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Business - Need to Know

Morning Edition

A fast food nation? Business is certainly booming at Just Eat, the online takeaway ordering business. The stock market darling has delivered a 52 per cent rise in orders this morning.

"Just Eat has made a very strong start to 2015, increasing the numbers of active users, takeaway restaurants and orders,” said David Buttress, chief executive Officer.

On the back of the better-than-expected performance, Just Eat is stepping up its investment with plans to spend an additional £8 million in marketing and an additional £5 million into technology.

It is an impressive performance, the market had been expecting growth of around 40 per cent. But Just Eat needs to impress - with the shares up more than 100 per cent over the last year, the market has put a price tag of £2.9 billion on the business, which is now trading on a price-earnings ratio of over 47 times. There is no room for disappointment with a valuation like that. We’ll have a full story on Just Eat shortly on www.thetimes.co.uk/business.

UKFI - the government body charged with selling off the family silver - has confirmed this morning that it has sold 630 million shares, representing 5.4 per cent, in Royal Bank of Scotland at 330p a share. RBS shares closed at 337.6p yesterday. We’ll have the latest reaction to the sale on to our Business Now live blog.

Glencore has placed its South African coal mining Optimum business into “business rescue proceedings” amid an ongoing dispute with state-controlled utility Eskom about the price paid for coal.

Half-year profits are also up at Direct Line. We have also got results this morning from Standard Life, Meggitt and a trading update from Travis Perkins.

On the economic front we have had the Nationwide House Price Index this morning. House prices rose by 0.4 per cent on the month in July - in line with forecasts and compared with a fall of 0.2 per cent in June. Following yesterday's better-than-expected manufacturing PMI we get construction PMI data for July today. Economists expect a headline reading of 58.4, up from 58.1 in June.

In the US we get earnings from Walt Disney and CVS Health, the second-largest US drugstore operator.

Finally, don't forget you can also follow me on twitter for the latest updates - @fletcherr.

Have a great day.

Richard Fletcher
Business Editor
The Times
richard.fletcher@the-times.co.uk

China stepped up its crackdown on short-selling, unveiling rules that make it harder for speculators to profit from hourly price changes, as some of the nation's major brokerages suspended their short-selling businesses. The Shanghai and Shenzhen exchanges said in separate statements overnight that new rules, effective immediately, banned traders from borrowing and repaying stocks on the same day - a step that raises risks for short-sellers.

The government has begun the first sale of shares in Royal Bank of Scotland since the lender was rescued by a £46 billion taxpayer bailout at the height of the financial crisis. In a statement after the market closed in London yesterday, the Treasury confirmed a report in last Friday’s edition of The Times that ministers had agreed to a multibillion-pound sell-off.

A former millionaire trader was jailed for 14 years for rigging interest rates yesterday, in a ruling that sent shockwaves through the City. Tom Hayes, 35, a former Tokyo-based trader at UBS and Citigroup, became the first person to be convicted by a jury of manipulating the Libor borrowing rate.

“At some point in the coming months the Bank will have to lift interest rates and cause pain for many borrowers. Chances are they will have to lift them even further than they, or the data, predict,” get ready for interest rate pain borrowers, says Ed Conway.

The Nikkei 225 closed down 0.14 per cent this morning at 20,520.36. The FTSE 100 is expected to open 23 points lower when trading begins shortly.

London was outshone by its European counterparts yesterday as shares in mining companies pulled the market lower on weaker-than-expected manufacturing numbers from China. The FTSE 100 slipped by 0.1 per cent or 7.7 points to close at 6,688.6. The broader FTSE 250. drifted 7.3 points lower - flat in percentage terms - to 17,670.1. Read here for the full market report from Marcus Leroux.

Tumbling oil prices pulled energy shares down and left Wall Street with a negative start to the week. The Dow Jones Industrial Average gave up 91.7 points or 0.5 per cent to close at 17,598.2 while the S&P 500 finished 0.3 per cent or 5.8 points lower at 2,098. Around 6.5 billion shares changed hands compared with the recent daily average of 7.1 billion.

Sterling continued to edge higher against the euro yesterday - up 0.1 per cent to €1.423 - ahead of Super Thursday when the Bank of England publishes a mass of data including its monthly interest rate decision when two or possibly three policymakers are expected to vote for a rise. Against the US dollar, the pound eased 0.3 per cent to $1.558.

A world-wide supply glut, and uncertainty over economic growth, combined to send oil prices sharply lower yesterday. In New York, Brent crude for September settlement fell by almost 5 per cent to $49.67 a barrel.

ValueAct Capital has emerged as a 5.4 per cent holder in Rolls-Royce. The signs are that the San Francisco investor plans to stay in for the long term and wait for the benefits of the company’s huge order book to come through. Given the sharp fall in the shares since the start of last year, should other investors do the same, asks Tempus? Intertek is one of the less visible members of the FTSE-100 Index and has suffered because of its exposure to oil and gas companies, but the half-way figures contain no bad surprises. Ultra Electronics has been growing by acquisition, but it is inevitably still reliant on falling defence spending. To read more about the Tempus tips of the day click here.

