Barclays (BARC) has scrapped controversial plans to prevent customers withdrawing cash from post offices after an outcry by MPs and consumer groups. The reversal comes after Barclays was ordered to appear before a Commons committee to explain its earlier decision and after the intervention of John Glen, economic secretary to the Treasury. The high street lender said that it had been “persuaded to rethink” a plan to discontinue services at post offices from January. It has now committed with 27 other lenders to a three-year agreement giving its customers access to cash via the Post Office network.
Royal Bank of Scotland Group (RBS) cast uncertainty over the banking sector yesterday by swinging to a loss and reporting higher-than-expected bad debts. The bank took a £900 million charge for mis-selling payment protection insurance, at the higher end of a range it gave last month, raising fears that other banks’ provisions could be heavy. RBS’s pared-down investment bank also dragged down the group, posting a loss of £193 million after core income fell by 44%. Overall the bank made a pre-tax loss of £8 million in the three months to September 30, compared with a pre-tax profit of £961 million in the same period last year. It posted £213 million of impairments, which was above expectations. Barclays (BARC) reports its quarterly results today, with all eyes on the performance of its investment bank after Jes Staley, its chief executive, took direct control of the division in March. HSBC Holdings (HSBA), run by interim chief executive Noel Quinn, reports on Monday and Lloyds Banking Group (LLOY) on Thursday next week.
The board of Neil Woodford’s troubled investment trust plans to replace the fund manager with Schroders (SDR) in an effort to revive its fortunes. A team from the listed investment group is expected to take over as the portfolio manager of the Woodford Patient Capital Trust (WPCT) by the end of the year. Mr Woodford’s name will be dropped and it will be called the Schroder UK Public Private Trust. The trust’s board said that Schroders “intends to manage the portfolio in line with the company’s existing investment objective and policy”.
Britain has retained its place in the world’s top ten markets to do business as the government prepares companies at home and abroad for Brexit. The World Bank highlighted improving corporate environments in Saudi Arabia, China and India as it published its annual rankings, which put New Zealand in pole position. Somalia was bottom of the 190 economies in which it analysed barriers to business. Britain edged one position higher in the overall rankings, from ninth to eighth, overtaking Norway. The country did well in measures relating to the protection of minority investors, in which it was ranked seventh, and access to electricity, in which it came eighth. Its weakest performance was in the property registration category, where it was ranked 41st.
AstraZeneca (AZN) has raised its annual sales guidance for the second consecutive quarter after a strong performance in its new medicines but warned of slower growth next year in its important Chinese market. The pharmaceuticals group posted its fifth consecutive quarter of revenue growth, with product sales up 18% to $6.1 billion in the third quarter at constant exchange rates. The growth was driven by sales of new medicines, which rose 64% to $2.7 billion, and oncology treatments, up 48% to $2.3 billion. Sales in emerging markets, Astrazeneca’s largest region, increased by 29% to $2.1 billion, led by China, where sales were up 40% to $1.3 billion.
AJ Bell (AJB) reported a 17% increase in customer numbers to 232,066 for the 12 months to the end of September and a 13% rise in its assets under administration to £52.3 billion. Andy Bell, its chief executive and co-founder, said the trading update “demonstrates the resilience of our business model” and investors sent its shares up 4p to 375p, a 134% increase on their 160p float price.
The competition watchdog has launched an inquiry into Ovo Energy’s £500 million acquisition of the domestic supply arm of SSE (SSE). Ovo would take on SSE’s 3.5 million household customers in addition to the 1.5 million it already supplies. The Bristol-based company, which employs about 2,000 people, would also take on 8,000 SSE staff. The inquiry, will consider whether the deal is likely to result in a substantial lessening of competition within any market in the UK. If it finds that this is a risk, it could then launch an in-depth inquiry, with the potential to delay or even derail the deal.
Fortress Investment Group is understood to be the frontrunner to acquire a package of about 150 leased and tenanted pubs from Marston’s (MARS) for an estimated £45 million. Marston’s put the bottom-end pubs up for sale through Christie & Co as part of a debt reduction strategy. In January it outlined a plan to cut its £1.4 billion of net debt by £200 million by 2023, partly through “disposal of £80-£90 million of certain non-core assets”. In a recent year-end trading update, Ralph Findlay, the chief executive, said Marston’s was increasing its disposals guidance for the current financial year from £40 million to £70 million.
BP (BP.) has developed a new technology to recycle plastics such as black food trays and coloured bottles that typically end up in landfill or incinerator. BP said it would build a $25 million plant in Illinois, which it hopes will prove the method is commercially viable. If deployed at scale, it could “offer potential to divert billions of coloured polyethylene terephthalate (PET) bottles and food trays from landfill and incineration”.
Analysts at JP Morgan Cazenove cut their price target on Rolls-Royce Holdings (RR.) from 600p to 500p, adding that the future prospects of Britain’s biggest aircraft engine maker, whose market capitalisation is £13.6 billion, could benefit from the equity to help it “make better decisions on the health of the company”. Rolls-Royce has suffered from persistent problems with its Trent 1000 engine, which the analysts expect to cost more than £650 million in compensation to airlines, building spare engines and fixing a design flaw on the newest model.
RHI Magnesita N.V. (DI) (RHIM) issued a profit warning for the year to December, blaming a weakened global steel market, only a week after its peer Vesuvius issued a profit warning.
Capita (CPI) extended its contract with the National Trust to provide customer experience services, including support for the holiday, fundraising, donation and event management teams, for another five years, in a transaction worth £46 million.
Braemar Shipping Services (BMS) fell 9p to 221p after the broker reported a 14% fall in underlying pre-tax profit for the half-year to the end of August to £3 million, compared with £3.5 million a year ago.
Caroline Connellan, the chief executive of Brooks Macdonald Group (BRK), said that the uncertain macroeconomic climate had continued to weaken client sentiment for the investment manager. Net outflows hit £28 million in the three months to September, holding back asset growth to only 1%. Analysts at Peel Hunt said: “Brooks remains well placed to return to growth when market conditions improve, with recent cost-efficiency plans underpinning future operational leverage.”
GB Group (GBG) climbed 75p to 602p after it said it expected its half-year revenue to jump 64% to £93.7 million. Analysts at Jefferies said the group can continue to expand its revenues organically at 12% a year for the foreseeable future, while Numis said that “the group’s core global lines of business — identity, fraud and location — enhanced by recent acquisitions, are resonating well in a market seeing positive demand drivers”.
Shoe Zone (SHOE) whose chief executive Nick Davies, resigned in August, has made no secret of its difficulties but it reported revenue of £161.9 million for the year to this month, compared with £160.6 million last year.
Shares in Nuformix (NFX) gave up recent gains yesterday to trade 5% lower and close at 8¼p. Chatter that Nuformix is close to securing a licensing deal with Kissei Pharmaceutical, one of Japan’s largest drug companies, has sent shares in the minnow higher in recent days. Market gossip suggests that Kissei is in talks to license Nuformix’s lead fibrosis treatment alongside its unique oral delivery system. The proprietary delivery mechanism resolves a number of efficacy problems that have plagued Kissei for years, they claim. The partnership could enable Kissei to treat other conditions. The reports suggest that the deal being discussed involves an upfront milestone payment of £15 million and annual royalty payments worth more than £200 million. If a deal is struck and structured on those terms, Nuformix would generate revenues well in excess of its current £40 million market value.
Tempus – Energean Oil and Gas (ENOG): Hold. Quality gas-focused producer with eye for smart and cost-effective acquisitions
