Gourmet Burger Kitchen to close 26 restaurants
Gourmet Burger Kitchen will be axing 26 restaurants and 326 jobs in an attempt to save the wider workforce.
As reported by Sky News, the chain will continue to operate in 35 sites with the remaining 669 jobs, however, 26 restaurants will be sold to Ranjit Boparan.
Earlier this year, Boparan rescued the Carluccio’s chain and also owns Giraffe, Ed’s Easy Diner, and Fishworks.
Deloitte is handling the administration process for Gourmet Burger Kitchen and said: “As with a number of dining businesses, the broader challenges facing ‘bricks and mortar’ operators, combined with the effect of the lockdown, resulted in a deterioration in financial performance and a material funding requirement.”
The news comes as much of the UK has been forced into a second lockdown – risking many jobs in the hospitality sector.
Since March, companies in the casual dining sector including Wagamama and Prezzo have resorted to insolvency processes, auctions, or emergency fundraisings.
Using pensions to buy houses will be a disaster for property prices & your retirement
Pensions Minister, Guy Opperman, said in a webinar that he wanted to explore ways for the auto-enrolment pension system to be adjusted, to allow buyers to borrow from their pension pots for property deposits.
Today’s fire sale will mean fewer people will buy tomorrow
Much like the myopic and expedient stamp duty holiday, the risk with this next proposal on the ‘Generation Buy’ playlist is that it would artificially inflate short-term demand. Then, the ensuing buying spree would likely trigger a corresponding, rapid and – for future first-time buyers – harmful rise in property prices. This spike in demand would be unlikely to be matched by a surge in supply, as knowingly pushing existing property owners into negative equity is a huge no-no. Therefore, should such a spike occur, it would be here to stay (COVID and mass unemployment permitting). While dipping into pension pots might build a short-term ‘Generation Buy’, we appear to have forgotten the lessons of Right-to-Buy. If we offer a one-time fire sale to today’s buyers, the first-time buyers of tomorrow will see property ownership as an increasingly distant dream. What should instead be the goal is a consistent supply of housing stock (including social housing), alongside efforts to align property prices with inflation.Pensions or pittance?
Further, even if we blindly skip into a place where this policy exists (which would be necessary to make you think think it’s a good idea), we must consider the issue of compound interest. As stated by Isabelle Fraser, “a small amount taken out of a pension now [- in order to afford a deposit -] turns into a much larger shortfall after decades of missed growth.” The OECD declared that the majority of today’s youngsters will retire with 60% less than current retirees, and that millenials wanting to retire at the same age as their grandparents will have to save an additional £80,000. With this in mind, Boris’ latest gambit isn’t just reckless for property prices, but could be truly devastating for pensioners of the future. Even if today’s buyers survive by using their pension pot to buy property, and then build on that and pay for their retirement – what about the people after them, and the people after that? If we are encouraged to use up larger and larger chunks of our pension pot to buy a house, at what point will people reach retirement age and have to choose between their home and sufficient liquid capital to pay the bills? In short, this latest proposal is an indictment of policies trying to deal with complex issues, too quickly.No guarantee banks will even accept pension pot deposits
Another major oversight with this new proposal is that it seems to ignore the situation going on right in front of us, regarding mortgage approvals. Having pledged to lower mortgage deposit rates to 5%, the PM didn’t seem to address one of the core reasons why mortgage applications are getting denied so regularly. Certainly, deposit size is an issue, but so too, is the provenance of the deposit. As I was told by a property-focused solicitor, banks don’t just want to know if you have the money, but where it has come from – because that gives a lot of indication of whether they can rely on more coming. For instance, if your mortgage deposit is courtesy of the bank of mum and dad, you’re far more likely to be rejected. What banks want is a deposit generated organically by working groups or individuals, with steady and reliable incomes, not one-off sums followed by promises. I don’t see how this differs from drawing money out of a pension pot. It’s a one-off sum of money that doesn’t exactly reflect your month-to-month ability to pay a mortgage. While pension contributions are based on an individual’s salary, they don’t take account of things like one’s cost of living, job security, or financial prudence. With this in mind, I’m not sure whether banks would accept pension-pot-based deposits – and given what we’ve discussed, that’s probably for the better.Are pensions and property investment ever compatible?
