Boris Johnson intends to ‘drive a hard bargain’ in UK-US trade talks
Boris Johnson has told the UK that he will drive a hard bargain, following plans to negotiate a trade deal with the US.
Last week, Liz Truss welcomed Robert Lighthizer into London – as the two parties looked to sit at the negotiating table to discuss trade formalities.
Since the December election, PM Johnson has made a number of pledges including trade deals outside of Brexit.
The last few weeks have been busy for the British Prime Minister, and certainly a deal with the United States should fall at the top of his priority list.
The newly elected Conservative Government have promised to boost the British economy by almost £3.5 billion, benefit areas such as Scotland, the Midlands and also maintain food standards across the United Kingdom.
There was heavy speculation that the NHS could also be partially sold off, in an attempt to partially privatize the UK Healthcare System, in similar fashion to the US.
However – Johnson has reaffirmed his status saying that the NHS is not for sale, and that the NHS will continue to work in the interest of British people.
“We’re going to drive a hard bargain to boost British industry,” said Mr Johnson.
“Trading Scottish smoked salmon for Stetson hats, we will deliver lower prices and more choice for our shoppers.”
Talks with the US are expected to start this month – however there is more optimism that a post-Brexit deal with the United States can be struck, following the difficulties that Johnson currently faces in Brussels.
The relationship between Johnson and Trump seems to be amicable – Trump is currently embarking on his election campaign and has visited India most recently, whilst looking to capture the American vote to give himself another tenure in office.
Frances O’Grady, general secretary of the Trades Union Congress, said: “The government should be focused on getting a good trade deal with the EU – not cosying up to Donald Trump.”
Following sanctions and exports between both nations, it is difficult to speculate which direction these talks could go in.
The US is the UK’s second largest trading partner after the EU, and this is something that PM Johnson will have to bear in mind.
Following the apparent ‘decline’ of the special relationship with the USA, Boris Johnson will have to make sure that he strikes a balance between getting a good deal with the US and not hindering further relations – which could lead to tariffs, embargo and other economic sanctions.
Senior shares jump 7% on mixed final results
Senior plc (LON:SNR) have seen their shares spike following a mixed set of final results.
Shares in Senior trade at 152p (+7.65%). 2/3/20 10:12BST.
The engineering and defense first said that its’ results had been pleasing, despite the recent problems that Boeing (NYSE:BA) had been facing.
The Chief Executive noted: “Senior has delivered robust full year results for 2019 with adjusted earnings per share growth and a strong free cash flow performance. This result has been delivered in a period where the business has faced challenges caused by the grounding of the Boeing 737 MAX fleet.
The civil aerospace market has been impacted by the grounding of the Boeing 737 MAX fleet following the Lion Air and Ethiopian Airlines tragic air accidents. As a consequence, in mid-April 2019 Boeing reduced the programme build rate from 52 airplanes per month to 42 per month. In December 2019, Boeing announced the temporary suspension of 737 MAX production beginning in January 2020, pending the certification and return to service of the airplane.”
Despite the strong final results, Senior did allude to drops in revenue across 2020, however shareholders have reacted optimistically to the update provided today.
The firm reported that revenue had jumped 3% across 2019 to £1.11 billion, but without currency movements the figure saw a decline.
Looking at profit figures, Senior saw their pretax profits fall by 53% on an actual basis, tp £28.7 million.
The FTSE 250 listed firm added that they had been bruised by a £22 million loss in disposal following the sale of its Flexonics operations in France in 2019.
The aerospace division, saw their revenues increase by almost 6% to £835.4 million, however adjusted operating profit in the division dropped 8.7% to £76.4 million.
Going forward, the firm did not give such an optimistic sentiment for 2020. Senior expect Aerospace revenue to drop by around 20%, as performance will be more second half weighted.
Senior have proposed a final dividend of 5.23p per shares, giving a 2019 total of 7.51p.
Commenting on the results, David Squires, Chief Executive of Senior plc, said:
“Senior delivered robust full year results for 2019 with adjusted earnings per share growth and a strong free cash flow performance. This result has been achieved in a period where the business has faced challenges caused by the grounding of the Boeing 737 MAX fleet. It is clear that our performance in 2020 will continue to be affected by the 737 MAX situation and the Company is taking all necessary actions to mitigate the impact.
