After the FTSE100 breached the 7,000 level late last week, shares in London have consolidated that position with more modest gains in morning trading this morning. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Shares in Kainos (KNOS) were up 8 per cent this morning on the news that it expects results for the year ending 31 March 2019 to be ahead of current market estimates. In a trading update for the period 26 November to today, the company said that growth for its digital services business remains strong, while there is continued demand for the digital transformation and Workday services segments. The digital platforms business’s growth is “in line with previous guidance”. Buy.
Wizz Air (WIZZ) reported a 9.5 per cent increase in capacity during January to 2.92m seats, with passenger numbers up 10 per cent to2.57m giving load factor of 88.1 per cent. Over the rolling 12 months Wizz has increased capacity by 17.2 per cent to 36.9m seats, with passenger numbers up 18.5 per cent to 34m with a load factor of 92.4 per cent. Shares were flat in early trading. Buy.
The board of Ukrainian iron ore pellet miner and processor Ferrexpo (FXPO) has announced a comprehensive independent review, after "unexplained discrepancies" were found in the bank statements of a charity to which Ferrexpo donated $9.5m in the first half of 2018. The charity in question is Blooming Land, which was "established with the primary function of coordinating Ferrexpo's CSR programme", but has not received funds from Ferrexpo since last May. Deloitte, which apparently uncovered the discrepancy, has indicated to Ferrexpo that an unfavourable review outcome could "qualify or otherwise modify" its audit opinion relating to the full-year accounts, which are due to be published on 20 March. The shares, which have rallied alongside the recent spike in iron ore prices, are off 6 per cent today on the news. Under review.
dotdigital (DOTD) has extended its global premier technology partner status with Magento – an Adobe company – for a further three years. Magento is a provider of omnichannel commerce services. dotdigital announced separately that it has a new nominated adviser (NOMAD) – Canaccord Genuity. The shares were up 4 per cent in morning trading. Buy.
RPS (RPS) shares rose 7 per cent his morning following a positive trading update and news of an acquisition. The consultancy business anticipates full year profits before tax and amortisation to come in at £50.2m, down from last year’s level of £53.9m but ahead of some analyst expectations. Its acquisition of Corview, an Australian-based transport advisory consultancy, for a maximum consideration of AUD$32.0m (£17.7m), is its first since John Douglas took over as chief executive. Buy.
KEY STORIES:
Opioid addiction specialist Indivior (INDV) has announced plans to divest its rights related to the Sai Bo Song tablet in China to Zhejiang Pukang Biotechnology Co. for close to $123m (£94m). Pukang is a private company focused on vaccines and headquartered in Hangzhou, China.
Savannah Petroleum (SAVP) has signed its long-promised implementation agreement to finalize its complex Seven Energy deal. While management is now "highly confident" the Nigerian transaction will complete, it has come at a cost; namely an increase in the liquidity facility for the Seven restructuring, from $20m to $28m. It is not immediately clear if the additional funds raised two weeks ago will be put towards the advisory fees which Savannah has now decided to pay via the liquidity facility, though a 3 per cent rise in the share price this morning suggests some investors' doubts have been removed. The company now needs ministerial consent for the deal to close, which is expected before the end of March.
Taptica (TAP) has announced a recommended offer for RhythmOne (RTHM), following news of advanced discussions between the two last week. Were the merger to complete, RhythmOne shareholders would receive 28 Taptica shares for every 33 RhythmOne shares held. Taptica shareholders and fully-diluted RhythmOne shareholders would hold 50.1 per cent and 49.9 per cent of the company respectively. Based on RhythmOne’s 170.4p closing price on 1 February, the offer values its share capital at around £135m. Ofer Druker. currently executive chairman of Taptica’s Tremor Video business, is expected to become chief executive of Taptica and the enlarged group. Taptica plans to launch a $15m discretionary share buyback programme following the deal’s completion. Taptica’s shares were up 8 per cent this morning; RhythmOne’s were up 5 per cent.
Flybe (FLYB) confirmed that it had received an offer from Andrew Tinkler, the former chief executive of Stobart Group (STOB) who was fired as chairman of the company last year, for a capital injection if the deal with Connect Airways (of which Stobart is a member) fell through. Flybe management emphasized that this was not a formal offer, and that they still intend for the Connect Airways deal to complete. The airline also confirmed that Hosking Partners had submitted a valid request to convene a general meeting to elect Eric Kohn as a director of the company, and then conduct an investigation of the sale process.
Ryanair (RYA) reported a €20m (£17.5m) loss in the third quarter due to higher fuel and staff costs and a drop in average fares to under €30 due to excess capacity in Europe. Management called the performance “disappointing” but called this financial year “the year of investing in people”, including the 20 per cent increase in pilot pay. The group structure will also change. A small senior management team will oversee the development of four airline subsidiaries - Ryanair DAC, Laudamotion, Ryanair Sun and Ryanair UK - each with their own chief executives and management teams. Michael O’Leary will step down as CEO of Ryanair DAC and take up the role of group CEO. Shares fell 5 per cent in early trading.
OTHER COMPANY NEWS:
Serco (SRP) has signed a contract with Bupa, providing business support services to the medical group on its contract with the Australian Defence Force. The deal is worth an estimated £560m over its initial six-year term, and has the option for up to four, one-year extensions. The deal will bolster Serco’s image as a company in turnaround. It recently won its largest ever contract and is expected to return to positive cash flow within the next couple of years.
Shares in Hurricane Energy (HUR) are down 6 per cent again this morning, after the oil and gas group said the buoy hook-up operation for the Lancaster field's early production system failed. No damage has been reported to the Aoka Mizu vessel. The first attempt to hook up the buoy on the 18 January also failed.
The Mercuria-backed Argentina-focused oil and gas explorer Phoenix Global Resources (PGR) has amended the terms of its convertible revolving credit facility, granting the group $50m of extra funds. Mercuria is providing the funds, which will be used to "support the first phase of the group's 2019 business plan".
Cybersecurity group Avast (AVST) has sold a non-core asset – ‘managed workplace’, its remote monitoring and management product – to Barracuda Networks Inc. For the year ending December 2018, managed workplace saw low-teens revenue in $m and a “materially lower margin profile” than the rest of the company.
