The Mail 12/03/19 - Vox Markets | Vox Markets

The Mail 12/03/19

Domino’s Pizza Group (DOM) suffered a 22% drop in profit last year, its latest preliminary results reveal. Annual pre-tax profit fell to £61.9million, with chief executive David Wild claiming the group was stung by ‘growing pains’ in its international business. After customers told the group it was not offering value for money in 2017, the delivery pizza group said today it had ‘renewed’ its focus on promotions. Over 88% of orders made last year were secured ‘on some kind of promotion’, with an average discount of just over 38% on menu prices. Neil Wilson, chief market analyst for Markets.com, said: ‘The franchisee strife looks set to weigh on growth prospects as it will impact the store rollout in the UK and Ireland. ‘Meanwhile there are also more challenges from competitors than before. ‘Nevertheless, Domino’s seems to be holding onto market share and the app in particular is very sticky with customers.’

French Connection Group (FCCN), in which High Street-hungry tycoon Mike Ashley holds a 27% stake, said it made a marginal profit of £100,000 in 2018, compared with deep £2.1million losses the year before, thanks to improvements at its wholesale arm. However, on a pre-tax basis, the firm’s losses spiralled to £9.3million. Retail sales tumbled 11%, down both in stores and online, amid what it dubbed a ‘difficult’ retail trading environment.

Mothercare (MTC) is swinging the axe once again, this time ridding itself of its toy business Early Learning Centre (ELC) . The struggling mother and baby specialist, which will have shuttered 57 UK shops by the end of this month and made job cuts at its head office last year, today said it was selling its ELC business in a bid to slash its debt mountain and exit the highly-competitive toy market. It has been snapped up by Amersham-based toy chain The Entertainer for £13.5million. The disposal, aimed at helping Mothercare pay off around £17.5million of debt over the next year, forms part of its urgent turnaround efforts, after sales and profits plummeted. ELC, which Mothercare paid £85million for in 2007, consists of 80 UK concessions within Mothercare stores, 400 stores internationally via franchise partners and a website. The Entertainer will also take over ELC’s portfolio of brands, including Happyland, but Mothercare will retain around £6million of stock to sell down.

Ryanair Holdings (RYA) has threatened to stop UK investors from buying shares in the company and strip them of voting rights if there is a No Deal Brexit. The Irish airline said it would take the controversial step to ensure it remained majority owned and controlled by European Union-based shareholders, as required by the bloc’s rules. Under the plan, if the UK leaves without a deal on March 29, all non-EU shareholders – including British ones – will be stripped of their rights to attend, speak or vote at any company meeting. Britons and other non-EU nationals will also be barred from buying shares in the firm.

An activist investor has called an emergency meeting to try to oust the chairman of struggling vehicle hire group Northgate (NTG). Richard Bernstein’s Crystal Amber said it has given up on Andrew Page after several profit warnings at the business and poor performance. It instead wants former Northgate chief executive Steve Smith to return and replace him as a non-executive director. Last night the fund, which owns 6.3% of Northgate, revealed it had served notice to the firm’s board requiring them to call an emergency meeting of shareholders. It means the company must hold the gathering next month. Bernstein said yesterday: ‘We have finally lost patience with Mr Page’s refusal to listen to positive proposals to enhance shareholder value. ‘He has presided over multiple profit warnings, a culture of inept communications with the market and, in our view, has failed to ensure there is the right mix of skills and experience on the board. ‘As chairman, he inherited a business with a strong market share in a healthily growing sector, yet his tenure has left the company totally lacking in strategic direction and languishing in the doldrums.’

Superdry (SDRY) has shut the door on co-founder Julian Dunkerton, saying it will be damaging and divisive if he returns to the board. Shareholders in the fashion group vote on April 2 on whether the 54-year-old should be reinstated as a director amid a dispute between the two sides. The company has heavily criticised the businessman in a last-ditch bid to keep him out. It accused him of coming up with clothing ranges which sold poorly and failing to accept this was his fault. Superdry’s management said: ‘The board unanimously believes that Mr Dunkerton’s return to [Superdry], in any capacity, would be extremely damaging to the company and its prospects. ‘It would lead to a strategy that would fail, be divisive, lead to dysfunctional relationships with the board and management, damage morale across the business and cause departures of key personnel,’ the firm said.

