FTSE 100 closes up 19 at 7,370
FTSE 250 down 37, largely thanks to Carillion's plunge
Milestone Group lifted by strategic investor coming on board at big premium
FTSE 100 joined other European indices to close around 19 ahead at 7,370 with miners in support.
The FTSE 250 however closed the session 37 down at 19,357, with Carillion PLC (LON:CLLN) shares losing almost 40% at 117.10p.
Shares crashed today as the chief executive went for the exit as it suspended its 2017 dividend and warned profits would be lower and debt higher than expected.
Top dog however on FTSE 100 was Schroders (LON: SDR) as it rose 2.15% to 3,225p, while miners BHP Billiton plc (LON:BLT) and Anglo American (LON:AAL) both added 1.6%.
Drugs giant Shire (LON:SHP) was the biggest faller, losing 3.19% to 4,186.5p.
Today it emerged the firm had won a court injunction in Germany to stop its Swiss rival Roche from spreading “incomplete and misleading” statements about the Irish company’s bypassing agent FEIBA.
Roche blamed FEIBA for its role in adverse events during trials of its emicizumab drug for treating haemophilia, a rare condition that affects the blood's ability to clot.
3.15pm - FTSE 100 sporting modest gains
Entering the final hour of trading, the FTSE 100 was sporting moderate gains but the FTSE 250 remained weighed down by Carillion PLC (LON:CLLN).
The FTSE 100 was 27 points to the good at 7,378, but the FTSE 250 was down 36 points at 19,359, as investors in Carillion stampeded for the exits.
Carillion’s chief executive has gone; its dividend has gone – at least for the time being – and the company’s interest in public/private partnership work in the UK has also disappeared, taking with it about two-thirds of the share price.
£CLLN looks uninvestable to me. £700m of debt on very mediocre cash flows suggests unpleasant dilution ahead.
— Tabhair (@tabhaircom) July 10, 2017
Short sellers – people who borrow shares from a third party and sell them in the hope of buying them back at a lower price – have reportedly made a killing on Carillion.
$CLLN CARILLION the short position was 25.49% with Blackrock, Marshall Wace & Thunderbird in the £ seats: the FCA shorters corner list.
— Hardman & Co (@HardmanandCo) July 10, 2017
This one will take some explaining.
CLLN got big problems then - so Share Price chart was telling us all along. They're doing Webcast that will be on their website later.
— WheelieDealer (@wheeliedealer) July 10, 2017
At the cheaper end of the market – although at this rate Carillion will be down among the small caps soon enough - Milestone Group PLC (LON:MSG), the digital media, technology and social impact solutions provider, saw its shares rise from 0.14p at Friday’s close to 0.162p after British businessman Dr Ramesh Para pumped £1.5mln into the company by subscribing for shares at around 0.29p a pop.
Following this show of faith, Dr Para will join the board of Milestone is what is expected to be the first of a number of appointment to be made to the Milestone board and management team in support of a restructuring of the business.
3.00pm ... FTSE 100 recovers from lunchtime wobble
UK blue chips emerged from a lunchtime wobble to reclaim the high ground in the afternoon session.
The FTSE 100 was up 29 at 7,380, despite a mixed opening by US stocks.
The top-share index was bolstered by a turnaround in the fortune of mining stocks, which make up a substantial proportion of the index.
Among the small caps, Michelmersh Brick Holdings Plc’s (LON:MBH) share price stoked up to 79.5p, up 4.6%, on news of its latest contract win.
The bricks maker, which operates at the premium end of the market, said bricks from its Blockley plant in Telford, Shropshire, will be used on the Battersea Power Station development in London.
The building will be familiar to most Londoners or indeed Pink Floyd fans after it was featured on the album cover of the band’s Animals album.
Chile-focused Herencia Resources PLC’s (LON:HER) tumbled 17% to 0.0390p after a huge number of shares were issued at 0.01p as a result of a loan note conversion.
In all, just over 943mln shares were issued as a result of a conversion of loan notes into equity.
1.30pm ... Expectations of subdued start on Wall Street see Footsie's gains dissipate
The FTSE 100 turned negative in the lunchtime session, albeit by just over a point, ahead of the start of trading in the US.
Spread betting quotes suggested the S&P 500 would open its account barely changed when trading starts at 2.30pm UK time, while the Dow was seen opening around 10 points lower.
The FTSE 100 was a point off the pace at 7,450.
Among the mid-caps, Carillion remained the big talking point.
“The group, which is involved in a wide range of activities including construction, maintenance and support services, has been hit by cash flow problems on construction contracts in the Middle East,” noted Ian Forrest, an investment research analyst at The Share Centre.
“Carillion’s problems are not new as can be seen by the fact that the shares have underperformed the market for two years. The final straw for many investors patient enough to hold on until now was probably today’s news that dividend payments have been suspended. Despite the group continuing to win new contracts I think it is fair to say it has a lot of work to do to regain the market’s confidence,” he added.
Carillion shares were down 35% at 125.3p.
11.30 ... Footsie consolidates early gains
After opening firmer, the FTSE 100 traded in a narrow range for the following three hours.
