Press | Vox Markets
BOO
Lombard – Online retailer Boohoo.com (BOO) cheers up after Asos sales upset. Results stand in contrast to online rivals but investors should keep eye on certain metrics
Ineos chooses Antwerp for €3bn petrochemical investment. Jim Ratcliffe says Brexit not making any difference to private group’s operations
BARC
Barclays (BARC) bankers part of Euribor conspiracy, court told. Former investment bank traders deny charges over manipulation of benchmark rate
PFG
Provident Financial (PFG) warns on profit after rise in bad debt. Subprime lender reports tougher trading at Vanquis credit card division
BOO
Online fashion brand Boohoo.com (BOO) upgrades sales outlook. Low-cost retailer raises forecast after jolly Christmas shopping period
What recent trading updates reveal about UK retailers’ health. Results do not match pre-Christmas gloom but show consumers are wary
FLYB
STOB
Investors in Flybe Group (FLYB) have succumbed to a sinking feeling, as hopes evaporated that a white knight buyer may table a higher bid for the struggling airline. Virgin Atlantic, Stobart Group Ltd. (STOB) and investment company Cyrus Capital last week joined under the name of Connect Airways to put up a £2.2million offer for Flybe, paying shareholders 1p per share. Though the price was raised yesterday to £2.8million, to prevent Flybe from failing before the deal concluded, shares in the airline fell 41.8%, or 1.7p, to 2.4p. Investors will still get only 1p per share, and the extra £600,000 will go towards running the company.
NSCI
Shares in healthcare technology company NetScientific (NSCI) were looking sickly as it called off a bid to sell itself. The firm, which invests in ideas and businesses that target chronic diseases, put itself up for sale in November. But yesterday it said it had not received any approaches and did not believe it would. Options now may include asking shareholders for extra money, further reducing costs and possibly delisting from the stock market.
WMH
GVC
888
Britain’s gambling companies were on a downwards slide, as the US Justice Department looked set to tighten restrictions on internet betting firms. The shift was a slap in the face to many investors who had taken a punt after the US moved to legalise sports betting last year. Players such as William Hill (WMH), Ladbrokes Coral owner GVC Holdings (GVC) and 888 Holdings (888) stepped into the US market following the Supreme Court ruling. They had hoped for a boom, but all online gambling may now be restricted. Yesterday, the Justice Department’s criminal division, which prosecutes illegal gambling, issued a new opinion in which it said the law has been misinterpreted for several years. Its previous guidance, that restrictions applied only to online sports betting, was wrong, and they should instead apply to all online gambling.
GYM
Investors were disappointed in The Gym Group (GYM), even though membership for 2018 grew 19.3 per cent to 724,000 and revenue rose 35.6% to £123.9million. Its rapid expansion, which saw 30 sites open last year, has resulted in extra costs, and profit would be around £37million, lower than estimates of £38.6million from analysts at Liberum.
SVS
Predictions of a gloomy 2019 from estate agent Savills (SVS) caused it to dip 4.8%, or 36.5p, to 728p, despite a solid year. It said: ‘Prospects for 2019 are overshadowed by macro-economic and political uncertainties across the world.’ As a result, it expects sales to fall in a number of markets.
SPI
Private hospital company Spire Healthcare Group (SPI) sank 13.9p, to 102.7p after it hinted it would miss its previous profit aims. It expects 2018 profits to be between £119million and £120million, down from guidance of £120million to £125million.
PSN
Persimmon is set to become the first housebuilder in Britain to rake in profits of more than £1billion in a year. The FTSE 100 firm made around £1.1billion in 2018 as it cashed in on the taxpayer-funded Help To Buy scheme. That is up from £966million the previous year and comes after sales reached £3.5billion. The bumper results fuelled anger that a taxpayer subsidy has left the industry awash with cash when many families are struggling to get on the housing ladder. Persimmon (PSN) has been fiercely criticised for making massive payouts to executives and faced criticism over shoddy workmanship and poor-quality homes. Former boss Jeff Fairburn was ousted over his ‘obscene’ bonus that at one stage was worth £131million.
MKS
More than 1,000 jobs at risk as M&S axes 17 more stores with boss blaming crippling business rates. More than 1,000 jobs are at risk after Marks & Spencer Group (MKS) revealed its latest round of store closures as it struggles to deal with crippling business rates. In a desperate bid to save money, the High Street stalwart said it would shut another 17 shops. M&S chief executive Steve Rowe has said punishing business rates – a tax on commercial properties – are an ‘unfair’ burden that have directly contributed to the High Street’s struggles. M&S’s rates bill was £184million last year while it made sales of £10.7billion. The company is preparing to close a total of 100 shops and have one-third of sales made online by 2022. So far it has closed 30, with a further eight planned.
SVS
Estate agent Savills expects lower sales as Brexit and global slowdown fears take a toll on property investor confidence. Savills (SVS) expects lower property sales in a number of markets this year as Brexit-related uncertainty and US trade policy take a toll on property investors’ confidence. The upmarket estate agent, which has offices around the world, said prospects for 2019 are ‘overshadowed by macro-economic and political uncertainties’ globally. But the group, which also runs consultancy and property management businesses, said it still expects full-year results to be in line with expectations as these ‘less transactional’ divisions would offset a decline in sales volumes.
PFG
Provident Financial’s profit gloom hits shares with nearly £320m wiped off the value of the doorstep lender. Nearly £320million has been wiped off the value of doorstep lender Provident Financial (PFG) after it warned profits will be lower than forecast. The Provvy suffered from customers falling behind on payments at its credit card arm, Vanquis Bank, which opened 76,000 new accounts in the last three months of 2018 – 17,000 fewer than a year earlier. It means profits for 2018 will be at the lower end of analysts’ predictions of between £151million and £166million.
GNK
Greene King picks Madame Tussauds boss as new chief. The man who runs Madame Tussauds, the London Eye and the Blackpool Tower for Merlin Entertainments is to take charge of pub giant Greene King (GNK). Nick Mackenzie, who currently heads Merlin’s Midway Attractions division, will join the FTSE 250 brewer as chief executive in May, replacing long-time boss Rooney Anand. Mr Anand is passing the baton after 14 years of running the pub chain, having more than doubled its market value to £1.9bn and quadrupled revenues to £2.2bn.
ASHM
Money slows into Ashmore as investors grow wary of emerging markets. The amount of money flowing into Ashmore Group (ASHM) slowed significantly late last year after turmoil in emerging markets and rising US interest rates hit investor appetite for riskier ventures. The FTSE 250 fund manager, which specialises in emerging markets, said assets under management rose by just 0.4% to $76.7bn (£59.7bn) over the three months to December as it attracted $500m of net inflows. The figures mark a significant slowdown compared to the same quarter a year earlier, when investors eager to take a punt on developing markets poured $3.6bn into the business.
