IC TIP UPDATES:
Dalata Hotel Group (DAL) has acquired a hotel in Aldgate, London, for £91m on a long leasehold basis. As part of the deal Dalata will acquire the entire issued share capital of Hintergard Limited from Aldgate Hotel Holdco, an investment vehicle of an international private equity real estate investor. The 212 room hotel is expected to be complete by the end of this year. Shares are up more than 2 per cent in early trading. Buy.
Marine service provider James Fisher and Sons (FSJ) reported a 12 per cent increase in revenue during the first half to £261m, with underlying operating profit up 18 per cent to £24.5m. The company reported profit growth across all divisions, with marine support up by 21 per cent and specialist technical up 19 per cent. Management expect the company to meet full year expectations. Shares were up 3 per cent in early trading. Buy.
Ofgem fined British Gas, subsidiary of Centrica (CNA) £2.65m this morning after an investigation revealed the group had overcharged more than 94,211 customers, wrongly informed 2.5m that exit fees were chargeable and charged fees to 1,698. Given the hammering the energy supply groups have taken in recent times, this is an unhelpful turn of events. However, the market seems unconcerned, and shares in CNA are up 1 per cent this morning. Sell.
OTHER COMPANY NEWS:
Interim numbers for oil services group Petrofac (PFC) show a decline in the order backlog year-on-year, though a provisional agreement for a $600m engineering procurement and construction contract in Algeria, announced today, should provide some solace. As standard for the group, the bottom line was heavily impacted by impairments, largely related to the JSD6000 and Greater Stella disposals, the proceeds of which should help to reduce net debt by the end of the year.
Shares in Micro Focus (MCRO) were up 3 per cent this morning, after the software group announced the commencement of a share buy-back programme with an initial tranche of up to $200m. This follows the company’s agreement back in July to sell its SUSE business for a total cash consideration of around $2.5bn. Shareholders voted to approve this sale on 21 August, and – subject to certain conditions and clearances – it is expected to complete in the first quarter of the 2019 calendar year. Citi is conducting the buyback programme.
Gym Group (GYM) reported a 36 per cent increase in sales during the first half to £53.8m, with group adjusted cash profits up 28 per cent to £17.5m. Pre-tax profits fell 14 per cent to £5.1m due to £1m of exceptional costs, mainly relating to the acquisition of easyGym. Strip this out and profit before tax would have increased 8.4 per cent. Six new gyms opened during the first half, along with the acquisition of 13 easyGym sites in July, bringing proforma site number to 147. Shares fell more than 1 per cent in early trading.
Shares in Diploma (DPLM) are up 3 per cent this morning after the group announced trading ahead of expectations for the year to September 2018. Organic growth beat analyst forecasts at 7 per cent, led by strong growth in the seals and controls divisions. In less positive news, chief executive Richard Ingram has stepped down from his position and from the board with immediate effect. Mr Ingram has only been in the position since May, but analyst Peel Hunt saw the quick action as a positive. Hold.
