Patisserie Valerie investor’s anger at Johnson links to KPMG. Fresh questions were raised on Thursday over ex-Patisserie Valerie chairman Luke Johnson’s relationship with accountancy giant KPMG, which is advising another one of his businesses. KPMG was hired as administrator of Patisserie Holdings (CAKE), the parent company of the collapsed cafes chain, on Tuesday after a £40 million accounting fraud brought it to its knees. Since then, 71 outlets have been shut and 920 staff lost their jobs. Johnson, who owned 37% of Patisserie, had hired KPMG last year to advise on a sale of Bread Holdings, which owns posh bakeries chain Gail’s. KPMG also scrutinises Bread Holdings’ financials as its auditor, potentially leading to a conflict of interest, some Patisserie Valerie investors have said. Johnson, who has been trying to save the business, injected two £10 million loans to keep it afloat and raised a further £15.7 million in emergency cash from investors in November. PwC later found “significant manipulation” of its accounts.
Gama Aviation (GMAA) has dished out its second profit warning in just a matter of months. In an unscheduled trading update, the AIM-listed tiddler which manages private jets for tycoons such as Sir Philip Green, blamed “accounting adjustments” for full-year profits being $3 million (£2.3 million) below guidance. Investors have now grown used to these kneejerk updates and as a result the share price has tumbled 66% in the last year. In its previous update, on October 29, the firm also said it expects full-year profit to be $3 million below original expectations. It means 2018 profit is now expected to be $6 million below what the firm forecast in September. Shares tumbled 26p, or 22%, 89p, this session.
UK Oil & Gas saw its shares jump as the explorer behind the project at Horse Hill revealed it will drill nine wells between 2019 and 2020. It also said that after a successful drilling campaign, it plans to move Horse Hill’s ongoing test-based oil production into permanent production by the end of 2019. I think the key word in this sentence is ‘if’ to be honest. UK Oil & Gas Investments (UKOG) chief executive officer, Stephen Sanderson said: “If successful, this comprehensive plan aims to add significant value to the company and shareholders via transforming UK Oil & Gas from an exploration and appraisal company into a fully-fledged producing oil company by the end of 2019.”
Primary Health Properties and MedicX to merge and create £2.3bn GP surgeries empire. Primary Health Properties (PHP) on Thursday unveiled plans for a takeover of rival MedicX to create a £2.3 billion empire of GP surgeries and clinics. The all-share merger, which values MedicX shares at 88.7p, or £393 million, will create a FTSE-250 firm that has 479 properties, many of which are leased to the NHS and used for X-rays and blood tests. Harry Hyman, PHP boss, will lead the new larger company. The firm is looking to capitalise on increased demand for space as the Government looks to free up hospital beds. Hyman said: “It is all about moving care out of expensive and inflexible hospitals, driven by cost saving pressures and technology advancements that aren’t in old hospitals.” Nexus, a management company used by PHP and owned by Hyman and his family, will work with the larger firm. Cost savings of £4 million per year are expected.
Fuller’s agrees to sell London beer business to Japan’s Asahi in £250m deal. Fuller Smith & Turner (FSTA), one of London’s last remaining big brewers, on Friday agreed a £250 million sale of its beer arm in a shock move that will net the founding families a multi-million pound payday. The firm, which makes beer at the Griffin Brewery in Chiswick, has agreed to offload its beer division to Japanese brewing giant Asahi, which is behind the Peroni and Grolsch brands. The deal will see Asahi take control of the production and distribution of ales such as London Pride, as well as ciders. The sale also includes the freehold of the historic brewery. Fuller’s, led by Simon Emeny, will return between £55 million and £69 million to shareholders. The company is just over 50% owned by the founding Fuller and Turner families. Shares in Fuller’s surged 166p, or more than 18%, to 1075p. The firm, founded in 1845, now plans to focus on its 381 mainly freehold pubs and hotels.
