From UK-Analyst.com: Tuesday 19th February 2013
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The Markets The Financial Services Authority (FSA) has fined Lloyds Banking Group 4.3 million pounds as punishment for failing to deal with complaints over the mis-selling of Payment Protection Insurance (PPI). According to the FSA, failures within the bank resulted in up to 140,000 customers experiencing delays in receiving compensation for being mis-sold PPI. Lloyds has already set aside a provision of 5.3 billion pounds for PPI settlement fees, the highest amount set aside by any UK bank. A statement from the bank conceded that it had made "administrative errors" and said, "We acknowledge that this led to some customers not being compensated on time and we apologise to those customers whose payments were delayed." According to UK power watchdog Ofgem, energy consumers will be forced to pay higher rates in the future as power station closures loom large in the UK. The government plans to close ageing and inefficient power stations over the next few years in an attempt to cut pollution but, as a result, the amount of energy the UK can produce is set to fall. Subsequently, the shortfall in supply will be filled by increasing gas imports, a move which will ultimately see customers being handed the majority of the bill. Ofgem Chief Executive Alistair Buchanan commented, " We're going to have to go shopping in world markets at a time when they will be very tight on supplies themselves." Over in the US, President Barack Obama is set to force Republicans to make concessions which will ultimately stop budget cuts which appear increasingly likely to kick in on 1st March. It is thought that the President is likely to push forward a $110 billion (71.2 billion pounds) tax increase and a more moderate spending cut plan in attempt to avoid the more drastic cuts which are set to begin on at the start of next month. Obama has always been an advocate of an approach which balances tax increases and spending cuts, as opposed to Republicans who traditionally put more of an emphasis on spending cuts rather than additional taxes on the most wealthiest Americans. A White House official said, "The President will urge congressional Republicans to compromise and accept this solution so these devastating cuts that will hurt our economy and middle class families won't hit." 
At the London close the Dow Jones was up by 51.07 points at 14,032.83 and the Nasdaq increased by 7.32 points to 2,771.69. In London the FTSE 100 increased by 60.88 points up to 6,379.07; the FTSE 250 finished 155.96 points down at 13,654.95; the FTSE All-Share gained 32.43 points to 3,355.15; and the FTSE AIM Index crept up by 2.31 points to 754.15.  Broker Notes Cantor Fitzgerald retained its "sell" recommendation on clean energy company Drax Group (DRX) with a target price of 523p. The broker downplayed the fact that EBITDA levels for 2012 were above market expectations at 298.4 million pounds, concentrating on the risky revised biomass plans the group is embarking on. Cantor also cited the exposure to rising carbon costs as a reason to stay away from the stock for the time being. The shares climbed by 37p to 641.5p. Panmure Gordon cut its "hold" recommendation to "sell" on construction group Morgan Sindell (MGNS) with a 450p target price. The broker envisages a tough short-term outlook for the construction industry at present and believes that the group's profit warning in its full year results will not help an already unsure investor base. Panmure also noted the dividend was cut by 36% and believes the implied 4.6% yield is unlikely to support the current share price. The shares were down by 43p at 533p. Canaccord Genuity reiterated its "buy" recommendation on industrial maintenance group Brammer (BRAM) with a 375p target price. The broker was impressed with the 37.2 million pounds EBITDA figure which was recorded for 2012, 2% ahead of its own forecasts, as gross margins were higher than expected. Looking forward, Canaccord expects growth in 2013, driven by synergies created by the integration of the Buck and Hickman business. The shares increased by 7p to 348p. 