The Times
The government has begun the first sale of shares in Royal Bank of Scotland since the lender was rescued by a £46 billion taxpayer bailout at the height of the financial crisis. In a statement after the market closed in London yesterday, the Treasury confirmed a report in last Friday’s edition of The Times that ministers had agreed to a multibillion-pound sell-off.
read full update
Daily Telegraph
The Chancellor has pushed the button on the sale of part of the taxpayer’s stake in the Royal Bank of Scotland, beginning the privatisation of the bank seven years after it was bailed out. After the markets closed in London last night, UK Financial Investments, which manages the stake, said it hoped to sell approximately £2 billion of RBS shares in an overnight placing.
read full update
Financial Times
Chancellor George Osborne has kicked off Britain’s biggest ever privatisation by selling £2bn of shares in Royal Bank of Scotland at a loss to the taxpayer, seven years after the bank was rescued with a record £45 billion state bailout. The sale marks a watershed moment for the UK banking system and a step back to normality for what was once the world’s biggest bank by assets but later became the UK’s most spectacular victim of the financial crisis.
read full update
Economics

UK manufacturing: Activity in the country’s factories reached a higher level than expected in July after strong domestic demand helped to offset weak exports, but new orders were hit by the strength of sterling and grew at their slowest pace in nearly a year. Orders from overseas fell for a fourth month in a row, according to the Markit/CIPS manufacturing purchasing managers’ index. The PMI rose to 51.9 from June’s 26-month low of 51.4 and was better than analysts’ expectations of 51.6. Any reading above 50 indicates growth.

Exports: A government target to double the value of British exports by 2020 will be missed by 14 years, a business group has warned. The British Chambers of Commerce said that, based on present growth rates, a target for exports to reach £1 trillion would not be hit until 2034.

China: The country’s manufacturing sector contracted at its fastest pace since July 2013, with new orders suffering a sharper-than-expected fall, according to the private Caixin/Markit manufacturing purchasing managers’ index. It dropped to 47.8 from 49.4 in June. The data, which fuelled fears that growth in the world’s second-biggest economy is stalling, marks the fifth consecutive month of contraction in the sector. A figure below 50 indicates contraction.

Greece: Five weeks of capital controls in the country have plunged its manufacturers into crisis. A collapse in new orders and supply problems caused by restrictions on bank transfers and withdrawals sent factory activity to its lowest level on record last month. Markit’s purchasing managers’ index dived from 46.9 to 30.2.

Markets: The Athens stock exchange took its worst beating yesterday, tumbling by 22.8 per cent on reopening after a five-week hiatus.

Russia: Western sanctions could slash 9 per cent from Russian GDP, adding to the woes of an economy weighed down by the halving of the price of oil, according to the International Monetary Fund. The IMF said that it expected Russia to be in deep recession this year, with GDP falling by 3.4 per cent, before it mounted a weak recovery next year.

United States: A fall in factory activity in July has cast further doubt on the strength of the US recovery, with America’s export-orientated manufacturers suffering the effects of a strengthening dollar. The Institute for Supply Management said that its index of national factory activity had fallen to 52.7 from 53.5 a month earlier.

Banking & Finance

-0.04%

Royal Bank of Scotland: The government has begun the first sale of shares in the lender since it was rescued by a £46 billion taxpayer bailout at the height of the financial crisis. In a statement after the market closed in London, the Treasury confirmed a report in last Friday’s edition of The Times that ministers had agreed to a multibillion-pound sell-off.

Libor rate-rigging trial: A former City trader has been jailed for 14 years after becoming the first person to be convicted by a jury of rigging Libor rates. Tom Hayes, 35, a former senior trader at UBS and Citigroup, was convicted on all eight counts of conspiracy to defraud in a landmark case for the Serious Fraud Office after a multimillion-pound investigation into the manipulation of benchmark interest rates.

Goldman Sachs: The US banking giant has raised the top end of its range for possible legal losses to about $5.9 billion, according to a filing made to the US Securities and Exchange Commission. This compares with its estimate in May of $3.8 billion in legal losses above what it had set aside already.

Bitcoin: Investigators in Tokyo have accused the former head of the Mt.Gox bitcoin exchange of padding accounts at levels far beyond the $1 million described on his arrest warrant. They said that Mark Karpelès appeared to have manipulated the markets out of tens of millions of pounds on the exchange. He has denied wrongdoing.

American International Group: The largest US commercial insurer raised its second-quarter dividend by 124 per cent to 28 cents and raised its share buyback programme to $5 billion last night after better-than-expected earnings, driven by investments in one of China’s biggest insurers and earnings from AerCap, the aircraft leasing company. Net income was 42 per cent lower at $1.8 billion compared with a year ago, when it recorded a gain from the sale of International Lease Finance Corp.

Delta Lloyd: Emiel Roozen, the chief financial officer of the Dutch insurer, has resigned after a court last week upheld a €22.7 million ethics fine from the Netherlands central bank. The bank imposed the fine in December after the insurer allegedly had made a rate change based on confidential information indicating that the central bank was planning to change a measurement it uses to calculate solvency.

