Financial stocks took the biggest hit on the London index this morning. The Trader Nicole Elliott explains what's been happening on the markets today.
IC TIP UPDATES:
Legal and General (LGEN) grew operating profits across all its core businesses during the first half of the year, with its retirement business generating a 40 per cent increase. Its investment management arm gained external net inflows of £21.7bn, up from £9.6bn in 2016. However, its general insurance business suffered a 52 per cent decline in profits as na result of increased costs from non-weather related claims. Buy.
Philip Scott, non-executive director at Diageo (DGE), is set to step down from the board on 20 September. He’s been a board member at the spirits company since 2007 and stood down from his role as chair of Diageo’s audit committee at the end of last year. Shares were largely flat in early trading. Buy.
KEY STORIES:
Telit Communications (TCM) issued a statement noting “speculation regarding historical indictments in the United States of America” of Telit’s chief executive Oozi Cats, regarding “matters which are unrelated to Telit and significantly pre-date its establishment”. Telit’s board has “appointed independent solicitors to conduct a thorough review of this matter”, and has also approved Mr Cats’ request for a leave of absence from Telit pending the outcome of this review. Yosi Fait, who is finance director and president of Telit, will serve as interim chief executive for the time being. Shares fell by over 30 per cent.
Shares in Stock Spirits Group (STCK) were up nearly eight per cent after the company announced that revenue increased by 3.3 per cent to €119.8m during the first half of the year with operating profit up 32 per cent to €16.5m. This was driven by an increase in total sales volumes to 5.7m nine litres cases, up 7.3 per cent from the same period the year before. The central and eastern European spirits company management to save €2.5m during the period thanks to initiatives introduced in 2016 and expects to cut another €1.5m form its budget after it restructures its operations and legal team.
Shares in Spirax-Sarco (SOX) were on the rise after the engineering group posted a jump in first-half profit and revenue helped by acquisitions, positive currency translations and the strength of its operations outside the UK. The firm reported a 30 per cent rise in adjusted pre-tax profit to £99.2m and raised its interim dividend by 13 per cent to 25.5p.
A strong set of results from G4S (GFS) nevertheless sent the share price down 5 per cent in early trading. The cause of this seems to be the group being hamstrung by its own success. A trading update for the first three months of 2017 showed revenues from continuing businesses was up 8.9 per cent on the same period in 2016. This morning, however, the group reported a 6.2 per cent rise on a constant currency basis. Pre tax profits were likewise up 5.9 per cent.
Investors balked at news Interserve (IRV) was raising the guidance for its year-end net debt this morning, sending the shares down 1.3 per cent in early trading. Revenues for the group were up slightly for the six months to June 2016, but adjusted operating profit fell 28 per cent following the cost of restructuring and cost headwinds during the period.
OTHER COMPANY NEWS:
Worldpay (WPG) reported top line growth of 18 per cent and a “very strong” pipeline of new business. A 0.8p dividend was announced, up 23 per cent. Additionally, a special dividend of 4.2 per share will be paid to shareholders, conditional on the completion of the merger with Vantiv. Vantiv simultaneously announced that its board and that of Worldpay have “reached agreement on the terms of a recommended merger”. The terms grant each Worldpay shareholder 55p per share in cash, and 0.0672 of a new Vantiv share.
Premier Foods (PFD) has appointed a new chairman to its board. Keith Hamill will join the board on 1 October as non-executive chairman before he officially takes up the role as chairman on 9 November. Outgoing chairman David Beever will leave after nine years with the company, five of which as chairman.
Unilever (ULVR) is set to buy back preference shares as part of its effort to simplify its capital structure. The consumer goods company has agreed with NN Investment Partners and ASR Nederland to buy all of their six per cent and seven per cent cumulative shares in Unilever NV. The deal will be made through a public offer so that all holders of similar preference shares can have the option to sell on the same terms as NN and ASR. The company stated that this should make Unilever “easier to understand” and help to improve corporate governance by “strengthening the link between economic interest and voting rights” for shareholders.
