Activist investor urges Legoland owner Merlin to go private. Merlin Entertainments (MERL), whose attractions include Alton Towers, Legoland and Madame Tussauds, has been told to put itself up for sale by one of its biggest shareholders. San Francisco-based activist ValueAct Capital urged chairman Sir John Sunderland to sound out private bidders amid claims the City does not see the true value in the world’s second-biggest visitors attraction group. Merlin responded by saying “regularly considers all options for driving shareholder value”. In an open letter, ValueAct, which owns a 9.3% stake in Merlin, said its share price “does not reflect the underlying value of the company and may not in the foreseeable future”.
New boss slashes Mediclinic losses. Mediclinic International (MDC) losses have narrowed as a turnaround implemented by its new chief executive shows signs of paying off. Trading for the South Africa-based hospital operator has been lacklustre since listing in London two and a half years ago, leading to a series of profit warnings and a £479m pre-tax loss last year. Ronnie van der Merwe was brought in last year to steady the business. The former anaesthetist has boosted efficiency and cut costs to help Mediclinic cope with regulatory changes and shrinking health budgets. As a result, pre-tax losses for the year to March fell to £137m.
United Utilities Group (UU.) faces nationalisation ‘uncertainty’ with rising dividends. One of Britain’s largest water companies plans to pour billions into new investments and rising dividends as it faces the “uncertainty” of a Labour government asset grab. United Utilities will invest an extra £100m this year to accelerate its spending plan for the start of the next decade and will use its rising profits to hike shareholder payouts by almost 4%. At the same time it has admitted that Labour’s plan to renationalise the water sector is a “key area of uncertainty for the business”.
Marks & Spencer plans new food stores as profits fall for third year. Marks & Spencer Group (MKS) is planning to open 25 new larger food shops as it accelerates the overhaul of its dated store estate as shoppers shift online. Despite reporting reported its third straight drop in annual profits, chairman Archie Norman said M&S was getting “match fit” as it worked on changing every area of the business. The turnaround veteran – feted for his transformation of Asda – said he expected the business to deliver an improvement in trading in the next six months. Full-year pre-tax profits fell 10% to £523.2m. After adjusting for exceptional items, including a £222m charge to reflect the 26 shops shut last year, pre-tax profit rose £17.8m to £84.6m.
SSE abandons home energy market after customer exodus. SSE (SSE) has vowed to sever ties with its home energy supply business by the end of next year after the supplier lost hundreds of thousands of customers. The Big Six owner said it would sell the supply arm, or list it as a separate business, by the second half of 2020 after failing to spin off the embattled energy company in a deal with Npower last year. SSE lost more than half a million customers from its home supply arm in the year to March after customer accounts fell to 6.25m, from 6.8m the year before. The customer exodus caused SSE’s adjusted operating profits from the business to fall by two-thirds to £89.6m in the last financial year.
Dividend cut means more pain for Royal Mail investors. Investors in Royal Mail (RMG) face more pain after the company revealed plans to slash its dividend by two fifths to divert more cash into its turnaround. The postal monopoly said it would cut the dividend by 10p to 15p from next year in a decision that will hit small shareholders and employees who were each handed a stake when it listed in 2013. Royal Mail plans to spend an extra £1.8bn on its UK business in a bid to improve efficiency and keep better track of parcels.
Pets at Home shares jump on better than expected results. Pets at Home Group (PETS) beat City expectations despite reporting lower profits for the year to March as it continued on a restructuring plan. Revenue rose 6.9% to £961m, but pre-tax profit fell more than a third to just under £50m after taking a £40m hit from the costs of a previously announced restructuring. Shares rose as much as 11% as investors welcomes the results, which were better than analysts had forecast. “Our strategy is doing really well,” said Pets at Home boss Peter Pritchard. “We’re in a pet care market that is continuing to grow.”
Superdry shares buoyed by new hire. Superdry (SDRY) enjoyed its strongest share price surge in 2019 after the struggling fashion brand poached an industry veteran for its top team and City analysts hailed the early stages of its turnaround. The company has appointed Wiggle’s Nick Gresham as its chief financial officer, a retail stalwart who has also had roles at Homebase and Debenhams. Mr Gresham has been brought in after a string of profit warnings led to the resignation of Superdry’s board and the dramatic return of founder Julian Dunkerton earlier this year. Analysts at Liberum praised “how swiftly decisions are being made”, arguing that the appointment will allow Mr Dunkerton “time to focus on brand and product”.
Metro Bank founder Vernon Hill sees off shareholder revolt. Metro Bank (MTRO) under-fire founder Vernon Hill has survived a shareholder revolt following calls for him to step down, but the rest of the board did not escape unscathed following a loans gaffe earlier this year. Only 12% of investors who voted opposed the re-election of Mr Hill as chairman despite three powerful shareholder advisory groups and Legal & General Investment Management, Metro’s largest UK investor, calling for him to leave. Chief executive Craig Donaldson was opposed by 10%. Investors instead turned their attention to Stuart Bernau, who until recently ran the bank’s audit committee, and Eugene Lockhart, head of the risk committee.
Babcock chief rejects latest Boatman attack as profits tumble. The boss of Babcock International Group (BAB) hit back at another “very inaccurate” report from the mysterious Boatman Capital research as a series of one-off charges hit the engineering specialist’s profits. Last week Babcock was hit with a second wave of claims made by Boatman, which claimed the company’s structure had created “a system that is opaque, needlessly complex, needlessly expensive and prone to errors”. Babcock defended itself against the “malicious” claims at the time, insisting that it did not intend to write down the value of its defence support group division.
Questor: this well-managed trust has just raised its dividend. So why are we selling? Questor investment trust bargain: Ediston Property Investment Company (EPIC) has coped well so far with the troubles in retail but we can only see the task getting harder