We are closely monitoring the development of the coronavirus (COVID-19), including the potential impact of any macroeconomic disruption on our end markets, our supply chain and those of our customers.
However, we entered 2020 with a robust balance sheet and a continued focus on cost, efficiency and cash generation. We are taking firm actions to restructure the business and have every confidence in returning to growth in 2021.”
Senior review their Aerostructures division
In December, the firm gave an update saying that they would be performing an internal review. Senior confirmed that it has been reviewing all strategic options for its Aerostructures business, which includes an early stage assessment of a potential divestment of the division,” the FTSE 250 listed company said. The Hertfordshire-based company added that the Aerostructures review is in line with Senior’s policy to review its portfolio and evaluate all its operating businesses in terms of their strategic fit within the group. The Aerospace unit supplies components for airplanes such as Boeing accounts for 70% off overall revenues, and the aerospace business includes divisional sections such as fluid conveyance and engines.Sage dispose Brazilian operations within £10 million deal
The Sage Group Plc (LON:SGE) have told the market that they have sold their Brazilian business on Monday.
The FTSE 100 listed firm said that the deal had been completed with local management in a deal valued at up to £10 million.
Following its annual results – which were published last year, Sage noted that it was looking to offset its Brazilian operations.
The initial deal will cost £1 million, and there could be a deferred consideration of up to £9 million.
Sage added that the business had decided to restructure their focus and strategy – more towards subscription software services and products.
The firm commented: “This divestiture is part of Sage’s strategy to focus on subscription software solutions that are in or have a pathway to the Sage Business Cloud.”
The deal is expected to be completed within the next two months – and shareholders have been pre-warned that the firm may face a loss on disposal of £15 million.
Sage concluded: “Sage expects to report a statutory non-cash loss on disposal of £15m on completion, of which £11m reflects the reclassification of foreign exchange losses from other comprehensive income to the income statement.”
Sage’s strong start to 2020 slows down
A few weeks back, the firm reported that it had seen strong trading across its North American and European business. Sage alluded to double digit revenue growth in the first quarter of its financial year, as shares took to the rise. The firm told the market that it had achieved recurring revenue of £410 million in the three month period ending in December. Notably, this was 11% higher than before and attributed the growth of software subscription by 25% to £286 million. Recurring revenue was gained from strong performance in both North America and North Europe, with strong momentum in its financial year continuing. North America recurring revenue was up 12% to £154 million, and Northern Europe rose 15% to £93 million.
Gender and ethnic diversity among the FTSE 100 company boards
Many companies in this day and age vow to encourage diversity throughout their business. But how many of these firms have boards which reflect this very mindset? We’ve taken a look at some of the most and least diverse FTSE 100 boards in terms of gender and ethnic equality.