DTY
Dignity strikes back in funeral price war. Dignity (DTY) rose from the ashes as it posted “stronger than expected” performance thanks to cheaper funerals and a new “unbundled” offer for mourners. The company, which offers cremations, prepaid funeral plans and services, said that people spent more than expected on funerals in the three months to December, helping it gain market share and report underlying profits that beat previous estimates at £79m, despite a price war that has gripped the sector. At the end of last year Dignity introduced ‘un-bundled’ funeral packages, which allow customers to choose specific aspects of a funeral plan instead of a bundled package.
GVC
Investors reduced their bets on bookie GVC Holdings (GVC) after a US Justice Department U-turn threatened to stunt America’s fast-growing online gambling market, in what City analysts called an “unsettling” development. The Justice Department issued a new legal opinion judging that all online gambling is illegal under federal law, reversing an Obama-era decision on the Wire Act. Peel Hunt analyst Ivor Jones said that the implications of the decision would not become clear until the US Government shutdown has ended but warned that the “apparent change of heart is unsettling to an already thoroughly unsettled sector”.
FLYB
STOB
Flybe wins £10m loan to stay aloft. The consortium bidding for Flybe Group (FLYB) has revised the terms of the deal after failing to reach agreement with the struggling airline’s lenders. Connect Airways, which includes Virgin Atlantic, Stobart Group Ltd. (STOB) and US private equity firm Cyrus Capital Partners, will release £10m from a revised bridging loan to Flybe on Tuesday that will allow the airline to continue operating. A further £10m will be released at a later date. Connect will also pump a further £80m funding into the troubled business.
SVS
Savills predicts gloomy 2019 as uncertainty knocks property sales. Savills (SVS) has warned it will struggle to eke out growth next year as a cocktail of economic worries discourage people from investing in property. The property agent, which employs 35,000 people, said while last year’s profits had grown as forecast, “prospects for 2019 are overshadowed by macro-economic and political uncertainties across the world”. Savills said it was difficult to predict the precise impact of the economic wobbles on demand for property from businesses and investors but “at this stage, we expect to see declines in transaction volumes in a number of markets”.
PSN
Persimmon bids to move on from bonus debacle. Britain’s second-largest housebuilder Persimmon (PSN) is seeking to move on from the embarrassing departure of its former boss Jeff Fairburn as it revealed profits for last year would come in “moderately” above expectations. Dave Jenkinson, who has been running the business on a temporary basis since December, said he hoped the company could “move forward”, although he too benefitted from the bonus share scheme that cost Mr Fairburn his job. Mr Jenkinson, thought to be the favourite for the top job, made around £40m through the bonus, but later returned £3m of it.
MPE
Questor: palm oil is a commodity but these firms are best placed to ride out the ups and downs. M. P. Evans Group (MPE) and United Plantations are long-established family businesses, both with efficient operations and strong balance sheets to boot
REL
Exhibitions organiser can relax after selling firm for £200m. The family behind one of Britain’s largest independent exhibition organisers has hit the jackpot after selling the firm for as much as £200 million. Relx plc (REL), the FTSE 100 media group, has acquired the St Albans-based Mack Brooks Exhibitions, an arranger of corporate jamborees. Yesterday’s acquisition will be life-changing for Stephen Brooks, chief executive and son of one of its founders. Mr Brooks, 55, and Sally Brooks, 56, control more than 75% of Mack Brooks, according to filings at Companies House. The pair gave their home address as a six-bedroom, double-fronted period house in Muswell Hill, an affluent suburb in north London. Reed Exhibitions, Relx’s events division, did not disclose the purchase price, but it is understood to be about £200 million. Mr Brooks declined to clarify the size of his holding.
MKS
M&S adds 17 stores to closure list. Marks & Spencer Group (MKS) is to close another 17 stores with the potential loss of 1,045 jobs as it continues to cut costs as part of its turnaround plan. The retailer said that it needed to shut the shops to reshape its British store estate, which includes some outlets in prewar buildings or on high streets where shopper visits have been declining for years. The stores listed for closure are in Ashford in Kent, Barrow, Bedford, Boston, Buxton, Cwmbran, Deal, Felixstowe, Huddersfield, Hull, Junction One Antrim, Luton Arndale, Newark, Northwich, Rotherham, Sutton Coldfield and Weston-super-Mare.
BOO
Boohoo bucks trend with surprise jump in revenues. In results that will be the envy of bricks-and-mortar retailers up and down the high street, Boohoo.com (BOO), the online seller of affordable fashions, said yesterday that it would report larger revenues than it had expected in the year to February after a strong Christmas. The Aim-quoted company, which owns the Nasty Gal, Pretty Little Thing and Boohoo websites, reported a 44% rise in revenues to £328.2 million in the four months to the end of December. Its revenue grew in all regions, with sales in Britain rising by 33%, in continental Europe by 57% and in the United States by 78%. Sales in the rest of the world were 35% higher. Boohoo said that it now expected its revenue growth for the full year to be between 43% and 45%, up from a previous forecast of 38% to 43%. Mahmud Kamani and Carol Kane, co-founders and joint chief executives, said that they were “delighted” by the results and that the “global growth opportunity is significant and we will be addressing it in a controlled way, investing in our proposition, operations and infrastructure”.
PFG
Credit card debts deal fresh blow to battle-scarred Provident Financial. An increase in bad debts meant more turmoil at Provident Financial (PFG) yesterday, sending the troubled sub-prime lender’s shares plunging in their worst day since August 2017. A fall in people paying their credit card bills on time proved to be the spark for shares in the Bradford-based business to fall by a fifth. It warned that annual profits would be at the bottom end of forecasts that range from £151 million to £166 million, blaming impairments at Vanquis Bank, one of its high-cost consumer credit businesses, that had been “modestly higher than expected”. An increase in credit card arrears among Vanquis customers put pressure on a unit that accounts for about 53% of group revenues. In 2017, Provident made adjusted profits of £109 million, down from £334 million the previous year.
FLYB
STOB
Flybe buyers revise deal in bid to ease airline’s cashflow headache. The consortium buying Flybe Group (FLYB) has agreed to snap up its operating assets early and has agreed new emergency funding amid concerns over the troubled airline’s working capital. Connect Airways, a group made up of Virgin Atlantic, Stobart Group Ltd. (STOB) and Cyrus Capital Partners, an American investor, is paying £2.8 million for Flybe Limited, the main trading company, and Flybe.com, its online business. The consortium also has agreed a bridging loan of up to £20 million, with £10 million released yesterday to “support the business”. The terms of the loan were changed after Flybe failed to meet the conditions announced on Friday, sending the bombed-out shares even lower.