Shortly after 11.00am, the blue-chip benchmark was up 24 at 7,374, some 14 points below its high on the day.
Babcock International Group PLC (LON:BAB), down 1.3%, was one of the biggest fallers among Footsie constituents as it got caught in the fall-out from this morning’s shock announcement from fellow infrastructure and building company, Carillion PLC (LON:CLLN).
READ Carillion shares plunge as it warns on full year revenue and chief executive departs
Payday for hedge funds short Carillion (and there's a lot) - profit warning wipes 40% off market cap pic.twitter.com/jWURh3OVLe
— Alasdair Pal (@AlasdairPal) July 10, 2017
Carillion shares are above their nadir for the day of 113.8p but are still down by almost a third at 130.6p after announcing a strategic review following the departure of its chief executive, Richard Howson.
The share price collapse of Carillion was severe enough to drag the FTSE 250 index into the red – down 40 at 19,355.
Also on the slide was homewares seller Dunelm Group PLC (LON:DNLM), which shed 19p to 601p after Cantor Fitzgerald chopped its price target to 780p from 850p.
Among the minnows, Saffron Energy plc (LON:SRON) shares made a positive start to Monday, rising 11%, after the recently listed Italy-focused firm reported a 104% rise in gas production.
Figures for the second quarter show output of 1.76mln cubic metres (or 62.2mln cubic feet) in the three months to June 30, compared to 862,000 cubic metres (30.4mln cubic feet). The jump in production was a direct result of the Bezzecca field coming online in mid-April 2017.
It also noted gas sales to Shell Energy Italia rose by 93% during the period.
Sector peer 88 Energy Ltd (LON:88E, ASX:88E) plunged 39% after it announced it is planning to shut-in the Icewine-2 well on Alaska’s North Slope to allow pressure to build up and soaking to occur.
Despite today’s loss, the shares are still up 5.3% over the last year.
8.30am ... Carillion clobbered as it exits numerous markets and parts ways with CEO
The top-share index has started on the front foot with financials leading the way.
The FTSE 100 was up 18 at 7,369 with wealth management firm Schroders PLC (LON:SDR), up 2.5% at 3,236p, the top riser among the index’s constituents after RBC Capital Markets upgraded the stock from ‘sector perform’ to ‘outperform’ and pushed up the target price to 3,400p from 3,300p.
Emerging markets focused banks HSBC Holdings PLC (LON:HSBA) and Standard Chartered PLC (LON:STAN) were the next best performers; both were up 1.3% as Asian markets advanced strongly this morning.
Mining stocks were out of favour, especially the silver and gold diggers. Fresnillo PLC (LON:FRES) was down 2.8% while Randgold Resources Ltd (LON:RRS) shed 1.1%.
The situation was not so rosy among the mid-caps, with the FTSE 250 off 13 points at 19,383, largely due to Carillion PLC (LON:CLLN) losing more than a third of its value after a bleak trading statement.
The company said its first half operating profit was lower than expected, primarily due to the phasing of public/private partnership (PPP) equity disposals, which are now expected to take place in the second half.
Worse than that, deterioration in cash flows on a select number of construction contracts has led the board to undertake an enhanced review of all of the group's material contracts, and as a result the group has made a contract provision of £845mln.
As a result of the enhanced contracts review and the strategic actions it is taking, reflecting difficult markets and exits from certain territories, Carillion revised down full-year guidance, with revenue now expected to be between £4.8bn and £5.0bn and overall performance expected to be below management's previous expectations.
Market preview
London’s blue chips are set to start brightly after good gains in Asia overnight.
Financial spread bet firms see the FTSE 100 adding over thirty points when trading gets underway to add to gains of 13 on Friday at 7,350.
Asian markets picked up from a strong close to the US ahead of the weekend, with the Dow Jones Industrial Average almost 100 points higher after the strong non-farm payroll numbers.
Tokyo was over 160 points higher, Hong Kong added 250 with only China lagging and barely moving near the close.
News headlines
- G4S has landed a new tagging contract with the Ministry of Justice despite having to repay more than £108mln to the UK government over a fraud scandal, City AM writes. The security company will supply tagging equipment to keep tabs on offenders, the MoJ said.
- A traditional British fry up could cost £3 more if the government fails to secure a trade deal with the European Union, the Guardian writes. citing a report by KPMG.The ingredients for a family breakfast could increase by nearly 135 from £23.59 to £26.61.
- Ofcom will begin a multibillion-pound auction of mobile airwaves this week, The Telegraph says. The auction, seen as a crucial step on the path towards next-generation 5G internet access, is expected to lay the ground for an £11bn return to the stock market later this year for mobile operator O2.
- Theresa May will this week pledge to embrace ideas from Labour in an attempt to shore up her premiership against mutinous MPs as she prepares to publish the most significant piece of Brexit legislation, the FT reports.
- External consultants have been drafted in by BT as part of a cost-cutting drive. The telecoms group has been working with McKinsey to find efficiency savings as it prepares to face shareholders at its annual meeting on Wednesday, reports the Times.
- The owner of British Airways has thrown its support behind a new third runway plan for London’s Heathrow airport from the wealthy founder of the Arora hotel group who claims he can cut the price of the project by up to £7bn.
