After heavy selling in the US overnight, London's blue chips are off colour again this morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
KEY STORIES:
Animal health group Dechra Pharmaceuticals (DPH) has completed its acquisition of Laboratorios Vencofarma do Brasil. Venco - as it’s known - brings with it a large vaccines portfolio and other food producing animal products which it sells mainly in Brazil. The deal takes Dechra into this market, as well as other South American territories, with significant investments planned over the next two to three years.
Shares in National Grid (NG.) are down 6 per cent this morning, after regulator Ofgem published details of the potential allowed returns under the next RIIO regulatory period. The allowed returns are now in the 3-4 per cent range, from 3-5 per cent previously. This compares with6.7-7 per cent in the previous regulatory period. National Grid’s management has expressed disappointment in the proposal, saying it does not reflect the risk borne by transmission networks. SSE (SSE) is also marginally down. We are reviewing our buy recommendation.
Shares in Petrofac (PFC) are bucking the market drop this morning, after the oil and gas services group said net debt had fallen, its order backlog has held up at $10.2bn, and new order intake has reached $5bn so far in 2018. The group, whose shares have shed 30 per cent since the start of October, is also bidding on $15bn of new projects in early 2019.
Redde (REDD) confirmed that the positive trading performance at the start of the financial year has carried through into December. Sales rose over the same time last year, reflecting continued growth in trading volumes, with trading profits ahead of the corresponding period last year.
Shares in Telit Communications (TCM) were down more than a tenth this morning on the news that the Financial Conduct Authority (FCA) has expanded the scope of its ongoing investigation announced on 27 March this year. This is to “consider the accuracy of earlier announcements by Telit”, including the group’s trading update from 25 April 2017 and the placing announced on 4 May 2017, which completed the next day. In its announcement this morning, Telit noted that its board of directors has completely changed since the respective events. It added that it has fully cooperated with the FCA so far, “and will continue to do so”.
XLMedia (XLM) has announced a programme to buy back shares worth up to $10m. The programme will run from today until the conclusion of the 2019 AGM. The group noted that the buyback programme will be funded from its existing cash balances, which were around $42m as at June 2018. It will not affect XLMedia’s dividend policy of paying out at least half of retained earnings. Non-executive chairman Chris Bell said management had decided this was an “opportune moment to undertake a share buy-back initiative” as part of its “broader strategy to deliver shareholder value, coupled with recent weakness in our share price”. The shares were up 3 per cent this morning.
