(Alliance News) - The following is a summary of top news stories Wednesday.
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COMPANIES
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Media firm Future unveiled a GBP594 million takeover of price comparison site GoCo Group. GoCo - which owns Gocompare.com, Look After My Bills and MyVoucherCodes - saw its shares leap 14% to 125.00 pence in London on Wednesday morning. Under the agreed combination, GoCo shareholders will be entitled to receive 0.052497 new shares in magazine publisher Future and 33 pence in cash, valuing each GoCo share at 136p each. This represents a premium of 24% to Tuesday's closing price, when GoCo shares closed at 110p. GoCo shareholders will own around 19% of the combined group. GoCo directors intend to recommend shareholders vote in favour of the deal, as do Future's directors. Future expects the transition to be "immediately" earnings per share accretive. Separately on Wednesday, Future published its full-year results. In the year to September 30, the firm's pretax profit jumped to GBP52.0 million from GBP12.7 million the year before. Revenue surged 53% to GBP339.6 million from GBP221.5 million. Future said the revenue growth was driven by a combination of organic growth and acquisitions, underpinned by a 56% rise in total online users.
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Melrose Industries said it is currently trading at the top end of its expectations for 2020, but warned that short-term uncertainty remains. The FTSE 100 company, which specialises in buying and improving underperforming businesses, said its performance in the four months to the end of October reflected a faster than expected recovery in automotive markets, the continued strong performance in Nortek Air Management, and "more challenging" market conditions in Aerospace. "Trading in the period has been encouraging in a number of our end markets and we are seeing the benefits of actions taken by management in our businesses' performance," said Chair Justin Dowley.
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United Utilities said profit in the first half rose despite a fall in revenue due to average customer bills being reduced. The Warrington, England-based water company posted a pretax profit in the six months to September 30 of GBP201.1 million, increasing by 3.1% from GBP195.1 million a year before. Finance expenses fell 32% to GBP132.0 million from GBP193.9 million a year ago. Revenue declined by 4.3% to GBP894.4 million from GBP935.5 million a year prior. The company said this largely reflected a reduction in its average customer bill. United Utilities upped its interim dividend by 1.5% to 14.41 pence per share from 14.20 pence per share the prior year. Going forward, the company expects its revenue for the year ending March 2021 to be between GBP1.75 billion and GBP1.80 billion.
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Virgin Money UK reported a narrowed annual loss, after putting behind it the payment protection insurance remediation costs of a year before, but this was hampered by a jump in credit impairment charges, reflecting a "cautious approach to an uncertain economic environment". For the financial year that ended September 30, Virgin Money's pretax loss narrowed to GBP168 million from GBP232 million the year before. The lender's total impairment losses on credit exposures jumped to GBP501 million from GBP153 million the year before. But this was offset by Virgin Money's legacy conduct costs dropping to GBP26 million from GBP433 million the year before. The sharp drop was due to the non-recurrence of significant one-off acquisition costs and legacy PPI conduct charges. Net interest income dropped 15% to GBP1.28 billion from GBP1.51 billion. As total operating income fell 18% to GBP1.44 billion.
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MARKETS
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London stocks had dipped into the red by mid-morning in London, with investors growing cautious ahead of a slew of US data on Wednesday afternoon ahead of Wall Street's Thanksgiving break on Thursday. Takeover target GoCo was up 12%.
"Today's bearish correction could be qualified as 'technical' and 'normal', like a usual pull-back after most markets broke-out of major resistances yesterday. However, most investors now brace for a host of significant US economic indicators such as core durable goods orders, initial jobless claims, Q3 GDP and the highly anticipated FOMC minutes which could bring a few surprises," said Pierre Veyret, technical analyst at ActivTrades.
The pound, softened ahead of UK Chancellor Rishi Sunak's spending review.
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FTSE 100: down 0.3% at 6,411.52
FTSE 250: down 0.9% at 19,606.39
AIM ALL-SHARE: down 0.1% at 1,031.09
GBP: lower at USD1.3325 (USD1.3357)
EUR: higher at USD1.1901 (USD1.1882)
GOLD: higher at USD1,810.69 per ounce (USD1,805.23)
OIL (Brent): higher at USD48.52 a barrel (USD47.68)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Rishi Sunak is pledging to make jobs his "number one priority" as he sets out his first spending review against the backdrop of an economy ravaged by the effects of Covid-19. In his Commons statement on Wednesday, the chancellor will announce the launch of a three-year Restart programme, worth GBP2.9 billion, which will help more than a million unemployed people get back into work in the wake of the pandemic. But while business leaders have welcomed the moves to support jobs, Sunak is braced for a backlash from trade unions over an expected freeze on public sector pay as he begins to repair public finances. Unusually, because of the economic uncertainty caused by the virus, most government departments will only receive a one-year spending allocation rather than the usual multi-year settlement. Other commitments are expected to include GBP3 billion more to support the NHS, including GBP1 billion to address the treatment backlogs built up while it was dealing with the Covid-19 crisis.
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European Commission President Ursula von der Leyen told EU lawmakers on Wednesday that despite the "genuine progress" on several important issues in post-Brexit trade talks with London, she "cannot tell you today if there will in the end there be a deal". After months of deadlock, the head of the EU's executive branch told the European Parliament that negotiators have made great strides on establishing terms of police and judicial cooperation as well as for social security arrangements. "Also on goods, services and transport we now have the outline of a possible final text," the German politician said. "There are still three issues that can make the difference between a deal and no-deal," she added: the extent of British compliance with EU social and environmental standards, how to govern disputes and fisheries. Brussels and London are now homing in on an agreement on their future relations, with only weeks remaining until an end-of-year deadline that could see Britain crash out of the EU single market unregulated, disrupting business and trade.
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US President-Elect Joe Biden has stressed the importance of keeping the Irish border open following Brexit. Speaking to reporters in Wilmington, Delaware, on Tuesday, he said: "We do not want a guarded border. We want to make sure – we've worked too long to get Ireland worked out, and I talked with the British prime minister, I talked with the Taoiseach, I talked with others, I talked to the French. "The idea of having a border north and south once again being closed is just not right, we've just got to keep the border open." Biden discussed Brexit with UK Prime Minister Boris Johnson earlier in November during one of his first phone calls to other world leaders as president-elect, warning him Brexit must not jeopardise the Northern Ireland peace process. Biden previously touched upon the 1998 Good Friday agreement during his presidential campaign, tweeting in September: "We can't allow the Good Friday Agreement that brought peace to Northern Ireland to become a casualty of Brexit.
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The European Central Bank warned that a premature withdrawal of government support to the eurozone's pandemic-hit economies could derail the recovery and trigger a wave of bankruptcies. An "abrupt" end to the measures could "result in a more severe economic contraction than during the first wave of the pandemic," the ECB said in its twice-yearly financial stability report. Eurozone governments have taken unprecedented steps to shield companies and workers from the pandemic fallout, including through guarantees on bank loans and repayment moratoriums, massive short-time working schemes and aid for businesses hit by shutdowns. Despite recent optimism about Covid-19 vaccines, "there is a long road ahead," ECB Vice President Luis de Guindos said in a statement. "Authorities will have to make difficult decisions on whether and how to extend policy measures and, eventually, deal with the debt they create," he said.
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The prospect of former Federal Reserve chair Janet Yellen becoming the next US treasury secretary is "good news for the US and the world economy", de Guindos said. Yellen, who would be the first woman in the job, would face the daunting task of steering the world's largest economy through the Covid-19 crisis and is seen by experts as favourable to more government spending.
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