Citadel Securities: China’s markets regulator has frozen a trading account linked to Citadel Securities, of the United States, as part of its investigation into whether algorithmic traders have been disrupting stock markets. China’s two main markets have dropped by about 30 per cent since June, and Beijing has intervened to restore confidence. It has reined in those who can trade and declared war on “malicious” short-selling.

Consumer goods

+0.28%

Heineken: Strong sales in Asia and Latin America offset weak trading in Europe, with both volumes and profits in Britain down, helping the Dutch brewer to report a 3.4 per cent increase in first-half operating profits to €1.6 billion while volumes grew by 1 per cent. It is hoping its sponsorship of the Rugby World Cup will boost sales in Britain.

Engineering

+0.10%

Rolls-Royce: The aircraft engine maker said that it had engaged in “constructive discussions” with ValueAct Capital Management, the American activist investor that emerged late last week with a 5.4 per cent stake, but it would not comment further on the content of the meetings.

Ultra Electronics: A falling-off in US defence orders and the early termination of a large contract in the Middle East held back revenues and profits at the maker of sophisticated electronic equipment.

Keller Group: The engineering group that built the foundations for the Olympic stadium in east London suffered a decline in first-half sales amid tough market conditions in Canada and Australia, but said that it would still hit full-year forecasts. Keller said that harsh weather in North America and delays to several projects had contributed to a slow start to the year, as interim revenues fell by 4 per cent.

Health

+0.44%

Shire: One of Britain’s biggest drugs companies has set its sights on treating the contagious “pink eye” infection. By snapping up the New York-based Foresight Biotherapeutics, a private company specialising in eye treatments, for $300 million, Shire has stepped up the dealmaking frenzy gripping the global pharmaceuticals industry.

GlaxoSmithKline: Vivian Shi, who was at the centre of a bribery scandal that plagued Britain’s largest pharmaceuticals company last year, has been rehired in what has been viewed as an attempt to rebuild relations with the Chinese government. Glaxo paid a fine of nearly £300 million last September and issued an apology after admitting that its staff had used a £320 million travel budget in China to channel kickbacks to doctors who prescribed its drugs.

Leisure

-0.21%

Autobahn Tank & Rast: Germany’s biggest motorway service station operator has been sold by Guy Hands’ Terra Firma Capital Partners to a consortium led by Allianz Capital Partners for an estimated €3.5 billion.

MB Partners: Mark Blundell has swapped the high-octane world of international motor racing for the more prosaic job of running a small business based in Hertfordshire. After a spell as a Formula One broadcaster with ITV, Mr Blundell, 49, now runs a sports management business that looks after motor racing drivers, golfers and promising young footballers.

Media

-0.12%

Trinity Mirror: Hopes that a slump in print advertising will be shortlived sent shares in the publisher of the Daily Mirror up almost 13 per cent. Trinity Mirror said that the double-digit decline in advertising in May and June had eased in July and that an improved revenue trend looked set to continue in August and beyond.

Natural Resources

-3.10%

Oil prices: The price of oil slid to its lowest level in more than six months after Iran indicated that it would boost production as soon as sanctions against it were removed. The latest 4 per cent fall in the price of a barrel of Brent crude, the benchmark North Sea contract, to $49.81 came after Iran said that it would be able to pump an extra 500,000 barrels of oil per day within a week of sanctions ending.

Miners: On a day of renewed worries over the Chinese economy, the price of iron ore, the key ingredient of the country’s building spree, leapt 4.5 per cent to $55.30 a tonne, according to The Steel Index. The news would normally send traders piling into Rio Tinto, whose main profit engine is its vast high-grade, low-cost iron ore operation in Western Australia, yet Rio was the fourth-worst performer among London’s blue chips, shedding 54p to close at £24.32½.

Professional & Support Services

+0.50%

Intertek Group: Shares in the supplier of testing equipment, which have been under the weather owing to its exposure to the oil industry, rose 11 per cent after halfway figures showed a return to growth and strong cash generation.

Technology

-1.13%

Here: Nokia has exited its mapping business at a big loss after agreeing to sell its Here unit to a group of German carmakers, which see the deal as a way of curtailing Silicon Valley’s encroachment on to the dashboard. BMW, Daimler and Audi have agreed to pay €2.8 billion for Here, which has a market share of more than 50 per cent in the in-car navigation systems market, where it competes with TomTom.

Fidessa Group: The financial software company, known as Royalblue until 2007, has developed a reputation for rarely disappointing. However, the shares were punished yesterday for the slightest of mis-steps. First-half revenue grew by a mere 3 per cent and a small dip in profits was enough to send the shares down 395p to £20.05.

Transport

-0.80%

Industrial action: Striking rail workers are set to bring disruption, with a 24-hour Tube stoppage looming for London Underground commuters tomorrow and industrial action on routes to the West Country over the bank holiday. One of the unions representing London Underground workers has rejected an offer aimed at averting a strike over the new all-night Tube. Unite, whose members include engineers and power staff, said that the proposed deal did not go far enough, especially on the flexibility of working the new night Tube.

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