Barclays said it will kick off a £1.00 billion share buyback programme on Tuesday. The programme, initially announced in February, had been delayed in March after the bank admitted it sold more financial products to investors than it was allowed to.
The London-based bank said at the time that securities offered and sold under its US shelf registration statement for an approximate one-year period had exceeded a registered amount. This, the bank explained, gave the purchasers of the affected securities a right of rescission, requiring Barclays Bank to repurchase the affected securities at their original purchase price.
Late on Monday, Barclays provided further explanation.
‘The provision for over-issuance of US securities is particularly sensitive to equity market movements, however, this would be expected to be substantially offset by hedging arrangements, including specific hedging and overall portfolio positioning,’ it said.
Barclays said it had found ‘one material weakness’ in its internal controls.
‘The material weakness that has been identified relates to a weakness in controls over the identification of external regulatory limits related to securities issuance and monitoring against these limits. As a result of this weakness, BBPLC issued securities in excess of the amount registered under the US shelf,’ it said on Monday.
Barclays shares were up 1.8% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.9% at 7,443.82
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Hang Seng: down 2.0% at 20,054.66
Nikkei 225: closed down 0.9% at 26,748.14
S&P/ASX 200: closed down 0.3% at 7,128.80
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DJIA: closed up 618.34 points, or 2.0%, at 31,880.24
S&P 500: closed up 72.39 points, or 1.9%, at 3,973.75
Nasdaq Composite: closed up 180.66 points, or 1.6%, at 11,535.27
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EUR: down at $1.0673 ($1.0690)
GBP: flat at $1.2578 ($1.2575)
USD: down at JP¥127.56 (JP¥127.78)
Gold: down at $1,852.53 per ounce ($1,854.61)
Oil (Brent): down at $111.97 a barrel ($112.23)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday’s key economic events still to come
0930 CEST Germany flash purchasing managers’ index
1000 CEST EU flash PMI
0930 BST UK S&P Global-CIPS flash PMI
1100 BST UK CBI distributive trades survey of business conditions
0855 EDT US Johnson Redbook retail sales index
0945 EDT US flash manufacturing PMI
0945 EDT US flash services PMI
1000 EDT US new residential sales
1000 EDT US Richmond Fed business activity survey
1630 EDT US API weekly statistical bulletin
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UK government borrowing remains stubbornly high, still above pre-Covid times, according to numbers from the Office for National Statistics. Public sector net borrowing, excluding banks, amounted to £18.6 billion in April. It was the fourth-highest April figure since monthly records began in 1993.The figure was down from £24.2 billion a year earlier but up from £10.7 billion in April 2019. April’s figure climbed from £14.7 billion in March 2022. The figure for the financial year ended March, meanwhile, was downwardly revised to £144.6 billion from £151.8 billion. It remains the third-highest borrowing number since financial year records began in March 1947, however.
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Hundreds of people gathered in central London on Tuesday morning in an attempt to be among the first passengers on the new Elizabeth Tube line, PA reports. Transport enthusiasts hailed the ‘momentous occasion’, having travelled from across the country for the ceremony and queued from the early hours of the morning. Around 300 people queued outside Paddington Station ahead of the service’s opening at 6.30am, and the crowd cheered and rushed forwards when the doors opened at around 6.20am. The first train departed on time at 6.33am carrying hundreds of excited passengers.
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BROKER RATING CHANGES
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Peel Hunt cuts Royal Mail to ’sell’ (buy) - price target 307 (550) pence
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Citigroup cuts SSE to ’neutral’ (buy) - price target 1937 (1829) pence
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SocGen raises Kingfisher to ’hold’ (sell) - price target 271 (260) pence
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COMPANIES - FTSE 100
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Siggi Olafsson resigns as chief executive officer of Hikma Pharmaceuticals ‘to pursue other opportunities’, leaving on June 24. Executive Chair Said Darwazah will take over all CEO responsibilities while the board looks for a new CEO. Darwazah is the former CEO of Hikma. Olafsson has been in post for four years.
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KPMG has been hit with a £3.37 million fine by the audit watchdog over failings working on accounts for engineering firm Rolls-Royce Holdings. The big four auditor was told it could face a fine of up £4.5 million but saw this reduced after admissions related to the case. The Financial Reporting Council first launched an investigation into KPMG’s conduct in 2017 over bribery allegations following a probe by the Serious Fraud Office. KPMG had been Rolls-Royce auditor since 1990 but was sacked by the FTSE firm after agreeing a settlement with the SFO and US Department for Justice amid bribery claims. It resulted in the auditor paying out £670 million in fines.