Barclays (LON:BARC)
Let’s start with one of the world’s leading multinational investment banks and financial services companies. The board is currently made up of thirteen individuals. Of these, four are women and two are of a BAME background. That’s not a bad divide for the British bank with almost a 50/50 diversity split.HSBC (LON:HSBA)
Next we have a competitor of Barclays – HSBC. The bank’s board of directors is also made up of thirteen people. Among these directors, six are women and three are of BAME backgrounds (of which two are also women). Therefore, the firm’s board is rather diverse with the majority of positions filled by social minorities.JD Sports Fashion (LON:JD)
Let’s move on from the banks and take a look at a couple of retail companies. JD Sports is a sports-fashion retail company based in the UK, but with stores across the globe. Its board of directors consists of seven leaders, and two of these are women. The FTSE 100 lister does not have any directors of BAME backgrounds sitting on its board. Granted there are only seven members, but this is not a representative board at all for ethnic minorities.Burberry Group (LON:BRBY)
Next we have a retailer which falls under the luxury end of the fashion market. Burberry is a British luxury fashion house based in the UK; it’s products are iconic and are recognised by most for their unique print. The company has eleven people sitting on its board of directors. Five of these are women, and one of these women is from a BAME background. Burberry’s board is rather diverse in terms of gender, but it could certainly be more varied in terms of ethnicity.EasyJet (LON: EZJ)
Most of us have travelled with easyJet to reach destinations within Europe. The British airline is known for its low-cost flights and most flyers have used easyJet at least once in their travels. But how diverse is the company’s board of directors? Well, there is not a single person from a BAME background sitting on its board. Instead, there are four women and seven men. This is a rather poor show from the airline; just over a third of its management are women, but there is no ethnic diversity.Whitbread (LON:WTB)
The British multinational hotel and restaurant company, Whitbread, is the last firm on our list. Similarly to easyJet, its senior management does not include a single individual from a BAME background. Whitbread’s board of directors consists of eleven people; four women and seven men. There may be some variation in gender, but the company’s board is certainly lacking in ethnic diversity. What the majority of these companies are missing at a senior level is ethnic diversity. Gender equality seems to be growing, but there is still an absence of BAME representation on many of these boards. Back in 2017, companies were given four years to appoint at least one ethnic minority board member. The deadline is approaching, so where is the representation?3 reasons it’s the best time to buy Shell shares since 2015
Blue-chip oil extraction and refinement company Royal Dutch Shell (LON:RDSB) has long been known as a reliable sit and hold stock, but recently the company has been at the forefront of the Coronavirus-led commodities crash, with its share price falling at a rate not seen since the start of 2015.
Value for money
The company’s shares finished Thursday trading at 1,732.40p per share, down 3.00% or 53.60p 27/02/20 16:35 GMT, and a far cry from the 2,804.00p peak seen on the 18th of May last year. The company’s shares have spent most of the last decade trading at over 2,000.00p per share, with only one other notable dip, down to 1,351.50p per share on 15 January 2015. What this suggests is that the company’s share decline could have a little way to go before consolidating and/or recovering. In the grand scheme of things, though, the iron is certainly hot. The company’s shares have dipped consistently from 2,581.00p a share on the 28th of June 2019, with the current price representing a five-year nadir. What should be apparent though, is that over the last two decades, the company’s price trend clearly illustrates an ability to recover from troughs, with an largely upward direction of travel.Income not to be scoffed at
On the 30 January, the company announced a fourth quarter (FY19) dividend of US $0.47 a share, level with its dividend paid for the previous quarter. As stated earlier, Shell should be seen as a sit-tight stock. Despite having a fairly reliable upwards trajectory, its main attraction is its widely-documented income potential. At present, its dividend yield stands at 8.48%. This is extremely generous. If we’re looking for a place to tuck our money away and see a healthy income roll in, Shell is among the best equities to do this with. It’s large cap, well-known and regardless of its share price, we know that appealing dividend is being paid into the account every quarter.Even Shell have had enough of shelling out
At the end of January, Shell posted its most recent set of quarterly results, in which its CEO Ben van Beurden acknowledged a challenging trading environment, and restated the company’s commitment to buying back shares.“The strength of Shell’s strategy and portfolio has enabled delivery of competitive cash flow performance in 2019 despite challenging macroeconomic conditions in refining and chemicals, as well as lower oil and gas prices. We generated $47 billion in cash flow from operating activities excluding working capital movements and distributed over $25 billion in dividends and share buybacks to our shareholders.”
“We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks. Our intention to complete the $25 billion share buyback programme is unchanged, but the pace remains subject to macro conditions and further debt reduction.”
