The Times - UK (2020-07-21)

46 1GM Tuesday July 21 2020 | the times

BusinessMarkets

news in brief

Miner’s golden float

A goldminer focused on the

Americas is applying for a

standard listing on the London

Stock Exchange. Yamana Gold is

already listed in Toronto and

New York. It had revenues of

$1.6 billion and net earnings of

$226 million last year and has a

market capitalisation of more

than $5 billion. It mines gold and

silver in Canada, Brazil, Chile and

Argentina. Yamana said that it

aimed to become the “investment

of choice” for gold investors in

London, backed by “a strong,

sustainable dividend” and mines

in “mining-friendly jurisdictions”.

Share sale reaps £1.3m

The boss of Persimmon has made

£1.3 million from the sale of

50,000 shares in the FTSE 100

housebuilder. Dave Jenkinson, 52,

who is leaving the business after

just over a year as chief executive,

has retained 733,290 shares,

worth £19.2 million at last night’s

closing price of £26.14. He will be

replaced at the end of the year by

Dean Finch, the boss of National

Express. Persimmon is working to

recover its reputation after

accusations of low-quality work

and a bonus scheme scandal.

Cruise jobs at risk

Hundreds of jobs are at risk after

administrators were appointed at

the Essex-based Cruise &

Maritime Voyages and three

sister companies. All UK

employees are likely to be made

redundant and group staff at

offices in Australia, France, the

United States and Germany face

an “uncertain future”, insolvency

practitioners from Duff & Phelps

said. The company has 150 staff

at its head office in Purfleet.

Cruise operations have been

suspended because of Covid-19.

Oil giant enters Israel

Chevron has bought Noble

Energy, an oil and gas producer,

for about $5 billion in stock, in

the first big energy deal since the

coronavirus sent crude oil prices

to historic lows. Ownership of

Noble’s flagship Leviathan field in

Israel makes it the first oil major

to enter the country. The

company said it was “mindful” of

tensions with nearby countries

where it has business, including

Saudi Arabia, Kuwait and Qatar,

but added that it was an

“apolitical” commercial actor.

producer that became

Petropavlovsk’s biggest shareholder

this year, capitalised on low turnout

at its annual meeting to oust most of

the directors, including Mr

Maslovskiy, 63, the chief executive.

Petropavlovsk descended once more

into the kind of corporate turmoil

that investors thought they’d seen

the back of. The company accuses

UGC of trying to gain control by

stealth and on the cheap, with the

presumed aim of gaining access to

the pox hub.

UGC denies acting in concert, but

its announcement yesterday that it is

further increasing its shareholding by

exercising convertible bond rights

only adds credence to the idea that it

plant, one of only two such facilities

in Russia. A decade in the making,

the site started up in late 2018 and

allows the company to process

“refractory ore”, which is abundant

in Russia but is much harder to

process than conventional deposits.

In March, Petropavlovsk was

promoted to the FTSE 250,

cementing its recovery from the dark

days of 2015, when Peter Hambro

and Pavel Maslovskiy, its co-

founders, led a painful restructuring

to stave off collapse. As gold prices

continued to rise, by late June the

shares were worth more than double

their value at the start of the year.

But then another boardroom battle

broke out. UGC, a rival Russian

I

t was all going so well for

Petropavlovsk (Emily Gosden

writes). After a solid 2019,

mercifully free of the boardroom

coups that dominated previous years,

the Russian goldminer enjoyed a

strong start to 2020.

Gold prices surged as the

pandemic triggered a flight to the

“safe haven” metal. Petropavlovsk

was producing significantly more of

the stuff, too, thanks to a good

performance from its prized new

“pox hub”, or pressure oxidation

Tempus

Buy, sell or hold: today’s best share tips

Questions on both sides of Atlantic

A

year ago you might have

struggled to predict that

Dominic Cummings and

Rishi Sunak would be in

charge of a defence

review that could change Britain’s

military objectives for a generation

or more (Robert Lea writes).

One of them, the prime minister’s

very special adviser, marches to his

own tune and his well-publicised

tour of the country’s most important

military establishments is enough to

put the chiefs of staff in a tiz.

