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FTSE 250 movers: Balfour, Galliford hit by Carillion fallout as Serco benefits
The fallout from the Carillion debacle showered the FTSE indices with casualties on Monday. On the 250 Galliford Try and Balfour Beatty, both partnered up in projects with the collapsed government contractor, saw their share prices fall as a result.
Galliford and Balfour, which are in a joint venture with Carillion on the £550m Aberdeen Western highway contract, noted that they are obliged to complete the contract, as per the terms of the contract.
Galliford estimated the additional cash contribution outstanding from Carillion to complete the project is £60-80m, of which any shortfall will be funded equally between the joint venture members.
Balfour Beatty, which is also partner with the doomed company on the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme, said its cash impact would be an outflow of £35-45m in 2018 as it continue to work to meet its contractual commitments.
Carillion's partner on its 'C2' and 'C3' portions of the HS2 rail line, Kier Group, put out a statement assuring investors and suppliers that it had put contingency plans in place. Kier currently also operates joint ventures involving Carillion on the Highways England smart motorways programme. The shares rose on the news.
"We have put in place contingency plans for each of these projects and are working closely with clients so as to achieve continuity of service," Kier said, adding that, "after a short period of transition for these contracts, we do not expect there to be an adverse financial impact on the group arising from these joint venture contracts".
HICL Infrastructure Company shares were lower after it noted that Carillion provides facilities management services for 10 public private partnership (PPP) project companies in which it is invested, representing approximately 14% of its portfolio value, expected to reduce to circa 8% as a result of Carillion's sale of its healthcare business to Serco.
Serco shares rose on news of the acquisition.
HICL said on Monday that it was carrying out its contingency plans, "with a number of potential replacement service providers", to ensure services would continue to be provides and that management were confident that permanent replacement providers will be secured "as soon as practicable".
Heat treatment supplier Bodycote surged after saying it now expects full year 2017 headline operating profit to be towards the upper end of market expectations as it announced that US tax changes should have a positive one-off impact.
William Hill rose after saying it is undertaking a review of its Australian business, as it said 2017 adjusted profits were 11% than in the previous year, surpassing forecasts of £290m, while Acacia Mining shone after the release of its fourth-quarter production figures.
Vedanta Resources shares were up after announcing plans for $8bn in capital expenditure over the next three years to substantially lift its production capacity, especially in the oil and gas sector.
The Bangkok Post cited an interview with Asia Focus, in which founder and chairman Anil Agarwal said $3.5bn out of the total would be allocated to oil and gas. The rest would go to zinc, copper and iron ore.
The aim is to increase Vedanta's production capacity in all these sectors by 50%, if not double in the case of oil and gas. This, Agarwal says, would ultimately help add $10bn in earnings before interest, tax, depreciation and amortisation.
Market Movers
FTSE 100 (UKX) 7,771.81 -0.09%
FTSE 250 (MCX) 20,863.47 0.02%
techMARK (TASX) 3,542.58 -0.07%
FTSE 250 - Risers
Serco Group (SRP) 104.39p 6.36%
Vedanta Resources (VED) 953.60p 4.70%
Vesuvius (VSVS) 624.00p 4.26%
Bodycote (BOY) 988.50p 3.89%
Vectura Group (VEC) 120.80p 3.87%
Dignity (DTY) 1,859.70p 3.49%
Provident Financial (PFG) 923.00p 3.17%
Kier Group (KIE) 1,116.00p 3.14%
Rathbone Brothers (RAT) 2,616.00p 2.27%
Brown (N.) Group (BWNG) 293.80p 2.23%
FTSE 250 - Fallers
Galliford Try (GFRD) 1,212.00p -5.16%
Wood Group (John) (WG.) 672.60p -2.80%
Balfour Beatty (BBY) 299.80p -2.54%
Marshalls (MSLH) 446.40p -2.36%
Moneysupermarket.com Group (MONY) 346.20p -2.34%
CLS Holdings (CLI) 227.06p -2.13%
Daejan Holdings (DJAN) 5,760.00p -2.04%
IP Group (IPO) 136.00p -1.88%
Big Yellow Group (BYG) 817.00p -1.86%
Shaftesbury (SHB) 998.00p -1.67%