The incoming Bank of England governor has admitted that he is concerned about how ill-prepared the UK is for a prolonged fall in the stock market or house prices. Andrew Bailey, chief executive of the Financial Conduct Authority, the City regulator, said that increased exposure to asset values had been accompanied by declining understanding of the fallout from a decline in prices, saying that the issue was “one of the things that worries me most”. Mr Bailey added: “There hasn’t been a major fall in asset prices now since the [global financial] crisis and of course, we don’t want one to happen, but they do happen. I do think that there is not as great an understanding of what the consequences of that could be.”
The takeover involving took an unexpected twist yesterday after the CMA launched an investigation into the £10 billion merger between the food delivery service and Takeaway.com. Just a day before the all-share deal was due to complete, Takeaway.com said in a statement to the stock market it had been informed by the CMA that it had “reconsidered its position” about the tie-up and “now believes that a merger investigation is warranted”. The Dutch-listed company said: “Management understands that the CMA intends unexpectedly to conduct a targeted investigation focused on assessing whether Takeaway.com would (absent the Just Eat transaction) have re-entered the UK market.”
A big boost in sales over the crucial Christmas period has reassured investors that ASOS (ASC) is getting back on track after a tumultuous year that included two profit warnings. The fashion retailer reported a 20% increase in sales to £1.1 billion for the four months to December 31, comfortably beating City predictions. Asos chief executive, soothed shareholders by saying that there had been a “robust operational performance” during the peak period and Black Friday, when its warehouses are under the most pressure to deal with a spike in orders and returns. He said that during the peak the warehouses dealt with 2,000 orders a minute.
Hotel Chocolat Group (HOTC) has enjoyed a bumper jump in first-half revenue despite higher costs in the supply chain. In an upbeat trading statement yesterday, the chocolatier said that revenue in the 26 weeks to the end of December was up 14% while over the three months to the same date it rose by 11%. The company, which was founded in 1993, said business in the run-up to Christmas was in line with expectations but highlighted “inefficiencies in the supply chain” which increased costs “moderately”. The company said it would address these expenses in 2020.
About 3,000 management jobs are being cut at Morrison (Wm) Supermarkets (MRW) as part of a shake-up of its stores that will also involve the hiring of thousands of shopfloor workers. Morrisons plans to remove the higher-paid middle-management roles across its 500-strong store chain and to recruit 7,000 new hourly paid roles. The grocer said the net 4,000 increase in personnel was designed to improve customer services and many will be on its fresh food Market Street counters, including butchers and bakers.
The boss of John Laing Group (JLG), one of Britain’s best-known investors in public infrastructure, is to return to his native France. Olivier Brousse, 54, has been chief executive of John Laing for the past six years and saw through its flotation on the London Stock Exchange in 2015. Yesterday, the £2 million-a-year executive announced he had resigned from the group to return to his former employer, Veolia, the French utilities conglomerate. John Laing says he will leave when a successor has been identified. He leaves after doubling the share price in five years. John Laing has investments in assets valued at £1.5 billion and is valued on the stock market at £1.8 billion.
Severe drought in Chile led to a 28% drop in copper production from one of Anglo American (AAL) biggest mines in the fourth quarter last year. Lower availability of water at the Los Bronces mine in the Andes, near Santiago, resulted in a 44% drop in throughput at the plant, offset in part by productivity improvements and mining more copper-rich ore. The group’s total output of copper, used in electric wiring, fell by 13% in the fourth quarter and 5% over the year. The setback was more than covered by increased production of iron ore from Anglo’s Minas-Rio project in Brazil and greater output of coking coal in Australia, leading to a 4% rise in group production.
Lloyds Banking Group (LLOY) has told almost 200 former customers that it will forgive debts collectively worth tens of millions of pounds in recognition of mistakes it made over the scandal at its Reading branch that ruined or damaged small businesses. The promise comes on top of a commitment last month to make £35,000 individual payments to 191 victims of the HBOS fraud as compensation for the stress and inconvenience created by Lloyds’s review. They may also receive payments for the original destruction of value to their businesses as a result of the fraud. Lloyds has already written off some debts and is extending the amount after Sir Ross Cranston, 71, a retired High Court judge, concluded in a report last month that the bank’s redress scheme had “serious shortcomings”. Sir Ross found that Lloyds had blamed victims for the damage to their companies.
Daily Mail and General Trust A (Non.V) (DMGT), the owner of the Daily Mail said that digital advertising revenues had risen by nearly a fifth over the past quarter, with more than 15 million people visiting its website every day. Turnover at its newspaper division was up 2% in the three months to the end of December, with ad sales rising 9%, according to the Daily Mail and General Trust. Print advertising rose 3% while digital ad income jumped 17% as the daily visitors to Mail Online rose 30%. The publisher said it was on track to meet forecasts for the year to the end of September, which call for revenues of between £1.3 billion and £1.6 billion and adjusted profit before tax ranging from £99 million to £110 million.
