Pound slumps amid travel bans & Brexit chaos

Safiya Bashir
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Pound slumps amid travel bans & Brexit chaos

The pound sterling plunged 2.2% this morning amid the Brexit transport chaos and fears of the new Coronavirus strain.

As the prime minister put London and other regions into Tier 4 and tightened restrictions across Christmas, the pound plunged to a month-low. 

The lack of progress in Brexit negotiations has also caused the pound to tumble.

“It was a grand weekend of Tory mishandling, one that has really done a number on the FTSE and the pound. First, on Saturday, Boris Johnson delivered news that the easing of restrictions over Christmas was done for after the emergence of a ‘new strain’ of the virus – a strain the government has been aware of since September, something confirmed by the World Health Organisation,” said Connor Campbell from SpreadEx.

“The announcement led to multiple countries banning travel from the UK, with France going once step further, imposing a 48 hour halt not only on people, but the ‘transport of goods, by road, air, sea or rail’, sparking fears about supplies over the holiday period.

“Sterling was distraught, undoing last weekend’s optimism in a flash. Cable sank 1.7%, hitting a 10-day low of $1.328, while against the euro the pound dropped 1.6%, leaving it at a 3-month nadir of €1.086.”

“Though sterling’s losses did mitigate the FTSE’s own decline, the UK index still shed 50 points, slipping under 6,470,” he added.

Amid the biggest fallers on the FTSE today were International Airlines Group, which was 16% down on opening and Rolls-Royce, which was down 9%. Holiday operators also fell with Tui shares down 6.6% while the cruise ship company, Carnival, was down by 9%.

Crude oil prices have slightly recovered after earlier dropping by as much as 5%. The price of Brent crude futures is down 3.7% at $50.37. Shares in Shell opened 4% lower on Monday as the group commented on the future of the industry.

Universe Group expects “modest level” of full-year profits

Safiya Bashir
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0
Universe Group expects “modest level” of full-year profits

Universe Group shares (LON: UNG) were 11.27% lower on Monday as the group shared a trading update for the year to 31 December 2020.

Revenues for the second half of the year are expected to be in line with revenues recorded for the first half of the year – depending on the roll-out of a material project where work is ongoing.

“Revenues from this project are now expected to be recognised in the first half of 2021 but the investment made in the project must be recognised in the current financial year,” said the group in a statement.

Amid the Brexit uncertainty and Covid-related costs, Universe Group remains confident and expects to report a modest level of adjusted EBITDA profitability for the full year.

Jeremy Lewis, the chief executive of the company commented: “The Company’s employees and management have worked hard this year to keep customer service levels up in difficult circumstances. We are working on a small number of high-value projects while continuing to focus on a significant level of recurring and repeating business. We have a resilient financial position and are cautiously optimistic about our prospects for next year. We look forward to providing further updates as the new year progresses.”

Universe Group shares (LON: UNG) are currently trading -13.88% at 3.66 (1145GMT).

Trident Royalties to acquire portfolio of royalties in the Pukaqaqa Copper Project

Safiya Bashir
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0
Trident Royalties to acquire portfolio of royalties in the Pukaqaqa Copper Project

Trident Royalties (LON: TRR) has announced its acquisition of three existing royalties over the Pukaqaqa Copper Project in Peru.

The company said in an update that it had entered into a binding, conditional agreement with Bellatrix Ltd, a subsidiary of Orion Resource Partners, for a total consideration of US$3m worth of new Trident ordinary shares.

Pukaqaqa is a project that is located in an established mining district of Peru. It covers 11,125.87 hectares and is made up of 34 concessions.

The three royalties are: Vaaldiam, Pukaqaqa Norte, and Pukaqaqa Sur.

Trident, the growth-focused, diversified mining royalty and streaming company shares are up this week following news of the acquisition. The group has said that as part of its strategy, it is building a royalty and streaming portfolio to broadly mirror the commodity exposure of the global mining sector and targeting attractive small-to-midsize transactions, “which are often ignored in a sector dominated by large players.”

The large-scale project advancing towards development will generate a significant revenue stream for nearly two decades, said Trident chief executive, Adam Davidson.

He commented in a trading update: “We are very pleased to announce this all-share transaction with Orion. The royalties cover a large-scale asset which is being actively advanced by an established regional operator that, once in production, will generate a significant revenue stream for nearly two decades based on the most recent technical study. On the current resource, at a processing rate of 30,000 tonnes-per-day we believe Pukaqaqa has the potential to produce around 35,000 tonnes of copper per year, along with potential molybdenum, gold, and silver credits.

“Whilst not losing sight of our priority to acquire cash generative royalties, as we plan for Trident’s long-term growth, acquiring attractive development stage royalties over significant assets such as this has the potential to catapult a royalty company from junior status to that of mid-tier / major. I would also add that it was a pleasure transacting with Orion, and we look forward to further engagement in the future. It is worth noting that Trident’s transaction pace since our June 2020 listing continues to exceed my expectations and demonstrates the robustness of our pipeline. I look forward to reporting further on our progress,” he added.

