Pound climbs to over $1.32 on strong jobs update; Paddy Power slapped with £2.2m fine over stolen money; Scottish Power pins its colours to wind; Housebuilder Bellway warns of Brexit risk. has been slapped with a £2.2million fine for ‘failing to protect customers and stop stolen money being gambled’. Scottish Power is set to become the first of the big energy firms to rely solely on wind power as it sells its gas and coal power stations to Drax Group (DRX) for £702million. And the boss of upmarket housebuilder Bellway (BWY) said today he was ‘mindful’ that Brexit ‘could pose a threat to consumer confidence’ during the critical spring selling season next year.
The competition watchdog has today confirmed that it will take Aldi and Lidl into account in its probe of the proposed mega-merger between Asda and Sainsbury (J) (SBRY). In a document outlining how its in-depth investigation would work, the CMA said: ‘The level and impact of competition presented by newer or growing retailers – including Aldi and Lidl – will be considered alongside these issues.’
British American Tobacco (BATS) issued a trading update this morning cutting its full-year revenue target for next-generation products leading to a fall in the share price. Graham Spooner, investment research analyst at The Share Centre, explains what the news means for investors: “The trading update follows last week’s fears of a crackdown on cigarette regulation as the US Food and Drugs Administration highlighted research that discovered that cutting nicotine by as much as 96% would improve public health. “BAT is a share with an excellent long-term track record but it has come under pressure this year and hit a 4-year low last week. But overall the group stated that it continues to perform well. “As Western governments keep the pressure up on tobacco companies, investor focus will increasingly be on its new products, a number of which are set to be launched in the coming months. “The group generates significant steady cash-flow which helps with dividend payments; but the long-term plan by the US authorities to reduce nicotine addiction presents a challenge so the shares are recommended at no more than a ‘hold’.”
Superdry founder Julian Dunkerton lost £32million after a profit warning sent the fashion chain’s shares plunging. The retailer shed more than a fifth of its value as it admitted that the warm weather during September and October has hit demand for its coats and jumpers. With these items accounting for 45% of annual sales, Superdry (SDRY) said the ‘unseasonably hot weather’ so far this autumn would shave £10million off its profits for the year. The company also said it has taken an £8million hit from foreign exchange costs. Analysts had expected profits for the year to come in at around £110million compared with £97million a year earlier.
The boss of cafe chain Patisserie Holdings (CAKE) has quit his role on Restaurant Group (RTN) board as he grapples with the fallout of a massive accounting scandal. Paul May’s decision to step down as a non-executive director at the group which owns Frankie & Benny’s and Garfunkel’s came after a black hole of nearly £40million was discovered at his main business. The 59-year-old and Luke Johnson, Patisserie Valerie’s chairman and part-owner, are facing questions about how the huge fraud went unnoticed until last week. They came under fire yesterday for the number of positions they hold at other businesses, with individual shareholders’ group Sharesoc saying it ‘seemed to be far too many’.
Greencore Group (GNC), the FTSE 250 listed Irish food-to-go supplier, has sealed a deal to sell its entire US arm for £817million. American snacks company Hearthside Food Solutions has agreed to buy the group’s US division on a cash and debt-free basis, the Dublin-based sandwich-maker said. The majority of the proceeds – roughly £509 million in cash – will be handed to shareholders via a special dividend of 72p per share ‘as soon as practicable’, once the deal is completed.
Convatec Group (CTEC) shares plummeted on Monday after the company warned of a hit to profits at the same time as announcing the retirement of its chief executive. The medical equipment maker has blamed the loss on a change in inventory policy by the biggest customer of its infusion devices franchise, which analysts say is US-listed medical devices company Medtronic. As a result, shares in the FTSE 250 medical company’s plunged by nearly 30% in early trading after the announcement.
British online estate agent Purplebricks Group (PURP) has entered the continental European market after revealing it has taken a joint stake in its German counterpart Homeday. The stake was acquired via Purplebricks and publisher Axel Springer entering into an equally-owned joint venture, called NewCo. Britain’s biggest online estate agent said that it has invested £11million in Homeday with Axel Springer putting in the rest of the £22million.
Engineering group Babcock International Group (BAB), which works on UK military aeroplanes and naval bases, has come under fire from a secretive research firm. Boatman Capital Research, which has a Panama-registered website and whose directors are unknown, said in a report that Babcock ‘has systematically misled investors by burying bad news about its performance’. It called on the senior leadership team, ‘specifically the chairman and chief executive’, to step down. Boatman alleged that Babcock’s relations with the Ministry of Defence are ‘terrible’, despite the government department being its largest customer and accounting for 38% of revenue last year.
Active Energy Group (AEG) has stoked up investors by forming a joint venture to turn chicken excrement into fuel. It is teaming with Georgia Renewable Power in the US to install its Coalswitch technology in three biomass-to-energy power plants. Coalswitch uses waste wood, plant materials and palm oil residue as a coal substitute, but Active will ‘evaluate the potential’ to use poultry faeces.
As retailers have continued to take a battering, value footwear company Shoe Zone (SHOE) appeared to be a surprising bright spot. In an end-of-year trading update, the company said revenue had risen by 1.8% to £161million – and profits should be ‘in excess of £11million’. Part of this was down to better revenues from its spring and summer ranges, but also the company generated higher margins after axing loss-making stores and implemented policies to better protect itself from currency swings. After closing 20 stores and opening 16 over the year, Shoe Zone had 492 shops around the UK. Of those, 19 were in the new ‘big box’ format located in out-of-town retail parks. Investors were also pleased that Shoe Zone’s third special dividend would go ahead. The firm said it would distribute £4million of excess cash to shareholders – around 8p per share.
Roman Abramovich had some welcome news, as his 21.1% stake in biomass company Velocys plc (VLS) increased in value by £1.3million. Shares climbed by 39.8%, or 1.5p, to 5.31p as it said it was making ‘strong progress’ in finding investors for its Mississippi biorefinery development.
Urals Energy Public Co Ltd. (DI) (UEN) slid by 10%, or 5.5p, to 49.5p as it revealed it was running out of cash after Sergey Kononov, the president of its subsidiary, made an ‘unauthorised’ £1.1million loan of company funds to another employee. Urals ordered Kononov to repay the misappropriated or outstanding cash, but bizarrely said it would not be firing him due to the confidence that the board had in him ‘over the last few years’.
