Shares in London are finally feeling the weight of political uncertainty with the FTSE100 down sharply today. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
IC TIP UPDATES:
Debenhams (DEB) could be about to secure itself a £200m lifeline as it battles Sports Direct’s (SPD) Mike Ashley in his attempt to take control of the company. Reports emerged last night that the retail tycoon had suffered a setback in his campaign after it turns out the near 30-per cent stake Sports Direct owns in Debenhams is held in a third party nominee account, rendering Mr Ashley’s call for a general meeting invalid. It’s said Mr Ashley has since sorted the required paperwork and re-instigated his call for a shareholder meeting. However, Debenhams has said its lenders have until next Thursday to approve a new refinancing plan, which would allow it to turn down Mr Ashley’s own offer of a £150m emergency loan (conditional on his appointment as chief executive). We remain sellers.
easyJet (EZJ) announced that 49.92 per cent of its shareholders are EU nationals, still below the 50 per cent plus one share threshold required by EU regulation following Brexit. New EU regulation will give airlines 6 months to comply with applicable EU ownership and control requirements following a "no deal" Brexit, provided that an airline submits an acceptable remedial plan. If by this time easyJet has not met the required threshold, then it will suspend the voting rights of shares owned by non-EU investors. The airline looks better prepared than some of its peers and has been clear in its communications with the market. Buy.
Shares in SDX Energy (SDX) are down 8 per cent this morning, after the North African explorer-producer posted an underwhelming set of full-year numbers. A $5.7m exploration write-off, a $3.5m impairment charge, and a 98 per cent tax charge meant net profit came in at just $0.1m, compared with $28.3m in 2017. The previous year’s figures were arguably skewed by gains on the revaluation of the Circle assets, though a lower capital expenditure bill in 2018 failed to stop a decline in net cash to $17.3m. Production guidance for 2019 has been reduced, and reserves are down. Under review.
KEY STORIES:
Smiths Group (SMIN) will demerge its medical arm and list the business separately, as announced in November. The technology group expects to complete the process during the first half of 2020, having spent years trying and failing to find a home for Smiths Medical, most recently during summer 2018. Elsewhere, half year results revealed that statutory pre-tax profits were down 13 per cent on the prior half year, in part led by the costs of guaranteed minimum pension equalisation. Shares were flat on the announcements.
Shares in Thomas Cook Group (TCG) fell 5 per cent in early trading after the struggling travel group announced plans to accelerate its UK efficiency programme. It’s planning to close 21 shops, bringing the total number of retail locations to 566, along with hundreds of job cuts. More and more holidaymakers are switching online, accounting for 64 per cent of all Thomas Cook bookings in the UK last year. Growth in online has been the fastest in all sales channels, rising by 30 per cent in 2018 with continued strong momentum. The market reaction suggests this may not be enough.
Late yesterday afternoon, Taptica (TAP) announced that all resolutions were duly passed at its extraordinary general meeting held earlier in the day – including the resolution to authorise the directors to allot up to 68,343,888 new Taptica shares on a non-pre-emptive basis pursuant to the terms of the offer to purchase the entire share capital of RhythmOne (RTHM). RhythmOne’s court meeting takes place today (22 March), as does its general meeting. The last day of dealings in, and for registration of transfers of, and disablement in CREST of RhythmOne shares is 29 March 2019. The delisting of RhythmOne shares is expected by 7am on 2 April 2019, with the admission of new Taptica shares to trading on Aim expected by 8am the same day.
OTHER COMPANY NEWS:
Senior (SNR) has been selected by defence company Saab to supply components for Boeing’s T-X advanced pilot training system. Senior will provide the Bleed Air Duct System and the APU Exhaust duct assembly to Saab, and will manufacture in the US. The shares were unmoved on the announcement.
Shares in Sanne (SNN) nudged up in early trading after the asset management support services specialist reported a healthy 27 per cent rise in annual revenues to £143m and a 6 per cent improvement in pre-tax profits to £23.7m. A lot of that came down to a slew of new business wins, which contributed roughly £24.5m-worth of revenue in 2018. Margins also bounced back in the second half following a period of investment, with further growth expected this year as market conditions remain favourable.
Kosmos Energy (KOS) is to redeem the $525m of outstanding senior secured notes due 2021, by issuing $650m in new senior notes which mature in 2026. The difference will partly used to repay a portion of the oil firm’s revolving credit facility, together with fees and expenses, but a coupon of 7.125 per cent still highlights the high price bondholders can demand for a heavily leveraged, exploration-focused oil and gas firm.
