2.45pm: Dunelm confident despite near term uncertainties
Dunhelm Group PLC (LON.DNLM), the homewares retailer, is in demand after positive half year results and the resumption of its dividend payment. Profits rose 34% to £112mln although the company did – unsurprisingly – caution on the near term outlook due to COVID-19. Further out, chief executive Nick Wilkinson said: “We have never been more confident about the future. Dunelm is a market leader with a challenger brand mentality, in a large and growing segment. We have a clear runway to grow active customers and their frequency across our total retail system and to realise our long-term ambitions.”
That confidence means its shares are the day’s top performer in the FTSE 250, up 83p or 6.58% to 1344p. Analysts at Shore Capital said: “The reinstatement of an interim dividend reflects the Board’s confidence in the medium term, in our view. Dunelm remains a well managed business, leveraging the investments made in the online platform and the remain…one of the best-in class retailers with strong cash generation capabilities and a tight focus on stock and cost controls.”
It also has the chance to benefit from the demise of department store chains like Debenhams.
11.25am: AEX Gold slumps on Greenland problems
Mining shares may be in demand in the FTSE 100 but lower down the market, one particular explorer is having a hard time.
AEX Gold Inc (LON.AEXG) has seen its Aim-listed shares drop 22.5p or 40.91% to 32.5p after it said it would defer development of its key Nalunaq project in South Greenland.
It blamed the pandemic, specifically a travel ban put in place by the Greenland government in January: “The development of Nalunaq is dependent on the Company being able to access the entirety of the property with a significant number of both externally contracted and locally sourced labour. Given the travel restrictions, there can be no certainty that the Company will be able to deploy the sizeable workforce necessary to complete the development of the project and meet the timeframes initially envisaged.”
There is also the problem of costs: “With approximately C$13 million committed to long lead items to date, some of which may be recoverable, and approximately C$58 million of cash on hand, the Board has assessed that the fluidity of both the operational risks and variability in costs is too great to warrant committing the bulk of the Company’s available liquidity in a timeframe that would permit the Company’s current development schedule to be met. Accordingly, the decision to proceed with the development has been deferred.”
10.20am: Smurfit heads FTSE 100 risers
Investors counting on company dividends have had some good news from packaging group Smurfit Kappa Group PLC (LON.SKG), which has lifted its final payout by 8% for last year.
The increase came as the company reported better than expected results for the year to December. Russ Mould, investment director at AJ Bell, said: ““The Irish-headquartered company continues to capitalise upon the inexorable rise of e-commerce. In addition, its business mix is weighted toward fast-moving consumer goods and so the company could benefit if and when the virus is contained, and economic activity starts to pick up in earnest.”
Bell pointed out that Smurfit Kappa was the first FTSE 100 company to restore dividend payments in 2020. He said: “Fifteen FTSE 100 firms have now restored dividend payments, having previously cancelled or suspended or deferred them. Smurfit Kappa was the first in July 2020 and Barratt Developments became the latest member of the UK’s corporate elite to do so when it declared an interim dividend of 7.5p per share the first week of February. Three more have stated their intention to restore payments this calendar year.
“Those 15 FTSE 100 firms have now announced the restoration of payments to a value of £2.8 billion. This is still dwarfed by the £39.8 billion of cuts announced by FTSE 100 members to date, but with payments of £31.3 billion having been retained, the balance between cuts and retentions and restorations is looking a lot better than it did.”
The news has lifted Smurfit shares by 3.05% or 108p to 3648p, making it the biggest riser in the FTSE 100.
8.45am: Synectics shines on surveillance contract
Synectics PLC (LON.SNX), a specialist in security and surveillance systems, has jumped 10.64% or 12.5p to 130p on news of a multi-million pound contract for a cloud-based surveillance control system to be installed in London starting later this year. It added: “The precise scope and terms of the contract are currently being finalised and a further announcement will be made in due course.”
Analyst Robert Sanders of house broker Shore Capital said: “We have highlighted in most of our comments in recent months that, we believe that an important inflection point would have been reached when the S-Bahn contract commenced in Germany last month. In our view, Berlin would now act as an important reference client for other major metropolitan areas considering an integrated transport management solution.
“We have also argued that Synectics would be a beneficiary of a vaccine-led economic recovery… We continue to believe that when more normal trading conditions return, there will be a significant operationally-geared uplift in profits which should also lead to the resumption of dividends in due course”
Another big mover is digital imaging specialist SDI PLC (LON.SDI) after an upbeat trading statement. It has already told the market in October that most of its businesses had been hit by coronavirus but two divisions had won contracts “relating respectively to the treatment and testing of COVID-19 and of similar respiratory and viral diseases.”
