21st Dec 2020 08:07
(Alliance News) - Frasers Group on Monday became the first of likely many UK retailers to officially warn investors about the damage that will be done to its business by the last virus restrictions imposed on London and elsewhere in England.
Frasers said it can no longer "commit" to achieving guidance of a 20% to 30% improvement in underlying earnings before interest, tax, depreciation and amortisation during its current financial year following further UK virus restrictions.
The Sports Direct and House of Fraser owner said the UK government's closure of non-essential retail in London, the south east and east of England with "no warning" over the weekend has led to "virtually all" of the company's stores closing in these areas.
"Given this is a peak trading period, and combined with the high likelihood of further rolling lockdowns nationwide over the following months at least, such is the uncertainty of when stores can and cannot open that the board of Frasers Group can no longer commit to Frasers Group achieving its publicised guidance," said Frasers.
Under the new Tier 4 rules affecting almost 18 million people, non-essential shops – as well as gyms, cinemas, casinos and hairdressers – have to stay shut and people are limited to meeting one other person from another household in an outdoor public space.
Those in Tier 4 were told they should not travel out of the region, while those outside were advised against visiting.
Health Secretary Matt Hancock suggested on Sunday the restrictions may be needed for "the next couple of months".
Frasers Group shares were down 5.8% early Monday.
Meanwhile, the FTSE 100 index and the pound dropped, following the new restrictions in England and blocks to travel from the UK to Europe over concerns about the new strain of virus, while Brexit talks dragged on without agreement but plenty of warnings of possible failure.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 1.8% at 6,411.00
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Hang Seng: down 0.6% at 26,329.41
Nikkei 225: closed down 0.2% at 26,714.42
DJIA: closed down 124.32 points, 0.4%, at 30,179.05
S&P 500: closed down 0.4% at 3,709.41
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GBP: down sharply at USD1.3276 (USD1.3482)
EUR: down at USD1.2173 (USD1.2235)
Gold: up at USD1,896.90 per ounce (USD1,885.75)
Oil (Brent): down at USD50.52 a barrel (USD52.16)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
1100 GMT UK CBI distributive trades survey of business conditions
1600 CET EU flash consumer confidence indicator
0830 EST US CFNAI Chicago Fed national activity index
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UK Prime Minister Boris Johnson will hold crisis talks with ministers after France banned lorries carrying freight from the UK and countries around the world ended flights amid fears over the new mutant coronavirus strain. The prime minister will chair a meeting of the government's Cobra civil contingencies committee on Monday amid warnings of "significant disruption" around the Channel ports in Kent. Hauliers were urged to stay away from the area amid warnings of potential problems as the end of the Brexit transition period looms on December 31. Kent Police said they were implementing Operation Stack in a bid to ease potential congestion, while the Department for Transport said Manston Airport was also being prepared as another contingency measure against the anticipated level of disruption. Countries including France, Germany, Italy, the Netherlands, Belgium, Poland, Austria, Denmark, Ireland, and Bulgaria announced restrictions on UK travel following the disclosure that the highly infectious new strain is widespread across south-east England.
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Talks on a post-Brexit trade deal look set to continue into next week after another weekend of tense negotiations failed to achieve a breakthrough. After lead negotiators Michel Barnier and David Frost met in Brussels on Sunday, a UK government source told PA the discussions had been "difficult". The source said "significant differences" remained over the key issues of fisheries and the so-called "level playing field rules" on state aid for business. "Teams have been negotiating throughout the day and expect to continue tomorrow. Talks remain difficult and significant differences remain," the source said. "We continue to explore every route to a deal that is in line with the fundamental principles we brought into the negotiations."
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BROKER RATING CHANGES
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RBC INITIATES HARGREAVES LANSDOWN WITH 'OUTPERFORM' - TARGET 1820 PENCE
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COMPANIES - FTSE 100
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Royal Dutch Shell said it has agreed to the sale of a 26% interest in the Queensland Curtis Liquefied Natural Gas common facilities to Sydney-based infrastructure fund manager Global Infrastructure Partners Australia for USD2.5 billion. The common facilities are owned solely by oil major Shell, and include LNG storage tanks, jetties and operations infrastructure that service QCLNG's LNG trains. Shell said the sale is consistent with its strategy of "selling non-core assets in order to further high-grade and simplify" its portfolio. The sale will "contribute to its expected divestment proceeds, without impacting on people or the operations of the QCLNG venture, and aligns its interest in the common facilities with its 73.75% interest in the overall QCLNG venture", it added.
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Rosneft Oil - the Russian oil company in which BP holds a 20% stake - said it expects to deliver on the key operational and financial indicators in its 2020 business plan, based on its actual results for the first nine months of the year and forecast for the fourth quarter. The comment came as Rosneft said its board of directors last week approved the business plan for 2021 and 2022, which includes an effort to secure 100% replacement of its resource base.
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Vodafone said discussions with Saudi Telecom Co over the sale of the London-listed telecommunication firm's 55% stake in Vodafone Egypt have been terminated. Vodafone gave no reason for ending the talks. However, Chief Executive Nick Read said: "We believe that the Egyptian government is committed to an optimal framework for the telecoms sector, which will enable Vodafone Egypt to deliver on the country's vision of digitization and financial inclusion and create a technology hub to support our growth in the African region."
