Maitland/AMO Morning Monitor – Friday 8 November 2019
The FTSE, CAC and DAX are all expected to open up today.
In Asia, the Nikkei has marginally risen today, while the Shanghai Composite and Hang Seng have both fallen.
In the news
- Bankers for Saudi Aramco's IPO consider the possibility of bonus payouts
- Sajid Javid uses election speech to propose higher spending on UK infrastructure
- Beijing announces that the U.S. and China have mutually agreed to roll back tariffs
The political day
- Boris Johnson to announce a new NHS visa intended to attract more doctors and nurses
- Labour to unveil a series of reforms to 'transform the workplace for women'
- The SNP launches its election campaign with a pledge to introduce an 'NHS Protection Bill'
Top Financial Announcements* Maitland Client
Phoenix Group Holdings PLC* Board Changes
- The Board of Phoenix Group Holdings plc today announces that Clive Bannister, the Group Chief Executive, will retire on 10 March 2020 following the publication of the Group’s full year results and after nine years with the business.
- He will be succeeded by Andy Briggs, who will join the business as CEO- designate on 1 January 2020 in order to effect a smooth handover. Andy Briggs will also be appointed to the Board of Phoenix Group Holdings plc from 1 January 2020.
- Clive leaves a business with an experienced senior executive team that has delivered on all of its financial and operational targets. In that time the Group has achieved a total shareholder return of 179%, while assets under management have risen by 263% to £245bn, and the number of policyholders has risen by 67% to 10m. He was the architect of a series of successful acquisitions, culminating in the £2.9bn purchase of Standard Life Assurance in 2018; after which Phoenix became a constituent of the FTSE100 Index in March 2019.
- Nick Lyons, Chairman, said: “Clive has worked with great passion and energy during his nine years as CEO. He has led Phoenix in a period of sustained growth and success to its current position as the largest life and pensions consolidator in Europe and he leaves us, as a business, confident and assured. The Board would like to thank him for the tremendous contribution he has made. Phoenix, its customers, colleagues and investors will benefit from the smoothest of successions between two great industry leaders and, with Andy as our future CEO, we will be in the best position to leverage the broad strategic platform that Clive has delivered.”
- As a result of the level of votes at the 2019 AGM opposing the directors’ remuneration policy, Standard Chartered PLC’s Remuneration Committee announced on 8 May 2019 that it would engage further with shareholders to listen to their views on specific areas of the policy.
- To respond to the concerns of shareholders and the guidance on pensions published by the Investment Association at the end of September, the Committee has made the following decisions:
- To change the contractual terms and conditions for Bill Winters and Andy Halford and reduce their pension allowance from 20% of salary to 10% of salary with effect from 1 January 2020.
- To continue to pay executive directors’ salaries as a mixture of cash and shares. The share-based component is released over five years to strengthen shareholder alignment and focus on long-term value creation. It is not variable or performance-related pay.
- To improve the disclosure in the 2019 directors’ remuneration report on the structure of fixed pay, and how it aligns with the wider workforce and complies with the UK Corporate Governance Code.
- Christine Hodgson, Chair of the Standard Chartered PLC Remuneration Committee, said: “I would like to thank Bill and Andy for their willingness to agree to these changes and to thank our shareholders and their representatives for engaging constructively with the Remuneration Committee, and for the strong support that they share with the Board for our executive directors. The changes we are making will align the current executive directors’ pension allowances with other UK employees with effect from 1 January 2020. This will result in a material change to Bill and Andy’s pension allowances as well as an 8% reduction in their total remuneration opportunity.”
- The group has experienced periods of under-performance in the last six months.
- The group’s net asset value per share, with debt at fair value, rose but only by 3.2% compared with 9.9% for the FTSE All-World Index (both in total return terms).
- The group notes that the last six months have seen markets become so concerned at the current low levels of global economic growth and political harmony that the equities of preference have been those perceived to possess minimal sensitivity to the perils of stagnation.
- The group however remains optimistic about the aggregate and underlying progress of its companies and therefore its portfolio, and sees no evidence that the “dim global economic conditions or the unappealing international political environment are undermining the tectonic shifts and structural advances driven by broadening and accelerating technological progress”.
- Following on from the Group’s update in September, trading to 3 November 2019 has continued well.
- Compared to the same period in the prior year, sales and profits are ahead. Royalties receivable are also significantly ahead of the prior year driven by the timing of guarantee income on signing new licences.
- The groups preliminary estimates of the results for the six months to 1 December 2019 are sales of not less than £140m and profit before tax of not less than £55m.
- Morgan Advanced Materials plc is trading in-line with management expectations and its outlook for the full year remains unchanged.
- Sales for the nine months to September 2019 were 0.2% higher for the Group, on an organic constant-currency basis, compared to the first nine months of last year.
- Consistent with the position reported at the half year, declines in the industrial and automotive market segments have been offset by growth in the semiconductor and electronics, healthcare and chemical and petrochemical segments.
- As previously guided, Group headline operating margins are slightly ahead of the prior year driven by our efficiency actions.
- The group continues to see business growth and the Board remains confident that the Group will show progress in 2019.
- The group continued to see healthy order intake growth, in line with that seen in the first half.
- Following Eric Updyke’s appointment on 1 May 2019, a number of initiatives have commenced to evolve the strategic direction of Spirent to maximise market opportunities by creating a more agile, customer-focused organisation, including a strategic focus on recurring revenue streams over time; a strengthened leadership team, and development of the group’s sales and marketing structure to drive improved effectiveness to exploit its leading technologies.
- Eric Updyke, CEO, said: “Our business has maintained a good level of traction with our customers and overall we delivered a solid third quarter. We saw the benefit of the diversity of our portfolio as increased demand for our Positioning products offset some short-term lumpiness in order placement in other areas. I see an ever-increasing number of market opportunities for our technologies but we need to move faster to capture the full opportunity. To ensure that we can best take advantage of these, we are focusing on building more recurring revenue streams over time and to do this we have augmented our experience and capabilities with some new senior leaders. We are also evolving the organisation to further improve the effectiveness of our sales and marketing investment whilst investment in future technologies is undiminished to underpin planned growth. We are on track to show full year progress on 2018 with, as in previous years, revenue and earnings performance weighted to the second half of the year and in particular to the final quarter. Our expectations for the full year remain unchanged.”
- Gross premiums written increased by 12% to $2,192m (Q3 2018: $1,958m).
- Premium rates on renewal business increased by 6%.
- Strong investment return of $215m (Q3 2018: $26m).
- Andrew Horton, CEO, said: “We continue to see strong, double digit premium growth across our business as a whole, driven by organic growth and rate rises across many lines of business. We have continued to experience heightened claims activity with our exposure to catastrophes in Q3 estimated to be $80m net of reinsurance and reinstatement premium. We have been anticipating a more difficult claims environment in areas such as directors & officers, employment practice liability and healthcare liability in recent years. As such we have been adjusting our underwriting for several years in these areas and began opening at a higher reserve position at the start of 2018. Our investment team has delivered another strong performance in Q3, bringing our year to date net investment income to $215m or 4.0%.”
- Royal Mail plc will today make an application to the High Court for an interim order to injunct CWU with respect to its recent postal ballot of Royal Mail employees for industrial action.
- The Company is making this High Court application because it believes the integrity and legal soundness of any electoral process is vital.
- Royal Mail is also making this application because of the damage industrial action would do to the Company and its customers in the run-up to Christmas.