UK retail sales helped the FTSE 100 off to a strong start but the gains didn’t hold and the index dipped as trade progressed.

On Friday, investors digested a mixed set of UK economic data, including worrying government borrowing stats, stronger-than-expected retail sales, and poor service sector figures, and sold UK-listed as a result.

The FTSE 100 was down 0.5% at the time of writing with analysts focusing their concern on public borrowing figures.

“The last time net debt represented the same proportion of GDP revealed today was when the Beatles had yet to enjoy a number one single, TV was in black and white and the country was still paying off debts accumulated during the Second World War. It shows the difficult task facing whoever occupies Number 10 after next month’s election,” said AJ Bell investment director Russ Mould.

After the Bank of England held rates at 5.25% yesterday and hinted at a possible August rate cut, we are now set for a summer of ‘will they, won’t they’ debate about interest rates. This holding pattern in the narrative was reflected in equity markets on Friday as the FTSE 100 dipped slightly into the weekend amid mixed macro developments.

“It’s a quiet end to the week on the corporate news side of things, meaning there isn’t too much else for the FTSE to hang its hat on,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.

Although FTSE 100 constituents earn the lion’s share of their revenue overseas, news the UK consumer is in rude health wasn’t lost on UK retail stocks such as Ocado, JD Sports, and Burberry who were among the few gainers on Friday.

Ocado was 1.5% higher after it rebounded from heavy selling yesterday but didn’t erase anywhere near the extent of the losses.

“Ocado recovered some ground after being squashed like a tomato yesterday on news its Canadian partner had exited their exclusive deal and halted expansion plans,” Russ Mould said.

Britvic, the UK-based soft drinks manufacturer, has confirmed it recently rejected a takeover proposal from Danish brewing giant Carlsberg. The offer, valuing Britvic at £1.25 billion, marks the second attempt by Carlsberg to acquire the company in less than a fortnight.

On 11 June, Carlsberg tabled an unsolicited cash offer of 1,250 pence per share for Britvic’s entire issued and to-be-issued ordinary share capital. This followed a previous bid of 1,200 pence per share on 6 June, which was also rejected by Britvic’s board.

Britvic’s board unanimously rejected the latest proposal on 17 June. The company stated that the offer “significantly undervalues Britvic and its current and future prospects”.

Britvic shares were 10% higher at the time of writing.

“Britvic believes its products are probably the best soft drinks in the world because it is not letting Carlsberg rock up and buy the company on the cheap,” said AJ Bell investment director Russ Mould.

“Trading on just 15 times earnings before revealing the bid approach, Britvic is a classic example of a company that quietly got on with the job. There was no glamour around its products, investors didn’t hype up the stock, and it sat quietly on the UK market slowly growing sales and revenue. Often, it’s only when something is taken away that you miss it, and investors might take that view if Britvic was gobbled up and delisted.

“Carlsberg is not the first company you would suggest when trying to compile a list of potential buyers for Britvic. It is known for selling beer and lager, but there have been hints it wanted to diversify.

“A ‘Beyond Beer’ strategy is in place and has seen the company explore other avenues such as hard seltzers. Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market.

Under UK takeover rules, Carlsberg now faces a deadline of 19 July to either announce a firm intention to make an offer or declare it will not proceed. This timeline can be extended with the consent of the Takeover Panel.

Rockhopper Exploration plc (LON: RKH) has announced the receipt of its first payment in the monetisation of its Ombrina Mare Arbitration Award. The company confirmed that all precedent conditions for the transaction, initially revealed on 20 December 2023, have been met.

The oil and gas exploration firm has received €19 million of the €45 million Tranche 1 payment. The remaining €26 million has been allocated to a specialist arbitration funder, which had previously covered all costs related to the arbitration process. This payment fully discharges Rockhopper’s liabilities under its 2017 litigation funding agreement.

Rockhopper stands to receive additional payments from Tranches 2 and 3 of the Award, contingent on a successful annulment outcome. The company also noted that success fees of approximately €4 million are owed to its legal representatives if the claim is won and Italy being required to pay damages of €25 million or more.

Following this initial payment, Rockhopper’s cash balance has risen to approximately $27 million. This influx of funds significantly bolsters the company’s financial position, potentially providing more flexibility for future operations and investments.

“We are delighted to have received the Tranche 1 payment under the Ombrina Mare monetisation agreement,” said Samuel Moody, CEO.

“This cash gives us the strongest balance sheet we have had for a number of years, and we remain confident in the merits of our legal case as we await the decision of the Ad Hoc Panel on the annulment request from the Italian Republic.”

The Trading Statement at yesterday’s AGM for Futura Medical (LON: FUM), the consumer healthcare company behind the award-winning Eroxon® product, was bullish.

The £108m capitalised group specialises in the development and global commercialisation of innovative and clinically proven sexual health products.

Futura’s Lead Product

Its lead product is Eroxon, has been developed for the treatment of Erectile Dysfunction, which is the only topical gel treatment for ED available over the counter.

ED impacts 1 in 5 men globally across all adult age brackets, with about half of all men over 40 experiencing ED and 25% of all new diagnoses being in men under 40.

The company considers that Eroxon, which helps men get an erection in ten minutes, addresses significant unmet needs in the ED market.

Global Distribution Potential

The company has distribution partners in place in a number of major consumer markets including Haleon in the US, which is the largest market for ED in the world, and with Cooper Consumer Health in the European market. 

Importantly, it reported that it was working closely with Haleon, the global consumer healthcare company, on the preparation for the US launch of Eroxon within the next eight months or so.

Considering the size of the company’s target market, along with the initial feedback that the company has received in the markets where it has so far launched, has given its Management great confidence as it looks to make Eroxon® available to more people across the globe and on the path towards profitability in the next 12 months.

AGM Statement

Chairman Jeff Needham stated that:

“FY24 continues to progress well, as previously reported in the Group’s full year results in April.

At the time of the results announcement, we stated that we expected full launches in at least ten countries including key European markets such as France, Italy and Spain during the first half of 2024.

The Company can confirm that these launches have successfully taken place. The Company also confirms that revenues remain in line with market expectations for FY2024.

We also expect further launches in the second half of FY24 in both Europe and Rest of World and therefore plan to give updated guidance on trading FY24 at the time of our Interim results in September.”

Analyst View

Seb Jantet at Liberum Capital rates the group’s shares as a Buy, with a Price Objective of 131p, almost four times higher than the current market price.

His estimates for the current year to end December are for sales of £10.0m (£3.0m), while it is expected to slash its pre-tax loss by some 70% to £2.1m (£6.9m).

However, profits are just around the corner – with Jantet estimating £18.0m sales next year, helping to pump up some £2.6m in profits, worth 0.9p per share in earnings.

For the group’s 2026 trading year the analyst sees £24.0m revenues working to jack up a far healthier £4.1m of pre-tax profits, worth 1.4p per share.

The analyst concludes that Futura starting to generate meaningful EBITDA will remove the final barrier to broader institutional ownership.

My View

In the last year or so these shares have been as high as 67p and as low as 23p.

Now at just 35.90p I consider that there is massive upside potential for the group’s shares, which will become evident as the corporate newsflow increases up to the US launch.

By that time the shares could well have doubled.