Britain recorded its largest ever trade surplus in November as companies chose to run down their stocks before importing more goods from overseas. The country’s trade balance rose to £4 billion in November, up from a deficit of £1.3 billion in October, according to the Office for National Statistics. Although the headline figure suggests than the UK has a healthy trade position, a £5 billion, or 7.8%, fall in imports on the month indicates that companies rushed to stockpile component goods before October 31 and then made fewer orders in November. Andrew Wishart, at Capital Economics, the consultancy, said that the numbers “strongly suggest businesses built up their inventories in October and didn’t need to buy as much in November.” Exports also surged by £3 billion in the month, but this was largely thanks to an increase in trade of erratic items, including aircraft and gold. Samuel Tombs, at Pantheon Economics, another consultancy, said that trade surpluses would not become the “norm” for Britain. “We expect the monthly trade balance to return to a deficit of £2 billion to £3 billion, once Brexit-related volatility has washed out,” he said.
Lekoil Ltd (DI) (LEK) appears to have been defrauded after paying $600,000 for a fake $184 million loan agreement with people pretending to represent Qatar’s sovereign wealth fund. Shares were suspended yesterday after the Qatar Investment Authority queried the supposed loan, which was announced on January 2 and led to a rise in Lekoil’s share price. Last night Lekoil said it appeared that the loan agreement, supposed to fund drilling at the huge Ogo oilfield off Nigeria, had been made with “individuals who have constructed a complex façade in order to masquerade as representatives of the QIA”. Lekoil said it had paid $600,000 “in good faith” to Seawave Invest Limited “in its capacity as introducer to those purporting to be the QIA and lead adviser to the company in relation to the facility agreement”. It said there was no guarantee it could recoup these funds. Lekoil faces a race against time to secure alternative funding by February, when it must make a $10 million payment to its partners in Nigeria and show that it can raise a further $28 million. If it fails to do so, it may be forced to sell its interest in the Ogo field.
AstraZeneca (AZN) is to take a hit of up to $100 million after a heart disease trial failed. Astrazeneca has decided to close a late-stage study of Epanova, which will lead to a write down of inventories and weaken its earnings in the fourth quarter. The drugs company was also reviewing the $533 million value of Epanova on its balance sheet. The disappointing results follow the recommendation of an independent data monitoring committee.
Spirent Communications (SPT) expects its profits to rise by a fifth thanks to increasing investment in faster fixed-line and mobile networks. Spirent Communications said that its revenues had risen to $503 million last year and that adjusted operating profit would climb from $77 million to between $91 million and $93 million. The earnings projection was 10% higher than investors had expected. “Good momentum continued into the final quarter of 2019, with the group securing a number of important contract wins,” the company said. Spirent highlighted increased spending by customers on the next generation of mobile phone networks, known as 5G. Telecoms companies are also upgrading their fixed telecoms networks to meet soaring demand for high-speed internet access, boosting sales of Spirent’s products and services.
Savills (SVS) is expecting higher profits after Boris Johnson’s election victory boosted property transactions at the end of last year. Savills said that its annual profit would be at the upper end of the £134 million to £142 million that had been forecast previously by analysts. “The clear outcome of the general election prompted a strong close to the year as confidence to transact returned to the market,” the company said. A slowdown in property transactions caused by political uncertainty in Britain and Hong Kong contributed to a 7% fall in first-half profit to £24.7 million. Unrest in the Chinese territory was a continuing problem but Savills reported a “resilient performance” there as a result of increasing market share. It said that its year-end results also had been boosted by significant growth in the United States and a strong performance by its investment management division. Chris Millington, an analyst at Numis, a broker, said that the results were “a great achievement in light of the volatile market backdrop”.
William Hill (WMH) two most senior female executives are leaving the company amid efforts to simplify its management structure. As the bookmaker said yesterday that its annual profits would be ahead of expectations, it also emerged that Ruth Prior, who joined as chief financial officer in October 2017, was heading for the exit. Ms Prior, who came to William Hill from Worldpay, is returning to the private equity sector as chief financial officer of Element Materials Technology. The company said that Ms Prior, who is on 12 months’ notice, would receive no payoff or bonuses because she had resigned. Her leaving date has yet to be determined but William Hill has begun to search for a successor. Separately, The Times has learnt that Lyndsay Wright, who joined the group in 2008 to set up its investor relations function and in 2018 took charge of its strategy for tackling the harm caused by gambling, is leaving the company. The two departures are the latest senior changes at the group since Ulrik Bengtsson was promoted to replace Philip Bowcock as chief executive in September. Terry Pattinson, group trading director, and Paul Durkan, chief information officer, also have left.
Relx plc (REL) has spent $375 million on a small American company that helps clients to spot fraud and credit risks. In one of its largest takeovers of the past decade, Relx is buying ID Analytics, which is based in San Diego, California, from Norton Life Lock, a listed software developer. The company will fold the business into its Risk and Business Analytics division, which operates under the Lexis Nexis Risk Solutions brand. Analysts at Barclays called it a “small deal in the context of Relx”, but said that it made “a lot of sense strategically”. The company was “not a major acquirer of businesses, so anything that they buy in the hundreds of millions is noteworthy”, the analysts added.
