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Markets: FTSE 100 stays positive on Tuesday
Interactive Investor's Market Report brings you bite-sized news covering all the day's FTSE and AIM announcements, the latest on commodities, global and domestic economics, gold, oil and currencies as well as US markets. Updated throughout the day, it's the digest you can't afford to miss.
Last updated: 17:00
UK markets: Tuesday's close
The FTSE 100 (UKX) slowly wore away at the gains made in early trading on Tuesday and closed barely up. Early enthusiasm over the striking of a new Greek bail-out deal eked away as Wall Street opened down.
The blue-chip index closed 12.99 higher at 5799.71.
The banks were the biggest winners, with Royal Bank of Scotland (RBS) gaining 4% after Swiss broker UBS upgraded the lender to 'buy'. Aberdeen Asset Management (ADN) lost 2% despite reporting strong results.
Christie Group (CTG) moved up 25% on AIM, while Falkland Oil and Gas () fell 48% after it reported that it had plugged and abandoned a well that came up dry. Falkland's heavy discount meant Interactive Investor users bought the stock heavily, while almost as many sold.
Chris Beauchamp, market analyst at IG, commented: "The Greek Prime Minister might have declared today to be a new dawn for Greece, but from a cold London the situation appears quite unchanged.
"The willingness to thrash out a new deal suggests a greater degree of tolerance for Greece's difficulties, but the embattled nation is certainly not out of the woods yet. No amount of debt swapping will change that."
At a glance...
|GBP/USD: 1.6024||Gold: $1,744.96|
|GBP/EUR: 1.2389||WTI crude oil: $87.14|
|EUR/USD: 1.2938||All changes from 09:00 GMT.|
US markets: 16:45 update
US stocks held near neutral on Tuesday following a series of positive US economic reports and after eurozone finance ministers loosened terms on loans to Greece.
Consumer confidence climbed in November to the highest level seen in more than four years, while before the bell, the Commerce Department reported orders for durable goods came in unchanged in October, with the data better than the decline anticipated by economists. A separate report showed home prices rising for a sixth month in September, underscoring the trend toward ongoing stabilisation in the sector.
The Dow Jones slipped 14 points to 12952. The Nasdaq added one point to 2978, while the S&P 500 was trading flat at 1406.
Portugal faces another year of austerity
Portugal has passed another austerity budget, as it aims to cut its deficit from 5% of economic output in 2012 to 4.5% in 2013, as required by its bail-out conditions.
The measures include a rise in the standard income tax rate from 24.5% to 28.5%, a rise in the top rate from 46.5% to 48%; plus a special 2.5% "social solidarity" tax; a lowering of the threshold for the top rate from €153,300 to €80,000 (£123,700 to £65,000) and an additional 3.5% surcharge on all incomes in 2013. The tax rises are equivalent to more than a month's wages for most Portuguese workers, and aim to increase government revenues by 30%. Spending cuts of €2.7 billion have also been targeted.
Portugal's economy is projected to shrink 3% this year, after contracting 1.7% in 2011, but the government hopes the recession will moderate to a 1% decline next year. The government is also expecting unemployment to rise from 15.7% to 16.4% of the workforce over the coming year.
King warns of euro threat
Outgoing Bank of England governor Sir Mervyn King has warned that the eurozone poses an increasing risk to the UK economy.
Sir Mervyn told MPs that the central bank's downbeat outlook for UK growth was the result of problems in the eurozone as well as worries about Asian and US economies.
However, as he prepares to step down from the top role, the governor said the bank would be in "very good hands" with his successor, Mark Carney.
Zambeef doubles pre-tax profits
Zambeef () has almost doubled its adjusted pre-tax profits for the full year to $13.5 million (£8.4 million), driven by the full-year contribution of the Mpongwe farm acquisition and ongoing demand for the company's major proteins.
A four-month delay to the recommissioning of its Zamanita plant has resulted in a temporary increase in net debt as uncrushed soya beans remain as stock on the balance sheet funded by short-term debt, with the additional impact that the group has forgone the EBITDA on the crushing of the soya beans. This has resulted in c. $40 million of working capital outflow contributing to net debt of $128 million. The plant is now fully operational and production is steadily ramping up, currently crushing 250 tonnes per day, with a target of 300 tonnes per day.