Now, we can infer a few things from its commitment to buyback its shares (which has been backed up by two buybacks of its Class B shares and four buybacks of its Class A shares within the last week), four of which are worth noting. First, it could perhaps tell us that the company recognises the generosity of its own dividend payments and wants to minimise the ensuing costs. Dividends are a cost of equity, and buying back its own shares could give us an idea that it thinks the short-term cost is preferable to the long-term burden of pay-outs to its shareholders. Secondly, it also tells us that its the time the company are happy to buy their own shares. Buybacks occur at or around market rate, and thus to initiate a buy-back programme, even blue-chips will tend to opt for time periods where they perceive they’re getting value for money. Ergo, Shell may be telling us they think their own shares are undervalued, and this is the right time to buy. Third: fewer mouths, more pie. This one is nice and straightforward – fewer shareholders at the table, more earnings for those remaining. A company’s dividend cover – in particular its EPS – will be stretched between fewer shareholders, and thus those who hang tight will see their already generous earnings increase. Finally, share buybacks usually drive prices up. If the company continues its commitment to buying back its own shares, this could well contribute to the long-term rise in its share price. While this point is perhaps a little less strong than the others put forwards, Shell buying back its own shares could give us confidence in its ambition to maintain long-term share price growth, and at best could even express a desire to turn around the current share price dip. To wrap up: Shell may or may not have seen the end of its share price dip, but it represents good value in comparison to the prices it has spent the majority of its time frequenting over the last decade. For this reason – and its attractive income – I’d say either now or in the near future, would be a good time to buy into the company. Analysts from Berenberg reiterated their ‘Buy’ stance on the Group’s stock on Monday.Coronavirus & commodities carnage knocks FTSE down to 12 month lows
With the seemingly unshakeable Coronavirus working its way across Europe, the FTSE was the worst-hit casualty of a hauntingly bad session for global equities.
After spending most of the last month behind its peers, the FTSE spent a few days leading the pack (in recovery mode), before blazing a trail in the opposite direction during the Thursday session.
The index suffered alongside its Eurozone peers, with early losses turbocharged by the Dow Jones’s 90 point plummet. It did, however, manage the impressive feat of leading the fall of global equities during the day, with the commodity-heavy British market being weighed down by a rough day for oil.
After one of the worst weeks in recent memory, we can only hope markets don’t fancy too much more correction on Friday, before we wobble our way back to the corner for some respite and head out into trading again next week.
Speaking on Coronavirus and the calamitous Thursday session, Spreadex Financial Analyst Connor Campbell commented:
“Investors were in danger of throwing the baby out with the bathwater on Thursday afternoon, as was the rush to ditch equities.”
“Just as Wednesday’s US open helped drag Europe higher, today’s 900-point plunge from the Dow Jones sparked an acceleration in the session’s coronavirus carnage. The Dow is now trading at 26050 – astonishingly, around 3400 points off of where it was exactly one week ago. And that’s not a fat finger typo – three thousand four hundred points!”
“Percentage wise, however, the Dow’s 3.3% decline paled in comparison to the numbers posted by its European peers. The DAX lost 4.2%, sinking to a fresh 4-month-plus low of 12250. The CAC, meanwhile, was down 4.5% and at 5425 for the first time since the end of August 2019.”
“In terms of lows, the FTSE had all its US and Eurozone cousins beat. Unlike the Dow and DAX, the UK index didn’t inexplicably spend much of February touching all-time highs. Already, then, lagging behind, Thursday’s 4.3% plunge has sent the Footsie to 6750, a price last seen 13 months ago.”
“It makes sense – the UK bourse is pregnant with commodity stocks, all of which received an absolute hammering as the session went on. With Brent Crude down 4.3% to its own 13 month nadir, BP (LON:BP) and Shell (LON:RDSB) sank 4.8% and 4% respectively, while, in the case of Rio Tinto (LON:RIO), the FTSE’s miners shed as much as 6.6%. Elsewhere, travel restrictions and a slowdown in business caused WPP (LON:WPP) to haemorrhage 17%, with airlines easyJet (LON:EZJ) and IAG (LON:IAG) both shedding more than 12% for obvious reasons.”
“This is one of the worst weeks in recent memory – and terrifyingly, it’s not over yet. Friday is a tricky proposition. Will the vultures swoop in, picking over the market’s carcass in search of relative bargains? Or will the sheer momentum of Thursday’s losses turn tomorrow into another bloodbath? One way or the other, it’s hard to see any tangible good news appearing to generate a sustainable rebound.”
JLEN celebrates its ‘significantly oversubscribed’ £57.2m placing
Diversified renewables asset management company JLEN (LON:JLEN) announced that it had successfully raised £57.2 million in accordance with its placing announced on the 11th of February this year.