Now it says its Atik Cameras business has won further orders from a manufacturer of DNA amplifiers. Overall the company said: “While timing of delivery for the orders in hand is still to be finalised, and there is no guarantee that further orders will follow, the Board believes that the Group, as a whole, will exceed the market’s sales and profit expectations for the year ending 30 April 2021 and substantially exceed the market’s sales and profit expectations for the year ending 30 April 2022. This is also underpinned by the continued recovery of activity across all of its businesses.”
The news has boosted its shares 29p or 24.07% to 149.5p.
Proactive news headlines
AdEPT Technology Group PLC (LON:ADT) said it is reinstating its guidance for the current year outturn and for the year to March 31, 2022, following what it said was the “incredible resilience” of its business despite headwinds and challenges caused by the coronavirus (COVID-19) pandemic. The AIM-listed IT services firm also reported a trading update for the third quarter of its current year, saying that business had “remained resilient” and in line with management expectations during the final three months of the 2020 calendar year.
Bacanora Lithium plc (LON:BCN) announced it has begun initial site activities at the Sonora Lithium Project in Mexico.
Argo Blockchain PLC (LON:ARB) said it has entered a non-binding letter of intent setting out terms to acquire 320 acres of land in West Texas, USA, where it intends to build a new 200-megawatt cryptocurrency mining facility in the next 12 months.
Tirupati Graphite plc (LON:TGR) told investors that it is starting sales and bulk supplies to several large consumers of its expandable graphite products across the European Union/ European Economic Area after its subsiadiary Tirupati Speciality Graphite gained certification for its range of expandable graphite products for marketing and sales into the EU/EEA. The European Chemicals Agency has approved the company’s REACH registration and pilot trials and qualifications with customers have been successfully completed.
US Oil & Gas Plc (USOIL) told investors that it believes that the potential impact of the Biden administration’s temporary suspension of new drilling permits on Federal lands are not material to its exploration plans and prospects.
Crossword Cybersecurity PLC (LON:CCS) said it has raised £1.6mln through an oversubscribed placing and subscription. The AIM-listed firm said it raised the funds through the placing of 591,340 shares and a subscription of 38,460 shares to new and existing institutional shareholders at a price of 260p each, a 6.8% discount to its closing price on Tuesday.
Alaska explorer 88 Energy Ltd (LON:88E) plans to bolster its funds ahead of new well drilling, with a A$12mln placing, and, it also announced that managing director Dave Wall will leave the company in May.
Alien Metals Ltd (LON:UFO) told investors that, following the legal registration to acquire the Nueva Andromeda Permit next to San Celso, Mexico, it has issued 100,000 ordinary shares of no par value at an issue price of £0.00975p per share, to the two vendors under the terms of the option agreement. Under the agreement, the company has also agreed that should it exercise its option to acquire the permits in the future it will pay the vendors US$100,000 in cash.
ZAIM Credit Systems PLC (LON:ZAIM) said Stonedale Management & Investments Ltd, a company controlled by its finance director Simon Retter, bought 1.3mln shares in the company at a price of 4.4p per share. Retter now has a beneficial interest in 4.9mln shares, representing 1.12% of the total issued share capital.
Enteq Upstream PLC (LON:ENQ) has strengthened its management, with the appointment of Neil Bird as a product director ahead of a new product launch. The company is preparing to launch a new Rotary Steerable System product and Bird will be responsible for its development and commercialisation.
W Resources PLC (LON:WRES) told investors that non-executive director Oscar Marin Garcia will step down from the board on February 12 to focus on increased commitments in his own business, but said he is retaining his shareholding in the company. The search for a new non-executive director is underway, the tungsten and tin miner said.
Ergomed PLC (LON:ERGO) said it will announce its preliminary results for 2020 on March 23. Executive chairman Miroslav Reljanović and chief financial officer Richard Barfield will host a virtual presentation and conference call for analysts at 9.00am GMT on the day.
Rare diseases specialist Amryt Pharma PLC (NASDAQ:AMYT, LON:AMYT) said it is presenting at the virtual SVB Leerink Global Healthcare Conference on February 25, 8am EST. To tune in click here: https://wsw.com/webcast/svbleerink47/amyt.l/2992128
Remote Monitored Systems plc (LON:RMS) has placed on its website a list of questions from shareholders in relation to the forthcoming general meeting on Friday February 12, together with answers. The questions and answers may be found at: https://www.remotemonitoredsystems.com/investor-relations/documents/