Equities in London are flat in morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Aviva (AV.) has announced plans to return £500m in capital back to shareholders, as part of a £2bn return of excess capital. Around £900m will be used to pay down debt and about £600m for bolt-on acquisitions. At the same time management announced operating profit had increased by 2 per cent to £3.1bn. The total dividend was increased by 18 per cent. Buy.
Shares in Communisis (CMS) were up 10 per cent in early trading following the release of the group’s full year results. A number of significant contract wins sent the group’s pre tax profit up 24 per cent to £14.4m. The group has also agreed a contribution plan with the trustees of its pension scheme, giving it more clarity on costs. Buy.
AA (AA.) former executive Bob McKenzie has filed a High Court claim against his former employers alleging wrongful dismissal and accusing the group of having little regard for his mental health. Mr McKenzie was sacked in August, following an altercation with another employee. That followed claims by Mr McKenzie that the group had received a takeover approached from a private equity fund in 2017. Sell.
KEY STORIES:
Everything about Premier Oil (PMO) is big, apart from its market capitalisation, as full-year results once again remind us. Last year, average production was 75,000 barrels of oil-equivalent per day (boepd), a figure which could this year rise to 85,000boepd, depending on the timing of the ramp-up at Catcher. In 2018, the Tolmount gas project is likely to be sanctioned, a final investment decision on Sea Lion should be reached, and free cash flow is set to increase. The debt pile remains lofty, but the early conversion of most the group’s convertible bonds means that the short in the group’s shares has pulled back. Could market sentiment soon follow the bullish outlook from analysts and management?
Stobart Group (STOB) is planning to spend around £40m between 2018 and 2021 on marketing route development for London Southend airport, around £10m of which has been invested in the current financial year. The airport saw passenger numbers increase by a quarter in the 12 months to February, and Stobart management reckon there’s further scope for expansion. The company also stated in its pre-close update that proceeds from disposals in its infrastructure and investment divisions to support the dividend to 2022. Shares were up more than 1 per cent in early trading.
Shares in Alfa Financial Software (ALFA) plummeted by a fifth this morning, after the group said the weakening dollar would be a headwind in 2018 - leading management to expect low double-digit sales growth. For the year to December 2017, the US contributed 48 per cent of overall sales. Alfa, which provides software for the asset finance industry, reported 20 per cent revenue growth to £87.8m in 2017 and operating profit growth of 104 per cent to £33.8m.
Domino’s Pizza Group (DOM) reported a 15 per cent increase in group system sales to £1.2bn during 2017, while total revenue was up by a third to £475m. Chief executive David Wild said this was achieved despite weaker consumer demand and cost inflation affecting the sector. The pizza group is aiming to eventually have 1,600 sites, and are expecting to open up to 75 in 2018. Shares were up less than 1 per cent in early trading.
Shares in G4S (GFS) were down 4 per cent this morning, after falling back from an initial spike following the release of the full year results. Revenues and profits were up, but operating cashflow weakened by 16.7 per cent to £527m. The group’s net debt fell to 2.4 times cash profits, from 2.9 times previously.
OTHER COMPANY NEWS:
Shares in Spirent Communications (SPT) were up 11 per cent this morning, after the group reported a slight drop in full-year revenues from £458m to £455m, but a higher adjusted operating margin at 13 per cent versus 10.2 per cent. Within its largest networks and security segment, a strong performance from the positioning and application security businesses helped mitigate “softness” in high-speed ethernet testing among customers. The lifecycle service assurance grew revenues by 10 per cent, while connected devices returned to profit over the course of 2017.