Debenhams (DEB) is racing to secure £150 million from its lenders as it fends off an audacious boardroom coup by Sports Direct billionaire Mike Ashley. If it manages to secure the loan, the department store group will use £40 million to pay back emergency funding it acquired in February. Ashley, 54, who has a 29.7% stake in Debenhams, revealed plans days ago to seize control of the beleaguered department store chain by clearing out the bulk of its board and installing himself as chief executive. But Debenhams’ creditors – which include hedge funds Alcentra, Silver Point and Angelo Gordon – are thought to be unhappy with Ashley’s proposals, preferring to back current management with more cash instead in the hope they can turn the firm around.

 

SRT Marine Systems (SRT) saw its shares rise after the London-listed firm said a £31 million project with the Philippine government was on schedule. The business has been putting in place technology to monitor fisheries in the country since December. SRT said it has now received the first payment related to this work.

Kier Group (KIE) shares plunged as it revealed its debts are £50 million bigger than previously reported. The construction group blamed the mistake on an accounting error, and has upwardly revised its net debt as of December 31 from £130 million to £180.5 million. At the same time, Kier said it is expecting to take a £25 million hit this year because of delays on its contract to redevelop Broadmoor Hospital in Berkshire. Kier said it remains on track to meet expectations for the full year, but warned Brexit uncertainty is making it harder to get backing from lenders.

Challenger banks Charter Court Financial Services Group (CCFS) and OneSavings Bank (OSB) soared after confirming plans for a £1.6 billion tie-up. Analysts said the buy-to-let lenders complement each other well and a combination could allow them to make significant savings. If the deal goes through, the new business will be 55% owned by Onesavings shareholders and led by its boss Andy Golding. Charter Court shares jumped 34.2p, to 340.6p after the announcement, while Onesavings rose 40.4p, to 410.4p.

Doorstep lender Provident Financial (PFG) hit back at a hostile bid from rival Non-Standard Finance (NSF). NSF has set out details of its proposal, including plans to pay as much as £22.3 million in fees to its investment bankers and other advisers. Its scheme has backing from three shareholders who own almost 50% of PFG stock between them. But PFG said the proposals will leave most shareholders worse off and could de-stabilise the business. This is because the takeover values the firm at current market prices, meaning investors will get no profit if it goes through. Patrick Snowball, chairman of the PFG, said: ‘The information in NSF’s offer document does nothing to change the board’s view that the offer is not in the interests of all shareholders and lacks both commercial logic and regulatory understanding.’ If the battle is won by NSF – which is led by the PFG’s former boss John Van Kuffeler – then it plans to sell its rival’s car finance arm, Moneybarn, and shut or sell its payday lender Satsuma.

Cairn Energy (CNE) plunged 11% after it admitted its four-year bid to claw back more than £1bn from India’s tax authorities has been delayed again. The oil and gas company’s legal challenge has become a victim of bureaucracy, with the arbitration panel that has been charged with making a decision not expected to report back until late this year at the earliest. Its guidance is a blow to Cairn, which argues that India’s decision to retrospectively tax it for a reorganisation of its business in 2006 was unfair.

 

 

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Mentioned in this post

CCFS
Charter Court Financial Services Group
CNE
Cairn Energy
DEB
Debenhams
DOM
Domino\'s Pizza Group
FCCN
French Connection Group
KIE
Kier Group
MTC
Mothercare
NSF
Non-Standard Finance
NTG
Northgate
OSB
OneSavings Bank
PFG
Provident Financial
RYA
Ryanair Holdings
SDRY
Superdry
SRT
SRT Marine Systems