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“The FTSE 100 was in the ascendancy early on Wednesday after gains on Wall Street overnight and ahead of the publication of US inflation figures later,” says AJ Bell Investment Director Russ Mould.
Galliford Try
“Construction, regeneration and housebuilding firm Galliford Try serves up a nasty surprise for investors this morning in the form of a £150m fundraise. The cash injection is intended to shore up its balance sheet thanks to cost overruns and the impact of the collapse of outsourcer Carillion in January.
“This is mainly linked to the £550m Aberdeen Western Peripheral Route contract, carried out in joint venture with both Carillion and Balfour Beatty. In January Galliford said Carillion’s liquidation would require an additional cash contribution of £30m to £40m and it has stuck with this estimate suggesting there have been further cost over-runs on a long-troubled project.
“Although the company could have absorbed the extra costs without raising money it did not want to divert funds from the higher quality regeneration and housebuilding divisions – which both delivered strong results for 2017.”
Serco
“The fall-out from the Carillion’s liquidation continues to reverberate around the outsourcing industry. Serco has renegotiated the price it paid for a portfolio of contracts managing health facilities, acquired from Carillion in December 2017, down from £48m to £29.7m.
“The lower price reflects a new evaluation of liabilities and working capital requirements linked to Carillion’s messy failure.”
Sky
“Pay TV broadcaster Sky is among the biggest FTSE 100 risers as the latest award of Premier League football rights suggests costs pressures in this area, one of the key bear arguments against the stock, are starting to abate. Announced overnight, the new package sees the company secure exclusive live rights to 128 Premier League games a season from 2019/20 but will pay 14% less than it is currently doing. Most analysts were expecting the cost to increase, so earnings forecasts are likely to be upgraded.
“In a further boost for Sky, its rival BT has come away from this auction with relatively limited rights.”
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