There was no specific update on the Zambian Revenue Authority's (ZRA) tax claim for $9.7 million in relation to Zamanita. The issue remains with the Zambian Revenue Appeals Tribunal, which is still waiting to hear the ZRA's evidence. The tribunal has set the ZRA a date of 19 December to make its submission, which if complied with, should result in a ruling from the tribunal in the first quarter of 2013.
OECD lowers growth prediction
The world is in danger of plunging back into recession unless firm action is taken by the leaders of the most powerful nations, the Organisation for Economic Co-operation and Development has warned.
The body lowered its prediction for the growth of its member economies the richest countries in the world to just 1.4% for next year, down from the 2.2% forecast in May.
The eurozone recession, which it said would be deeper than expected, and the US fiscal cliff were its major concerns.
MP Evans acquires new land in Indonesia
MP Evans (MPE) has obtained an interim permit, pending the issue of a definitive long lease, to develop 20,000 hectares of land for growing oil palms in South Sumatra, Indonesia. The cost was $275 (£172) per hectare.
While the company did not provide an estimate of how much land it expects to be able to plant, it said in-field planting would start in 2014. It has also committed 30% of the developed land to smallholder co-operatives.
"Our initial very rough assumption would be for c. 10,000 hectares of land to be developed, with 3,000 hectares of this given over to smallholders," estimated Graham Jones, analyst at Panmure Gordon. "Such a scale of planting would give it the critical mass to build a [palm-oil processing] mill in due course. We would assume this planting is done over four years to 2018, with the first crop being delivered in 2016/2017."
UK markets: 15:00 update
The FTSE 100 (UKX) gave up some of its gains as Tuesday wore on, trading at 5795, eight points higher.
Royal Bank of Scotland (RBS) jumped 3%, while Aberdeen Asset Management (ADN) lost almost 2%.
On the AIM front, Falklands Oil and Gas () continued to linger in the doldrums, losing almost 46%. Shares in ATH Resources (ATH) soared 20%.
At a glance...
|GBP/USD: 1.6047||Gold: $1,745.96|
|GBP/EUR: 1.2396||WTI crude oil: $87.75|
|EUR/USD: 1.2946||All changes from 09:00 GMT.|
US markets: Tuesday's open
US stocks lost out in early trading after data showed companies were still not shelling out for big-ticket goods.
Orders for durable goods were flat in October, as declines in defence and transportation wiped out gains made elsewhere, according to data from the Commerce Department. Economists had predicted a 0.4% fall.
House price data pointed towards a recovery of the sector, with the S&P/Case-Shiller home price index posting a 0.3% increase in September. This was the sixth successive month of gains, but was lower than the 0.8% in August.
The Nasdaq lost three points to 2974, while the S&P 500 moved down one point to 1405. The Dow Jones fell 12 points to 12955.
Max unveils refinancing plans
Max Petroleum () has announced its intention to implement a refinancing and a comprehensive restructuring of its outstanding debt facilities.
"The future opportunities for Max to grow production and reserves in the post-salt remain exciting and offer valuable upside to our shareholders," commented president and chief financial officer Michael Young. "This refinancing enables us to focus on maximising value through the drill bit by implementing our post-salt drilling programme and to remove the overhang of debt that we previously faced coming to maturity in 2013."
Read: Max Petroleum to restructure debt, for the full story.
2ergo technology used for O2 Dublin scheme
2ergo Group () has deployed its podifi technology to launch O2's mobile "contactless couponing" pilot in the Silicon Docklands area of Dublin.
O2's Docklands Deals scheme enables customers on any mobile network to redeem local discounts and promotional offers from participating local retailers using their iPhone or Android smartphones.
Consumers can download the 2ergo-developed application from the iPhone App Store or Google Play Store to view available offers, saving relevant coupons to their smartphone, enabling it to act as a virtual mobile wallet.
