MBE Mineral Technologies has bought 10 million shares, increasing its stake from 25.27 per cent to 41.69 per cent.  

The funds will be used to enable Specialist’s new borrowing arrangements with Standard Chartered Bank and MBE, as well as to settle existing derivative instruments.

MBE has bought the shares at 50 pence per share, a 117 per cent premium to today’s trading price of 23 pence.

MBE is the investment arm of McNally Bharat - one of the largest engineering and construction firms in India. 

In April, Specialist said that it was also proposing a further placing to issue four million new company shares in order for it to buy between 20 and 24 per cent of MBE Cologne Engineering GmbH - a wholly-owned subsidiary of MBE. 

The share price was up 7 per cent at 15.57 today at 23 pence.

Specialist Energy (LON:SEGR) said today the weakness in the demand from China and India that hit its first half has started to ease, while nuclear work is also better.

The industrial boiler pump maker post annual trading profits of £1.7 million, down from £2.9 million as a recovery by its aftermarket arm in the second half could not offset a tough year for manufacturing. 

Revenues in 2011 were down 16.7 per cent at £32.1 million (2010: £38.5 million).

Specialist Energy also took write-downs on its property in Luton, where its manufacturing unit is being restructured, receivables and a financial derivative totaling £4.8 million, which meant an overall loss for the year of £3.1 million.

More encouraging was the increase in the 2011 order intake of 5 per cent to £31.6 million (2010: £30.1 million) in spite of the temporary softening in new unit orders from China and India. 

Demand for oil and gas new units and aftermarket services are strengthening including a recovery in nuclear market post-Fukushima, Specialist added.

Shares in the engineer have rallied recently following a proposed £5 million fund raising with MBE - the wholly-owned investment subsidiary of one of India's leading engineering and construction groups.

MBE will acquire shares in the group at 50 pence, a substantial premium to the current market price while the cash will also enable Specialist Energy to set up new borrowing and banking facilities.

John May, Specialist’s chairman, added the proposed refinancing through MBE and closer working relationship with its McNally Bharat arm would enable it to deliver a more effective manufacturing operation and continue growing the aftermarket division.

“We are pleased with the trading levels experienced in the second half which significantly exceeded those achieved in the first six months of the year,” said chief executive of Specialist Energy Ewan Lloyd-Baker.

In addition, the company has made a series of appointments at its main operating subsidiary Hayward Tyler including a group chief operating officer, group supply chain director and group human resources director.

The group said the appointments reflected the continuing investment in the business as it develops a “more reliable supply chain and flexible manufacturing operation to support its international customer-base”.

HT makes boiler circulating pumps (BCP) used in power stations to pump water at high temperature and high pressure.

The traditional buyers of BCPs are the large power utilities and leading boiler manufacturers. However the group has also branched into the oil and nuclear industries.

Specialist Energy will release its full year results for 2011 on April 16.

Investors cheered the report, sending shares in Specialist Energy up seven percent to trade at 30 pence at 7:25. The group currently has a market cap of £10.65 million.

His comments were made as it was revealed order intake at HT rose 19 per cent to £25.4 million in the third quarter.

HT makes boiler circulating pumps used in power stations to pump water at high temperature and high pressure. 

The traditional buyers of BCPs are the large power utilities and leading boiler manufacturers. However the group has also branched into the oil and nuclear industries. 

In its update today, Specialist Energy said orders won by HT’s manufacturing division in the quarter included five offshore units for use in oil and gas exploration. 

The contracts, expected to be shipped next year, are valued at over £2 million, it added.

Business in the aftermarket has been driven by the nuclear and energy markets, with over £7 million of contracts won since the half year, Specialist Energy revealed. 

In the nuclear field, the group secured a major spares contract with Korea Hydro & Nuclear Power, as well as landing deals with TVO Finland and Hatch in the US. 

Specialist Energy chief executive Ewan Lloyd-Baker said: "We are delighted that Hayward Tyler has continued its momentum in the core areas of its business activity. 

“Indeed, despite the difficult market conditions, we are quietly confident that order intake levels for the year will be ahead of 2010."

Shares in SEGR responded positively to the news and were up 2.8 pence, or more than 9 per cent, at 33.8 pence in early deals.

The recent drop in the share price of power station pump manufacturer Specialist Energy Group (LON:SEGR) represents a buying opportunity, according to a research note released today from the firm’s house broker finnCap.

Since SEG announced in mid-September that it was no longer in discussions regarding a potential takeover, as well as interim results that revealed a weak first half, shares in the firm have fallen from around 60 pence each to under 35 pence.

finnCap believes that this makes the firm more attractively valued and will provide investors with an opportunity for appreciation over the next year as it is expected to see a pick-up in activity and the return of “more normal ordering patterns”.

Turnover during the first half was down 20 per cent, mainly due to the manufacturing division experiencing quality control problems on specific cast parts sourced from a supplier. But the broker noted that this problem has now been rectified, while the strength of SEG’s services operation and shift in product mix has boosted group margins.

