MARKET REPORT: Melrose investors cheer £729m payout

Turnaround specialist Melrose received a boost as investors welcomed plans for a multi-million-pound payout.

In its half-year results, the FTSE 100 business said that on September 14 it will return £729million to shareholders, equivalent to 15p per share, adding that its balance sheet has capacity for a ‘significant further capital return next year’. It also declared an interim dividend of 0.75p a share.

The windfall came as the company said it has plugged a £1billion hole in the pension scheme of UK engineering firm GKN, which it controversially acquired for around £8.1billion in 2018.

Paying out: Melrose is to will return £729m to shareholders, equivalent to 15p per share, adding that its balance sheet has capacity for a 'significant further capital return next year'

Paying out: Melrose is to will return £729m to shareholders, equivalent to 15p per share, adding that its balance sheet has capacity for a ‘significant further capital return next year’

Melrose said the GKN pension deficit now stood at £150million, enabling it to halve its annual contribution to £30million. 

The firm also said its net debt has been cut to £300million from £3.4billion in the prior year, although this will rise above £1billion with the £729million capital return.

The group topped off the good news by saying it is ‘trading ahead of expectations’ with ‘better profit margins and better earnings’. 

It posted profits of £109million for the first half of the year, having made an £80million loss in the same period of 2020. The shares climbed 7.2 per cent, or 12.36p, to 184.24p.

Stock Watch – Tiziana Life 

Biotechnology firm Tiziana Life Sciences notched up healthy gains, rising 14.2 per cent, or 8.7p, to 70.2p after unveiling an exclusive licence agreement for its antibody product, known as Foralumab, with US firm Precision Biosciences.

Foralumab is designed to enhance CAR-T therapy, a new type of treatment for blood-borne cancers. Precision will aim to use foralumab to increase the tolerance of CAR-T in patients and potentially increase its long-term viability as a cancer treatment.

In return for granting the licence, Tiziana will receive upfront and milestone payments as well as royalties.

The biggest faller on the FTSE 100 was mining giant BHP, which saw its shares sink 5.6 per cent, or 124p, to 2107p after going ex-dividend on a record 145p payment announced in its final results last month. The huge sum means BHP returned over £10.9billion to shareholders in its last financial year.

Another big-cap on the back foot was Dove and Wall’s Ice Cream owner Unilever, which dropped 2 per cent, or 83p, to 3961p after being hit with a downgrade from analysts at JP Morgan.

The FTSE 100 managed a small increase, rising 0.2 per cent, or 14.06 points, at 7163.9. The mid-cap FTSE 250 index fell 0.1 per cent, or 24.56 points, to 24,226.27.

Ryanair received a lift to its share price, rising 1.9 per cent, or €0.31, to €16.30 after reporting a rise in passenger traffic during August as holidaymakers jetted away for the summer. The Irish airline said it carried over 11m passengers last month, up from 7m a year ago.

Rival budget carrier Wizz Air also gained altitude as it reported a 50 per cent increase in passengers over August to 3.6m, sending the shares up 1.8 per cent, or 87p, to 5020p.

Pharma firm Evgen shot up 9.4 per cent, or 0.6p, to 7p as the US Food and Drug Administration (FDA) granted orphan drug designation to SFX-01, the company’s lead product designed to help treat brain tumours.

Iraq-focused oiler Gulf Keystone Petroleum gushed 13.9 per cent, or 21.6p, to 176.8p after swinging to a profit in its first half. 

The firm also raised the lower end of its 2021 production guidance to between 42,000 and 44,000 barrels of oil per day from 40,000 to 44,000 previously.

Dev Clever, a provider of online career guidance platforms, rose 6.4 per cent, or 2p, to 33.5p after inking a partnership deal with a Dubai-based consumer tech firm.

Elsewhere, Surface Transforms, a maker of carbon-fibre reinforced ceramic brake discs, saw its shares accelerate 4.6 per cent, or 3p to 68.5p as investors backed a new manufacturing strategy at its factory in Knowsley, Merseyside.

Online auction specialist Auction Technology Group suffered a fall of 10.2 per cent, or 168p, to 1474p after a group of investors offloaded around 12.6m shares in the group for £189million. The shares were sold for 1,500p each, an 8.6 per cent discount to the firm’s last closing price before the sale was announced.

Property developer One Heritage found itself on shaky foundations, down 17.2 per cent, or 12.5p, to 60p, after it was made aware of ‘financial issues’ relating to a subsidiary of One Heritage Complete, in which it owns a 47 per cent stake.

Meanwhile, Enquest sank 6.1 per cent,, or 1.55p, to 23.7p after the UK-focused petroleum firm said it expects production for 2021 to be at the lower end of guidance.

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source: dailymail.co.uk