Thomas Cook Group (TCG) ‘fundamentals remain robust’, says fund management titan. Thomas Cook’s biggest shareholder has come out fighting for the 177-year-old travel giant, blasting a stock market sell-off as an “overreaction”. As fears grow over the company’s future, Invesco insisted Thomas Cook’s “fundamentals remain robust”. Almost 60% was wiped off the company’s market value in eight days after Thomas Cook last week announced its second profit warning in two months, suspended its dividends and revealed it had opened talks with its lenders in the wake of a burgeoning debt pile. But Invesco global equities fund manager Stephen Anness said: “Much of what we heard from Thomas Cook last week was a repeat from what we already knew – that trading suffered from the exceptionally hot summer. That was exaggerated by the unexpected change to accounting, a change we very much approve of as it more clearly reflects the underlying business. “The market has taken fright but from what we see, the fundamentals remain robust. From our conversations with the company, the balance sheet and liquidity is intact. This seems an overreaction.”
Ryanair Holdings (RYA) faces legal action over refusal to compensate strike-hit passengers. The Civil Aviation Authority (CAA) has launched an enforcement action against Ryanair after the low-cost airline refused to pay compensation to passengers for flight disruptions caused by recent strikes. Ryanair had argued that the widespread strikes over the summer amounted to “extraordinary circumstances” and it was therefore not obliged to pay out compensation. The CAA refuted this claim and said that the low-cost airline was not exempt, meaning Ryanair customers should be compensated. Ryanair has suffered a number of strikes this year by cabin crew and pilots after the airline recognised unions for the first time in 2017.
Joules Group (JOUL) sales rise as fashion brand braces for Brexit. Fashion brand Joules, known for its brightly coloured designs, has taken early deliveries of its spring and summer ranges and set up European a warehouse as it braces for a no-deal Brexit. The company said that it was also preparing for increased paperwork that could result from stricter customs checks and had hedged its US currency requirements for the next year “to mitigate the expected disruption that could arise in the event of a hard Brexit”. Joules joins the growing list of British companies, including drugs firm AstraZeneca and drinks merchant Majestic Wine, that are scrambling to stockpile products and looking for alternative routes in fear that the ports at Dover will be thrown into chaos from increased checks. The fashion brand said that it anticipates trading conditions in the UK to “remain challenging over the near term, with continued macroeconomic uncertainty, rapidly changing consumer shopping behaviours and a highly competitive environment”.
The £46bn merger between Shire Plc (SHP) and Takeda has won approval from shareholders, paving the way for the deal to be completed as early as January and creating one of the biggest pharmaceutical companies in the world. More than 88% of shareholders in Japanese company Takeda voted in favour of the acquisition, defying speculation that investors would reject the controversial deal. Anglo-Irish Shire, meanwhile, received the backing of more than 99% of its shareholders. The deal will be the largest ever foreign takeover by a Japanese firm and will rank among the 10 biggest acquisitions ever in the pharmaceutical sector. The tie-up will create a drugs powerhouse with close to £22bn of annual sales, roughly equivalent in size to AstraZeneca.
Profits at City broker plunged 17% for the year to September as a hiring spree meant it failed to cash in on a rise in M&A activity. The company, whose clients include Aston Martin and Asos, said that extra hiring costs and “a year of investment” meant profits fell to £31.6m, despite advisory fees shooting up 21% due to a boom in takeovers. The business has traditionally won work on listings but in recent years has refocused its efforts on M&A, which generates lucrative fees and is an area previously dominated by big banks or specialist boutiques. Co-chief executive Alex Ham, who at 35 is among the youngest bosses in the City, said that the listing market has “got a bit tougher” and the rise in advisory fees “does reflect a slight re-emphasis from us” towards acquisitions.
Stagecoach Group (SGC) insists it will not sell its troubled US coach arm “at any cost” despite swinging sharply into the red following a hefty writedown on operations across the Atlantic. The bus and rail giant announced on Wednesday that it had opened sale talks with a number of parties over the sale of all or part of its North America network. The announcement came as the company posted a £22.6m half-year pre-tax loss, principally driven by a painful £85.4m writedown of its US investment. Stagecoach also shouldered a £24.2m cost to equalise minimum pension benefits between men and women. Shares rose around 13% and the company’s valuation briefly broke through the £1bn barrier as profit margins on Stagecoach’s UK rail arm beat City expectations.
Faroe Petroleum (FPM) has clinched a deal to boost its oil production in the Norwegian North Sea while battling a hostile takeover bid from its largest shareholder. Faroe told shareholders that the asset swap arrangement with Norwegian major Equinor, formerly known as Statoil, would raise its oil production by between 7,000-8,000 barrels of oil a day from next year. The Aberdeen-based producer said the output boost could allow it to return cash to shareholders and push through a sustainable dividend policy. Graham Stewart, the company’s chief executive, told investors that the shareholder sweetener was not designed to see off the bid by DNO to snap up the company.
Scandal-hit cake and coffee chain Patisserie Valerie has secured the services of a new finance chief after a hiatus of almost two months. Nick Perrin, the former finance director Aim-quoted veterinary company CVS, has been picked on an interim basis by parent company Patisserie Holdings (CAKE). He fills the void left by Chris Marsh, who was suspended on Oct 10 and resigned later in the month. Mr Marsh was interviewed by police as part of an ongoing fraud investigation. Led by serial entrepreneur Luke Johnson, Patisserie Valerie was plunged into crisis two months ago after revealing “significant, and potentially fraudulent, accounting irregularities”. A £40m black hole in its books was later unearthed.
