London’s FTSE 100 was up modestly by midday on Monday, the blue chip benchmark gaining 0.1% to 7,231.69, but down on its highs for the day amid speculation about private equity interest in several UK firms following the $12 billion bid for Telecom Italia.
UK equity markets had started Monday’s trading session on a positive note despite increasing concerns regarding the rapid rise in Covid-19 infections in Europe, where Austria has been forced to impose a lockdown on unvaccinated citizens.
MINING CLOSURES SMASH HOCHSCHILD
In corporate news, mining group Hochschild Mining (HOC) slumped 35% to 107.5p after the Government in Peru voted to shutdown mines in the Ayacucho region due to environmental concerns.
Hochschild, which owns two of the mines in the area, maintains that its operations run under the highest environmental standards and will fight what it believes to be ‘illegal’ efforts by the Peruvian authorities to close the mines.
The two mines earmarked for closure account for over two-thirds of the group’s annual gold output.
Staying in the sector, industry giant BHP (BHP) moved 1% higher to £19 after it agreed to merge its oil and gas portfolio with Woodside, to create a global energy company that will be listed on the ASX.
Woodside will acquire BHP’s petroleum assets in return for a 48% in the combined company. Woodside will pay just under $20bn for the assets. The deal is set to close on the second quarter of 2022 (calendar year), and the effective date of the merger is 1 July 2021.
In a separate announcement, BHP said it had approved US$1.5 billion in capital expenditure for development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia.
Shares in technical products and services business Diploma (DPLM) jumped by 6.6% to £34.14 after the company reported a jump in annual profit, driven by a boost from acquisitions including Windy City Wire.
For the year ended 30 September 2021, pre-tax profit jumped to £96.6 million from £66.7 million as revenue increased 46% to £787.4 million. The company recommended a 51% increase in the final dividend to 30.1 pence, taking the total dividend for the year to 42.6p, up from 30p.
Diploma offered positive guidance for 2022 of mid-single digit revenue growth and an adjusted operating margin between 18% and 19%.
Video games developer Frontier Developments (FDEV:AIM) saw its share price plunge more than 30% to £17 after the company slashed growth guidance for the year to May 2022. Frontier now expects revenue of between £100 million to £130 million, down from the previous forecast of £130 million to £150 million.
The UK Competition & Markets Authority is apparently looking at International Consolidated Airlines’ (IAG) planned €500 million purchase of Spain’s Air Europa to assess if the deal would harm competition in the UK.
The news saw IAG shares nudge 1.8% higher to 151.1p.
The new CEO of engineer Smiths (SMIN) Paul Keel has defended the company’s conglomerate structure, following plans by General Electric and Toshiba to break-up their diversified structures to extract better shareholder value.
For the time being investors seem fairly relaxed about Smiths, the shares bid up 1% to £15.11 by lunchtime.
SMALLER CAP WRAP
Shares in cinema group Everyman Media (EMAN:AIM) rallied by 4.6% to 148.5p after it upgraded its outlook on performance following better-than-expected admissions in the first half of the year.
The company expects revenues and earnings before interest, taxes, depreciation and amortisation, for the financial year ending 30 December 2021 to exceed current market expectations.
Customer relationship management software company Cerillion (CER:AIM) has more than doubled its annual profit as a result of a series of new business wins.
New orders rose by 43% to £33.3 million. For the year ended 30 September 2021, pre-tax profit rose 181% to £7.4 million as revenue increased 25% to £26.1 million.
A final dividend of 5p per share was proposed, up from 3.75p, bringing the total dividend for the year to 7.1p per share, up 29%. The shares moved ahead by 1.7% to 880p in response to the news.
Customer engagement software company Pelatro (PTRO:AIM) perked up 1.3% to 38.5p on news it has won a contract worth about $1 million from an unnamed African telco to provide its mViva campaign management solution.