The bad news just keeps coming from Carillion (CLLN). Following months of bad news the group has this morning announced it is in risk of breaching its financial covenants, and is seeking a deferment of testing. The support services giant has in recent months been selling off parts of its business, reducing costs and collecting cash, but the effect of these moves “will not be sufficient” for it to reach its target net debt/Ebitda ratio of 1-1.5 times. The group is looking at options for recapitalisation and expects to update in the first quarter of 2018. 2017 isn’t looking much better either. Delays to disposals and the commencement of a project in the Middle East, combined with some UK support services contracts missing margin improvement expectations will lead to 2017 profits being materially below market expectations. Average net debt for the year is expected to be between £875m-£925m. Stay away.
Record (REC) grew its notional assets under management by 5 per cent to $61.2bn during the first-half, while revenue increased 14 per cent year on year. The institutional currency manager reported a 13 per cent increase in management fees and a 5 per cent increase in pre-tax profits to £3.8m.
OTHER COMPANY NEWS:
STM (STM) made an announcement yesterday afternoon regarding the appointment of inspectors for some of its Gibraltar regulated subsidiaries. This is, at present, subject to a temporary stay by the Gibraltar Supreme Court. In the latest statement from STM, they note that the Gibraltar Financial Services Commission and subsidiaries have agreed to a voluntary stay, until the appeal against these appointments is heard by the Supreme Court. This stay “is without prejudice to the respective parties' legal arguments”. The stay means the inspectors will not start any work regarding these appointments, and STM’s relevant subsidiaries won’t endure the costs relating to the inspectors, “pending the outcome of the appeal”. This has been set for 22 January, and the subsidiaries believe the appeal has strong grounds. Shares in STM were down 8 per cent at the time of writing.
Mercia Technologies (MERC) announced this morning that it has made a new direct investment of £1.8m in ASton EyeTech, as part of a £5m syndicated round. This gives the group a 19.4 per cent stake in the company. The funding is due to be used to accelerate Aston’s product development and launch Aston’s new products.
Shares in WANdisco (WAND) were up 4 per cent at the time of writing, after the data replication specialist announced the release of the latest version of its flagship product: WANdisco Fusion 2.11. The new version includes “substantial performance improvements” with “significant product performance benefits”.
Seeing Machines (SEE) issued its AGM statement this morning. Management note that over the last four years, the group has focused on artificial intelligence, machine learning, digital camera technology and “human factors sciences”, while establishing commercial relationships across the automotive, commercial road, rail, mining, aviation and aerospace industries. The statement also cites the appointment this year of chief executive Mike McAuliffe among other managers. In rail, this year the company established a major agreement with Progress Rail, and in mining, Caterpillar has predicted strong sales of Seeing Machines’ technology.