Yet more weak economic data from China failed to rattle London investors this morning, who jumped on news of further cuts to banks' reserve ratio requirements there to mark the FTSE100 up to its highest level in two months. Click here to see what The Trader Nicole Elliott thinks.
IC TIP UPDATES:
Shares in Barclays (BARC) fell 7 per cent after the banking group revealed an 8 per cent decline in pre-tax profits due to increased litigation and conduct costs, including £800m for ongoing investigations relating to the foreign exchange market. The group also announced its intention to sell down its stake in its Africa business. We place our recommendation under review.
United Utilities (UU) and Severn Trent (SVT) have announced plans to merge their non-household water and wastewater retail businesses, subject to clearance from the Competition and Markets Authority, which it expects to obtain in Spring. The non-household retail market is set to be opened to competition in England in 2017. Buy UU.
The share price reaction to a 12 per cent rise in adjusted pre-tax profits to £29.2m for sausage casing maker Devro (DVO) seems a little curious. The stock has dipped more than 1.5 per cent in early trading. This could be because although profits rose, revenues were marginally below the prior year. The fact management managed to implement cost savings and the group’s new plants are on the cusp of firing up in the US and China suggests there’s more to come from the company. Buy.
Premium drinks venue brand Revolution Bars Group (RBG) has continued to have some swing in its step after reporting a mediocre set of numbers at its full-year results. High-end vodka has maintained some allure for party-goers as revenues rose more than 2 per cent to £59.2m but this meant pre-tax profits managed a marginal rise to £4.7m. But its three most recent openings in Milton Keynes, Leeds and Nottingham are trading ahead of the company’s pre-investment expectations and the growth plan doesn’t look overstretched. Buy.
Regus (RGU) reported a 67 per cent rise in pre-tax profit for 2015 helped by a 22 per cent increase in network size. Current trading is in line with management expectations and it remains confident in its prospects for 2016. Buy.
Rio Tinto (RIO) stressed two important points in its recent full-year results: it is managing costs tightly and sharply cutting back capital expenditure. But the miner has also been busy selling off non-core assets – to be precise, $4.7bn worth – in just over three years. Today, it announced the sale of its 40 per cent interest in the Bengalla coal joint venture in Australia for $617m, a move which pushed the stock up by 2.5 per cent. Buy.
Investors sent shares in Servelec (SERV) up 5 per cent after the healthcare and automation software specialist posted a 32 per cent rise in underlying operating profits to £16.2m in 2015. Health and social care sales nearly doubled, but sales fell in both the controls and technologies segments due to the downturn in oil and gas markets. The group has also agreed to buy Synergy, a specialist in children’s services, from Tribal (TRB). Buy.
Aim-listed Bacanora Minerals (BCN) has its results for the six months to December, ahead of the imminent publication of its pre-feasibility study. In addition to the previously reported mineral resource estimates upgrades, cash more than doubled to C$23.2m (£12.3m) thanks to a private placing in November. Eagerly awaiting the pre-feasibility study, which the company says should de-risk the group for institutional investors, we remain buyers.
Fresnillo (FRES) shares have rallied hard in 2016 thanks to an improving outlook for precious metals and guidance-beating gold production. Shares fell on these results, after the group announced it would cut budgets and postpone projects. Our buy call is under review.
Smiths Group (SMIN) has confirmed the completion of a triennial valuation for its pension scheme. The engineer said a deal to pay its deficit over the next three financial years will free up much needed free cash flow. Buy.
Shares in Rotork (ROR) soared 15 per cent after the maker of valve for oil markets claimed that cost-cutting measures had delivered higher than anticipated savings. The engineer posted a 28 per cent fall in pre-tax profit in the year to December 2015, which was in line with the guidance provided in its previous trading updates. Our buy advice is under review.
Shares in London Stock Exchange (LSE) leapt to a new record high after US-based rival ICE said it was considering submitting an offer for the business just days after it agreed a merger deal with Deutsche Borse.
Adjusted operating profits leapt 15 per cent to over £100m at Moneysupermarket.com (MONY) as the price-comparison specialist helped customers save over £1.6bn on their household bills. Sales leapt 14 per cent in the core business, while they climbed 8 and 35 per cent respectively at TravelSupermarket.com and MoneySavingExpert.com.
