IC TIP UPDATES:
Ideagen (IDEA) has won a new software-as-a-service (SaaS) contract with a ‘tier 1’ airline customer, worth £1.2m over a three-year term. The airline operates more than 3,000 flights across six continents. It will use Ideagen’s safety management software Coruson, to enable 65,000 users to log and report safety incidents. Buy.
Pennon (PNN) has announced a 5.4 per cent increase in adjusted cash profits to £593m for FY2019. Driven by the build out of its energy recovery facilities, the waste management division Viridor saw underlying revenue increase by 8.5 per cent to £853m. Although underlying revenue growth at South West Water was more muted at 1.7 per cent, the group has achieved fast-track status for the next regulatory period, AMP7. With £19.9m in non-underlying charges, statutory pre-tax profits declined by 1 per cent to £260m. Recommendation under review.
Atalaya Mining (ATYM) has said its legal issues in Andalucia are not having an impact on operations at the Proyecto Riotinto copper mine. The company’s chairman Roger Davey said in his annual report statement the legal body that issued the invalidated mining permit was supportive of the “continuation of the operation” and expressed confidence in the case having “no impact” on production. Last week, the miner reiterated its 2019 guidance of 45,000 - 46,500 tonnes of copper, off the back of March quarter production of 10,219t. Earnings per share were up 58.5 per cent year on year in the first three months of 2019 to €0.10, despite a lower realised copper price. Buy.
Urban & Civic (UANC) reported a 7.8 per cent rise in adjusted NAV during the first-half, with the master developer completing 365 residential plots - 58 per cent of its annual target – and £96m in contracted forward sales. The interim dividend was raised 0.1p to 1.4p a share. Buy.
KEY STORIES:
FirstGroup (FGP) has begun the process of selling its embattled Greyhound coach business, while it is investigating the separation of First Bus from the rest of the group. Shares grew as much as 12 per cent in morning trading despite a mixed set of results that revealed a statutory pre-tax loss owed to impairment charges. There was good news for the group’s First Student division, the largest provider of school transport in the US, which saw margins improve to 9.5 per cent.
Shares in De La Rue (DLAR) dropped more than a quarter this morning as the group announced its pre-tax profits had plunged by almost 80 per cent for FY2019. Net debt has more than doubled to £107.5m. As the group continues its five-year transformation plan, chief executive Martin Sutherland will be stepping down and the business will undergo a reorganisation, seeking over £20m of annual savings by 2022. With the banknote print market becoming increasingly competitive, the group anticipates margin pressures and significant headwinds for the year ahead. Operating profit is expected to be “somewhat lower” in FY2020.
Shares in the Daily Mail and General Trust (DMGT) were up 9 per cent this morning following release of the group’s half-year results to March 2019. Statutory revenues dipped 3 per cent to £724m. But on an adjusted, underlying basis, revenues edged up 1 per cent, while pre-tax profits soared 19 per cent to £100m. During the period, DMGT distributed its stake in Euromoney (ERM) and a £200m special dividend. Its consumer media business saw a 1 per cent rise in underlying revenues to £343m amidst favourable advertising conditions. Overall, management’s full-year guidance “remains broadly unchanged”. But, the consumer media’s underlying rate of revenue decline is now expected to be in the low-single digits, rather than the mid-single digits.
OTHER COMPANY NEWS:
Johnson Matthey (JMAT) saw strong sales growth in its clean air division for its full year to March 2019, achieving its goal of 65 per cent market share of European light duty diesel vehicles. Its new markets arm saw lower operating profits, meanwhile, owing to investment in its eLNO battery material. The company also settled with a customer for £17m on a no-fault basis over contingent liabilities.
Restaurant Group (RTN) announced that its new chief executive, Andy Hornby, will assume his position on 1 August 2019.
Amino Technologies’ (AMO) ‘AminoOS’ software will power the delivery of internet-protocol TV (IPTV) services across a newly-deployed fibre network in Bolivia, which covers nearly all the country. Entel – the national telecoms operator in Bolivia – has started a major development of AminoVU set-top boxes running on AminoOS.
Inmarsat (ISAT) said this morning that Airbus Defence and Space has been selected as its satellite manufacturing partner, as part of a “ground-breaking development” of its global express (GX) network. The contract with Airbus is for the manufacture of three next-generation GX satellites, with the first scheduled to launch in the first half of 2023. The level of capital expenditure under this programme is in line with that provided for in Inmarsat’s long-term planning – so, there is no change to its overall capex guidance.
Equiniti (EQN) has announced the completion of the technical separation of its US division from Wells Fargo. The group should now be able to realise operating synergies which are being delivered in line with expectations and scale operations to support growth.
Adding further fuel to the nationalisation debate, Citizens Advice has published research today suggesting that UK energy, water, broadband and telephone networks have overcharged customers by £24.1bn over the past fifteen years – £11bn in energy from 2004-2019, £13bn in water from 2005-2019 and £100m in broadband and phone from 2014-2018. It attributes these overcharges to “misjudgements by the regulators” with forecasting errors over-estimating costs and investment risk. The charity is calling for companies to offer voluntary rebates on bills and for regulators to intervene if they fail to do so. A similar report into energy networks in 2017 resulted in three energy companies returning £287m to customers.
