The Mail 15/03/19 - Vox Markets | Vox Markets

The Mail 15/03/19

Interserve (IRV) is set to fall into administration and into the hands of its lenders after it failed to secure investor backing for a controversial rescue plan. It comes just over a year after industry counterpart Carillon went bust, causing numerous project shutdowns and thousands of job losses. Interserve, which employs 45,000 people and holds crucial Government contracts for a range of services in prisons, schools and hospitals, will be immediately sold to its lenders after the administration in a process known as a pre-pack. This means the firm will avoid a Carillion-style of collapse. The business will continue to operate ‘as normal for customers and suppliers’, it said, but shares will be suspended from trading on the London Stock Exchange immediately. The pre-pack will be managed by accountancy giant EY and is expected to be completed on Friday evening.

The chairman of Wetherspoon (J.D.) (JDW) had a go at ‘the establishment’ over Brexit as the pub group reported a profit tumble in the first half amid rising costs. Tim Martin, a vocal supporter of Brexit, said: ‘Although the public voted to leave, the majority of ‘the establishment’, including most MPs, most universities, the Bank of England, the CBI and media organisations such as The Times, the Financial Times and The Economist favoured ‘Remain’. ‘The result has been a barrage of negative economic forecasts from those quarters, predicting that the UK will go to hell in a handcart without a ‘deal’ with the EU – which will effectively tie the country into EU membership and taxation, yet without representation. ‘The doomsters ignore the most powerful nexus in economics, between democracy and prosperity – and the fact that the EU is becoming progressively less democratic, as it pursues an ‘ever-closer union’, for which there is no public consensus.’ Martin continued: ‘Previous referendum results on major constitutional issues have always been respected in the UK, but if parliament votes either for Theresa May’s ‘deal’ which keeps us in the EU by the back door or to remain in the EU, the referendum result will not have been respected. This may well have significantly adverse economic consequences, as the country turns in on itself to endure months, or years, of stifling constitutional argument.’

Shares in Restaurant Group (RTN) jumped today despite a decline in like-for-like sales and profits at the new owner of Wagamama. Total revenues rose 1% to £686million in 2018, but sales at restaurants open for over a year fell 2% despite efforts to revamp menus and speed up service. The Restaurant Group, which also owns Garfunkel’s and Chiquito, blamed the impact of adverse weather for the sales decline, but noted it was an improvement on 2017’s fall. Pre-tax profits more than halved to £13.9million from £28.2million in 2017, due to falling sales and charges relating to Wagamama’s acquisition and the closure of some sites. Once these charges are stripped off, the decline was smaller, with adjusted profit before tax coming in at £53.2million, compared to £57.8million in 2017. The group, which also owns Garfunkel’s and Chiquito, said it booked a £39.2million charge related to its acquisition of Wagamama – which it completed at the end of last year – as well as the closure of 28 sites and onerous leases on stores.

Fat cat pay row at Shell with boss scooping £18m as rising oil price hits drivers in the pocket. Royal Dutch Shell ‘B’ (RDSB) sparked a fresh row over fat-cat pay after its chief executive was handed £17.8million last year. As the rising oil price hit drivers in the pocket, Ben van Beurden saw his pay more than double from £7.8million in 2017 thanks to a generous bonus scheme. It means the Dutchman, who joined the oil group in 1983, has been paid nearly £60million since becoming boss in 2014. Critics attacked Shell’s ‘warped culture’ and said motorists hit by price rises at petrol pumps would be infuriated by the payout. Blue-chip firms have been rocked by shareholder rebellions over staggering bonuses handed to bosses, with Astrazeneca, WPP and Unilever all attracting investors’ ire in the past year.

Aston Martin Holdings (AML) boss lands a £3m jackpot despite luxury car firm’s disastrous stock market debut. Aston Martin’s boss pocketed £3million last year as he steered the luxury car maker to its stock market debut. Andy Palmer, 55, was awarded a £1.7million bonus on top of a £1.2million salary. The remainder of his pay package was made up of benefits and pensions payments. Details of his pay came after Aston Martin suffered full-year losses of £68.2million, sending shares crashing to all-time lows. The James Bond car maker was hit by £136million one-off costs relating to its listing in October when shares floated at 1900p.

Property investment trust Capital & Regional (CAL) saw shares plunge after it swung to a loss of £25.5million. The blow came after the company, which owns seven shopping centres, took a £52.5million writedown on the value of its properties in the year to December 30. Capital & Regional previously made a £22.4million profit in 2017. The business’s shares fell 11.6%, or 3.7p, to 28.2p following the announcement. They have fallen 25% in the past year.

Shares in Just Group (JUST) tumbled after the pensions provider swung into the red, cancelled its dividend and sought £380million of fresh funding. The group said it made £86million of losses in 2018 having notched up a profit of £181million the previous year. At the same time, Just Group said it had decided to scrap its annual dividend and went to investors with a call for cash. It said it needed the extra money to cope with changes to mortgage regulations made by the Prudential Regulation Authority. The fundraising included a £300million debt offering and an £80million stock placing, with shares sold at 80p each.

Capita (CPI) shares dipped 0.75p, to 119p after chief executive Jon Lewis said his turnaround plan was on track despite having ‘some way to go’. The group – Britain’s biggest outsourcer – reported a 26% fall in profits to £282.1million for 2018 after revenues fell 5% to £3.9billion. Capita said it was expecting broadly flat profits in 2019, predicting between £265million and £295million. It said the successful delivery of its ongoing overhaul was ‘critical to the future performance’ of the group. Lewis said: ‘We’ve successfully completed year one of our multi-year transformation, fixed the basics and are firmly on track. ‘Our transformation still has some way to go. But I am very pleased with our progress.’

A contract win for British construction group Balfour Beatty (BBY) failed to lift its shares. An alliance led by the firm was chosen by Network Rail to carry out major work on tracks and crossings.

Savills (SVS) shares fell 3.8%, or 35p, to 888.5p after the property giant warned it had a tough year ahead due to economic and political uncertainty. Revenues rose 10% to £1.8billion last year but profits dipped 3% to £112.4million. Chief executive Mark Ridley said: ‘We have made a solid start to 2019; however, the year ahead is overshadowed by macro-economic and political uncertainties across the world. It is difficult accurately to predict the impact of these issues on corporate expansionary activity and investor demand for real estate. ‘At this stage, we expect to see declines in transaction volumes in a number of markets and growth in our less transactional business lines,’ he said.

Furniture chain DFS Furniture (DFS) also warned of a ‘challenging’ year ahead as it prepares for Brexit. It reported strong like-for-like sales growth of 6.6% in the 22 weeks to December 30. Group revenue in the period was up 29.1% to £422.3m, while underlying earnings climbed 23.8% to £32.8million. However, chief executive Tim Stacey said recent trading had been softer amid poor consumer confidence levels. ‘Although identifying underlying growth rates over short-term periods is extremely difficult, we note that year-on-year order intake in the second half of the financial year to date has been lower than the first half,’ he said.

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Mentioned in this post

AML
Aston Martin Holdings
BBY
Balfour Beatty
CAL
Capital & Regional
CPI
Capita
DFS
DFS Furniture
IRV
Interserve
JDW
Wetherspoon (J.D.)
JUST
Just Group
RDSB
Royal Dutch Shell \'B\'
RTN
Restaurant Group
SVS
Savills