In some capacity, they already are. Indeed, pension funds have invested in real estate for some time, and , according to Ringley Managing Director, Mary-Anne Bowring: “People are correct to look at pensions as a solution to the housing crisis but encouraging young people to pull money from their pension pots to buy a home is deeply irresponsible. “ “There is a historic opportunity to harness pension fund cash that was previously being invested into shopping centres and offices into delivering new homes for rent. Many pension funds are already investing significantly in so-called ‘build to rent’ homes across the UK.” “This asset class is perfect for investment from pension funds, as they require long-term steady income streams to match their liabilities.” “There’s a considerable undersupply of high-quality rental homes in this country and all indicators point to more people renting and for longer, underlining the need to deliver more rental housing.” Of course, this latter point is exactly what Boris is trying to avoid. What he wants is for more people to buy, and to do so at a younge rage. And, though a worthy goal, this latest proposal is short-sighted, and gives little thought to posterity.Barratt Developments shares rise thanks to growth in sales
Barratt Developments shares (LON: BDEV) rose on Wednesday after the housebuilding group shared a trading update for the period from 1 July to 11 October 2020.
The FTSE 100 firm posted 4032 agreed sales for the period, a 24% increase from the year previously – helped by pent-up demand and the Help to Buy scheme.
Total forward sales reached 15,135 homes, up from 12,963 a year ago, and totaled a value of £3.6m.
“Our sites continue to operate safely and successfully across the country, including areas of local lockdown, enabled by our extensive COVID-19 working practices and protocols. Construction activity remains in line with FY21 planned output, with an average of 294 equivalent homes constructed per week in the period,” said the group in a statement.
Whilst mortgage rates remain relatively attractive, since the pandemic Barratt Developments has seen a material change in loan to value (LTV) lending criteria with no mainstream mortgage lenders providing mortgages at 95% LTV for new-build homebuyers. This has increased the reliance of first-time buyers on Help to Buy. Between July and October, 51% of the group’s private reservations used Help to Buy.
David Thomas, the housebuilder’s chief executive, commented: “Health and safety remains our number one priority and we remain focused on keeping our people safe while we rebuild completion volumes, bring further operational improvements to our business, and deliver on our commitment to build the highest quality homes across the country.
“There is continuing strong customer demand for our homes and we have a healthy forward order book. As we look ahead, whilst significant economic and political uncertainties persist, we believe our disciplined approach and strong balance sheet provide us with the resilience and flexibility to react positively to future challenges.”
Amid the economic and political uncertainty, the group has ensured investors they remain in a strong position.
Barratt Developments shares (LON: BDEV) are trading +2.28% at 556,20 (1308GMT).
Kainos shares surge 28% on “strong trading performance”
Kainos shares (LON: KNOS) surged 28% on Wednesday morning after the IT provider shared a “very strong trading performance”.
Customer demand remained high from 1 April 2020 to date and the group expects full-year results ending 31 March 2021 to be ahead of expectations.
“As referenced in our September update, our Digital Services customers continue to prioritise digital transformation programmes in the NHS and Public Sector, and as a trusted partner to the UK Government, we continue to support these critical, long-term programmes,” said the group in a statement.
“Our Workday Practice continues to benefit from its international scale and an ability to secure new consulting contracts across all our geographies. Alongside these engagements, our specialist Workday automated testing platform, Smart, continues to support over 200 international clients and to drive new client acquisition, especially within the US market.”
The FTSE 250-listed firm also said that trading had been strengthened from several changes including increased utilisation and reductions in recruitment, training and travel expenditure.
