with exps. “Well capitalised”. Projects on track at various airports.
Litigation Capital Management (LON:LIT) (£51m)	Judgement in Funded Case and Trading Update	Lost case funded w/ £11.6m. 30/6 net debt A$73m. Fund III paused. FY25 commitments exp A$80m.
Brave Bison (LON:BBSN) (£40m)	Extension to Exclusivity	Brave Bison has extended the exclusivity period for acquiring MiniMBA until 26 June 2025.
R E A Holdings (LON:RE.) (£35m)	AGM Statement	YTD FFB +5% to 355k. Avg YTD CPO price $869/t (FY24: $819/t). Prospects are “encouraging”.
Revolution Beauty (LON:REVB) (£25m)	Frasers Group: Stmt of Intention Not to Make an Offer	SP -18% Frasers (LON:FRAS) does not intend to make an offer for Revolution Beauty. “Constructive engagement” continues with a number of other interested parties.	PINK (RED) (Graham) [no section below] With little fanfare or explanation, Frasers walks away from talks with REVB. I can’t say I’m all that surprised: I’ve been consistently RED on REVB as I’m concerned that the equity might not be worth much in the context of a “tight” cash situation and net debt of £26m (Feb 2025). If I was one of the “interested parties”, my main question would be whether or not a deal could be done with REVB’s banking partners who manage its £32m RCF (expiring October 2025), instead of doing a deal with the company itself.
First Property (LON:FPO) (£19m)	Full Year Results	Pre-tax profit of £3.0m, AUM -20% to £220m. NAVps -9.4% to 35.7p. “Our fortunes have improved.”
LPA (LON:LPA) (£7m)	Full Year Results	Full year results to be in line. H1 order intake of £17m exceeded exps. Rev -18%, LBT of £0.5m.

---

Graham's Section

Hays (LON:HAS)

Down 12% to 61.65p (£981m) - Pre-Close Year End Trading Update - Graham - BLACK (AMBER/RED)

We’ve been getting increasingly concerned about the recruitment sector and its seemingly never-ending slump: is it really just a temporary economic effect, or has something structural happened, especially when it comes to Permanent recruitment? Is it being “disintermediated” by the likes of LinkedIn?

Today’s update blames continued macro uncertainty for weaker profits:

c.£45m pre-exceptional operating profit expected in FY25 primarily due to more challenging Perm markets

The consensus forecast, as helpfully provided by the company, was £56.4m.

Permanent recruitment remains weaker than temporary/contract:

Activity levels during our fourth quarter (ending 30 June) have reduced sequentially driven primarily by broad-based weakness in Perm markets globally reflecting low levels of client and candidate confidence as a result of macroeconomic uncertainty. Temp & Contracting activity continues to be more resilient.

Note again the explanation: “low levels of client and candidate confidence as a result of macroeconomic uncertainty”.

But does this really make sense? I acknowledge that the German economy - where Hays is most active - has indeed shrunk very slightly, for the past two years.

But the EU overall, the US and UK are not in recession.

In the best-case scenario, we can say that recruiters are very economically sensitive. Even though the major economies are not in recession, economic growth has still not been strong enough to enable them to generate strong results.

Some key bullet points from the rest of the update:

• Like-for-like net fees down 9% year-on-year in Q4, or 8% down adjusted for the number of working days.

• Within this, Perm is down 14% and Temp/Contracting down 5%.

• The weakest geographies are EMEA (excluding Germany), UK&I and ANZ. The relatively strongest are Asia and North America.

Cash is “in line with normal trends”, with a modest net cash position expected at year end. Cash flow can be volatile in this sector.

Outlook: no light at the end of the tunnel yet.

We expect current challenging market conditions to persist into FY26 and remain committed to delivering our focused strategy. Our initiatives to improve net fee productivity in real terms and back-office efficiency will be important drivers of medium-term profit recovery when the market recovers.

Graham’s view

Mark noted in February that there were risks associated with this one, including an anticipated H2 weighting for EPS.

Now that this risk has materialised in the form a full-fledged profit warning, I’ll have to downgrade our stance on it from neutral to AMBER/RED, on the basis that profit warnings tend to be followed by other profit warnings.

The trend in EPS forecasts has been truly miserable:

I’m going to have to re-examine whether I can look positively on any recruiters, given what is happening in the sector. Perhaps we might see some balance sheet bargains among them at some point, that could benefit from a future recovery. But for now, with the likes of Hays (where there is little balance sheet support), I would stay away.

---

Roland's Section

XPS Pensions (LON:XPS)

Down 2.5% to 367p (£767m) - Final Results for y/e 31 March 25 - Roland - AMBER/GREEN

We are confident that we are well placed for further growth in FY 2026 and beyond.

