Interactive Investor

FTSE 100 round-up: Rolls-Royce, Avast, Endeavour Mining

3rd August 2022 15:27

Graeme Evans from interactive investor

Rolls-Royce shares have been boosted ahead of tomorrow’s interim results, while it was a landmark session for cybersecurity firm Avast with a surge of more than 40%.

In a barren summer for M&A action, two deals with a 2021 vintage were today behind big share price gains for FTSE 100-listed Rolls-Royce (LSE:RR.) and cyber security firm Avast (LSE:AVST).

Rolls, which posts half-year results on Thursday, lifted 2.15p to 90p as it emerged the Spanish government had given the all clear for last September’s sale of component supplier ITP Aero.

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The divestment to a private equity consortium led by Bain Capital means that Rolls has raised the £2 billion from disposals it targeted in August 2020, when the company was fighting to shore up its finances at the height of Covid uncertainty.

Rolls said today that about 1.7 billion euros (£1.4 billion) will be used to support its medium-term ambition to return its balance sheet to an investment grade credit profile.

It added that ITP Aero, which employs around 4,000 people at production centres in Spain, UK, Mexico, Malta and India, will remain a key strategic supplier across both civil aerospace and defence programmes.

Other actions taken since the pandemic have included a major restructuring in civil aerospace, prompting chief executive Warren East to tell shareholders in May that Rolls was now a “better balanced and more resilient business with a sustainable future”.

Large engine flying hours in civil aerospace have also shown improvement in 2022, but this upturn has failed to kickstart the share price. Having started the year at 127p, the blue-chip stock has been stuck below the 100p threshold since the end of March.

At Avast, the clearance of the company’s NortonLifeLock takeover by the Competition and Markets Authority helped to send shares soaring by 205.1p to 683p.

The cash and shares deal is now expected to complete in mid-September, more than a year after the two parties agreed merger terms valuing each Avast share at 608p. Prague-based Avast employs 1,500 people, including at major offices in London and SIlicon Valley, and generated revenues of $941.1 million last year (£776.5 million).

Nasdaq-listed Norton said last year that the acquisition would strengthen its cyber safety platform, giving it a reach of more than 500 million users.

Other stocks on the risers board included Endeavour Mining (LSE:EDV), which rallied 63p to 1,682p after half-year results from the West Africa-focused gold producer reiterated 2022 production guidance and included a 43% increase in half-year dividend.

With assets in Senegal, Côte d’Ivoire and Burkina Faso, Endeavour has offset inflationary pressures through favourable exchange rates, long-term supply contracts and cost optimisation.

Endeavour joined the FTSE 100 in March when shares were above 2,000p but it has dropped back in line with a weaker gold price. Liberum, which has a “hold” recommendation and target price of 1,427p, said today’s adjusted earnings figure of $0.45 a share was ahead of City consensus.

Shareholder returns since early 2021 now stand at $476 million (£392.7 million), which includes $100 million (£82.5 million) from today’s dividend and represents around 10% of its market capitalisation.

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