Interdealer broker Tullett Prebon (TLPR) reported a 2 per cent fall in broking revenue last year, but total sales were boosted by information sales to 13 per cent. Revenue in the Americas was 4 per cent higher, excluding its 2014 acquisition of oil instrument broker PVM. However, the Europe and Middle East division suffered a 7 per cent fall in sales, excluding this acquisition as market conditions in all major product divisions remained difficult.
Intellectual property investment company IP Group (IPO) increased its net assets by half last year £782m. Meanwhile the fair value of its portfolio grew to £552m, up from £350m in 2014. During the year the group completed a share placing, raising £179m for future investments.
Organic sales rose 14 per cent at GlobalData (DATA) - formerly Progressive Digital Media, sending shares up 3 per cent in the business data, analytics and insight provider. Strong demand drove adjusted cash profits up 48 per cent to £12m.
Mark Cutifani’s decision to focus on diamonds received a welcome boost today, after Anglo American (AAL) subsidiary De Beers reported an uptick in provisional sales. Auction and global sightholder sales of rough diamonds in the second cycle of the year continued their positive trend, fetching $610m, ahead of $545m in the first sales cycle. The market responded positively to the news, sending Anglo shares up 4 per cent.
Consumers’ demand for alternative types of sugar clearly remains robust if the results of PureCircle (PURE) are anything to go by. The group is the world’s largest producer of stevia, a plant which is increasingly being used as a sugar substitute. One such product which uses the ingredient is Coca-Cola Life. PureCircle registered sales of $54m - a rise of a quarter - in the first half thanks to growth in each of its sales regions.
The size of Glencore’s (GLEN) loss in 2015: $8bn. That’s what happens when prices crumble and companies are boards are forced into enormous asset write-downs. In the commodity giant’s case, the most significant loss was a $4bn impairment on a major nickel investment. The group is making headway on plans to reduce debt, however, which has sparked a near-doubling of the share price in the last six months.
Johnson Service Group (JSG) posted adjusted pre-tax profits of £25.2m for the year to the end of December - 26 per cent up on 2014.
Jardine Lloyd Thompson (JLT) grew its revenue by 5 per cent last year to £1.56bn, led by a strong performance from its risk and insurance business. However, sales for its employee benefits divisions fell 6 per cent due to a slowdown in new work for its UK and Ireland business, as a result of changes to the occupational pensions market.
Shares in UK Oil & Gas (UKOG) this morning tested historic highs after the group received positive drilling results for the second interval of the Horse Hill discovery, which flowed at rates of 900 barrels a day. This follows the discovery of oil in the first interval two weeks ago, which flowed at a stabilised rate of 460bopd. There were also gains at Evocutis (EVO), Alba Mineral Resources (ALBA) and Solo Oil (SOLO), which all own stakes in Horse Hill Developments.
Elementis (ELM) became the latest company in its peers group to announce a special dividend as the chemical company moved to appease investors concerned with its difficult trading environment. Sales and profit both fell in 2015, as the group grappled with the depressed oil price.
OTHER COMPANY NEWS:
Motor retailer Vertu (VTU) has announced a £21.9m acquisition of Sigma Holdings and its subsidiary Greenoaks, the latter operating Mercedes-Benz franchises in Reading, Ascot and Slough. This is the first Mercedes-Benz related deal for Vertu.
The fall in North Sea investment has been a big challenge for John Wood Group (WG.), but the oil and gas services company continues to pick up contracts in other divisions. Today, the group announced it had won a $120m, five-year contract to supply Babcock International with industrial services across a number of its UK sites.
Boutique hotel business PPHE Hotel Group (PPH), which recently won the tender for the hotel in the forthcoming development of Battersea Power Station, has bought the outstanding 80 per cent of a joint venture in Croatia it did not already own for €51m (£40m). The deal means PPHE will own the joint venture’s stake (74 per cent) in Arenaturist, a Croatian public company traded on the Zagreb Stock Exchange. This owns three Croatian private companies which together own seven hotels and six apartment complexes and have ownership interest in eight campsites in Istria, Croatia