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Ocado recoups some losses over Takeoff, Kroger worries

A look at some of the major risers and fallers in London on Wednesday

Mulberry under pressure

Ocado PLC (LON:OCDO) was a big riser on Wednesday, up 5% to 1,133p as it recouped some of its sizeable losses in recent days on the back of worrying reports for the company that its relationship is “cooling” with US grocery partner Kroger.

Shares in the online grocery specialist had fallen around 20% over the week to Tuesday on concerns that rival tech firms are catching up, which is perhaps resulting in cold feet for Kroger, for which the UK company is helping build 20 high-tech warehouses around the USA to fulfil grocery delivery orders. 

Analysts at Jefferies put out a bearish note to clients about Ocado’s Kroger deal, noting the smaller and more efficient automated warehouses being rolled out by rival online grocery start-up called Takeoff Technologies, based in Massachusetts.

It has been suggested by analysts that Takeoff’s smaller warehouses might be better suited for the US market than Ocado's as they might be better at fulfilling same-day delivery orders. 

In a new note, Bernstein analysts said that the sell-off was undeserved, arguing that Takeoff's systems are not as sophisticated as Ocado's and that the FTSE 100 group's relationship with Kroger remains strong.

“At current share price, we are very close to the point where nothing of the future is priced in,” they said.

Another company recouping some share price losses is Royal Mail Group PLC (LON:RMG) as it won a High Court injunction to block a potential strikes by postal workers.

Last Friday the letters and parcels group applied for the legal blocking manoeuvre to prevent members of the Communication Workers Union going on strike, saying it believed the ballot was “unlawful” and that the process could “damage” the company.

After the ruling on Wednesday afternoon the CWU said: "The High Court has ruled against us. Genuinely this is an utter outrage. 110,000 workers vs the establishment."

The postal group was not please with all the day’s developments, however, as it was slapped with a £50mln fine for breaking competition rules after losing an appeal against regulator Ofcom in the Competition Appeal Tribunal.

RMG shares were up 1.5% at 231.05p.

Befitting of its great racehorse name, Arkle Resources PLC (LON:ARK) shares leapt 21% higher to 1.39p after it identified encouraging features at a zinc project in Ireland.

Geophysical survey data at the Stonepark project, in which Ankle holds a 23.44% stake, had refined a key exploration concept at the site as well as a cross fault in another area.

"Our partners continue to build evidence supporting new and exciting exploration targets to the south of the project along the 'Pallas Green Corridor’”, said Arkle chief executive Patrick Cullen.

1.30pm: Tullow Oil investors pinch noses over sulphurous whiff from Guyana 

In among the habitually volatile small-cap movers on Wednesday was Tullow Oil plc (LON:TLW) as its shares crashed 28% to 148.6p by early afternoon after cutting its oil production target and revealing disappointment about recent discovery drilling.

The Africa-focused producer said it anticipated average daily production for 2019 will be around 87,000 barrels of oil, down from the previous guidance of 89,000–93,000, which in combination with a dip in oil prices has also hit free cash flow generation and therefore putting pressure on the dividend. 

Tullow also said its recent discoveries in Guyana with Eco Atlantic contain low quality, heavy, sulphurous oil, which analysts said would offer significantly lower commercial value.

“Given the group has recently started paying a dividend, but still has some work to do on debt reduction, that’s far from ideal,” said analyst Nicholas Hyett at Hargreaves Lansdown.

Other fallers among the FTSE 250 included OneSavings Bank PLC (LON:OSB), down more than 2% to 362p despite a seemingly strong performance in the third quarter.

In what was the first trading update since the completion of the merger with Charter Court in early October, the challenger bank said that despite the macroeconomic uncertainty, both franchises were “performing very well, with strong levels of applications at attractive margins … building a robust pipeline for Q1 2020”.

Broker Shore Capital said the performance appeared to be in line with previous guidance in respect of loan book growth and net interest margin. 

