 | NMC Health (NMC) has branded accusations of mismanagement and balance sheet manipulation made by US-based short seller Muddy Waters ‘baseless and misleading.’ NMC Health, which saw over £1.6billion wiped off its value on Tuesday, said it will ‘respond in detail in due course’, while reaffirming its full year outlook and announcing a fresh share buyback scheme. NMC Health, which was founded by UAE-based billionaire Bavaguthu Raghuram Shetty, said Muddy Waters’ claims ‘appear principally unfounded’ in a stock market update today. |
 | Pearson (PSON) unveiled a £530million deal to sell its remaining stake in book publisher Penguin Random House as it announced the retirement of chief executive John Fallon. Pearson will end its near-50 year relationship with Penguin with the sale of its last 25% holding in the group to German media group Bertelsmann – a deal valuing Penguin at around £2.8billion. Pearson said Fallon will step down as boss in 2020 once a successor has been appointed. His departure will cap more than six years in the role and comes after a difficult 12 months, with Pearson recently warning over profits. The group is halfway through an overhaul to become a digital educational products and services company – a strategy that Fallon has overseen, and has included a raft of major asset sales, as well as job cuts. |
 | Versarien (VRS) edged higher after being selected to participate in a project led by Airbus. The graphene flagship programme is funded by the European Commission, and helps companies work together to put emerging technologies to use. Versarien will focus on using graphene, an extremely strong substance formed from carbon, to make thermoelectric ice protection systems for aircraft. |
| The tycoon behind the investment platform AJ Bell (AJB) has cashed out £23.1million from his company. Andy Bell, 53, sold 5.5m shares for 420p each, regulatory filings revealed, but remains the largest shareholder by far, with his 24% stake worth about £418million. He also sold shares worth £18.1million when AJ Bell floated on the stock exchange a year ago. AJ Bell yesterday said it remained ‘fully committed to the business and confident in the outlook’. Bell himself said: ‘If I’d been selling a large chunk I think people might be justified in being concerned, but it really is a cashflow-driven sale. It gives me a few quid to go and play with, with other projects I’ve got on the go.’ | |
 | Shares in Staffline Group (STAF) plunged 24.9p to 81.1p as it revealed profits for the year would come in well below expectations. The company, which had to launch an accounting probe this year over claims some clients did not pay the minimum wage, said profits will likely be between £10million and £12million, compared to a September forecast of £20million and last year’s £36m. |
 | Arrow Global Group (ARW) soared after raising £712million to buy more loans. It snaps up cut-price debt from institutions like banks and then aims to make a return on its money by collecting repayments. Arrow said it was a ‘major achievement’ in its ambition to become a full-blown investment manager. |
| Trainline Plc (TRN) threatened to derail as Barclays cut its target price on the stock from 490p to 480p. After the company posted impressive trading performance this week, Barclays said momentum was slowing. | |
| Shares in NMC Health (NMC) dropped again as the private hospital firm fought back against explosive claims of financial mismanagement. The company said claims made by US hedge fund Muddy Waters in a 34-page report published earlier this week appear unfounded – despite their crippling effect on its share price. The stock plunged by a third when the attack was launched on Tuesday, wiping £1.8bn off the business. Muddy Waters, which makes money by betting that the price of shares in companies will fall, raised “serious doubts” over NMC’s finances and claimed there was poor corporate governance. |
| The founder of investment platform AJ Bell (AJB) insisted he remains committed to the business after selling £23m worth of shares to raise “a few quid to go and play with”. Andy Bell, chief executive of the firm he co-founded in 1995, reduced his stake from 25% to 24% and will remain the company’s largest shareholder. Shares in AJ Bell have more than doubled in value since the fund shop floated on the London Stock Exchange in December 2018. The surge means Mr Bell’s remaining stake is worth about £415m. One industry analyst described the shares’ current valuation as “stratospheric”. | |
 | Blackstone has sparked hopes of a post-election dealmaking spree after snapping up warehouse owner Hansteen Holdings (HSTN) for £500m. The private equity giant wants Hansteen’s warehouses for its own new logistics company Mileway, which is seeking to cash in on the online shopping and food delivery boom, paying 116.5p a share for the business. It comes as experts brace for a flood of similar takeovers, with firms expected to spend billions of pounds in the UK now that political uncertainty has been lifted by the Conservatives’ resounding general election win. |
