Equities in London started the day positively but have since given up their gains. Click here for The Trader Nicole Elliott's latest take on the markets.
IC TIP UPDATES:
Shares in Gemfields (GEM) sold off this morning after the coloured stones miner announced a dip in half-year earnings. The main reason for the fall was the deferral of one auction until last week; that booked relatively low revenues of $22.3m at an average of $64 per carat. The company’s end markets remain impacted by India’s demonetisation programme, which has reduced the spending power of a large proportion of the customer base. Lower grades from Kagem also push our buy recommendation to ‘under review’.
KEY STORIES:
Well it’s all over before it really started folks. The proposed mega-merger between Unilever (ULVR) and Kraft-Heinz is a no-go. News emerged that the latter had made a $143bn (around £112bn) offer for the consumers goods giant on Friday, but it wasn’t long before Unilever boss Paul Polman said he saw “no merit, either financial or strategic” for the tie-up. It seems that over the weekend the Warren Buffett-backed US food group has re-considered and both companies have “amicably” decided to step away. Unilever shares fell 8 per cent in early trading.
Shares in support services specialist Interserve (IRV) have been trashed today after the company admitted that the cost of extracting itself from its waste to energy business is likely to be significantly higher than previously thought. Following a recent termination notice from Glasgow and the entering into administration of subcontractor Energos, management has upped its accounting provisions against exiting waste to energy from £70m to £160m. There is considerable uncertainty over what losses may be recovered in future and the new developments will also send net debt higher. Interserve shares had slumped more than 20 per cent by late morning.
Analysts at Investec this morning voiced their concern that Petra Diamonds (PDL) may be running close to bank covenant limits, after the miner finished 2016 with net debt of $464m. The company, which pointed to its borrowing headroom and liquidity, also now expects production from the new plant at Cullinan to sit at the lower end of the recently flagged 4.4-4.6mct range.
OTHER COMPANY NEWS:
Sound Energy (SOU) has now entered into binding arrangements to buy a further 20 per cent stake in Tendrara’s exploration permits and rights to apply for a three-quarter operated interest in the Meridja field in Morocco, and has applied for a further position in relinquished areas of the Tendrara exploration. Investors in the high-flying oil and gas stock will also be encouraged to hear that a third well has been spudded at Tendrara.