Similarly, Wizz Air Holdings PLC (LON:WIZZ) quickly gave up early gains to fall 2% to 3,786p despite tightening its full-year profit guidance. 

The central and eastern Europe focused airline now expects full-year profit to be between €335mln and €350mln, after revenue increased 21.7%, mostly thanks to a 39% boost in ancillary services. 

Wizz shares hit an all-time high earlier this month, so the shares seemed victims of some profit taking or over-optimism from some investors. 

Elsewher, Renold PLC (LON:RNO) was clunking lower as it reported flat sales and profits for the first half, with a couple of board members breaking free from the maker of industrial chains. 

“A more challenging economic backdrop impacted on revenue and order intake in the first half of the year,” said chief executive Robert Purcell, adding that work had been done to sustain profits and improve margins.

But finance director Ian Scapens has given notice of his resignation, while non-executive director Ian Griffiths is retiring.

9.15am: Inspirit warms up after "long journey" with boiler

Inspirit Energy Holdings Plc’s (LON: INSP) seemingly frozen shares warmed up a little as the company said it was in discussions about a number of potential application of its technology into sectors such as solar, renewable and refrigeration.

Inspirit, which as KleenAir Systems acquired a business developing a micro combined-heat-and-power domestic boiler in 2013 using the Stirling engine technology first developed by Scottish clergyman Robert Stirling in 1816, said it had been invited to demonstrate its Stirling technology to a “large scale Swedish marine engine manufacturer” with a view to designing and developing a potential application for the marine and shipping industry.

Shares in the company, which said it was “at a pivotal point” after a “long journey...that has not been as straight forward as we would have liked”, were up 46% to 0.051p on Wednesday morning.

Meanwhile, investors are not the only people queuing up to buy Accesso Technology Group PLC (LON:ASCO) as the e-ticketing specialist continues talks to sell itself.

The company said it has received “refreshed indications of interest over the last several months” and these suitors were still engaged in financial and operational due diligence.

Accesso shares jumped 13% to 585p by late morning.

EQTEC PLC (LON:EQT) shares also sparked up 11% to 0.1p as it won a €5.5mln (£4.7mln) contract to develop a biogas power plant in France.

In what is its first deal in the country, the company will provide the technology, equipment and services required to construct the plant.

Final documentation for the agreement is now being processed, while Eqtec has also reached out to third parties regarding funding for the project.

9.45am: Bonhill running down that hill

Shares in Bonhill Group plc (LON:BONH) were tumbling down a 31% incline to 37.13p in early morning trading after its big acquisition from earlier in the year was hit by tougher trading in Hong Kong and the UK. 

The publisher of What Investment and Growth Company Investor said the civil unrest in Hong Kong and weaker flows in the UK fund management industry were weighing on Last Word Media, the business information, data and live events business it acquired for £7.8mln in April.

Bonhill said that while it had fired three executives and been reassured by “more normalised trading pattens” for its US business in the second half, the group was likely to fall short of full-year targets.

House broker Shore Capital noted that underlying profits (EBITDA) for the year are now expected to come in roughly at £2.5m, well below previous guidance of circa £4.0mln.  

Over in the more glamorous circles of luxury group Mulberry Group PLC (LON:MUL) some investors were clutching their handbags to their chest with disappointment after the leather goods maker’s interim results. 

Revenue was up less than 1% to £68.9mln as good overseas growth was offset by a 4% decline from the UK, with loss before tax growing to £9.9mln from £8.2mln last time due to further investment and the effect of a “challenging UK market”.

The board said the UK has been impacted by “an increasingly promotion led environment and lower traffic to stores” but was able to say it “expects the group to trade profitably and to generate cash during the second half of the financial year”.

Mulberry shares were down 7% to 261.65p.

Proactive news headlines:

Integumen PLC (LON:SKIN) provided 2020 revenue guidance of £4mln as it unveiled a deal to deliver artificial intelligence software to clients of Parity Group, the data and people specialist. The Drive4Growth partnership will provide Integumen access to Parity's National Health Service, central government and private institutional client base, the company said.  And it creates the opportunity to cross-sell its intelligent data management services driven by its Rinodrive technology, it added.