| The boss of AJ Bell (AJB) has raised £23 million by selling shares in the company after its sharp stock market rise. Andy Bell sold 5.5 million shares in the company. Its stock price closed up 1½p last night at 425p, more than 150% higher than the 160p-a-share at which it floated at a year ago. AJ Bell said: “Andy Bell will remain the company’s largest shareholder and is fully committed to the business and confident in the outlook. This small placing is being carried out to provide additional liquidity in response to strong investor interest in last week’s placing.” Some City analysts are bearish on the stock. Liberum introduced a “sell” rating in October, describing the share price as “a challenge to justify”. | |
   | A flurry of profit warnings rocked London’s junior market yesterday, prompting concerns that political uncertainty and a global economic slowdown have hit smaller British businesses. Five companies listed on Aim admitted that results for this year would not meet the expectations of their bosses or investors. Staffline Group (STAF) cut its forecasts while warning of an accounting blunder and announcing the departure of its finance chief. The company blamed “high levels of consumer uncertainty” as businesses held off from recruitment in the run-up to the election. Staffline added that it overstated profit by about £4 million last year and that Mike Watts, the chief financial officer, had left with immediate effect. Bistack (BIDS) was the most heavily punished by the market, with its shares tumbling by a third to 7¾p. The company said that it would miss revenue targets this year as talks with big advertising agencies had dragged on for longer than it had expected. 600 Group (SIXH) said that its performance had been hit by the downturn in the global automotive market, with orders in Germany and the Far East particularly weak. Prospects looked better in Britain, where sales had doubled, but full-year results would be “significant below” forecasts. Midwich Group (MIDW) also bemoaned a “challenging” global backdrop as it warned that a lack of large projects, which are typically higher margin, would hold back profits this year. The news sent the shares 36p lower to 573p. Touchstar (TST) was the other company to sound the earnings alarm yesterday, sending its share price tumbling by 4p to 31½p. |
| The boss of Pearson (PSON) has resigned only months after a profits warning knocked his plan to reshape the troubled education publisher off course. John Fallon, a company veteran who has been chief executive since 2013, will step down next year when the FTSE 100 group finds a replacement. Sidney Taurel, 70, the chairman, will oversee the succession process. Mr Fallon, 57, has transformed Pearson from a broad-based publisher of newspapers, paperbacks, textbooks and financial information into an education specialist. Its performance has disappointed investors, who have seen their holdings halve in value during Mr Fallon’s tenure. His reign has been punctuated by setbacks at its mainstay US university business, which used to reap lavish profits from $200 print textbooks but has struggled to adapt to the world of online learning. Two years ago Mr Fallon endured one of the largest shareholder revolts on record. More than 60% of investors voted against his £1.5 million pay package, which came in a year when Pearson reported a record £2.6 billion loss. He said yesterday that Pearson had made good progress in managing the shift to digital and that the company was “much more efficient” than when he succeeded Dame Marjorie Scardino. |
| Pearson (PSON) has ended a 50-year relationship with the sale of its remaining stake in the owner of Penguin Books. Penguin was founded in 1935 by Allen Lane and is credited with bringing paperback books to a mass audience. It won a significant legal case in 1960 after being sued for publishing the first uncensored English version of Lady Chatterley’s Lover by DH Lawrence. The victory is credited with liberalising the books industry. Pearson bought Penguin in 1970, taking ownership of all its imprints, including Penguin Classics, Puffin Books and Viking Press. |
