LONDON MARKET PRE-OPEN: ContourGlobal ahead; Amigo scheme closer

Fri, 13th May 2022 07:53

(Alliance News) - Stocks in London were called sharply higher on Friday, helped by a positive session in Asia, as equity markets look to rebound from Thursday's bloodbath.

In early corporate news in London, Sage performed in line with expectations, while ContourGlobal was ahead of its own. Amigo moved a step closer to agreement on customer redress.

IG futures indicate the FTSE 100 index will open up 76.46 points, or 1.1%, at 7,309.80 on Friday. The blue-chip index closed down 114.32 points, or 1.6%, at 7,233.34 on Thursday.

CMC Market analyst Michael Hewson said: "We've seen more wild swings in equity markets over the last 24 hours, largely driven by a concern over slowing growth, and sticky inflation, raising fears of looming stagflation and possible recession.

"These worries manifested themselves in the guise of fluctuating bond yields, and weaker commodity prices, while Federal Reserve officials continued to show little signs of [backing down] from their current approach of aggressive tightening in the months ahead."

In Asia on Friday, the Japanese Nikkei 225 index closed up 2.6%. In China, the Shanghai Composite was 0.8% higher, while the Hang Seng index in Hong Kong was up 2.3%. The S&P/ASX 200 in Sydney ended up 1.9%.

In London, accounting software firm Sage Group left its full-year outlook unchanged after a strong first half performance, with its Business Cloud sales the star of the show.

In the six months to March 31, Sage recorded pretax profit of GBP189 million, down slightly from GBP190 million in the same period a year prior.

Revenue was broadly flat, slipping to GBP934 million from GBP937 million. It noted, however, organic revenue was up 5%, driven by Sage Business Cloud growth of 21%.

Sage upped its interim dividend to 6.30 pence from 6.05p.

"Our strategic investment in sales, marketing and innovation has continued to accelerate revenues across Sage Business Cloud, underpinned by increasing levels of new customer acquisition. Cloud native solutions, which now account for around a quarter of group annualised recurring revenue, have performed particularly well," Chief Executive Steve Hare said.

For financial 2022, Sage continues to expect organic recurring revenue growth in the region of 8% to 9%.

ContourGlobal said its trading has been "resilient" in the first three months of 2022, and believes it can still perform well despite the "unprecedented turbulence in the global energy markets".

The London-based power generation company continued: "We performed ahead of the board's expectations during the quarter, and I am pleased to confirm the first quarter dividend payment of 4.91 US cents per share, representing a 10% year-on-year growth in line with our dividend policy. This is underpinned by strong operating cash flows and a 15% year-on-year growth in adjusted Ebitda to USD208 million. The outlook for the rest of the year is favourable."

In the three-month period, revenue was up 53% year on year to USD652 million from USD427 million, with income rising 24% to USD94 million from USD76 million.

Net profit stood at USD8 million, down from USD9 million.

Production increased 40% to 4,701 gigawatt hours from 3,349 the year prior.

UK Oil & Gas said Friday it has been granted a one-year extension for its work programme at its PEDL137 licence, which contains the producing Horse Hill oil field.

The extension, granted by the North Sea Transition Authority, allows UKOG to drill a second well at Horse Hill's Kimmeridge oil pool, with work currently scheduled to begin before September 2023.

UKOG owns an 86% stake in Horse Hill, and is the operator, with a 12% stake held by Alba Mineral Resources. Horse Hill is an oil project near Gatwick Airport in southern England.

In May, UKOG won a full production permit for the field.

AQSE-listed Hydrogen Utopia International confirmed it is in discussion with AIM-listed Powerhouse Energy Group over a potential opportunity in Ireland.

"HUI has been exploring the possibilities in the region since November 2021and is searching for a JV partner to develop a first of a kind waste to hydrogen facility. There is currently no agreement in place and the PHE board is considering the proposal and how it may become involved in the potential project, which is at a very early stage," Hydrogen Utopia explained.

Investment vehicle Sivota said it has completed its acquisition of a majority stake in digital marketing engagement platform Apester.

Sivota was targeting investments in later-stage, Israeli technology-related firms.

The deal, Sivota noted, values Apester at USD16.0 million, and Sivota will now own 58% of its voting rights through preferred seed shares.

The deal will be funded by a GBP11.5 million placing and subscription of 11.5 million Sivota shares at 100p.

"Apester will be Sivota's first acquisition and is closely aligned with Sivota's strategic principles. Sivota is keen to leverage Apester's existing assets whilst applying forward thinking leadership and insight in order to increase value for Sivota's shareholders over time," the company added.

Embattled lender Amigo said its creditors have voted to push forward with its new business scheme.

The scheme - which is being proposed to settle customer claims following probes from UK regulators into mis-sold loans - required at least 75% of the claims of all creditors vote for it. Amigo noted, at a meeting held on Thursday, over 88% of creditors approved the scheme.

It also said, however, that 83% voted for Amigo's wind down scheme.

Now, the guarantor loans provider will asked the courts to approve the new business scheme, but should it be turned down, will ask for the wind down scheme to be approved.

Amigo said its shares will be suspended while the court decides what scheme to approve.

Chief Executive Gary Jennison said: "Our customers have voted in favour of the New Business Scheme, which the board of Amigo believes offers the maximum possible redress to creditors. This is an important step to address the liabilities that arose from historic lending practices under previous management."

In the US on Thursday, equities ended moderately lower, helping to stabilise sentiment after a grim day in Europe.

The Dow Jones Industrial Average closed down 0.3% and the S&P 500 down 0.1%, though the Nasdaq Composite closed 0.1% higher.

The small rebound on the tech-rich Nasdaq came after Fed Reserve Chair Jerome Powell – confirmed Thursday by the Senate for a second term – expressed confidence that the US economy is strong enough to withstand tighter monetary policies.

According to Bloomberg, Powell reaffirmed that the Fed was likely to raise rates by a half point but isn't "actively considering" a 75-basis point move.

Oanda analyst Jeffery Halley said: "Nothing has materially changed in the world from yesterday, and if anything, Russia-Europe risks are increasing. The rally today looks more like a technical rebound after a torrid week, than a structural turn in sentiment. As such, it should be taken with a grain of salt."

Brent oil was quoted at USD108.50 a barrel Friday morning, slightly lower from USD108.55 late Thursday. Gold stood at USD1,822.50 an ounce, down against USD1,838.71.

The dollar's recent strength was in full show again Friday morning in London, keeping sterling and the euro and multi-year lows.

Oanda's Halley added: "It certainly seems as if the US dollar and US bonds are investors' haven of choice at the moment and earning 2.50% to 3.0% to shelter your money from events in the world is certainly appealing. That is probably going to keep the US dollar resplendent into the weekend. One casualty is the precious metals sector, where gold fell overnight, but silver and platinum took a real betting, while palladium catalytically converted itself into a near six per cent loss for the day."

The pound was quoted at USD1.2211 early Friday, lower from USD1.2229 at the London equities close on Thursday. The euro was priced at USD1.0393, down against USD1.0417.

Against the yen, the dollar was trading at JPY128.72, firm from JPY128.25.

CMC's Hewson said: "The pound slipped close to a two-year low against the US dollar after the latest set of UK economic data pointed to a UK economy that has more or less ground to a halt. On the monthly GDP numbers January is the only month this year that has seen any economic expansion at all, and as far as the monthly numbers are concerned, could well be the high-water mark for this year."

The economic events calendar on Friday has eurozone industrial production at 1000 BST and US import & export prices at 1330 BST.

By Paul McGowan; paulmcgowan@alliancenews.com