SPI
Spire blames NHS for hit on earnings. One of Britain’s biggest private hospital companies has cut its expected annual earnings owing to the funding pressures being felt by the NHS. Spire Healthcare Group (SPI) said yesterday that earnings in 2018 before interest, tax and other charges and excluding exceptional items were set to be about £120 million. In September Spire had forecast earnings in a range of £120 million to £125 million, already lower than the £150 million generated the year before. Shares in Spire fell by almost 14p, or 11.9%, to 102¾p, extending declines over the past 12 months to 57% and valuing the company at £412 million. Spire, which operates 39 hospitals and 11 clinics, employs about 8,400 full-time staff. Its customers include self-pay patients, private medical insurance and referrals from the NHS.
GNK
Greene King seeks magic ingredient from Merlin. Greene King (GNK) is banking on an executive from Merlin Entertainments to weave some magic as its next chief executive. The FTSE 250 brewer and pub operator said that Nick Mackenzie, 50, managing director of Merlin’s Midway Attractions division, would take over from Rooney Anand at the conclusion of its financial year on May 1. Mr Anand, one of only a handful of black, Asian and minority ethnic bosses of big publicly quoted companies, said in November that he was calling time on almost 14 years at the top of the 220-year-old company. An external successor had been widely expected after the departure of the leading internal candidate. Clive Chesser, managing director of brewing and brands at Greene King, resigned in June last year to become chief executive of Punch, the tenanted pubs company.
PSN
Housebuilding increase pays off for Persimmon (PSN). Building more homes and raising selling prices has put Persimmon on course to beating profit expectations, the builder said yesterday as it tried to move on from the row over the pay of its former chief executive. However, it said that it was cautious about buying new plots for development “until the smoke clears on Brexit”. Britain’s second biggest housebuilder said that full-year profits for the 12 months to December would be slightly ahead of market expectations of about £1.1 billion and comfortably ahead of the £966.1 million of 2017. In its first trading update since the removal of Jeff Fairburn as chief executive in November, Persimmon said that it had completed sales of 16,449 homes last year, a 3% increase on 2017. Its average selling price increased by 1% to £215,560. Revenues rose 4% to £3.7 billion.
SBRY
CNA
Sainsbury’s finance chief adds Centrica board seat. The chief financial officer at Sainsbury (J) (SBRY) is to take on a non-executive directorship at Centrica (CNA) as the supermarket chain embarks on a complex merger with Asda. Kevin O’Byrne, who joined Sainsbury’s two years ago after serving as chief executive of Poundland, will assume the role at Centrica on May 13. He will be paid £72,500 a year to attend ten Centrica board meetings annually, in addition to the £1.4 million package he receives at Sainsbury’s. The appointment comes at a critical time for Sainsbury’s, which is seeking regulatory approval for its proposed takeover of Asda. The deal, between Britain’s second and third biggest grocers, was announced last April and since then the supermarket chain has been scrambling to respond to inquiries from the Competition and Markets Authority. Observers fear that the deal could be in jeopardy after the supermarkets group took the regulator to court last month to buy itself more time to file paperwork. It also comes after a disappointing Christmas for Sainsbury’s, which reported the weakest sales figures of the sector’s Big Four.
PPB
GVC
888
WMH
Britain’s biggest gambling companies have spent heavily on expanding into the American market, but yesterday what had seemed to many to be an odds-on bet suddenly lengthened. The US Department of Justice published a legal opinion stating that online gambling across state borders was illegal under federal law and investors immediately braced themselves for the fallout. The legal opinion said that a previous interpretation of the Wire Act, which banned only sports betting, was a misinterpretation. It is unclear how the justice department will apply this ruling and it is expected to be tested in court. Last May the US Supreme Court made it possible for states to legalise gambling on sports including basketball, American football and baseball. “The apparent change of heart is unsettling to an already thoroughly unsettled sector,” analysts at Peel Hunt said. However, they also said that the implications were unlikely to become clear until the US government had returned from its present shutdown. Shares in Paddy Power Betfair (PPB) fell 50p, or 0.8%, to £62.10; Ladbrokes’s owner GVC Holdings (GVC) retreated 19½p, or 2.8%, to 675½p; 888 Holdings (888), the online gaming group, tumbled 13½p, or 7.5%, to 164½p; and William Hill (WMH), which has a strong sports betting presence in America but no casino or bingo products, fell 5p, or 2.9%, to 163¾p.
DEB
SPD
Invesco has reduced its stake in Debenhams (DEB) in an apparent volte-face after Martin Walker, the fund manager, told the Daily Mail in August that he believed the shares could soon be on the up and that Sports Direct’s Mike Ashley, the biggest shareholder in the department stores chain, would have to cough up a lot more for the business than its trading price at that time. The shares have since have fallen by more than 75% to 3p. Invesco has reduced its stake in the troubled business from 5.5% to 4.8%, according to a stock exchange regulatory filing. The share sale comes after Sports Direct International (SPD) engineered a coup last week in which the chairman and chief executive were voted off the board.
SPT
Spirent Communications (SPT) shot up 17½p, or 13.9%, to 142½p after saying that it expected to deliver an adjusted operating profit for 2018 of between $75 million and $77 million, 17% ahead of consensus forecasts.
WJG
Watkin Jones (WJG) rose 7p, or 3.3%, to 220p after it reported a 25.6% price in profit before tax to £54.3 million in its full-year results. The developer said that revenue had risen by 20.3% year-on-year to £363.1 million. It has benefited from strong institutional investor demand for the stable, income-producing student accommodation sector.
 
VOD
Tempus – Vodafone Group (VOD): Avoid. A dividend cut is a real possibility
GYM
Tempus – The Gym Group (GYM): Buy. No signs that it’s running out of puff
City traders dig in for night of turmoil on Prime Minister Theresa May’s crunch Brexit vote. City traders were braced for a gruelling all-nighter today as they prepared for potential panic in the aftermath of the Brexit vote. Investors were poised for a turbulent night of trading and banks said they had no choice but to order staff to stay at their desks to advise worried clients. Experts said trading in sterling would be the most volatile, but shares, bonds and other indices were also under scrutiny in the wake of the historic vote on Theresa May’s withdrawal agreement from the EU. The beleaguered Prime Minister is facing the biggest Parliamentary defeat for a British government in almost a century. In Canary Wharf, JPMorgan, Citigroup and Barclays were among the major firms staffing for a night of turmoil with a similar picture across the Square Mile. One banker said: “Global events like tonight are real ‘where were you?’ moments. Banks have to step up and be there or clients will look elsewhere.”
DTY
Funerals firm Dignity (DTY) sees surprise revival but outlook still looks grave. Undertaker Dignity rose from the grave on Tuesday after revealing a surprise rise in performance for the final quarter but repeated warnings 2019 would be tough. The firm, hit by a 60% share price drop, grew market share and said people had spent more than expected on funerals between September and December. Underlying operating profits are now expected to be £79 million, ahead of market expectations. Around 599,000 people died last year, in line with what the company expected. However, the bleaker outlook for 2019, which hammered the shares last year, remains the same as it seeks to defend market share by slashing basic prices to compete in a tough price war with The Co-op.