| NMC Health (NMC) hammered by a short-selling attack from a US investor has launched an internal review of the claims. NMC Health yesterday responded to a scathing 34-page report from Muddy Waters, a San Francisco-based bear raider, which raised “serious doubts” about its financial statements, including asset values, cash balance, reported profits and debt levels. NMC said it will review the “assertions, insinuations and accusations made in the report, which appear principally unfounded, baseless and misleading, containing many errors of fact, and will respond in detail in due course”. The company reiterated trading guidance for this year and next and moved on with a $200 million share buyback approved by shareholders this month. The report from Muddy Waters, which has taken a short position in NMC, drove the company’s shares down by almost a third on Tuesday and wiped £1.75 billion off its market value. |
| Blackstone is putting a £500 million bet on demand for e-commerce and delivery services growing in Britain. The American private equity group is poised to buy Hansteen Holdings (HSTN). It said that the acquisition was an opportunity to expand Mileway, its European last-mile logistics property company, in Britain. Last-mile properties are typically used by e-commerce companies such as Amazon as the final storage location for a product before it is delivered. Blackstone has built up an €8 billion portfolio of such assets across Europe. |
 | Playtech (PTEC) has come under further pressure after an activist investor raised concerns about its corporate governance. It is understood that Springowl, a New York-based hedge fund, has privately urged Playtech to cut all commercial ties with its founder, Teddy Sagi, and asked the company to draw up a succession plan for its chief executive. Springowl’s governance concerns increase the pressure on Playtech, which faces the prospect of an investor backlash over its bonus plans at a shareholder meeting today. |
  | Analysts have questioned whether Meggitt (MGGT) can hit its profit margin target over the next couple of years following Boeing’s decision to halt production of its 737 Max plane. Compared with its rival Senior (SNR), which also makes parts for the plane, Meggitt came out relatively unscathed in Tuesday’s session, the day after the announcement. Analysts at Panmure Gordon expect the market will catch up, though, and they are advising clients to sell any shares they hold and stay well clear if they aren’t already invested. “With downgrades yet to be priced in, we initiate with a “sell” recommendation and a target price of 506p,” the analysts said. The brokerage said that Meggitt stands to miss out on £57 million of sales, while the lack of deliveries results in about £750,000 of lost profits each month as spare parts are not required. “We are therefore forecasting margins to rise to just 18.2% by 2021, versus guidance of 19.9%.” Panmure, which called on suppliers to “reassess their relationship” with both Boeing and Airbus, was more upbeat on Senior, which bore the brunt of investors’ frustration earlier in the week. “With another downgrade for 2020 already priced in by [Tuesday’s] 9% share price fall, we initiate with a ‘buy’ recommendation and a target price of 201p,” the analysts said. |
   | London office stocks were among the fallers as Deutsche Bank took a more bearish view on the sector. “Despite a decisive Conservative win last week, we still believe the uncertainties around the transition timeline and the nature of the agreements remain,” analysts at the German bank said as they cut their sector rating to “hold” from “buy”. Shares in Derwent London (DLN) fell 58p to £38.06, Workspace Group (WKP) dipped by 14p to £11.60, while Shaftesbury (SHB) eased 16p lower to 914p. |
 | The property mogul behind Berkeley Group Holdings (The) (BKG) has cashed in more of his shares in the building group for £50.5 million. Tony Pidgley, 72, the co-founder and chairman, took advantage of the post-election “Boris bounce”, which sent the stock price above £50 for the first time. He sold just over 1 million shares at £50.40 each on Monday, according to a regulatory filing. Since spring 2017, Mr Pidgley has made £216.5 million by reducing his stake in the upmarket developer, with much of the sale in the past six months. As a result, his holding has fallen to 1.3%, worth about £83 million and just enough for him to remain one of the top ten shareholders. |
 | Tempus – ITV (ITV): Avoid. A big bounce in advertising revenue feels unrealistic and earnings growth at ITV Studios is hardly stellar |
 | Tempus – The Renewables Infrastructure Group Limited (TRIG): Buy. Well priced and feeling the benefits of scale |
