First Class Metals shares fell on Friday after completing a discounted placing to fund working capital and exploration activities.

Earlier this year, we wrote that, despite the attractiveness of First Class Metal’s assets, they were in danger of having to raise funds again in 2024, and the placing level could well be beneath 3p. That article can be read here.

First Class Metals has now completed two placings beneath 3p in just two weeks, and the amounts are far less than the placings in 2023, which raised £600,000 and £1,000,000.

Today’s placing raised gross proceeds of £256,500 at 2.7p, a 16% discount to yesterday’s closing price. The prior placing 17 July raised £85,000 at 2.8p.

The funds will be allocated to the ongoing ‘potentially significant impact exploration programme’ at the Hemlo gold project’s Dead Otter Trend North. Helmo is First Class Metal’s flagship project.

“In light of the recent announcements regarding the high priority status of the Dead Otter Trend, it was considered wise to take advantage of the crews and equipment already mobilised at the site to increase both the number and scope of stripping sites,” said James Knowles, FCM’s Executive Chairman.

“We believe that the Dead Otter project holds transformative potential for FCM’s future, and completing this capital raise promptly will allow significant additional work this summer, thus enhancing our understanding of the geology and the target’s true potential.”

With FCM shares now down 52% year-to-date, shareholders will certainly hope the recent fundraises can facilitate material progress over the summer.

ITM Power PLC has announced a significant improvement in its financial outlook for the fiscal year ending 30 April 2024. The green hydrogen technology firm, based in Sheffield, has revised its EBITDA loss forecast, painting a much rosier picture than previously anticipated.

Previously, the company had projected an EBITDA loss between £39.0m and £44.0m, as stated in their 6 June trading update. This figure already marked an improvement from earlier estimates. However, today’s announcement signals further material improvement, with ITM Power now expecting losses to narrow to between £30.0m and £32.0m.

The driving force behind the dramatic improvement is the resolution of disputes tied to legacy projects. With these matters now settled, ITM Power has been able to release a provision previously set aside, significantly bolstering its EBITDA financial position.

As the audit process nears completion, investors will be gearing up for 15 August, when the preliminary results will be released.

ITM has recently signed deals with industry heavyweights such as Shell and shareholders will be looking forward to further insight into progress in the rollout of ITM’s electrolyser stacks.

The FTSE 100 gained on before falling back Thursday after the Bank of England cut interest rates for the first time since the pandemic when it took rates to record lows to support a ravaged economy.

Since then, the BoE has increased interest rates from 0.1% to 5.25%, which has had broad-reaching effects on businesses, households, and the stock market. Today’s cut to 5% doesn’t take interest rates anywhere near where they have been over the past decade, but the move will have a significant impact on confidence.

“Whilst nominal in absolute terms it is a meaningful milestone in the direction of travel for monetary policy should add to the already building momentum in UK business and consumer confidence,” said Indriatti van Hien, Fund Manager at Henderson Small Companies Investment Trust.

Consensus for the decision to cut rates or not had been on a knife edge leading up to today’s historic announcement, which represents the Bank’s victory in controlling inflation and beckons an easing of pressures on households.

“The central bank has decided to fire the starting pistol on rate cuts in a move that will invigorate investors and mortgage holders alike,” said Rachel Winter, Partner at Killik & Co.

“The Bank of England was clearly satisfied with the recent fall in CPI to the 2% target level, and its choice demonstrates a deviation from the Federal Reserve across the Atlantic, which has yet to cross the finish line in its battle with inflation.”

The FTSE 100 gained in the initial reaction to the announcement, but the rally was sold into as the session progressed.

Market reaction

The FTSE 100 was supported by a string of upbeat earnings from companies including, Next, Barclays, and Shell on Thursday. Although the announcement was well received, with a sharp uptick of 30 or so points for the FTSE 100, the move was far from europhic.

The interest rate-sensitive housebuilding sector spiked higher but was quickly sold into, with Taylor Wimpey and Persimmon gaining just 0.5% at the time of writing.

Banks have been reducing mortgage rates in preparation for the rate cut, and today’s news is unlikely to offer any additional boost to the sector in the short term. Whether the Bank of England signals more cuts in the coming months will have a greater effect. Interest rate futures traders seem to think they will cut rates again, judging by current pricing.

Elsewhere, Next was storming ahead after yet another beat of expectations – something investors have become accustomed to. That said, another quarter of producing sales growth amid tough economic conditions was not lost on the market, and shares were over 8% higher at the time of writing.

Shell was 1% higher after it was confirmed that it was still a cash-generating machine, as free cash flow increased despite lower earnings.

The standout gainer was Rolls Royce, adding 10%. Investors cheered the reintroduction of shareholder distributions to commence later this year as the jet engine maker’s operating profit soared. The company embarked on a streamlining strategy that is now rewarding investors.

It’s been a solid earnings season so far for FTSE 100 banking earnings, and Barclays has done nothing to break the mould with stronger than expected earnings pleasing investors on Thursday.

Barclays enjoyed improving net interest margins in the second quarter across most business units in the second quarter culminating in a group net interest margin (NIM) of 4.2% compared to 4.12% in the first quarter.

