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News Review 10 Feb: Persimmon incurs cladding charge

Our selection of the biggest stories of the week
News Review 10 Feb: Persimmon incurs cladding charge
  • AEX Gold defers mine development
  • Twitter mulls subscription features
  • Investors urged to join Woodford legal claim

Tougher UK border rules as variant fears mount

The summer still looks uncertain for the tourism sector, write Harriet Clarfelt and Mark Robinson

Travellers to the UK who try to hide recent visits to ‘red list’ countries could face up to a decade in jail under tough new government measures.

Inbound travel is banned from the 33 countries deemed most risky at present. But starting from 15 February, returning UK residents from these ‘red list’ nations will have to isolate in an assigned hotel room for 10 days after arrival – costing each passenger £1,750 including hotel, transport and mandatory virus testing.

Westminster has contracted 16 hotels for an initial 4,600 rooms, health secretary Matt Hancock told the House of Commons on Tuesday. Anyone flying in from a ‘red list’ zone who lies on their passenger locator form could face a severe prison sentence. Passengers from other countries also face financial penalties for flouting isolation and testing rules.

The new measures come as concerns mount about the potential for virus variants to elude existing Covid-19 vaccines. South Africa has stopped rolling out the Oxford/AstraZeneca (AZN) jab after a study suggested it did not protect against mild to moderate disease caused by the more transmissible variant circulating in the country.

All this could throw another spanner in the works for the beleaguered tourism sector. Everyone is praying that the various vaccination programmes will have the desired effect, including German package tour operator TUI AG (TUI). In a trading update for the first quarter, the group posted revenues of €468m (£410m), down more than four-fifths.

The danger for the industry is that regulatory restrictions and compulsion are not synonymous with leisure travel, so many prospective holidaymakers might simply give up on the idea altogether. 

 

Investors urged to join Woodford legal claim

A legal claim on behalf of Woodford investors has become the first to reach funding and claimant cost insurance agreements, giving those affected “a much better chance of recovering significant losses”.

The claim, led by legal firm Leigh Day and endorsed by investor rights group ShareSoc, will argue that Link Fund Solutions breached FCA rules by allowing the then Woodford Equity Income fund to hold excessive levels of illiquid or difficult to sell investments, causing investors significant losses. 

The Woodford fund suspended trading in June 2019, never to open again, and is yet to entirely liquidate all of its assets in a bid to return any cash available to investors. 

ShareSoc is encouraging Woodford Equity Income investors to join the legal claim, adding that they could get back “70 per cent of their losses” if the claim were successful. DB

 

Persimmon incurs cladding charge

Persimmon (PSN) has made a £75m provision in its 2020 accounts to pay for remedial work on 26 buildings that may be affected by cladding fire safety issues.

The housebuilder has identified nine high-rise buildings, which are over 18 metres, where under government guidance cladding may need to be removed. It has identified 17 more below 18 metres that may be fitted with cladding requiring “detailed investigation”.

The findings emerged from a review of past projects following the Grenfell Tower fire tragedy. EP

Cladding fire safety issues are casting a shadow over Kingspan (KGP), too. Read more here. 

 

AEX Gold defers mine development

AEX Gold (AEXG) shares have plunged following the Greenland mining hopeful’s announcement it would not reach the first gold milestone this year. The company listed in London last year telling shareholders production at the Nalunaq underground mine would start within two years. 

Now, the company has deferred the decision to proceed with development, sending its shares down almost half to 30p at time of writing. The turnaround came from the discovery the old mine’s bulkhead, which holds back tailings, was unsafe, and Covid-19 restrictions also played a part. AEX said it would “commence a short period of consultation with shareholders” before announcing its next steps. AH

Read here about the company pitching London investors on its ambitious plans last year. 

 

Rolls-Royce considers summer shutdown to cut costs

Rolls-Royce (RR.) said that it is considering shuttering its jet engine factories for a fortnight in the summer in order to cut costs. The move comes amid the Covid-driven downturn in civil aerospace which Rolls predicts will leave its engine flying hours 45 per cent lower than pre-pandemic levels in 2021 and drive a £2bn free cash outflow.

The summer closure is designed to reduce costs in the short-term, but Rolls is also looking to make longer-term savings by improving productivity and efficiency across its UK civil aerospace operations by 10 per cent. To this end, the group has commenced “complex and constructive discussions” with its workers’ union on how this can be achieved. NK

 

Omega rises on rapid test report

Aim-traded shares in Omega Diagnostics (ODX) rose by around a third this week, taking the small cap’s market value to roughly £170m, after the Financial Times reported that it was one of three British businesses selected to make rapid Covid-19 tests.

Two people briefed on the matter told the FT that the UK’s Department of Health had picked Omega, SureSCreen and Global Access Diagnostics to make up to 2m lateral flow testing kits each day.   

Omega Diagnostics confirmed that it is “continuing to modify its Alva-based facility to upscale significantly its lateral flow test production capacity”. HC

 

BP spends up big in wind farm lease auction 

BP (BP.) has committed to spending hundreds of millions of pounds a year on new offshore wind capacity in the Irish Sea after winning preferred bidder status in the Crown Estate undersea auction. In a joint venture arrangement with German company Energie Baden-Wuerttemberg (EnBW), BP won two offshore leases with combined potential capacity of 3 gigawatts (GW). 

BP’s lease costs come to £231m per project per year. The energy giant said it could reach its targeted return of 8-10 per cent from renewables projects. It is expected to reach a final investment decision on the wind projects in four years. AH

 

Twitter mulls subscription features

Twitter (US:TWT) chief financial officer Ned Segal said that the social media company was researching and testing possible subscription features, as it pushes to diversify its revenue outside of advertising. He noted however that they would not meaningfully contribute towards growth until next year. Meanwhile, revenue in the fourth quarter rose by 28 per cent year on year to a new high of $1.3bn, but user gains fell slightly short of expectations. LA

 

Boohoo snaps up fallen Arcadia brands 

The online retailer will buy the brands’ intellectual property, reports Oliver Telling

E-commerce has completed its raid on Philip Green’s once-mighty high street empire. Online fashion retailer Boohoo (BOO) confirmed it will buy the remaining Dorothy Perkins, Wallis and Burton clothing brands from Green’s Arcadia, which collapsed into administration last November.

This comes only a week after Boohoo rival Asos (ASC) confirmed its acquisition of Arcadia’s Miss Selfridge, HIIT, and prized Topshop and Topman labels. 

As with these recent acquisitions, Boohoo will not be buying the physical stores of Dorothy Perkins, Wallis and Burton – leaving hundreds of shops closed and thousands of high street workers without a job. For £25.2m, the online retailer will acquire the intellectual property rights of these brands, including their customer data and inventories.

Boohoo said it will now sell the labels through its own platform as well as through the Debenhams marketplace, which it also rescued from administration last month and plans to turn into an online-only business. It could also revamp the three Arcadia brands as standalone online stores, as it has previously done with the Karen Millen and Oasis labels.

The recent takeovers of Arcadia and Debenhams in quick succession have tied off the dramatic rebalancing of power in the UK retail sector, after coronavirus lockdowns shuttered high streets across the country while boosting sales for e-commerce businesses. Green has been forced to hand his crown to two companies only recently dismissed as online upstarts; with no clear route out of the current crisis, it remains unclear whether the big hole left in UK high streets will be filled.