 | Persimmon (PSN) has been accused of shoddily building homes that left its customers exposed to an “intolerable risk” in the event of fire. An independent review of the company published on Tuesday found Persimmon had a “systemic nationwide failure” to install fire-stopping cavity barriers. Persimmon has been at the centre of political and public anger over the poor quality of its homes and the vast bonus paid to its former boss Jeff Fairburn The review, which the company commissioned following a deluge of customer complaints, said the failure to meet minimum building standards was “a manifestation of poor culture” at the firm. Jeff Fairburn’s £75m bonus at Persimmon is infamous, and here’s the ugly twist. Some of the homes the company was building in the bonus-accumulation period were shoddy. That damning finding comes via an independent review that reads as genuinely independent, which isn’t always the case with board-commissioned reports. Stephanie Barwise, a QC at Atkin Chambers, and representative of some of the Grenfell Tower victims, set the tone with this arresting line: “Persimmon has traditionally been more of a land assembler and house-seller rather than a housebuilder.” |
 | British American Tobacco (BATS) and three other e-cigarette firms have been banned by the UK advertising watchdog from promoting their vaping products on public Instagram pages in a ruling described as “a huge step forward” by health campaigners. The landmark ruling against puts the spotlight on tactics used to market increasingly controversial vaping and e-cigarette products to young people. The Advertising Standards Authority (ASA) rules ban the advertising of unlicensed, nicotine-containing e-cigarettes, however companies are allowed to put factual information about their products on their own websites. BAT, one of four companies to receive bans from the ASA for using Facebook-owned Instagram to promote vaping, had argued its Vype Instagram account was equivalent to a company-owned site. |
| British American Tobacco (BATS) banned from Instagram vape ads. Regulator finds Vype brand’s Lily Allen posts broke rules on marketing nicotine products |
| Lombard – Persimmon (PSN) bosses cashed in as fire safety went unchecked. Review calls for housebuilder to change culture after £85m payout |
 | Tullow Oil (TLW) investor raises stake on hopes of recovery. Samuel Dossou-Aworet aims to advise energy explorer after becoming largest shareholder |
| Lex – Hipgnosis Songs Fund (SONG): not so merky.. Opaque nature of revaluations make investors feel that they, like The Boss, are Dancing in the Dark | |
 | Lex – Unilever (ULVR): appetite suppressant. Flagging sales suggest the consumer goods group might need to invest more in the business |
| Persimmon (PSN) told to overhaul culture after customer complaints. Review of UK housebuilder’s policies also recommends shaking up bonus scheme |
| Unilever (ULVR) warns it will miss full-year sales targets. Chief executive Alan Jope under pressure after consumer goods group cuts forecasts |
 | Rolls-Royce Holdings (RR.) chief battles with turnround as engine woes persist. ‘The supply chain does not trust them any more,’ says industry executive |
 | Huntsworth (HNT) failed to impress with its trading update yesterday. It said profits would be in its expected range of between £38.5million and £41million, and it had returned to growth in its marketing arm. But investments in its property and hiring will slightly squeeze profitability. It added: ‘Despite some currency headwinds as a result of the strengthening in sterling, management is confident about future trading.’ |
| Muddy Waters has turned its attention to the FTSE 100. In a damning report, the fund accused private hospital provider NMC Health (NMC) of ‘materially misleading’ investors at best and committing fraud or theft of company assets at worst. Led by American entrepreneur Carson Block, Muddy Waters said: ‘We have serious doubts about the company’s financial statements, including its asset values, cash balance, reported profits, and reported debt levels.’ The hedge fund accused the Gulf-focused firm of fraudulently valuing some of its assets. Block thinks it is understating its debt by manipulating its balance sheet, and has poor governance due to a lack of truly independent board directors. Block concluded: ‘We are unsure how deep the rot at NMC goes, but we do not believe that its insiders or financials can be trusted.’ NMC chairman, Bavaguthu Raghuram Shetty, said: ‘We hold ourselves to the highest standards across our entire portfolio.’ Shares in Finablr PLC (FIN), a payments firm he founded, fell 22.7p, to 187.3p. |
 | Boeing’s decision to temporarily suspend production of its grounded 737 Max sent shock waves through British suppliers across the Atlantic. Shares in Hertfordshire engineer Senior (SNR), which counts Boeing among its biggest clients, tumbled 11%. Other UK suppliers also fell, including Meggitt (MGGT) (down 1.5%), which makes the fire detector system for the Max engine, and Melrose Industries (MRO) (down 1.1%), which supplies the windows. Boeing confirmed on Monday that it would halt production of the jet which was grounded after two crashes within five months killed 346 people. There are fears this will trigger job losses at suppliers in Britain. |
