Pennon: South West Water owner raises dividend despite loss
Pennon Group, the company that owns South West Water, has pushed through a dividend hike despite falling to a loss in the year to 31 March 2024.
According to the company’s results, which were published this morning, the group’s revenue increased 10 per cent to £908m in the year thanks to higher customer bills.
However, a jump in debt costs pushed the group to an overall loss for the period. It reported a statutory loss after tax of £8.5m, a sharp turnaround from the £0.4m profit reported in the prior year.
Debt across the group also rose. Excluding SES Water, net debt at the end of March was £3.5bn, up from just under £3bn at the end of the prior period.
Despite these figures, the company recommended a final dividend of 30.33p per share, giving a total dividend per share of 44.37p for the year. This also included a 0.84p reduction for the £2.4m fine from South West Water prosecution.
Pennon said that during the period it had achieved: “Sector-leading internal sewer flooding performance with 100 per cent bathing water quality for [the] third consecutive year.” What’s more, the group added that it would invest £583m in its water business over the coming year to “protect our customers, the network and the environment.”
Susan Davy, group chief executive officer, said: “Overall, we have a robust financial position with solid financial performance and are well positioned for the next regulatory period. Our efficiency programmes are focused on keeping costs below inflationary levels, despite the impacts of the unprecedented wet weather.
“Furthermore, with a robust balance sheet, we are also efficiently funded and growing shareholder value. Our strategy for financing will continue to seek to ensure we remain one of the most efficient in the sector,” Davy added.
“As we look ahead to PR24, we have a robust base on which to build. It is an ambitious plan, based on the four priorities that customers care about most. We will be investing efficiently, within our total expenditure in the plan of £4.5bn, we have built in 12 per cent of efficiency keeping bill increases to a minimum, and with good support from customers at 74 per cent.”
‘New era of growth’: Astrazeneca aims to double revenue by end of the decade with long pipeline of drugs
Pharmaceuticals giant Astrazeneca has said it wants to hit $80bn (£62.9bn) in total revenue by 2030 through launching new medicines and investing in technology.
The largest London-listed firm by market cap, which reported revenue of $45.8bn (£36bn) in 2023, aims to achieve this goal through growing its existing portfolio of oncology, biopharmaceuticals and rare disease drugs and launching an expected 20 new medicines.
Pascal Soriot, chief executive at Astrazeneca said the firm today “announces a new era of growth. In 2023 we delivered the ambitious $45 billion revenue goal set a decade ago.
“With the exciting growth of our innovative pipeline, which has the potential to transform millions of lives, we are now aiming for $80bn by 2030.
“We are planning to launch 20 new medicines by 2030, many with the potential to generate more than $5 billion in peak year revenues. The breadth of our portfolio together with continued investment in innovation supports sustained growth well past the end of the decade.”
Astrazeneca said it will continue to prioritise research and development while improving efficiency in a bid to boost profits and achieve a core operating margin of a mid-30s percentage by 2026.
It comes amid an investment drive for the drug manufacturer. The company yesterday said it plans to invest $1.5bn (£1.2bn) in a new manufacturing facility in Singapore to produce antibody drug conjugates (ADCs), a next-generation cancer treatment.
The group’s oncology and rare disease divisions were particularly strong performers, with revenue up 26 per cent and 16 per cent, respectively.
Another London-listed loss? US giant tables £571m offer for XP Power
Advanced Energy Industries has upped the stakes in its bid for the electronic component supplier XP Power after three prior offers were shunned.
The Nasdaq-listed firm’s latest offer values Singapore-based XP Power, which holds a listing on London’s Main Market, at £571m. It had previously put forward three bids worth £339mm, £369m and £468m in October, November and early May, respectively.
The latest offer, at a price of £19.50 per share, represents a 68 per cent premium to XP Power’s closing share price of £11.64 on May 20 and an 82 per cent premium on its 30-trading day average price.
“We believe that the proposed offer for XP Power provides compelling value for both Advanced Energy’s and XP Power’s shareholders,” Steve Kelley, the president and chief executive of Advanced Energy, said.
“By expanding our portfolio of products and technologies, and combining our technical capabilities, we believe we will be better able to meet the growing needs of our customers.”
The offer comes amid a slew of take-private deals involving London-listed firms, which have included the likes of Darktrace’s £4.3bn deal with Thoma Bravo.
