OBR lifts borrowing forecast
£20bn per year
The Office for Budget Responsibility (OBR) has restated its March 2019 forecast, increasing public-sector net borrowing by around £20bn a year. This means that the deficit would still be greater than £30bn in the 2023-24 year. The new forecast incorporates changes to accounting treatment. This restatement was going to be released on 7 November, but the OBR said at the time that publication would not go ahead on the day following advice from the cabinet secretary that it would not be consistent with general election guidance.
Hansteen agrees £500m takeover
116.5p per share
Hansteen (HSTN) has recommended a £500m cash takeover offer from ‘Potter UK Bidco Limited’ – a company indirectly owned by investment funds advised by affiliates of Blackstone. Under the deal terms, shareholders would receive 116.5p a share – representing a premium of 10.3 per cent to the regional commercial landlord’s closing price on 17 December, and 11.6 per cent to the 30 June 2019 EPRA NAV per share of 104p. The bidders have received irrevocable undertakings to support the offer from the Hansteen directors, representing 5.5 per cent of the share capital.
Boeing suspends 737s
Knocking Senior shares
Boeing has suspended production of its grounded 737 Max planes starting in January. It noted that “safely returning the 737 MAX to service is our top priority”. “As we have previously said, the FAA [Federal Aviation Administration] and global regulatory authorities determine the timeline for certification and return to service”. Following this announcement, shares in UK-listed supplier Senior (SNR) tumbled by around a tenth. The latter said that it would provide a further update on the potential implications to its 2020 performance once it has clarifications from customers. Its expectations for 2019 performance remain unchanged.
PMI data lacks festive cheer
Private-sector activity fell
Activity in the private sector fell again in the UK, led by the fastest drop in manufacturing production in seven years. The data adds to a downbeat picture for the end of the year, with official figures last week showing that growth stagnated in the three months to October. “December’s PMI survey data sadly lacked festive cheer, indicating that the economy contracted for the third time in the past four months,” commented Chris Williamson, chief business economist at IHS Markit. The decline has been attributed to political instability, Brexit uncertainty and weakening global growth.
Pearson CEO to go
Leaving in 2020
Pearson (PSON) chief executive John Fallon is to retire from his role in 2020, once a successor has been appointed. The group also announced that it has agreed to sell its remaining 25 per cent stake in Penguin Random House to Bertelsmann, generating net proceeds of around $675m (£530m). The sale – which is subject to regulatory consent – is expected to close during the first half of 2020. It won’t, thus, impact 2019 results. Pearson added that it will commence a £350m share buyback early next year.
Staffline lowers expectations
CFO departs
Staffline (STAF) has warned on full-year profits again – sending its shares down by around 30 per cent. Fourth-quarter trading in the recruitment division has been below management’s expectations, with lower-than-anticipated demand from end-customers. Now, the board expects adjusted operating profits for the 12 months to December 2019 of around £10m-£12m. In September, it had anticipated profits of approximately £20m. The group has also announced that chief financial officer Mike Watts has resigned, and is stepping down immediately. Daniel Quint has been appointed as interim CFO.
Christmas discounts
Could top 50 per cent
Deloitte has found that pre-Christmas discounting currently averages a record 43.8 per cent across all retail, but – for the first time – “could top 50 per cent” by Christmas Eve. Deloitte analysed over 800,000 online and in-store products. Jason Gordon – lead consumer analytics partner at the consultancy – said that “retailers have faced a challenging year, as consumer confidence has continued to fall amidst macroeconomic uncertainties. In addition, the introduction of Black Friday in recent years means consumers have also come to expect an increasing amount of pre-Christmas discounting.”
The Conservatives’ landslide election victory drove an uptick in sterling against the US dollar – reaching $1.35 – with the result ostensibly bringing greater certainty about prime minister Boris Johnson’s Brexit withdrawal agreement being pushed through, and the UK leaving the EU at the end of January.
However, the pound fell to $1.31 on 17 December, following the news that the government would seek to stop an extension of the Brexit transition period beyond the end of 2020.
