Ergomed shares dip on contract delays
Pharmaceuticals developer Ergomed Plc (LON:ERGO) have seen their shares dip in the wake of a disappointing first half.
The company’s status was downgraded from ‘buy’ to ‘hold’ by analysts at Numis, as shares dipped 27 percent today, down to 173.25p. Looking to the rest of the year, the firm has warned its shareholders that delayed contracts and reduction in scope of some contracts will lead to profits staggering 5 percent behind the market consensus.
Because of this, the company expects 2018 profits post tax, depreciation and amortisation to amount to little more than the adjusted profits of 2.8 million for 2017. A spokesperson for the firm said the AIM-listed company’s profits were “below management’s expectations”, as there is now a backlog of contracts worth just over 100 million GBP.
“This year, we anticipated exceeding market expectations for revenue, allowing us to more than cover the cost of the additional investment required to deliver our strategic goals for 2020. It is unfortunate that delays and reductions in scope of a limited number of contracts has resulted in us investing ahead of the curve. The business overall is in robust health, as demonstrated by a backlog approaching GBP100 million, and we are confident 2018 will provide a solid foundation for future growth”, said chief executive, Stephen Stamp.
Analysts from Numis then noted that Ergomed, “is constantly hiring ahead of anticipated revenue growth”, thus a delay in anticipated revenue, alongside a resource surplus, was bound to drive margins lower.
Both the firm and the broker analysing them were equivocal in response to the delays, and the company’s next course of action. They certainly appear less proactive than their larger counterparts.
IAG launches new airline on 19 days’ notice
IAG (LON:IAG), parent company of British Airways, is set to launch its new budget airline with less than three weeks’ notice.
The name of the new airline will be Anisec Lufthart for logistical reasons – as the firm has an operating certificate in that name – but to all intents and purposes the airline will be branded ‘Level’, after their low cost transatlantic service. The new airline will operate from Austria, with the first flight between London Gatwick and Vienna scheduled for July 17th. This steps directly on the toes of Laudamotion, which also operates out of Austria and is 75 percent owned by Ryanair.
IAG’s chief executive, Willie Walsh, said, “We are launching this new short-haul subsidiary to provide Austrian consumers with more flight choices across Europe”.
Following the success of their Barcelona-based short haul service, Vueling, it was only a matter of time before the firm weighed in on the Austria market.
While the decision to launch the airline on such short notice is an unusual one, an IAG spokesperson said that they are, “[…] so confident that the new operation will be a success, that tickets will fly off the shelves like hot cakes.”
One can only imagine the move is an attempt to capture the market of summer holiday-makers. While the firm’s share price is fairly steady, they have seen one of their sharpest dips this year with prices dropping from 723.6-669.4p this week. Today, they have dropped 11.2p or 1.67 percent, which isn’t positive, but certainly less severe than the collapse of their African counterparts, Fastjet.
BP leads the way for electric vehicles
BP (LON:BP) has just bought Chargemaster Plc for 130 million GBP, in an effort to diversify its operations and accommodate the increasing demand for electric vehicles.
The deal comes in the wake of BP announcing a five year contract with analysis engineering firm AS Mosley, and after President Trump eased tensions by calling off the next round of tariffs yesterday.
BP will take over Chargemaster’s 6500 existing charge points in the UK, and hopes to build new, fast charge points at its petrol stations around the UK.
The decision to buy Chargemaster came after BP released projections, stating that the number of electric cars in the UK would grow from 135,000 to 12 million by 2040. Indeed, the world’s largest car maunfacturer – Volkswagen (LON:VLKAY) – has said it will release an electric version of every one of its 300 models by 2030.
“Bringing together the UK’s leading fuel retailer and its largest charging company, BP Chargemaster will deliver a truly differentiated offer for the country’s growing number of electric vehicle owners”, said Tufan Erginbilgic, Chief Executive of BP downstream.
The move is a natural step, not only are they tapping into a growing market, but a market that threatens the profitability of their existing products. Shell had a similar idea last year, buying charging company NewMotion (LON:NWMO). As such, BP’s move to buy the UK’s largest car charging firm, is a step in the right direction to becoming the leading provider of energy to low-carbon vehicles.
BP spokesperson David Nicols, added, “Chargemaster is a leader in the UK market. We want to learn from them, and eventually, yes, grow the business worldwide.”
