Dividend holds key to Vodafone Group (VOD) revival: Investors feel pain as stock languishes at 9-year lows. The stock is languishing at nine-year lows, with the disappointing performance prompting some investors to wonder if it’s time to get out. Yet the telecoms group is also at a major crossroads which could dramatically revive its fortunes – or cause more trouble. Analysts say Vodafone’s £16billion takeover of Liberty Global’s European cable assets, which it hopes to have approved this year, could bag it significant cost savings across the business. And the group is also poised to roll out cutting-edge 5G mobile networks across Europe, which are expected to allow a dizzying array of new devices – including autonomous cars and even talking fridges – to connect to the ‘internet of things’. Vodafone is pondering the future of its masts business and whether it will sell a stake in it, another possible source of income. But at the same time, boss Nick Read – who took over in October – must wrangle with a £26billion debt pile and keep investors onside. Many remain worried about the firm’s £3.5billion dividend, despite reassurances from management. Vodafone first handed shareholders a dividend in 1990 and has never cut it since.
Mail stock punt: Sydney-based eServGlobal Limited (DI) (ESG) offers mobile services such as electronic wallets, customer service platforms, as well as cross-border payment systems. It said last week that its gross profits rose to £2.7million in 2018, compared to a £3.5million loss the previous year. It made an overall loss of £10.4million, but this had fallen from £22.7million previously. Lorne Daniel, director of research at broker Finncap, says the key value in eServGlobal is its interest in Homesend. Mastercard’s joint backing gives it a major boost and means it has the fire power ‘to dominate the international money transfer market’. Because eServGlobal is still loss making. It is trying to sell its Paymobile business, but no buyer has been found yet.
Mail stock pick: Temple Bar Inv Trust (TMPL) seeks out unloved stocks that should be worth more. It looks for firms with the potential to be turned around under the right management, or hidden assets that could be exploited to boost investors’ returns. Run by Alastair Mundy and his team at Investec, the trust looks for firms which have both solid dividend potential and a rising share price. It is heavily focused on UK companies such as the banks, building merchant Travis Perkins, BT and outsourcer Capita. For every one of the past 20 years, it has increased its annual pay-out to shareholders. The trust’s style of picking underperformers is not popular at present.
The high-cost lender seeking to buy rival Provident Financial (PFG) has unveiled a surge in business. Non-Standard Finance (NSF) – which has launched a hostile takeover of the Provvy – said its total loan book grew by 29% to £310.3million last year. The firm is run by the Provvy’s former boss John Van Kuffeler, who is seeking to take advantage of problems at his former firm to seize control. If his bid is successful, NSF will split off its doorstep lender arm, Loans At Home, to keep competition watchdogs happy. NSF set aside a total of £42.7million to cover the costs of losing money where customers fail to pay back what they have borrowed.
The bosses of Foxy Bingo owner GVC Holdings (GVC) have sold shares worth nearly £20m – sending the stock price plummeting. In a move that stunned investors, chief executive Kenny Alexander, 49, scooped £13.7million offloading more than 2m shares for £6.66 each. And chairman Lee Feldman, 51, landed a £6million payday after dumping 900,000 shares in the owner of bookmaker Ladbrokes at the same price. The share sale sent shockwaves through the City and the GVC stock plunged 14%, or 95.5p, to 588.5p on a brutal day for investors. The slump, the worst for nine years, came days before the Cheltenham Festival, a crucial week for bookies when punters bet millions on one of the world’s most prestigious horse racing events.
A power grab at Debenhams (DEB) by Mike Ashley threatens the future of his other business , analysts have warned. The tycoon stunned the City on Thursday when he launched a bid to become Debenhams’ chief executive, booting out boss Sergio Bucher. Ashley would stand down as boss of Sports Direct, creating a power vacuum at the tracksuit-and-trainers retailer. Ashley, who has a 29.7% stake in Debenhams and also owns Newcastle United football club, is understood to have met the retailer’s lenders on Wednesday to put forward his proposals. Debenhams was handed a £40million lifeline by its lenders last month, giving it breathing space as it works on a long-term solution. But 54-year-old Ashley’s attempts to woo the banks are thought to have been unsuccessful, leading him to demand a meeting with shareholders to vote on the plans.
Greggs (GRG) is preparing to launch a home delivery service after a successful test run with Deliveroo and Uber Eats. Chief executive Roger Whiteside said the bakery chain’s existing menu proved popular with customers ordering from home during trials in Newcastle and Manchester. The company plans to expand the scheme, which could see its stores stay open later and offer more hot food popular with families who want evening meals delivered to their door. Whiteside said the chain had introduced hot foods such as chicken goujons, soups, potato wedges and pastas already but would explore more options to boost the appeal of evening deliveries.