PFG
Doorstep lender Provident Financial profit hit after relaxing payback demands. Doorstep lender Provident Financial (PFG) got another “kick in the teeth” on Tuesday after profits were hit by an overhaul of credit card repayment plans for under-pressure customers. The company, led by former banker Malcolm Le May, said 2018 profits would be at the “lower end” of a £151 million to £166 million range due to higher impairments at Vanquis Bank, which offers credit cards to 1.8 million people with poor credit scores. Shares fell nearly 20% to 525p. The profit cut is the latest blow for the company, which suffered a string of profit warnings, regulatory investigations and the sudden death of executive chairman Manjit Wolstenholme last year.
FLYB
STOB
Flybe to stay in the air with fresh rescue funds. Struggling regional airline Flybe Group (FLYB) was given yet another lifeline on Tuesday, as white knights Stobart Group Ltd. (STOB) and Virgin Atlantic outlined a revised rescue deal. The buying consortium, which also includes investor Cyrus Capital Partners and is called Connect Airways, will pay £2.8 million for the main trading company Flybe and its digital arm. The funds will be on top of the 1p per share offer, which values the firm at £2.2 million, announced last Friday. The acquisition of the trading company follows Flybe’s announcement today it has failed to strike a deal with its banks which would have released a £20 million bridge loan from Connect Airways. Shares in Flybe nearly halved to 2.1p today.
MKS
M&S reveals names of next store closures. Marks & Spencer Group (MKS) on Tuesday revealed where the next 17 store closures will be, putting 1,000 jobs at risk. The retailer, whose sales have been suffering as cheaper rivals have piled on the pressure and shoppers have migrated online, is planning to shut 100 stores by 2020. So far, over 80% of the 1891 staff impacted by the closures have moved to new roles, but 300 have lost their jobs. Chief executive Steve Rowe added in November: “I’m saying that this will continue. I won’t pause at a hundred [stores] and say that’s job done. We must learn the lesson of the past. We need the right stores, in the right sizes, in the right places.”
BOO
Boohoo shrugs off rivals’ woes after Christmas discount battle. Online fashion retailer Boohoo.com (BOO) appeared immune to the problems enveloping some of its peers as it struck a bullish tone in hiking sales forecasts on Tuesday. The fast-fashion business, which also owns Pretty Little Thing and Nasty Gal, said sales will grow up to 45% this year, an increase on what the City had previously anticipated. Rival Asos warned on profits before Christmas, triggering fears that increased discounting and the wider retail struggles were spreading online. High Street names, including Moss Bros, have reported gloomy trading on a tough Christmas while New Look and Debenhams are shutting stores.
PSN
Persimmon fails to impress City. Housebuilder Persimmon (PSN) failed to convince a worried City on Tuesday despite raising its guidance on annual profits. Shares in the firm, whose performance last year was overshadowed by the row about departed chief executive Jeff Fairburn’s £100 million bonus, dipped 11.5p to 2217.5p even though 2018 profits will be “modestly ahead” of the £1.07 billion market consensus. Persimmon is more exposed to stronger performing northern markets, helping the UK’s biggest builder grow sales 3% to 16,449 in a climate of low unemployment and cheap mortgage deals. But interim boss, Dave Jenkinson, said the firm was “trading well” despite the housing market’s seasonal slowdown starting a couple of weeks earlier than usual. Sales of bigger homes have been a “little bit sticky” amid more caution from buyers as Brexit looms.
KGH
Law firm Knights Group Holdings plc (KGH) has clocked up a 5p rise to 210p after buying employment law specialist Cummins Solicitors for £1.5 million. Founded in 2010, Cummins posted revenues of £784,000 and earnings of £175,000 for this year. In October Knights bought Leicester law firm Spearing Waite. Knights, which listed last June, also said revenue in the six months to October 31 rose 36.6% from £17.5 million to £23.9 million.
MKS
Marks & Spencer closes 17 more stores in new blow to high street. M&S outlets in Bedford, Hull, Huddersfield and Rotherham among those to be axed with 1,000 jobs at risk. Marks & Spencer Group (MKS) has dealt a fresh blow to the high street as it announced another wave of store closures, putting more than 1,000 jobs at risk. The struggling high street giant is shutting 100 of its stores by 2022 and on Tuesday revealed the locations of the next 17 branches to close in coming months. Sacha Berendji, the M&S retail, operations and property director, said: “Proposing to close stores is never easy, for our colleagues, customers or the local community, but it is vital for the future of M&S.”
FLYB
STOB
Flybe Group (FLYB) to stay in air as Virgin Atlantic-led group injects cash. Regional airline, which faces cashflow crisis, is being taken over by consortium for £2.2m. The consortium led by Virgin Atlantic and Stobart Group Ltd. (STOB) has been forced to rush through an injection of cash into Flybe, after the struggling regional airline failed to mollify banks that were withholding money. Virgin Atlantic, which is still part-owned by billionaire Richard Branson, Stobart and investment house Cyrus announced the £2.2m bid for Flybe on Friday, under the banner of Connect Airways, a joint venture. Connect also pledged to inject £80m for investment and £20m in a loan to keep Flybe’s operations running. However, Connect on Tuesday announced that Flybe had not satisfied its conditions for the loan, prompting a need for an urgent injection of capital.
PSN
Persimmon expects higher profits as help-to-buy props up prices. Housebuilder is one of the biggest beneficiaries of the taxpayer-funded scheme. Persimmon (PSN) has upgraded its annual profit forecast after building more houses and increasing its prices, with nearly half the homes sold using the government’s help-to-buy scheme. Britain’s second-biggest housebuilder reported a 4% rise in revenues to £3.7bn in 2018, after completing 406 more homes than a year earlier, increasing the total by 3% to 16,449. The average selling price for private homes rose 2% to £238,877. The company said the housing market was underpinned by robust employment levels, low interest rates and competitive mortgages. Persimmon is one of the main beneficiaries of the taxpayer-funded help-to-buy scheme, which supported 48% of the firm’s house sales last year, similar to 2017. When the scheme, which was first launched in 2013 by the then chancellor, George Osborne, was extended in 2017, a report by Morgan Stanley found that the £10bn of taxpayers’ cash had mainly benefited housebuilders, rather than buyers, by pushing up prices.
