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“The FTSE 100 was on course to end a turbulent week on a high note. After gains in Asia and US overnight on softening trade rhetoric from the Trump administration, the index was up by more than 1% early on,” says AJ Bell Investment Director Russ Mould.
Serco
“There is profit growth and profit growth – the kind signalled by outsourcer Serco this morning was never likely to impress the market. A guided increase of up to 20% in trading profit in the first half was achieved thanks to heavy cost cutting instead of any improvement in trading.
“Revenue actually fell materially amid market conditions, which in the company’s estimation is ‘less than ideal’.
“Investors have very limited visibility on the future performance of the business as Serco admits its profitability is highly sensitive to even modest movements in revenue and costs.
“There is no mention of any recovery in the pipeline of potential new work. At the year end the pipeline had nearly halved to £4.4bn and this is still to be replaced by new opportunities.”
FastJet
“A turbulent week for African budget airline FastJet is ending on a marginally brighter note as the company announces plans for a $10m fundraise which provides enough working capital to see it through the remainder of 2018.
“This emergency capital raise should not obscure the fact that this is a business in serious trouble. Since the middle of 2016 it has had to return to the market for cash on five separate occasions and you have to question when investors will run out of patience with the company.
“For now, largest shareholder, South African airline, Solenta Aviation appears willing to provide its support. In a messy set of 2017 results also announced today, the company did provide some cause for hope as it slashed operating costs by nearly 50%.”
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