 | Lyndon Davies, 59, the man leading a shake-up at toy firm Hornby (HRN), thinks it’s time old-style gifts made a comeback. ‘I’ve got a grandson who’s six,’ the Welshman says. ‘I watch him play on his phone, but I’ll sit there with an Airfix Lamborghini, pour the pieces on the table and he’ll come over and say: ‘What are you doing Gramps?’ He’s desperate to help. ‘What it shows is that if you can connect, make the products relevant, then there is room in the world for these products.’ |
| The housing tycoon behind Berkeley Group Holdings (The) (BKG) cashed in on the ‘Boris bounce’ by selling £50.5m worth of shares. Tony Pidgley sold just over 1m shares in his company for 5040p each on Monday, according to regulatory filings. It takes his total haul from share sales since April 2017 to £216million. And it reduced his stake to 1.3%, meaning he is now longer a top ten shareholder. That stake is worth around £82millionThe 72-year-old moved after Berkeley surged 10% higher on Friday, as markets welcomed the Conservative election victory. |
| Britain’s second largest housebuilder has been told a poor culture led it to build bad-quality and unsafe homes. Persimmon (PSN) has been heavily criticised in a new report for putting customers at potential risk of serious injury for not installing cavity barriers in homes it built across the country. The review, led by by Stephanie Barwise QC said this ‘intolerable risk’ was compounded by a poor corporate culture that lacks a Group build process. It also states that Persimmon was more concerned with achieving a five-star rating from the Home Builders Federation (HBF), the UK’s largest trade association representing housebuilders, than with designing high-quality new builds. |
| Dove and Vaseline owners Unilever (ULVR) says trading challenges in multiple international markets mean sales growth both this year and next will be lower than expected. The consumer goods giant says a combination of weakening economic growth in South Asia, poor trading conditions in Africa mean sales growth will be below its 3% to 5% range. This forecast comes despite sales in North America showing signs of improvement, though it warned that a full recovery there will ‘will take time.’ Unilever has faced challenging conditions in India, with a slowing economy, monsoons and four-decade high unemployment hurting sales. The Indian economy expanded by 4.5% year-on-year in the third quarter this year, its weakest growth for six years. |
| Higher international ticket sales has helped revenues for the rail ticketing firm Trainline Plc (TRN) jump by more than a quarter for the first nine months of the financial year. The company, which floated on the London Stock Exchange earlier this year, saw revenues rise by £41million to £198 million for the nine months to 30 November. It said it is on track to hit its performance targets for the full year following ‘strong progress’ so far in 2019 as its total group revenue jumped by 26%. UK tickets sales rose by 14%, with consumer net ticket sales increasing by 24% year-on-year to £1.5billion. Trainline puts the successful rise down to the increasing popularity of eTickets. International ticket sales and revenues saw the largest increase though, by 49% and 90% respectively. This was despite strike action on the railways in France, which has been rocking the country since September. |
 | Royal Dutch Shell ‘B’ (RDSB) has revealed that it paid no corporate income tax in the UK in 2018 despite raking in $731m (£557m) of pre-tax profit on revenues of $108bn in the country. The new report, published on Tuesday, is the first time the oil and gas titan has released public details of the corporate income tax paid in countries and locations across all its businesses. Shell said it would disclose the amount paid in an attempt to be “more transparent”. It also admitted that it did not pay any corporate income tax in the Netherlands last year, apart from at its gas joint venture with ExxonMobil, as its profit was offset with losses from previous years. |
 | Investors should cash in on Tory plans to boost the North of England by wading into housebuilding and property stocks, stockbroker Peel Hunt has said. The firm has unveiled its top picks as Boris Johnson plans to splash up to £100bn on the region over five years, in a spending spree aimed at shoring up the so-called “red wall” of formerly safe Labour constituencies which he seized in last week’s election. This investment bonanza is expected to boost property markets – offering the potential for investors to make a bumper profit. Peel Hunt’s top choice is Harworth Group (HWG), a brownfield developer aiming to become the leading land and property regeneration specialist in the North of England. |