EServGlobal announces Moneytrans partnership
EServGlobal (ESG) on Tuesday announced the integration of its HomeSend remittance service with the central platform of Moneytrans, a leading worldwide money-transfer operator based in Belgium.
A live remittance corridor is now in operation between Belgium, France, Spain, Italy, the Netherlands, the UK and the Philippines, enabling customers of Moneytrans to send funds to GCash, Globe Philippines' mobile wallet.
"The integration with Moneytrans will benefit all members of the HomeSend hub," said chief executive Craig Halliday. "Money-transfer organisations bring their expertise in quickly and smoothly transferring funds, allowing receivers to get their money sooner.
"In turn, HomeSend offers them extensive access to receiving markets without the need to invest in capex or opex associated with building new agent networks."
Elektron Technology sells ASL
Elektron Technology (EKT) has exchanged contracts for the sale of the business and assets of its ASL brand to WIKA Instruments for a total of approximately £600,000.
ASL manufactures and supplies precision temperature metrology and calibration equipment, areas where WIKA already has an established presence. As part of the transaction, eight employees will transfer from Elektron's Redhill site, which is scheduled for closure early in 2013, to the nearby WIKA facility.
The sale is expected to complete in the new year.
Caledonia hails outperformance
Caledonia Investments (CLDN) said it had outperformed its benchmark in the six months to 30 September.
The investment trust grew its net asset value total return by 3.8%, which represented an overperformance of 1.9% compared to the FTSE All-Share index.
However, for the year to 30 September it fell short of the index's performance.
The firm increased its interim dividend by 10% to 12.9p per share, reflecting continued growth in income from its portfolio.
Chief executive Will Wyatt commented: "The divestment of non-core, sub-scale investments is progressing well and income is increasing in line with our expectations. While markets remain difficult, we are reassured by the improving performance across the portfolio."
Fastjet launches Tanzania flights
Fastjet (FJET) has unveiled its first fully-branded aircraft ahead of commencing flight operations in Tanzania in two days' time.
At an industry event in Dar es Salaam, government officials, fastjet executives and aviation experts watched the fastjet Airbus A319 take to the skies for the first time.
The African low-cost airline will operate twice-daily flights on its first two routes, Dar es Salaam to Kilimanjaro and Dar es Salaam to Mwanza, both popular domestic destinations.Tickets went on sale two weeks ago and fastjet said demand outstripped its initial expectations.
Chemring performance "disappointing"
Chemring (CHG) has warned that its performance during 2012 was extremely disappointing. Operational performance had been weak, it said, and admitted that management of investors' expectations over the past year had been poor.
However, expectations for the defence group's trading performance for the financial year ended 31 October remained in line with the trading update issued on 1 November.
Trading in the final quarter was impacted by the issues that principally affected the countermeasures and munitions business segments. As a result, turnover is expected to be approximately £740 million, up from £725 million.
The year-end order book was approximately £760 million, compared to £878.3 million at the prior-year end.
Mitchells and Butlers predicts difficult 2013
Mitchells and Butlers (MAB) has announced 2012 results marginally below market expectations, reporting pre-tax profit of £166 million, compared to a Bloomberg-compiled consensus of £170 million.
Like-for-like sales in the first eight weeks declined 0.1%, against a comparative of 2%. The group highlighted that like-for-like sales in the first few weeks of 2013 were down as a result of unseasonably warm weather last year and since then, like-for-like sales had increased by around 1%. The pub operator expected further inflationary and regulatory cost pressures to impact 2013, with ongoing alcohol duty increases, further food price inflation and other cost increases, coupled with continued tightness in consumer incomes.
"The market thinks Mitchells and Butlers represents good value because the [price/earnings ratio] is low at 9.8 [times], but the adjusted [enterprise value to EBITDAR ratio] of 7.7 [times] is a premium to managed pub and restaurant peers," noted Panmure Gordon's Simon French. "The market seems content to ignore that the group has a c. £400 million pension deficit, returns are below [the] weighted average cost of capital and, unusually for a pub company, it trades at a c. 25% premium to its net asset value.