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Govia Thameslink Railway (GTR) will keep Britain’s biggest rail franchise but will pay out £15m to improve services after its “unacceptable performance” contributed to a bungled timetable roll-out earlier this year. GTR’s parent company Go-Ahead Group (GOG) announced on Tuesday that it had struck a deal with the Department for Transport (DfT) that means it will hang on to the south east rail network, but will have to fund “passenger enhancements” this year. The DfT concluded that a termination of the franchise “would cause further and undue disruption for passengers and is not an appropriate course of action”. However Go-Ahead revealed that its overall profits would not be knocked off course by the Government sanctions, sparking anger among rail users who suggested that the decision by transport secretary Chris Grayling was a “whitewash”.
Greencore stockpiles frozen prawns to avert Brexit sandwich crisis. The boss of Greencore Group (GNC) has warned Britons could face fewer sandwich options in the event of a chaotic withdrawal from the European Union as the catering company begins stockpiling ingredients such as frozen prawns. Patrick Coveney, chief executive, said that the main concern was “the availability of fresh produce” if there was a “no-deal” Brexit and problems at the border. The company, which makes sandwiches for Marks & Spencer and around half of all the brands on Britain’s high street, sources around 20% of ingredients from outside the UK. It has already started stockpiling “a few weeks’ worth” of frozen prawns and tomato paste. Prawn sandwiches have regularly been voted as the UK’s favourite.
Travis Perkins mulls sale of Wickes chain as it focuses on trade arm. Builders merchant Travis Perkins (TPK) could offload its Wickes DIY chain as part of plans to focus on trade customers in an overhaul of the company which also includes a sale of its plumbing and heating division. In a stock market announcement ahead of an analyst meeting Travis Perkins said that it is executing a “significant cost reduction programme” at Wickes while also “looking to review the options for maximising the value of Wickes in the medium term.” It is understood one of these options is a sale. Wickes has suffered from falling sales as it has faced intense competition from rival B&Q and a steady decline in the wider DIY market which has dragged the profits for its consumer division lower. Last month the retail business posted a 7.7% slump in half-year sales as operating profits were dragged down by £14m to £29m.
Ferguson plays down suggestions it could leave the UK as US sales continue to boom. Ferguson (FERG) played down suggestions it could jettison its UK business after rival Travis Perkins set out plans to sell its plumbing and heating division. The FTSE 100 giant, formerly known as Wolseley, was founded more than a century ago in the UK and is listed in London but now does the vast majority of its business across the Atlantic. While its US arm has been booming in recent years thanks to the strong economy, its home division has been going through a drawn-out restructure aimed at bolstering margins amid stagnation in the market. Analysts at Peel Hunt said Ferguson’s presence in the UK “looks increasingly circumspect” in light of Travis Perkins’ decision to sell up.
‘Me Too’ scandals boost Lam Zyfin Global Markets UCITS ETF Lam Zyfin MSCI India Ucits ETF (MIND) as more companies seek out harassment training. The recent string of high-profile sexual harassment scandals helped boost revenues at executive training business Mind Gym as top employers sought out advice on how to stamp out inappropriate behaviour in the office. Octavius Black, the company’s co-founder and chief executive, said its new Respect programme had signed up 11 clients in the wake of allegations against the likes of Hollywood producer Harvey Weinstein. He said: “We’re increasingly finding that organisations are at the very least wanting to mitigate the risk and at best create an environment that we might call ‘psychologically safe’, where people can flourish without fear or intimidation. “We’re seeing global appetite among [senior directors] about how can they can get the right culture and behave in ways that are constructive and helpful, rather than putting each other at risk.”
Travis Perkins mulls sale of Wickes chain as it focuses on trade arm. Builders merchant Travis Perkins (TPK) could offload its Wickes DIY chain as part of plans to focus on trade customers in an overhaul of the company which also includes a sale of its plumbing and heating division. In a stock market announcement ahead of an analyst meeting Travis Perkins said that it is executing a “significant cost reduction programme” at Wickes while also “looking to review the options for maximising the value of Wickes in the medium term.” It is understood one of these options is a sale. Wickes has suffered from falling sales as it has faced intense competition from rival B&Q and a steady decline in the wider DIY market which has dragged the profits for its consumer division lower. Last month the retail business posted a 7.7% slump in half-year sales as operating profits were dragged down by £14m to £29m.
Thomas Cook Group (TCG) fears spread into debt markets. Fears over Thomas Cook’s future have leached into corporate bond markets, sending the company’s shares to fresh lows as concerns reverberated about its towering debt pile. Yields on the company’s listed debt spiked to almost 20% as the cost of insuring against a Thomas Cook default hit a record high. Its share price sank more than 15% when the market opened on Tuesday leaving the 177-year-old company worth little more than £300m. With net debt of £389m, yields on Thomas Cook’s two corporate bonds – due to mature in 2022 and 2023 – rose sharply. Meanwhile, the price of credit default swaps, which pay out if Thomas Cook is unable to meet its financing obligations, doubled to around 10%
