Political intrigue at home and ongoing worries about the global impact of the coronavirus outbreak are dampening investor enthusiasm with equities mixed in mid morning trading. Click here for The Trader Nicole Elliott's latest thoughts on the markets.
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Pennon’s (PNN) water business South West Water has decided to accept Ofwat’s final determination for the next regulatory period, AMP7. This includes a totex allowance of around £2bn between 2020 and 2025. Pennon says this outcome will be taken into account as part of its ongoing review of the strategic focus, growth options and capital allocation for the wider group. There is no word yet on the potential sale of the waste management business Viridor. Buy.
Segro (SGRO), the real estate investment trust, bumped up its full-year dividend by 10.1 per cent at 20.7p, after it reported earnings in line with market expectations. The group, which develops and manages warehouses, also posted a 7.5 per cent increase in the value of its portfolio, driven by capital growth in the UK and continental Europe, up 2.5 per cent and 13.5 per cent respectively. The company has benefitted from the rise of e-commerce and urbanisation, with its shares up more than 40 per cent over the past year. Buy.
Technology-focused venture capital group Draper Esprit (GROW) has exited its stake in electric vehicle charging company Pod Point, at a price ahead of its latest fair valuation. The sale, to EDF Energy, gives Draper a three-year internal rate of return of 39 per cent, and brings the cash value of exits in the current financial year to £36m. Some of this cash has already been recycled into a Series B fundraising for Finnish software group Aiven. Buy.
Knights (KGH) has acquired Fraser Brown Solicitors, one of the largest independent law firms in Nottingham, for a total consideration of up to £8.38m. The payment comprises £2.83m in cash upon completion, the issue of £3.03m in 680,911 new shares and a deferred cash consideration of up to £2.42m. Fraser Brown serves a wide range of commercial and private legal services across the East Midlands, aligning with Knights’ strategy to increase its regional footprint outside of London. The acquisition brings 81 new fee earners and is expected to deliver a pre-tax profit margin in excess of 15 per cent once integrated. Buy.
Life insurance consolidator Chesnara (CSN) has a new chairman. Luke Savage, who has held top finance roles at both Standard Life Aberdeen and Lloyd’s of London, will take over from Peter Mason – who announces his retirement today. Mr Savage is already a non-executive director at broker Numis (NUM) and law firm DWF (DWF). Buy.
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Shares in the Royal Bank of Scotland (RBS) fell by more than 6 per cent this morning, despite a decent set of full-year results. Investors appear to have taken umbrage at the potential £1bn bill attached to the proposed restructuring of NatWest Markets, though the size of capital returns – including a 3p final dividend and a 5p special – was less than markets were expecting. A rebrand to NatWest Group, slated for later this year, is among a series of changes and multi-year plans unveiled today by newly-appointed chief executive Alison Rose.
AstraZeneca (AZN) has seen total product sales increase by 15 per cent at constant currencies to $23.6bn in 2019, driven by new medicines and growth in emerging markets. Sales of new medicines jumped by 62 per cent to $9.9bn and now represent 42 per cent of total product sales, up from 30 per cent in 2018. However, amid higher investment in research and development and increased selling and marketing costs, operating profit dipped 16 per cent to $2.9bn. Core earnings per share remained flat at $3.50, falling short of analyst expectations. Assuming an unfavourable impact from the coronavirus outbreak that lasts up to a few months, the group is guiding to core EPS growth in the mid to high teens in 2020.
NMC Health (NMC) has had a long week. On Monday, the Middle East-focused hospital owner and operator said its founder and director BR Shetty likely owned far less shares than thought, and claimed preliminary takeover talks with a company that said it was not interested the next day. Now, NMC has announced the resignation of director Khalifa Butti Omeir Bin Yousef. He was also involved in the share ownership mixup, alongside his business associate and fellow major shareholder Saeed Mohamed Butti Mohamed Khalfan Al Qebaisi.
Trifast (TRI) warned in a third-quarter trading update that its full-year adjusted pre-tax profits will sit near the bottom of analyst forecasts, with house broker Peel Hunt revising this figure down to £18.9m from £22m. The industrial fastenings manufacturer said that “market conditions have become more challenging than had been anticipated” since the release of its half-year results in November, bringing down revenue growth in a number of sectors. “A corresponding reduction in gross and operating margins against a semi-fixed cost base being further impacted by deferred start of production dates.”
Gemfields (GEM) has returned to AIM after over two years, with the former Pallinghurst Resources (now just called Gemfields) adding a London listing to a presence in Johannesburg and Bermuda. The emerald and ruby miner opened trading at 10.5p without raising any cash. There was tragedy at its Montepuez ruby mine a day before the return, when 11 people died during an “artisanal miner incursion”, in which 800 people forced their way onto the property. Gemfields said the deaths came from “ground collapse incidents”.
Mike Ashley’s Frasers Group (FRAS) is backing the British Retail Consortium’s campaign calling for government action on business rates. The group said some of its stores were “paying up to four times the rates bills they should be”, and that the current system “punishes those in greatest need of relief”. The UK retail sector has long been calling for action on business rates, arguing they are forced to pay a disproportionate share of the tax burden.