| More than £1.8bn was wiped from the value of private hospital firm NMC Health (NMC) after a hedge fund launched an assault on the firm over claims of financial mismanagement. Shares plunged 32% to £17.47 following an attack in which US short-seller Muddy Waters accused the FTSE 100 company of understating its debt by about $320m (£242m). Muddy Waters said NMC had failed to properly report leases in its 2018 accounts associated with British hospital operator Aspen Healthcare, which it bought for £10m last year. The hedge fund has taken out a short position on NMC shares, meaning it makes money if their price falls, but did not disclose the size of the stake. |
| Unilever (ULVR) has been accused of failing to take responsibility for its own problems after it blamed poor sales growth on challenging market conditions. Shares in the Anglo-Dutch maker of Marmite and Domestos fell more than 7% as it warned sales this year will be lower than expected. The company blamed the forecast cuts on an economic slowdown in south Asia – one of its largest markets – and tough trading in west Africa. Its problems will pile pressure on boss Alan Jope, who took over from Paul Polman in January following a shareholder rebellion which forced the firm to ditch a plan to shift its headquarters out of London and into the Netherlands. |
 | Ted Baker (TED) departing bosses are in line for a £600,000 pay-off, the ailing fashion brand said as it parted ways with another executive. The chain stunned the City last week with a shock profit warning – its fourth this year – and the departure of its chief executive and chairman. Lindsay Page – Ted Baker’s long-standing finance chief, who was promoted to chief executive in April after founder Ray Kelvin stepped down amid sexual harassment allegations – could get about £500,000 after his departure, but no bonus. Chairman David Bernstein also stepped down and is in line for about £100,000, half of his annual salary. |
 | Questor: Serco Group (SRP) record £5bn order book gives it a powerful springboard for next year. Questor share tip: the company has a record of hitting its targets and profits are expected to jump by 30% this year |
| Boeing’s decision to halt production of its bestselling 737 Max wiped nearly £300 million from the value of three leading British aerospace components manufacturers yesterday as investors worldwide sold out of companies linked to the American aviation group. Senior (SNR) suffered the sharpest fall, with its shares losing 11%. Boeing accounted for 11% of the group’s revenue last year and the company expected to make $354,000 in sales on every Max built. Melrose Industries (MRO) fell by 1.1%. The company makes windows, wing tips and engine casings for the Max and had expected to make $400,000 a jet. Meggitt (MGGT) makes seals and composite parts for the Max’s control systems and expected to make $155,000 revenue per Max. Its shares declined by 1.5%. Senior said it “continues to work closely with Boeing” and that it would give an “update on the potential implications to its 2020 performance once it has clarification”. Melrose declined to comment and Meggitt did not respond to requests for comment. |
| Muddy Waters issued a 34-page report yesterday on NMC Health (NMC) raising “serious doubts” about statements, including its asset values, cash balance, reported profits and debt levels. The report sent shares in NMC down by a third to £17.47½, wiping £1.75 billion off its market value. Muddy Waters alleged that NMC had “invested in large assets at costs that we find too high to be plausible — including from parties we believe are de facto under common control”. The company was founded in the 1970s in Abu Dhabi by Bavaguthu Raghuram Shetty, 77, an Indian pharmacist, and has expanded through acquisitions. Dr Shetty’s other ventures include Finablr PLC (FIN), the foreign exchange company, which floated in May with a valuation of about £1.2 billion. Its shares closed down 10.8% at 187¼p. |
| Unilever (ULVR), the consumer goods group behind Dove soap and Ben & Jerry’s ice cream, has warned it will miss its sales target this year as it faces pressure in several global markets. Unilever said it expected underlying sales, which strip out currency movements and acquisitions and disposals, to be below its previous guidance of the lower half of its 3% to 5% range. The unscheduled trading update pushed the shares down 331½p to £42.99. Analysts at RBC, said: “We believe Unilever needs to increase investment in the business, even if it comes at the expense of margins.” Mr Jope said Unilever would step up its cost savings plan to fund greater investment and would consider offloading weaker businesses. “We are far from crisis conditions,” he said. “This is just a little bit more turbulent than normal.” Despite the slowing sales growth, it said earnings, margins and cash were not expected to be affected. |
