LONDON BRIEFING: Aviva Promises Fatter Payout Amid Corporate Slimming

(Alliance News) - Aviva on Thursday said it was making progress on its company simplification ...

Alliance News 26 November, 2020 | 8:28AM
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(Alliance News) - Aviva on Thursday said it was making progress on its company simplification strategy and announced a new sustainable dividend policy, based on its core markets of the UK, Ireland and Canada.

The London-based insurance, savings and investments firm said it is "exploring options across our manage-for-value portfolio", meaning non-core, including in France, Poland, the remainder of Italy and other joint ventures.

Aviva declared a 7.0 pence per share interim dividend. The insurer currently expects to recommend a final 2020 dividend of 14 pence per share, subject to a decision to be taken in March 2021. The expected 2020 total dividend of 21.0 pence per share is then expected to grow by low to mid-single digits, it said.

Aviva said its trading performance so far in 2020 has been robust and financial position is strong with a capital surplus of GBP11.8 billion. The first nine months of the year has demonstrated its ability to grow in core markets where it has long-term growth prospects.

Further, bulk purchase annuities sales increased to GBP5 billion, which is a record, and commercial insurance premiums are up 9% across the UK, Canada and Ireland, it noted.

Aviva said as its portfolio simplifies it will deliver further value to shareholders by returning excess capital above 180% solvency cover ratio, once the debt leverage target ratio has been reached.

Looking ahead, Aviva said trading from fourth-quarter lockdowns remains uncertain but expects no significant increase in net business interruption claims.

Aviva shares were down 1.4% early Thursday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.3% at 6,370.97

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Hang Seng: up 0.6% at 26,819.45

Nikkei 225: closed up 0.9% at 26,537.31

DJIA: closed down 173.77 points, 0.6%, at 29,872.47

S&P 500: closed down 0.2% at 3,629.65

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GBP: flat at USD1.3389 (USD1.3382)

EUR: up at USD1.1937 (USD1.1909)

Gold: up at USD1,814.70 per ounce (USD1,811.61)

Oil (Brent): up at USD48.65 a barrel (USD48.04)

(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

US Thanksgiving Day holiday. Financial markets closed.

1000 CET EU monetary developments in euro area (M3)

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UK Health Secretary Matt Hancock is to set out which tier each local authority in England will fall under after the end of the national lockdown. Hancock will make the announcement in Parliament on Thursday after the government set out its Covid-19 "winter plan" earlier this week. Each area will be placed into one of three tiers when lockdown ends on December 2 – but the system has been toughened from the previous regime, meaning more authorities will move into the higher tiers. Areas which make progress in slowing the spread of the virus could still be moved down a tier before Christmas, however, with the first review of the allocations due to take place by December 16. On Wednesday night reports suggested there would be few areas in England placed in Tier 1, with The Times reporting parts of eastern England and remote areas in Cornwall and Cumbria are expected to be allocated the lightest measures. Meanwhile London was expected to go in Tier 2 along with the majority of the country.

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BROKER RATING CHANGES

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GOLDMAN SACHS CUTS CRH TO 'SELL' (NEUTRAL) - PRICE TARGET 32 EUR

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MORGAN STANLEY RAISES DCC TO 'OVERWEIGHT' ('EQUAL-WEIGHT') - TARGET 7490 PENCE

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COMPANIES - FTSE 100

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Severn Trent reported a fall in earnings amid lower consumption from non-household customers as a result the coronavirus pandemic. For the half-year ended September 30, revenue was down 2.5% to GBP887.6 million from GBP910 million last year, and pretax profit was GBP126.5 million, down 30% from GBP180.7 million. Severn Trent declared an interim dividend of 40.63 pence, up 1.5% from 40.03p last year. The utility, which serves the English Midlands and parts of Wales, said the profit fall reflected lower revenue and an increase in bad debt provisions due to the expected hit from the rise in UK unemployment. Chief Financial Officer James Bowling said: "We have been encouraged by household customer cash collections that are slightly ahead of the same period a year ago with no significant increase in direct debit cancellations. However, we continue to anticipate bad debt increases in line with the guidance previously given, as recent redundancies and the future increases in unemployment included in consensus economic forecasts impact our region. In the first half of the year we, therefore, recorded an additional GBP8.2 million in the bad debt charge in our Regulated Water and Waste Water business for the expected impact on our customers' ability to pay in full amounts already billed."

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SSE said that together with its Norwegian equal joint venture partner, Equinor, it has reached financial close on the first two phases of what will be the "world's biggest offshore wind farm". SSE said the two companies are proceeding with the first two phases of Dogger Bank Wind Farm, a project off the north east coast of England which, once all three phases are complete in March 2026, will be the largest in the world. SSE said Dogger Bank will produce enough clean, renewable electricity to supply 5% of the UK's demand, equivalent to powering six million UK homes. Total investment in the first two phases of the project will be around GBP6 billion and has already created hundreds of UK jobs, with more to come as project construction ramps up, SSE added.

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Concerns are increasing over the way Oxford University and AstraZeneca have handled the early readout from trials of their coronavirus vaccine candidate, the Financial Times reported. The results were hailed a success for showing an average efficacy of 70%, a figure reached by pooling the results from cohorts on two different dosing regimens. AstraZeneca on Monday said one dosing regimen showed vaccine efficacy of 90% when AZD1222 was given as a half dose, followed by a full dose at least one month apart. Another dosing regimen showed 62% efficacy when given as two full doses at least one month apart. The combined analysis from both dosing regimens resulted in an average efficacy of 70%. But on Tuesday, Moncef Slaoui, the head of Operation Warp Speed, the US government's funding programme for vaccine development, disclosed that the subgroup that scored 90% was limited to people aged 55 or below, a demographic with lower risk of developing severe Covid-19, FT reported.

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COMPANIES - GLOBAL

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US software firm Salesforce.com plans to buy corporate messaging platform Slack Technologies, the Wall Street Journal reported Wednesday, leading to a jump in stock prices for the young company. Slack, which has enjoyed increased popularity since the beginning of the coronavirus pandemic, saw its shares surge 38% in New York, though they gave back 3.0% in after-hours trade. Shares in Salesforce, however – which specializes in technology that allows businesses to communicate with clients – closed down 5.4%, adding back 0.5% after-hours. The two companies have begun merger discussions for an agreement that could see Slack valued at more than the present market capitalization of USD17 billion, the newspaper reported. "If Salesforce does head down this path it would set off a chain reaction for more cloud software deals in 2021," Wedbush analyst Dan Ives said. It could pave the way for more mergers in the cloud tech sector, Ives said, especially since the move could set up Salesforce as a competitor for Microsoft, which owns Slack rival Teams.

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Thursday's Shareholder Meetings

DX Group PLC - AGM

IronRidge Resources Ltd - AGM

PZ Cussons PLC - AGM

Alternative Income REIT PLC - AGM

Pan African Resources PLC - AGM

Pennpetro Energy PLC - AGM

Clinigen Group PLC - AGM

Castillo Copper Ltd - AGM

ASOS PLC - AGM

Mothercare PLC - GM re resolutions that required completed audit

CVS Group PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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