BARC
HSBA
RBS
LLOY
Barclays on wrong side of history with climate policy, says Greenpeace. Environmentalists attack rules that fail to ban funding oil projects linked to tar sands. Environmental activists have accused Barclays (BARC) of being on the “wrong side of history” after publishing an “underwhelming” climate policy document that fails to rule out funding for tar sands projects. Barclays is the last major UK bank to publish rules for how it will conduct business with companies involved in carbon-heavy industries such as oil and coal. Other lenders including HSBC Holdings (HSBA), Royal Bank of Scotland Group (RBS) and Lloyds Banking Group (LLOY) outlined their own commitments last year. Despite meeting environmental activist groups including Greenpeace and ShareAction while finalising the policy in recent weeks, Barclays stopped short of introducing a full ban on funding for oil projects linked to tar sands.
BOO
Online fashion brand Boohoo.com (BOO) upgrades sales outlook. Low-cost retailer raises forecast after jolly Christmas shopping period
Brexit threat exposes frailties in UK debt markets. Foreign investors are ‘sitting on their hands’, leaving some asset classes at risk
Lex – L’Occitane/Elemis: cream puff. UK skincare group can point to a strong financial record to justify its price
New Look plan seeks to slash long-term debt. Capital raising comes amid sharp downturn in trading in December
Banks brace for next wave of digital shake-up. Open banking is yet to provide a flood of innovation but its architects are sticking at it.
SVS
Estate agent Savills expects lower sales as Brexit and global slowdown fears take a toll on property investor confidence. Savills (SVS) expects lower property sales in a number of markets this year as Brexit-related uncertainty and US trade policy take a toll on property investors’ confidence. The upmarket estate agent, which has offices around the world, said prospects for 2019 are ‘overshadowed by macro-economic and political uncertainties’ globally. But the group, which also runs consultancy and property management businesses, said it still expects full-year results to be in line with expectations as these ‘less transactional’ divisions would offset a decline in sales volumes.
PSN
‘Gravy train’ continues for Persimmon as the housebuilder says profits are now expected to beat forecasts. Housebuilder Persimmon (PSN) said it expects profits to come in slightly ahead of market expectations as it issued its first trading update since the departure of boss Jeff Fairburn at the end of last year. The FTSE 100 listed company said it has sold more homes at higher prices, having benefited from the new developments it opened through the year. Revenues rose 4% to £3.74billion last year, with a 3% increase in homes sold to 16,449 and an average selling price creeping up by 1% to £215,560. For the current year, Persimmons’s forward sales are ahead 3% to £1.40billion.
MKS
Is your local M&S set to close? More than 1,000 jobs at risk, as retail giant reveals the 17 stores across the UK that will shut next. High Street stalwart Marks & Spencer Group (MKS) has put more than 1,000 jobs at risk as it unveiled its latest round of store closures. The chain is shutting over 100 stores as part of a five-year turnaround plan and on Tuesday listed the 17 shops that it will close next. They are: Ashford, Barrow, Bedford, Boston, Buxton, Cwmbran, Deal, Felixstowe, Huddersfield, Hull, Junction One Antrim Outlet, Luton Arndale, Newark, Northwich, Rotherham, Sutton Coldfield and Weston Super Mare. The closures will impact 1,045 staff.
BOO
Boohoo breezes through retail’s choppy waters to notch up bumper sales over Christmas, but shares take a dive. Online fashion firm Boohoo.com (BOO) – a golden child of UK retail – has upped its sales forecasts today after enjoying bumper trading over Black Friday and Christmas. The group, which owns Pretty Little Thing and Nasty Gal, said sales surged by 44% to £328.2million in the last four months and expects its full-year performance to top expectations as a result. Despite seemingly having the edge over its retail rivals, beating expectations by about 2%, Boohoo shares fell in early trading. The stock dipped by 5% to £1.83 amid concerns that the PrettyLittleThing brand was responsible for such a large portion of the growth.
Storm clouds darken as Europe and China falter: Germany hit by recession fear amid eurozone factory slump. Fears are growing for the global economy after sharp falls in manufacturing raised the spectre of another recession in the crisis-torn eurozone. Industrial production in the single currency bloc was 1.7% lower in November than it had been the previous month, sparking concerns of a slowdown on the Continent. A report by Bank of America Merrill Lynch warned that Germany is already in recession. In another sign of a gathering storm, exports by China slumped 4.4% in December – their biggest decline in two years – amid a trade war with the US. The figures from Europe and China came as the US government shutdown entered its 24th day, making it the longest ever period that federal agencies have been closed.
BARC
Former Barclays (BARC) bosses deny fraud over £6bn Qatar fundraising during the financial crisis. Barclays’ former boss has appeared in court to deny fraud charges. John Varley and three colleagues – including Roger Jenkins, the former head of Barclays’ Middle Eastern business – are accused of fraud when the bank raised £6.1billion from Qatar during the 2008 financial crisis.The case was brought by the Serious Fraud Office. Varley, 62, pleaded not guilty to two counts of conspiracy to commit fraud by false representation at Southwark Crown Court. Jenkins, 63, and former senior bankers Thomas Kalaris, 63, and Richard Boath, 60, also entered not guilty pleas. Varley – Barclays’ boss from 2004 to 2011 – is the most senior banker to go on trial over the 2008 crisis, which saw banks collapse around the world and triggered a string of taxpayer bailouts.
STOB
FLYB
Ousted Stobart boss buys stake in Flybe hours after his former employer announces it is buying the struggling airline with Virgin. Stobart Group Ltd. (STOB) former boss bought a stake in Flybe Group (FLYB) hours after his previous employer and Virgin announced they would buy the struggling airline for £2.2million. Andrew Tinkler, who was kicked off the Stobart board last year, bought a 12.23% stake, or 26.5m shares, in the airline on Friday. The price he paid has not been disclosed although the stake is worth £1.1million.
RBG
The party’s over for bar chain Revolution as its shares tumble 21% following disappointing sales. Investors’ heads were spinning as High Street bar and party chain Revolution Bars Group (RBG) reported sliding sales for the first half of its financial year. Like-for-like sales at the boozy lunch-cum-nightclub spot, during the six months to December 29, were down 4% on the same time a year earlier. Its Revolucion de Cuba brand was propping up the group, while the Revolution brand ‘consistently traded below last year’, the company said. Despite its efforts to ‘revitalise’ Revolution, the company added that profit for the first half would be £2million lower than last year.
COIN
Investment firm Coinsilium Group Limited (COIN), which supports businesses using the blockchain technology that underpins digital currencies such as bitcoin, has disappointed investors. Shares slid 10.7%, or 0.5p, to 3.93p as Coinsilium noted its share price was linked to the price of bitcoin, since it earns a ‘significant proportion’ of its sales in the digital currency. In 2018, bitcoin fell from around $19,000 to under $3,500. Coinsilium said its long-term goal was to become less dependent on bitcoin.
