MARKET REPORT: Rolls-Royce is liquidated by sale of its Norwegian engine arm to Nottinghamshire industrial group Langley
The city yesterday welcomed the news that Rolls Royce has made a breakthrough with ambitious plans to recover from the pandemic.
Long the most prestigious name in British engineering, the FTSE 100 group has sold its Bergen Engines business to Nottinghamshire-based industrial group Langley.
And after the market closed, Rolls announced it is in exclusive talks, led by private equity group Bain Capital, to sell its Spanish division ITP Aero, which makes parts for Eurofighter Typhoon jets.
The city yesterday welcomed the news that Rolls-Royce has made a breakthrough with ambitious plans to recover from the pandemic
Rolls aims to sell £2bn worth of companies to bolster its books after the pandemic virtually wiped out its main source of income for more than a year.
It makes much of its money servicing engines on long-haul aircraft. Bergen and ITP Aero have been up for sale for months.
The numbers in the Bergen transaction are small compared to the overall target, which will see Rolls earn around £60 million from the sale and keep a further £34 million in cash in the division.
But it is a relief for investors after a setback in March when Norway dramatically vetoed a £131 million deal Rolls had agreed with Russian train manufacturer Transmashholding (TMH) over ties between TMH bosses and Vladimir Putin.
Bergen makes engines and technology for boats, including the Norwegian Navy. It is unclear at this stage how much Rolls could get back from the sale of ITP Aero. However, it has been widely reported that ITP Aero could be worth £1bn, potentially putting Rolls halfway to its goal in one fell swoop.
Rolls is releasing its half-year results today. Shares were up 1.4 percent, or 1.4p, to 104.54p. The FTSE 100 ended 0.3 percent higher, up 18.14 points, to 7123.86, while the FTSE 250 climbed 0.3 percent, or 58.08 points, to 23347.73.
Construction and infrastructure group Morgan Sindall was the second largest faller in mid-caps despite stunning results
The rise in the mid-cap index occurred despite the sharp sell-off Ferrexpo and Morgan Sindal. Investors in Ukraine’s Ferrexpo iron ore mine had much to celebrate after skyrocketing metal prices pushed profits soaring in the first six months of 2021.
Donors receive a semi-annual payout that triples what they received in the same period last year. Prices of iron ore, a key ingredient in steel production, have exploded as the global economy begins to recover from the Covid crisis. But Ferrexpo fell 9.3 percent, or 46.2p, to 449p after it said it expects demand for iron ore to decline.
STOCK WATCH: Cora Gold
Minnow Cora Gold reported “extremely encouraging” results after it drilled two more holes to hunt for metals at its gold project in southern Mali. In the ninth round of exploring the Sanankoro site, Cora said it had found more high-quality deposits and the discoveries exceeded the company’s expectations. Cora will complete her current drilling program this month and hopes to improve on official estimates of gold in the Sanankoro area. Shares in the AIM-listed group climbed 23.9 percent, or 2.75p, to 14.25p.
Group Construction and Infrastructure Morgan Sindal was the second-largest fall in mid-caps despite stunning results, including a first-half profit that tripled to £54 million on record sales of £1.56 billion. It fell 6.6 percent, or 160p, to 2280p.
Brickmaker Ibstock posted gains — finishing 1 percent higher, up 2.2 pence, to 223.2 pence — after it said it had benefited from the DIY boom, as homeowners continued to dabble in renovations. AIM-listed drug developer Avacta Group was in the red after it began sending its rapid Covid tests. Wetherby company is behind a 20 minute lateral flow test that is CE marked for professional use in the UK and EU.
Avacta’s stock price mushroomed last year, but has since fallen, closing 1.9 percent or 2.5 pence, to 128 pence. There were powerful updates from video game developers Keywords Studios and Squad 17, which thrived during lockdowns as millions turned to their computers and consoles to both socialize and play.
Technical and creative services provider Keywords (3.9 percent or 114p to 2816p) said sales were up 37 percent in the first six months of the year and profits up 80 percent. Debbie Bestwick, boss of Wakefield-based developer Team 17, home of the original Worms games, said it entered the second half “in good shape” in a brief stock market statement. Shares fell 0.6 percent, or 5p, to 835p.