Also, first half revenues in service activities saw some slight, indirect impact from the Fukushima disaster and “these should be resolved in the second half”.

Meanwhile, finnCap noted that a better second half has been forecast with order intake up 20 per cent to £16.5 million, “which provides the group with some decent future visibility”. The broker also sees a hiatus in Chinese order placement as being temporary, given China’s continuing need for new power generation.

“Following the downgrade on this year’s forecasts (as a result of the issues mentioned) the rating for the current year appears fair,” said finnCap in its note. “However, we look to next year to see the improved levels of trading and a return to normality to provide an attractive rating of 5.8 times. This gives plenty of upside potential to the shares over the next year.”

finnCap estimates that SEG will make sales of £36 million for this year, increasing to £38 million in 2012. Pre-tax profit is expected to come in at £2.2 million, increasing to £3.1 million next year, while earnings per share is estimated at 3.4 pence and 5.9 pence for 2011 and 2012 respectively.

Specialist Energy Group (LON:SEGR) chairman Ewan Lloyd-Baker told investors that the longer term outlook for the international power generation market remains buoyant, despite the current global economic uncertainty.

In this morning’s interim results statement, for the six months ended June 30 2011, the specialist power plant engineering group reviewed a period of contrasting results for the group’s primary operating subsidiary, Hayward Tyler.

The group’s higher margin ‘aftermarket’ division – which deals with spares, field service and repairs – showed a strong performance, while the manufacturing division – which makes new pumps and motors for power plants – suffered weaker trading due to delayed shipments.

Importantly SEGR confirmed that the majority of these delayed units have now been shipped. Accoring to SEGR the delays have highlighted some supply chain problems relating to the sourcing and quality of larger bespoke castings. 

This issue has been addressed with new investments in the UK operational team and additional support for the procurement team. The company has also introduced a supply chain training initiative and a new enterprise resource planning system.

Overall first half revenues were down at £14.4 million, compared with £18.1 million in the comparative period of last year, mainly because of the problems in the manufacturing business.

SEGR reported an operating profit of £0.5 million (H1 2010: £1.1 million) and an adjusted pre tax profit of £0.2 million (H1 2010: £1 million). Earnings (EBITDA) were down from £1.4 million in the first half of last year to £0.8 million.

There were also positives. Order intake increase by 20 per cent to £16.5 million, compared with £13.8 million in the first half of last year. 

Breaking it down into its component parts the £16.5 million order intake, which puts the order book at £21.5 million at June 30 2011, was split with £6.7 million in manufacturing and £14.8 million in aftermarket. This order book provides delivery coverage into the second quarter of 2012, SEGR said.

Thanks to the strength of the aftermarket division gross profit margin increased to 34.1 per cent compared with 32.3 per cent last year. 

Net debt reduced to £9.3 million from £10.5 million in the first half of last year, but this is actually up from the £6.7 million reported at the 2010 year end, due to a temporary increase in working capital.

"We are pleased that order intake levels in Hayward Tyler have continued to grow in line with previously stated expectations.  It is also encouraging to see a further improvement in gross margin levels,” said chairman Ewan Lloyd-Baker.

“However, it is disappointing that delays in the manufacturing division have impacted our half year numbers. 

“We nevertheless expect to see a substantial improvement in the operational performance of the business in the second half though inevitably the timing of certain contracts completing will ultimately determine the scale of our full year results.”  

Highlighting a more positive outlook for that current period, SEGR said: “With the majority of the delayed units now shipped the second half outlook for the manufacturing division is more encouraging with margins expected to improve albeit not to the levels achieved last year.”

In the short term there are still question marks over demand, although SEGR said that the ‘softening in new unit demand’ experienced in China and India is expected to be only temporary in nature and the longer term outlook is positive for new build power plants in both countries.  

“Likewise, given the events earlier in the year (the Fukushima disaster) it is encouraging to see activity levels in nuclear new-build increasing and this sector remains a critical part of the future energy plans of China, India, the UK and USA (all markets in which Hayward Tyler has a strong presence).”

“The board expects to see a substantial improvement in the operational performance of the business in the second half driven by the higher margin aftermarket business,” SEGR added. 

“Management is currently focused on restoring the manufacturing division to profitability.”

In a separate statement today SEGR confirmed that it is no longer in talks, with an un-named third party, over a potential sale of the company.

At 9:00 the group’s shares were down 10.5 pence, about 16 per cent, trading at 52.5 pence a share.

“(The) interims show a decent improvement in service profits while manufacturing was disappointing, with slippage in some contract deliveries out of the first half into the second,” finnCap analyst David Buxton said in a note to clients. 

“There has also been a boost from the shift in the product mix towards the higher gross margins of the services operation. 

“India and China should both resume orders as their inexorable growth demands significant increases in power generation equipment,” he added.