Insurance giant Aviva (AV.) shares have dipped after it claimed uncertainties over Brexit and Britain’s economy mean its outlook for this year looks ‘more muted.’ Amid the ongoing uncertainty, the group said it would be difficult to sustain the level of earnings growth it notched up over the last two years. In the annual results statement, Aviva also announced plans to alter the way it pays dividends to shareholders in a bid to cut its debts. It said it would move from a fixed payout ratio to a progressive dividend linked to underlying growth, giving the board more flexibility to make adjustments. Aviva’s new boss, Maurice Tulloch, said he was determined to ‘re-energise’ the insurer as it reported a 2% rise in underlying operating profits to £3.1billion. Mr Tulloch, the group’s former international boss who was appointed chief executive on Monday, added: ‘We have strong foundations but we are only scratching the surface of our full potential. ‘There’s a huge opportunity here. At the heart of it, it’s all about insurance fundamentals, delivering excellent customer experience, tackling complexity and injecting a different pace of change into Aviva.’ The group’s comments on Brexit follow approval last month for it to transfer around £9billion in assets to a new Irish company ahead of Brexit.
Thousands of staff at motor insurer Admiral Group (ADM) have been handed bonuses worth £3,600 each as the firm enjoyed record full-year profits. A total of 10,000 staff were handed the share award under a bonus scheme linked to Admiral’s performance. Boss David Stevens said: ‘Mostly happy staff, mostly happy customers, and increased dividends – something for everyone.’ It came as Admiral posted record full-year profits, driven by strong growth in customer numbers. Pre-tax profit at the group rose 18% to £476.2million in 2018, while turnover increased 11% to £3.28billion. Customer numbers were up 14% to 6.51 million and the full-year dividend came in at 126p.
Struggling fashion firm Quiz (QUIZ) sparked an almighty sell off in its shares today as it crushed investors with its second profit warning in as many months. Quiz – best known for its tie-up with TV show The Only Way is Essex – suffered a painful 50% drop in its shares to 16p in early trading after it slashed its profit forecast for the year by almost half. The retailer, which floated on the London stock exchange less than two years ago, said it now expects to generate earnings of £4.5million, a far cry from the £8.2million it guided to at its first profit warning in January. Quiz blamed the nosedive on a ‘significant shortfall’ in sales across its 169 concessions and 71 shops since the start of the year, and said that it has resorted to heavy discounting to move stock, which would put the squeeze on its profit margins. An online sales rise of 16.2% was not enough to mitigate the decline.
Hyped-up publicity surrounding the launch of a vegan sausage roll helped Greggs (GRG) achieve annual sales of over £1billion for the first time last year. The company’s boss, Roger Whiteside, said the group had spent ‘millions of pounds’ transforming the way people view the brand. The bakery has been ploughing cash into store re-fits, healthier food options and is now looking to move into the evening food market, Mr Whiteside told BBC Today. Chairman Ian Durant said the company’s vegan sausage roll enjoyed an ‘extraordinary level of social and general media coverage’. In the seven weeks to 16 February, the group’s managed shop like-for-like sales rose by 9.6%. Summing up the chain’s performance, chief executive, Robert Whiteside, said: ‘2018 was a year that tested the resilience of Greggs’ business model and demonstrated the benefits of our strategic investment programme.’ He added: ‘Whilst there are significant uncertainties in the months ahead, Greggs has started 2019 in great form, helped in part by the publicity surrounding the launch of our vegan-friendly sausage roll.’
Shares in estate agent group Countrywide (CWD) have fallen over 8% after the group revealed it slumped to a £218.2million loss last year, against a loss of just over £207million a year earlier. The group said ongoing uncertainty surrounding Brexit continued to affect ‘both our sector and consumer confidence as a whole.’ Countrywide’s income for the year also slipped by 7% to £627.1million and earlier this week the embattled firm was slapped with a £215,000 fine by HM Revenue & Customs for anti-money laundering procedures failures. The company’s share price is currently down 8.67% or 0.91p to 9.59p. This time a year ago, the company’s share price was hovering at around the 87p mark. Chairman Peter Long said: ‘2018 was undoubtedly one of the most challenging years that the Group has faced.’ He added: ‘We encountered market weakness in quarter four due to the further uncertainties surrounding Brexit which is affecting both our sector and consumer confidence as a whole. These headwinds have continued into 2019. ‘As a result, we are experiencing further slow-down in residential and commercial property transactions particularly in London and the South, which will affect our half one earnings by some £3-£5 million.’
Provident fights back in bitter £1.3bn bid battle as it accuses former boss of destroying shareholder value and failing to grasp modern technology. A war of words has erupted between the doorstep lender Provident Financial (PFG) and its former boss John van Kuffeler as he mounts a £1.3billion hostile takeover bid. The Provvy has accused van Kuffeler of destroying shareholder value and failing to grasp modern technology. ‘The offer is not in the best interests of Provident’s shareholders and should be firmly rejected,’ it said. ‘The offer has major strategic flaws.’ But van Kuffeler, who ran the Provvy for 22 years and is now leading a bid by his new company Non-Standard Finance (NSF) to buy it, said these criticisms were laughable, adding: ‘Their board doesn’t understand the sector.’ NSF has already secured the backing of three major shareholders who own almost 50% of the Provvy’s stock, and are also invested in NSF. If he wins control, van Kuffeler will sell the car finance arm Moneybarn and sell or shut its online payday lender Satsuma. Provvy shares have fallen more than 70% in the past two years after an IT upgrade went wrong, making it impossible to collect debts. It also revealed regulatory probes over mis-selling claims at Moneybarn and its credit card business, Vanquis Bank.
