(Alliance News) - UK supermarket chain J Sainsbury early Thursday followed rival Tesco in deciding to forgo business rates relief.
In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would give all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the holiday intended to help companies weather the pandemic.
Sainsbury's noted that in the first half of its financial year, it spent GBP290 million as a result of Covid-19 and this was partially offset by GBP230 million of business rates relief.
The grocer said: "However, lockdown restrictions have remained in place for longer than originally expected and throughout the pandemic all Sainsbury's stores have been deemed essential retail. Almost all have been open and trading strongly, with the exception of a small number of convenience stores."
Sainsbury's sales and profit have been stronger than originally expected, particularly since the start of England's second national lockdown, it said, and as such it has decided to forego business rates relief on all stores. Sainsbury's now expects underlying pretax profit of at least GBP270 million of the financial year to March, including the assumption it will forgo around GBP410 million in business rates relief.
"In the event that the business delivers profits and cash generation at least in line with its current expectations, the board believes that shareholders should not bear the full short-term financial impact this year of the business making the right decisions for customers and colleagues through the Covid-19 pandemic. Therefore, when considering free cash flow allocation this year the board will prioritise payment of dividends to shareholders over net debt reduction," Sainsbury's added.
Late Wednesday, Wm Morrison Supermarkets had said it was planning to waive its business rates for financial 2021, to the tune of GBP274 million, following rival Tesco's announcement earlier that day. On Wednesday morning, Tesco said it will repay GBP585 million of business rates relief received.
Sainsbury's shares were up 0.7% early Thursday. Tesco was up 0.2%, but Morrisons was down 1.5%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: marginally higher at 6,465.43
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Hang Seng: up 0.6% at 26,699.00
Nikkei 225: closed marginally higher at 26,809.37
DJIA: closed up 59.87 points, 0.2%, at 29,883.79
S&P 500: closed up 0.2% at 3,669.01
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GBP: up at USD1.3391 (USD1.3343)
EUR: up at USD1.2123 (USD1.2086)
Gold: up at USD1,840.82 per ounce (USD1,827.01)
Oil (Brent): up at USD48.26 a barrel (USD47.90)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
0930 GMT UK services purchasing managers' index
0955 CET Germany services PMI
1000 CET EU services PMI
1100 CET EU retail trade
0830 EST US unemployment insurance weekly claims report
0945 EST US services PMI
1000 EST US ISM report on business services PMI
1200 EST US monthly retail chain store sales index
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China's services sector continued to grow in November, leading to the composite purchasing managers' index reaching a ten-year high, data from Caixin showed. Caixin's services PMI rose to 57.8 in November from 56.8 in October, also coming in higher than 54.8 in September. November's reading marks the second quickest rate of growth since April 2010, beaten only by June's 58.4. There was an improvement in the sector's growth momentum driven by a faster increase in new orders during the month. In addition, the rise in sales accelerated at the fastest rate since April 2010, and new export business has grown for the first time since June 2019. With the strong reading from the services sector, China's composite output index rose to 57.5 from 55.7 in October, signalling the steepest rise in total output since March 2010. This was supported as well by the fastest rise in manufacturing output for a decade, with the manufacturing PMI reading released on Tuesday coming in at 54.9.
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The AIB Ireland services PMI fell to 45.4 in November from 48.3 in October.
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BROKER RATING CHANGES
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JPMORGAN RAISES BP TO EUROPEAN ANALYST FOCUS LIST - REMOVES TOTAL
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BERNSTEIN RAISES SHELL TO 'OUTPERFORM' (MARKET-PERFORM) - PRICE TARGET 2,100 (1,800) PENCE
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RBC CUTS G4S TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 235 (215) PENCE
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COMPANIES - FTSE 100
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Phoenix Group Holdings said cash generation is ahead of target. The life and pensions consolidator ahead of its capital markets day reported cash generation of GBP1.71 billion in 2020, up from GBP707 million in 2019 and exceeding the upper end of its cash generation target range for the year of GBP1.5 billion to GBP1.6 billion. "Phoenix has continued to perform strongly with full year cash generation of GBP1.7 billion now complete, exceeding the top end of our target range. Our balance sheet remains resilient, underpinned by our high-quality portfolio of assets and unique approach to risk management, and our shareholder capital coverage ratio of 159% remains robust," said Chief Executive Andy Briggs.
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Standard Life Aberdeen said it has sold 27.8 million shares in HDFC Life through wholly-owned subsidiary Standard Life (Mauritius Holdings) 2006. The shares were sold at an average price of INR619.14, which will result in Standard Life receiving INR17.03 billion, or around GBP172 million. Standard Life holds an 8.9% stake in HDFC following the transaction, with its remaining interest valued at GBP1.2 billion. "It is also noted that SLMH06's remaining 8.89% shareholding in HDFC Life is locked in until end March 2021 and a shareholding below 10% will no longer provide SLMH06 with the right to nominate a director to the board of HDFC Life," Standard Life said.
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Pershing Square Holdings will join the FTSE 100 on Monday, December 21, replacing Homeserve, after the latest quarterly review was announced late Wednesday. Homeserve's promotion to London blue-chip lasted only for six months, the home repair and improvement business having been promoted in June. Pershing Square Holdings is a North America-focused investor managed by Bill Ackman's Pershing Square Capital Management. In the FTSE 250, shopping centre-owner Hammerson and specialty chemicals firm Elementis replace marine services firm James Fisher & Sons and Scottish Investment Trust.
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COMPANIES - FTSE 250
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Investment platform AJ Bell said profit jumped in its recently ended financial year, prompting a big dividend hike. Revenue for the financial year to September 30 rose 21% to GBP126.7 million from GBP104.9 million, with pretax profit increasing 29% to GBP48.6 million from GBP37.7 million the year prior. "This financial performance was a result of the continued success of our platform propositions. The two key drivers of our growth, customer numbers and AUA, grew by 27% and 8% respectively in the 12-month period. The 8% increase in AUA was particularly pleasing against a backdrop of the FTSE All-Share Index falling by 19% during the same period," said AJ Bell. Total customers increased by a "record" 63,239 in the year to 295,305, the company said. The FTSE 250 constituent declared a final dividend of 4.66 pence, taking the total payout for the year to 6.16p, up 28%.
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Thursday's Shareholder Meetings
Nanoco Group PLC - AGM
Marwyn Value Investors Ltd - AGM adjourned from November 17
CQS New City High Yield Fund Ltd - AGM
B&M European Value Retail SA - EGM re changes related to Brexit
MJ Gleeson PLC - AGM
Ormonde Mining PLC - AGM
Ferguson PLC - AGM
Ceiba Investments Ltd - EGM re share issue
STV Group PLC - GM re bonus issue
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By Tom Waite; thomaslwaite@alliancenews.com
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