Russian gold miner Petropavlovsk on Friday warned it has a $200 million term loan and a $86.7 million revolving credit facility with Gazprombank, a bank which now has been sanctioned by the UK, in the wake of Russia’s invasion of Ukraine.
‘It is a condition of these facilities and the term loan that Gazprombank acts as an off-taker of 100% of the group’s gold production,’ the Petropavlovsk explained.
Sanctions and asset freezes imposed on Gazprombank currently prevent Petropavlovsk from making further sales of gold to Gazprombank.
‘Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group’s gold output,’ Petropavlovsk warned.
‘The company is urgently considering with its advisers the implications for the group’s activities and financing arrangements resulting from GPB being designated for the purposes of an asset freeze. A further announcement will be made in due course. Petropavlovsk reconfirms that none of the companies in the group has to date been named in the sanctions against Russia announced by the United Kingdom, United States, European Union, and other nations.’
Petropavlovsk shares were down 29% early Friday. The stock is down 93% so far in 2022.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,458.66
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Hang Seng: down 2.5% at 21,404.88
Nikkei 225: closed up 0.1% at 28,149.84
S&P/ASX 200: closed up 0.3% at 7,406.20
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DJIA: closed up 349.44 points, or 1.0%, at 34,707.94
S&P 500: closed up 1.4% at 4,520.16
Nasdaq Composite: closed up 1.9% at 14,191.84
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EUR: up at $1.1019 ($1.1002)
GBP: down at $1.3177 ($1.3187)
USD: down at JP¥121.72 (JP¥122.16)
Gold: down at $1,956.20 per ounce ($1,964.88)
Oil (Brent): down at $117.28 a barrel ($118.85)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday’s key economic events still to come
1000 CET EU monetary developments in euro area
1000 CET Germany Ifo business climate index
1000 EDT US University of Michigan survey of consumers
1000 EDT US pending home sales index
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US President Biden is due to meet with European Commission President Ursula von der Leyen on Friday, the second day of an EU leaders’ summit focused on the war in Ukraine, which is now in its second month. Biden is meeting von der Leyen with a deal expected on new supplies of liquefied natural gas from the US to the EU to help the bloc ends its energy dependency on Russia. Biden attended an extraordinary NATO leaders meeting as well as G7 and EU summits on Thursday to show a united front in responding to the Russia invasion of Ukraine. On Thursday, NATO leaders decided to activate defences against chemical and nuclear weapons amid fears of a Russian escalation in Ukraine. The US and Britain announced new sanctions against Russia. After the meeting between Biden and von der Leyen on Friday, the president is due to leave for Poland, which is hosting the largest contingent of Ukrainian refugees as the war-torn country’s western neighbour.
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UK retail sales fell on a monthly basis in February, undershooting expectations for an increase. According to the Office for National Statistics, retail sales declined 0.3% month-on-month in February, following a 1.9% hike in January from December. The figure for February was below FXStreet cited consensus of a 0.6% rise. Annually, retail sales rose 7.0% in February, slowing from growth of 9.4% in January. FXStreet-cited consensus had forecast a 7.8% yearly rise for February. February’s retail sales volumes are 3.7% above the level of two years earlier, so just before the onset of the pandemic.
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UK consumer confidence has continued to slump as the cost of living crisis deepens, a long-running survey showed. GfK’s consumer confidence index fell five points to minus 31 in March as consumers confront a ‘wall of worry’ amid 30-year-high levels of price inflation. It is the fourth month in a row that the survey’s headline figure has dropped, to a level last seen in October and November 2020 when Covid numbers were rising. Confidence in personal finances over the next 12 months fell four points to minus 18 – 28 points lower than this time last year. Expectations for the general economic situation over the coming year dropped by six points to minus 49, 32 points lower than March last year.
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BROKER RATING CHANGES
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Credit Suisse cuts B&M European Value Retail to ’neutral’ (outperform) - price target 600 (675) pence
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Jefferies raises British Land co to ’hold’ (underperform) - target 455 pence
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Morgan Stanley starts Indivior with ’equal-weight’ - price target 930 pence
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COMPANIES - FTSE 100
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Engineering firm Smiths Group said it has seen ‘accelerated organic growth’ in its financial first half, which ended January 31.Revenue rose 3.7% yearly to £1.19 billion from £1.15 billion. Pretax profit almost doubled at £160 million from £84 million. Smiths noted it saw 3.4% year-on-year organic revenue growth during the half-year. ‘Our performance in the first half demonstrates the meaningful progress we are making against our strategy. We accelerated Smiths’ organic revenue growth to 3.4% and converted that into even stronger profit and earnings growth, despite supply chain challenges and cost inflation,’ Chief Executive Paul Keel said. Smiths raised its interim payout by 5.0% to 12.3 pence per share from 11.7p. Smiths backed annual guidance for 3% organic growth in revenue. However, it expected a ‘more challenging aviation original equipment market in the near-term’.
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Anglo American has sold its remaining 8.0% stake in coal offshoot Thungela Resources. It took home R 1.67 billion, or $115 million, from the sale of its shares which were priced at R 154 each - a 12% discount to Thungela’s closing price on Thursday.
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Water works United Utilities expects to post a revenue rise for the financial year ending March 31, though underlying operating profit will be ‘broadly the same’. Increased revenue will be offset by ‘higher underlying operating costs’, driven by price inflation, United Utilities said. Underlying operating profit in financial 2021 amounted to £602 million, on revenue of £1.81 billion. Reported pretax profit was £551.0 million.
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The UK Competition & Markets Authority confirmed it will refer the acquisition of cyber-security firm Avast by US peer NortonLifeLock to a phase 2 investigation, as no undertakings have been offered. The decision was expected as NortonLifeLock had said last week it didn’t intent to offer any remedies for the regulator’s competition concerns.
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COMPANIES - MAIN MARKET AND AIM
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DIY retailer Wickes posted double-digit revenue growth, with the DIY retailer benefitting from increased demand driven by the Covid-19 pandemic. Revenue in the financial year that ended January 1 jumped 14% to £1.53 billion from £1.35 billion. Pretax profit surged to £65.4 million from £28.9 million. Wickes, separated from Travis Perkins back in April of last year, paid an annual dividend of 10.9 per share. ‘Favourable consumer trends’ and an ‘ageing housing stock’ mean the company is set for a decent 2022, CEO David Wood said. The results from Wickes come as numbers showed UK retail sales fell on a monthly basis in February, undershooting expectations for an increase.
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Transport operator Go-Ahead said the UK Department for Transport has handed rail contracts to its Govia Thameslink Railway unit. It will mean GTR continues to operate the Thameslink, Southern and Great Northern rail services, the largest railway network in the UK. Go-Ahead has a 65% stake in Govia. The pact begins at the start of April and runs for the three years. There is also an option for a further three years, should government agree. GTR will earn a fixed yearly management fee of £8.8 million, with an additional performance fee of up to £22.9 million. ‘Subject to the achievement of performance targets set by the DfT, the maximum fee receivable by GTR would therefore be £31.7 million per annum.’ Go-Ahead added.
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Friday’s shareholder meetings
Beazley PLC - AGM
Coro Energy PLC - GM re proposed bond restructuring
Europa Oil & Gas Holdings PLC - GM re fundraise
Kitwave Group PLC - AGM
Triad Group PLC - GM re revised remuneration policy
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