A profit warning from G4S (GFS) has dragged its share price down 13.7% to 263.6p. The security group has warned of tough trading conditions in Europe, lower margins and £6 million of bad debts. Analysts subsequently downgraded forecasts and flagged that G4S may have to sell some businesses if it wants to maintain its target of spending £150 million to £200 million on new acquisitions.
Banking giant HSBC (HSBA) improved 2.7% to 733.5p on news pre-tax profits for the first quarter almost doubled to £5.4 billion. Lower bad debts and compensation payments for mis-selling financial products contributed to the rise in profits as did a 10% reduction in costs.
Part state-owned lender Lloyds Banking (LLOY) was up 1.6% to 54.9p after supermarket chain Sainsbury (SBRY) confirmed it was in advanced negotiations to buy Lloyds’ 50% stake in Sainsbury’s Bank. A sale would represent a further positive step in Lloyds’ strategy to focus on its high street operations, which in recent months has seen it sell shares in wealth manager St James’s Place (SPJ) and its Spanish retail operations.
Life insurer Prudential (PRU) fell 2.6% to £11.24 as it announced a worse-than-expected performance in the US, where profits dropped 10% to £192 million during the first three months of the year. However, its Asian business proved a success with new business profits rising by 18% to £308 million.
Shares in National Express (NEX) added almost 2% at 207.4p on news of a positive start to the year from the transport group. In a well received trading update, National Express flagged strong revenue growth in its North American school bus operations as well as recent rail and coach contract wins in Germany. The £1 billion cap also pleased with news it is on track to deliver its profit expectations for 2013.
Housebuilder Crest Nicholson (CRST) added 8p at 326.5p on a chipper first half trading update. The £816 million cap, which returned to the stock market in February, delivered robust growth in the first half to April, with 810 housing legal completions representing a 9% increase over the 746 achieved in the comparable half last year.
Pan-European data centre operator Telecity (TCY) put on 6p to 951.5p after reporting a strong start to the year with solid order book build across its business. The £25 million acquisition of Sadece in Turkey will also act as a bridge between Europe and Asia, but some analysts remain sceptical that rising debt is not equating to significant future earnings. There's also question marks over pricing with demand not necessarily outstripping capacity after vast industry expansion over the past few years.
Insurance outsourcery specialist Quindell Portfolio (QPP:AIM) continues to divide opinion, with fans pointing to soaring full year 2012 topline growth. Earnings before interest, tax, depreciation and amortisation (ebitda) jumped nearly seven-fold to £52.2 million in 2012, while recent contract success suggests a fast start to 2013. Rising debtors (money owed but not yet collected) to £202 million is one concern for sceptics, as is rapid expansion into new markets – property and the US recently – sparking worries that perhaps Quindell is taking on too much too fast. Net cash in from operating activities is worth noting. The shares dipped 7.6% to 12.25p.
Shares in compliance red tape software supplier Ideagen (IDEA:AIM) were in demand, jumping 9.3% to 22.12p after telling the market that it will deliver a forecast beat for the year to end April 2013. We flagged the emerging optimism around the £27 million cap in last week's issue of the magazine (read here).
Tanzanite producer Richland Resources (RLD:AIM) jumped 2.6% to 5p after progress with resolving licence issues in Tanzania. It reckons a new mining licence will be issued in the next few days giving the government a 50% share of income from its Tanzanian operations.
Medical technology company Angle (AGL:AIM) was up 3% to 50p after announcing that it expects EU approval for its Parsortix cell separation system by the end of 2013. Medical Device Management, a specialist regulatory company hired to win regulatory approvals for Parsortix, also expects to submit the system to the US Food & Drug Administration (FDA) early next year.