London shares are mixed in early trade on Wednesday with blue chips guiding higher but midcaps failing to make progress and smaller companies largely flat. Traders continue to cast wary glances towards the pricing of crude and safe-haven assets but many remain jittery about the global economy. Europe was up while Wall Street and Asia fell overnight.
The benchmark FTSE 100 index nudges 12 points, or about 0.2%, higher to 6,137.
In corporate news, private sector security outsourcer GFS (GFS) tumbles 11.3% to 189p despite posting relatively solid results with revenue and underlying profit before interest, tax and amortisation flat at £6.39 billion and £381 million, respectively. Investors are instead focusing on negative commentary around some of G4S’ struggling operations in the UK, which includes a £31 million charge because of an increase in asylum seekers in the country. Chief executive officer Ashley Almanza remains upbeat on prospects for 2016.
‘Against a background of global economic uncertainty, demand for our services remained resilient and growth accelerated in the second half of 2015, providing good support for further operating and financial progress in 2016,’ says Almanza.
‘In the current economic environment we expect medium term demand for our services to grow by around 4-6% per annum.’
Underlying earnings per share was 14.7p, up 15.5% from a year earlier.
Life insurer Prudential (PRU) rises 1.7% to £13.49 after beating expectations in 2015 and unveiling a one-off dividend hike. Operating profit was 22% higher than in 2014 at £4 billion, while new business profit improved 20% to £2.6 billion after selling more products in the UK, US and Asia. This led management to recommend a 10p a share special payment to complement the 38.8p a share full-year dividend.
Oil play Cairn Energy (CNE) gushes 10.3% higher to 187.1p as it announces a second successful appraisal well on its SNE field offshore Senegal. Chief executive Simon Thomson says the results 'validate the scale and growth potential of the SNE field'.
Small cap explorers Amerisur Resources (AMER:AIM) and Pantheon Resources (PANR:AIM) are down 10.2% and 1% respectively as both go back to the market for cash. Texas-focused Pantheon successfully completes an oversubscribed placing announced 8 March at 115p, raising $30 million for additional drilling and the acquisition of new acreage. Amerisur proposes its own $35 million placing, the proceeds being used to accelerate work on its Colombian licences to take advantage of low costs.
Small cap iron ore miners are in vogue as investors look for ways to play the surprise increase in the metal price. Iron ore jumped by 20% at the start at the week and is up by nearly 50% year to date. Ironridge Resources (IRR:AIM) leaps by 60% to 3p; Sable Mining (SBLM) moves ahead 10% to 0.6p and West African Minerals (WAFM:AIM) advances by 9.5% to 2.88p.
Tech tiddler Proxama (PROX:AIM) jumps more than 40% to 1.25p as it continues to work closely with Google to deploy the world's first Physical Web consumer engagement experience. The MyStop web experience from Proxama, delivers real-time transport updates to London commuters and travellers' mobiles.
Naval navigation firm Software Radio Technology (SRT:AIM) soars 32% to 24.5p as it enters into a major agreement for the supply of a significant maritime domain management system (MDM system) for a large country in Asia.
Bicycle manufacturer Tandem (TND:AIM) plunges 25.4% to 132.5p after warning its bicycles and mobility division will have a challenging year in 2016 due to fierce competition and the fact it doesn't have a large cycle promotional contract. Revenue in this division fell 4% in 2015, while group revenue grew by 10% to £34.4 million due to strong growth in the sports, leisure and toys business.
Frankie & Benny's-owner Restaurant Group (RTN) sinks 16% to 456.4p after saying the challenging trading conditions seen in the fourth quarter of 2015 have continued into 2016, with like-for-like sales down 1.5% in the first 10 weeks of the year. Total sales are expected to rise as new restaurants open but like-for-like increases 'are likely to be difficult to generate'. Pre-tax profit rise by 11.2% to £86.8 million in 2015.
Luxury ceramic tableware maker Portmeirion (PMP:AIM) perks up 5.1% to £11.35 after reporting a seventh consecutive year of record sales, profit before tax up 13.6% to an all-time high of £8.6 million. The running Play of the Week also hikes the total dividend for 2015 from 26.5p to 30p and issues a positive outlook statement, trading in the opening two months of 2016 ahead year-on-year.
Car dealer Vertu Motors (VTU:AIM) reverses 5.8% to 64.5p following yesterday's strong pre-close trading update after announcing a £35 million placing at a discounted 62.5p per share to fund its attractive acquisitions pipeline.
Premium British chocolatier Hotel Chocolat announces its plans to IPO on AIM in the second quarter via a £50 million placing. We'll look at the business in a bit more detail here later.
Packaging group DS Smith (SMDS) edges up 1.2% to 395.1p on news its volumes and financial returns are continuing to grow despite ongoing challenging market conditions. Volume growth has been particularly good in Western and South Eastern Europe, which the group says is down to its design and innovation skills.
Plans for a £6.8 million placing and open offer sends cancer therapeutic developer Scancell (SCLP:AIM) 9.8% lower to 18.2p. The shares will be sold for 17p each, a 17% discount to Tuesday’s 20.5p closing price. The proceeds will fund clinical trials for two of its drug candidates.
A strong set of final results from Breedon Aggregates (BREE) fails to impress investors and shares in the £784.1 million cap are down 1.5% at 68.2p despite posting a 46% rise in pre-tax profit to £31.3 million.
Elsewhere in the construction space, insulation and specialist materials maker SIG (SHI) sheds 7.8% to 133.3p on the back of a 11.2% drop in underlying profit to £98.7 million in the year to the end of December. Management blames 'weak trading conditions in Mainland Europe and the UK RMI market, as well as movements in foreign exchange.'