Pound Sterling falls on yet another Brexit fishing impasse

Jamie Gordon
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Pound Sterling falls on yet another Brexit fishing impasse

It feels as though we’re copy and pasting an old story. The pound sterling drops as two sides willing to negotiate and unwilling to compromise, hit another stalemate over the allocation of post Brexit fishing rights.

Michel Barnier made his way to London on Friday, following news that the UK negotiating team had turned down an offer by team EU to cede between 15% and 18% of their current fishing quota.

“The UK has already blown Michel Barnier’s plan to boost British fishing quotas by up to 18 percent out of the water before it arrives in London,” said Joe Barnes, Brussels Correspondent for The Express.

Barnes added that his source on the UK side told him: “it’s derisory, nothing more to say about it.”

Prime Minister Boris Johnson offered a lukewarm response, merely saying that: “substantial and important differences to be bridged”.

Perhaps more concerning, though, was that even EU sources weren’t in favour of the concessions being offered by Barnier. Speaking to BBC Brussels Correspondent, Chris Beake, the source said they were ‘surprised’ by Barnier’s proposal. One diplomat added that the percentage bracket was just one of many that had been discussed in recent weeks, and would be a ‘very high price to pay’ for the EU’s fishing-reliant countries.

Beake said that after the Brexit transition, the UK is demanding the right to double its own catch quota within its own waters, as a result of claiming independent status. The bottom line, though, was that more percentages were likely to be ‘bandied around’ in the coming weeks, though an agreement on fishing still seems a long way off.

Following these developments, the pound sterling fell by 0.76% against the euro, down to a rate of 1.1125 GBP/EUR. Likewise, cable (GBP/USD) dropped 0.44% to 1.3298. Speaking on the Brexit fishing stalemate and the situation as it stands, IG Senior Market Analyst, Joshua Mahony, said that:

“The issues of fishing right, state aid, and future dispute resolution remain a trio of hurdles which remain the three major sticking points which could ultimately lead the UK out of the EU without a deal.”

“Nevertheless, with the pound having gained ground against the euro over recent months, it is clear that traders either expect a last-minute breakthrough or have simply taken on a more relaxed stance to what originally touted as the worst-case scenario in 2016.”

Two strategic shifts driving Unilever shares higher

Jamie Gordon
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0
Two strategic shifts driving Unilever shares higher

Consumer defensive sector giant, Unilever (LON:ULVR), has been on the lips of several pundits over the past few weeks, with the stock looking value-for-money versus the role it plays in the Western retail sector.

Indeed, with a p/e ratio of 17.44, six versus three analyst Buy and Sell stances respectively, and a healthy 3.42% dividend yield, the consumer blue chip is not be sniffed at. Similarly, with its 4,590p share price just 5.56% ahead of where it began the year – versus some of the colossal gains posted by other companies during the pandemic – and 5% short of analysts’ consensus target price of 4,819p, Unilever remains a good-value stock for retail investors looking for a solid foundation.

The company’s price has increased somewhat this week, however, with two strategic developments seeing its stock come back into vogue and rise over 6%. Following the announcement that it would target $1.2 billion in plant-based sales by 2025 last Friday, the company’s shares hit a four-month low of 4,325p. Now, with news released over the last two days, it Unilever stock has seen something of a resurgence.

On Thursday, the company announced that it had agreed to acquire Californian nutrition business, SmartyPants Vitamins. Though the terms of the acquisition, and regulatory approval, have yet to be confirmed, the non-profit-backed health business will help to bolster Unilever’s ethical offerings by providing expectant mothers and children in need with affordable health goods.

Speaking on the deal, Fabian Garcia, President of Unilever North America, said: “We are delighted to welcome SmartyPants Vitamins to the Unilever family and our portfolio of purpose‐led brands. SmartyPants Vitamins aligns strongly with our mission to improve the health and wellbeing of consumers and empower people to take charge of their health with solutions they can understand and trust.”

On Friday, the company announced that its shares would trade on the Amsterdam exchanger for the final time on Friday. The group said it would be merging its UK and Dutch arms amid an uncertain macroeconomic landscape, marred by a pandemic downturn and disruptive Brexit proceedings. The owner of PG Tips, Vaseline, Ben & Jerry’s, Hellmann’s, and Lynx said the merger will help provide extra flexibility in acquiring and exiting businesses, as well as more unified corporate governance and reduced complexity.

Speaking last month, ahead of merging the 90-year-old hybrid company, the group said: “The boards consider that unification is in the best interests of Unilever, its shareholders and other stakeholders taken as a whole.”

Though both strategic shifts indicate positive changes within the company, the latter could pose some considerable challenges, given that four previous chief executives had tried and failed to get rid of the company’s hybrid structure. Regardless, investors responded neutrally to the news, with Unilever shares exactly flat by mid-afternoon on Friday 27/11/20.

