The turbulence that has buffeted Thomas Cook Group (TCG) over the past year intensified yesterday as the travel group issued a fresh profit warning and reported a half-year loss of almost £1.5 billion after a goodwill write-off of £1.1 billion. Shares of the 178-year-old tour operator, already down by more than 80% over the past 12 months, fell by a further 14.7%, losing 3½p to 19½p — close to the level they plunged to in 2012 when it came close to collapse. The value of its debt also fell further, with the price of its bond maturing in 2022 falling by 9.2 cents to 58.3 cents on the euro, a distressed level, according to data from Bloomberg. The company sought to allay fears of a fresh cash crunch, announcing a new £300 million bank facility to sit alongside its existing £875 million facility. However, it acknowledged that the terms represented a “material uncertainty” that “could cast significant doubt on the ability of the group to continue as a going concern”.
Metro Bank raises £375m amid strong demand for placing. Metro Bank (MTRO) capital raising exceeded its £350 million target by £25 million last night as it asked investors to pay £5 a share to help to shore up its finances. The price was higher than some had predicted, as Metro’s shares have plunged amid concerns over whether it would be able to drum up enough support to back the fundraising and reports last weekend about customers withdrawing cash. Metro took only three hours to close the book with investors. It is thought to have had demand for $1 billion of new investment in total. The placing level was at a discount of 6.8% to Metro’s 536½p closing price and 6% lower than the average price it has traded at this week.
Royal Bank of Scotland Group (RBS) and Barclays (BARC) are among five banks that have been fined more than €1 billion for taking part in a cartel to manipulate the foreign exchange market for 11 currencies. The other banks hit with fines by the European Commission were America’s Citi and JP Morgan, and MUFG of Japan. Citigroup received the biggest fine at €311 million, followed by RBS at €249 million. JP Morgan had a penalty of €229 million, Barclays €210 million and MUFG €70 million. The banks could now face substantial legal claims from pension funds and others who had invested in products affected by the manipulation of rates which included the dollar, euro and pound, lawyers warned.
National Grid (NG.) threatens to sue Labour. Labour will face legal challenges if it seeks to nationalise Britain’s power and gas networks at a knockdown price, National Grid has warned. John Pettigrew, chief executive of the FTSE 100 utility group, said there were “a whole host of legal routes companies including National Grid, or their investors, could pursue against the government if they didn’t pay fair value”. He claimed Labour’s proposals for a replacement system of national, regional and municipal energy agencies would return Britain to Yes, Minister levels of bureaucracy.
Burberry Group (BRBY) handed nearly £3 million in severance pay to a clutch of senior staff last year as part of an overhaul aimed at reviving the luxury goods giant. It has shaken up its management team in response to changing patterns of spending. Burberry cut a layer of executives in its Asian operation last year and has been sharpening its marketing efforts on Instagram and other social media. The £2.9 million of “termination benefits” for former managers Burberry disclosed yesterday come on top of the estimated £10 million in salary, pension and stock-based bonuses collected by Christopher Bailey, 48, its former chief executive and creative head, last year. He quit the board at the end of March last year but remained on the payroll until December.
The American owner of Asda was “disappointed” that its proposed sale to Sainsbury (J) (SBRY) was blocked by the competition watchdog, its boss said. Doug McMillon, 52, chief executive of Walmart, said that a combination of the two supermarket businesses “would have been good for customers and the businesses”. Brett Biggs, Walmart’s chief financial officer, reiterated comments made this week by Judith McKenna, head of its international division, that Walmart would consider “the potential of an IPO at some point in the future” for Asda. Ms McKenna, 53, told Asda staff on Tuesday: “While we are not rushing into anything . . . we are seriously considering a path to an initial public offering — a public listing — to strengthen your long-term success.”
Investec (INVP) closes ‘hyped-up’ robo-adviser Click & Invest. The prospects for the entire fintech sector have been exaggerated, a senior London banker suggested yesterday as he pulled the plug on a so-called robo-adviser investment service at a cost of more than £32 million. Investec, the Anglo-South African bank, shut down its Click & Invest service to new customers with immediate effect, putting up to 54 jobs at risk, with customers being advised to sell or transfer their holdings. Investec said the service had attracted fewer customers than expected when it was launched two years ago. Hendrik du Toit, co-chief executive of Investec, said: “The entire fintech sector has been hyped . . . to think you can create a parallel financial sector to the existing one is a fallacy.”