Blue-Chips Hotel operator InterContinental Hotels (IHG) posted a 4% increase in revenues to $1.835 billion (1.2 billion pounds) for 2012 with operating profits up by 10% to $614 billion (397 billion pounds). This growth was primarily driven by a good trading performance in the US with Revenue Per Available Room (RevPAR), a key metric in the industry, up by 6.1% year on year. Also of note was the 21% operating profit growth generated in China, boosted by a 5.2% increase in RevPAR as the group outperformed its peers in the country. The shares fell by 36p to 1,953p. Mid Caps Rank Group (RNK), the European gaming firm, revealed that it has received approval from the Competition Commission to acquire 19 of the 23 casinos it originally bid for from Gala Coral Group Limited. The terms of the acquisition were set out early last year but the Office for Fair Trading intervened and referred the proposed acquisition to the Competition Commission for an in-depth merger review, which meant the original deal fell through. The fees involved have remained undisclosed and the acquisition of the relevant licences is still conditional on further negotiations. The shares slipped by 2.4p to 165p. AZ Electronic Materials (AZEM) posted a 3% increase in pre-tax profits to 129.1 million pounds for 2012 on broadly flat revenues of 793.9 million pounds. The group's Optronics division posted a 6% increase in revenues to $236.9 million (153.2 million pounds), boosted by customer acquisitions and increased demand in the global flat panel display industry. The chemicals specialist went on to stress that it expects revenues and profits to show "positive momentum" in 2013 despite the uncertainty surrounding the economic climate. The shares grew by 1.6p to 376.6p.
Dairy Crest (DCG), the UK-based dairy foods company, announced that it has retained its contract to supply liquid milk to Sainsbury's for three years from February 2014. Although precise financial details were omitted the udder squeezer alluded to the fact that the deal is on less favourable terms. However, Dairy Crest will offset any financial impact via the continuation of its current cost-cutting programme. In the group's IMS earlier in the month it revealed that it was on target to exceed its current cost saving target by delivering savings or approximately 23 million pounds for the year ended 31st March 2013. The shares climbed by 10.7p to 431.7p. Small Caps & AIM Surgical tool manufacturer Surgical Innovations (SUN) revealed that due to manufacturing capacity constraints and a delay in US regulatory approval in December, 1 million pounds worth of orders from 2012 will now not be recognised for that period but in 2013 instead. As a result, revenues for the 12 months ended 31st December will be below market expectations at 7.6 million pounds. The shares dropped by 0.62p to 6.62p. Manufacturer of diagnostic screening products Akers Biosciences (AKR) announced that its disposable breath alcohol detectors will be launched into the French market. This follows the approval of the product by the National Reference Laboratory of France, confirming that the product complies with the relevant quality benchmarks. Back in July 2012, it became compulsory for every driver in France to carry a disposable breathalyser kit with them in their vehicle. With over 34 million French nationals owning a vehicle the product launch represents an attempt to tap into a huge and potentially lucrative market. The shares gained 0.13p to 1.22p. Indonesia-focused gold and copper miner Kalimantan Gold (KLG) revealed that its recent drill results from the Beruang Kanan prospect have shown significant copper mineralisation. Copper of grades between 0.63% and 1.03% have been found in an intersection of over 60 metres in length. Kalimantan also revealed that drilling work at the Beruang Tengah prospect has intersected gold and copper mineralisation including gold at 25 gramms per tonne. The shares were up by 0.75p to 4.12p.
Fusion IP (FIP), a company which endeavours to turn university research into commercially viable products, announced that its subsidiary, Phase Focus, has entered into a licensing agreement with Gatan Inc, a developer of microscope technology. The deal will see Phase Focus partner Gatan develop a wide range of products including a Phase Focus lens "add-on" product for existing electron microscopes. The shares bulged by 1.5p to 59p. Oil and gas exploration firm Chariot Oil and Gas (CHAR) announced it has abandoned a well in Namibia after it produced no commercial hydrocarbons and also revealed that its cash balance fell by 39.2% to $68.32 million (44.2 million pounds) by the end of 2012. The group went on to stress that it has identified 19 new targets across central Namibia and also plans to begin drilling in Mauritania and Morocco by 2016. The shares tumbled by 5.5p to 24.5p. Mobile marketing group InternetQ (INTQ) revealed it has entered into partnerships with Samsung and two European network providers in relation to its music streaming service, Akazoo. The Akazoo service, which enables customers to gain unconstrained access to a music catalogue of over 15 million tracks, will be initially piloted in Greece before it is rolled out in other European countries later in the year. The shares jumped by 5.5p to 260p. | 
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