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(Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Tuesday.
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FTSE 100 - WINNERS
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Ferguson, up 1.9%. The plumbing and heating products supplier said it intends demerge its UK operations and will evaluate a new listing structure for its businesses. Wolseley UK will become an independently listed company solely serving the UK market, and Ferguson will be wholly focused on North America, the company explained. Ferguson said the board is considering the "most appropriate listing structure" for the US-focused group going forward. UK shareholders of Ferguson had become concerned last month amid reports the company was planning to move the listing of the entire company from London to New York. "It now also seems plausible that the company will switch its listing to the US which would be a blow to many of its big investors who hold the stock in UK equity funds. If Ferguson did leave the UK market, it would represent yet another well-known British business delisting from the London Stock Exchange as a result of a takeover, merger or strategic refocus," commented AJ Bell's Russ Mould.
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FTSE 100 - LOSERS
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DS Smith, down 2.0%. The packaging company said expectations for financial performance remain unchanged despite continued macro-economic uncertainty. DS Smith said for its first quarter to the end of July business has continued to progress well, driven by new wins in Europe and the US, as well as ongoing operating cost efficiencies and a focus on generating cash flow. These actions have bolstered DS Smith's confidence in its business, it said, despite ongoing subdued volumes in some markets, particularly areas with significant export-led market exposure, such as Germany. Construction of its greenfield packaging plant in Indiana is on-track, with production expected to start within 2019. In addition, the sale of DS Smith's Plastics division is expected to be completed before the end of 2019.
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Lloyds Banking Group, down 1.8%. The high street bank said it has acquired grocer Tesco's GBP3.7 billion UK residential mortgage portfolio. The deal will see 23,000 mortgage customers transfer to Halifax - a division of the Bank of Scotland, in turn a wholly owned subsidiary of Lloyds - from Tesco Personal Finance, which falls under Tesco Bank. Lloyds and Tesco expect the transfer of customers to begin at the end of September with the legal title change happening in March next year. The purchase price, of about GBP3.8 billion, represents a 2.5% premium to gross book value. Lloyds will fund the acquisition from existing internal resources, noting the deal will have "minimal" impact on capital. Tesco shares were down 1.2%.
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FTSE 250 - LOSERS
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Restaurant Group, down 13%. The Frankie & Bennys, Wagamama and Chiquito restaurants operator said reported a sharp swing to a half-year loss on a GBP100 million impairment charge for shutting 16 restaurants. In the 26 weeks to June 30, the company recorded a sharp swing to a pretax loss of GBP87.7 million from a GBP12.2 million profit a year before. Restaurant Group recorded GBP115.7 million in exceptional costs in the first half, compared to just GBP8.4 million a year before. In the first half, the company recognised GBP100 million in impairments in its Leisure unit, after closing 16 sites that were "structurally unattractive". Restaurant Group declared an interim dividend of 2.1 pence, in line with its policy of paying a dividend covered two times by adjusted profit after tax. A year ago, the company paid an interim dividend of 6.8p. "Today's very negative share price reaction is down to expectations being too high and Restaurant Group not delivering enough good news to keep the stock rising," said Mould.
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easyJet, down 4.3%. The budget airline was cut to Reduce from Hold by Keppler Cheuvreux.
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OTHER MAIN MARKET AND AIM - WINNERS
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Synnovia, up 38% at 121.10 pence. The industrial components manufacturer said it recommended a GBP48.8 million takeover offer from funds advised by Camelot Capital Partners. Under the acquisition's terms, BPF1 Ltd, a company wholly owned by Camelot will acquire Synnovia for 125 pence per share, reflecting a 43% premium to Synnovia's closing price of 87.5 pence on Friday last week. Camelot is the investment manager of Barker Partnership, which currently holds a 30% stake in Synnovia. The acquisition is conditional on receiving valid acceptances from at least 90% of shareholders in Synnovia for the offer, as well as a management shareholder resolution being approved at the company's next general meeting. So far, Camelot has received irrevocable undertaking from 58% of shareholders to accept the offer.
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Solid State, up 12%. The computing and power products manufacturer said that a strong start to its financial year has fostered confidence that profit for the year will be ahead of expectations. For the first four months to the end of July, Solid State said its trading was very strong and well ahead of budget. Revenue has largely remained in line with management expectations; however an acceleration of project work in the first half to date is set to benefit reported revenue and profit for the year. As a result of the strong start, profit for the year ending March 2020 is expected to be significantly ahead of expectations. Revenue is expected to be in line with consensus forecasts; however opportunities remain to generate further sales later in the year. Consensus estimates for the 2020 financial year gathered by Edison Investment Research has pretax profit at GBP3.7 million and revenue at GBP68.0 million. Solid State's pretax profit for financial 2019 was GBP2.8 million, on revenue of GBP56.3 million.
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OTHER MAIN MARKET AND AIM - LOSERS
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Xaar, down 29%. The industrial inkjet printhead maker said it now expects to generate lower revenue than previously guided due to higher than anticipated provisions for its Xaar 1201 Thin Film printhead inventory. In July, Xaar guided for interim revenue of GBP22.5 million, which included a GBP4.3 million "revenue reversal" relating to Xaar 1201 Thin Film printhead inventory being returned to the company. However, as part of a review of the company's inventory, and taking into account "near term prospects for sales", Xaar decided it would be "prudent" to up the provision to GBP5.7 million. Looking ahead, Xaar expects the remainder of the year to be "weaker" than previously anticipated. "This is principally due to lower sales volumes of Xaar 1201 and Xaar 2001 printheads as a result of slower than expected new printer installs by OEMs and credit and sales channel issues on Xaar 1201," the company explained.
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