GVC Holdings (GVC) bets on less gloomy impact of fixed-odds cut. The gambling group behind Ladbrokes and Coral has reduced the predicted impact on its betting shops from the imposition of a £2 maximum stake on fixed-odds betting terminals. GVC Holdings said that the cut in the maximum stake from £100 to £2, brought in on April 1 to address gambling addiction, would hit its earnings by about £105 million, down from a previous forecast of £120 million. GVC has previously estimated that the £2 stake would result in 950 to 1,000 shop closures over the next 18 months, costing about 5,000 jobs, although a reduction in losses may mean the final number of closures is lower. Its optimism over the cut in the maximum stake is in contrast to William Hill, which said that the impact was “in line” with its initial guidance, while Flutter Entertainment — formerly Paddy Power Betfair — said that the fall in revenues was “at the upper end” of the predicted drop.
Just Group to shut its US division. Just Group (JUST) reported a sharp slide in sales for the first quarter and said it would shut its loss-making American division as part of a cost-cutting drive, sending shares in the struggling retirement and pensions specialist more than 7% lower. As part of a plan to tackle the impact of costly new rules covering its sale of lifetime mortgages that come into effect later this year, the FTSE 250 company also said that it would step up its plans to save money and consider closing other loss-making parts of the business.
Action stations bring reward for 3i Group (III). The private equity group 3i has booked another £670 million of gains from its single biggest investment, the continental discount retailer Action. 3i valued its 44.3% holding in the fast-growing retail chain at £2.73 billion, up from £2.06 billion a year earlier, boosting its total return to shareholders to £1.25 billion for the year to 31 March, up by 18%. Action has been a money-spinner for 3i since it put in an initial €130 million in October 2011. Including the £800 million of dividends extracted since then, it has made 28 times its initial investment.
Countryside finds its new direction very affordable. An increased focus on affordable homes and rental properties helped Countryside Properties (CSP) to boost revenue for the first half of the year. The housebuilder built 2,362 homes in the six months to the end of March, a 43% increase on the same period the previous year. Revenues jumped by 27% to £507 million. Adjusted operating profit increased by 11% to £89.4 million. Ian Sutcliffe, chief executive of Countryside, said strong sales in the second quarter showed that consumer sentiment had improved as people became “tired of the discussion and rhetoric” surrounding Brexit.
BT boss offers incentive to staff with £50m share plan. BT Group (BT.A) is to hand staff £50 million in shares each year in an attempt to energise them and improve customer service. Philip Jansen, its new chief executive, said he wanted to give his 100,000-strong workforce a stake in the company’s future, as he ramps up investment in next-generation fibre-optic and 5G networks. Mr Jansen, 52, took charge in February with a mission to revive the fortunes of the former monopoly operator, whose market value has halved over the past three years.
Kingfisher (KGF) the company behind the B&Q and Screwfix chains has launched an express-store format to lure younger urban shoppers. Kingfisher’s pilot Good Home shop in Wallington, near Croydon, focuses on home improvement projects instead of the products needed to undertake them. The goal is to bring the content of B&Q’s traditional large warehouse-style outlets to the high street. More shops are set to open in the UK and France later this year.
A deal to breed virus-resistant pigs in China lifted the livestock genetics company Genus (GNS) to the top of the FTSE 250 leaderboard. The company has agreed to license its intellectual property to Beijing Capital Agribusiness in a deal that will give it access to the world’s biggest pork market, if Chinese regulators approve its technology. BCA will use the patent to develop a market in resistant-strain pigs, giving Genus a foothold in China, which bars foreign companies from operating and developing biotechnology in its market. Under the deal, Genus will receive upfront and milestone cash payments of $20 million, subject to conditions being fulfilled. If BCA gets regulatory approval, Genus will receive between $120 million and $160 million under a joint venture that will use its gene-editing knowledge. The process will take some time, Genus said in a statement. China has no regulatory framework for the use of gene-edited animals yet. Beijing is opposed to genetically modified crops but gene editing does not run into the same issues because it does not introduce genes from other species.
Utilities continued to suffer from Labour’s threat to nationalise them at below market value. National Grid (NG.), which delivers gas and electricity around the country, was down for a second day, shedding 28¼p to 814½p.
Sophos Group (SOPH), the FTSE 250 cyber-security software company, lit up the UK markets. Its shares soared 47p to 387p after it beat forecasts. It delivered $53.6 million profit before tax for the year to the end of March, recovering from a $41 million loss the previous year. It said billings fell 1.1% to $760 million but that was above consensus forecasts. The antivirus developer has seen its shares tumble from 639p in the past year as it warned that the rapid growth rate of previous years would not be replicated. Its guidance lowered expectations enough for the stock to bounce on little more than reassuring fourth-quarter figures.
Tempus – Admiral Group (ADM): Avoid. The opportunities are ample but profits are under pressure from rising costs and claims inflation
Tempus – Workspace Group (WKP): Buy on weakness. Growing, highly profitable business with attractive model