PAGE
Economic turmoil hit fees for recruiter Pagegroup (PAGE) in France and China at the end of 2018. Rioting in Paris amid the so-called yellow vest protests is thought to have badly damaged the French economy in the last three months of the year, triggering a fall in the number of jobs created. Page’s fees in France grew by just 10% in the final quarter of 2018, down from 21% growth in third quarter. Meanwhile the FTSE 250 firm’s fees from greater China were up 12% in the fourth quarter – down from growth of 31% – as a trade war with the US took its toll on the Asian nation’s manufacturers. The problems took the glow off improved figures for Britain and Australia.
PMO
Premier Oil (PMO) was another drag on the FTSE 250, as the oil and gas exploration business confirmed it was considering buying North Sea sites from US energy major Chevron. The sale process for the assets was launched last summer, as Chevron began to pull back from the UK. Premier has been rumoured as a potential bidder for months, but has not yet tabled an offer. Investors were worried by the prospect that they might be called upon for cash, and shares plummeted 9.2p, to 70.25p.
OPHR
Ophir Energy (OPHR) unanimously slapped down a £340million takeover offer from Indonesian oil company Medco Energi. Medco last week said it was mulling a 48.5p per share cash offer for London-listed Ophir, which has assets in South-East Asia, Tanzania and Mexico. But Ophir said that this offer undervalues the company. Medco’s bid is significantly less than its previous approaches at 58p per share in October and 53.8p in December. Ophir became a takeover target after it failed to find financing for a liquefied natural gas project in Equatorial Guinea, causing its share price to more than halve over 2018.
PPB
A broker downgrade for Paddy Power Betfair (PPB) made it the Footsie’s biggest loser, wiping 4.1%, or 270p, off its share price which ended the day at 6260p.
MKS
M&S names 17 stores for closure, with loss of 1,000 jobs. Marks & Spencer Group (MKS) has named the next 17 shops set to close in a move that puts 1,045 more jobs at risk as part of its ongoing turnaround plan. The former high street stalwart announced last year its plans to shut more than 100 shops as it grapples with the rapid rise of online shopping and spiralling property costs. M&S has proposed closures in Ashford, Barrow, Bedford, Boston, Buxton, Cwmbran, Deal, Felixstowe, Huddersfield, Hull, Junction One Antrim Outlet, Luton Arndale, Newark, Northwich, Rotherham, Sutton Coldfield and Weston Super Mare.
BOO
Boohoo sales beat expectations to ease worries over online growth. Online fashion retailer Boohoo.com (BOO) has upgraded its outlook for the full year after posting strong Christmas sales. The company, which owns PrettyLittleThing and US brand Nasty Gal, posted a 44% surge in revenue in the four months to Dec 31. As sales in the US rocketed 78% over the period and jumped 33% in the UK, Boohoo’s gross profit margin also rose to 54.2%. It now expects full-year revenue growth to be between 43% and 45%, ahead of its previous 38% to 43% guidance.
PFG
More pain for Provident Financial with another profit warning. The long spell of bad news for Provident Financial (PFG) continued on Tuesday after shares in the embattled doorstop lender plunged following another profit warning. The former FTSE 100 company lost almost a fifth of its value after warning investors that profits for 2018 would be towards the lower end of expectations. The collapse puts it on track for its steepest loss since August 2017, when £1.7bn was wiped off its value in one day. The profit warning was a bitter blow to shareholders, who had hoped that the 138-year-old business – dubbed “the Provvy” – might turn a corner following the worst year in its history.
FLYB
Flybe wins £10m loan to stay aloft. The consortium bidding for Flybe Group (FLYB) has revised the terms of the deal after failing to reach agreement with the struggling airline’s lenders. Connect Airways, which includes Virgin Atlantic, Stobart Group and US private equity firm Cyrus Capital Partners, will release £10m from a revised bridging loan to Flybe on Tuesday that will allow the airline to continue operating. A further £10m will be released at a later date. Connect will also pump a further £80m funding into the troubled business. In return for the £10m loan, Flybe will sell its two main subsidiaries, Flybe Limited and Flybe.com Limited, to the group.
SVS
Savills predicts gloomy 2019 as uncertainty knocks property sales. Savills (SVS) has warned it will struggle to eke out growth next year as a cocktail of economic worries discourage people from investing in property. The property agent, which employs 35,000 people, said while last year’s profits had grown as forecast, “prospects for 2019 are overshadowed by macro-economic and political uncertainties across the world”. Savills said it was difficult to predict the precise impact of the economic wobbles on demand for property from businesses and investors but “at this stage, we expect to see declines in transaction volumes in a number of markets”.
HAS
Overseas growth offsets weak UK for Hays (HAS). Strong growth overseas helped Hays offset a subdued UK market beset by Brexit uncertainty at the end of last year. Hays, the UK’s biggest recruitment firm, posted a 8% rise in net fees in the three months to December 31. Alistair Cox, chief executive, praised the company’s strong performance in the quarter “despite continued economic uncertainties”. “While activity levels at the start of the New Year will be an important driver of the Group’s second half performance, and we remain mindful of macroeconomic conditions,” he warned.
PSN
Persimmon bids to move on from bonus debacle. Britain’s second-largest housebuilder Persimmon (PSN) is seeking to move on from the embarrassing departure of its former boss Jeff Fairburn as it revealed profits for last year would come in “moderately” above expectations. Dave Jenkinson, who has been running the business on a temporary basis since December, said he hoped the company could “move forward”, although he too benefitted from the bonus share scheme that cost Mr Fairburn his job. Mr Jenkinson, thought to be the favourite for the top job, made around £40m through the bonus, but later returned £3m of it.
GAW
Games Workshop in ‘great shape’ after posting record sales. Fantasy game retailer Games Workshop Group (GAW) has said it is in “great shape” after unveiling record sales and profits. The FTSE 250 company reported a 14% rise in revenue to £125.2m in the six months to Dec 2, while pre-tax profit grew 7% to £40.8m. However this marked a slowdown in growth compared to the year June 30. Retail and trade sales climbed 6.8% and 26.4% respectively, but were offset by weak online sales, which dipped 3.6% to £21.2m. Games Workshop said that revenue at its online Citadel shop remained flat compared to last year and that its Forge World and Black Library stores declined 13% to £4.6m.
New warning adds to fears for global car industry. Concerns about the car industry’s health continue to mount after parts giant Continental warned of deteriorating conditions in the sector, sales of cars in China plunged and Ford flagged up the huge costs of developing technology for electric and driverless vehicles. Continental, the world’s second-largest supplier of vehicle parts and tyres, forecast weak demand for at least the first six months of this year. The German-based business – an industry bellwether – twice warned on profits last year and on Monday gave an update painting a picture that is only getting bleaker.
NXT
Next (NXT) post-Christmas relief rally ran out of steam after City analysts warned that the resilient retailer’s stores could be hit by its rivals’ woes. The high street giant’s shares have surged in 2019 after it survived the worst of the sector slump, bolstered by a 15% jump in online sales during another tough festive period. But Credit Suisse’s analysts told clients that Next could be affected by subdued footfall sinking further as other struggling chains close stores and shoppers desert the high street.