Earlier this year, the group acquired Intuitive Technologies LLC. Commenting on the acquisition Brendan Mooney, CEO, said: “I am delighted to welcome the IntuitiveTEK team to Kainos, and into our ever-expanding Workday practice. The team’s expertise, excellent reputation, and passion for building strong customer relationships aligns with our business, and we look forward to having them on board.
“As a leading Workday partner, we see this acquisition as an important step to deepen our expertise in Adaptive Insights Business Planning Cloud in the United States, where we continue to see growing demand from clients in modernizing their planning and financial management processes,” he added.
Results for the six months ending 30 September 2020 will be made on 16 November.
Kainos shares (LON: KNOS) are currently trading 27.84% higher at 1.304,00 (1051GMT).
G4S shares dip as revenue falls
G4S shares (LON: GFS) dipped 2% on Wednesday’s opening after the group reported a fall in revenue for the first nine months of the year.
Revenue fell 2% over the period, however, the group saw profits for the same period ahead of last year thanks to “tight direct and indirect cost control and reduced interest costs.”
“G4S today is a focused global business delivering integrated security solutions which combine our risk consulting, security, technology and data analytics capabilities,” said chief executive, Ashley Almanza.
“The benefits of our strategy, strong execution and rapid response to Covid-19 continue to be reflected in the group’s results during 2020 with resilient revenue, earnings and cash flow.
“I would like to thank our customers and employees for their commitment to G4S during these challenging times,” Almanza added.
The group is currently in a hostile takeover bid with Gardaworld. Gardaworld has appealed to G4S shareholders by and has criticised the firm’s directors and accused them of acting in a “cavalier manner” after directors have rejected several approaches in recent months.
G4S shares (LON: GFS) have recovered and are steady at 209,70 (1037GMT).
IMF World Economic Outlook predicts ‘deep recession’ with 4.4% global contraction
In its latest, unsurprising but painful prognostication, the IMF World Economic Outlook projected what it described as a ‘deep recession’, with global growth expected to fall to -4.4%.
Speaking ahead of the WEO forecast, IMF chief economist Gita Gopinath said:
“So we continue to project a deep recession in 2020 with global growth projected to be -4.4%. This is a small upgrade relative to our June numbers. We expect growth to rebound partially in 2021, coming back to 5.2 percent. However, with the exception of China, all advanced economies and emerging and developing economies, excluding China we are projecting output will remain below 2019 levels well into 2021. Therefore, we see that the recovery from this catastrophic collapse will likely be long and even highly uncertain,”
Gospinath argued that as world economies attempt to bounce back from COVID turmoil, there are challenges yet to be faced, but also a real opportunity for the situation to improve.
“There are broad risks to the upside and to the downside. On the upside, we could have positive development in terms of treatments and vaccines that could hasten the end of this health crisis. And we could also have more policy support that would help. But there are many downside risks. We could have worse news on the health front, and we could have greater financial turmoil at a time when debt is at the highest level in recorded history. And we have rising geopolitical tensions that could also derail the recovery,” she said from her home in Boston.
She added that the road to recovery will be a difficult one, but offered some suggestions on how policies could be designed to put economies back on a growth trajectory.
“First, it is essential that fiscal and monetary policy are not prematurely withdrawn as this crisis is far from over. Second, we need much greater international collaboration to end this health crisis by making sure that when once new treatments and vaccines are available, then it will be produced a sufficient scale to be available widely in all countries. And lastly, policies should be designed towards putting economies on a path towards more sustainable, inclusive and prosperous growth,”
Despite Gospinath’s cautiously optimistic outlook, the IMF red growth percentage will be another reason for global equities to feel the burn at the start of a challenging week.
Political tensions leave a bitter taste, with Brexit and the US Presidential Election creating opportunity for unknown downsides and poor sentiment between now and Christmas.
