22nd Jul 2025 08:00
(Alliance News) - London's FTSE 100 was called to open lower on Tuesday, as public sector borrowing figures were higher than expected in June.
In early corporate news, Compass lifts its full-year guidance following strong third-quarter growth, and ME Group reports double-digit interim profit growth.
Here is what you need to know before the London market open:
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MARKETS
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FTSE 100: called down 0.2% at 8,996.09
GBP: down at USD1.3469 (USD1.3506 at previous London equities close)
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ECONOMICS
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UK public sector net borrowing was higher than expected in June, figures released by the Office for National Statistics show. Public sector borrowing totalled GBP20.68 billion in June, exceeding an FXStreet-cited consensus for GBP15.6 billion and up from GBP17.44 billion in May. It was the second-highest June borrowing since monthly records began in 1993, after that of June 2020, the ONS noted. It was also more than the GBP17.1 billion forecast by the Office for Budget Responsibility in March. Borrowing for the three months ended June 30 was GBP57.8 billion, up GBP7.5 billion from the year before and the third-highest April to June segment bowstring since monthly borrowing began, after 2020 and 2021. Also, it reports the current budget deficit was GBP44.5 billion in the three months to June, which was GBP6.5 billion higher on-year. Monthly, the deficit was GBP16.3 billion in June, which was GBP7.1 billion more than the year before.
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Insurers have been told by the UK Financial Conduct Authority to improve their claims handling, following "concerning" evidence of poor practices in some cases. The regulator said that, while rising motor insurance premiums are largely driven by external cost pressures, shortcomings persist in how some insurers handle claims. FCA analysis indicated that increases in the cost of motor claims – due to higher prices for cars, parts, labour, energy and more complex cars and supply chains – have contributed to premium increases. The cost of hire vehicles, the number and cost of theft claims and uninsured drivers have also risen significantly. This confirms that increased costs outside of firms' control, rather than firm profit, were the biggest cause of recent premium rises in motor insurance. But the FCA did identify that referral fees from credit hire firms and claims management companies were associated with slower claims processing and increasing costs. Where it has seen poor practice from firms, the regulator said it is addressing it directly with them, including taking action against specific firms where necessary.
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BROKER RATINGS
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RBC cuts Legal & General to 'underperform' (sector perform)
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JPMorgan raises Pennon Group to 'overweight' (neutral) - price target 600 (500) pence
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UBS raises Ryanair price target to 29.60 (27.40) EUR - 'buy'
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COMPANIES - FTSE 100
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Compass reports organic revenue growth of 8.6% for the third quarter that ended June 30, alongside 8.5% growth for the year to date. Within this, North America delivers 9.6% growth during the three-month period, while its International segment reports a 6.6% rise in organic revenue. The contract caterer upgrades its guidance for 2025, now expecting constant currency underlying operating profit growth towards 11%, driven by ongoing margin progression. Also on Tuesday, Compass announces its planned acquisition of food services business Vermaat Groep for an enterprise value of around EUR1.5 billion. The takeover is expected to be margin and earnings per share accretive to the group, with post-acqusition leverage expected to be around 1.5x net debt to earnings before interest, tax, depreciation and amortisation at the end of 2026, before deleveraging in 2027. Vermaat has delivered a compound annual growth rate of nearly 20% over the last 15 years, and is on track to generate sales of around EUR700 million with a double-digit operating margin in 2025. "This strategic acquisition represents a step change in our core markets by creating a strong platform for expansion across Europe," says Compass Chief Executive Officer Dominic Blakemore.
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Centrica agrees to acquire a 15% equity stake in Sizewell C, a new 3.2 gigawatt nuclear power station under construction in Suffolk, England. Once operational, Sizewell C will generate electricity equivalent to around 7% of the UK's current demand. Centrica's investment comprises committed construction funding of GBP1.3 billion, and the firm will jointly own the power station alongside the UK government, which holds a 44.9% interest, La Caisse, with 20%, Electricite de France, which owns 12.5%, and Amber Infrastructure, which holds a 7.6% stake with the option to acquire a further 2.4% from the government. Centrica expects IRR above 12% from Sizewell C, and anticipates its share in the regulated asset base to grow to around GBP3 billion at the commercial operations date. International Public Partnerships also commits around GBP250 million to Sizewell C in return for an around 3% shareholding. INPP intends to invest roughly GBP50 million a year over the next five years. The Sizewell C project will cost a total of around GBP38 billion.
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COMPANIES - FTSE 250
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ME Group International reports pretax profit of GBP34.0 million for the six months that ended April 30, rising 13% from GBP30.0 million a year prior. Revenue rises 2.3% to GBP153.8 million from GBP150.4 million, driven by a "strong performance" from its laundry operations, while administrative expenses increase 17% to GBP19.0 million from GBP16.2 million. Net non-operating income grows to GBP2.0 million from GBP133,000. The instant-service equipment firm declares an interim dividend of 3.85 pence per share, 12% higher than 3.45p the year before. Looking ahead, ME group continues to expect full-year pretax profit between GBP76 million and GBP80 million, which would be up 9.0% at best from GBP73.4 million in financial 2024. "The group's predictable revenue streams and highly cash-generative characteristics continue to support our strong balance sheet. We have a clear growth strategy and competitive advantage. We leverage our R&D and market expertise, alongside our disciplined financial approach, to grow our photobooth and laundry activities and maximise return on capital, targeting a rapid return on investment," says Chief Executive Officer Serge Crasnianski.
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OTHER COMPANIES
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Evoke delivers revenue growth of around 3% during the six months that ended June 30, or roughly 4% at constant currency, buoyed by 5% on-year growth during the second quarter. This is driven by double-digit gaming growth, online growth of around 6% with "continued strength" in its International Core Markets segment, while its Retail unit returned to growth during the second quarter after the rollout of 5,000 new gaming machines across the estate. Sports was impacted in the second quarter against the prior year, with the Euros taking place last year as well as stronger win margins. Robust cost control and improved marketing returns is expected to deliver first-half adjusted earnings before interest, tax, depreciation and amortisation between GBP163 million and GBP167 million, bringing adjusted Ebitda for the last twelve months rolling to more than GBP360 million. Looking ahead, Evoke confirms no change to its full-year expectations, as it continues to anticipate 5% to 9% revenue growth plus an adjusted Ebitda margin of at least 20%.
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Tullow Oil signs an agreement for the sale of its Kenyan assets to Gulf Energy Ltd for a minimum of USD120 million in cash. The disposal was first agreed back in April. The portfolio of all of Tullow's assets in Kenya have a total of 463 million barrels of best estimate contingent resources. Tullow will receive USD40 million upon completion, USD40 million by June next year, and USD40 million over five years from the third quarter of 2028. Tullow also may receive royalty payments. It has a back-in right for a 30% participation in potential future developments. The deal remains conditional on approval by the Competition Authority of Kenya. Tullow says the cash will be used to reduce debt. "We continue to advance plans to optimise our capital structure during 2025," says Richard Miller, interim chief executive officer. "Coupled with the sale of our Gabonese assets, the disposal of these non-core assets is expected to provide cash proceeds of USD380 million in 2025." In March, Tullow sold all of its assets in Gabon to Gabon Oil Co for USD300 million in cash.
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By Emily Parsons, Alliance News reporter
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Legal & GeneralPennonRYA.LCompass GroupCentricaInternational Public PartnershipsME GroupEvoke PlcTullow Oil