The Telegraph 16/04/19 - Vox Markets | Vox Markets

The Telegraph 16/04/19

Employment hits another record high and wages rise despite Brexit turmoil. Jobs and pay powered ahead again in February as the employment miracle ignored Brexit chaos in Parliament to hit new record levels. A record 32.7m people were in work in the three months to February – a rise of 179,000 on the previous three months and a jump of 457,000 on the year. The quality of jobs improved as most of the increase came in full-time employment, while the very low unemployment rate forced employers to offer workers more money. Unemployment fell by 27,000 on the quarter and 76,000 on the year, with the jobless rate holding steady at 3.9% – the joint-lowest rate since the mid-1970s.

Profit warning sinks Galliford Try shares. Galliford Try (GFRD) has vowed to slim down its contract construction arm after a series of problem contracts forced the builder to slash profit forecasts. The FTSE 250 firm has begun a review of the division, which builds roads, schools and commercial buildings, and said it plans to focus on less risky and more profitable areas of the market. Costs from the overhaul, along with new charges against existing and historic contracts, are expected to knock between £30m and £40m off Galliford’s pre-tax profits this year. Analysts had previously been expecting profits to come in at about £156m.

Provident steps up war of words with hostile bidder NSF. Provident Financial (PFG) has again hit out at Non-Standard Finance (NSF), renewing accusations that its suitor made illegal dividend payments. Provident’s chairman stepped up his rhetoric as the doorstep lender battles a £1.3bn takeover offer from its smaller rival NSF, branding the bid “more of coup d’état than a hostile takeover”. NSF acknowledged late on Friday that it committed “technical infringements” of company law by making several dividend payments since 2016 that were not part of its distributable reserves – amounts which may lawfully be paid to shareholders.

Finish Line takeover sends JD Sports sales and profits soaring. JD Sports Fashion (JD.) has bulldozed through the struggles on the high street to post record sales, helped by its takeover of US trainer chain Finish Line. The sportswear company, which is now more than three times bigger than arch rival Sports Direct, said sales leapt by almost 50% to £4.7bn. Like-for-like sales, which exclude the effect of new stores, rose 6%, helping pre-tax profits to jump 15.4% to £340m. Peter Cowgill, executive chairman, said that while JD Sports was “not immune to the widely reported challenges to physical retail in the UK”, the company was outperforming its rival because it offered “attention-grabbing theatre both in stores and online”.

G4S hails growth in cash handling as rivals continue to circle. Takeover target G4S (GFS) hailed a “good start” to its financial year, reporting a slight rise in revenues as rivals continued to circle the security outsourcer’s armoured van unit. Its “cash solutions” division, which stores and transports coins and notes for retailers and tops up ATMs, notched up sales growth of 4.4%. G4S is looking to spin off the unit, which accounts for 15% of revenues, amid pressure from investors to revive its share price. Last month the company said it had received potential offers from companies interested in buying the division, but other options including a stock market listing are also thought to be on the table.

Card Factory battles lower footfall on the high street. Card Factory (CARD) blamed fewer customers entering its stores, weaker demand at its online gifting business and foreign exchange costs for a slide in profits. The budget greetings cards retailer posted pre-tax profits of £66.6m in the year to January, a 8.3% drop compared to the same period the year before. Revenue rose 3.3% to £436m. However sales at stores open for more than a year were broadly flat, down 0.1pc, while around 1pc of those shops were loss making. The company’s sales through its website increased by 56% compared with the previous year, but its online gifting business, Getting Personal, had a “disappointing” performance with sales falling 8.4% as it was hit by “competitive discounting”.

Legal & General votes against record number of UK bosses over pay and diversity worries. The number of votes cast by Legal & General Group (LGEN) against UK directors rose by nearly 270% last year compared to 2017 amid wider crackdown on excessive pay, lack of diversity and sloppy governance. Legal & General Investment Management (LGIM), which manages around £1 trillion worth of assets, voted against 479 UK company directors in 2018 compared to 178 in 2017 and just 89 in 2016. “Diversity has got better in the UK but we voted against more chairman of boards than we’ve ever done – we’re asking for more,” said Sacha Sadan, LGIM’s director of corporate governance.

Another setback for Acacia Mining (ACA) in Tanzania resulted in the embattled gold miner suffering its worst day of trading in a year as miners weighed heavily on London’s market. Acacia admitted that gold production had slipped 13% year-on-year to 104,899 ounces in its first quarter after “unanticipated production issues” at its North Mara mine. The gold producer’s production and share price has tumbled in recent years after being embroiled in a long-running dispute with the Tanzanian government. It vowed to hit its full-year production guidance of 500,000 to 550,000 ounces after taking “immediate steps to address” the problems, but analysts raised doubts over its ability to hit the targets.

Questor: high yield, low valuation: either something’s about to go wrong or this is a buy. Questor share tip: this column is in the latter camp when it comes to S&U (SUS), the specialist lender, although we must acknowledge the risks

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Mentioned in this post

ACA
Acacia Mining
CARD
Card Factory
GFRD
Galliford Try
GFS
G4S
JD.
JD Sports Fashion
LGEN
Legal & General Group
NSF
Non-Standard Finance
PFG
Provident Financial
SUS
S&U