Stronger NIMs will be welcome news for investors in the face of money markets positioning for interest rate cuts and the pressure of increased competition.

“Banks are booming, and Barclays has joined the party,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“Second quarter results pretty much beat across all lines. As we’ve seen from peers, Barclays continues to call out the strong UK borrower with low missed credit card payments, good mortgage quality, and an improved economic outlook all helping to keep those pesky impairment charges down. Barclays also has a huge US card business, and impairments were also better than expected, but our friends across the pond are under a little more pressure and write-offs have been ticking higher.”

A key differentiator for Barclays is its investment banking arm, which can provide a welcome boost to underlying income as capital markets activity picks up.

Although global capital markets are still well below their peak, deal flow has increased, helping Barclays Investment Banking income rise 10% in the second quarter.

The Investment Banking unit is by far Barclays’ largest single unit in terms of revenue and was the key driver in group revenue increasing in the second quarter.

“Barclays Investment Banking revenue beat is positive for mid-term targets, our specialists argue that the 50% IB RWA target needs to be achieved through top-line revenue growth and this seems like a step in the right direction,” said Max Georgiou, Analyst at Third Bridge.

“To continue executing this strategy we expect to see a continued focus on regrowing share in the US market. The risks within this are potential human resources attrition from lay-off rounds and lower additional compensation and challenges in reaching high fee floors across completed advisory work.”

Rounding off an all-round solid update for Barclays, the bank announced a fresh £750m share buyback programme in addition to a 2.9p dividend for the first half.

The financially troubled ‘strategic infrastructure projects’ group has announced that it has been awarded an additional $25m funding facility.

That now takes its total commitment up to $140m under that facility.

It has also taken a number of corporate decisions to help to stabilise its operations.

The group announced that it is immediately ceasing the operation of all of its passenger services between the Isles of Scilly and Penzance, reducing its services to those just based out of its Appledore, Arnish, Methil and Belfast delivery centres.

Additionally, the group will not be proceeding with its ‘fast ferry service’ with the fast ferry expected to be out for disposal.

Importantly, it is noted that the company has formally engaged Rothschild & Co as financial adviser to assess strategic options for the group.

Embattled Chairman Malcolm Groat stated that:

“We are grateful to our lenders in continuing their funding commitment to support Harland & Wolff Group’s ongoing stabilisation and long-term strategy objectives.

We also look forward to working with the very experienced team from Rothschild & Co to help us achieve that objective.

It is regrettable that we have taken the tough decision to terminate the fast ferry, but we need to focus our energies and resources in continuing to grow the core business across our four delivery centres.

This decision aligns with and brings us back to our fundamental five markets and six services strategy.

Our ferry service team will be working closely with passengers and other counterparties to ensure a smooth transition out of this business.”

The group’s shares are currently trading at around the 8p level, at which the group is capitalised at £14.7m.

British engineering giant Rolls-Royce has posted strong financial results for the first half of 2024, overcoming ongoing supply chain difficulties to significantly boost its profits and raise its full-year guidance.

Investors can now also look forward to distributions for the full year as the company reinstates payouts.

Underlying operating profit skyrocketed to £1.1 billion, a staggering 74% increase compared to the same period last year. Increased profitability saw underlying margin up by 4.4% to 14.0%. These figures reflect the early success of Rolls-Royce’s transformation programme and strategic initiatives designed to streamline the business.

Rolls Royce has been one of the best-performing FTSE 100 stocks since the pandemic, and today’s results are a validation of the sharp rally.

“Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is proceeding with pace and intensity. We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing. We are on track to deliver our mid-term targets,” said Tufan Erginbilgic, CEO of Rolls Royce.

The Civil Aerospace division emerged as a standout performer, with its operating margin soaring to 18.0% from 12.4% in H1 2023. This leap was fuelled by a resurgence in large engine flying hours and a stronger showing in the business aviation sector. Defence and Power Systems divisions also reported significant margin improvements, contributing to the overall stellar performance.

Free cash flow more than tripled to £1.2 billion, driven by the surge in operating profit and continued growth in long-term service agreement (LTSA) balances. This financial strength has allowed Rolls-Royce to slash its net debt to a mere £0.8 billion – this progress shouldn’t be underestimated.

In light of these achievements, Rolls-Royce has raised its full-year guidance for 2024. The company now expects underlying operating profit to reach between £2.1 billion and £2.3 billion, up from the previous forecast of £1.7 billion to £2.0 billion. Free cash flow projections have also been revised upwards to £2.1 billion to £2.2 billion.

However, it’s not all smooth sailing. Rolls-Royce acknowledges the persistent challenges in the supply chain, which are expected to impact free cash flow by £150-200 million this year. The company anticipates these hurdles to continue for another 18-24 months but is actively working to mitigate their effects.

In a move that will surely please investors, Rolls-Royce has announced plans to reinstate shareholder distributions for the 2024 financial year. The company will start with a 30% pay-out ratio of underlying profit after tax, with the potential to increase this to 30-40% in subsequent years.