Headquartered in Denver, Colarado, Advanced Energy provides control and power technologies to the semiconductor, telecoms and renewable sectors.
In a statement to markets, the company said the acquisition would “extend Advanced Energy’s ability to service its customers with a broader and deeper set of products and technologies.”
“For semiconducter equipment use cases, the acquisition of XP Power would expand a portfolio of embedded system power solutions which would broaden Advanced Energy’s ability to support its OEM customers.”
It also said the takeover would boost its presence in the US, Europe and Asia Pacific.
Advanced Energy said it had $1bn cash on hand and low-cost debt as of 21 May. The offer is subject to Singaporean takeover regulations as opposed to City rules on mergers and acquisitions.
Kingfisher: B&Q owner holds guidance despite weak ‘big-ticket’ sales
B&Q owner Kingfisher has held its guidance for the year, as the firm posted improving sales in its UK and Ireland market despite a decline in ‘big-ticket’ sales.
The home improvement retailer, which also owns the Screwfix and TradePoint brands, said total sales in the first quarter rose 0.3 per cent to £3.3bn.
In its home market of the UK, total sales grew 2.7 per cent, with sales at both “banners growing ahead of their respective markets”.
B&Q sales were up 0.4 per cent, helped by a strong performance in e-commerce and the trade segment. The firm said this helped offset a weaker sales performance in ‘big-ticket’ categories.
Meanwhile at Screwfix sales grew 6.4 per cent due to demand from trade customers.
In its French arm trading was not as strong with sales down 8.1 per cent, while in Poland sales were up by 3.1 per cent.
Kingfisher has faced challenges in maintaining its earnings since 2020 due to headwinds such as high inflation which has impacted consumer spending. After the pandemic, it’s also seen a slowdown in Brits doing home improvements, which boomed during lockdowns.
Thierry Garnier, chief executive officer, of Kingfisher, said: “Trading in the first quarter has been in line with our expectations. We have seen continued resilience in our core categories, although ‘big-ticket’ sales have been weak reflecting the broader market as expected. In the UK, we have gained considerable share across our banners.
“Our trade proposition continues to resonate with customers, driving positive LFL sales at Screwfix and strong LFL sales growth of 8.5 per cent at TradePoint.
He added: “In France, while slightly improved on Q4, trading reflects the weak overall retail market. And in Poland, we are seeing encouraging sales trends as the consumer environment improves.”
“Looking forward, we confirm the guidance outlined in March for the full year, including our expectations for the overall market in 2024.”
For the full year, the company expects to post adjusted PBT of between £490m- £550m.
Wall Street titan Jamie Dimon eyes stepping away from JP Morgan
Jamie Dimon, arguably the single most significant figure in global finance, gave his clearest indication yet that he is thinking about stepping down from JP Morgan.
Dimon has previously brushed off questions about the remaining length of his tenure by saying he would stay five more years, every year.
However yesterday he told a New York gathering that “we’re on the way, we’re moving people around,” Dimon said.
“The timetable is not five years anymore.”
He has been at the top of the shop for 18 years.
Some have speculated that Dimon, never shy of an opinion on geopolitics, could be considering a run at political office.
“I love my country, and maybe one day I’ll serve my country in one capacity or another,” Dimon said in an interview with Bloomberg TV last week, when asked if he would consider a run.
Hedgie Bill Ackman said Dimon would make an excellent leader.
Succession candidates
Succession candidates include Jennifer Piepszak and Troy Rohrbaugh, co-CEOs of the commercial and investment bank at JP Morgan.
Brit Marianne Lake, CEO of consumer and community banking, and Mary Erdoes, CEO of asset and wealth management, are also believed to have a shot at the top job.
JP Morgan reported another set of healthy results, with net interest income – the difference between loans and deposits – expected to now hit $91bn (£72bn) this year.
It does matter that you understand the forces and dynamics that are happening in China
Jamie Dimon on China, where he will be later this week
Dimon said he was “cautiously pessimistic” about the geopolitical and economic situation, and pointed to persistent inflation as a further worry.
Shares slipped a little, which analysts pegged to Dimon’s announcement and a lack of further buyback momentum.
“We attribute today’s weakness (in shares) to a lack of interest to buy back stock at current prices and a shorter CEO transition timeline,” David George, an analyst at Robert W. Baird, wrote in a note.