The company said that following the placing, it would issue a total of 49,701,820 new ordinary shares at the placing price of 115.00p per unit.
Announcing the outcome of its placing, the company’s statement read,
“The Placing was significantly oversubscribed and, as a result, applications have been scaled back in line with the terms and conditions of the Placing set out in the Placing Announcement. Any Placing applications at a price below the Issue Price have not been accepted.”
JLEN said that it planned to use the proceeds raised to repay amounts drawn under its revolving credit facility, in order to finance upcoming projects in the bioenergy and flexible generation sectors. It then reiterated its commitment to securing opportunities which would deliver long-term and predictable cash flows, with long-term contracts and stable regulatory frameworks.Customary placing procedure
Outlining the regulatory procedure of the completion of its placing, JLEN said it had made applications to the FCA for the admission of the new shares to the premium section of the Official List and the London Stock Exchange (LON:LSE), for trading on its main market for listed securities.
It is expected the admission will become effective on the 3rd of March, and when issued, the new ordinary shares will be recognised on a par with existing shares in the capital of the company. The only difference, in practice, is that shares issued during the placing will be exempt from the dividend payment the 13th of March, which covers the quarter to the 31st of December.
Continuing to set out the details of the placing, JLEN said:
“Immediately following Admission, the Company’s issued share capital will consist of 546,720,025 Ordinary Shares with voting rights. This figure may be used by shareholders in determining the denominator for the calculation by which they will establish if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.”
“The Placing is conditional, among other things, on Admission being effective and the Placing Agreement not being terminated in accordance with its terms.”
JLEN investor notes
Despite the positive reception of its placing, the announcement of its fund raising was met with a 1.06% or 1.25p share price decline, down to 116.26p per share 27/02/20 15:29 GMT – which indicates its placing offered value for money. The headline for any potential JLEN shareholder, though, has always been its dividend yield, which remains attractive at 5.61%.
Talking to the company yesterday, ahead of the conclusion of their placing, they said they were particularly excited about the opportunities offered by anaerobic digestion and bioenergy going forwards.Brexit talks could stop in June if no further progress is made
Brexit negotiations have taken another turn on Thursday. It seems that the Brexit saga is never ending, and today Michael Gove has had his say.
The UK Government said to the EU that it will walk away from trade talks in June, unless a broad outline of a deal is produced.
The UK Government have been in lockdown with Brussels over a potential Brexit Withdrawal Deal – and both parties are seemingly unwilling to give any sovereignty to their counterpart.
The UK Government also said tat they would not accept any alignment with EU laws, as the EU is demanding.
The UK document says:
* The UK “will not negotiate any arrangements in which the UK does not have control of its own laws and political life”
* The UK’s aim is for a trading relationship with the EU similar to the ones the 27-nation bloc has with Canada, Japan and South Korea
* There will be no jurisdiction for EU law or the European Court of Justice in the UK
* The UK will rely on World Trade Organisation rules under an arrangement with the EU similar to Australia’s if progress on a comprehensive deal cannot be made
* A separate agreement on fisheries is needed, to reflect the fact that “the UK will be an independent coastal state at the end of 2020”.
The terms from the EU side stated that the UK could be expected to be under EU rules and regulations following the Brexit Withdrawal process. There was a mention of state subsidies for industry, environmental standards and workers rights.
PM Johnson has promised the British people that a Brexit deal will only be agreed where the EU can give some concession, and the final deal favors the British people.
Post Brexit talks are heating up, as the French Foreign Minister warned Boris Johnson that the deal could turn into a ‘battle’ last week.
Michel Barnier have already said that the EU is prepared to give the UK “super-preferential access” to the EU market of 450 million people – but it seems that a hard Brexit is on the mind of the government.
The UK Government will have to realize that not everything can be done on their terms, and that some ground will have to be given if a Brexit Withdrawal deal is to be struck.
Michael Gove, added: “Geography is no reason to undermine democracy. We will not be seeking to dynamically align with EU rules on EU terms governed by EU laws and EU institutions.”