Avacta Group PLC (LON:AVCT) has taken an “important step” towards further “substantial” milestone payments from the drug development arm of the Korean giant LG by expanding its partnership. The latest update reveals that LG Chem has now nominated two further prospective treatments that will use the UK group’s technology. Avacta chief executive Alastair Smith said the first LG drug programme had made “excellent progress”, and was upbeat on the expanded collaboration.

Xpediator PLC (LON:XPD) has appointed a new chief financial officer, Robert Ross, who will take up his post on 1 January. In a statement, the AIM-listed provider of freight management services said Ross is replacing Richard Myson, who has been at the company for 15 years and will become the group's chief commercial officer. Ross is currently finance director of Europa Worldwide Group, a transport and logistics company with £175mln annual revenues, and previously held several management roles at Big Four auditor PwC.

Arc Minerals PLC (LON:ARCM) has unveiled plans to sell its entire 99.43% interest in Casa Mining Limited to Canadian private equity group, Century Capital Management Ltd for a total consideration of up to US$9.8mln. In a statement, the company said the initial consideration will comprise a cash consideration of US$1.8mln and will have a significant positive impact on Arc's cash and balance sheet position.

EQTEC PLC (LON:EQT) has inked an agreement to develop a 1.18 megawatt (MW) biogas power plant in the commune of Gratens in France. Under the €5.5mln (£4.7mln) commercial agreement with French group Biomasse 31, EQTEC’s first in the country, it will provide the technology, equipment and services required to construct the plant.

Accesso Technology Group PLC (LON:ASCO) is continuing discussions with several parties over a potential sale of the business. In a brief update on Tuesday, the electronic queuing and e-ticketing specialist said it has received “refreshed indications of interest over the last several months” and the interested parties were still engaged in financial and operational due diligence.

Caledonia Mining PLC (LON:CMCL) has shrugged off power outages in Zimbabwe to lift production at the Blanket mine by 7% in its latest quarter. Production in the three months to September was 13,646 ounces of gold as output rose in the second six weeks as Caledonia used generators it has installed at the gold mine to keep operations running.

Eco Atlantic Oil & Gas Ltd (LON:ECO, CVE:EOG) chief executive Gil Holzman said the explorer is “very confident of the potential” of its Guyana joint venture as it updated investors on the latest findings of analysis from its two new offshore discoveries. The Jethro-1 and the Joe-1 wells, drilled in August and September, continue to be analysed and fluid samples are presently in the lab. Initial results, meanwhile, indicate that both discoveries comprise mobile heavy crudes which are said to be “not dissimilar” to the commercial heavy crudes in the North Sea, Gulf of Mexico, Brazil, Venezuela and Angola.

Horizonte Minerals PLC (LON:HZM) (TSX:HZM) has highlighted another quarter of good progress at its projects in Brazil. At its flagship Araguaia project, mine financier Orion is to provide US$25mln for a 2.25% royalty on the first 426,429 tonnes of contained nickel within the final product (ferronickel) produced and sold. Horizonte also published a first resource for the Serra do Tapa nickel deposit that sits 90km to the north-west of Araguaia. In the Measured and Indicated category, Serra do Tapa contains 70.3mln tonnes grading 1.22% nickel, which has boosted Horizonte’s total tonnage by 30%.

Collagen Solutions PLC (LON:COS) has decided to streamline its board of directors by reducing its size from eight to six members as it enters its next phase of growth. In an update on Wednesday, the manufacturer of biomaterials and regenerative medicines said that its chief business officer, Lou Ruggiero, and chief operating officer, Tom Hyland, will resign from the board of directors. This will leave the chief executive officer Jamal Rushdy and chief financial officer Hilary Spence as the only two executive directors on the board, and reduce the entire size from eight members to six.

