Shares in London are down once again. Click here for The Trader Nicole Elliott's latest take on the markets.
IC TIP UPDATES:
SafeCharge (SCH) reported 56 per cent transaction growth to 118m over the half-year to June, while transaction value rose 59 per cent to $6.7bn. In turn, revenues were up 26 per cent to $66.8m, and gross profits also improved – though the gross margin declined slightly, dampened partly by a changing mix in the customer base. Pre-tax profits were down 2.5 per cent to $13.2m, after higher amortisation and depreciation charges, and currency-related finance expenses. Still, the cash position remained strong and the interim dividend was lifted 15 per cent. The shares were up 4 per cent in morning trading. Buy.
Xeros’s (XSG) revenues – using its ‘earned income’ figure – were up 77.3 per cent to £1.9m for the half-year to June. And there were some hints of progress: sales of commercial laundry machines improved, and in July, the group signed a licensing agreement with Sea Lion, a Chinese manufacturer of commercial washing machines. Meanwhile, pre-tax losses narrowed from £15.1m to £13m. Cash sat at £10.4m as at June. Still, the company expects to raise more funds this year to help complete “the commercialisation of our current applications by the end of 2019”. The shares were down 6 per cent this morning. Under review.
Legal & General (LGEN) has underwritten the largest ever UK bulk annuity transaction, completing the £4.4bn buy-in of British Airways pension liabilities, covering nearly 22,000 pensioners. That takes the total global de-risking transactions completed during the year to date to £6bn. Buy.
Higher oil prices and higher production levels meant revenues doubled for Amerisur Resources (AMER) in the six months to June. However, an increased rate of drilling activity has led to a negative movement in working capital, in turn constraining the build-up in cash. Under review.
On a reported basis, interim sales at GVC Holdings (GVC) increased from £375m last year to £1.11bn this year thanks to its acquisition of Ladbrokes Coral, which completed on 28th March. On a proforma basis revenue was up 8 per cent to £1.69bn, with a 17 per cent increase in underlying operating profit to £273m. The gambling company is looking to the US to make up for a decline in UK retail. It recently agreed to a joint venture with MGM reports to create a sports betting and online gaming platform in the US. Meanwhile, UK retail like-for-like net gaming revenue fell 3 per cent during the first half. Shares were flat in early trading. Buy.
Shares in Ricardo (RCDO) were down this morning after the group reported sharp drops in statutory profits and EPS, brought about by restructuring and challenges in the automotive sector. However, both the order intake (new contracts won) and order book (work yet to be completed) grew to record levels in the year. And cash conversion remained strong, sending net debt down 31 per cent. The long-term drivers are still in place. Buy.
KEY STORIES:
Any illusions that Ophir Energy (OPHR) might still get its Fortuna LNG project over the line evaporated with the independent’s half-year numbers this morning. Though the group still holds the licence, the development has been impaired down to just $300m, and interim chief executive Alan Booth can merely offer a promise of “continuing to work to deliver value for our shareholders” to get something out of the project. A strategic update, also out today, states the London office will be “downsized”, the headquarters moved to Asia, and the focus switched from exploration to production.
On Wednesday, with fifteen minutes left in the trading day, Bushveld Minerals (BMN) informed the market that industrial action has continued at its Vametco vanadium mine, a week after it first began. The shares dropped. This morning, the company is out with another major piece of news: the acquisition of Sojitz Noble Alloy’s interest and rights in SMC, which in turn owns 75 per cent of Vametco, for a total consideration of $20m. The shares are up a fifth.
OTHER COMPANY NEWS:
French oil supermajor Total (TTA) has agreed to exercise an option to acquire from Eco Atlantic Oil & Gas (ECO) a 25 per cent working interest in the Orinduik block offshore Guyana. The Aim junior explorer, which retains a 15 per cent stake in the block, will be paid $12.5m for the privilege. Speculation that the option might be exercised, together with continued success for ExxonMobil in the acreage, has caused Eco’s shares to jump 55 per cent in the last fortnight.
Hurricane Energy (HUR) has completely the installation of its early production system at its Lancaster field. The offshore infrastructure is now ready for the arrival of the FPSO (floating production, storage and offloading) facility, which is being completed in Dubai.
Morrisons (MRW) has announced an interim special dividend worth 2p a share after a solid 4.9 per cent in like-for-like sales during the first half. The second quarter proved particularly successful, giving rise to a 6.3 per cent improvement in underlying sales to a nine-year high. However, several accounting technicalities, including a £51m net adjustment to cover things like successful bond tender offers and a £28m hit from a change in estimating stock provisions left reported profits down nearly a third to £142m. Bond tender costs and lower disposal proceeds also had a knock-on effect on free cash flow, although net debt still fell by £44m to £929m.
