(Alliance News) - Covid-19's toll on leisure businesses in the UK continued to mount Wednesday, even as the prime minister is set to loosen the lockdown so more.
Restaurant Group announced plans to close 125 restaurants, mostly in out-of-town retail parks, while seeking lower rent for another 85 sites.
In town, Shaftesbury said the value of its commercial properties in London's West End theatre district, which includes Chinatown, has plunged
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called up 8.28 points, 0.1%, at 6,344.00
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Hang Seng: down 0.1% at 25,036.77
Nikkei 225: closed up 0.2% at 23,124.95
DJIA: closed down 300.14 points, 1.1%, at 27,272.30
S&P 500: closed down 0.8% at 3,207.18
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GBP: firm at USD1.2758 (USD1.2742)
EUR: flat at USD1.1355 (USD1.1359)
Gold: soft at USD1,717.67 per ounce (USD1,718.42)
Oil (Brent): flat at USD40.53 a barrel (USD40.56)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
0830 EDT US consumer price index
1030 EDT US EIA weekly petroleum status report
1400 EDT US monthly treasury statement
1400 EDT US Federal Reserve interest rate decision
1400 EDT US Fed economic projections
1430 EDT US press conference with Fed Chair Powell
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UK Prime Minister Boris Johnson is set to announce children will soon be able to visit zoos in the latest easing of lockdown measures – although their wait to go back to school could last months. Johnson will face the nation at the Downing Street briefing on Wednesday and is expected to confirm zoos, safari parks and drive-in cinemas can reopen in England from June 15. It comes a day after Business Secretary Alok Sharma confirmed shops would also be able to reopen on the same day as the government seeks to kick-start the UK economy. But Education Secretary Gavin Williamson was forced to admit defeat over plans for all primary pupils in England to attend classes before the summer break. Meanwhile health bosses have raised concerns that around 10 million people will be on the waiting list for NHS treatment by the end of the year – more than double the current figure – due to a combination of social distancing measures, a backlog of treatments and staffing shortages.
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The German government plans to extend the travel warning it has in place for more than 160 countries outside the EU until August 31, as nations around the world continue to battle the coronavirus pandemic. The cabinet intends to take a decision on the matter on Wednesday, dpa has learned. Exceptions could be made for individual countries that meet certain criteria. Foreign Minister Heiko Maas issued a travel warning for all around 200 countries around the world on March 17 after the outbreak of the coronavirus pandemic, which was an unprecedented step.
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Japan's powerful lower house of parliament approved an emergency budget worth nearly USD300 billion Wednesday, doubling the scale of measures to pep up the world's third-biggest economy after the coronavirus tipped it into recession. Consumer spending has slowed to a crawl despite Japan's relatively low infection numbers and death toll from the pandemic, prompting the first economic downturn since 2015. In response, lawmakers approved a second exceptional budget of JPY31.91 trillion - or USD297 billion - including subsidies for smaller businesses and cash handouts for medical workers. The budget bill will be sent to the upper house and is widely expected to be enacted as early as Friday.
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Japan's machinery orders fell considerably in April on a month-on-month basis, data from the Cabinet Office showed. Orders received by 280 manufacturers operating in Japan dropped by 8.3% in April to JPY2.098 trillion from JPY2.289 trillion the month prior. Orders in March increased by 3.0% from February.
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BROKER RATING CHANGES
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RBC CUTS ASHTEAD GROUP TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 2600 (2200) PENCE
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RBC CUTS UDG HEALTHCARE TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 800 (730) PENCE
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RBC RAISES CONVATEC TO 'OUTPERFORM' ('SECTOR PERFORM') - TARGET 245 (178) PENCE
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BARCLAYS CUTS CHEMRING GROUP TO 'EQUAL WEIGHT' ('OVERWEIGHT') - TARGET 250 PENCE
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COMPANIES - FTSE 100
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Warehouse investor SEGRO said it increased the size of its fundraise to GBP680 million from GBP650 million due to "strong demand" from investors. A total of 82.1 million shares have been placed by BofA Securities and UBS London Branch at a price of 820 pence each. Alongside this, investors had subscribed for 865,435 shares via the PrimaryBid platform. The placing price represents a 4.5% discount to Tuesday's closing price of 858.8p. "The company is pleased by the strong support it has received from new and existing shareholders, including a number of its existing retail shareholders via the retail offer," said SEGRO.
