Price cap pledge wipes £1bn off energy giants
MORE than £1bn was wiped off the value of energy companies after Prime Minister Theresa May announced long-mooted plans for a price cap on energy bills to help households save money.
The level of the cap has not been set, but with about 70pc of households on the targeted standard variable tariffs, it has the potential to leave a large dent in energy firms’ profits.
Shares in Centrica, the owner of British Gas and the UK’s largest energy provider, sank to a 14-year low, losing some £600m immediately after the announcement at around midday.
They recovered slightly to close down 6.1pc, or 11.6p, at 179.3p. Rival SSE fell about 4pc on announcement, wiping about £580m off its market value, before closing down 3.2pc, or 45p, at 1,367p. But the Tory Party conference was not bad news for the blue chips, with builders cheering May’s announcement that she would take ‘ personal charge’ of boosting home ownership and that more building land would be available. Analysts at Jefferies said they were defiantly bullish on the sector, expecting more building and higher cash returns.
Housebuilders’ shares had already soared upon May’s Monday announcement that the Government would find another £10bn for its Help To Buy scheme.
Shares in Persimmon closed up 0.1pc, or 3p, to 2,688p. Barratt
Developments dropped 0.2pc, or 1p, to 640.5p, and Crest Nicholson fell 1.8pc, or 10.5p, to 561p.
One of the largest fallers of the day was the £931m online gambling firm 888 Holdings after the family of a late founder sold off his remaining stake. Aaron Shaked set up the firm with brother Avi Shaked and their partner Ron Ben-Yitzhak. Aaron’s family has been selling his stake since his death in 2010 and yesterday sold the remaining 46.3m shares for 243p each, netting £120m. Shares fell 6.1pc, or 15.8p, to 243.2p.
Investors were muted about a 29.9pc growth in half-year sales for the luxury furnishings and fabric group Walker Greenbank. It said £10.3m of its £54.3m in sales came from Clarke & Clarke, the fabrics and wallpaper business it bought last year. That and overseas brand growth helped offset weaker performance in the UK.
Results included £3.1m insurance payouts for losses when Storm Desmond flooded its Standfirst and Barracks fabric printing site on the River Lune in Lancaster in 2015. Shares fell 0.2pc, or 0.5p, to 237.5p.
But investors were more excited about pub-chain JD Wetherspoon, which shot up after an upgrade to ‘hold’ from Berenberg analysts who credited a boost in sales to a new app allowing punters to order from their seats. Shares closed up 3.6pc, or 44p, to 1,277p. On the junior market, Lancashire-based
Velocity Composites, which makes materials for airplanes, announced a new contract with an existing unnamed US-owned client. It said this secured around £4.1m per year of business and added around £0.9m annually. Velocity joined the stock market in May. Shares closed up 6.1pc, or 5p, to 87p.
Meanwhile, alternative energy firm Ceres Power toasted rising demand and progress in commercialising its fuel cells. The Horsham-based firm’s SteelCell is designed to power homes, cars, data centres and businesses more efficiently. It has agreements to commercialise the technology with Honda, Nissan and Cummins. This year they signed a new, unnamed partner, and expect a fifth soon. Bosses said their order book was up £3.2m and profits were up 140pc to £4.1m. Berenberg analysts reiterated their ‘ buy’ recommendation on the stock, saying the market was likely to grow by 25pc by 2024. Shares fell 4.4pc, or 0.6p, to 13.5p.