Shares in London began the week with a sunnier disposition, regaining some of the losses of last week. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
The Serious Fraud Office (SFO) has confirmed that it is extending charges relating to Barclays’ (BARC) 2008 capital raising to Barclays Bank. The SFO had charged Barclays PLC with unlawful financial assistance contrary to section 151(1) of the Companies Act 1985, in respect of a $3bn loan provided to the State of Qatar in November 2008. Barclays Bank and Barclays PLC intend to defend the charges brought against them. We place our buy recommendation under review.
Unilever (ULVR) has sent a warning to digital platforms like Google and Facebook that it will pull its online advertising if they “create division” or fail to stop the spread of hate online. The consumer goods giant’s chief marketing officer Keith Weed said they “cannot have an environment where our customers don’t’ trust what they see online”. Unilever spent €7.7bn on advertising last year. Cutting back on advertising will also help the company meet its cost cutting goals. Shares in Unilever were up 1 per cent in early trading. Buy.
Payments technology group SafeCharge (SCH) has invested further in Nayax - a global cashless payments provider for unattended machines. SafeCharge first invested in Nayax in December 2016. Today’s subsequent investment takes its total investment to around $24.5m, which will facilitate Nayax’s international expansion. Buy.
As it has frequently demonstrated in recent years, Faroe Petroleum (FPM) is a canny wheeler-dealer of its portfolio. In its latest instalment of asset horse-trading, the North Sea explorer and producer has sold most of its 25 per cent interest in the Fenja development, to Suncor, for $54.5m in cash. As handy as the cash is – though there are few immediate signs that Faroe’s balance sheet has been strained – the stake sale will also reduce Faroe’s capital expenditure outlay from £233m to around £70m. The shares are up 7 per cent today, but we are reviewing our buy call.
In keeping with the rest of the market, it’s been a rocky month for many energy-focused blue-chip stocks, oil services outfit Wood Group (WG.) among them. News of a multi-million dollar, five-year contract to help engineer and manage one of Saudi Aramco’s mega-projects at the Marjan oil field, will therefore be welcomed by shareholders. No financial details were disclosed, though the market has responded by pushing the shares 3 per cent higher. Our sell call is being reviewed.
KEY STORIES:
All conditions for the merger between Aveva (AVV) and Schneider Electric’s software business have now been fulfilled, with admission expected on 1 March. This follows the review by the Committee on Foreign Investments in the United States (‘CFIUS’), which has concluded with clearance given. Shares in Aveva were up 1.6 per cent at the time of writing.
Peter Geleta, the interim chief executive of the beleaguered Acacia Mining (ACA), is convinced his company’s “operations are well placed to deliver in 2018”, despite the continuing impacts of Tanzania’s concentrate export ban. Full-year results suggest the challenge will be tough: a huge drop in cash generation and build up in working capital has reduced net cash to just over $9m, while full-year production is expected to decline from 768koz to as little as 435koz.
Saga (SAGA) has entered into a new quota share agreement with NewRe and Hanover Re to cover 80 per cent of the underwriting risk of motor policies of its in-house underwriter AICL from February 2019. That’s up from 75 per cent and supports the gradual withdrawal of capital from the underwriter. Shares were up 4 per cent in early morning trading.
Shares in BNN Technology (BNN) were de-listed from Aim this morning. This follows the group’s announcement last Friday that it has not appointed a replacement Nominated Adviser (Nomad), while it is now in advanced discussions with two listed US companies with a view to closing a deal that could “greatly enhance shareholder value”. If completed, this deal would entail the acquisition of all or large parts of the company. Following the cancellation on Aim, the directors plan to set up a matched bargain arrangement to allow shareholders to trade their existing holdings of shares.
Late on Friday Ladbrokes Coral (LCL) released a trading update alongside the takeover prospectus from GVC Holdings (GVC). Full year operating profit at Ladbrokes was at the top end of management’s expectations. Revenue during the fourth quarter was 12 per cent ahead of the year before driven mainly by customers playing digitally. Ladbrokes shareholders have now been sent the prospectus for the GVC takeover and will vote on the deal in March. Shares in Ladbrokes were up more than 1 per cent in early trading.
OTHER COMPANY NEWS:
EVR Holdings (EVRH), the creator of virtual reality music content, has summarised its progress in 2017. Achievements included a deal with Universal Music Group, a global partnership with Microsoft Corporation, a global framework agreement with Sony Music Entertainment and a partnership with artist Jay Z’s company Roc Nation. The group also undertook two fundraises during the year. Its flagship product, MelodyVR, has not yet launched - though the company says it is “well positioned for a successful public launch” in 2018. As at 31 December 2017, EVR had a year-end cash balance of around £12.4m. Shares were up 4 per cent this morning.
Spend control and eProcurement company Proactis (PHD) expects to report a 123 per cent rise in revenues to around £26.3m for the six months to 24 April, up from £11.8m. The group also anticipates a 183 per cent increase in adjusted cash profits to around £8.5m, up from £3m. This follows its acquisition of Perfect Commerce on 4 August last year, which contributed around £13.5m in revenue and £3.7m in adjusted cash profits. Shares were up 6 per cent this morning.
Shares in Game Digital (GMD) were up 13 per cent this morning, after the company announced a collaboration agreement with Sports Direct. This means that concessions of Game’s retail stores, and its Belong gaming and e-sports experiences, will be launched in some Sports Direct stores. As part of this agreement, Sports Direct has acquired a 50 per cent interest in the rights of Belong’s intellectual property for £3.2m and a 50 per cent share of future profits of Belong and its associated venues. Game Digital’s Spanish subsidiary has also entered into a loan agreement with Sports Direct for loan facilities up to £55m on an unsecured basis. Last year, Sports Direct’s Mike Ashley bought a 26 per cent stake in the group.
Gaming Realms (GMR) - the producer of mobile money and social games - has signed a multi-show game licensing agreement with ITV. This follows the successful launch of the loveislandgames.com site last summer, and will initially focus on TV shows Dancing on Ice, The Only Way is Essex and Hell’s Kitchen.
Ticketing specialist Accesso Technology (ACSO) has announced a five-year extension to its current agreement with Cedar Fair, to provide its ‘accesso Passport’ e-commerce solution to all of its properties. Cedar Fair is one of the largest regional amusement-resort operators globally.
Waste-to-product group Renewi (RWI) is expecting to trade in line with expectations for the full year. In a trading update released this morning the group announced it expected to realise at least €12m (£10.6m) in merger synergies for the year to the end of March 2018. Volume growth has begun to decline in the commercial division, the largest part of the business, which is being offset with price increases. However, the group is carrying out a review of onerous contracts in its Municipal division, which are likely to increase exceptional charges for the full year. Management plan to update further ahead of release of the results.
Shares in UP Global Sourcing Holdings (UPGS) are down more than 40 per cent today after the consumer goods company warned that full year cash profits would fall to somewhere between £6m and £7m, compared to £11.5m last year. A number of orders the company had expected to come through during the second half of its financial year have now been pushed to 2019. UP also had to pay a one-off charge of between £4m and £5m due to a change in its arrangements with a European customer.
