Sir Richard Branson was last night facing a backlash amid fears he and fellow investors could pull the plug on Flybe Group (FLYB) less than a year after coming to its rescue. The entrepreneur’s airline teamed up with Stobart Group Ltd. (STOB) and hedge fund Cyrus Capital to snap up Flybe on the cheap in early 2019, with the promise to invest £100million to turn the ailing carrier around. The deal – which was completed in March – all but wiped out shareholders, with investors receiving 1p a share as part of the £2.2million rescue. The consortium, known as Connect, insisted this was the ‘most realistic means’ of securing the airline’s long term future after it had been hammered by high fuel costs, competition and spiralling debts. But it is understood that two of Connect’s shareholders – Stobart and Cyrus – are now reluctant to inject £100million into Flybe in the coming years unless ministers agree to delay the airline’s multi-million pound air passenger duty bill. This has left the airline on the brink of collapse, according to Sky News.
Circassia Pharmaceuticals (CIR) one for the recovery portfolio as sales pick up. City broker finnCap expects Circassia’s revenues to rise to £84million this year and to hit £106million in 2021, with a healthy profit in two years’ time. Cash at the latest year-end was also higher than expected at £27milllion with outflows in the second half dropping to about £5million from £20million a year earlier. Changes in the boardroom have also seen listed biotech company veterans Ian Johnson and Michael Roller take over as executive chairman and CFO respectively of Circassia. A dispute over the distribution of a breathing product for babies is a reminder that there still might be a few bumps in the road. But with revenue rising, costs under control and the potential of the Tudorza re-labelling and Duaklir approval to come through fully, a market value of £87million at 23.3p does not reflect the recovery potential.
Savills (SVS) shares jump after announcing that the UK commercial and residential markets picked up after last month’s general election. The real estate business said its full-year results for 2019 will be at the ‘upper end’ of expectations, following an ‘excellent’ performance in the UK. Savills said that Brexit uncertainty had restrained UK growth until mid-December, but saw ‘a strong close to the year as confidence to transact returned to the market’. The firm also said it was particularly ‘resilient’ as it faced challenging backdrops in both the UK and Hong Kong. In Hong Kong, Savills said the political unrest had a severe impact on trading from the middle of 2019 and continues to press on performance in the region. It announced that, as a result of the political backdrop, its Asia Pacific region has performed ‘slightly below’ expectations, while the company has also seen an increase in the time taken for its Australian business to bear fruit.
William Hill (WMH) said profits for the past year are expected to have surpassed expectations after it was buoyed by favourable sporting results in December. The gambling giant said this helped to boost its retail division and increase total group profits. It expects operating profits from continuing operations in 2019 to have been between £143million and £148million. The company said it made ‘good progress’ despite a challenging regulatory backdrop which saw its retail business hit by a heavy reduction in the maximum stake for fixed-odds betting terminals.
Train delays and poor attendances during the Rugby World Cup will cause profits to be ‘slightly below expectations’ at the The City Pub Group (CPC). The pub chain has said its earnings have been hit by a set of ‘one-off factors’ over the last year, although they still expect to make a profit of around £9million. These include the South West Trains strike in December, the underwhelming impact of the Rugby World Cup and ‘unhelpful weather’. They also blame the sales impact on political uncertainty and the delayed opening of two former Jam Tree pubs in London for hitting profitability. Bosses had previously warned the company was reining in ambitious expansion plans, blaming Brexit and the potential impact of a no-deal departure.
Shares in Verona Pharma (VRP) were the day’s stand-out performers after its phase IIb clinical trial was hailed as a big success. Verona has developed a treatment for a life-threatening respiratory condition called chronic obstructive pulmonary disease. Patients were given the Verona drug as an add-on to the current, established medication. The results of the trial were described as impressive.