When the transaction is completed, Orion will become a 6.1% shareholder in Trident Royalties.

Trident Royalties shares (LON: TRR) are trading +4.77% at 35.60 (1054GMT).

Arcadia: Evan’s brand sold in £23m deal

Safiya Bashir
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0
Arcadia: Evan’s brand sold in £23m deal

The Evan’s brand, owned by Arcadia, has been sold to Australian-listed City Chic in a deal worth £23m.

Following the collapse of Phillip Green’s Arcadia, the firm has brought Evans’ brand and wholesale business. The deal will not include any of the UK stores.

Evans is a plus-size clothes and footwear retailer. Australia’s City Chic is also a plus-size fashion retailer, which has stores across Australia and New Zealand.

Whilst the deal does not include UK stores, Deloitte has said that they will “continue to trade for the time being”.

Other Arcadia brands, including Topshop, Topman and Dorothy Perkins, are still on the market. Deloitte said: “There have been significant expressions of interest for all brands” and updates would be provided after the new year.

It was revealed by Sky News last week that Next was in talks with American investment firm Davidson Kempner about a joint bid for the rest of the Arcadia group.

Sources said that the two companies were “likely, but not certain” to make a bid in the next few weeks.

Arcadia, which has over 500 stores across the UK, fell into administration earlier this year after a last-minute rescue deal involving Mike Ashley’s Fraser Group fell through.

Guy Elliott, is the senior vice president at consultancy Publicis Sapient. He commented on the collapse of Arcadia:

“For the past few years, Arcadia and its brands have failed to be relevant to the demographics targeted by the respective brands, and Topshop in particular has lost much of its appeal to the younger generation,” he said.

“I have no doubt that Topshop will be highly fought over as part of the administration process and hopefully new owners can turn it into the retail giant it once was, with the right investment in product, digital and marketing,” he added.

FTSE 100 plunges amid Brexit chaos & new strain

Safiya Bashir
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0
FTSE 100 plunges amid Brexit chaos & new strain

The FTSE 100 plunged 1.8% in early trading and was down 117 points, to 6,410 points.

Due to the lack of Brexit negotiations, the new strain of the virus and chaos around borders, the blue-chip index was down almost £33bn within minutes of opening on Monday.

The biggest faller on the FTSE 100 this morning was International Airlines Group, which was 16% down on opening. Rolls-Royce was down 9%.

Banks were also down this morning. Lloyds Banking Group shares fell by 6%, whilst Barclays opened 4.7% lower.

Holiday operators also fell on Monday. Tui shares fell 6.6% while the cruise ship company, Carnival, was down by 9%.

Similar scenes to the FTSE 100 are being seen across the rest of Europe. Germany’s Dax was down 1.9%, France’s Cac 40 fell by 2.4% and Spain’s Ibex lost 2.8%.

The pound was also down 2% against the dollar this morning at about $1.3272. The pound is down by 1% against the Euro at €1.0907.

Commenting on the impact of the new strain of Covid-19 and looming Brexit deadline on the FTSE 100 and the economu, Olivier Konzeoue, FX Sales Trader at Saxo Markets, said: “A new strain of COVID-19 deemed to be 70% more contagious, pushing the U.K. Government to put new lockdown measures in place, combined with stalling Brexit talks make for a rather toxic mix that weighs on the Great British Pound.

“Let’s keep in mind seasonality will be a factor as liquidity typically gets thinner going into the end of the year, potentially causing more extreme moves. The sudden drop from GBPUSD 1.35 area to 1.3278 not only illustrates this phenomenon, but also shows markets are not positioned for a cliff-edge breakup between the U.K. and Europe. No doubt headline risks will keep sterling under pressure in the coming days.

“On the vaccine front, the U.K.’s frequent use of gene sequencing could explain the fact a new variant of the coronavirus has been identified and described as more infectious but similar studies could reveal similar conclusions on variants spreading across continental Europe. The main worry for investors remains whether these mutated versions of COVID-19 could resist the vaccine, potentially putting a lid on recovery hopes for the foreseeable future at a global level,” he added.

DP Poland secures Polish pizza reversal

Andrew Hore
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DP Poland secures Polish pizza reversal

DP Poland (LON: DPP) has agreed the acquisition of rival Poland-based pizza restaurant group Dominium for £22.7m in shares and loan notes of €7.5m. This reverse takeover will nearly double the number of stores to 126 and provide economies of scale.
The combined group will be one of the top three pizza chains in Poland. Competition has been fierce, and the group will be better placed to combat this. On its own DP Poland has struggled to grow revenues to the point where it can be consistently profitable.
Domino’s Pizza Inc is supportive of the deal and there will be temporary branding of Dominiu...

