LONDON BRIEFING: Severn Trent in GBP250 million raise for green push

(Alliance News) - Water works Severn Trent on Wednesday announced a share issue to raise GBP250 ...

Alliance News 19 May, 2021 | 8:28AM
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(Alliance News) - Water works Severn Trent on Wednesday announced a share issue to raise GBP250 million, which it will put towards environmental projects endorsed by UK regulator Ofwat.

Severn Trent will offer shares in a placing, together with a retail offer via PrimaryBid. The placing will be conducted via an accelerated bookbuild run by Merrill Lynch International and Morgan Stanley & Co International, and the price for the offer will be set at the end of the bookbuild.

The new shares will represent up to 5% of the existing total. Severn Trent shares were quoted at GBP2,488.00 pence early Wednesday, down 0.5%. The company has a market capitalisation of just under GBP6 billion.

The utility said the fresh cash will go toward six projects worth GBP624 million. These were supported by Ofwat as part of its Green Recovery Award for the water sector announced on Monday.

"They will support long-term growth through decarbonising the supply of water, accelerating environmental improvements in the Severn Trent region, creating bathing quality rivers, replacing lead supply pipes, building a sustainable flood-resilient community, and installing smart meters for customers," Severn Trent said.

Ofwat on Monday said the award will result in GBP850 million of new spending across the UK water sector, and GBP1.9 billion of planned green projects from water companies will be brought forward.

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

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MARKETS

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FTSE 100: down 1.0% at 6,964.16

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Hang Seng: Hong Kong market closed for National Day holiday.

Nikkei 225: closed down 1.3% at 28,044.45

DJIA: closed down 267.13 points, or 0.8%, at 34,060.66

S&P 500: closed down 35.46 points, or 0.9%, at 4,127.83

Nasdaq Composite: closed down 75.41 points, or 0.6%, at 13,303.64

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EUR: up at USD1.2238 (USD1.2206)

GBP: unchanged at USD1.4189

USD: firm at JPY109.00 (JPY108.94)

Gold: up at USD1,871.23 per ounce (USD1,868.50)

Oil (Brent): down at USD68.14 a barrel (USD69.36)

(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

0930 BST UK house price index

1100 BST Ireland goods exports and imports

1100 CEST EU consumer price index

0700 EDT US MBA weekly mortgage applications survey

1030 EDT US EIA weekly petroleum status report

1400 EDT US Federal Reserve meeting minutes

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UK inflation picked up sharply in April as coronavirus restrictions eased, according to the latest figures from the Office for National Statistics. On an annual basis, UK consumer prices rose 1.5% in April, accelerating from inflation of 0.7% in March. The latest reading just beat market consensus, cited by FXStreet, for a 1.4% increase. Consumer price inflation rose 0.6% month-on-month in April, quickening from a 0.3% rise in March. The print was in-line with market forecasts. UK producer prices jumped 3.9% on an annual basis in April, having increased 2.3% in March. Market consensus was for a 3.5% rise in PPI. Month-on-month UK producer price inflation was 0.4% in April, decelerating from an 0.8% rise in March.

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UK Prime Minister Boris Johnson could face pressure to clarify the confusion around international travel rules when he takes Prime Minister's Questions for the first time since Parliament reopened last week. Facing Labour leader Keir Starmer in a six-question round for the first time since the local elections and the Queen's Speech, the prime minister is likely to face questions on where it is safe to holiday after one of his ministers said all international trips were "dangerous". With a new traffic light system brought in on Monday to allow some foreign travel to resume again after months of coronavirus lockdown, the prime minister stressed countries on the so-called "amber list" were "not somewhere where you should be going on holiday". But two Cabinet ministers appeared to offer a different reading of the rules, with Environment Secretary George Eustice telling broadcasters people could go to amber-listed countries as long as they observed quarantine rules on their return.

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BROKER RATING CHANGES

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BERENBERG RAISES FERGUSON TO 'HOLD' ('SELL') - TARGET 8,400 (7,500) PENCE

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JPMORGAN REINITIATES LONDON STOCK EXCHANGE WITH 'OVERWEIGHT' - PRICE TARGET 8,635 PENCE

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BERENBERG RAISES C&C GROUP TO 'BUY' ('HOLD') - TARGET 345 (181) PENCE

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COMPANIES - FTSE 100

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Plumbing and heating products supplier Ferguson said it delivered revenue and profit growth ahead of expectations in the third quarter. For the three months to April 30, revenue was USD5.92 billion, up 25% from USD4.75 billion a year ago, and underlying trading profit was USD560 million, up 69% from USD333 million. Ferguson said US market demand accelerated through the quarter as the US economy continued to re-open. Given the better than expected results, Ferguson revised its outlook for financial 2021 upwards as it said it expects to continue to outperform strong end-markets in the fourth quarter. Ferguson expects to generate group trading profit in the range of USD2.00 billion to USD2.10 billion in the year that ends July 31. In financial 2020, trading profit was USD1.67 billion, up 8.6% from financial 2019. "Ferguson has brought forward its Q3 announcement as we delivered strong revenue and profit growth ahead of expectations," Chief Executive Officer Kevin Murphy said.

