Lloyds’ bulging pension
Zurich acquisition
Lloyds (LLOY) may still be sweeping away the cobwebs of its disastrous 2008 merger with HBOS, but it is not shying away from further acquisitions. In the same week as its battle with disgruntled shareholders over the handling of the HBOS acquisition has entered the courts, the banking group has announced a deal to add £19bn of pensions and savings assets from Zurich UK. The acquisition is part of the group’s new strategy to expand in the retirement market and offsetchallenges caused by low interest rates.
Winter warmers
Energy price cap
Consumers will spend another winter paying expensive energy bills after the government revealed that its plans for a price cap on standard variable tariffs will not be imposed until 2018. This gives the big energy companies some breathing space. Many, including British Gas owner Centrica (CNA), rely heavily on expensive standard tariffs. In the long run, it is not just the energy companies that could feel the heat from a clampdown on rates. Price comparison websites may be hurt if the price cap reduces switching in the energy market.
Rio pays up
Mozambique misery
Rio Tinto (RIO) has shelled out £27.4m ($36.4m) to settle a Financial Conduct Authority investigation into the diversified miner’s impairment of its disastrous Mozambique coal venture at the start of the decade. But the case may have further to run. US prosecutors have filed fraud charges against Rio, its former chief executive Tom Albanese and former chief financial officer Guy Elliott, accusing the group of inflating the value of the coal assets.
Nuclear clean-up
No more outsourcing?
The failure of the Magnox nuclear clean-up operation conducted by Babcock (BAB) and Fluor is changing views on how nuclear decommissioning should be done. This week, the government announced that it is considering bringing all nuclear decommissioning in-house after the failure of the £6.2bn contract exposed “fundamental flaws” in the outsourcing model. Ministers are now likely to leave the Magnox work in the hands of the state-owned Nuclear Decommissioning Authority, rather than offer it out to another private contractor.
Footasylum to float
IPO for JD sports venture
The founders of sportswear giant JD Sports (JD.) have announced their intention to float their new venture, Footasylum, on Aim in November. Founded in 2005, the fashion footwear and clothing retailer increased revenues from £78m in 2015 to £147m in its 2017 financial year, while adjusted cash profit rose fivefold in the same time. Management hasn’t confirmed how much it plans to raise or how much existing shareholders are selling down, but says it plans to use the new funds to invest in the growth of the business.
Equiniti’s rump
Fundraising troubles
Not all shareholders were overly impressed by Equiniti’s (EQN) heavily discounted rights issue. Despite offering three new shares for every 14 existing shares at 190p (a 55 per cent discount to the current market price), only 97 per cent of the new shares were bought. The company – which has raised £122m to help fund its acquisition of financial services group Wells Fargo – therefore had to place the remaining shares in a rump placing, which were bought by institutional investors Citi and Barclays (BARC).
Foxtons bear
London rental woes
A third-quarter trading update from estate agent chain Foxtons (FOXT) reveals the continued pressure in London’s housing market. Revenues slid 6.4 per cent to £35.1m in the three months to September 2017, dragging total revenues in the first nine months of the year down 12 per cent to £93.7m. The UK’s chronic housing shortage has been a playground for housebuilders as demand for new homes has soared. But political and economic uncertainty has reduced activity in the lettings market.
Increases in the price of transport and food drove the consumer prices index inflation to 3 per cent in September, a level it last reached in April 2012, up from 2.9 per cent in August. With inflation hitting a five-year high, it is now 0.9 per cent above the rate of wage growth, meaning the incomes squeeze is becoming tighter. Pensioners will, however, be celebrating. The CPI figure means they will get a 3 per cent increase next April when state pensions will start to rise in line with September’s inflation.