GOAL
Goals Soccer Centres dives by a fifth on profit warning. Higher costs have taken a bite out of profits at football pitch operator Goals Soccer Centres (GOAL), sending its share price tumbling by a fifth. The company alarmed investors by slashing its profit guidance and issuing a cautious outlook for the next two years, despite an improvement in sales through the second half of last year. After a disappointing first half, in which cold weather and the football World Cup kept punters away from the pitch, new initiatives introduced in the second half boosted sales, helping revenues in the year to the end of December rise 0.5% to £32.4m.
OPHR
Ophir Energy rejects Medco takeover bid. Ophir Energy (OPHR) is calling on takeover suitor Medco Energi to raise its planned takeover offer or walk away from the negotiating table. The UK-listed oil company called time on talks over a possible cash offer of £340m for the company on Monday, saying that the plan “undervalues” Ophir. The board’s swift rejection came just days after Ophir confirmed that it was in talks with the Indonesian oil giant over a possible takeover, and ahead of Ophir’s trading statement on Tuesday. Medco has until the end of the month to make a formal offer for the company, and Ophir is likely to use the market update to prove the company is worth more.
Sportswear and toy boosts Christmas sales for Shop Direct. Shop Direct, the retailer that owns the Very.co.uk and Littlewoods.com brands, has reported strong Christmas sales driven by a surge in demand for sportswear and toys. Group revenue increased 3.7% in the seven weeks to Dec 28, compared to the previous year, as growth at Very, its largest and fastest growing brand, jumped 8.8% over the period. The multi-brand online retailer, which is owned by Sir David and Sir Frederick Barclay, the owners of Telegraph Media Group, said the results were achieved “without compromising margin”, despite participating in its earliest and longest Black Friday promotional period.
CPI
Capita ‘naively ambitious’ and ‘chased revenue’ to win Army recruitment deal. Capita (CPI) will never make money on the troubled £495m contract it signed to recruit soldiers for the British Army, MPs have been told. The boss of the outsourcing company admitted Capita was “chasing revenue” when it took on the programme in 2012, and which has failed to provide enough soldiers, leaving the Army dangerously under strength. The admission came as the Public Accounts Committee quizzed Capita boss Jon Lewis and generals about the Defence Recruiting System (DRS) deal, which handed over responsibility to the private company for signing up the almost 10,000 troops needed each year.
PAGE
Pagegroup (PAGE) boss predicts more growth despite China and Brexit wobbles. The boss of recruitment giant Michael Page has insisted it is on track for another year of strong growth despite signs of a slowdown in some of its markets towards the end of 2018. Net fees across the company, which employs 7,800 staff across dozens of countries, rose 15.9% to a record £815m in the 12 months to December. But it was dogged by economic uncertainty in the final quarter as worries over China’s trade relationship with the US cut growth in the country in half and its UK executive headhunting arm Michael Page shrank 1% amid Brexit worries.
VP.
Questor: as Brexit uncertainty peaks, buy this sturdy equipment rental company at a low valuation. VP (VP.) has stable management and robust finances, and despite a recent rise in the dividend trades at just 10 times earnings
China cuts taxes to bolster economy. China has moved to quash market fears over its weakening economy by announcing measures to bolster growth and restore confidence. The world’s second largest economy will reduce value-added tax rates and hand out rebates in certain sectors to deal with a domestic slowdown. Chinese exports suffered their worst fall in two years in December, heightening concern over global growth. Leading stock indices and commodity prices retreated Asia, Europe and America yesterday after the poor December reading, which showed a 4.4% drop in China’s exports and a 7.6% slump in its imports. Confidence that the country will take action to revitalise its economy helped markets to recover this morning. The SSE Composite rose 1.4 per cent in Shanghai and the Hang Seng advanced 2% in Hong Kong.
PFG
Provident Financial shares hit by credit card arrears. A slump in people paying their credit card bills on time has helped push down shares in Provident Financial (PFG), the doorstep lender, by a fifth as it warned that annual profits would be at the lower end of expectations. Provident said that profits for 2018 would be at the bottom end of market forecasts in the £151 million to £166 million range, blaming higher impairments at Vanquis Bank, one of its high-cost consumer credit businesses. An increase in credit card arrears among Vanquis customers put pressure on the unit, which accounts for about 53% of group revenues. In 2017 Provident made adjusted profits of £109 million, down from £334 million the previous year.
BOO
Boohoo has plenty to shout about as revenues soar. Boohoo.com (BOO), which sells affordable fashion for teenagers and young adults, has raised its full-year profit guidance after avoiding the troubles on the high street to report strong Christmas sales. The Aim-listed company, which owns the Nasty Gal, Pretty Little Thing and Boohoo websites, reported a 43% rise in revenues to £328.2 million in the four months to the end of December. Group revenue grew in all its regions, with Britain up 33%, the rest of Europe up 57%, the United States up 78% and the rest of the world 35% higher. The retailer said that it expected revenue growth for the full year to be between 43% and 45%, up from its previous forecast of 38% to 43%.
Fears of global slowdown as China’s exports shrink. Growth fading in most richer economies, OECD warns. There were renewed fears over the strength of the global economy last night after a leading think tank said that growth was slowing in most influential countries and China shocked traders with poor exports. Alarm bells have started ringing for the United States, Germany, France, Canada and Britain, according to the Organisation for Economic Co-operation and Development, underscoring recent warnings of a global slowdown from institutions such as the International Monetary Fund.
BARC
Former Barclays bankers deny fraud charges. Four former senior Barclays (BARC) bankers have appeared in court to deny fraud during the 2008 financial crisis. John Varley, ex-chief executive, Roger Jenkins, ex-chairman of Barclays in the Middle East, Thomas Kalaris, former head of wealth management, and Richard Boath, a former senior investment banker, denied conspiracy to commit fraud by false representation in relation to a June 2008 capital-raising.
JD.
JD Sports shows struggling rivals a clean pair of heels. Britain’s biggest sportswear retailer has upgraded its profit outlook after outperforming its rivals over Christmas. JD Sports Fashion (JD.) said that its like-for-like sales had risen by more than 5% in the 48 weeks to January 5, helped in part by strong sales generated during the Black Friday sales and the holiday period. This was up from a 3% rise in comparable sales in the first half. The chain said that although many retailers had engaged in short-term “reactive” discounting, particularly over the festive period, it had held firm on its pricing strategy and had maintained its profit margins. It expects its profit before tax to be at the upper end of analysts’ forecasts of between £325 million and £352 million.
