(Alliance News) - Stock prices in London are seen opening slightly higher on Monday following a higher close in New York on Friday, while the final easing of UK lockdown restrictions looks set to be delayed by four weeks.
In early company news, outsourcer Serco Group raised its annual profit guidance and said its joint venture with France's Engie won defence infrastructure contracts with the UK government. Fashion retailer Ted Baker skipped its dividend after its annual loss widened. Infrastructure projects investor JLEN Environmental Assets made an acquisition.
IG futures indicate the FTSE 100 index is to open 19.84 points higher at 7,153.90. The blue-chip index closed up 45.88 points, or 0.7%, at 7,134.06 on Friday.
Serco Group said Vivo Defence - its joint venture with Engie - has been awarded contracts to provide asset and facilities management services by the UK Defence Infrastructure Organisation, an operating arm of the Ministry of Defence. The contracts are for the South West and Central regions of the UK.
Serco said the total core contract value for the two regions is estimated to be around GBP900 million over an initial seven-year period, with total potential value of GBP3.4 billion. There are a further three one-year extension options, it noted.
Serco said the services Vivo will deliver will support the UK's defence capability, maintaining the Ministry of Defence's built estate across more than 200 sites and around 19,000 buildings. The core services include planned and reactive maintenance, as well as mandatory safety checks.
Turning to current trading, Serco said the strong performance it saw at the beginning of the year has continued. All of its four divisions have traded in-line or ahead of their budgets in the first five months of the year, the outsourcer said.
In the UK in particular, volumes on both its Testing & Tracing contracts have continued to be strong, and Serco now thinks that demand for these services will continue for longer in the second half than previously anticipated.
As a result, Serco increased guidance for underlying trading profit in 2021 by GBP15 million, to around GBP200 million. It posted underlying trading profit of GBP163 million for 2020.
Retailer Ted Baker reported a fall in annual revenue, amid shop closures due to Covid-19 restrictions.
For the financial year ended January 30, revenue was GBP352 million, down 44% from GBP630.5 million the year before, and the company's pretax loss widened to GBP107.7 million from GBP77.6 million.
Ted Baker is in the first year of a three-year strategic transformation programme it has dubbed 'Ted's Growth Formula', and said progress on so far has been "encouraging".
The retailer said that, given current trading conditions and the high level of uncertainty about the future, the board has decided that no final dividend will be paid, having paid out 40.7 pence last year. In the long term, "we remain committed to paying dividends and returning surplus cash to our shareholders", Ted Baker said.
Chief Executive Officer Rachel Osborne said: "We are making good progress against our strategic transformation plan, and Ted Baker is increasingly well placed to take advantage of the significant growth opportunities ahead of us. The Ted Baker brand has strengthened further, with the number of active customers growing to 1.2 million by the end of the year.
"While the impact of Covid-19 is clear in our results and has amplified some of the legacy issues impacting the business, Ted Baker has responded proactively and is in a much stronger place than it was a year ago. During the period, we delivered robust cashflow generation, fixed our balance sheet, refreshed our senior leadership team and today we are upgrading our financial targets for the second time since outlining our new strategy last summer."
JLEN Environmental Assets Group said it has acquired Cramlington Renewable Energy Developments for an undisclosed amount.
Cramlington Renewable Energy is a 28 megawatt biomass combined heat-and-power plant located in Northumberland. The purchase represents JLEN's first investment into a large-scale biomass CHP plant and is in line with its strategy to "further diversify its portfolio" and to secure strong inflation-linked revenue streams, it said.
"We believe that assets such as these provide a sustainable source of renewable heat and power that can be utilised as baseload power to the grid and a direct provision to nearby industrial customers. The plant has a strong operational track record, and we look forward to optimising this asset for the future," said JLEN Chair Richard Morse.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up marginally, S&P 500 up 0.2% and Nasdaq Composite up 0.4%.
The Japanese Nikkei 225 index closed up 0.7% on Monday. Financial markets on Monday were closed in Hong Kong and Shanghai for the Dragon Boat Festival holiday. In Sydney, the Australian Securities Exchange was closed for the Queen's Birthday holiday.
"This morning's Asia session has been a subdued affair, due to public holidays in China and Australia, with markets here in Europe set to continue their slow drift higher as we start a new week," said CMC Markets analyst Michael Hewson.
"The overriding impression from the last few days' events appears to be that bond markets and investors in general appear to be buying the central bank narrative that the current high levels of inflation are transitory and will soon pass," Hewson added.
UK Prime Minister Boris Johnson is facing a furious backlash from Tory MPs as he prepares to put the final lifting of coronavirus lockdown restrictions in England on hold.
Johnson is expected to announce the ending of social-distancing rules - which had been slated for June 21 - will be delayed for four weeks to July 19, with the BBC reporting early on Monday the decision had been signed off by senior ministers.
The move follows warnings from scientists that the rapid spread of the delta variant first identified in India risks a "substantial" third wave if it is allowed to spread unchecked.
Johnson is expected to appeal to the public to show patience, with one last push to ensure that when controls do finally end it is "irreversible".
However, it comes as a huge setback to many businesses - particularly in the battered hospitality sector - which had pinned their hopes on a full summer reopening to recoup some of the losses of the past year.
There was deep frustration among lockdown sceptics on the Conservative benches who said there was no reason not to end the restrictions as those most at risk of death or serious illness are now fully vaccinated.
Former minister Mark Harper, the chair of the Covid Recovery Group of Tory MPs, said any postponement would be a "political choice". He warned that if the unlocking did not go ahead as planned, restrictions could carry on through the autumn and into the winter as other respiratory infections picked up.
Elsewhere, China on Monday accused the G7 of "political manipulation" after it criticised Beijing over its human rights record in Xinjiang and Hong Kong.
In a communique after a three-day summit in England, G7 leaders slammed China over abuses against minorities in the Xinjiang region and pro-democracy activists in Hong Kong, while US President Joe Biden called for Beijing to "start acting more responsibly in terms of international norms on human rights".
The Chinese embassy in the UK responded angrily on Monday, and accused the G7 of "interfering".
The pound was quoted at USD1.4105 early Monday, unchanged from its level at the London equities close Friday.
The euro was priced at USD.2100, up marginally from USD1.2096 late Friday. Against the Japanese yen, the dollar was trading at JPY109.74, slightly lower from JPY109.80.
Brent oil was quoted at USD73.05 a barrel Monday morning, higher than USD72.85 late Friday. Gold was trading at USD1,860.82 an ounce, down from USD1,894.00.
The economic events calendar on Monday has eurozone industrial production at 1000 BST.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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