The unheralded chancellor of the

exchequer, meanwhile, will have

little or no money in a few months’

time, when the impact of the Covid-

19 economic turmoil begins to tot up.

In any event, no one believes that

anyone at the Ministry of Defence is

in charge of defence policy.

What all this means for BAE

Systems, the country’s pre-eminent

defence company, is anyone’s guess

— but engaging with people who

either care little about the industrial

and military establishment or have

an empty bank account is not a good

start. Then again, a British defence

review is not even its biggest issue.

Of last year’s £18.3 billion of annual

revenues, nearly half came from the

United States. Ever since BAE tossed

away the nation’s sizeable and

strategic stake in Airbus, western

Europe’s aerospace and defence titan,

for a pittance in 2006 — and even

more so after Angela Merkel, the

German chancellor, blocked merger

talks between the two in 2012 —

BAE’s focus has been on America.

BAE Systems is the company

created from the 1999 merger of

British Aerospace, itself a

combination of the likes of Vickers-

Armstrongs, Hawker Siddeley and

Royal Ordnance with the defence

parts of Marconi, which included

Plessey and the Clyde shipbuilders.

Today it employs 87,000 people in 40

countries. About 40 per cent of

them, more than 33,000 people, are

at 50 sites around the UK.

A parochial view of BAE would see

it as the company behind new

aircraft carriers, building Type 26

frigates, Astute and Dreadnought

submarines and Typhoon aircraft.

However, the UK accounts for only

about 20 per cent of its £18 billion

annual revenues, with the Middle

East — mostly Saudi Arabia —

another 20 per cent and the US just

less than 50 per cent, at £8.6 billion.

For that country BAE builds or is

developing tanks, armoured troop

Firing blanks

Share price

Source: RefinitivOct Jan Apr Jul

By sector

700p

650

600

550

500

450

400

2019 2020

Sales £18.3bn

UK 38%

US 36%

S Arabia 7%

Australia 5%

Others 16%

US govt 45%

UK and other

governments 37%

Commercial 18%

Air 52%

Maritime 25%

Land 18%

Cyber 5%

Customers

Employees 87,800

carriers, amphibious vehicles and

howitzers. It is also a main

contractor to the US navy for repairs

and upgrades and has cybersecurity

contracts with the Pentagon.

It is a leader in defence and

commercial avionics and electronics,

although the latter market is not so

good at present. The company’s two

biggest recent acquisitions — Collins

Aerospace’s satellite positioning

systems and Raytheon’s Airborne

Tactical Radios, for a combined

$2.2 billion — were both in the US.

BAE is exposed to some

interesting defence budget decisions

in America, especially in light of the

elections in November. There were

deep defence cuts at the beginning of

the last decade as the US evaluated

its priorities after the global financial

crisis and the wars in Iraq and

Afghanistan, but tensions with China

and Russia have grown since then.

BAE announces its half-year

results next week. Many in the City

continue to wonder when the

postponed £460 million final

dividend for last year will be paid. At

a trading update three weeks ago, the

company said that it expected profits

to be down 15 per cent on flat sales,

but indicated that investors should

expect a much stronger second half.

As Covid-19 began to grip the

West, shares in BAE went from 669p

to 438p and have done only a little

better since, closing last night at just

under 490p — up 3¾p, or 0.8 per

cent — valuing the company at

£15.75 billion and putting it at less

than 12 times this year’s earnings.

ADVICE Hold

WHY Though not without

upcoming issues BAE is a

long-term, US-focused play

is trying to gain control. A

shareholder meeting in the next few

weeks will decide whether most of

the original directors are reinstated.

It’s an unsavoury mess best avoided

by a prospective new investor, but

those who already hold the shares

should retain them — and exercise

their rights to vote for the return of

Mr Maslovskiy and his allies, who

hold a more credible claim to have

their best interests at heart.