Boardroom cull at Barclays as it seeks new blood: Three directors go amid war with activist. Barclays (BARC) has ditched three board directors in a shake-up under new chairman Nigel Higgins. Reuben Jeffery, Dambisa Moyo and Mike Turner will stand down at the bank’s annual meeting in May. It comes as Barclays fights off corporate raider Ed Bramson, who is trying to win a board seat. Higgins, a former investment banker at Rothschild, is thought to want a smaller board, and more directors with banking experience. Jeffery and Moyo are leaving due to guidelines which require non-executives to go after nine years. Turner is former chief executive of defence firm BAE Systems and has not worked in finance. He is resigning after less than 18 months. Barclays said in February that fellow non-executive director Sir Gerry Grimstone was also leaving. It means there are now four vacancies, although Higgins could cut the board’s size after he takes over from John McFarlane in May.
Melrose fires starting gun on GKN break-up: Turnaround group to sell gearbox division to US private equity firm. Turnaround group Melrose Industries (MRO) has started the break up of GKN with the sale of one of its business units. The FTSE 100 company, which acquired GKN in an £8.1billion hostile takeover last March, said it expects to complete the sale of Walterscheid Powertrain Group to US private firm One Equity Partners by the summer. The unit, previously known as GKN Off-Highway Powertrain, makes gearboxes and driveshafts for mining and farming vehicles.
Shares in high-interest loan firm Amigo Holdings (AMGO) fell 3.9% after the City watchdog launched an industry-wide crackdown. The company lends cash to customers with a poor credit record at 49.9% interest. It uses a guarantor model where, if the borrower is unable to pay, then a friend or family member steps in to take on the debt. But the Financial Conduct Authority (FCA) warned guarantors across the industry are increasingly forced to make repayments. It is now investigating the market to understand how well-informed guarantors are.
Packager Smith (DS) (SMDS) sells its plastics division in bid to become more environmentally friendly. Box maker DS Smith is selling its plastics division for £450million as part of its strategy to be more environmentally-friendly. It makes products such as nozzles and bags used in boxes of wine, packaging foam and plastic crates and said the sale would shift it towards more sustainable products and cut debts. News of a deal with private equity firm Olympus Partners saw shares rise more than 5%. Miles Roberts, DS Smith chief executive, said: ‘The transaction is attractive financially and strategically as we reinforce our position as a leader in sustainable packaging with a clear focus on our fibre-based business.’
Assets boom means Legal & General Group (LGEN) becomes the first UK investment manager to look after more than £1trillion of savers’ money. Total assets rose £32.2billion last year, taking them above £1trillion for the first time. L&G unveiled profits of £2.1billionn for 2018, up 2% on the previous 12 months. Shareholders will get a total annual dividend of 16.42p per share, up 7% on a year earlier. The firm has showered investors with cash in the past five years, turning £10,000 into £15,818 for those who reinvested dividends, according Hargreaves Lansdown. It puts the company ahead of rivals such as Aviva, where a £10,000 investment would have turned into £11,740 over the same period. L&G chief executive Nigel Wilson said his firm is now focused on putting its money to work in the British regions by supporting science and technology projects.
Shares in Victoria Oil & Gas (VOG) dived after it said executive chairman Kevin Foo will leave when the firm completes a £12.6million fundraising. The Cameroon-focused gas group will raise £6.5million by selling 50m new shares to YF Finance, its largest shareholder, and another £6.1million will be raised through a proposed share placing. Foo, at the company since 2004, will be replaced by senior non-executive director Roger Kennedy.
Shares in Burberry Group (BRBY) suffered after the luxury clothing company fell out of fashion with Goldman Sachs analysts. They downgraded the FTSE 100-listed trenchcoat maker from ‘neutral’ to ‘sell’ and slashed its target price from 2148p to 1855p. The US investment bank liked the long-term story at Burberry, but thinks it will need to spend more on things like marketing to reinvigorate sales. Products from Burberry’s new creative director, Riccardo Tisci, began arriving in stores last month – around the same time that Tisci generated headlines for including a top that included a noose – blasted as a ‘suicide’ hoodie – in one of its fashion shows.
Defence contractor Ultra Electronics Holdings (ULE) was the FTSE 350’s top riser after it boosted its order book and hiked its dividend, despite its profit falling. Its order book was 10% higher at the end of 2018 than it had been the previous year, at £984million, and even though revenue fell 1.1% at £767million, it beat estimates of £756million. The company, which makes torpedo defence systems for submarines, raised its final dividend by 5.7% to 37p per share, meaning the total payout for the year will be 51.6p. It will be welcome news for investors as it is London’s second most-shorted stock, with 11.4% of shares on loan to firms that believe its price will dip.
British American Tobacco (BATS) and Imperial Brands (IMB) rose after the commissioner of US federal body the Food and Drug Administration, Scott Gottlieb, announced he was resigning. It’s rare for a resignation outside a company to so affect share prices, but as a strident anti-tobacco and anti-vaping commissioner who tried to curb the use of flavoured e-cigarettes in the US, the industry will be breathing a sigh of relief. Big tobacco companies have been using the burgeoning market in e-cigarettes to bolster their earnings.
The world’s biggest serviced office space provider, IWG (IWG), gained more than 3% after it said it would close or refurbish some locations in the UK and worldwide to boost its books after a lower annual profit. Revenue rose nearly 10% to £2.5billion, but profit before tax fell 7% to £139million.
Recruiter Pagegroup (PAGE) clocked a 20% rise in full-year profits as its overseas arms offset a less impressive performance in the UK. Profit before tax shot up 20% to £142million on a 14% revenue rise to £1.5billion in what the firm called ‘a record year’. Brexit uncertainty hit the UK arm, which was the only division to post a decline, but there were double-digit rises in Europe, the Americas and Asia-Pacific.