Benchmark Holdings shares slip as profits half

Jamie Gordon
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0
Benchmark Holdings shares slip as profits half

Aquaculture specialists, Benchmark Holdings (AIM:BMK), saw its shares slide as it posted the results from a challenging full year of trading.

The company’s revenues dropped 14.83%, down from £124 million to £105.6 million. This was led by a 40.22% drop in its Health segment revenues and a 22.25% fall in its core Advanced Nutrition sector – though its Genetics segment grew by 4.53%.

While Benchmark Holdings’ statutory loss from continuing operations narrowed from £59.1 million to £22.8 million, its adjusted EBITDA fell 32.86% to £14.5 million, with its adjusted operating profit dropped 51.53%, from £16.3 million to £7.9 million.

On a brighter note, shareholders’ loss per share narrowed from 15.03p to 5.26p, while the company made significant progress in reduced its net debt, down from £87.1 million to £37.6 million year-on-year.

Benchmark Holdings said that the shrimp market has been challenging during the pandemic, while its salmon business has been ‘fairly resilient’. It also announced it had finished its restructuring and currently sits with a strong financial position.

Speaking on its performance, company Chairman, Peter George, said:”2020 was a transformational year for Benchmark. With the restructuring complete, we now have a streamlined Group focused on the three core aquaculture areas of Genetics, Advanced Nutrition and Health, each with substantial growth opportunities and long-term positive drivers which give usoptimism for the future. Our focus remains on becoming a profitable cash generative Group.”

“Against a very challenging backdrop this year with Covid-19, I am proud of the Group’s resilience both operationally and financially and this reflects well on the commitment and contribution of Benchmark employees.”

Following the update, Benchmark Holdings shares dropped 6% as trading began on Friday. The Marketbeat community currently has a 56.76% “outperform” stance on the stock. Over the past three months, company insiders have sold no shares in the company, and bought £82,800.

Arcadia faces collapse, risking 15,000 jobs

Safiya Bashir
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Arcadia faces collapse, risking 15,000 jobs

Arcadia Group could face collapse in the next few days putting 15,000 jobs at risk.

Reported by Sky News, the group is preparing to appoint administrators from Deloitte. The collapse of the group will come following a number of failed attempts to secure emergency loans.

The group, owned by the controversial Sir Philip Green, could appoint administrators as early as Monday. Earlier this month, Arcadia Group said it was taking “all the appropriate steps” to avoid administration and denied the rumours of collapse.

Arcadia owns brands including TopShop, Burton and Dorothy Perkins. Its collapse could lead to many creditors trying to purchase the company’s assets.

Just two weeks ago the group was in talks to secure a £30m loan, however a spokesperson from the group said:

“It is not true that administrators are about to be appointed. Clearly, the second UK lockdown presents a further challenge for all retailers and we are taking all appropriate steps to protect our employees and other stakeholders from its consequences.”

If the group does collapse, it will put 15,000 jobs at risk. The company already announced 500 job cuts from the head office earlier this year. Amid the lockdown, 14,000 employees have been furloughed.

Green bought the high street group in 2002 for £850m and in 2012 sold a 25% stake in TopShop’s immediate holding company to Leonard Green & Partners.

Nicola Sturgeon calls for a second referendum

Safiya Bashir
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0
Nicola Sturgeon calls for a second referendum

Nicola Sturgeon is calling for a second Scottish referendum “in the earlier part” of her next term.

Speaking to the BBC, she said: “I’ve not put a date on it yet. I have not ruled it out nor I have ruled it in. I think that is right not least because of the challenge the country is facing coming out of and rebuilding from Covid. Scotland should have the opportunity to choose whether to become independent in the earlier, rather than the later, part of the next parliament.”

Since the start of the pandemic, polls have continually shown majority favour for independence. Boris Johnson, however, has said that while he in power he will not allow another referendum.

The Scottish Minister has not honed in on specific timings for another referendum and emphasised the importance on rebuilding Scotland amid the pandemic.

She said: “I think the referendum should, for a whole variety of reasons, be in the earlier part of the next parliament.”

“I intend to say more about this before the election in our manifesto, but we are still in a global pandemic that I feel a bit more hopeful about seeing the end of than I did even just a couple of months ago.

“There’s still a lot of uncertainty ahead. I’m a life-long believer and campaigner and advocate for independence, but right now I’m also the first minister of Scotland. My responsibility is to the health and wellbeing of the country and trying to steer it through a pandemic and I’m very focused on that,” added Sturgeon.

Willie Rennie, the Scottish Liberal Democrat leader, said that the country should only be focusing on emerging from the pandemic.

