Rolls Royce announce £1Bln Share Buyback

Aircraft engine maker Rolls Royce (RR.L) has announced that following the successful completion of the sale of its gas turbine and compressor business to Siemens they will buyback £1Bln of shares.

Rolls Royce (RR.L) say the aim of the buyback to is to reduce the amount of issued capital in the company, the sale will be managed by Jefferies who will make trading decisions “independently of, and uninfluenced by, the company”.

The company had previously stated in June it intended to return proceeds of the energy sale to investors as it had a strong balance sheet and did not intend to make any material aquisitions.

The shares Rolls Royce (RR.L) buyback will be cancelled or held in tresury.

Shares in Rolls Royce (RR.L) are currently trading at 878p, up slightly on the day (2.3%).

 

Ashtead Share Price Jumps on Record First Half Profit

Equipment rental company Ashstead (AHT.L) today posted a record first half profit causing shares to move upwards. The company also revised upwards its full year profit expectations.

In the first half Ashstead (AHT.L) profits rose 33% to a record £265.5M, with pretax profit in the second quarter up 33% to £145M. 8% higher than analyst expectations. Total group revenues on a constant currency basis were up 23% on last year at £987.3M.

Ashstead (AHT.L) also announced an interim dividend of 3p per share, 33% better than last time.

Chief Executive, Geoff Drabble commenting said “The Group delivered another strong quarter with record underlying pre-tax profits of £266m, up 33% on the prior year. It was particularly pleasing to see a strong contribution from both Sunbelt and A-Plant.

We continue to execute on our strategy, focused on organic growth supplemented by bolt-on acquisitions. We invested £588m in capital expenditure and a further £107m on bolt-on acquisitions in the period. Given the profitable growth opportunities evident in our markets, we are increasing our full year guidance for capital expenditure to a range of £925m to £975m.

Even with these significant levels of investment, we continue to grow responsibly, generating strong returns and maintaining leverage within our stated objectives.

With both divisions performing well, recovering end markets, and a proven track record of market share gains, we now anticipate a full year result ahead of our previous expectations.”

Shares in Ashstead (AHT.L) were trading at 1157p, mid morning. Up 80p (7.5%)

Citigroup Says Lloyds most at risk UK Bank in Stress Tests

Citigroup has tipped Lloyds (LLOY.L) as the bank most likely to be at risk by the latest UK banking stress tests, of which results are due next week. The broker and analysts says BoE tests use more aggressive yard sticks and could see Lloyds in focus.

Commenting Citigroup said ”All listed banks are likely to ‘pass’, in our view, but we view Lloyds (LLOY.L) as most at risk, due to its large exposure to UK mortgages. The risk remains that economic conditions could deteriorate again, leading to reduced levels of activity and higher impairment losses. In addition, there is a degree of restructuring risk as the group continues to run-down legacy assets”

Off the back of the news shares in Lloyds (LLOY.L) are slightly down today trading at 78.94 (down 1.84%)

Bank of England stress test results are expected at 7am on 12th December.

Tesco Falls Sharply after Price Warning

Supermarket giant Tesco (TSCO.L) surprised the market this morning after an unscheduled announcement to investors issuing another profit warning.

Tesco (TSCO.L) issued guidance of up to a 58% drop in full year profits, a much worse drop than was feared and send shares plummeting in early trading.  Tesco (TSCO.L) says profit for the year to february 2015 is not expected to exceed £1.4Bln. Down from £3.315Bln the previous year, and much less than the expectations of analysts in the range £1.8-2.2Bln.

The company said that recent measures to improve policies and procedures along with customer service would impair this years results however the company will continue to invest in improving services to customers amid falling sales. Tesco says On the 8th January they will share more detail about the measures they plan to take to improve the competitiveness of the UK customer offer and to strengthen the balance sheet.

Dave Lewis, CEO said:

Tesco (TSCO.L) is focused, and will continue to focus, on doing the right thing for customers.  This means running our business in a way that everything we do creates sustainable value.  Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business.  We will not engage in short term actions that compromise in any way our offer for customers.

We still have much to do but are making good progress in developing our plans to improve the long-term positioning of the Group and I will share more of that on the 8th January.  Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency.  For now, all the Tesco team is focused on delivering the best Christmas for customers.”

Shares in Tesco (TSCO.L) fell as low as 160p this morning and have managed to recover slightly this afternoon, currently trading at around 175p (down 6.5%)

 

Broker Downgrade Hits Glencore

Liberum announces a downgrade on Miner Glencore (GLEN.L), moving its rating from HOLD to SELL and citing concerns over coal production.

Liberum says it is “going cold on coal”.  With Analysts Ben Davis and Richard Knights Commenting “Despite Glencore’s estimated deficit of 50m tonnes in 2016, it is difficult to be confident on price recovery when coal is so severely challenged on any timescale,”

Current stockpiles of coal remain high and the price has been severely depressed since 2011. Also over the long term many countries are moving away from coal powered power production in favour of greener technologies.