RDSB
Oliver defends ‘hypocritical’ Shell deal. Jamie Oliver has defended his decision to sign a reported £5 million deal with Royal Dutch Shell ‘B’ (RDSB) despite years of campaigning for action on climate change. The television chef said that he had anticipated the accusations of hypocrisy that he has faced since news leaked of his agreement to design a range of deli food for the oil major’s British petrol stations. Oliver said that he had “thought a lot” before signing the deal, but had reached the conclusion that “there are pitfalls working for any client and they all have their own baggage”. He argued that the partnership “was absolutely worth it” if it meant that people had access to better-quality food. The chef, who was named an “environmental champion” by the UN Environment Programme in 2015, has created a range of 80 wraps, sandwiches and salads to be sold at more than 500 service stations across the UK.
CPI
Soldiers are costing Capita a fortune. The head of Capita (CPI) has told MPs that the outsourcing company will lose “a considerable sum of money” on its Ministry of Defence contract to recruit soldiers into the British Army. Jonathan Lewis told the Commons public accounts committee yesterday that the company’s previous management had put too much emphasis on “chasing revenues” rather than setting realistic targets. “We were more interested in booking additional contracts versus really being a true partner to, in this case, the army,” Mr Lewis said. A combination of financial penalties imposed by the MoD for missing targets and a £60 million investment in technology meant that the contract was now likely to make a loss.
PAGE
Smoke signals reveal pressure on Page. Febrile political atmospheres on both sides of the Channel have taken a toll on the most recent performance of Pagegroup (PAGE). The listed recruitment specialist reported a 15.4% rise in profit to £211.1 million in the fourth quarter yesterday, but that disguised disruption in both the British and French markets. Page said that its profits in the UK were up by only 2.1%, reflecting “continued Brexit-related uncertainty” that in turn had affected “candidate and client confidence” in a market that accounts for 16 per cent of its revenues. There was evidence, too, of a knock-on from the gilet jaunes protests in France, in which demonstrators in high-viz yellow jackets have taken to the streets demanding fairer fuel prices and tax reforms and a lower cost of living. Page’s profits grew by 10% in France, below a Europe-wide figure of 13.9%.
OPHR
Rival’s reduced takeover bid is too low, says Ophir. Ophir Energy (OPHR) has rejected a £340 million takeover bid from an Indonesian oil company. The London-listed oil and gas business said that its board had “unanimously rejected” the offer, arguing that it was too low. Medco Energi had revised down two previous, higher approaches as crude prices fell and Ophir lost the rights to a gasfield in Africa. Ophir Energy was founded in 2004 and was listed in London in 2011. At one point its shares were trading above 600p after it made gas discoveries off the coast of Africa. It was hit by the collapse in oil prices from 2014 and yesterday its shares were up by nearly ¼p, or 0.3%, at 45¼p.
GOAL
Goals takes a tumble as it chases customers. Higher British costs and disappointing trading in the United States are set to deliver a costly one-two for profits at Goals Soccer Centres (GOAL). The company said yesterday that a combination of Brexit-related uncertainty, the introduction of food and drinks services in the UK and slower business at two new sites in Los Angeles would trip up its immediate progress as it downgraded its profit expectations for this year. Goals, which runs 46 sites in Britain and four in California, has been listed on Aim since 2004. Sports Direct is its largest shareholder, with an 18.92% stake. The leisure company has been going through a turnaround, in which many pitches have been revamped, with new lighting.
RBG
The bar is lowered at Revolution. Investors in Revolution Bars Group (RBG) had reason to drown their sorrows after its shares fell by a fifth. Rob Pitcher, chief executive of the bars operator, warned that economic and political uncertainties were expected to knock its profits. The group expects annual earnings of £12 million, down from £15 million, after like-for-like sales fell 4% in the first half. Yesterday its shares fell by 21%, or 25¾p, to 96p.
NXT
Simon Irwin, a Credit Suisse analyst has downgraded Next (NXT) from “neutral” to “underperform”. Next defied gloomy forecasts for the retail sector to report better Christmas trading than had been expected this month, helped by stellar online sales that offset its weaker store division. Results for the fourth quarter demonstrated the strength of Next’s management and the resilience of the brand, Mr Irwin said. However, he did not believe that would be enough to prevent continued pressure on profit margins from foreign currency effects. Amid worries over consumer confidence, the analyst saw better value in stocks with “structural growth”, pointing to Asos and Zalando for online retail, B&M and Primark for discount plays and Adidas and JD Sports Fashion for sporting goods.
ANTO
Miners were among the biggest fallers as the price of copper fell by more than 1% amid concerns about softer demand from China, the world’s largest metals consumer. Antofagasta (ANTO), the Chilean copper group, closed down 21¾p, or 2.6%, at 814½p.
PSN
LAND
JP Morgan Cazenove said that it was time to re-enter UK domestic stocks as it believed that the probability of a no-deal Brexit had “sufficiently reduced”. Reversing its bearish call on British housebuilders, it upgraded the sector from “underweight” to “overweight” as it said that house prices could stabilise if Brexit tail risks kept reducing. Persimmon (PSN), which will give a trading update today, was named as the top pick on the basis that “recent share price pressure looks illogical” and the analysts saw scope for upgrades and further returns in the near term. The bank’s property team named Land Securities Group (LAND) as its top stock in the sector, thanks to its loan-to-value ratios at close to historical lows while occupancy rates are close to 100%. They believe that recent weakness in Landsec’s share price has been tied to Brexit, giving it the potential to rally.
PPB
Gambling stocks were weak after Barclays warned that increased regulation would suppress growth in the short term. It downgraded Paddy Power Betfair (PPB) to “equal weight” after lowering its earnings estimates. Paddy Power tumbled 270p to £62.60.
RST
Restore (RST), an office services provider, dropped 49p, or 12.7%, to 338p as worries over lower shredding volumes overshadowed a trading update that reported full-year results broadly in line with expectations.
CCS
Crossword Cybersecurity plc (CCS), a technology and consulting company, shot up 62½p to 332½p, despite no specific news related to it. It released research last week showing the value of the cybersecurity research market, with reported funding of EU projects at more than €1 billion.
DPH
Sales rise is shot in the arm for Dechra. Strong trading in Europe and North America have helped to lift sales and revenue at Dechra Pharmaceuticals (DPH). The London-listed maker of veterinary medicines yesterday reported revenue growth of 18% over the past six months, adding that sales in North America had been bolstered by the expansion of its direct sales force in the United States. In a trading update, the FTSE 250 company said that it had completed its acquisition of Venco, a Brazilian rival. It expected the South American business to lift group revenue in the second half of its financial year. Dechra said that its Brexit contingency preparations were on track.
SMIN
Tempus – Smiths Group (SMIN): Hold. Having returned to growth last year, there should be lots more value to come
ASL
Tempus – Aberforth Smaller Companies Trust (ASL): Avoid. Too exposed to the UK economy given uncertainties