Could the tide be starting to turn on the ‘Tourism Tax’?
Could it be the first vague hint of a change of heart? Trade minister Nigel Huddleston today asked for more “information and data” on the impact of the Treasury’s decision to remove VAT-free shopping for overseas visitors — the so-called tourism tax — when questioned about the subject today.
The Government has been under huge pressure on this issue — not least from the Evening Standard — and there is no doubt that central Londonbusinesses that depend heavily on high spending travellers are hurting, while in Paris, Milan and Madrid retailers and tourism bosses are rubbing their hands with glee.
£30 million City office block to be converted to ‘low-carbon’ flats
A City office block bought today for £30 million is to be converted into “low carbon” apartments.
Developer HUB and investor Bridges Fund Management have snapped up 45 Beech Street close to the Barbicanestate, the City’s biggest concentration of homes.
The 1950s building was previously a serviced workspace centre. It follows the recent acquisition of another City office building by the same purchasers on Ludgate Hill. Both schemes will be developed by HubCap, a subsidiary of HUB focused on low carbon building reuse.
Wood backs standalone prospects, ASOS shares back under pressure
Private equity firm Apollo’s decision not to make a £1.7 billion takeover offer for Wood Group has left shares in the oilfield services firm back where they started the year. It ends a long-running saga in which Aberdeen-based Wood turned down four previous proposals.
The loss of Wood’s bid premium means shares are down by a third or 73.3p to 145.7p, although the company said it is well placed to deliver “substantial value for shareholders”. It pointed to last week’s trading update showing good momentum across all businesses, as well as November’s release of new medium-term earnings targets.
The private equity focus clouded the performance of the mid-cap FTSE 250 index, which stood just 3.65 points higher at 19,192.02.
In contrast, the FTSE 100 index added 21.05 points to 7775.67 as major global markets continue to make progress despite economic storm clouds and next month’s deadline for the United States to avoid a debt default.
The most significant milestones were in Germany, where the Dax touched its highest level since January 2022, and in Japan as the Nikkei 225 added 0.8% for an 18-month peak.
In London’s top flight, Flutter Entertainment was among the frontrunners as analysts at Citigroup gave the betting giant a 19,000p target. Shares rose 195p to 16,115p.
Other strong performers came from the banking sector, but oil stocks were under pressure after Brent Crude futures started the week near $74 a barrel compared with $85 a month ago. Shell fell 14.5p to 2394.5p while Tullow Oil lost 0.8p to 23p in the FTSE 250 index.
It was also another grim session for ASOS, with the fast-fashion chain down another 11% or 58p to 447p as the sell-off following last week’s results continued.
On a brighter note, seals and controls business Diploma rose 72p to 2922p as it upgraded full-year guidance alongside interim results showing a 33% rise in operating profits to £109.7 million.
Vice Media files for Chapter 11 bankruptcy
Vice Media has filed for Chapter 11 bankruptcy as it prepares for a sale in the latest sign of the toll taken on digital media outlets by a slump in advertising revenue.
The firm, which was first launched in the mid 1990s, was once valued at as much as £4.5 billion as it sought to convince investors its strategy of appealing to younger online audiences would give it the edge in the digital media market.
But despite attracting a number of high-profile investors including billionaire George Soros and media mogul Rupert Murdoch, the company has struggled to turn a profit and has now sought a grace period to reorganise its debts as it plans a sale to its lenders for $225 million.
Vice said it “expects to emerge as a financially healthy and stronger company in two to three months”.
Travelodge sales boosted as more customers seek budget hotels
Travelodge expects to benefit from consumers reacting to the cost-of-living crisis by swapping more upmarket hotels for budget ones, the accommodation giant said as it revealed higher sales.
The company, which has nearly 600 sites that are mainly in the UK but also in Ireland and Spain, added in its results update that it plans to open around eight new hotels this year. The chain last month said there is potential to boost its network with 300 more UK Travelodges.
Expansion comes after total underlying revenue jumped to £909.9 million in 2022, up from £559.7 million a year earlier and £727.9 million pre-pandemic in 2019.