| Persimmon (PSN) has been criticised for having a corporate culture that results in “poor workmanship” and “potentially unsafe” homes, following an independent review of its operations. Persimmon commissioned the £1.5 million review by Stephanie Barwise, QC, of Atkin Chambers in April after it came under scrutiny over the quality of its work and an executive pay scandal. Demand for its homes has been supported by the government’s Help to Buy equity loan scheme, which accounted for about 60% of its sales last year. The scheme helped it to almost triple its profit per house between 2012 and 2018. The review has uncovered a range of concerns about the company’s practices, including the absence of policies in areas relating to its building process, training and inspections. It also found that the housebuilder has a “nationwide problem” with missing or incorrectly installed cavity barriers in its timber frame properties. The barriers are essential for slowing the spread of fire. |
 | Petrofac Ltd. (PFC) has reported a further decline in its order backlog as it struggles to win new business. Shares in the company fell by 6.6% yesterday after it said that it had won only $3 billion of new orders this year, compared with $5 billion at this point a year ago. Its backlog of work was $7.4 billion at the end of November, down from $10.2 billion a year earlier, as it failed to win enough orders to offset its completed work. The company previously said that it had lost out on billions of dollars of new work in the first half of the year after the bribery conviction of one of its former executives. It added yesterday that it had seen “delays in engineering and construction bidding processes in the second half of the year”. |
| The exodus at the top of Ted Baker (TED) accelerated as a director resigned from the fashion retailer’s board, a week after the chairman and chief executive said they were departing. Ron Stewart, 72, who was Ted Baker’s senior independent director, stepped down yesterday with immediate effect following nine years as a non-executive, the period after which directors are no longer deemed to be independent under corporate governance rules. Jon Kempster, 56, has joined the board. He is the former finance chief of Sports Direct who resigned in July as Mike Ashley’s retail group, which this week changed its name to Frasers, shocked the City with a €674 million Belgian tax bill in its delayed results. |
| Trainline Plc (TRN) said yesterday that it was set to hit its annual targets after British and international ticket sales rose by 18% to £2.85 billion. The rail and coach ticketing app confirmed that it would meet ticket sales and revenue forecasts for the financial year, with group revenue up by 26% on the year to £198 million in the nine months to November 30. Rail strikes in France have not yet had a significant effect on trading but are expected to hit sales. The industrial action, in which transport staff walked out over proposed pension reforms, is at the end of its second week. Trainline said that it would report between 15 and 20% growth in ticket sales, and revenue growth of between 20 and 25% for the year to February 2020. | |
| The world’s fund managers are buying equities again as they grow increasingly optimistic in their outlook for next year. In June, a net 50% of the stock pickers surveyed by Bank of America Merrill Lynch expected global growth to weaken over the next 12 months. They appear to have changed their tune, with the latest report showing that a net 29% think the global economy will pick up next year. On top, nearly two-thirds reckon a recession, which had been mooted in some corners of the City, is unlikely to materialise in 2020. In a reflection of their new-found bullishness, fund managers’ allocation to stocks which are considered riskier investments has risen ten percentage points on the month to a one-year high. Money has flowed into UK equities, in particular, over the past two months, where investment is at a four-year high. It is not all sunshine and rainbows, though; a third of managers believe the trade war between the US and China remains the biggest tail risk facing the markets, which could put a dent in the global economy next year. | |
 | Whitbread (WTB) shares took a dive after analysts at UBS replaced their “buy” rating with “neutral”. The investment bank warned that the threat posed by Airbnb has “grown significantly”, while it expects Premier Inn’s revenue per available room to underperform its competitors in the near term. |