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NatWest said it has agreed to buy a GBP3.0 billion portfolio of prime UK mortgages from Metro Bank. The portfolio consists of owner occupied residential mortgages with a weighted average current loan to value of 60%. The purchase price of GBP3.1 billion represents a 2.7% premium on gross book value. "Growing our mortgage book is an important strategic priority as we build a bank that delivers sustainable returns for shareholders. The addition of this loan book will supplement the strong organic growth that we continue to achieve," said NatWest Chief Executive Alison Rose.
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GlaxoSmithKline said it has received marketing authorisation from the European Commission for ViiV Healthcare's Vocabria to be used with Janssen's Rekambys and Edurant. "This authorisation represents the first time people living with HIV in Europe may be able to receive a long-acting injectable treatment that removes the need to take daily oral tablets, following the oral initiation phase," said Glaxo. ViiV Healthcare is a specialist HIV company majority owned by Glaxo, with Pfizer and Shionogi as shareholders. Janssen is part of Johnson & Johnson.
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AstraZeneca late Friday said the US Food & Drug Administration has extended the review period of its anaemia drug roxadustat in order to carry out further analysis of the study data. Roxadustat - which is being developed by Astra and US biotechnology company Fibrogen as a treatment of anaemia in patients with chronic kidney disease - promotes red blood cell production through the increased production of erythropoietin, improved iron absorption and downregulation of hepciden, the company explained. Erythropoietin is a hormone produced by the kidneys to stimulate production and maintenance of red blood cells. Hepciden is a protein which regulates iron metabolism. AstraZeneca said the regulator has extended the review period of the New Drug Application for roxadustat to March 20 next year after FibroGen submitted additional analysis of clinical data for the drug.
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COMPANIES - FTSE 250
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Signature Aviation said it is minded to recommend a USD5.17-per-share firm takeover offer from Blackstone. The offer - equating to around 386p - represents a 44% premium to Signature's closing price on December 16, the last business day before the offer period began. The stock closed on Friday at 368.90p but had closed at 269.20p on Wednesday before the offer was announced on Thursday afternoon. "Discussions between the parties remain ongoing. A further announcement will be made as and when appropriate. There can be no certainty that any offer will be made nor as to the terms of any offer. Shareholders are advised to take no action with regard to the matters described in this announcement," said Signature.
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COMPANIES - MAIN MARKET AND AIM
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Card Factory said it has appointed Darcy Willson-Rymer as chief executive officer. Willson-Rymer will join Card Factory from Costcutter Supermarkets, where he has served as CEO for the last eight years. Card Factory noted that, in his time there, he steered the nationwide multi-site owned and franchised convenience retail business through a "period of significant change". Prior to this, he was CEO of greeting cards retailer Clinton Cards. He will join Card Factory on March 8.
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South32 said the Competition Tribunal of South Africa has completed its hearing to consider the proposed sale of its shareholding in South Africa Energy Coal to Seriti Resources Holdings. The Perth, Western Australia-based mining and metals company said the SA regulator is expected to announce its decision within ten business days. The deal was agreed back in November, when South32 said it will sell its 92% holding in coal subsidiary for an upfront payment of ZAR100 million. The consideration also includes a deferred payment which will see South32 receive a portion of the cash flow generated from by the unit, capped at ZAR1.5 billion. The London, Sydney and Johannesburg listed company will earn 49% of cash generated between the completion of the transaction and March 2024.
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Gemfields Group said it plans to resume operations at its mines in the first quarter of 2021 as coronavirus hurt its performance in 2020. The gemstones supplier said it had cash balances of USD44.3 million as of December 11, a gross debt position of USD58.9 million, a resulting net debt position of USD14.6 million and, in addition, USD12.0 million of auction receivables due from gem auction customers. Monthly cash operating expenditure has dropped to an average of below USD5.0 million per month in the three months ending November 30 from USD12.1 million per month on average during 2019, thanks to the cost-saving measures implemented across the group. Gemfields said it presently holds sufficient rough gemstone inventory to be able to host one auction of each of mixed-quality rubies, higher-quality emeralds and commercial-quality emeralds.
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COMPANIES - GLOBAL
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International payments firm TransferWise is planning an initial public offering in the new year, which is set to confirm its status as one of the most valuable technology companies ever founded in the UK, Sky News reported on Saturday. The company was valued at USD5 billion in a secondary fund raising five months ago. Investment banks are being asked to pitch for roles in the IPO, with Goldman Sachs understood to be well-placed to play a leading role, Sky said. London is the preferred listing destination of TransferWise founders Taavet Hinrikus and Kristo Kaarmann, according to Sky, but use of a special purpose acquisition company rather than an IPO, popular in New York, also is a likely option.
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Monday's Shareholder Meetings
dotdigital Group PLC - AGM
Parkmead Group PLC - AGM
WH Ireland Group PLC - GM re Harpsden acquisition
Westminster Group PLC - GM re placing
Global Resources Investment Trust PLC - GM re company voluntary arrangement
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By Tom Waite; [email protected]
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