FTSE 100 higher, Wood Group down 39%
The FTSE 100 index has made a positive start to the week, with London’s top flight trading 30.26 points higher at 7784.88.
Big risers include Flutter Entertainment, which is up 320p to 16,240p after analysts at Citigroup gave the Paddy Power-to-FanDuel business a “buy” recommendation and 19,000p target price.
With Brent crude futures back at $73.88 a barrel, shares in BP and Shell came under pressure at the top of the fallers board with declines of up to 1%.
The FTSE 250 index is 42.91 points higher at 19,231.28, led by Currys after its trading update showing a better-than-expected performance in the UK and Ireland to help shares up 5% or 2.75p to 58.70p.
Seals and controls business Diploma also rose 68p to 2918p after it upgraded guidance alongside half-year results. Wood Group shares tumbled 39% or 84.5p to 134.5p after private equity firm Apollo ended takeover talks.
ASOS shares also remain under pressure, falling another 48p to 457p as the sell-off following last week’s interim results continues.
£125 annual increase ‘in the average monthly rent paid on a newly-let home’
The average monthly rent paid on newly-let homes across Britain was £125 or 11.1% higher in April than a year earlier, according to an index.
This typical monthly increase equates to an extra £1,500 being paid per year.
Average rents paid for newly-let homes reached a new high of £1,249 per month in April 2023, according to property agent Hamptons, whose lettings index has been running for just over a decade.
Apollo drops plan for £1.7 billion bid for John Wood Group
Apollo said today that it will not make an offer for oilfield services group John Wood Group, ending a long-running bid £1.7 billion saga, in which the Aberdeen-based engineer turned down four previous proposals from the private equity firm.
It comes just days after Apollo dropped another potential bid, for e-commerce company THG, in a sign that the wave of private equity interest in London-listed firms could be easing.
Apollo’s latest potential move for John Wood was valued at 240p per share, valuing it at around.£1.7 billion. The stock closed at 219p on Friday.
Wood Group said today that it “remains confident” in its “strategic direction and long-term prospects,” adding:
“Following a transformative year in 2022, including new executive leadership and a new strategy, Wood is well placed to deliver substantial value for shareholders.”
Smoking giant BAT new CEO
British American Tobacco, the £75 billion giant behind Kool and Dunhill, today promoted its finance director to CEO.
Tadeo Marroco will succeed the departing Jack Bowles, who stands down today.
He will have basic pay of £1.3 million but can expect to do much better than that with bonuses and share awards.
Under BAT rules, he will be expected to build up share ownership equal to five times his pay to ensure his interests are aligened with other investors.
He said: “I am honoured to be appointed as Chief Executive of BAT. I wish to thank Jack who has been instrumental in establishing our A Better Tomorrow strategy. Having been at the centre of the formulation of this strategy, I am convinced that this is the right strategic path for BAT. In this dynamic environment, I remain firmly committed to focusing on results delivery through executional excellence.”
All tobacco players are pivoting to vaping as a healthier way to smoke.
Oil prices lower ahead of economic releases, FTSE 100 seen higher
The FTSE 100 index is expected to open marginally higher as the uncertain trend for global markets continues.
The S&P 500 index finished slightly lower on Friday amid ongoing concerns about US debt ceiling negotiations and the weaker economic outlook after the most aggressive interest rate tightening cycle since the 1980s.
The biggest event in this week’s UK economic calendar is tomorrow’s release of unemployment and earnings figures by the Office for National Statistics.
The jobless rate for March is expected to have remained at 3.8%, with average earnings excluding bonuses forecast to have risen from 6.6% to 6.8%.
More evidence of persistent wage pressure will fuel expectations that the Bank of England will need to make another quarter point hike in interest rates at its policy meeting next month.
Elsewhere, tomorrow’s industrial production figures in China will be closely watched for signs that the country’s pandemic recovery is beginning to slow. The same day also sees the release of US retail sales figures.
The updates from the world’s two biggest economies come with oil prices under pressure on fears over slowing demand. Brent crude futures today slipped 0.4% to $73.86 a barrel, having been at $85 a month ago.