The company are ambitious and investing in their future, following a successful start to 2018. Irrespective of the turmoil in the rest of the FTSE 100, BP’s share price has seen modest growth form 560.7 GBX last Friday, to 581.7 GBX today.
London ‘most dynamic city in Europe’, according to new research
London is the most dynamic city in Europe, according to new research from Savills IM, boosted by its new Elizabeth Line and ability to adapt to economic changes.
The UK capital has taken the top spot for the second year running, closely followed by Cambridge, Paris, Amsterdam and Berlin in second, third, fourth and fifth place respectively.
Real estate investment manager Savills IM surveyed 130 European cities as part of the research, across six categories of innovation, inspiration, inclusion, interconnection, investment and infrastructure.
Irfan Younus, head of research in Europe for Savills IM, commented on the report:
“While London’s continued dominance as Europe’s leading ‘supercity’ will reassure those investors concerned by Brexit, new developments such as Crossrail, which opens later this year, and the Greenwich Peninsula – a formerly underdeveloped area that is fast becoming a vibrant community for living, working and recreation – underlines the scale of its ability for self-improvement.”
Jules Pipe, the deputy mayor of London for planning, regeneration and skills, said its excellent transport links were a major player in its high ranking, with Crossrail and the Elizabeth line opening London up for investment and regeneration.
Just Eat shares dip following cautious projections
Following a realistic meeting with its investors about the costs of investment, Just Eat’s (LON:JE) share price dipped 7.1 percent to 755 GBX by the end of trading yesterday.
This drop saw the company become the FTSE’s ‘biggest faller’ on Wednesday, and although its share price has rallied to 775 GBX within the first 3 hours of trading today, it still hasn’t recovered to the levels it saw of over 820 GBX before the investor meeting.
The meeting came as Just Eat reminded investors not only of the importance of infrastructural investment to improve the business, but also of the steep costs that such expenditure would incur. For instance, the firm made a pre-tax loss of 76 million GBP in 2017, following investment in doing its own deliveries.
While analysts such as Liberum expected “a positive message” at yesterday’s Capital Markets Day, such investment is necessary to allow Just eat to keep up with its rivals. Indeed, Deliveroo poses a threat, having caused Just Eat’s share price to dip 7 percent last Wednesday, following the release of its new ‘Marketplace+’ feature.
Going forwards, Just Eat have already been proactive with their investment, having struck a deal to coordinate a delivery service with food outlet Subway.
“We’re excited to welcome Subway to Just Eat, as part of our continued efforts to offer customers more of their favourite food brands at the tap of the app.” said Graham Corfield, UK Managing Director.
This deal could mean that Just Eat adds to its collection of market-leading food outlets including KFC and Burger King – with its total number of 28,000 outlets dwarfing Deliveroo’s 10,000.
Shire shares up on failure of Takeda shareholder revolt
Shire’s (LON:SHP) share price rose on Thursday, after a group of Takeda shareholders failed to pass a proposal to defeat the company’s proposed $62 billion takeover of the Irish pharmaceutical company.
130 ex-Takeda employees hold one per cent of the company’s shares and have previously tried to use their influence to sway the actions to the Takeda board. The group had hoped to rally one third of shareholders in order to block the proposed takeover by Takeda, but was defeated at the company’s annual general meeting.
However, according to Reuters it did not expect the motion to pass, and are working on rallying another third of shareholders against the proposed acquisition. Last year the same group tried to stop the appointment of outgoing chair Yasuchika Hasegawa to an advisory position at the company.
Shire shares were boosted by the defeat on Thursday, becoming one of the bigget risers on the FTSE 100 and are currently trading up 2.17 percent at £41.83 (1115GMT).
Hunting Group shares fall despite “comfortable” market expectations
Hunting plc (LON:HTG) shares fell on Thursday morning, despite the group saying that they were “comfortable” with market expectations for the full year 2018.
The oil and gas supplier reported a mixed performance, with regional trends weighing on results in certain areas. Performance in the US offshore, Asia Pacific and Middle East markets had improved, but there continued to be lower drilling activity in Europe and across Canada.
The group’s US segment of Hunting Titan returned to profitability over the period, reporting a performance ahead of market expectations. However, other businesses in the group’s portfolio reported an operating loss.
Net cash balance stood in excess of $30 million expected at 30 June 2018.
However, Hunting remained cautious going forward and warned on the impact of weak market conditions.
