Morning Financial Press Review 10/09/19
Paul Kettle
AM Press Round-Up -3 min read
05:51, 10th September 2019

Below are the key morning press headlines, featuring the The Times, The Telegraph, The Daily Mail & more - see the full Press section here.

A surge in PPI claims ahead of the August 29 deadline has pushed the banking industry’s final bill for the mis-selling debacle past £50bn. Lloyds Banking Group (LLOY)FOLLOW and Barclays (BARC) FOLLOW have both been forced to increased their provisions for payouts with Lloyds setting aside another £1.8bn and Barclays coughing up £1.6bn. In July Lloyds unveiled £650m of PPI costs during the first half of the year with an added provision of just over £1bn. This was based on the assumption that the number of PPI claims would continue at the rate of 190,000 a week until the August deadline. However, a sudden surge in claims to between 600,000 and 800,000 a week last month has forced Lloyds to raise its estimate, echoing similar announcements from Royal Bank of Scotland Group (RBS) FOLLOW and Clydesdale Bank owner CYBG (CYBG) FOLLOW last week. Lloyds now expects to take a charge in the range of £1.2bn to £1.8bn, although those numbers are not final as it is still processing the last of the submissions. Meanwhile, Barclays said after the market closed on Monday that a “significantly higher than expected volume of PPI-related claims, enquiries and information requests” would lead it to take a charge of between £1.2bn and £1.6bn in its third quarter. It added: “The final outcome could be above or below the estimated range and will depend on a number of factors including the quality of recently submitted claims.”

Plans to almost double revenues at Abcam (ABC) FOLLOW in the next five years divided opinion in the City yesterday amid fears that they could amount to “jam tomorrow”. The Cambridge-based biotechnology company announced an investment drive to increase revenue to between £450 million and £500 million by 2024, including by increasing market share in its core antibodies market, expanding into adjacent products and continuing to upgrade its IT systems. The five-year growth plans would be funded by an increase in capital expenditure to between £175 million and £225 million and a weakening of profit margins, the company said. Shares in Abcam fell as investors expressed concern that the plans would hit profits in the short term and as analysts failed to reach a consensus on the company’s prospects.

Shares in Intu Properties (INTU) FOLLOW surged on Monday on hopes that the embattled shopping centre owner could be taken private. Investors piled into the owner of malls including Lakeside in Essex and Manchester’s Trafford Centre following a weekend report that private equity group Orion Capital Managers is trying to round up a consortium to buy Intu. Speculation that Orion, which focuses on property and is led by investor Aref Lahham, is targeting Intu pushed up its shares by almost 20pc in early trading. The gains were later pared back to a 10.5% rise at 40.3p, valuing the company at £548m.

The conglomerate behind Primark has warned that the weaker pound is set to put profit margins at the fashion chain under pressure in its next financial year. Associated British Foods (ABF) FOLLOW, which generates half its sales and profit from the retailer, said that the strengthening of the US dollar and decline of sterling would increase the cost of goods. The alert, issued in a pre-close trading update for its financial year ending September 14, pushed shares in ABF down 49p to £23.05. John Bason, 62, finance director said that it would not pass on the costs to shoppers, meaning that there would be an inevitable hit to profit margins, but the business would look to mitigate some of the impact, including via lower material costs for its garments.

Scotgold Resources (DI) (SGZ) FOLLOW six months away from production at Cononish as gold price hovers near highs. Chief executive Richard Gray explains.’We will be producing our first gold at the end of February,’ he says. ‘We are currently developing and enlarging the existing adit so we can get our mechanised equipment in. We are getting the machinery over. And we are working on the buildings for the machinery.’ First ore will be mined at the end of this year, and a small stockpile will be built up before the first gold comes out in February. Now that production is so close, it seems in some ways as if the timing couldn’t be better. That’s because of the three way dynamic that operates between sterling, the dollar and the gold price. Almost all of the operating costs at Cononish will be incurred in sterling, which is currently very weak against both the dollar and gold. That means that while the likely selling price of the gold that gets produced from Cononish will be high, the only pressure on costs will be downward.

Travelodge has stolen a march on arch rival Premier Inn by increasing sales despite tough market conditions. Comparable revenue per available room – a key metric in the hotel sector – rose 0.6% in the first six months of the year, although the figure slipped to be just 0.1% higher in the three months to June. The market shrank by 2.6% and 1.8% respectively. Boss Peter Gowers said: “More and more people looking to make their travel money go further in these uncertain times.” Total half-year sales rose 6% to £337m and earnings edged up by £1m to £45m, although pre-tax profit was not disclosed. Travelodge’s ability to shrug off what Mr Gowers called “challenging conditions” comes as Premier Inn, owned by Whitbread (WTB) FOLLOW,grapples with falling like-for-like sales. They tumbled 3.7% in the first three months of the year – a fall blamed on “ongoing political and economic uncertainty in the UK”. Premier Inn, which has 785 hotels compared with Travelodge’s 584, appeared to have left its rival in wake in recent years.

The world’s largest education publisher has been hit with a class action lawsuit after computer hackers accessed the personal information of an estimated one million American students. Pearson (PSON) FOLLOW stands accused of being slow to identify the breach and of failing to raise the alarm quickly enough. According to legal filings, the hack was in November last year, but Pearson did not become aware of it until the FBI law enforcement agency informed it in March. Parents and students were not told until July. The plaintiffs — a mother and daughter from Illinois — said that the British company had “concealed its knowledge” of the data breach from victims.

Mike Ashley has swooped on another struggling retailer despite anger over his buying spree among Sports Direct International (SPD) FOLLOW investors. The 55-year-old tycoon has tabled a bid for jewellery chain Links of London after its owner Greek-based group Folli Follie put it up for sale. Ashley is understood to have made the offer through Sports Direct, where he is chief executive and the largest shareholder with a 63% stake. He is braced for a backlash from investors at Sports Direct’s annual meeting tomorrow amid claims he is losing focus as he seeks to expand his empire. Shareholder advisers ISS and Glass Lewis have urged investors to vote against Ashley’s re-election as a director, with the former warning that Sports Direct’s purchase of House of Fraser has ‘led to concerns about the company’s viability as a whole’.

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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