The Times 12/06/19 - Vox Markets | Vox Markets

The Times 12/06/19

The future of the emergency restructuring at Sir Philip Green’s retail empire rests on a knife-edge vote today after one of Arcadia’s biggest landlords said that it would vote against the plan. Creditors of Arcadia, including landlords and suppliers, are due to meet in London to vote on an overhaul of the owner of the Topshop chain. A vote last week was adjourned when it became clear there was insufficient support for the plans. Intu Properties (INTU) has told Arcadia it intends to vote against the revised proposal for a company voluntary arrangement, an insolvency procedure that would result in 50 store closures and rent cuts on a further 194. Intu’s objection was first reported by Sky News. However, both the pensions regulator and the Pension Protection Fund confirmed their support for the new CVA last night. Arcadia has warned that if creditors do not approve the overhaul, it is “highly likely” to fall into administration. Intu holds significant sway as its exposure to the retailer means that it accounts for about 15% of the vote on at least six of the seven CVA proposals, which will need the approval of 75% of creditors to succeed. Arcadia was continuing to try to win over landlords last night. British Land Company (BLND) and Hammerson (HMSO) are expected to vote in favour. Land Securities Group (LAND), M&G, Aviva Investors and Aberdeen Standard needed to be persuaded last week and it is unclear how they will vote.

Halma advances on all fronts thanks to its accent on safety. The most successful British industrial company of the 21st century so far hit new heights yesterday, with Halma (HLMA) reporting record profits, worldwide sales growth, a fortieth consecutive year of dividend rises and a share price that topped the FTSE 100 leaderboard as it moved to a new peak. Andrew Williams, the engineering group’s chief executive, said that being in the right sectors, completing successful takeovers and identifying the best local management had helped it to shrug off the worst effects of Brexit and the US-China trade war.“Safety, healthcare, environmental — these are all closely regulated markets and therefore good markets for long-term growth,” Mr Williams, 52, said. “We aim to double the size of our business every five years, half through organic growth, half through acquisitions.”

Hargreaves questioned over its links to suspended fund. The Treasury select committee has requested details of Hargreaves Lansdown (HL.) ties to the suspended Woodford fund, intensifying scrutiny of the investment platform’s role. Nicky Morgan, chairwoman of the committee, wrote to Hargreaves Lansdown yesterday regarding its relationship with Woodford Investment Management. She said: “We have asked Hargreaves Lansdown about its links to the Woodford fund, the fund’s inclusion on Hargreaves Lansdown’s Wealth 50 list and the number of Hargreaves customers exposed to the fund.” The committee also has requested a timeline of Hargreaves’ engagement with Woodford, including when it raised concerns, and whether it received commission from administering investments related to Woodford.

Dividend cut is answer to tough times at Quiz (QUIZ). A sharp fall in profit and tough trading on the high street have forced Quiz to suspend its dividend. Shares in the troubled fashion chain fell sharply yesterday after it said that it was seeking to save up to £3 million in costs with plans that include reducing the number of its concessions and stores. Pre-tax profit tumbled to £216,000 in the 12 months to the end of March, compared with £8.5 million in the previous financial year, despite a 12% rise in revenue to £130.9 million. Online revenue increased by 34% to £41 million, international turnover was up 8% to £23 million and in British stores and concessions it grew by 4% to £66.9 million.

Ashley goes to court over Debenhams rescue plan. Mike Ashley has stepped up his battle with Debenhams (DEB) by launching a legal challenge to an emergency restructuring of the department stores chain. Debenhams said yesterday that it had received applications contesting its company voluntary arrangements from parties including Mr Ashley’s Sports Direct International (SPD). It is understood that Debenhams has received two legal challenges and that the second has been submitted by M&G, one of its landlords. The retailer put two CVAs before its creditors, including landlords, last month, with one receiving 97% backing and the other 95% approval. Each needed 75% support to pass.

Profit warning triggers takeover talk at out-of-fashion Ted Baker (TED). A second profit warning in less than six months sent shares in Ted Baker down by more than a quarter yesterday and triggered talk that the fashion retailer could be vulnerable to a takeover. Ted Baker blamed cut-throat discounting in global markets, consumer uncertainty, unseasonably cold weather in North America and disappointing spring and summer womenswear collections for slashing its forecasts. In a trading update covering the 19 weeks to June 8, it predicted underlying pre-tax profit for the year to January 25 of between £50 million and £60 million, set against consensus forecasts among analysts of £70.9 million and profits last year of £63 million.

The world’s biggest catering group has announced the €475 million purchase of a Nordic food services business. Compass Group (CPG) said that it was buying Fazer Food Services, a family-owned caterer operating in Finland, Sweden, Norway and Denmark with a presence in business industry, education, healthcare and defence. It said that Fazer’s focus on quality and innovation would “enable Compass to create compelling and innovative solutions for its clients and consumers”. Fazer Food Services runs more than 1,000 restaurants serving almost 500,000 meals a day. It has a turnover of about €600 million and 7,000 employees. It is being acquired from Fazer Group, founded in 1891, which sells baked goods and confectionery.