“Given current market conditions, and the outlook for the remainder of the year, management continue to take a cautious view on the rate of recovery in the wider market in H2 2018, but currently remain comfortable with the market consensus for the 2018 full year outturn,’ the company said.
Shares in Hunting plc (LON:HTG) are currently trading down 2.30 percent at 806.00 (1055GMT).
Morning Round-Up: FTSE & EU shares down, worries on trade war
The FTSE and European share markets began trading marginally up on Thursday morning, before dropping into the negative mid-morning.
The FTSE is currently down 0.11 percent, with the DAX down 0.46 percent and the IBEX down 0.57 percent (1027GMT).
Fiona Cincotta, Senior Market Analyst at City Index, commented on stock movements in the US and Asia overnight:
Gains in US energy stocks, driven by further rises in the oil price, have been offset overnight by selling in the technology sector, resulting in a drop of 165.52 points in the Dow Jones. The S&P 500 also ended down at 2,699 despite having been 0.85% in positive territory at one point during the day’s trading in America.
:The reversal was caused by ongoing worries about the evolving tit-for-tat trade war spat emerging between the US and China, where the rhetoric seems to be heating up. Threats by the White House to curb Chinese investment in the US seems to have hit technology stocks hardest, with the NASDAQ down 1.5% at 7,445.
“Asian stocks followed suit, also dropping to nine month lows overnight, despite the fact that the White House has seemed to be softening its stance slightly on China. The MSCI World Equity Index, considered a good benchmark of equity market sentiment, is down at a three month low, but the USD is up slightly this morning as the market hopes that Trump has been talked down from his earlier tougher stance on China investment.”
The top risers on the FTSE 100 on Thursday are Just Eat (LON:JE), up 3.12 percent, Shire plc (LON:SHP) and Bunzl (LON:BNZL), after they posted an 11pc rise in revenue on Wednesday.
The FTSE’s biggest fallers included Evraz (LON:EVR), down 2.30 percent, NMC Health (LON:NMC) and Primark owner Associated British Foods (LON:ABF), down 2.03 percent.
Cluff Natural Resources raises £2m via share placing
Cluff Natural Resources (LON:CLNR) said on Wednesday that it would raise 2 million GBP via placement and subscription of 95.2 million shares.
The company said 80.5 million of the shares will be issued via placing and the remaining 14.7 million shares will be issued through the subscription.
According to Cluff, the additional funds raised will fund the process of evaluating and developing its new enlarged portfolio of 10 new blocks in the Southern and Central North Sea. This in the wake of a “highly successful outcome” at the UK’s 30th offshore licensing round.
“Due to the significant expansion of the size and nature of the company’s portfolio of prospects, the board now has the opportunity to accelerate investment in the technical and commercial evaluation of both oil and gas prospects to create a significant pipeline of future drilling opportunities, while continuing its current process of securing partners for its existing licences to implement its planned drilling programme in 2019.” said Chairman, Algy Cluff.
The company have said they expect the new shares to start trading on the Alternative Investmentnt Market on the 4th of July, at a price of 2.1p. With the addition of the new shares, the company’s new share capital will stand at 538.2 million GBP. Following yesterday’s announcement, the price per share rallied to 2.11p, but has dipped 0.36 percent to 2.09p as markets opened this morning.
In addition to the new ALLISS, the firm are committed to seeking out new strategic investors and partners to fund drilling on its existing licenses P2248 and P2252, as well as planning for a multi-well drilling programme in 2019.
Sports Direct ranked above Apple for innovation
Sports Direct (LON:SPD) have been ranked above Apple for its innovation in retail, according to the latest Internationalisation Retail Index.
The Index produced by Loqate along with Planet Retail RNG and Retail Week Connect, put the sportswear company fourth in the world. This is one spot higher than Apple, with Amazon coming in at the top spot and John Lewis at number 11.
Sports Direct issued a statement in a stock exchange announcement on Thursday, sending shares up modestly in early morning trading.
Michael Murray, the group’s Head of Elevation, said: “I’m pleased that Sports Direct is starting to be mentioned in the same breath as other great companies like Apple and John Lewis. It’s a huge accolade for all our people, whom I’d like to thank for their loyalty and hard work.
“This index shows that our elevation strategy, along with our approach to innovative initiatives such as our strategic investments and partnerships, is continuing to gain traction.”
Shares in Sports Direct are currently trading up 0.09 percent at 404.80 (1009GMT).