Pressure now mounts on policymakers, to decide whether or not lockdown part 2 is the correct path. The WHO are stressing that lockdown should be avoided if possible, and stated that the lockdown earlier in the year – as a result of diminished trade and travel – pushed around of quarter of a billion people back into poverty. All most of us can do is shelter our money, and hold on for what will likely be a harsh winter.
JP Morgan beats analysts’ expectations, profits soar
JP Morgan has a strong third quarter, with revenue and profit jumping amid the Corona-uncertainty.
Trading beat analysts’ expectations during the period, with revenues growing from $9.52bn to $11.5bn. Profit soared from $2.83bn to $4.3bn.
Jamie Dimon, Chairman and CEO, commented: “JPMorgan Chase earned $9.4 billion of net income on nearly $30 billion of revenue and we maintained our credit reserves at $34 billion given significant economic uncertainty and a broad range of potential outcomes.
“We further strengthened our capital and liquidity position, increasing CET1 capital to $198 billion (13.0% CET1 ratio, up 60 basis points after paying the dividend) and liquidity sources to $1.3 trillion. The Corporate & Investment Bank continues to be a big driver of Firm performance with Markets revenue up 30% and Global IB fees up 9%.
“CIB and Commercial Banking continue to attract and retain deposits given our strong client franchise as our clients remain liquid. Asset & Wealth Management generated record revenue and net income and saw strong net inflows into long-term products,” added the JP Morgan chief executive in a statement.
Meanwhile, rival Citigroup saw profits falling 34%, however, earnings per share of $1.40 beat analysts’ expectations. Citigroup shares fell over 3% on the news.
Johnson & Johnson shares slide as vaccine trial put on hold
American multinational medical and pharmaceutical firm Johnson & Johnson (NYSE:JNJ) has seen its shares slip 1.50% on Tuesday afternoon after it announced that its coronavirus vaccine trial has been forced to halt due to the ‘unexplained illness’ of a participant.
The company has stated that the volunteer’s illness is currently being assessed by an independent regulator to determine if their symptoms are related to the vaccine. It is not yet known if the patient had received a genuine dose or a control placebo.
Until a review is carried out, Johnson & Johnson has confirmed that it has completely suspended the crucial Phase III of its clinical human trials as a precaution. Further details of the patient’s condition are protected under privacy agreements.
This is not the first coronavirus vaccine set-back so far. Just last month, the world-leading collaboration between Oxford University and AstraZeneca was forced to halt its own clinical trials after a participant developed neurological symptoms.
Regulators later deemed the trial safe to go ahead, but not without dealing a heavy blow to hopes that the development of an effective coronavirus vaccine will be a smooth and swift ride.
Johnson & Johnson released a statement on the news, remaining tight-lipped about the details of the incident while issuing a reminder that a patient becoming ill is not necessarily unusual:
“Adverse events – illnesses, accidents, etc. – even those that are serious, are an expected part of any clinical study, especially large studies.
“We must respect this participant’s privacy. We’re also learning more about this participant’s illness, and it’s important to have all the facts before we share additional information”.
Much like AstraZeneca’s proposed jab, Johnson & Johnson’s makes use of a modified common cold virus to train the immune system to fight coronavirus infection.
There are currently nearly 180 vaccines in development around the world, but it is widely-thought that a readily-available jab for the general public will not be accessible until Spring 2021 at the very earliest.
Johnson & Johnson’s share price slipped 1.50% to USD 149.58 at GMT 14:59 13/10/20, down slightly from yesterday’s peak of USD 153.14.
However, investors should not necessarily shy away, as the firm has gained leaps and bounds since its annual nadir of just USD 111.14 on 23/03/20, and has remained relatively consistent within the boundaries of USD 140.00-157.00 ever since.
OnTheMarket reveals busiest ever quarter – shares fall
OnTheMarket shares (LON: OTMP) took a tumble on Tuesday after the group its latest results.