Liberum set a new target price of 280p for Glencore (GLEN.L), shares are currently trading around  321p, down 0.5% today.

Sky and CVC deal sees Skybet valued at £800M

Sky (SKY.L) has announced news its has agreed to sell a controlling stake in online betting venture SkyBet to CVC capital partners in a deal valuing SkyBet at £800M.

Under the terms of the transaction, Sky will receive cash of £600 million on completion and further deferred and contingent consideration up to the value of £120 million. The total value of £800 million represents a multiple of approximately 15x EBITDA for the 12 months ended 30 June 2014.  Sky will retain an equity stake of approximately 20 per cent in Sky Bet and ongoing board representation. As part of the transaction Sky has also entered into a long-term brand licence agreement with Sky Bet.

Jeremy Darroch, Group Chief Executive of Sky (SKY.L), said: “In the last ten years, we have successfully grown Sky Bet from a start-up to one of the leading online betting and gaming companies in the UK. This transaction will allow us to focus further on the substantial growth opportunities in our core international pay TV business while realising significant value for our shareholders.”

The transaction is subject to regulatory clearances in the UK and Ireland and is expected to close in the first quarter of 2015.

FTSE reshuffle, IMI and Petrofac Out, Barratt and Taylor Wimpey In

The results of the quarterly review of the FTSE index were published last night.

IMI (IMI.L) and Petrofac (PFC.L) are to leave the FTSE100 to be replaced with Barratt Developments (BDEV.L) and Taylor Wimpey (TW.L).

The move reflects the recent sell off in commodities and growth in home builders. Taylor Wimpey (TW.L) and Barratt Developments (BDEV.L) have both gained between 20-30% this year.

The FTSE250 index will see the inclusion of IMI (IMI.L), Petrofac (PFC.L), Greggs (GRG.L), Jimmy Choo (CHOO.L), Game digital (GMD.L), Allied Minds (ALM.L), CLS Holdings (CLI.L) and The Spirit Pub Company (SPRT.L).

Companies losing their place in the FTSE250 will be EnQuest (ENQ.L), Fenner (FENR.L), Ferrexpo (FXPO.L), Hochschild Mining (HOCM.L), Foxtons (FOXT.L) and Spirent Communications (SPT.L) along with the switching of Taylor Wimpey (TW.L), Barratt Developments (BDEV.L), .

To Find out more about how shares enter and leave the FTSE100 index read ‘How do stocks join and leave the FTSE100 index’ here.

FTSE Oil and Resource Shares Rise on the back of Oil rebound, China Stimulus

FTSE100 oil and mining shares are in demand this morning as US oil rebounded to $69 after falling as low as $64 previously. The biggest one day rise since October 2012. Resource and mining shares are also on the rebound, tracking large rises in Chinese shares this morning as speculation mounts that China will ease its monetary policy in an attempt to stimulate further growth.

The FTSE100 is trading around 1% higher at 6733 rebounding from mondays lows and oil and mining shares are some of the FTSE100s best performers this morning.

Tullow Oil (TLW.L), BG Group (BG.L),  BHP Billiton (BLT.L), BP (BP.L), Glencore (GLEN.L) , Anglo American (AAL.L) , Rio Tinto (RIO.L) and Royal Dutch Shell (RDSA.L) are performing well and all in the risers column.

 

 

Aviva Agrees Terms of Takeover of Friends Life

Aviva (AV.L) has announced agreed details of its proposed takeover of Friends Life in an all share deal.  The deal proposed would give Friends Life shareholders ownership of around a quarter of the enlarged group with each shareholder of Friends Life being given 0.74 shares in Aviva for each share they hold.

Commenting on the Proposed Acquisition, John McFarlane, Chairman of Aviva, said: “Aviva’s recent success and sound growth and return prospects already present a compelling investment proposition and enable us to advance our strategy through acquisition as well as organic growth.
The Proposed Acquisition not only consolidates Aviva’s leading position which Aviva has established in the UK, it is expected to enable a much stronger dividend flow and balance sheet position than would otherwise have been possible. It also offers Friends Life Shareholders an attractive outcome.

This move enhances, and is consistent with, our investment proposition of “cash flow plus growth”, and I commend it to shareholders.”

 

Mining Shares Take Hit after China Manufacturing Growth Slows

Figures out this morning show that Chinas factory activity has slowed more than expected in November, highlighting current worries about the slow down in its economy.

The official purchasing managers’ index (PMI) came in at 50.3 for November, down from 50.8 in October and less than the figure expected by analysts of 50.6.

Chinese economic growth has slowed to 7.3% in the third quarter this year, the slowest the economy has grown since the start of the financial crisis. The country looks set to miss its yearly growth target of 7.5% for the first time in 15 years.

The news has impacted on FTSE100 mining shares, with both BHP Billiton (BLT.L)  and Anglo American (AAL.L) taking a hit – both dropping nearly 4%.