FTSE 250 movers: Pets at Home falls, Workspace gains

Pets at Home announced a further £50m share buyback on Thursday as it hailed a record full-year performance, posting a jump in underlying pre-tax profit and revenue.

In the year to 30 March, underlying pre-tax profit rose 4.8% to £136.4m, ahead of previous guidance, with a strong trading performance partly offset by higher energy costs and increased investment in digital assets as it builds out its platform.

Meanwhile, revenue was up 6.6% to £1.4bn, with like-for-like revenue 7.9% higher.

On a statutory basis, pre-tax profit fell 17.7% on the previous year to £122.5m, reflecting the gain on the sale of its Specialist Group in FY22 and the costs of bringing the company's new distribution centre onstream in FY23.

Vet Group revenue increased 13.3% during the year to £122.8m, while retail revenue was up 5.9% at £1.3bn. Within retail, food grew at 11.4%, but accessories fell 0.9%.

Pets said it had completed a £50m share buyback programme during the year, and announced a further £50m buyback for the year ahead.

It also announced a new medium-term strategy to build "the world’s best pet care platform".

"This will generate sustainable value for all stakeholders, as we create a better world for pets and the people that love them," it said.

Chief executive Lyssa McGowan said: "Our record performance over the past year demonstrates that our compelling pet care offer continues to resonate strongly with consumers.

"Through our unique blend of products, services and expert advice we were able to serve pet owners better, grow our consumer base, and win more market share, building on our leading position in the UK pet care market."

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "Pets at Home has put in a remarkably strong performance for the full year, beating expectations in the process. The joy of operating a business in this space is that a certain level of demand is guaranteed, no matter what the economic climate, our dogs and cats still need food, and this is one of the last areas people will skimp on when times get tough.

"Pets at Home’s market-leading position hasn’t come by accident and is testament to the strong work that’s been done on product availability and pricing proposition. Free cash flow remains a major benefit, helping to underpin another year of dividends and buybacks.

"However, there are some potential clouds gathering. Consumers are tightening their belts, which means they’re more interested in buying the basics than they are more lucrative accessories. As Pets at Home continues to invest in keeping prices low, it means margins are taking a hit. Spending money to protect existing market share rather than grow it is never ideal, and it’s possible the group’s close to bumping up against the side of the tank. The vet business is an attractive revenue diversifier, but is relatively mature. Stoking further growth is likely going to mean Pets at Home needs to open its own wallet once again."

Office space provider Workspace said on Thursday that it swung to a full-year loss due to a drop in its property valuation.

In the year to the end of March, the company swung to a pre-tax loss of £37.5m from a profit of £124m a year earlier as its property valuation declined 3.2% to £2.7bn.

Net rental income was 34% higher on the year at £116.6m, or 17% higher on an underlying basis. EPRA net tangible assets per share were down 6.2% from the end of March to £9.27.

Workspace said it continues to see "good" demand and expects to see further price growth. In addition, rental income growth will be supported by the letting of recently-completed projects and the letting of refurbished and vacant space in the McKay portfolio.

However, it also cautioned that the current high levels of inflation will impact on both its service charge and administrative costs.

"In relation to service charge costs, where the majority of the cost is passed on to our customers, we have been able to limit the impact on customers by the hedging of our energy costs in October 2021," it said.

"Staff costs are the most significant driver of our administrative expenses and, whilst we have limited inflationary salary increases to 6% for staff earning more than £50,000, we have given higher increases for those on lower salary levels."

Qinetiq upgraded its long-term guidance on Thursday as it reported a rise in full-year profit and revenue amid record orders.

In the year to the end of March, underlying pre-tax profit jumped 33% to £189.7m, with revenue up 20% to £1.6bn and orders 41% higher at a record £1.7bn. The company hailed "continued high demand" for its offerings.

Chief executive Steve Wadey said: "We have delivered an excellent set of results characterised by a record order intake and strong operational performance across the group. The integration of the two strategically significant acquisitions of Avantus and Air Affairs gives us a compelling global platform from which to grow.

"We are operating in an uncertain world and the heightened threat environment is increasing demand for our distinctive offerings, which are closely aligned to our customers' priorities. We are now seeing an increased addressable market presenting opportunities for further growth and enhanced shareholder returns."

Qinetiq maintained its FY24 expectations but lifted long-term guidance. It is targeting high single digit organic revenue growth at 11-12% margin and has increased the scale of its ambition to grow the company to around £3bn revenue by FY27, including further strategic acquisitions.

"This upgraded guidance will approximately double our revenue and profit over the next four years, a 20% improvement to our previous guidance," it said.

Britvic, Diversified Energy and IP Group all fell as they traded without entitlement to the dividend.

FTSE 250 - Risers

Workspace Group (WKP) 506.00p 5.68%
Carnival (CCL) 777.20p 4.57%
Allianz Technology Trust (ATT) 249.00p 4.40%
Renishaw (RSW) 3,804.00p 4.05%
Polar Capital Technology Trust (PCT) 2,140.00p 3.63%
Hill and Smith (HILS) 1,414.00p 3.51%
Wizz Air Holdings (WIZZ) 2,944.00p 3.30%
Bytes Technology Group (BYIT) 457.60p 3.06%
Direct Line Insurance Group (DLG) 167.75p 3.04%
QinetiQ Group (QQ.) 381.20p 3.03%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 89.05p -5.17%
Tritax Eurobox (GBP) (EBOX) 60.00p -4.76%
Centamin (DI) (CEY) 100.60p -3.82%
Currys (CURY) 52.05p -3.61%
Pets at Home Group (PETS) 354.20p -3.54%
Future (FUTR) 785.00p -3.50%
Harbour Energy (HBR) 236.60p -3.07%
ASOS (ASC) 422.80p -3.03%
UK Commercial Property Reit Limited (UKCM) 51.60p -3.01%
IP Group (IPO) 56.00p -2.95%