Sound Energy PLC (LON:SOU) has told investors that Mohammed Seghri, its current managing director for Morocco, will be appointed as interim chief executive in the near future. In August, the company revealed that James Parsons would step down from the company amid a strategy to partially divest its Eastern Morocco portfolio, which envisages the continuing Morocco business being fully carried and non-operated. It has now been confirmed that Seghri will be interim chief executive and current non-executive director Marco Fumagalli will become acting chairman with immediate effect, to replace chairman Simon Davies.

Crossword Cybersecurity PLC’s (LON:CCS) chief executive, Tom Ilube, has been added to the #IB100, a list of the top 100 most influential black, Asian and minority ethnic (BAME) leaders in the tech sector. The list will be published online as part of a Financial Times report into diversity in tech aiming to encourage technology firms to implement inclusive working practices to fix progression challenges facing BAME individuals from moving to senior leadership positions.

Landore Resources Limited (LON:LND) has converted the exploration permits into mining leases at two huge licences next to its Junior Lake property in Ontario. The two licences are held by 90% subsidiary Lamaune and cover an area of 4,133ha adjacent to four leases at Junior Lake.

Echo Energy PLC (LON:ECHO), the Latin American-focused upstream oil and gas company, announced that the acquisition by the company of a 70% initially non-operated working interest in the Santa Cruz Sur package of five mature producing blocks, from Petrolera El Trebol SA, a subsidiary of Phoenix Global Resources PLC has now completed. Martin Hull, Echo’s chief executive, commented: "We believe we have secured a very attractive price for a package of assets which provide the Company with a balanced, revenue-generating portfolio with significant upside as well as exciting near-term drilling opportunities. I look forward to updating shareholders on our progress in due course, not least as we finalise preparations for drilling at Tapi AIke."

Collagen Solutions PLC (LON: COS) has decided to streamline its board of directors by reducing its size from eight to six members as it enters its next phase of growth. In an update on Wednesday, the manufacturer of biomaterials and regenerative medicines said that its chief business officer, Lou Ruggiero, and chief operating officer, Tom Hyland, will resign from the board of directors. This will leave the chief executive officer Jamal Rushdy and chief financial officer Hilary Spence as the only two executive directors on the board, and reduce the entire size from eight members to six.

Seeing Machines Limited (LON:SEE), the advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety has appointed two independent non-executive directors, John Murray and Gerhard Vorster, with effect from 1 December 2019. The group noted that Murray is currently chairman of PainChek Limited, listed on the Australian Stock Exchange (ASX); Vorster is a former Deloitte partner with a growing board portfolio and significant expertise in strategy and technology and is currently an alternate director of the Brisbane Airport Corporation and chairman of the Bio Capital Impact Fund.

Nu-Oil and Gas PLC (LON:NUOG) has announced that Graham Scotton has resigned from his position as a non-executive director of the company with immediate effect by mutual agreement.

Verona Pharma  PLC (LON:VRP) (NASDAQ:VRNA), a clinical-stage biopharmaceutical company focused on respiratory diseases, said its CEO Jan-Anders Karlsson will present a corporate overview and host one-on-one meetings with investors at the Jefferies 2019 London Healthcare Conference taking place November 20-21, 2019.

Oriole Resources PLC (LON:ORR), the AIM-quoted exploration company focused on West Africa, said it will be attending the 121 Mining Investment Conference on Wednesday 20 November to Thursday 21 November 2019 at etc.venues County Hall, Riverside Building, Belvedere Road, London, SE1 7PB. The group said Tim Livesey, its chief executive officer, will be giving a presentation at 4.10pm on the 21 November 2019.

Gfinity PLC (LON:GFIN), a world-leading esports solutions provider, said its Annual General Meeting will be held at 10.00am on 6 December 2019 at the Gfinity Arena, Vue Cinema Fulham Broadway Retail Centre, Fulham Road, London SW6 1BW.

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