   | Investors have taken fright at an overhaul of bank capital buffers over concerns that the changes will hit lenders’ plans to return money to shareholders. Shares in Lloyds Banking Group (LLOY), Royal Bank of Scotland Group (RBS) and Barclays (BARC) fell sharply yesterday after the Bank of England revealed on Monday that it was tweaking the rules governing the capital that lenders must hold. City analysts said that the changes could hit the level of share buybacks by the lenders next year, as well as the dividend at Barclays and the special dividend that Royal Bank of Scotland is expected to pay. The Bank said that it would double the “countercyclical capital buffer”, which can absorb losses, from 1% of risk-weighted assets to 2% by the end of next year and at the same time reduce other capital requirements. The regulator said that the change would enable lenders to withstand up to £23 billion of losses without cutting lending. Analysts at Jefferies, the investment bank, said that it appeared to be a “Brexit buffer”. |
| Tempus – Royal Dutch Shell ‘B’ (RDSB): Buy. Ability to generate very large cashflow and commitment to return value to shareholders |
 | Tempus – Halfords Group (HFD): Avoid. Unappealing bet hinges on recovery in retail sector |
| Britain’s leading companies have seen their stock market valuation rise by almost £50bn after the post-election rally in share prices gathered pace. In a second day of hefty gains, the FTSE 100 index shrugged off evidence that the economy was struggling in the run up to polling day and closed 165 points higher at 7,519.05. At one stage the FTSE 100 was up by 190 points but still posted its biggest one-day gain since the week following the EU referendum in June 2016. By the close of trading in London, the index was up by 2.25% – adding nearly £42bn to share values. The FTSE 250 – which charts the performance of the next 250 biggest quoted companies – finished up 412 points at 21,920. The 1.92% jump added £7.5bn to valuations. | |
 | FirstGroup (FGP) is considering a sale of all its North American businesses, in an apparent reversal of strategy only months after the struggling transport group said it would focus primarily on its US bus operations. The group said it had appointed advisers to explore options, including the potential disposal of First Student, which operates about 43,000 yellow school buses, and First Transit, which provides outsourced public transport. The third US division, Greyhound, which operates the famous intercity coaches, was put up for sale in May. The turnaround comes after FirstGroup was announced the winner of the West Coast Partnership franchise in the UK, which secures a longer term future in rail. |
| The Serious Fraud Office has charged two former employees of the outsourcing firm Serco Group (SRP) with fraud and false accounting, as its investigation into contracts awarded by the government for the electronic tagging of prisoners continues. Serco said it was “mortified” earlier this year after it paid a £23m fine to the SFO as part of the investigation, which included allegations of charging for tagging people who were either dead, in jail, or had left the country. The SFO said on Monday it had brought charges against Nicholas Woods, the former finance director of Serco Home Affairs, and Simon Marshall, former operations director of field services. Both were charged in relation to representations made to the Ministry of Justice between 2011 and 2013. Woods was also charged with false accounting in relation to the 2011 statutory accounts of Serco Geografix. |
| Mike Ashley has said more House of Fraser stores will be forced to shut unless the government undertakes a fundamental review of the business rates system, which the boss criticised as “broken and unworkable”. Ashley said the current rates regime “is clearly helping to kill much of what remains of the UK high street” and that large stores were coming under particular pressure from the property-related tax. “We cannot keep loss-making stores open,” Ashley said. He would not say how many stores might close but said a decision would be taken within months. Seven department stores have closed since Sports Direct bought House of Fraser out of administration in August last year, leaving 52 branches. Sports Direct formally changed its name to Frasers Group at a shareholder meeting on Monday. |
| Rolls-Royce Holdings (RR.) chief battles with turnround as engine woes persist. Questions mount about whether Warren East’s reboot of UK group will be fast enough |
| Lombard – Ashley has not won vote of confidence yet. Excluding acquisitions, such as GAME Digital and Jack Wills, group revenue is actually falling | |
 | Lex – Cineworld Group (CINE)/Cineplex: Captain North America. Cinema needs consolidation of the kind presaged by this deal |
| weighs sale US school bus and public transit units. UK rail and bus operator under pressure from shareholders after November share plunge | |
| Cineworld Group (CINE) to buy Canada’s Cineplex in $2.1bn deal. Acquisition makes UK-based cinema group the biggest in North America by screens |
| shares soar on ‘green shoots’ at House of Fraser. Billionaire founder Mike Ashley says he is considering a £100m employee bonus scheme |
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