Despite its busiest ever quarter, shares in the property group fell by almost 4% in afternoon trading.
In the six months to July 31, OnTheMarket saw revenue rise 28% to £10.2m and achieved profitability “as a result of measures implemented to reduce costs and conserve cash.”
As lockdown restrictions were eased, the group saw pent-up demand and year-on-year visits in July 2020 increased 173% to 27.5m and average leads per advertiser increased 56% to 148.
Clive Beattie, acting chief executive, commented:
“We started the year strongly with trading in February and the first half of March in line with management expectations. However, the first half of the financial year quickly became dominated by the impact of the COVID-19 pandemic.
“Our focus during the period has been to safeguard employee well-being, provide value and support to our agent and housebuilder customers and to manage costs and conserve cash.
“We have been particularly pleased with the strong consumer engagement with the portal since the easing of national lockdown restrictions in May, with record leads indicating that those consumers most active in the property market visit OnTheMarket.com.”
OnTheMarket shares (LON: OTMP) are trading -3.56% at 97,89 (1505GMT).
New Mexico nudges towards carbon neutral future
New Mexico has announced that it is set to launch a new ‘smart infrastructure’ and carbon neutral energy era alongside Agile Fractal Grid and Cityzenith, following the 2019 Energy Transition Act (ETA) granting the US state the position of global leader in the fight against climate change.
The partnership between energy supplier The Agile Fractal Grid (AFG) and software firm Cityzenith will see New Mexico develop a novel integrated power and broadband network which is expected to ‘transform life and the economy’ across the state and eventually ‘ripple outwards as other energy operators, states and nations see the benefits’.
The project’s developers have hailed its potential to generate ‘1,000s of new businesses, 100,000s of new jobs, better and faster data links, higher infrastructure efficiency, and up to six new smart cities’.
New Mexico – the 5th largest US state with a population of 2.35 million and GDP of $104 billion – has also announced its plans to replace its fossil fuel power with a cleaner ‘smart energy’ network, making use of the country’s rapidly-growing carbon neutral wind and solar energy markets.
Citizens will get to experience ‘smart’ IT benefits across ‘entertainment and hospitality venues, retail, transport hubs, health and hospitals, security, telecoms, power utilities, employment, and manufacturing’.
At the heart of the project is Cityzenith’s SmartWorldPro – the world’s most advanced Digital Twin platform – whose software will provide ‘efficient design before construction’ and also ‘streamline [the] ongoing operation and development of the new assets’.
Cityzenith CEO Michael Jansen welcomed New Mexico’s announcement:
“It’s the kind of visionary project SmartWorldPro was designed for and we are already modelling New Mexico’s biggest city, Albuquerque (915,000) before rolling out across the state over a 10-year program.
“SmartWorldPro can integrate with AFG’s futuristic portfolio of AI, smart building, and other technologies towards a ‘Smart Connected Community’ for cities, large venues, and even whole states.
“It’s easy to see the benefits for New Mexico, but this cutting-edge technology can go global, pushing back against urban pollution and Climate Change and trillions in economic and environmental damage”.
AFG CEO John Reynolds added:
“The project is a highly efficient deployment of services for 21st century public, commercial, and industrial needs.
“Cityzenith’s SmartWorldPro means we can show and deliver this data-rich ‘smart lifestyle’ to everyone in New Mexico – urban and rural.
“Longer-term, this sustainable power, comms, and lifestyle ‘reset’ could span North America, and national 10GB broadband may be just 10 years away”.
Last month, Cityzenith pledged its SmartWorldPro platform to helping the world’s most polluted cities achieve carbon neutrality.
Jansen commented on the firm’s ongoing projects towards carbon neutrality:
“The world’s top 100 most-polluting cities produce 18 per cent of global urban emissions and we will meet this challenge head-on, by going right to the biggest contributors first.
As one megacity reaps the benefits, so others and governments will follow their example. What works for one will work for all”.