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News & Tips: Countrywide, Advanced Medical Solutions, Investec & more

Equities in London are set to end the week on a downbeat note
November 29, 2019

London shares are off colour in mid-morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets. 

IC TIP UPDATES: 

Countrywide (CWD) has sold commercial arm Lambert Smith Hampton to John Bengt Moeller for £38m, representing six times the disposal’s adjusted cash profits. The estate agency will use the proceeds to cut debt and has also agreed an amended credit facility with its lenders. The group is proposing a 50-for-1 share consolidation to improve market liquidity by reducing the volatility and spread. However, we remain sellers

Advanced Medical Solutions (AMS) has revealed that it has been notified by one of its third party medical device sterilisation partners of a failure at one of their UK e-beam sterilisation facilities. Therefore many of the December orders for the Company's topical adhesive product, Liquiband, will not be sterilised and shipped to customers during the 2019 financial year. The impact will not be known until after the year-end but could be up to £2m in adjusted cash profits. Despite this blip, we remain buyers

Valeura Energy (VLU) has seen its first sizeable share price gains in two months after positive news around the Devepinar test well at its Thrace basin gas project in Turkey. Valeura said Devepinar had the “best gas flow rates” from the three wells tested so far, but cautioned that they were early numbers. The company’s share price was up 23 per cent to 60p on the news. Buy

KEY STORIES: 

Shareholders in Investec (INVP) have a timetable for the spin-off of the financial services group’s asset management arm. The business, which will be re-branded ‘Ninety One’, is scheduled to be carved out on 13 March and listed separately on the London and Johannesburg stock exchanges – assuming all approvals are met. On a pro-forma basis, the de-merger is expected to improve Investec plc’s CET1 ratio by 130 basis points, though transaction costs are estimated to be “at least £56m”.

Shares in Reach (RCH) rose by more than a tenth after the group said that it was no longer in talks to buy certain assets from JPI Media – and, in the same breath, delivered a positive trading update. To the latter point, for the five months to 24 November, revenues fell by 4.4 per cent – better than the 6.6 per cent like-for-like decline seen a year earlier. The group also noted good cash generation and said it expects to see a net positive cash balance as at the 29 December year-end. Management is confident about full-year performance meeting its expectations.

OTHER COMPANY NEWS: 

Northgate (NTG) has seen revenue decline by 4.3 per cent to £358m in the first half of the 2020 financial year, with a 13.8 per cent fall in pre-tax profit to £24.8m. Whilst revenue from vehicle hire increased by 2.5 per cent to £266m, vehicle sales dropped by a fifth to £91.9m. The group has also agreed to a merger with Redde (REDD) under which each Redde shareholder will receive 0.3669 new Northgate shares for each Redde share, and Northgate will own 54 per cent of the combined entity. Shares in Northgate are down 4 per cent this morning. 

The Daily Mail and General Trust (DMGT) has announced that its consumer media business has acquired the ‘i’ - the UK national newspaper and website - from JPI Media for £49.6m. DMGT notes that the ‘i’ has retail sales of around 170,000 newspapers every weekday, and over 190,000 copies of the ‘iweekend’ every Saturday. Its ‘inews.co.uk’ website attracts around 300,000 daily unique browsers. During 2018, the ‘i’ generated £11m in cash operating income and operating profits from £34m revenue. DMGT said it is expected that the deal will be reviewed by the UK’s Competition and Markets Authority (CMA).