IC TIP UPDATES:
De La Rue (DLAR) expects adjusted operating profit for the first half of 2020 to be in the “low to mid single-digit millions” with the full-year total “significantly lower” than market expectations. It had previously guided in May that the FY2020 figure would be “somewhat lower”. The group has also announced that recently appointed chief executive Clive Vacher will be conducting a “detailed review” of the business, promising an update alongside interim results on 26 November. Shares are down 22 per cent this morning. Sell.
AA (AA.) has announced the addition of Aviva (AV) to its broker panel for motor insurance, the first external insurer to join in over a decade. Aviva has 16m customers in the UK and insures 10 per cent of cars on the road. AA is hoping the move will help expand the potential market for its broker and provide competitive premiums for AA members and customers. Shares are down 1 per cent this morning. Sell.
Severn Trent (SVT) has announced that Christine Hodgson has been appointed as the next chair of the company, succeeding Andrew Duff upon his retirement in April 2020. Due to join the board as a non-executive director from 1 January, Ms Hodgson is currently the chair at Capgemini. The news follows the release of regulator Ofwat’s service delivery report yesterday noting a “severe deterioration” in customer satisfaction at Severn Trent and its Welsh arm Halfren Dyfrdwy. Buy.
KEY STORIES:
Though Standard Chartered (STAN) remains locked in a dispute with shareholders over executive pay, the lender has provided further evidence that its turnaround plan is bearing fruit. In the three months to September, the group’s underlying pre-tax profit rose 16 per cent, while the return on tangible equity climbed 160 basis points to 8.9 per cent. And while there was “broad-based growth across all segments and regions”, the corporate and institutional, and private banking divisions were well up on the previous year. The market has reacted positively to today’s update in early trading, though mention of “growing headwinds” may leave some doubtful that a 10 per cent return on tangible equity by 2021 is possible.
OTHER COMPANY NEWS:
Australian mining company Adriatic Metals has announced it will list in London by the end of the year. It is developing a polymetallic project in Bosnia and Herzegovina that includes a historic openpit mine and other brownfield prospects. Adriatic floated on the ASX last year and is trading 450 per cent higher than the listing price of A20ȼ (11p). In its announcement, the company also said it was raising A$20m to fund development of the Vareš project.
Serco (SRP) has signed a new contract with the Ministry of Justice to provide prisoner escort and custody services for the larger South of England region. Starting on 29 August 2020, the contract has a total estimated value of £800m over a ten-year term, although £4m in mobilisation costs will be charged to 2020 profit. The group’s current contract only covers London and the East of England and whilst revenue for 2019 is expected to be around £41m it anticipates making a loss of around £6m.