ADVICE Hold

WHY Shareholders should

vote to bring back ousted CEO

bae systems

Order book

£45bn

Estimated profits

2020 £1.6bn

petropavlosk

Gold production

2019 517,000 oz

Revenues 2019

$741.6m

Commodities

ICIS pricing (London 7.30pm)

Crude Oils ($/barrel FOB)

Brent Physical 43.42 +0.25

BFOE(Sep) 43.36 +0.13

BFOE(Oct) 43.58 +0.16

WTI(Sep) 40.92 +0.17

WTI(Oct) 41.09 +0.15

Products ($/MT)

Spot CIF NW Europe (prompt delivery)

Premium Unld 354.00 355.00 -15.00

Gasoil EEC 363.50 365.50 +0.00

3.5 Fuel Oil 231.00 231.00 -1.00

Naphtha 361.00 363.00 -23.00

ICE Futures

Gas Oil

Aug 372.25-372.00 Nov 378.50-378.25

Sep 373.50-373.25 Dec 379.75-379.50

Oct 376.75-376.50 Volume: 599134

Brent (9.00pm)

Sep 43.20-43.18 Dec 43.86-43.85

Oct 43.38-43.36 Jan 44.08-44.06

Nov 43.63-43.61 Volume: 1547633

LIFFE

Cocoa

Sep 1561-1558 Dec unq

Dec 1571-1565 Mar unq

Mar unq May unq

May unq

Jul unq

Sep unq Volume: 73210

RobustaCoffee

Jul 1300-1265 Mar unq

Sep 1279-1278 May unq

Nov 1296-1290

Jan 1306-1299 Volume: 30394

White Sugar (FOB)

Reuters May unq

Aug unq

Oct 350.10-349.90 Oct unq

Dec 348.90-347.60 Dec unq

Mar unq Volume: 43004

PRICES

Major indices

New York
Dow Jones 26680.87 (+8.92)
Nasdaq Composite 10767.09 (+263.90)
S&P 500 3251.84 (+27.11)

Tokyo
Nikkei 225 22717.48 (+21.06)

Hong Kong
Hang Seng 25057.99 (-31.18)

Amsterdam
AEX Index 579.14 (+5.35)

Sydney
AO 6112.30 (-32.60)

Frankfurt
DAX 13046.92 (+127.31)

Singapore
Straits 2616.30 (-2.18)

Brussels
BEL20 3526.91 (+35.75)

Paris
CAC-40 5093.18 (+23.76)

Zurich

SMI Index 10470.92 (+60.40)

DJ EURO Stoxx 50 3388.34 (+22.74)

London

FTSE 100 6261.52 (-28.78)

FTSE 250 17385.85 (+37.92)

FTSE 350 3501.72 (-12.16)

FTSE Eurotop 100 2790.96 (+14.43)

FTSE All-Shares 3461.01 (-11.73)

FTSE Non Financials 4217.47 (-14.57)

techMARK 100 5525.04 (+53.09)

Bargains n/a

US$ 1.2660 (+0.0090)

Euro 1.1068 (+0.0084)

£:SDR 0.98 (+0.00)

Exchange Index 76.32 (-0.35)

Bank of England official close (4pm)

CPI 108.58 Jun (2015 = 100)

RPI 292.70 Jun (Jan 1987 = 100)

RPIX 290.10 Jun (Jan 1987 = 100)

Morningstar Long Commodity 458.09 (+0.42)

Morningstar Long/Short Commod 3866.60 (-3.99)

London Financial Futures

Period Open High Low Sett Vol Open Int

Long Gilt Sep 20 137.54 137.98 137.51 137.89 105133 515499

Dec 20 136.91

3-Mth Sterling Sep 20 99.890 99.900 99.890 99.895 38747 520043

Dec 20 99.920 99.920 99.910 99.915 32815 500766

Mar 21

Jun 21

Sep 21

3-Mth Euribor Sep 20 100.44 100.45 100.44 100.45 36326 489038

Dec 20 100.44 100.45 100.44 100.45 40182 407028

Mar 21

Jun 21

Sep 21

3-Mth Euroswiss Sep 20 100.71 100.72 100.71 100.72 596 44531

Dec 20 100.74 100.75 100.73 100.75 1975 35547

Mar 21

Jun 21

FTSE100 Sep 20 6274.5 6275.5 6186.0 6227.5 72941 722852

Dec 20 6217.5 6217.5 6217.5 6197.0 1 5093

FTSEurofirst 80 Sep 20 4586.0

Dec 20 4580.5

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