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COMPANIES - FTSE 250
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Homeserve reported revenue of £1.43 billion for the financial year ended March 31, up 10% from £1.30 billion a year earlier. Pretax profit surged to £175.1 million from £47.2 million. ‘Homeserve has emerged from the Covid-19 pandemic with all three of our business divisions performing strongly. Our membership-based business model continues to be resilient, predictable and highly cash generative, and we are well positioned for continued growth,’ Chief Executive Richard Harpin said. Homeserve’s annual results come in the wake of the company agreeing to be taken over in a £4 billion deal. Hestia Bidco, a subsidiary of Brookfield Infrastructure Partners, offered 1,200p per share in cash for each Homeserve share last week Thursday. The company is not declaring a final dividend in light of the deal. It had paid a 19.8 pence final payout a year prior. It means its total dividend for the year is 6.8p, down from 26p.
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SSP Group said revenue in the six months that ended March 31 was up more than three-fold to £803.2 million from £256.7 million a year earlier. Compared to financial 2019 levels, however, revenue was 36% lower. SSP’s pretax loss was narrowed substantially to £2.3 million from £299.7 million. The better top and bottom line figures were ‘driven by a recovery in passenger numbers, despite the impact of the spread of the Omicron variant in many of our markets in December and January’, SSP said. ‘The recovery has been led by leisure travellers, with business related travel recovering more slowly as expected. Encouragingly we have also seen increased spend per passenger in some markets reflecting the higher proportion of leisure travellers.’ SSP is unable to pay dividends due to arrangements with its lenders but said it will ‘consider the best way to restart the return of capital to shareholders’.
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COMPANIES - SMALL CAP
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Restaurant Group left annual expectations unchanged as like-for-like sales across its units were largely higher versus pre-virus figures. In the Wagamama unit, like-for-like sales in 2022 to date are up 15% from 2019, while in its Pubs and Leisure segments, they are 10% and 6% higher, respectively. In Concessions, they are down 20%, however. ‘Management’s current expectations for FY22 remain unchanged, with continued robust trading in our Wagamama and Pubs businesses and the stronger recovery in Concession sales offsetting the increased food and drink inflationary impact in FY22,’ Restaurant Group said, looking ahead.
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On the Beach’s revenue in the half year ended March 31 jumped to £52.9 million from £4.4 million a year earlier. The travel agency’s revenue was boosted by the easing of virus curbs. Half-year revenue was below the pre-pandemic figure of £63.5 million. Pretax loss in the first half of the current financial year was trimmed to £7.0 million from £12.1 million a year prior. ‘Sales have remained resilient into H2 and are 33% ahead of FY19 in the 8 weeks to 22 May 2022,’ the company said.
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COMPANIES - GLOBAL
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Toyota Motor is cutting production by tens of thousands of vehicles globally because of semiconductor shortages. The global production plan for June is about 850,000 units, of which 250,000 units are in Japan and 600,000 units overseas. The average global production plan from June through August is about 850,000 units, and 9.7 million units for the full period of fiscal year 2023. The shortage of semiconductors, spread of Covid-19 and other factors are making it difficult to look ahead, the company said in a statement. In addition, the Japanese car maker announced additional domestic factory line suspension due to supply shortages caused by Covid-19 lockdown in Shanghai.
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Samsung Electronics unveiled a massive $356 billion investment blueprint for the next five years aimed at making it a frontrunner in a wide range of sectors from semiconductors to biologics. The new figure is an increase of more than a third over its earlier plan announced last year. Samsung is South Korea’s largest conglomerate and its overall turnover is equivalent to a fifth of the national gross domestic product. Samsung Electronics, its flagship subsidiary, is the world’s biggest smartphone maker. The investment plan would bring ‘long-term growth in strategic businesses and help strengthen the global industrial ecosystem of crucial technology’, Samsung said in a statement.
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Tuesday’s shareholder meetings
4imprint Group PLC - AGM
Afentra PLC - AGM
Artisanal Spirits Co PLC - AGM
Bidstack Group PLC - AGM
Epwin Group PLC - AGM
FDM Group Holdings PLC - AGM
Forterra PLC - AGM
Harworth Group PLC - AGM
Henderson High Income Trust PLC - AGM
Hill & Smith Holdings PLC - AGM
Hilton Food Group PLC - AGM
Horizonte Minerals PLC - AGM
Judges Scientific PLC - AGM
Pebble Group PLC - AGM
Quarto Group Inc - AGM
Restaurant Group PLC - AGM
Riverstone Energy Ltd - AGM
Shell PLC - AGM
Thungela Resources Ltd - AGM
Vector Capital PLC - AGM
WPP PLC - AGM
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