LONDON MARKET PRE-OPEN: Victrex declares special dividend; LSEG buys

(Alliance News) - Stock prices in London are seen opening higher on Monday following upbeat comments from a US health official about the severity of the Omicron variant of Covid-19.

In early company news, London Stock Exchange Group made an acquisition in a bid to expand its range of Post Trade risk management solutions. Cyber security provider Darktrace started a share buyback programme. Speciality chemicals firm Victrex declared a special dividend after robust annual results.

IG futures indicate the FTSE 100 index is to open 45.48 points higher at 7,167.80. The blue-chip index closed down 6.89 points, or 0.1%, at 7,122.32 on Friday.

London Stock Exchange Group said that it has agreed to acquire portfolio, margin and capital optimisation services provider Quantile Group.

LSEG said it has agreed to pay a up to GBP274 million for London-based Quantile. The deal will enable the stock exchange to expand its range of Post Trade risk management solutions to its customers, it said.

Daniel Maguire, LSEG's group head of Post Trade said: "The acquisition of Quantile builds on the strong growth delivered by LSEG and our Post Trade division. It significantly enhances LSEG's multi-asset class customer offering across the transaction lifecycle by providing more sophisticated tools and infrastructure for customers to optimise their financial resources and drive greater operational efficiencies in OTC derivatives."

WPP said it has acquired a majority stake in branding and design agency Made Thought for an undisclosed sum.

The ad agency said the acquisition is aligned with its growth strategy and M&A approach to strengthen its creative capabilities in marketing, communications and design. The deal follows acquisitions of Universal Design Studio and Map Project Office, which both joined WPP in 2018. The three outfits will be integrated into WPP's AKQA to form a collective called 'The New Standard'.

Chief Executive Officer Mark Read said: "WPP is known for its creative excellence and our award-winning work that helps drive transformative growth for our clients. Bringing Made Thought together with Universal Design Studio and Map Project Office to create The New Standard will further strengthen our position as a creative leader and raise the bar for design that speaks to people across different platforms."

Darktrace said it will commence a share buyback programme of up to 4 million shares to be completed by December 31, 2022. The maximum amount allocated to the programme is GBP30 million and will be conducted by Jefferies.

Victrex said it delivered a solid and sustainable recovery during financial 2021, prompting the speciality chemicals firm to declare a special dividend.

For the financial year ended September 30, Victrex posted revenue of GBP306.3 million, up 15% from GBP266.0 million last year and pretax profit of GBP92.5 million, up 46% from GBP63.5 million.

Victrex declared a full year dividend to 59.56 pence, up 29% from 46.14p paid last year. In addition, as a result of its available cash balance exceeding the GBP85 million threshold, Victrex also proposed a 50p share special dividend.

Looking ahead to financial 2022, Victrex said its assumptions are for progress in sales volumes, with several end-markets expected to see further recovery, including in medical.

The company operates in six core markets: aerospace, automotive, energy, electronics, manufacturing & engineering and medical.

Victrex said it was facing increased raw material and energy costs, which will hurt earnings particularly in the first half of the new year, although it noted mitigation plans "are progressing".

"We will increase our investment in innovation, and will start to incur commissioning costs in relation to our new China facility, although better asset utilisation should support our margin. Overall, we plan to deliver year-on-year growth in financial 2022," said Chief Executive Officer Jakob Sigurdsson.

"With an attractive portfolio of short, medium and long term growth opportunities, a strong ESG agenda, including alignment to global megatrends and sustainable products which help Co2 reduction and support environmental and societal benefit, and a highly cash generative business model, the Group remains well placed for the medium to long-term."

Calls for a higher open in London were on hopes the Omicron variant would not be a severe as originally anticipated.

The Omicron variant has been detected in 38 countries but no deaths have yet been reported, the World Health Organization said, as authorities worldwide rushed to stem the heavily mutated Covid-19 strain's spread amid warnings that it could damage the global economic recovery.

WHO said on Friday it had still not seen any reports of deaths related to Omicron, but the new variant's spread has led to warnings that it could cause more than half of Europe's Covid cases in the next few months.

Further, early indications of the severity of the Omicron Covid-19 variant are "a bit encouraging", top US pandemic advisor Anthony Fauci said Sunday, while cautioning more information was still needed.

"Omicron has a transmission advantage" in South Africa, where the variant was first reported, Fauci said in a CNN interview, noting the country had a low level of cases before it saw "almost a vertical spike upwards, which is almost exclusively Omicron."

"Though it's too early to really make any definitive statements about it, thus far, it does not look like there's a great degree of severity to it," he said.

In Asia, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite ended down 0.5%, while the Hang Seng index in Hong Kong was down 1.8%. The S&P/ASX 200 in Sydney ended up 0.1%.

CMC Markets analyst Michael Hewson said: "While still early days, the evidence continues to support the notion that while Omicron is more transmissible it doesn't appear to be more deadly with no deaths currently reported because of the virus.

"Nonetheless markets appear to be becoming increasingly twitchy, whether it be over Omicron, or the ability of Europe to deal with its current problem with Delta. Nonetheless, despite these concerns European markets look set to start the week in a positive fashion, with Asia markets trading cautiously with little in the way of news flow to drive direction."

The travel industry has reacted with fury after it was announced all passengers arriving in the UK will have to take a Covid pre-departure test amid fears about the spread of the Omicron variant.

Ministers said it was intended to be a temporary measure following new data showing an increase in the number of cases of the new strain linked to foreign travel.

The move, which will be introduced on Tuesday, was welcomed by the opposition Labour party, which has been pressing for the return of pre-departure tests since the variant was first identified in South Africa.

The pound was quoted at USD1.3231 early Monday, up from USD1.3223 at the London equities close Friday.

The euro was priced at USD1.1285, lower from USD1.1291. Against the Japanese yen, the dollar was trading at JPY113.07, hardly moved from JPY113.06 on Friday.

Brent oil was quoted at USD71.51 a barrel Monday morning, firm from USD71.43 late Friday. Gold stood at USD1,784.57 an ounce, up from USD1,775.82.

The economic events calendar on Monday has UK construction PMI at 0930 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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