The financial services sector grabbed the market's interest at the start of the new working week. For once, it wasn't banks hogging the limelight. Instead, investment firms led the market higher with the FTSE 100 nudging up 1% to 6,453 by lunchtime.
News that Schroders (SDR) will buy rival private bank and fund manager Cazenove Capital has put the fizz back into its share price, up 2.3% to £21.42. Merging the two companies' fund management businesses, where Schroders is set to lose its head of UK equities and star performer Richard Buxton, should result in considerable savings. Earlier this month (15 Mar) Buxton, who manages the top-performing UK Alpha Plus fund, announced he would be moving to Old Mutual (OML) along with his deputy. But by merging Cazenove's funds with its own Schroders believes it can save between £12 million and £15 million a year, which should give the company a bit of a breather to get a new UK manager and process in place.
On the back of its pre-close update for the six months to 31 March South East Asia-focused Aberdeen Asset Management (ADN) powered ahead 4.3% to 427p and within a whisker of its 454p all-time high achieved in January 2001. Net new business inflows totalled £3.5 billion in the first two months of 2013 and such is demand for its global emerging markets mandates that the manager is having to 'moderate' new inflows.
Publisher Daily Mail & General Trust (DMGT) pleased with 2% underlying sales growth for the five months to February 2013. The £2.6 billion cap responded with a 3.1% rally to 710p, with investors taking particular note of the 5% underlying growth in the business-to-business operations. The newspaper publishing operations continued to suffer tough conditions, as revealed by reported sales in the five months to February 2013 down 5%, and off 2% on an underlying basis. This performance was better than the wider newspaper industry with the Daily Mail's market share increasing to 22.2%.
Drug giant AstraZeneca (AZN) improved slightly by 0.3% to £32.45 after settling a legal dispute in the US that had threatened its top-selling product. The company, which announced 2,300 jobs losses across its international business last week, has settled a US patent dispute with Watson Laboratories and EGIS Pharmaceuticals. The news means that AstraZeneca has retained the patent of cholesterol drug Crestor, which generated $6.25 billion last year, until 2016.
Africa and Middle East focused oil firm Afren (AFR) slicked up 2.6% to 151.5p after it posted record results with pre-tax profits up 169% year-on-year to $594 million. Alongside the numbers the company announced the acquisition of a 10.4% interest in First Hydrocarbon Nigeria for $37.1 million.
Finsbury Food (FIF: AIM) nudged up 1p to 52p, after the celebration cake and speciality bread maker cheered with news of reduced net debt and a return to the dividend list. Half-year figures from the £33 million cap, which recently (27 Feb) sold its 'Free From' business for £21 million to focus on its core business, revealed 33% growth in taxable profits to £3 million and net debt down 27% to £27.4 million at the half-year. Having transformed its balance sheet, Finsbury has also reinstated the shareholder payout by declaring a 0.25p interim dividend.
A solid set of financial results helped put the spark back into oil services group Kentz (KENZ), up 2.9% to 426.6p. The share price has stalled of late, yet analysts still see attraction in the stock, as we discuss in detail here.
West African gold producer Amara Mining (AMA: AIM) jumped 6.3% to 37.75p after upgrading the resource for its Yaoure project in Cote d'Ivoire. It has proved up 1.7 million ounces of gold, considerably greater than its 1 million target. Full-year results on Wednesday (27 Mar) will give an update on developments across its estate of gold projects.
A relief rally powered up Avocet Mining (AVM) 21.3% to 22.75p as the troubled gold producer restructured its finances and avoided an emergency cash call from investors. The company has obtained a loan from its largest shareholder Elliot Management and agreed with Macquarie bank to release restricted cash and buy back 17% of its gold hedge. Avocet has been locked into fixed selling prices for many years under its hedge agreement, selling gold considerably below the spot price. It will now increase the rate of sales into the hedge meaning it will be loss making for 2013, as forecast by analysts. A large number of investors had shorted the stock, so today's resolution of financial issues has created a short squeeze, sending the shares up to the point where investors either have to close our their short positions or increase the margin on their trade. Analysts say the restructuring is positive but few are scrambling to buy the stock, saying there are 'better opportunities' elsewhere in the market.
Also experiencing a short squeeze is Cupid (CUP:AIM), up 68.4% to 82.5p. The small cap slumped last week after press allegations that it had been engaged in dubious methods to encourage take-up of online dating subscriptions. Today it refuted all allegations that its business model or practices and procedures are 'fundamentally flawed, inappropriate or illegal'. It is taking legal advice on 'a great deal of misrepresentation and ill-informed speculation in the marketplace.'
Speciality pharmaceutical Allergy Therapeutics (AGY: AIM) was up 1.2% to 10.62p despite pre-tax profits for the six months to January falling to some £5.1 million from £8.2 million a year earlier. The cash position has increased by 75% to £3.5 million.
Investors didn't warm to an acquisition by insurance services 'buy-and-build' group Quindell Portfolio (QPP:AIM), down 3.2% at 11.5p. It has bought iSaaS Technology, a specialist in the legal market.
Falklands oil explorer Desire Petroleum (DES:AIM) was flat at 16.6p after full-year results revealed cash of $10.5 million – leaving the group reliant on a farm-out to fund further drilling on its acreage.
New contract awards fired machine gun maker Manroy (MAN:AIM) – up 22.8% at 62p. The new orders, worth £8.7 million, were from existing customers in Asia, Europe and the UK and increase the order book to £19 million against total revenue for the year to 30 September 2012 of £7.4 million.
Shares in onshore US oil & gas play Resaca Exploitation (RSOX:AIM) plunged 36% to 4p after a deal to sell a number of business units collapsed. This proposed divestment to ERG Resources was aimed at reducing the group's debt burden – as at 30 June 2012 the group had total liabilities of $58.6 million. Resaca, which has fallen 97% in the last five years, is focused on enhanced recovery which involves injecting water and eventually carbon dioxide to boost production from mature oil reservoirs. The company says it has notified its lenders of the withdrawal of the ERG offer and has not received any notice of an enforcement notice from these lenders. It adds that it is: 'pursuing other options with respect to disposing of assets and will provide a further update when more information is available.'