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Defence and aerospace firm BAE Systems said sales and earnings guidance at constant currency for all of 2021 remains unchanged. "Whilst there remain uncertainties arising from the COVID-19 pandemic, progress continues in combatting the virus under the vaccination programme in our major markets and our good operational performance underlines our overall confidence in the full year guidance," said Chief Executive Charles Woodburn.

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COMPANIES - FTSE 250

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John Laing has received a GBP2.0 billion takeover offer from Aqueduct Bidco, a newly formed company owned by funds advised by Kohlberg Kravis Roberts. Under the terms of the offer, each John Laing shareholder will receive 403 pence in cash for each John Laing share. The offer is a 27% premium to the closing price of 318p on May 5, which was the last date prior to the announcement by John Laing that it was in discussions with KKR and is an 11% premium to Tuesday's closing price of 361.00p. "Whilst the board has full confidence in John Laing's strategy and management team, it is clear that many of the initiatives are at an early stage of development, retain an element of execution risk and that it will take time for these to deliver value. The John Laing board believes that the offer from KKR represents an attractive and certain value in cash today for John Laing shareholders and reflects the high quality of the business, its people and future prospects, as well as providing a positive outcome for John Laing pensioners," said Chair Will Samuel.

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Future said it delivered a robust first-half performance extending its track record of growth in revenue, and profit. The magazine publishers calls itself a "global platform for intent-led specialist media". For the six months to March 31, revenue was GBP272.6 million, up 89% from GBP144.3 million last year, and pretax profit was GBP56.9 million, doubled from GBP27.1 million. Looking ahead, Future said it has started the third quarter ahead of management expectations and expects full-year results to be "materially ahead" of market expectations. "I am delighted to report the ongoing successful execution of our strategy with record revenue and profit in this half, materially ahead of market expectations," said CEO Zillah Byng-Thorne. Future raised its estimate of the annual cost synergies that it will achieve from the integration of recent acquisition GoCo to GBP15 million from GBP10 million. Future bought the owner of the GoCompare.com website for GBP594 million, completing the purchase in January.

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COMPANIES - MAIN MARKET AND AIM

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Tharisa said it expects to post a significant rise in earnings for the first half of its financial year, on the back of improved production in the second quarter. The Cyprus and South Africa-focused platinum and chrome producer said for the six months ended March 31, it expects basic earnings per share to come between 21 and 22 US cents, a near sevenfold rise from 3.6 cents in the same period a year ago. Headline earnings per share is set to rise to within the same range, compared to 3.7 cents a year before. In mid-April, Tharisa said that, for the second quarter to the end of March, 6E platinum group metals output rose 12% year-on-year to 35,800 ounces from 32,100 ounces, while chrome concentrate output rose 16% to 358,400 tonnes from 310,100 tonnes.

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COMPANIES - GLOBAL

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Bitcoin plunged below USD40,000 for the first time in more than three months after China said cryptocurrencies would not be allowed in transactions and warned investors against speculative trading in them. The comments sent the unit diving more than 10% and dealt it another blow soon after being battered by comments from Tesla founder Elon Musk. Trading in cryptocurrencies has been banned in China since 2019 to prevent money laundering as leaders try to stop people from shifting cash overseas. The country had been home to around 90% of the global trade in the sector. Bitcoin tumbled from USD45,600 to USD39,240, its lowest since early February, and well off the record high of USD64,870 seen as recently as last month. Analysts have warned it could go down as far as USD30,000. China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players – including Alibaba and Tencent – have been hit with big fines after being found guilty of monopolistic practices.

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Wednesday's Shareholder Meetings

Alliance Pharma PLC - AGM

Arix Bioscience PLC - AGM

BlackRock Latin American Investment Trust PLC - AGM

Boku Inc - AGM

City Merchants High Yield Trust Ltd - GM re merger with Invesco Enhanced Income Ltd

Coats Group PLC - AGM

Diaceutics PLC - AGM

Dialight PLC - AGM

EKF Diagnostics Holdings PLC - AGM

Funding Circle Holdings PLC - AGM

IQ-AI Ltd - AGM

K3 Business Technology Group PLC - AGM

Keller Group PLC - AGM

Medica Group PLC - AGM

Pendragon PLC - AGM

Permanent TSB Group Holdings PLC - AGM

Plutus PowerGen PLC - AGM

PPHE Hotel Group Ltd - AGM

Regional REIT Ltd - AGM

Riverstone Credit Opportunities Income PLC - AGM

Safestyle UK PLC - AGM

Science Group PLC - AGM

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
BAE Systems PLC 576.80 GBX 0.14
Ferguson PLC 10,200.00 GBX 0.54
London Stock Exchange Group PLC 7,460.00 GBX 0.00
C&C Group PLC 233.40 GBX 3.09 -
Severn Trent PLC 2,801.00 GBX -0.74 -

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