CMC Markets (CMCX) has raised its revenue forecast for the fourth time in five months. Shares in CMC Markets rose 2.6% to close at 164½p yesterday after the online financial trading business said net revenues for the 12 months to the end of March were expected to exceed even the most optimistic analysts’ forecast of £189.3 million. Analysts at RBC Europe, the stockbroker, said CMC’s quarterly trading update gave “further credence to the argument that the ESMA regulatory issues are behind the company”. CMC said it was buoyed in the three months to end of December by “higher retention of client income” compared with the first six months of its year. Punters have kept bets open for longer, which benefits CMC as it charges fees on positions held open overnight.
Countryside Properties (CSP) reported a sales jump amid improved market sentiment after the decisive general election result. The housebuilder reported a 29% increase in sales in the 13 weeks to the end of December. That helped boost its forward sales book to £1.7 billion, 65% higher than the same period a year earlier. Most of that gain came from Countryside’s affordable and private rental homes division, with the order book up to a record £1.6 billion. Its forward sales of private homes rose by 46% to £314 million over the period.
PPHE Hotel Group Ltd (PPH) said it was on track to hit full-year expectations on the back of a £100 million investment programme in some of its top venues. The group reported a 5.1% increase in like-for-like revenue per room to £103.70, driven by occupancy rates up from 79.4% to 80.7% and a room rate up 3.4% at £128.50. It said that after a “solid” fourth-quarter performance, room revenues had grown by 6.3% to £249 million on a like-for-like basis. Growth in the last three months of the year was about 2-3%.
Shares in Renishaw (RSW) surged 212p to £37.50 after Morgan Stanley said it senses a change in fortunes come the summer, when it expects orders from the big electronics giants will start to pick up. “There is a strong relationship between Asian machine tool growth and Renishaw’s growth, multiple and share price,” Robert Davies, an analyst at the investment bank, said. “Our MS Quant team predicts a strong inflection in the machine tool series by mid-year. Mapping prior down-cycles in Asian machine tools and for Renishaw suggests it can deliver a stronger growth inflection than current consensus assumes.” Mr Davies moved his rating up to “overweight” from “equal-weight”, while he also hiked his price target to £45 from just £28.50 previously. Renishaw was one of the few bright spots on a day when global stock markets took a kicking on renewed fears over the potential impact of the coronavirus in China.
Investors are wary of another repeat of the Sars virus in 2003, when the number of international air passengers fell by an estimated 2.4%. There was a 9% drop-off in passenger numbers in Asia that year. International Consolidated Airlines Group SA (CDI) (IAG) slipped by 25p to 609p and easyJet (EZJ) fell 53p to £14.74. Hotel chains were in the red as well as the market started to count the cost of cancelled bookings. InterContinental Hotels Group (IHG) tumbled 161½p to £48.34 as it told customers that they could cancel their stays in China and Hong Kong without penalty. The prospect of the outbreak damaging the Chinese economy also hit the mining sector, which relies on the Asian powerhouse to buy up the bulk of its metals and minerals. Antofagasta (ANTO) was marked down by 43¾p to 863¼p and Rio Tinto (RIO), the Anglo American (AAL) was 177½p lower at £44.26.
PureTech Health (PRTC) shares climbed 12p to 305p after selling a chunk of its stake in Karuna, an American company developing treatments for schizophrenia and Alzheimer’s. The drug developer sold an 11.2% holding in Karuna to Goldman Sachs for £152 million, although it still owns 20.4% of the shares, which are worth about £400 million — almost half of Puretech’s market capitalisation.
Blue Prism Group (PRSM) found itself thrust back into the upper echelons of London’s junior market yesterday. Only 12 Aim companies have a market capitalisation of £1 billion or more and Blue Prism can now count itself a part of that select group again after a surge in its share price. The NHS, Ebay and O2 are among the 1,677 customers that use its software. 96% of clients renewed their contracts last year and 544 of them signed up for more services. That sort of “sticky” business, coupled with increased adoption of “robotic process automation”, helped revenue to almost double to £101 million in the year to the end of October. Blue Prism is taking in about £10.6 million in monthly fees, which would see its revenue climb to more than £125 million this time around, although analysts at Numis are looking for even bigger bounce up to £168.8 million.
Tempus – Safestore Holdings (SAFE): Buy. Not overly pricey for a company in a hot sector that has plenty of growth potential, including overseas
Tempus – Premier Oil (PMO): Hold. Attractive proposition but buying now would be risky
