Wednesday’s Stock Market report featuring Royal Mail, Sage, Ladbrokes, Max Petroleum and Westminster Group

The Markets

George Osborne unveiled sweeping changes to residential stamp duty and the taxation of firms domiciled outside the UK in his Autumn Statement. The new stamp duty rules, which come into effect at midnight tonight, see the previous “slab” system replaced by new marginal rates. Under the revised format house buyers will see a stamp duty saving of 4,500 pounds on a typical 275,000 pound family home.

The Treasury also announced that it would levy a 25% tax on the profits of multinational firms that are “artificially” shifted abroad and limit banks’ ability to offset losses carried forwards against tax. However, details on some of these measures were sparse and the Office for Budget Responsibility said that it would be difficult to estimate how much money the tax changes would raise or how multinationals would respond. Osborne also said that UK GDP growth would be 3% this year, up from a previous estimate of 2.7%, but did admit that borrowing had been higher than hoped.

At the London close the Dow Jones had increased by 0.83 points to 17,880.38 and the Nasdaq fell by 3.07 points to 4,302.89.

In London the FTSE 100 closed down by 25.47 points at 6,716.63 and the FTSE 250 fell by 21.40 points to 15,832.95. The FTSE All-Share decreased by 12.46 points to 3,588.67 while the FTSE AIM Index shrank by 0.55 points to 711.50.

Broker Notes

Exploration and production firm Genel Energy (GENL) has had its “buy” rating reiterated by Westhouse Securities after Iraq and Kurdistan reached an agreement on oil and budgets that will allow the region to export 250,000 barrels a day. In line with existing promises between regional producers and the Kurdish Government, Genel will receive an initial payment of $24 million (15.31 million pounds) and future payments will become more regular. The shares grew by 20.5p to 740p.

Property developer Conygar Investment Company (CIC) has seen its target price from Liberum Capital upped to 203p and its “buy” rating retained after posting a 12% increase in NAV in its latest results. The broker believes that targets for 2015, including a number of long term milestones, are achievable and that the firm’s development pipeline can provide significant upside. The shares rose by 2.625p to 179.25p.

Shore Capital has retained its “buy” rating on Royal Mail Group (RMG) despite the disappointing ruling from Ofcom that the firms’ universal service obligation would be retained. The broker is confident that the universal service question will be settled one way or another after the 2015 election and its long term positive view is based on that assumption. The shares dropped by 7.5p to 398p.

Regulator delivers bad news for Royal Mail, but broker still upbeat

Blue Chips

British Airways owner International Consolidated Airlines (IAG) carried a total of 5.735 million passengers in November, up by 8.5% from the same month last year. Other key stats from the latest monthly figures included load factors up by 1.1 percentage points at 77.5% and Revenue Passenger Kilometres up by 5.9% at 15,341m. In other developments, British Airways will add Miami to its Airbus A380 network next October with two daily flights between London and Florida. Also, flights to more than 20 destinations will change terminals at Heathrow and by mid October 2015 all of the airline’s services will depart from either Terminal 5 or Terminal 3. The shares gained 5.8p, closing at 466.1p.

Antofagasta (ANTO) has named Ivan Arriagada Herrera as the new CEO of Antofagasta Minerals, the mining division of the group, with effect from 16th February next year. Herrera, a commercial engineer, previously held various positions at BHP Billiton, and spent a large part of his career in the crude oil industry with Royal Dutch Shell International. Shares in the Chile based copper miner slipped by 2p to 739p.

Business management software developer The Sage Group (SGE) increased profits before tax by 69.1% to 278 million pounds over the year ended 30th September as margins improved by 40 basis points and overall sales rose by 6.7%. Recurring revenues now comprise 73% of group income, which reduces volatility and has contributed to the margin improvement. Management are confident that growth will continue in 2015. Sage also upped the dividend by 7% to 12.12p per share, with the shares closing the day up by 18.9p at 422.1p.

Sage grows

Mid Caps

Investment management outfit Brewin Dolphin (BRW) saw pre-tax profits for the year to 28th September drop by 70% to 8.6 million pounds as the firm wrote off a major technology project. Total income rose by 2% to 290.5 million pounds, driven by fee income which was 17% higher than in the prior period but commissions fell due to lower rates of market activity. Shares in the firm rose by 10.4p to 289.2p.

Gambling operator Ladbrokes (LAD) has said that it has implemented its planned structural and operational changes and they are beginning to bear fruit, although not as quickly as had been hoped. The company is trading in line with expectations for the year ending 31st December and management expect further progress to be made in 2015. The board has also announced that it is beginning the search for a successor to current CEO Richard Glynn, who was hired in 2010 for a 5 year term. The shares edged up by 0.5p to 114p.

Ladbrokes on track to deliver targets

Small Caps

Veterinary pharmaceutical firm ECO Animal Health Group (EAH) intends to pay an interim dividend of 1.75p, its first interim payment since 2008, after pre-tax profits for the six months ended 30th September more than doubled to 2 million pounds. The company continued to expand in European, North American and Chinese markets, and also took strides in South-East Asia via the acquisition of the its long standing distributer in the region. The shares jumped by 14p to 169.5p.

Security firm Westminster Group (WSG) has won a security consultancy contract for a government in the Americas, the initial phase of which is worth roughly $4.4 million (2.81 million pounds). Work will commence immediately on a review of the country’s security arrangements, leading onto plans for a 15-25 year improvement plan in phase 2 which would be subject to a separate cost agreement. The shares rose by 2.5p to 34p.

Oil and gas exploration outfit Max Petroleum (MXP) narrowed its loss for the six months ended 30th September to $2.3 million (1.47 million pounds) from more than twice that much in the comparative period of 2013. Revenues were 17% higher due to increases in production at the firm’s fields in Kazakhstan. The recent drop in oil prices has had a major impact on the highly-levered firm’s cash flows and its ability to service its debt will be called in to question if proceeds from AGR Energy’s recent $37 million (23.6 million pound) subscription are delayed. The shares fell by 0.065p to 0.93p.

Gift card and packaging specialist International Greetings (IGR) said that currency volatility is to blame for a 1.5% drop in sales to 111.9 million pounds for the six months ended 30th September. The firm will also miss out on short-term profits due to development costs linked to its Australian arm, but management are adamant that margins will be superior to those in established European and North American markets. The shares dropped by 4p to 72p.

Point of sale and loyalty systems expert Universe Group (UNG) has signed a major new deal with the Morrisons supermarket chain that expands on the firms’ existing relationship following the expansion of the “Match & More” scheme across all Morrison’s UK stores. Universe’s subsidiary HTEC will continue to provide support and maintenance services to the programme. While no figure was put on the deal the firm said that it helps to support current market forecasts for the current financial year and beyond. Universe shares rose by 0.375p to 6.875p.

Real estate investment trust NewRiver Retail (NRR) is looking to raise up to 75 million pounds via a new placement. subject to approval at an EGM, in order to fund the acquisition of the 90% stake in the New River Retail Property Unit Trust that is currently not held by the firm. This purchase will cost 71 million pounds, with the portfolio containing five shopping centres with a net lettable area of over 1 million square feet. The shares dropped by 9p to 291p.

NewRiver on the market for rest of its joint venture