Driver benefits from international spread

Andrew Hore
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Driver benefits from international spread

Construction dispute and property services provider Driver Group (LON:DRV) maintained its profit in the second half of the year to September 2020 even though trading conditions were difficult. There was a mixed performance around the world, but costs are being adapted to the current levels of demand.
In the year to September 2020, underlying pre-tax profit declined from £3m to £2.5m on revenues 9% lower at £53.1m. Driver shed lower margin work as part of the strategy of new chief executive Mark Wheeler.
The higher margin Diales expert witness business continues to grow and there are additional...

CyanConnode builds orders

Andrew Hore
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0
CyanConnode builds orders

Radio frequency communications networks developer CyanConnode (LON: CYAN) continues to manage its cash, while increasing revenues. The order book should ensure that further growth in revenues.  
Chief executive John Cronin and finance director Heather Peacock are receiving part of their annual remuneration payment in shares.
Figures
In the six months to September 2020, revenues were £1.5m and the loss was £1.37m. This was achieved even though there was Covid-19 disruption in the period. Operating costs were reduced so that they are in line with levels of turnover. There are no direct comp...

Lombard Odier: Our Natural Capital fund will “deliver strong growth”

Safiya Bashir
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0
Lombard Odier: Our Natural Capital fund will “deliver strong growth”

Last month saw Lombard Odier launch a Natural Capital strategy, allowing the opportunity to invest in public companies that focus on the regenerative power of nature; Natural Capital.

According to the global wealth and asset manager, Natural Capital “will deliver strong growth and become the winners of the future.”

The fund was developed by Lombard Odier in partnership with the Circular Bioeconomy Alliance, established under the Prince of Wales’ Sustainable Markets Initiative and will connect investors to sustainable investable solutions, leading to a “nature positive economy”.

“Nature is the most productive asset of our economy. We rely on nature directly and indirectly across multiple sectors, including healthcare, agriculture, industrials, tourism and real estate. With eight billion people on the planet, our linear take-make-waste economic model is now dangerously depleting this most productive asset, despite its regenerative nature. This is a risk for our global economic activity,” said Lombard Odier.

“Preserving nature means shifting towards greater circularity in our production and consumption model as well as eliminating waste in our industrial activities. This is about creating a much leaner form of industry, or in other words about more efficient use of resources, a shift in our consumption model and about zero waste strategies.”

The fund was launched by Lombard Odier in November at an event hosted by The Prince of Wales.

Commenting on the Natural Capital strategy, Prince Charles said: “We need to accelerate our efforts and set the course for a sustainable future rooted in a new economic model – in other words, a circular bioeconomy that puts Nature and the restoration of Natural Capital at the centre of the entire process. Building a sustainable future is, in fact, the growth story of our time. If we are to drive global economic growth, it is imperative that we value and invest in our natural capital. This is why I am enormously encouraged to see that, under my Sustainable Markets Initiative, the Circular Bioeconomy Alliance is working hand-in-hand to support the Natural Capital Strategy developed by Lombard Odier.”

Lloyds to scrap staff bonus despite Q3 profits

Safiya Bashir
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0
Lloyds to scrap staff bonus despite Q3 profits

Lloyds Bank (LON: LLOY) has announced plans to scrap the staff bonus due to the plunge in profits over the pandemic.

Despite returning to profit in the third quarter, the lender said on Friday that it would axe the bonus as pre-tax profit for the first nine months of the year is 85% lower.

In the latest quarter, Lloyds profits were well ahead analyst expectations of £588m and hit £1bn in profits.

In a memo seen by the Financial Times, Matt Sinnott told employess: “Despite the good news about the vaccine rollout, like most of our peers our year-to-date business performance continues to be challenging. While we have returned to profit, we are not where we expected to be and are short of the commitments we made to ourselves and our shareholders.”

A spokesperson for the group said: “Given our expected levels of profitability for 2020, we are unable to pay Group Performance Share (or bonus) awards to our people for this year.”

In November, Lloyds named Charlie Nunn as the new the next chief executive. Current chief executive Antonio Horta-Osorio will be stepping down next year and said on the news: “Charlie will find a warm welcome at Lloyds Banking Group and a deep commitment from all of our people to deliver on our purpose and to help Britain recover. I am sure that he will find his time here as fulfilling and fascinating as I have done and I wish him the very best.”

Nunn said: “Lloyds’ history, exceptional people and leading position in the UK means it is uniquely placed to define the future of exceptional customer service in UK financial services. I look forward to building on the work of António and the team and their commitment to helping Britain prosper.”

Lloyds shares (LON: LLOY) are trading 2.03% lower at 35.48 (1407GMT). In the year to date, shares have fallen from highs of 64.51.

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