"Combined with our caution on the UK consumer for the next 12 months, we reiterate our 'sell' recommendation and 225p target price."
De La Rue's order delays to impact profitability
De La Rue's (DLAR) interim results came in modestly ahead of analysts' expectations, with first-half pre-tax profits jumping 9% to £31.5 million, driven by a strong performance in security products and identity solutions.
However, the trading update highlighted that delays in receiving a handful of orders would impact the group's planned production schedules and result in lower profitability in currency than previously forecast, despite the benefits of the improvement plan.
"Whilst the company is confident that these contracts are delayed rather than lost, we have not upgraded our outer year estimates as capacity is likely to be constrained," said Thomas Rands, analyst at Investec. "However, our assessment is that they should help underpin forecasts - the company is still guiding to operating profit in excess of £100 million for 2014." He had a 'hold' recommendation on the stock.
Cookson Group announces Alent finance director
Cookson Group (CKSN) on Tuesday announced that David Egan would become finance director of Alent with effect from 1 January 2013.
Alent will be a new London-listed speciality chemicals company demerged from Cookson's performance materials division. The demerger is expected to become effective on 19 December.
As previously announced, Mike Butterworth, currently group finance director of Cookson, will act as interim finance director for Alent from listing until 1 January 2013.
Britvic well placed for 2013
Britvic's (BVIC) 2012 full-year results came in better than anticipated, with revenues and adjusted pre-tax profits declining by 2.6% and 20% to c. £1.3 billion and £84.4 million respectively.
By division, GB Carbs delivered the best performance with brand contribution flat at £188.7 million. The impact of the Fruit Shoot recall in the second half resulted in GB Stills' brand contribution falling by 5.9% to £141.2 million. The international business reported a 24% decline in brand contribution of £8.3 million, depressed by the Fruit Shoot recall. In France, brand contribution declined by 4.5% to £59.2 million. Ireland remained weak, with brand contribution declining by 23% to £44.6 million.
"We forecast that Britvic as a stand-alone business should be able to deliver a strong increase in profitability once it has worked through the issues caused by the Fruit Shoot recall," stated Damien McNeela, analyst at Panmure Gordon. He had a 'hold' recommendation on the stock.
Biggest "Cyber Monday" recorded
The US recorded its biggest-ever online shopping day on Monday, according to research firm Comscore.
Sales on Cyber Monday - the first Monday after Thanksgiving - amounted to $1.5 billion (£0.9 billion) in 2012, 20% higher than in 2011. Online-sales tracker IBM Benchmark put the internet shopping rise even higher - up nearly 27%.
However, despite the jump in sales over the weekend, there were concerns that the rise in spending over the festive period as a whole would be weaker this year.
Greek debt slashed
After more than 10 hours of talks on Monday, eurozone finance ministers and the International Monetary Fund (IMF) struck a deal that saw Greece's debt cut by €40 billion (£32 billion), paving the way for the next tranche of bail-out loans worth €44 billion.
The debt reduction, which included cutting the interest rate on loans to Greece and returning €11 billion to Athens in profits from European Central Bank (ECB) purchases of Greek government bonds, will bring an immediate 20% reduction to the country's debt, from an estimated 144% to 124% of its gross domestic product by 2020.
For the full story, read: Ministers strike Greek debt deal.
Magnolia beats production forecast
After initial production at a well beat expectations, Magnolia Petroleum (MAGP) said it expects to pay off its investment at the Mississippi Lime formation, Oklahoma, ahead of time.
Chief operating officer Rita Whittington said: "We are delighted with the initial production rates for the Otis and SPS wells, both of which have exceeded our expectations."
Read: Better-than-expected production buoys Magnolia, for more.
UK markets: Midday update
After providing drag on Monday, the banks helped push the FTSE 100 (UKX) higher on Tuesday as the overnight agreement on Greece's aid package boosted sentiment.
The index of leading shares gained 18 points to 5805.
Royal Bank of Scotland (RBS) topped the table with a 2.8% gain, while Pearson (PSON) lost 1.6%.