- The Telegraph, though, adds that the hotel tycoon’s bid to build a cheaper third runway at Heathrow risks causing more noise pollution over London than the airport’s own £17.6bn proposal.
- UK car insurance prices are close to an all-time high, with the average cost for a comprehensive policy reaching £847 at the end of June. That is an increase of 19% over the past year according to Willis Towers Watson and Confused.com, reports the FT.
- Gold: US$1,207 down US$2
- Oil (WTI) US$44.48 up 25c
- £/$:1.2902
Commodities/currencies
Proactive News Headlines:
88 Energy Ltd (LON:88E, ASX;88E) shares dropped more than 35% in Monday’s early deals after the company announced it is planning to shut-in the Icewine-2 well on Alaska’s North Slope to allow pressure to build up and soaking to occur.
UK Oil & Gas Investments PLC (LON:UKOG) is topping up its stake in Horse Hill, the so-called ‘Gatwick Gusher’ project, in Southern England, by acquiring a stake held by Regency Mines. UKOG is picking up an extra 1.235% interest in the project, meaning it will have a beneficial interest of 32.435% in Horse Hill. It is acquiring Regency’s 1.9% stake in the HHDL vehicle which owns 65% of Horse Hill.
Aminex plc (LON:AEX) told investors it has hired io, a Baker Hughes unit, by commissioning a gas commercialisation study for the Ntorya gas discovery, in Tanzania, which was validated by the recent Ntorya-2 appraisal well.
Solo Oil PLC (LON:SOLO) chairman Neil Ritson declared himself “pleased” with the news that partner Aminex plc has hired IO, a Baker Hughes unit, for a gas commercialisation study for the Ntorya gas discovery, in Tanzania.
Europa Oil & Gas Holdings Plc (LON:EOG) has told investors that the multi-client Crean 3D seismic acquisition campaign is now underway, and it’s acreage is due to be covered during the summer. The company’s 30% owned Licence Option 16/19 is among the areas being assessed by the programme, carried out by TGS using the Polar Marquis vessel.
Columbus Energy Resources PLC (LON:CERP), the company formerly known as LGO Energy, has detailed new initiatives planned following an initial review of operations in Trinidad. The company explained the aim of the review was to develop a work programme, in a capital efficient manner, with the objective of being cash flow positive across the company by the fourth quarter of this year.
Digital media and social video broadcaster Brave Bison Group PLC (LON:BBSN) has confirmed that its new chief executive will take the reins earlier than expected following the sudden resignation of interim boss Kevin Deeley this morning. New CEO Claire Hungate – appointed last month – was due to take over in September, but that has now been brought forward to 1 August.
Electronics firm Stadium Group plc (LON:SDM) has enjoyed a strong first half of 2017, with revenues and the order book both growing. In the six months to the end of June, Stadium said trading was ahead of the same period last year and in line with expectations, while the order book jumped once again to above £28mln, up from £25.8mln at the end of 2016.
Patagonia Gold plc (LON:PGD) has completed construction of the agglomeration plant at its long-held Cap-Oeste gold project in Argentina. The company will now move to a testing phase, and will deliver gold and silver production guidance once a month of full production has been completed.
Chaarat Gold Holdings Ltd (LON:CGH) has promoted chief operating officer Robert Benbow to the position of chief executive. Founder Dekel Golan moves to a business development role as Deputy Chairman of the Board.
Caledonia Mining Corporation PLC (LON:CMCL) has announced a fatality at the Blanket gold mine in Zimbabwe in a mining-related accident that occurred on 7 July 2017. The accident occurred in number 6 shaft area of the mine.
Premier African Minerals Limited (LON:PREM) has released financial results for the year to December 2016. Losses were pared back from the previous year to just under £5mln. Cash flow from operations is expected this year, now that the first tungsten from RHA has been shipped.
Atlantis Resources Limited (LON:ARL) said two of the three AHH turbines at its MeyGen tidal power project have been successfully reinstalled and reconnected, with the third one scheduled to be redeployed when tides permit, sometime in August.
Savannah Resources Plc (LON:SAV) has raised around £1.3mln before expenses to fund work on its projects, including its Portuguese lithium mine, with the subscription backed by its largest shareholder, Al Marjan Ltd which will increase its holding to just under 30%.
Tharisa PLC (LON:THA) is seeing signs of stability in the chrome market after sharp falls recently in the price of the metal. Liquidity has returned on the back of continued stainless steel demand and consumption out of China, it said, "while the fundamentals of the global stainless steel market remain sound.”
Empyrean Energy PLC (LON:EME), which last week told investors that a proposed exploration programme onshore California has been given the green-light, said today that the operator of the Depsey1-15 well has signed a drilling contract.
Silence Therapeutics PLC (LON:SLN) has flagged up positive news from one of the parties it recently issued an intellectual property claim against in the UK High Courts of Justice in an attempt to extend its European patent protection.
Harvest Minerals Ltd (LON:HMI) has appointed Lino Furia as its Brazilian-based sales manager to support sales of its KPfértil fertiliser and build a strong presence across the country’s agriculture sector.