“Scotland has been through huge turmoil over the last nine months. We haven’t even embarked on the economic recovery from the pandemic and the first minister wants to spend months or even years dividing the country over Scotland going its own way with independence,” said Rennie.

Tungsten Corporation shares fall amid “unpredictable market”

Safiya Bashir
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0
Tungsten Corporation shares fall amid “unpredictable market”

Tungsten Corporation shares (LON: TUNG) plummeted 20% on Friday’s opening after the group posted a trading update amid “challenging market conditions”.

The group posted a decline in transaction volume by 8% and revenues and adjusted EBITDA would be impacted for the remainder of the financial year.

Andrew Lemonofides, Tungsten’s Chief Executive, commented:

“Tungsten has faced a difficult and unpredictable market in 2020. In spite of these challenges and the decline in transaction volumes, we have won new customer relationships and we expect to deliver broadly similar revenues to FY20. This performance is underpinned by the investments that we have continued to make in our sales and product capabilities, coupled with our operational gearing following our cost base reductions in H1.

“It is disappointing that our profitability is going to be materially lower that we expected this year, however, the Company remains focused on improving efficiency and converting its pipeline of opportunities to drive growth in sales.”

Looking forward, the company said in the update that it expects the macro economic environment to remain challenging over the coming months but anticipates that the gradual easing of restrictions, transaction volumes will begin to return to pre-pandemic levels during FY22.

Tungsten Corporation shares (LON: TUNG) are trading -15.39% at 26,48 (1034GMT).

Wetherspoon shares sink as more than four in ten of its pubs will remain closed

Jamie Gordon
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0
Wetherspoon shares sink as more than four in ten of its pubs will remain closed

Cut-price pub chain, JD Wetherspoon (LON:JDW), saw its shares slide on Friday, as It announced 42% of its entire UK estate would remain closed, subject to new tier restrictions beginning next week.

The company said that of its outlets, 13 pubs in England and 51 in Wales would be classified as being in tier one or a tier one equivalent. Meanwhile, 435 of its branches – including 17 in Scotland – will be in tier two, meaning customers will have to take advantage of a meal deal in order to get their hands on a hard-earned pint.

Finally, Some 366 pubs will remain closed, with 315 in England, and 51 in Scotland and Northern Ireland, falling within the tier three strata. Wetherspoons said that the decision to keep the doors shut on these branches was taken as takeaways are “unlikely to be a realistic option”.

The bombastic Wetherspoons Founder and Chair, Tim Martin, responded to the pub closures and implementation of an updated tier system:

“The company has campaigned for pubs to revert to the rules agreed between the pub industry, civil servants, local authorities and health officials, which were introduced when pubs reopened in July.”

“These rules greatly reduced pub capacity and provided strict social distancing and hygiene standards but, with difficultly, allowed pubs to trade viably. It is very disappointing that yet another raft of regulations has been introduced, which has effectively closed half our pubs. In reality, the government has extended a form of lockdown, by stealth, in large swathes of the country.”

“There has been no evidence of widespread transmission of the coronavirus in pubs, as the Test and Trace system has evidenced. As councillor Ian Ward, leader of Birmingham City Council, recently said:”

“The data we have shows that the infection rate has risen, mainly due to social interactions, particularly private household gatherings. In shops and hospitality venues there are strict measures in place to ensure they are COVID-safe, whereas it is much easier to inadvertently pass on the virus in someone’s house, where people are more relaxed and less vigilant”.

Following the update, Wetherspoons shares sunk 2.11%, down to 1,111.00p apiece 27/11/20. This price is below its post-lockdown high of 1,201p, but around 3% ahead of analysts’ target price of 1,080p per share.

The company currently has a p/e ratio of -12.41, while analysts have a consensus ‘Hold’ stance on the stock, and the Marketbeat community give it a 72.51% “underperform” rating.

Spotify sacrifices short-term profits to grow subscriber base by 27%

Jamie Gordon
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0
Spotify sacrifices short-term profits to grow subscriber base by 27%

Music streaming giant, Spotify (NYSE:SPOT), announced that its subscriber base soared by 27% in the third quarter, up to a total of 144 million. Similarly, the company stated that its monthly active users bounced 29% year-on-year, up to 320 million.

According to research published by Comprar Acciones, Spotify had just (I know, just) 18 million subscribers in the first quarter of 2015. This doubled by Q2 2016, and then again by Q4 2017, and now doubling again, to the figure recorded in the quarter just gone by.

Spotify subscribers, Spotify data, Comprar Acciones graphic

Following the increase in the number of subscribers, the company’s subscription revenue hiked 15% year-on-year during Q3, up to €1.79 billion. Overall revenue rose by 14% in the same comparison, up to €1.98 billion, while ad revenue increased by 9%, year-on-year and 41% in a quarter-on-quarter basis, up to €185 million.