Aortech International (AOR) gained 12% on AIM. Falkland Oil and Gas () lost almost half its capitalisation on the news that its Scotia well would be plugged and abandoned after no commercial oil or gas was found. This sparked Interactive Investor users to both buy and sell, as it became the most-traded stock on the site.
Alastair McCaig, market analyst at IG, commented: "It was a case of third time lucky for the International Monetary Fund and European Central Bank as late into the night they were finally able to thrash out an agreement over Greek debt.
"Looking ahead to the US open it will be interesting to see what Fed chairmen Ben Bernanke has to say at 1.30pm (London time), but at the moment the Dow is called to open up three points."
At a glance...
|GBP/USD: 1.6021||Gold: $1,746.23|
|GBP/EUR: 1.2376||WTI crude oil: $87.81|
|EUR/USD: 1.2949||All changes from 09:00 GMT.|
Nostra Terra well beats expectations
US-focused Nostra Terra Oil and Gas (NTOG) said the first horizontal well in its 20%-owned Chisholm Trail Prospect, Oklahoma, had averaged 258 barrels of oil equivalent per day for the most recent 10 days of production, which was ahead of the company's initial expectations.
Shares in Nostra Terra were trading up 5% on Tuesday.
The well has now been producing and selling oil for several weeks. It is still in the process of being cleaned up and will continue to recover a mixture of fracking fluid, oil and gas during this process.
The firm has also reported that hydraulic fracturing operations have been completed on both the second and third horizontal wells. Production testing of both wells is expected to start imminently. Production levels on these additional wells will be announced following the initial flush production.
Matt Lofgran, chief executive, commented: "This result, as well as results from surrounding wells, gives us confidence in the remaining three wells in the prospect which have been announced and which include one well with a working interest to Nostra Terra of 12.58%."
Alpha Plus issues new retail bond
Alpha Plus Holdings has launched a 5.75% retail bond, which matures in 2019.
The private education provider, which is chaired by Sir John Ritblat and owned by property fund DV4, will secure its bond against a portfolio of real estate in central London comprising several schools.
Read: Alpha Plus launches 5.75% retail bond, for the full story.
Xstrata ships first Antapaccay copper
Xstrata Copper's (XTA) Antapaccay copper mine in southern Peru commenced production of commercial-grade copper in concentrates at the beginning of November and has delivered its first shipment to Matarani Port for delivery to customers worldwide. Meanwhile, Shares in Mexico-focused Arian Silver (AGQ) gained 9% after it said it had signed a contract for exclusive use of a newly-refurbished processing plant.
For our round-up, read: Tuesday's mining news.
Price rises pay off for Severn Trent
Severn Trent (SVT) was hit by the wet summer, which meant lower consumption of water, however this was more than offset by a price rise.
There was an allowed price rise of 5.2% in its regulated business, which left turnover 3.6% higher at £917.7 million in the six months to 30 September.
Underlying pre-tax profit moved up 1.6% to £157.5 million.
The utilities group said it was on track to deliver its expectations for the full year, with consumption anticipated to return to normal seasonal levels in the second half.
GDP growth maintained at 1% in third quarter
GDP growth in the third quarter was confirmed at a robust-looking 1.0% quarter-on-quarter.
However, Howard Archer, chief UK and European economist at IHS Global Insight, warned that the economy was far from out of the woods: "Indeed, latest data and surveys indicate that there is a very real possibility that the economy could suffer a renewed modest dip in GDP in the fourth quarter, partly due to some unwinding of the overall boost to activity in the third quarter coming from the Olympics and partly due to heightened pressure on consumers coming from a move back up in inflation. Meanwhile, weakened eurozone economic activity continues to weigh on exports."
He was expecting the economy to be essentially flat in the fourth quarter, which would also result in flat overall GDP in 2012.
FOGL nosedives on well failure
Falkland Oil and Gas () lost almost half its market capitalisation on news that its Scotia 31/12-01 well found a poor-quality reservoir that would not yield oil or gas.
"Whilst reservoir quality at this particular location was poor, it should be recognised that the seismic amplitude anomaly that defines Scotia covers an area of approximately 350 square kilometres," the group stated.