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Also raising money, Premier Inn-owner Whitbread said its 1 for 2 rights issue generated acceptances in respect of 61.5 million shares at a price of 1,500 pence each. This represents just over 91% of the total number of shares to be issued under the fully underwritten rights issue. Joint bookrunners JP Morgan Cazenove and Morgan Stanley now will try to find acquirers for the remaining 5.8 million shares not accepted. If any are left over after this, they have agreed to take up the remaining shares.
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Vodafone Group said removing Huawei Technologies from the UK's telecom infrastructure would a deal a terminal blow to its 5G technology, the Financial Times reported. Vodafone backed the Chinese telecommunications equipment firm as the UK faces mounting political pressure to exclude Huawei, even though the company's gear is central to delivering 5G, new mobile technology that delivers vast amounts of data over wireless networks at fast speeds. However, Scott Petty, chief technology officer of Vodafone UK, told the Financial Times: "The UK's leadership in 5G will be lost if mobile operators are forced to spend time and money replacing existing equipment." A full ban could require the UK's telecom companies to rip out and replace billions of pounds worth of existing equipment.
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COMPANIES - FTSE 250
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London West End-focused property investor Shaftesbury reported a fall in net asset value as Covid-19 hit visitor numbers. EPRA net asset value fell 11% to 878 pence at March 31 from 982p at the end of September, which the company said was due to revaluation deficits. Its wholly-owned portfolio valuation fell 7.9% on a like-for-like basis to GBP3.5 billion following an increase in yields reflecting economic uncertainties, the impact of Covid-19 on near-term income and occupancy assumptions, and a softening of residential values. The "decisive outcome" of the December 2019 UK general election helped to boost business confidence and investment as well as consumer activity, with Shaftesbury's occupiers reporting good footfall and spending over Christmas and the New Year, as well as in the early weeks of 2020. However, Covid-19 began to hit leasing activity in February with a number of negotiations put on hold or terminated. The "collapse" in West End footfall was evident from early February in Chinatown and then spread across the rest of the area from mid-March, Shaftesbury said. "Although our business performed well during the first four months of the period, the growing impact of the measures to address the pandemic are having a material impact on normal patterns of life and commerce, both for our occupiers and on the near-term prospects for our business and financial performance," said Chief Executive Brian Bickell.
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COMPANIES - MAIN MARKET AND AIM
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Restaurant Group set out plans to reduce the size of its Leisure estate and rental cost base via a company voluntary arrangement. The CVA will relate to The Restaurant Group (UK) Ltd, which comprises mainly Frankie & Benny's outlets as well as some Chiquito sites and other Leisure brands. The arrangements will have no impact on Wagamama, Airport Concessions and Pub operations. A "comprehensive" review of the Leisure estate portfolio has identified 210 trading sites that are either underperforming, on unfavourable lease terms or not expected to generate future profitable returns. Of these, 125 have been selected for closure in the short-term, with the balance of 85 sites to seek a reduction in rental costs and revised lease terms. There are around 65 Leisure sites which will be unaffected by the CVA. "The issues facing our sector are well documented, and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations. The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector," said Chief Executive Andy Hornby.
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COMPANIES - GLOBAL
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Jack Dorsey, the chief executive officer and founder of Twitter, declared a company-wide holiday on June 19 to honour the Emancipation Proclamation, which freed millions of enslaved African-Americans in the 1860s. In a tweet, Dorsey said the social media giant along with Square, a mobile payment company, will have an annual company holiday for "celebration, education, and connection." The June 19 holiday, known as Juneteenth, celebrates the eradication of slavery, in what Americans see as the nation's "second independence day". President Abraham Lincoln issued the Emancipation Proclamation on January 1, 1863, which ostensibly ended slavery in the US, but it was not until June 19, 1865 that the proclamation was publicly enforced in the US state of Texas. Dorsey's announcement comes as the US is reckoning with police brutality and a history of racism towards African-Americans as the death of George Floyd while a white police officer kneeled on his neck shocked the country.
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Wednesday's Shareholder Meetings
EKF Diagnostics
Gaming Realms
TBC Bank
Destiny Pharma
Ergomed
Advanced Medical Solutions
Flowtech Fluidpower
WPP
Camellia
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By Tom Waite; thomaslwaite@alliancenews.com
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