Pension consulting and administration specialist XPS has reported another strong set of results. Revenue rose by 16% to £231.8m last year, while the group’s adjusted pre-tax profit climbed 34% to £59.5m.

Today’s adjusted earnings of 20.6p per share appear to be slightly ahead of Stockopedia’s consensus earnings figure of 19.3p per share. An updated note from broker Canaccord Genuity today confirms that today’s results are c.6% ahead of its earnings forecasts.

Shareholders are rewarded with an 19% rise in the full-year dividend to 11.9p. This is also ahead of forecasts and gives a useful 3% yield.

Trading commentary: looking across the business, XPS reports double-digit growth in both main divisions:

Advisory: revenue up 10% to £125.5m. Within this, Actuarial & Consulting revenue rose by 14% to £106.1m during the year thanks to growth in risk transfer (e.g. defined benefit buyouts) and GMP (Guaranteed Minimum Pension) projects.

The other component of advisory revenue is Investment Consulting, where revenue fell 4% to £19.3m, which the company says is due to activity levels normalising after having risen by 46% growth over the last two years.

Administration: revenue rose by 30% to £93.7m. XPS now administers pensions for a total of 1.2m members, an increase of 9% over the year. Management says that growth last year was driven by GMP projects and one-off McCloud remedy projects, in addition to new client wins.

The company flags up the successful onboarding of the John Lewis Partnership pension scheme administration contract as a particular highlight – this was completed ahead of schedule.

This is exceptional growth, but it’s clear that some of it has been one-off in nature. As far as I understand them, GMP and McCloud have both generated one-off work that will taper as the related issues are resolved. XPS says that 94% of McCloud members have now received a remedy statement.

The company believes it’s one of a very small number of pension administrators able to handle this kind of work. As a result, management believes that successful delivery of these projects has positioned it well to win similar work in the future.

Profitability: it’s worth highlighting that XPS’s 2023/24 reported profits (and margins) were boosted considerably by the disposal of a business unit.

In addition to this, XPS reports the usual hefty adjustments to profits for common items that I generally prefer to include in my measure of profit.

Even so, today’s results show that the group’s growth has continued to drive underlying margins higher, thanks to positive operating leverage.

My sums suggest the following comparable statutory metrics for the last two years, adjusted to exclude the FY24 disposal gain:

• Operating margin: 19.1% (FY24: 17.3%)

• Return on capital employed (ROCE): 16.3% (FY24: 14.7%)

This is a very good level of profitability, supported by good underlying cash conversion. Excluding £18.7m that was spent buying shares for the Employee Benefits Trust last year, I calculate free cash flow of £29.6m – almost 100% conversion from net profit of £30.3m.

The EBT purchase is a real cash outflow and I view this as a remuneration cost, as the shares will be used to settle employee share options. For these reasons, I’m inclined to include it in free cash flow, cutting genuine surplus cash to £10.9m.

However, last year’s EBT purchases were three times larger than the £5.6m spent in FY24. I don’t know if the FY25 figure was a one-off or will be more typical of future years.

What I would say is that as we often see with professional services businesses, it’s worth noting that generous remuneration can eat into the amount of surplus cash available for shareholder returns.

XPS’s net debt rose by £26.3m to £40.3m last year, in part because the combination of dividends and EBT purchases were not fully supported by free cash flow. This level of borrowing doesn’t concern me, but I think the principle is worth monitoring.

Outlook: XPS acknowledges the one-off nature of some recent work, but believes such circumstances will continue to arise as market and regulatory change continues.

The group’s expansion into the “closely related” insurance consulting sector is also expected to add to its addressable market. XPS says that while its core pension market has £2.5bn in fee potential, the insurance business it’s targeting could add a further £1.5bn to this figure.

However, management admits that the absence of a further McCloud type project means that comparators will be tough in FY26.

FY 26 expectations are unchanged today, in line with upgraded guidance issued in February.

With thanks to Cannacord Genuity for sharing their coverage, I can see that its analysts have left their forecasts (almost) unchanged today:

• FY26E: 21.1p (previously 21.0p)

• FY27E: 22.8p (previously 22.5p)

These figures leave XPS on a FY26 P/E of 17.5 and imply earnings growth of 2.4% and 8% in FY26 and FY27 respectively. That’s a significantly slower rate of growth than we’ve seen over the last couple of years.

Roland’s view

The flotation of XPS has been a success story for the London Market and for small-cap investors who’ve stayed on board for the ride. The stock has risen by 140% since 2017 and paid meaningful and growing dividends along the way:

The company has now grown into an established FTSE 250 member with good quality metrics and a seemingly strong competitive position.

I don’t see any reason to doubt XPS’s ability to continue growing over the medium term. But with growth expected to slow over the next year or two, the valuation is starting to look a little more stretched to me.

For this reason, I’m going to leave XPS unchanged at AMBER/GREEN today.