Brexit negotiations will kick off on Monday but the British government can hardly be called prepared.
First, we are not even sure there is a government.
Theresa May’s plans for the UK’s exit from the European Union have reportedly not been cemented as she has been focused on joining a pact with Northern Ireland’s Democratic Unionist Party (DUP) to prop up her minority Conservative government.
The government had on Friday still not sent papers outlining its opening position on Brexit, European Union sources told The Independent.
Brussels had sent its positioning papers to London four days previously but nothing had arrived from the UK as Theresa May held talks with the DUP.
The Prime Minister is yet to announce whether she has locked in the support of the DUP to give the Tories the majority needed to pass a vote approving the agenda set out in the Queen’s Speech.
The Queen’s Speech and State Opening of Parliament have been pushed back to Wednesday, instead of Monday as planned, to allow for the talks between the DUP and the Tories to continue.
Brexit Secretary David Davis has confirmed that regardless of cabinet splits on how to approach the EU, he will begin meetings with the EU’s chief negotiator, Michel Barnier, at the beginning of next week.
The Conservatives failed to secure a majority in last week’s general election after Labour won more seats in the House of Commons than expected.
Labour’s shadow Brexit secretary, Keir Starmer, has said that he would be working with the party’s MPs in the House of Commons to change the course on Brexit.
“I think there’s a majority in the House of Commons for a progressive partnership with the EU, and there’s not a majority for extreme Brexit,” he told the Guardian.
Wolseley to rely on US growth as Europe battles
Ferguson, the name of the US business, a market leader, is expected to generate almost 90% of group profit in 2017 alone, as the UK business undergoes restructuring against a challenging market and economic background.
The US business is also expected to get a kick from President Trump's tax changes and building policies.
As well as the US and the UK, the group operates in the Netherlands and Switzerland and has building materials in the Nordics, which it is selling.
Broker Liberum is a fan and has upgraded the share to 'buy' from 'hold' and hiked the target price to 5,300p from 4,975p (current price: 4,792p).
"We expect growth in the US to be renewed as the headwinds of industrial demand and deflation fade, and strong fundamentals shine through," said analyst Charlie Campbell.
He also reckons capital returns to shareholders are likely in the future.
"Wolseley returned £550m in 2014 and 2015 and we expect it to have scope to return up to £2.9bn over the next four years, including the Nordics proceeds, before acquisition spend," he noted.
Campbell noted that the UK restructuring is ongoing and that Wolseley has pooled its Swiss subsidiary, Tobler, with listed Walter Meier, keeping a 39% stake in the enlarged business.
"Restructuring across Europe should also be incremental to returns," he added.
Earlier this month, Wolseley, which plans to rename itself Ferguson, was also upgraded by heavyweight JPMorgan Cazenove to ‘overweight’ from 'equal-weight'.
It expects a sustained increase in the earnings multiple on which Wolseley trades.
As well as US growth, the broker cited reduced exposure to the new housing sector as the main reasons for an improved valuation.
On top of that, a succession of downgrades throughout 2016, driven by deflation and material declines in demand from the industrial sector, may have led to sentiment on the stock having become overly gloomy.
Hambro faces Petropavlovsk exit
Three top shareholders, who together own more than 30% of the Russian-focused miner, have cited corporate governance failures in their calls to replace Hambro and three non-executive directors.
Hambro, who founded the company in 1994, had questioned whether the rebel shareholders seeking to overhaul the board were acting together to pursue a “takeover by stealth” to avoid paying a premium for control.
However, the UK’s Takeover Panel has ruled that the shareholders were not “acting in concert” and their resolutions were not "board control-seeking" so there was no requirement for a mandatory offer.
The rebel shareholders include conglomerate Renova, Sothic Capital Management and M&G.
They have proposed Ian Ashby, a non-executive director at Anglo American, as chairman. The dissident shareholders have also nominated Vladislav Egorov of Renova Group, Garrett Sode of the Lundin group of companies, and Bruce Buck, chairman of Chelsea Football Club.
The Takeover Panel said all of the proposed directors were independent, apart from Egorov, who is not because he is employed by Renova.
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Trading statement: Wolseley PLC (LON:WOS)
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