Join our community of smart investors

News & Tips: Sirius Minerals, GKN, Plus500 & more

Equities in London are up again following on from a steady session in the US overnight.
February 14, 2018

London shares put on decent gains in morning trading as traders reacted to a steady session in the US overnight. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES:

After walking away from protracted negotiations with would-be provider AMC, Sirius Minerals (SXX) has finally signed the shaft sinking contract for its Yorkshire polyhalite project with DMC. Sirius now believes DMC’s shaft sinking methodology could both speed up the construction timeframe and cut costs. After protracted discussions of our own, we recently tipped Sirius – which you can read here.

KEY STORIES:

Engineer GKN (GKN) has launched Project Boost, a plan to rationalise its business and return £2.5bn to investors over the next three years as it tries to fend off a takeover approach from Melrose (MRO). The strategy is designed to deliver £340m in annual savings by 2020 and also sell off chunks of the business in the mean time, returning cash to investors. Management also intends to pay out half of free cash flow in dividends over the next three years. But management also admitted that the plan is likely to cost £450m to carry out.

Plus500 (PLUS) continued to pull-in new customers during 2017 - more than doubling numbers to almost 247,000. Active customer numbers also doubled to 317,000. However, the high level of new customers came at a price - average revenue per user was a third lower. That was because many new customers were taken on during the fourth quarter, management said. Management paid out another special dividend of 63.5ȼ (45.7p), taking the total for the year to $1.6867.

Shares in HSS Hire (HSS) are up 3 per cent this morning following an update from the group, confirming it was in line to meet its guidance of EBITA between £8-11m. It has also extended its £80m revolving credit facility to July 2019, which will dampen fears over leverage in the short term. Cost cutting is also going well, and the group has confirmed it has agreed changes to its supply chain that will result in savings at the top end of its £7-10m range. Changes to the group’s testing and repair of fast-moving products will lead to exceptional charges of around £40m, as it moves the operations closer to customers. 

BT (BT.A) and Sky (SKY) have secured the rights to another three seasons of Premier League Football - much to the relief of both their customers and investors. The deals are the outcome of a five day auction process for seven ‘packages’ of matches in the 2020, 2021 and 2022 seasons. Sky has won four of the packages and BT one, with both groups paying less than they did last time round. The lack of competition between the two bidders - now that they are sharing their sports broadcasting rights - seems to have led to a more tepid auction process. This is bad news for the Premier League which, last year, re-invested its broadcast earnings into record transfer fees and footballer salaries.  

OTHER COMPANY NEWS:

Outsourcer Serco (SRP) has made savings from the collapse of Carillion last month. Prior to the collapse, Serco was due to pay a total consideration of £47.7m for Carillion’s health facilities management contracts. However, the group has revised its agreement with the liquidators and will now gain the contracts for a total of £29.7m. Management said the lower price is a reflection of “potential liabilities, indemnities, warranties and the additional working capital investment required” following the liquidation. Shares in Serco are up 2 per cent.

Keystone Law (KEYS) expects its maiden profits for the year to January 2018 to be “comfortably ahead of current market expectation”. The law firm, which floated on Aim last November, said it has continued to trade strongly during the reporting period, achieving “significant growth”. Shares were up 4 per cent this morning.