Despite the company’s seemingly impressive growth, tough, Spotify booked a €101 million loss during the period, swinging from a €241 million profit during Q3 2019. This downturn, the company said, was the result of discount plans being offered to increase its userbase – which saw revenue per user fall by 10%, down to €4.19.

As stated by the Billboard report, music streaming sales accounted for 56% of all global music sales in 2019, with streaming revenue soaring 23%, while subscription revenue shot up by 24% and accounted for 40% of total label income.

At the topic of the music streaming tree, Spotify claims 35% of total music streaming market share, and along with Apple Music (19%) and Amazon Music (15%), the top three claim 67% of the market.

These trends are only expected to become further entrenched going forwards. While taking a hit to short-term profits, Spotify has positioned itself well for 2021 by bringing record numbers of users into its platform – many of whom for the first time. Speaking on the music streaming market as a whole, Comprar Acciones financial expert, Nica San Juan said:

“By the end of 2020, revenue in music streaming is expected to reach $16.4 billion according to Statista. That would mark a 15.0% increase YoY. The segment’s user base is expected to reach 595.8 million by the end of the year, marking a 15.1% YoY increase.”

“Revenue from music streaming is expected to grow at a 5.4% compound annual growth rate (CAGR) between 2020 and 2025, to reach $21.3 billion, and a total of 933.2 million users.”

Global equities look half-baked on Thanksgiving

Jamie Gordon
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0
Global equities look half-baked on Thanksgiving

Still mulling over Monday’s gains, global equities had to settle for an uneventful Thanksgiving Thursday, as US traders busied themselves with carving turkey.

In a directionless session, lacking much in the way of either volume or movement, non-US stocks didn’t post any performances worth noting, with any developments likely to be reversed once the Dow gets into full swing from next Monday. Commenting on the quiet day, IG Chief Market Analyst, Chris Beauchamp, said:

“Perhaps this year they will be thankful for the rest after the craziness of 2020 and all the volatility that has come with it. November has not been exactly quiet either, with stock markets finding their springboard to a fresh rally thanks to the election and vaccine news.”

“That rally has cooled this week, leaving indices to drift back from their recent highs but without any real conviction.”

“Without the US today and (mostly) tomorrow we can look forward to more drift, especially since investors are expecting more gains in December.”

As the final bell rang, Eurozone indexes were broadly flat, with the CAC and DAX down by 0.081% and 0.024% apiece. Likewise, the FTSE had a fairly uneventful day, though the 1% drop in Brent Crude weighed on oil stocks, and saw the UK index shed 0.44%. Now at 6,362 points, it the top British equities now sit around 10 points ahead of where they began the week.

Friday will likely be much of the same for global equities, though the effects of the UK’s loosening lockdown restrictions may provide some optimism for hospitality and travel stocks – provided case numbers don’t rise fast enough to inspire another full-scale lockdown in the new year.

Low Carbon Innovation Fund backs efficient LED lighting as part of £760k funding round

Jamie Gordon
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1
Low Carbon Innovation Fund backs efficient LED lighting as part of £760k funding round

Environment and energy efficiency specialised merchant bank, Turquoise, announced on Thursday that it had completed its fifth deal on behalf of the Low Carbon Innovation Fund 2. This latest deal was part of a £760,000 funding round, and saw the European Regional Development Fund-backed organisation invest in LED light specialists, Kubos Semiconductors.

Using technology derived from the University of Cambridge, Kubos develops LEDS in cubic Gallium Nitride, in order to deliver efficient green and amber devices. The company’s technology enables the production of ‘high-end, low-cost, highly-efficient LEDs’ by solving the green gap problem (efficiency is often lower in green and amber devices versus their blue and red counterparts).

The company said that the main applications of its technology are in general lighting, micro-LED displays, automotive, street lighting and digital signage settings.

Speaking on the announcement of new Low Carbon Innovation Fund 2’s investment, Turquoise Directors, Axel de Mégille, commented: “Kubos LED technology will represent a massive improvement in lighting and displays efficiency, significantly reducing energy consumption and accounting for less CO2 emissions. This investment fits very well in the investment strategy of LCIF2 into technologies helping to reduce greenhouse gases (GHGs).”

Kubos chief executive Caroline O’Brien added: “We are delighted to welcome LCIF2 as an investor in Kubos. This investment will enable us to further our development program to deliver a commercial proof of concept and start engaging with potential customers. LCIF2 will also enable us to strengthen our links with local and national government.”

Funded by the European Regional Development Fund, the Low Carbon Innovation Fund 2 is managed by the UK Ministry of Housing, Communities and Local Government. This latest round of investment follows previous contributions to agritech startup, KisanHub, and £350k in funding towards EV battery recycling specialists, Connected Energy.

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