— the online discount retailer in which Sports Direct tycoon Ashley has a 29.9% stake — said its profits will be towards the upper end (£28 million) of what the City was expecting this year. Sales were boosted by personalised gifts in the third-quarter to the end of December. Shares rose 12p, or 6%, to 212p.
Tribal Group (TRB) – Shares in the company — which sells software to universities — tanked 9.9p, or 12%, to 70p after it received a letter from one of its resellers demanding between £15 million and £30 million in royalty payments. Tribal claims this has come as a total surprise given that they have been using the unnamed reseller for nearly 20 years, adding that there has never been any problems in the past. The letter from the reseller says that Tribal has failed to account properly for royalties under the terms of an agreement signed in 2000 and had breached the terms of that agreement. Tribal said: “The board does not consider the claims to be justified.” Tribal added that the reseller in question has recently been taken over by an unnamed American private equity firm and that this might explain its new aggressive attitude.
Burford Capital (BUR) was up 30p at 1812p. Liberum believes the industry is managing $15 billion (£11.5 billion) in assets, but that it could grow to $50 billion. Analyst Ben Williams said: “We expect Burford’s litigation investments to grow from $2.7 billion in 2017 to $5.5 billion in 2022. We recognise that this is huge. The $251 million equity raised in early October shows Burford’s growth ambitions.” Rivals Manolete Partners and Litigation Capital Management also gained.
Mastercard today attempted to outmuscle arch-rival Visa to snap up a London payments firm. Mastercard, led in Europe by Ann Cairns, has made a £233 million bid for London-listed Earthport (EPO). The price is a 10% premium to Visa’s £198 million bid for the budget payment system firm. Earthport’s directors have unanimously recommended Mastercard’s offer in place of Visa’s.
Vodafone puts kit by Huawei on hold. The boss of Vodafone Group (VOD) on Friday said he will “pause” installing Huawei kit in some parts of the business after a backlash against the Chinese telecoms giant. Chief executive Nick Read, who replaced long-serving Vittorio Colao in October, said Vodafone will continue however to buy radio equipment from Huawei to help it build its 5G networks. Vodafone is the latest business concerned about the security of the smartphone maker after several foreign governments, including America and Australia, have considered banning or already banned Huawei’s devices to fend off possible leaks, cyberattacks and spying. Vodafone will only stop buying new equipment at the “core” — a critical part of its network — where it uses just a “small amount” of Huawei devices.
Irn-Bru maker Barr (A.G.) (BAG) on Friday said it managed to boost sales in a “volatile” year, but warned of further red tape ahead that could hit the drinks firm. The company, which also produces Rubicon juice and Funkin Cocktails mixers, expects revenues for the year to January 26 to reach £277 million, up 5%. Pre-tax profits are in line with analyst forecasts of £45.5 million. Chief executive Roger White said the growth came despite a number of obstacles in 2018, including bad weather hitting sales of cold drinks, and the new sugar tax. On top of that it had to grapple with a marketwide shortage of CO2 at the height of the summer heatwave. White said: “It’s been a volatile year, but we got through all of that.” However, his firm added: “Looking ahead, the current political and economic uncertainty in the UK looks set to continue. For the soft drinks industry, further regulatory intervention is on the horizon.”
Watchdog slams high-risk bond for controversial website ads. The City watchdog has slammed high-risk bond issuer London Capital & Finance for its advertising on controversial price comparison websites, whose practices were revealed in the Standard. The Financial Conduct Authority has frozen LC&F’s activities while investigating its business, meaning its 14,000 bondholders are unable to receive their coupon payments. It emerged in a supervisory notice that the FCA’s concerns include LCF’s ads via sites including Top-isa-rates.co.uk and Best-savings-rate.co.uk. In the ads, LC&F misleadingly describes its products as “fixed-rate ISA or Bond”. In fact, the bonds, promising 8% interest, are not Isa qualifying, the FCA said. LC&F said that was a “misunderstanding”. The FCA probe continues.