For the full story, read: Falkland Oil and Gas plummets on Scotia abandonment.
Standard Life bonds to raise £500 million
Standard Life () has announced a bond issue that should raise £500 million. The notes will have a 5.5% fixed rate with a first call date in December 2022.
The life and pensions firm said that the strong market demand, which was evidenced by an over-subscribed order book, had enabled Standard Life to price competitively at the low end of its target range.
Chief financial officer Jackie Hunt commented: "As part of our active capital management programme, and building on the recent issuance of subordinated debentures in Canada, we have today taken advantage of favourable market conditions to improve the leverage position of the Standard Life Group via a subordinated debt issuance directly from our holding company."
Vodafone launches Kenyan mobile finance service
Vodafone's (VOD) joint venture, M-Pesa, will now offer customers in Kenya access to interest-bearing savings accounts and the ability to take out small loans through a new service, called M-Shwari.
This is the next step in the M-Pesa plan to increase access to a wider range of financial services and is the result of a new strategic co-operation between Vodafone, Safaricom and the Commercial Bank of Africa (CBA).
Safaricom customers can sign up to the M-Shwari interest-bearing savings account, provided by CBA, directly through the M-Pesa menu on their phone. There are no forms to complete and no need to visit a bank branch. M-Pesa customers can also apply to CBA for a mini-loan, again directly from their phone. Based on the individual customer's M-Pesa transactions and savings history, CBA determines the customer's eligibility.
UK markets: 09:00 update
The FTSE 100 (UKX) moved up on Tuesday after news that a deal to provide the next bail-out tranche to Greece was agreed overnight.
The package means Greece will be able to draw down on funds, and also makes some concessions to ease the terms of previous agreements.
The benchmark index was at 5818, a gain of 31 points.
After a weak showing from banks on Monday, there was a recovery for many, with Royal Bank of Scotland (RBS) gaining 3.5% to top the blue chips.
Aberdeen Asset Management (ADN) was the worst of the few fallers on the index as it lost 0.4%.
Barclays (BARC) was once again the most-bought stock as it recovered from its losses on Monday.
Mike McCudden, head of derivatives at Interactive Investor, commented: "Relief that the European Union and International Monetary Fund have reached an agreement over Greece has pushed the euro higher and given equities a welcomed boost this morning.
"In early trading it's clearly 'risk on' with a sea of blue across the board. Regardless, most investors would agree that the ongoing Greek saga will be back to steal the headlines again in near future.
"Once the excitement dies down attention will quickly shift back to the US and the impending fiscal cliff."
US markets: Monday's close
Wall Street closed on a mixed note on Monday as US legislators prepared to debate the fiscal cliff.
The Dow Jones was down 42 points to 12967, whereas the Nasdaq gained nine points to 2976. The S&P 500 lost two points to 1406.
At a glance...
|Nikkei 225: 9423 ( 34)||GBP/USD: 1.6043||Gold: $1,748.10|
|Hang Seng: 21844 ( 17)||GBP/EUR: 1.2350||WTI crude oil: $88.13|
|Shanghai Composite: 1991 ( 26)||EUR/USD: 1.2990|
08:00 - The FTSE 100 (UKX) opens at 5786.72.
|DE LA RUE||494.50p||4.32%|
|ROYAL BANK OF SCOTLAND GROU...||253.50p||-1.86%|
|XSTRATA ORD USD0.50||0.00||0.00%|
|M P EVANS GROUP||740.00p||-0.80%|
|ABERDEEN ASSET MANAGEMENT||0.00||0.00%|
|CALEDONIA INVESTMENTS PLC O...||2,670.00p||-0.74%|
|ATH RESOURCES ORD 0.5P||0.00||0.00%|
|ARIAN SILVER CORP||0.21p||12.16%|
|VESUVIUS ORD 10P||0.00||0.00%|
|MITCHELLS & BUTLERS||243.00p||0.08%|
|NOSTRA TERRA OIL & GAS CO||3.70p||-1.99%|
|All data 15min delayed as of: 16:37:39 23/03/18|