Goldman Sachs to target older savers in Saga deal. The retail banking business of Goldman Sachs has made a fresh inroad into Britain with a plan to offer savings products to customers of Saga (SAGA), the retirement specialist. The pair will launch products from the autumn with the aim of tapping into the large number of Saga’s customers who have their wealth in liquid savings. Marcus is Goldman’s retail bank, named after Marcus Goldman, who founded the business in New York in 1869. Marcus, which took its first deposits in Britain in August last year, offers some of the highest rates of interest as part of its fast-growth strategy. It has attracted 250,000 UK customers with its easy-access savings account.

A Hong Kong billionaire is suing Shaftesbury (SHB), one of the biggest property owners in London’s West End, over a share placing. Samuel Tak Lee, the largest shareholder in Shaftesbury, is seeking £10.4 million for alleged losses, saying that the £265 million fundraising in December 2017 diluted his stake. Mr Lee, 80, owns the Langham estate north of Oxford Street and has a 26.3 per cent stake in Shaftesbury. His spokesman said: “He considers that the capital-raising was not for the proper purpose of raising equity funding for Shaftesbury, but rather for the improper purpose of diluting his stake in the company and increasing the cost of any potential takeover bid by him.”

Switching its focus from London may be showing early signs of promise for Crest Nicholson Holdings (CRST), but not yet on the all-important bottom line. The housebuilder said yesterday that its order book for uncompleted homes for the first six months of the year had risen by £80.8 million, or 15%, to £625.2 million year-on-year. Revenue was also up, by 7% to £501.9 million, which, according to analysts at Liberum, the broker, showed the business was “starting to see the fruits of its revised strategy” faster than expected. The company also said that it was on track to meet full-year revenue expectations of about £1.1 billion. Yet operating profit margins shrank from 16.8% to 14.1% — as house price growth stalled and both building costs and the proportion of lower-profit, forward-funded sales rose — and profit before tax fell by 11% to £64.4 million.Chris Tinker, 58, interim chief executive, said yesterday: “We enter the second half of the year with encouraging forward sales, a growing outlet base and an increased proportion of homes for sale at more affordable price points.”

Despite noting that buyers were returning to the housing market, Bellway (BWY) said yesterday that the overall value of its order book had fallen. The FTSE 250 housebuilder said that its sales reservation rate had increased by 4.7% year-on-year to 244 homes a week in the four months to the start of June. Its order book was up 2.7% in volume, at 6,312 homes, but its value fell by 3.5% to £1.6 billion. It blamed this discrepancy on an increased delivery of social housing units. Bellway, which was founded in Newcastle in 1946, said that demand for affordable homes had been supported by high employment, low interest rates and the government-backed Help to Buy scheme.

The impact of a lawsuit filed in California by Uber reached the City yesterday when an Aim-listed company revealed that it had been dragged into a long-running row between the American ridesharing app and its advertising agency. Nearly 40% was wiped off the value of Taptica International (DI) (TAP) after it said that it was one of up to a hundred companies subjected to a legal challenge by Uber Technologies, which is alleging fraudulent concealment, negligence and unfair competition. “Based on the information available to the company to date, the claims appear to be without merit,” it said, adding that it would “aggressively defend against these claims”. The claim against Taptica and others stems from a case in late 2017 in which Uber sued Fetch, its advertising agency, now part of Dentsu Aegis, for $40 million, claiming that millions of dollars it had spent on adverts had been wasted. It alleged that the advertising technology companies employed by Fetch were claiming payment for users who downloaded the Uber app organically and not after clicking on one of its adverts. The UK-based Fetch countersued for $20 million early last year over unpaid invoices and said that Uber was a “faithless business partner”. Uber subsequently voluntarily dismissed the case against Fetch, but now it has extended its legal fight to the businesses that Fetch used to place its adverts.

 

Tempus – Kingfisher (KGF): Buy. Progress in the turnaround is not shown in the price and a new boss should inject vigour

Tempus – EI Group (EIG): Buy. The move to a more profitable model is paying off

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Mentioned in this post

BLND
British Land Company
BWY
Bellway
CPG
Compass Group
CRST
Crest Nicholson Holdings
DEB
Debenhams
EIG
EI Group
HL.
Hargreaves Lansdown
HLMA
Halma
HMSO
Hammerson
INTU
Intu Properties
KGF
Kingfisher
LAND
Land Securities Group
QUIZ
Quiz
SAGA
Saga
SHB
Shaftesbury
SPD
Sports Direct International
TAP
Taptica International (DI)
TED
Ted Baker