Another private equity disaster as Saga (SAGA) crashes. Saga shares plunged to a record low yesterday – in another blow to investors in a firm formerly owned by private equity. On a brutal day that cost shareholders £444million, the stock crashed 37%, or 39.55p, to 67.25p as a radical change in Saga’s insurance business sent shockwaves through the City. Saga warned that the overhaul – including the launch of insurance policies with fixed prices for three years – would result in a major hit to profits. The dividend was also slashed by more than half, from 9p a share to 4p. The slump in the share price was a punishing setback for Saga’s 180,000 small investors who own 10% of the retirement firm, and mostly took part in its float five years ago. At that point the shares were sold by Saga’s then private equity owners at 185p each. Saga is just the latest company to suffer having been floated on the stock market by private equity owners. Others include the AA and struggling department store chain Debenhams.
Entertainment One Limited (ETO) in hog heaven as Peppa Pig keeps bringing home the bacon. The production company behind the children’s cartoon has hailed a strong performance in its family and music divisions as it lines up a slate of new releases. In a trading update ahead of full-year results, the company said it was on track to meet management expectations. Underlying earnings in its family and brands arm, which includes the successful Peppa Pig franchise, were up by more than 25% in the year to March 31. PJ Masks, another cartoon, also found success with growth of more than 40%. In music, a back catalogue including songs by folk rockers The Lumineers, and rap stars Dr Dre and Snoop Dogg continued to grow thanks to the rise of streaming.
Serco faces investors’ ire after handing boss Rupert Soames a £255,000 pension contribution. Serco Group (SRP) is the latest company to defy investors over lucrative pension payments. The outsourcer’s boss Rupert Soames was handed £4.5million overall in 2018, including a £255,000 cash pension contribution. The pension payment was worth 30% of his £850,000 base salary – putting the business in breach of tough new guidelines from investors’ groups. Soames, a grandson of Sir Winston Churchill, will also receive this amount in 2019, according to the Serco annual report published yesterday.
Shares in Jersey Oil And Gas (JOG) fell another 10% yesterday after an underwhelming result from a well earlier this week. The North Sea oil explorer’s stock lost almost 60% of its value on Wednesday after it said the Verbier well contained only around 25m barrels of oil equivalent. This was at the lower end of a range that went from 25m to 130m barrels of oil equivalent. Shares closed down 10.1%, or 9.5p, at 84.5p. They were around 230p at the start of this week.
Shares in AO World (AO.) were put through the wash yesterday after it admitted it would take a £2.5million hit this year. The white goods and electricals retailer said an overhaul of its management team, following the return of founder John Roberts as chief executive, will dent its bottom line. The costs also relate to a loss-making contract in Germany. Roberts, 48, who started the firm as a £1 pub bet, returned in January to take over from Steve Caunce, his former business partner. Roberts’ decision to abandon TV advertising and focus instead on social media is understood to have led to a string of redundancies. The father-of-five is also preparing to launch a £2-a-week washing machine rental service. His re-appointment after two years away came after it posted a £10.3million half-year loss.
Insurer Direct Line Insurance Group (DLG) fell a hefty 7.6%, or 27.7p, to 338.8p, as it went both ex-dividend and took a hit from a 37% fall in its rival Saga, which plunged after reporting lower profits and a less-than-rosy outlook for the coming year.
UDG Healthcare Public Limited Company (UDG) made gains on the mid-cap FTSE 250 index after analysts at Barclays upgraded their rating on its stock to ‘overweight’ from ‘equal weight’. The Dublin-based company, which is a contractor for the healthcare industry, rose 27p, to 622.5p after Barclays brokers said they ‘expect earnings upgrades and view management guidance as conservative’.
The market was confident in the prospects of Motif Bio (MTFB), which is trying to create new antibiotics, after it raised £2.7million through a share placing that priced its shares at 6p a pop. Its stock rose – which doesn’t always happen after a placing – by 13.5%, or 0.88p, to 7.38p. Motif will use the £2.7million to keep the business going as it provides more information to the US Food & Drug Administration in the next few months about its antibiotic, Iclaprim, which was developed to treat skin infections.
Home repairs provider Homeserve (HSV) rose after it said its annual profit will be at the upper end of City expectations and significantly more than the £142million it made the year before. The company, which offers monthly plumbing and drainage cover as well as one-off emergency call-outs, saw its shares lift 10p, to 1082p.
Rock star Liam Gallagher’s fashion chain Pretty Green is snapped up by JD Sports Fashion (JD.) after going bust last week. Pretty Green was founded in 2009 by Liam Gallagher, 46, former frontman of rock band Oasis. It sells parka jackets costing as much as £425 and polo shirts for up to £60. The purchase will lead to the closure of 11 shops and 33 concessions in House Of Fraser department stores, costing 95 jobs. But High Street retailer JD Sports will retain Pretty Green’s flagship store in Manchester, as well as its online and wholesale business, securing 72 jobs.