FTSE 100 live: London markets to trade in range ahead of UK inflation data
The latest updates on the FTSE 100 and London’s financial markets from City A.M.’s newsroom in the heart of the City of London.
US stocks closed mixed after cautious US Federal Reserve comments.
Overnight, the S&P 500 edged up 0.09 per cent to close at 5,308.13, while the tech-heavy Nasdaq Composite set a new closing record at 16,794.87, driven by gains in four of the Magnificent Seven groups.
The Dow Jones fell 0.49 per cent to 39,806.77 due to a 4.5 per cent drop in JPMorgan shares after CEO Jamie Dimon’s cautious comments.
The tech sector led gains in the S&P 500, with its index rising 1.32 per cent, driven by chipmakers like Nvidia, which surged 2.49 per cent ahead of Wednesday’s quarterly results.
In Asia, Japan’s Nikkei 225 rose 0.2 per cent, building on the previous day’s 0.73 per cent gain. Nasdaq futures slipped 0.1 per cent after hitting an all-time high, while S&P 500 futures held steady.
The Hang Seng Tech index fell 2.2 per cent, with Li Auto dropping 17 per cent due to a significant profit decline. Asian currencies weakened against the dollar, with the Korean won down 0.5 per cent.
Bitcoin rose 2.07 per cent on Monday to $70,982, marking an 82.3 per cent increase from its yearly low of $38,505 on January 23.
Ether, the cryptocurrency associated with the Ethereum network, increased by 5 per cent to $3,671.40.
Oil prices fell in early Asian trading on Tuesday, with Brent down 0.62 per cent to $83.19 and WTI down 0.64 per cent to $79.29 per barrel.
BHP Group shares reached a three-month high as the deadline neared for its bid on rival Anglo American, who recently rejected BHP’s $43 billion offer.
According to UK takeover rules, BHP must submit a binding bid by 1700 GMT Wednesday or wait six months for another offer. An extension may be granted if an agreement is reached before the deadline.
Australia’s central bank opted to keep interest rates stable in May but it hinted at a potential rate hike if inflation exceeded expectations, minutes showed.
On Tuesday, investors will be closely monitoring multiple speeches from top US central bank officials, starting with Governor Christopher Waller.
Bank of England chief Andrew Bailey is also scheduled to speak. In Europe, April’s German producer price data will be released, followed by the eurozone’s current account and trade balance figures later in the morning.
Additionally, investors will be scrutinizing Nvidia’s earnings to see if the AI chip leader can continue its strong growth and stay ahead of its competitors.
Time to give the UK’s golden goose some much-needed nurturing
What does betrayal look like? It’s easy to identify in love, and pretty simple at work, too.
One side committed – the other sniffing around elsewhere. It’s harder to judge in politics, where snake-like behaviour is more easily accepted.
Such a quiet betrayal has been at play for decades in how the Treasury treats the City. As we report today, financial services continue to contribute well above the average to the Treasury.
The tax take last year was more than the entire education budget.
Yet action to allow that particular golden-egg-laying-goose to grow further is sorely lacking. Reforms needed to reinvigorate the stock exchange are gathering dust on the shelves of Treasury and regulator mandarins.
A trade tax, rightly identified by the boss of the London Stock Exchange itself yesterday as a barrier to growth, remains firmly on the books; even the suggestion of getting rid of it last year was met with a stern shake of the head from the Chancellor.
Even universities – which have been a valuable training ground for UK-based financial services firms, ensuring London retains its human capital – are now set to suffer at the hands of immigration restrictions.
Is it betrayal? Benign neglect? Complacency? Whatever it is, it’s hard to shake the feeling that it’s time for the government to show some love to the industries that pay so many of the country’s bills.
With an ageing population and ever-growing demands on public services, somebody will have to.
Should the City not be nurtured, its continued ability to cough up could be threatened.
Not overnight, of course, but chipped away at a listing in New York not here, a headquarters moved from London to Singapore or Dubai. The Treasury would be wise to get ahead of that.
How business leaders can embrace shift to healthier office dining
The healthier office landscape is in a constant state of evolution, and the recent embrace of hybrid work models has only accelerated these changes.
