An attack on Saudi oil infrastructure which could remove a sizeable chunk from global production has resulted in a spike in the oil price, and subsequent dip in equity markets.
IC TIP UPDATES:
MJ Gleeson (GLE) reported an 11 per cent rise in pre-tax profits for the year to June, with a 25 per cent rise in sales volumes and a slight tick-up in average sales price offsetting build cost inflation. The low cost housebuilder’s strategic land business completed nine land sales and delivered a small increase in operating profit to £13m. Management has decided to retain the business following a strategic review of the business. Buy.
A Sky News report from the weekend suggests that a consortium of infrastructure funds – Dalmore, Equitix and GLIL Infrastructure – are in advanced talks to purchase a 20 per cent stake in the UK’s fleet of nuclear power stations for £1.2bn. Centrica (CNA) currently owns a 20 per cent stake in the eight power stations, with the remainder controlled by EDF. Centrica is aiming to exit nuclear power generation completely and RBC Capital Market notes the prospective arrangement to divest half its holdings would leave it with “an awkward 10 per cent remaining stake”. The report suggests any deal could also face delays due to ongoing reactor outages. Shares are up 2 per cent this morning. We remain sellers.
For the first half to June, Learning Technologies (LTG) enjoyed an 85 per cent increase in revenues to £62.6m. Recurring revenues constituted 74 per cent of the top line, up from 51 per cent. PeopleFluent – acquired in May 2018 – has been successfully integrated and is expected to return to growth in 2020. Adjusted operating profits climbed by 134 per cent overall to £19.4m. Statutory pre-tax profits landed at £6.8m, up from £1.3m. For the full year, the group is trading in line with its upgraded expectations announced in July. Buy.
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Shares in Alfa Financial Software (ALFA) plunged by more than a fifth this morning on the news that full-year profits for 2019 will land significantly below management’s previous expectations. Half-year revenues are expected to come in at around £31m – down from £32.9m – with operating profits at around £5m, down from £8.6m. This reflects delays in the implementation of some projects, and lower customer spend on optional upgrades and non-critical work, amidst macro-uncertainty. Full-year baseline revenue is expected to sit between £63-65m. Alfa expects to award remuneration increases for its delivery teams ahead of inflation rates, and it expects some one-off legal costs in the second half.
Eddie Stobart Logistics (ESL) warned that underlying operating profit for the full 2019 financial year will be “significantly below the board’s expectations” due to poor performance, delays in the implementation of operational efficiencies, provisions made against customer receivables, and delays on a significant property consultation project. It’s also taken on more debt following “substantial” demands on working capital, and is in discussions with its lenders as it relies more heavily on existing debt facilities. Eddie Stobart has yet to report it interim results, and shares will remain suspended at 71p until it does so.
OTHER COMPANY NEWS:
Independent hospital operator Spire Healthcare (SPI) has seen a 3.4 per cent increase in revenue to £492m for the six months to 30 June, with growth across all payor groups. Revenue from private services (comprised of self-paying patients and those covered by private health insurance) has risen by 4.1 per cent to £336m whilst NHS sales are up 2.5 per cent, driven by higher outpatient revenue. The group has swung to a £9.6m pre-tax profit from losses of £2.2m, largely down to lower exceptional costs from hospital impairments.
Tullow Oil (TLW) and Eco Atlantic Oil and Gas (ECO) have another hit in Guyana. The companies said the Joe-1 well had 14 metres net oil pay, following on from the Jethro well success last month. Tullow, which owns 60 per cent of the Orinduik block, saw a 10 per cent share price jump on the news, while 15 per cent-owner Eco Atlantic rose 4 per cent. The find was “smaller than expected”, according to Bank of Montreal analyst David Round. He said it was unlikely Joe-1 would be developed as a standalone project.
Shares in Horizon Discovery Group (HZD) are up 3 per cent this morning after the release of its half-year results. Pre-tax losses as the gene-editing specialist narrowed to £5.3m in the period, from £7.6m last year, while the gross margin once again improved strongly, this time up 500 basis points to 68.5 per cent. Management made no changes to expectations for the full-year, but the group’s performance was enough to earn a recommendation upgrade from broker Peel Hunt.
Shares in palm oil producer MP Evans (MPE) fell nearly 5 per cent in early trading after it revealed that operating profit during the first half of 2019 was $1m (£0.8m) compared to $10m during the first half of 2018 due to a “significantly weaker” price for crude palm oil and palm kernels. Add in the effect of an increase in finance costs and tax charges, and the company fell into an after-tax loss of $0.52m. This was despite a 6 per cent increase in crop in the period, and a 3 per cent increase in crude palm oil produced.
Ian Livingston, the chairman of listed hedge fund Man Group (EMG), is to step down at the end of 2019, after almost four years in the role. He will be replaced by non-executive director John Cryan, who served in a tumultuous two-year stint as chief executive of Deutsche Bank.