Shares in oil minnow Red Emperor Resources NL (DI) (RMP) have been on a bit of a rollercoaster over the last seven days as a cocktail of news from the Winx-1 exploration well in Alaska has sent them both plunging and soaring. The first swing came last Friday after the firm reported that evidence of oil, referred to as ‘shows’, encountered during drilling at the primary Nanushuk target was ‘at the lower end’ of the range needed to be commercially viable, which sent the stock tumbling nearly 65%to 1.4p. However, there wasn’t actually any definitive data or conclusion given as to whether the ‘discovery’ was or wasn’t viable. Then, on Monday, Red Emperor reported that additional ‘shows’ were observed in the well, including another in the primary zone and also in deeper zones, which sent the shares back up 152% to 3.6p. The objective facts remain the same, however, in that no definitive data or conclusion was given as to whether the ‘discovery’ was or wasn’t commercial. Instead, the explorer commented that the latest findings were ‘encouraging’. But as with Friday and Monday, no definitive information was given but that didn’t stop the shares jumping again to finish the week around 303%, or 4.3p, higher at 5.8p. Red Emperor’s partner, 88 Energy Limited (DI) (88E), followed the same down-up trajectory, eventually ending 32%, or 0.3p higher, at 1.2p while another partner firm, Pantheon Resources (PANR), was up 25%, or 5.2p, at 26.1p.
United Carpets Group (UCG) was floored by a profit warning, dropping 10% to 4.5p as weak consumer confidence ahead of Brexit meant it expected an earnings slump of as much as 64% in the year ending 31 March 2019.
Baron Oil (BOIL) shares tanked, plunging 45% to 0.17p after a side-track well at the Colter prospect, in which it holds an 8% interest, was plugged and abandoned after a disappointing result.
Packaging company RPC Group (RPC), which makes plastic containers used by the likes of Nivea and Dulux, has dropped its support for Apollo’s 782p offer and will instead endorse a rival 793p cash offer from Berry Global. RPC said it will recommend shareholders vote in favour of the new offer, which values the company at £3.34billion. RPC received an offer from US private equity giant Apollo in January, but just a week after it accepted, it confirmed it was talking to Berry Global. RPC chairman Jamie Pike said: ‘The combination of RPC and Berry would create a leading global plastics products design and engineering company and represents a strong strategic fit.
Shares in Goals Soccer Centres (GOAL) have crashed as the five-a-side football operator issued another profit warning after uncovering accounting errors. The company, which has about 50 outdoor small-sided soccer centres, including four in California, said it is working to resolve ‘certain accounting errors’ which emerged following a review of its financial results for 2018. It said that as a result, annual profits will be ‘materially below expectations’ and that the reporting date, which was set for 12 March, will be delayed. Goals said they were also reviewing ‘some accounting practices and policies’. KPMG was the group’s auditor until June 2018, when it was replaced with BDO. The firm added that while the ‘accounting adjustments’ are of a non-cash nature, it means Goals is in breach of one of its banking covenants.
Tech firm Seeing Machines Ltd. (SEE) has announced a deal with aerospace company Toll Helicopters to test a computer system which tracks pilots’ eye movements. It will install its technology in flight simulators at Toll’s training centre in Sydney, Australia. Instructors will be able see where pilots and aircraft crew look during training, to ensure they have focused on the right instruments and are aware of what is happening around them.
Outsourcer Serco Group (SRP) won a £153.1million contract to provide support to field workers for a US government pension agency. As part of the contract, it will help field officers of the Pension Benefit Guaranty Corporation (PBGC) manage documents and records, build databases and administer benefits. PBGC protects the retirement incomes of nearly 37m Americans in private sector defined benefit pension plans and is responsible for the benefits of about 1.5m in failed pension schemes. Serco’s boss Rupert Soames said the contract strengthens Serco’s ‘citizen services capabilities in the US and internationally’.
GlaxoSmithKline (GSK) the drug maker reported positive results from clinical trials that could see HIV patients take monthly treatments instead of daily dosages. Two clinical trials revealed that a once-a-month, two-drug treatment was just as effective as a daily, three-drug regimen. If approved, the monthly treatment could alleviate the burden on HIV patients. The studies were carried out on drugs developed by GSK’s subsidiary ViiV Healthcare and Janssen Pharmaceutical Companies, part of pharmaceutical group Johnson & Johnson. Only this week it was recently revealed that a third person may have been cured of HIV.
Shares in retirement firm Saga (SAGA) dropped 10.8p, to 112p after a gloomy note from JP Morgan. Saga is a big player in the insurance industry, where the analysts said tough competition is holding down profits. They added the firm has taken on a lot of debt to buy cruise ships and could be forced to cut its dividend if conditions get any tougher.
High-interest lender Amigo Holdings (AMGO) was another major loser as traders continued to ponder the impact of a crackdown on its industry by the Financial Conduct Authority watchdog. Amigo targets people with a poor credit history with guarantor loans, where a friend or neighbour agrees to pay up if the borrower cannot afford it. The FCA is concerned that guarantors are increasingly being called on to step in.
Building supplies firm SIG (SHI) made a profit of £28.5million in 2018 compared with a loss of £54.7million the year earlier after reining in costs and reducing its headcount. Investors brushed off a decline in revenues from £2.9billion to £2.7billion, sending shares up 10.3p, to 132.5p.