The break-up of Travis Perkins (TPK) has begun with the sale of a small part of its £1.5 billion plumbing and heating division. The sale of Primaflow fires the starting gun on the clear-out at Travis Perkins of businesses boasting more than £2.5 billion of annual sales, accounting for nearly 40% of group revenues. In addition to the plumbing and heating businesses, whose main trading brands are City Plumbing and PTS, Travis Perkins has put its Wickes do-it-yourself consumer business up for sale. Last year Wickes’ made revenues of £1.2 billion but its profits more than halved to only £25 million. The plumbing and heating businesses made operating profits of £39 million on annual sales of £1.5 billion. Travis Perkins has spent more than £45 million separating the plumbing and heating businesses, but has “paused” its sale process because of what it has called unprecedented uncertainty in trading conditions in the sector.
Finablr PLC (FIN) – Travelex is restoring in-store electronic customer orders as it seeks to recover from a disruptive cyberattack and criticism over a lack of communication with customers. The foreign exchange business said that it was in a position to begin restarting customer-facing systems in its retail branches and those of its partners, which include supermarket chains. The company has faced criticism for keeping customers in the dark, but it has said that its reactions and the nature of its customers’ transactions had limited its ability to notify people directly. It is expected this week to outline a timetable for restoring other services, including online orders. Travelex also said yesterday there was no evidence to suggest that customers’ data had been “compromised”.
Shares in Pennon Group (PNN) soared to an all-time high after it emerged that the daddy of the international buyout market KKR has been sniffing around the group with a reported £4 billion offer for its rubbish clearance and recycling business Viridor. The City was betting that both Viridor and South West Water could become bid targets. The former has been a candidate for sale ever since Pennon announced a strategic review of the shape of the business last autumn. That signal that Pennon could demerge or dispose of Viridor had pushed Pennon stock toward record highs. News that KKR, the American private equity firm formerly known as Kohlberg Kravis Roberts, had approached the group over Viridor and that an auction could break out, sent the shares to new peaks
A disappointing World Cup tournamnet was part of a cocktail of negatives that left the The City Pub Group (CPC) nursing a nasty hangover yesterday. Shares fell after a warning that full-year earnings would be “slightly below market expectations” owing to a series of one-off factors at the end of the year. It said that the Rugby World Cup, which it showed on screens in its pubs, “did not have the impact that we expected”, while political uncertainty before the general election had held back sales until the result was known, with companies limiting Christmas party budgets. Clive Watson, executive chairman, said that the timing of the rugby matches in the morning had not been ideal and that the tournament had “never really kicked in” with the same enthusiasm of previous ones. Trading also was dampened by “unhelpful weather during November and December” and delays to the refurbishment of two sites — “we shot ourselves in the foot” — while last month its London pubs were hit by disruption from industrial action on South Western Railway.
Yields on UK government bonds slipped lower as expectations grew that the Bank of England will move to cut interest rates at its next policy meeting this month. The speculation led to a stampede into bonds while the returns were still relatively decent, which in turn pushed up the price of government debt. Those who missed out on the initial rush were left to look elsewhere for yield, which drove the demand for energy and water suppliers. United Utilities Group (UU.) flowed higher to 971p, while its peer in the Midlands, Severn Trent (SVT), added 59p to £25.18. Centrica (CNA) also got in the act as it rose to 87½p, and SSE (SSE), the Scottish energy provider, added 19½p to reach £14.45.
Housebuilders were lifted by a bullish trading update from Savills (SVS), the estate agent. “The clear outcome of the general election prompted a strong close to the year as confidence to transact returned to the market,” Savills said, adding that its annual results would be at the top end of forecasts. Its shares climbed to £12.32, while those of Taylor Wimpey (TW.) rose to 202p, and Barratt Developments (BDEV), added 12¼p to sit at 768½p.
Just Group (JUST) fell to the bottom of the mid-cap leaderboard after the life insurer was downgraded to “underperform” by analysts at Credit Suisse. The Swiss bank also cut its price target for the company, which specialises in selling policies to people with shorter life expectancies, such as smokers, citing “less attractive risk-reward and higher regulatory headwinds” in the sector.
Shares in Marston’s (MARS) and Mitchells & Butlers (MAB) fell after both of which were downgraded by JP Morgan. The heavyweight investment bank said that the share prices had “caught up” after a strong 2019, although, with an “absence of significant catalysts in either direction”, it did away with its “outperform” ratings and moved to “neutral” instead.
Verona Pharma (VRP) was among the top risers yesterday, surging by a quarter after its lead treatment for a nasty lung condition breezed through a mid-stage study. Ensifentrine has been developed to treat chronic obstructive pulmonary disease by helping to open up the airways in the lungs. Patients reported a “statistically significant and clinically meaningful” improvement in their lung function during the four-week trial. Jan-Anders Karlsson, chief executive, said that he was “delighted” with the results and that Verona would start planning a final, phase III trial, pencilled in for the third quarter of this year.
Tempus – Pershing Square Holdings Ltd NPV (PSH): Buy. Investment manager is back on form, pays a dividend and the shares are cheap
Tempus – Learning Technologies Group (LTG): Avoid. Interesting growth story, but shares are expensive
