The Times 10/09/19 - Vox Markets | Vox Markets

The Times 10/09/19

Two of Britain’s biggest banks face a bill of more than £3 billion after a last-minute rush in payment protection insurance claims, pushing the total cost of the scandal above £50 billion. Lloyds Banking Group (LLOY) and Barclays (BARC) yesterday became the latest lenders to count the cost of a surge in compensation claims and requests for information before the August 29 deadline, which was imposed by the Financial Conduct Authority. The banks joined Royal Bank of Scotland Group (RBS), CYBG (CYBG) owned Clydesdale Bank and the Co-operative Bank in reporting far more complaints than expected last month as individuals and claims management companies rushed to make contact before the cut-off. Lloyds said yesterday that it had suspended its programme to buy back shares and that it would take a new provision of between £1.2 billion and £1.8 billion alongside its third-quarter results next month. That could bring its total bill for PPI to £22 billion. Barclays said that it would add £1.2 billion to £1.6 billion to its provision, on top of the £9.2 billion that it had already provided.

Plans to almost double revenues at Abcam (ABC) in the next five years divided opinion in the City yesterday amid fears that they could amount to “jam tomorrow”. The Cambridge-based biotechnology company announced an investment drive to increase revenue to between £450 million and £500 million by 2024, including by increasing market share in its core antibodies market, expanding into adjacent products and continuing to upgrade its IT systems. The five-year growth plans would be funded by an increase in capital expenditure to between £175 million and £225 million and a weakening of profit margins, the company said. Shares in Abcam fell as investors expressed concern that the plans would hit profits in the short term and as analysts failed to reach a consensus on the company’s prospects.

The conglomerate behind Primark has warned that the weaker pound is set to put profit margins at the fashion chain under pressure in its next financial year. Associated British Foods (ABF), which generates half its sales and profit from the retailer, said that the strengthening of the US dollar and decline of sterling would increase the cost of goods. The alert, issued in a pre-close trading update for its financial year ending September 14, pushed shares in ABF down 49p to £23.05. John Bason, 62, finance director said that it would not pass on the costs to shoppers, meaning that there would be an inevitable hit to profit margins, but the business would look to mitigate some of the impact, including via lower material costs for its garments.

A private equity firm that previously owned Eddie Stobart Logistics (ESL) has made a bid approach to the troubled trucking company. Eddie Stobart, which was left reeling by an accounting crisis and the abrupt exit of its boss and which had its shares suspended last month, said yesterday that it had received a “preliminary expression of interest” from the Isle of Man-based DBay Advisors about a possible takeover. DBay, which is Eddie Stobart’s third biggest shareholder, has until October 7 to make a firm offer or walk away. The potential bid could be a fillip for Neil Woodford, the troubled fund manager, who is Eddie Stobart’s largest investor with a 23%.

The world’s largest education publisher has been hit with a class action lawsuit after computer hackers accessed the personal information of an estimated one million American students. Pearson (PSON) stands accused of being slow to identify the breach and of failing to raise the alarm quickly enough. According to legal filings, the hack was in November last year, but Pearson did not become aware of it until the FBI law enforcement agency informed it in March. Parents and students were not told until July. The plaintiffs — a mother and daughter from Illinois — said that the British company had “concealed its knowledge” of the data breach from victims.

The chief executive of Berkeley Group Holdings (The) (BKG) has sold shares worth almost £12 million days after the housebuilder suffered a revolt over bosses’ pay. Rob Perrins, 54, cashed in almost a quarter of his stake yesterday, a stock exchange filing showed. The move came after an embarrassing annual meeting for Berkeley Group on Friday, when 43% of voting investors opposed the director’s pay policy, despite Berkeley’s efforts to curb executive pay. The group has proposed scrapping its annual bonus and forcing bosses to keep shares paid out by its long-term incentive scheme for an extra two years. Management will have to re-earn shares that have not vested by 2021 over a four-year period. However, shareholder advisory groups such as Institutional Shareholder Services and Glass Lewis said that the measures did not go far enough.

Profit-taking pushed AstraZeneca (AZN) 251p lower to £70.04. Its shares have weakened since hitting a record high of £75.33 this month. Astra was also knocked by news that Nancy Pelosi, Speaker of the US House of Representatives, is to unveil drug pricing legislation. GlaxoSmithKline (GSK) closed down 36p at £16.79¼.

Intu Properties (INTU) jumped 3¾p to 40¼p after a report that Orion Capital Managers, a private equity firm, was examining a deal for the shopping centre owner.

TalkTalk Telecom Group (TALK) slipped 1¼p 103½p despite Sir Charles Dunstone, executive chairman of the telecoms group, lifting his stake from 28.6% to 29.2%. He spent almost £6.3 million on the shares, according to a stock exchange filing.

Spire Healthcare Group (SPI) was buoyed by upbeat analyst comment and closed 4¾p higher at 116p. Analysts at RBC Europe started their coverage of the private hospitals group with an “outperform” rating and told clients that Spire could surpass the market’s revenue forecasts for 2019. They set a 149p price target on the stock.

Tempus – Standard Life UK Smaller Companies Trust (SLS): Hold. Strong defensive portfolio well positioned to endure the slowdown that is likely to come after Brexit

Tempus – PayPoint (PAY): Buy. Growth of higher-margin activities will offset declines

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Mentioned in this post

ABC
Abcam
ABF
Associated British Foods
AZN
AstraZeneca
BARC
Barclays
BKG
Berkeley Group Holdings (The)
CYBG
CYBG
ESL
Eddie Stobart Logistics
GSK
GlaxoSmithKline
INTU
Intu Properties
LLOY
Lloyds Banking Group
PAY
PayPoint
PSON
Pearson
RBS
Royal Bank of Scotland Group
SLS
Standard Life UK Smaller Companies Trust
SPI
Spire Healthcare Group
TALK
TalkTalk Telecom Group