As teams split their time between home and the office, work culture has been put under the microscope – these days, office workers are more vocal in their expectations of how and where they want to work, and more specifically, how and what they want to really eat at work.
Matt Ephgrave, managing director at office food delivery platform Just Eat for Business, has indeed observed changes in employee demands based on its platform order patterns from over the past few years.
Just Eat for Business’ own data shows a 164 per cent increase in orders from restaurant partners offering a selection of healthier office orders – lower fat, sugar and salt – dishes over the past year, as well as an increase in salad orders by 12.3 per cent from 2022 to 2023.
Matt says: “Data also shows that over a quarter of UK employees believe consuming a more balanced meal enhances both energy and focus. This not only highlights a fundamental shift in mindset, with workers now recognising the direct correlation between diet and productivity, but shows the changing nature of preference that employers need to keep up with. “
To meet this demand, Matt suggests that business managers adopt an employee-first approach to workplace dining.
He says: “Treating team members as valued customers, he argues, involves offering a diverse range of high-quality products that cater to their dietary needs and preferences. However, this customer-centric mentality extends beyond just sustenance.
“It fosters an environment where employees feel supported and empowered to make healthier choices. Embracing technology-driven food solutions is another key strategy in meeting the evolving demands of today’s workforce, according to Ephragve.”
He advocates for leveraging digital platforms that provide employees with access to a wide array of restaurant options and cuisines, all tailored to their specific dietary requirements. By harnessing the power of technology, employers can offer flexibility and choice, ensuring that every team member is satisfied with their workplace dining experience.”
Matt adds: “The shift towards healthier eating habits in the workplace is not merely a trend; it’s a reflection of broader societal changes and a growing awareness of the importance of wellbeing, especially with nutrition. For business leaders navigating this changing landscape, embracing the shift presents both challenges and opportunities.”
The transition to hybrid working models has reshaped not only how we work, but also how we eat at work. By recognising and adapting to the growing demand for healthier dining options, business leaders can create a workplace culture that supports employee wellbeing and enhances overall productivity.
AI skills could mean higher pay, PwC research finds
Artificial intelligent professionals are likely to earn more money than their counterparts without AI skills, according to PwC’s inaugural Global AI Jobs Barometer.
In the UK, jobs requiring AI skills offer an average wage premium of 14 per cent, a figure that rises to 27 per cent for lawyers with AI expertise and 58 per cent for database designers and administrators.
The UK ranks just behind the US, which has the highest average wage premium for AI skills at 25 per cent. In Australia, the premium for AI-related roles is just six per cent.
Mehdi Sahneh, senior economist at PwC UK, said: “Countries and sectors that have a high demand for AI skills tend to see higher wage premiums, especially if there is a scarcity of skilled professionals, whereas in areas where there is a more abundant supply of AI talent, lower premiums are more likely.
“Although on the surface lower wage premiums may sound less favourable, all else being equal, they suggest a balance between labour supply and demand, and could potentially foster greater AI adoption and innovation over the long term,” he explained.
It comes as the UK is looking to AI to solve its productivity problem. Between 2008 and 2021, UK productivity has grown just 2.2 per cent on average, slower than all of the G7 nations, bar Japan.
The slowdown in productivity growth since the financial crisis has been labelled “catastrophically bad” for the UK economy by a leading economist at the Office for Budget Responsibility (OBR).
“It’s also positive news that increased use of AI could turn the dial on productivity in the UK,” Sahneh added.
“With the gap widening in recent years, AI could be the missing piece of the UK’s productivity puzzle, bringing a boost to the economy, wages, and living standards.”
PwC’s AI Jobs Barometer, which analysed half a billion job ads from 15 countries, found that jobs using AI are experiencing nearly five times the productivity growth rate compared to those less exposed to AI.
This is only the tip of the iceberg in terms of economic impact, according to Barret Kupelian, chief economist at PwC UK.
“Currently our findings suggest that the adoption of AI is concentrated in a few sectors of the economy, but once the technology improves and diffuses across other sectors of the economy, the future potential could be transformative,” he said.
Clarification: Unicoin
We have removed the May 15, 2024, story entitled “SEC’s priorities go haywire as they register ‘Unicoin’ scam whilst suing Uniswap” because we have learned that several of its factual assumptions, implications, and characterizations regarding Unicoin were inaccurate. We regret this error and have apologized to Unicoin.”