Shares in London recovered a little of their recent losses in morning trading.
IC TIP UPDATES:
Yesterday, Polymetal International (POLY) produced its first gold concentrate from Kyzyl, one month ahead of January’s updated schedule. Capital expenditure for the project, the biggest in Polymetal’s history, has come in at 3 per cent below the original $325m budget, and given the mine’s low all-in sustaining cost profile, should begin to contribute to net income from the final quarter of 2018. By that point, Kyzyl should have hit nameplate capacity. Buy.
KEY STORIES:
Reporting a 3 per cent drop in sales and an underlying pre-tax loss of £8.7m would likely weigh on any company’s share price. Not so for retail chain Carpetright (CPR). Arguably - at this point - there’s not much more bad news it can possibly give its investors, hence why the shares only fell 2 per cent on the release of these numbers. The group recently entered a company voluntary agreement (CVA) in order to renegotiate and even exit, some of its onerous property leases. It’s thought this should help significantly reduce the group’s cost base and free up cash for reinvestment and general liquidity.
Van hire group Northgate (NTG) has been working to get its UK operations on track in recent months, and this morning’s full years indicate their efforts might be paying off. The vehicles on hire grew 6.9 per cent organically in the year. However, reductions in both rental profit and profit from disposals were both down, sending adjusted profits down 24 per cent in the year.
Understandably, investors in Petrofac (PFC) are keen for all and any evidence that the oil services company can secure new customers. On that front, a trading update for the year to date paints a mixed picture. The group has won $1.8bn of new business, is “well-positioned on several bids” and has a line of sight to $20bn of bid opportunities for award in the second half of the year. Petrofac will hope that will help to reverse the drop in the order backlog, which fell from $10.2bn to $9.7bn in the five months to 31 May.
Fresh from an agreement to develop the Shaikan field, and an Opec meeting which has broadly held up oil prices Gulf Keystone Petroleum (GKP) is now set to refinance its high-yield bonds. Today, the Kurdistan producer has issued a notice to redeem its $100m notes due 2021, and replace them with a five-year senior unsecured bond of $100m. Pareto Securities has been appointed to sound out fixed income investors.
BHP Billiton (BLT) and Vale have settled a 20 billion rial (£4bn) civil claim brought by public prosecutors over the fatal 2015 Samarco dam disaster. The deal also “establishes a process to renegotiate” various compensation and remediation programs in two years’ time, whilst progressing settlement of another 155bn rial civil claim.
OTHER COMPANY NEWS:
As announced yesterday, EVR Holdings’ (EVRH) flagship platform MelodyVR has now launched to the public in France, Germany, Sweden, The Netherlands, Switzerland, Greece, Austria and Belgium. The app, which offers virtual reality music content, was originally launched in the US and the UK last month, alongside Facebook’s (US: FB) Oculus Go hardware device. EVR also announced today that it has struck a record label agreement with Big Machine Label Group. The shares were up 4 per cent in morning trading.
Robotic process automation specialist Blue Prism (PRSM) enjoyed 145 per cent revenue growth for the half-year to April, reaching £22.9m. Recurring licence revenue comprised 93 per cent of sales, against 91 per cent a year earlier. And, the group’s exit run-rate (recurring licence revenue) rose to £4.4m per month as at April, against £1.7m at the same point in 2017. This momentum was underpinned by 559 new software deals, including 223 new customers, 298 upsells and 38 renewals. Pre-tax losses widened from £3.1m to £5.5m, due to higher administrative expenses and share based payments. The shares were down 7 per cent in morning trading.
Law firm Knights has announced its proposed admission to trading on Aim, and the placing of 20.7m new and 13.8m existing shares with institutional investors to raise around £50m. This follows the company’s intention to float statement on 4 June. With an offer price of 145p per share, Knights will have a market cap of around £103.5m. It will receive £30m from the IPO, which will go towards repaying existing debt and fees. Management expects Knights’ flotation to accelerate its organic and acquisitive growth strategy. Admission to Aim should take place on 29 June under the ticker KGH.L.
SIG (SHI) has continued the work of restructuring. This morning the building products distributor announced the disposal of VJ technology to private equity house Primary Capital. The deal is in line with the group’s strategy to rid itself of non-core businesses, and is expected to complete on or before 30 June 2018. SIG will use the £29.7m proceeds from the sale to reduce net debt. Hold.
Oil and gas companies who find themselves in the unfashionable business of offshore drilling are thinly rewarded for discovery these days. The upside to this, arguably, is a muted reaction to dry wells, as investors in Kosmos Energy (KOS) may have noted today. Shares in the explorer are off 4 per cent in early trading, after the Anapai-1A exploration well offshore Suriname failed to find hydrocarbons. Nonetheless, executive chairman Andrew Inglis said drilling plans for the block are “unchanged given the independent nature of the prospects”.
After a slow start to the year, De Beers’ diamonds sales cycle appears to be on the front foot. The fifth auction of rough diamonds by the Anglo American (AAL) controlled group brought in $575m, well up on the same period last year and the most recent haul.
