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Brexit: Companies respond to the Leave vote (updated)

UK-listed companies have rushed to reassure their shareholders
June 24, 2016

UK-listed companies have raced to respond to Britain's vote to leave the EU, reassuring investors that the decision would have minimal impact on their businesses. We will update this story throughout the day.

Update (4.30pm): In response to the Brexit vote, ITM Power (ITM) reduced the estimated value of its total pipeline by £3.47m - about 16 per cent - to reflect the greater risk of contracts falling through for items still being negotiated. The energy storage and clean fuel group's management added that its reliance on deals placed in foreign currencies, could mean greater currency volatility could affect its contract pipeline in the coming months. Nonetheless, it stood by its forecasts for the year to 30 April 2017.

Update (4.02pm): In a trading update, IG Group (IGG) highlighted the "extremely unusual" situation and significant market movements. The online financial trading group said it has "managed its operations and exposure very effectively through the night and into today", and its focus has been on supporting clients during a period of uncertainty. Management expects financial markets to remain unpredictable "for some time to come"; it plans to continue monitoring and managing its exposures and client positions.

Update (2.08pm): Westminster Group (WSG), which provides managed services and security solutions to governments, non-government organisations and large companies, doesn't expect the vote to have a significant impact on its business. Management highlighted the group's focus on Africa, the Middle East and Asia. It also earns most of its revenues in US dollars, so a weaker Sterling could be a boon. After falling sharply in the morning, its shares are up 5 per cent.

Sports Direct International (SPD) warned that market volatility and unpredictable exchange-rate movements, particularly in the short to medium term, could affect purchases for which it hasn't hedged in the financial year to April 2017 and beyond. Management plans to provide further updates when the group publishes its full-year results on 7 July. Its shares were down 16 per cent in the early afternoon.

Update (12.10pm): Steinhoff has announced that Poundland (PLND) has rejected its possible cash offer. The South African retail titan’s board is now considering its position, in light of the discount retailer's recent results, the movement in its share price and the impact of the EU Referendum on global markets.

Green Dragon Gas (LSE: GDG), a coalbed methane gas producer, said its focus on the domestic Chinese market means there should be no commercial or financial impact of the vote to leave. Its shares were down 13 per cent in the early afternoon.

International Consolidated Airlines (IAG) said it doesn’t expect the referendum outcome to have a long-term material impact on its business. But it warned that trading had been underwhelming in the run up to the UK referendum. The vote to leave, together with the current market volatility, prompted management to temper its operating profits expectations for this financial year.

Energy giant SSE (SSE) said the vote “presents no immediate risk" to its services or investment, and that its resilient business model and balanced range of energy businesses would allow it to navigate the transition. However, management warned the risks could rise if the vote “leads to a prolonged period of uncertainty" about the laws and regulations governing the energy sector, and expressed hope that both UK and European authorities would provide clarity on their plans. It added that harmony between the domestic energy market and European countries plays an important role in “efforts to deliver clean, secure and affordable energy”. It also pointed to the likelihood that the UK government will have to agree a new deal to remain in the Internal Energy Market.

London Stock Exchange Group (LSEG) and Deutsche Borse reminded investors that their proposed merger, which would combine the London and Frankfurt stock exchanges, wasn’t conditional on the outcome of the referendum. Both group’s boards said the vote doesn’t impact the strategic rationale for the deal, and their combined global reach, distribution network, brand strength, customer ties and financial resources will let the group serve a global customer base. The pair are in talks with both UK and European regulators and authorities.

Joachim Faber, a top Deutsche Börse official, said: "The decision of the UK to leave the EU makes it ever more important to maintain and foster ties between the UK and Europe. We are convinced that the importance of the proposed combination of Deutsche Börse and LSEG has increased even further for our customers and will provide benefits for them as well as our shareholders and other stakeholders."

Groupe Eurotunnel SE (0P72), which owns the Channel Tunnel, confirmed its commitment to facilitate transport between the UK and France. It added that the tunnel was created via an international treaty between the British and French governments rather than a European agreement.

Budget airline easyJet (EZJ) reassured investors that the vote wouldn’t affect its strategy or ability to deliver earnings growth and shareholder returns. Management said it had been preparing for this eventuality by sounding out ways to keep flying in all its markets. It has written to the UK government to ask them “to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and customers.”

Rival low-fare airline Ryanair (RYA) wrote to customers before the vote, warning that “if Britain leaves the single market/open skies, it is inevitable that air fares will rise, airline competition will reduce and the cost of holidays to Europe will increase.” In a later email it warned: “If the Leave side do win, then these will be the last low fares the UK will enjoy for a very long time.”

The Financial Conduct Authority (FCA) also published a response, stating it was in “very close contact” with financial services firms as well as the Treasury, Bank of England and other UK authorities. It reminded companies that they still have to abide by UK and European laws and continue with implementation plans for forthcoming legislation. Read Ian Smith’s piece on the vote’s impact on banks and insurers here.

In an unrelated but arguably symbolic move, International Greetings (IGR) rebranded as IG Design Group.

Read all our Brexit reaction:

Leave's triumph rocks markets

Carney talks up capital levels

Companies respond

Consumer confidence could see 'significant swings'

Property and housebuilders and that silver lining

Rush for gold

Bad news for the nation's scientists