I didn’t realise selling £13.7m of shares would affect market, says GVC boss Kenny Alexander. The boss of GVC Holdings (GVC) has admitted that if he had known how badly the market would react to his sale of £13.7 million of shares last month he would not have sold them. Kenny Alexander, 49, chief executive of the Ladbrokes and Sportingbet operator, said he had been surprised by the severity of the reaction — the shares slumped by 14% the day of the announcement — suggesting that it was an overreaction. The share sale, announced in tandem with the disposal of almost £6 million of shares by Lee Feldman, the GVC chairman, came only three days after Mr Alexander had delivered strong full-year results and insisted that the group was “significantly undervalued” by the market. “As I said to shareholders, if I knew the reaction was going to be as extreme as it was then I wouldn’t have sold, but that’s all with hindsight. Was it a bit of a cock-up? I was surprised by the extremeness of the reaction,” he said.
Stagecoach Group (SGC) shares slammed on the brakes after analysts at Jefferies downgraded the bus, coach and rail operator only two days after it bumped up its annual profit forecast. The FTSE 250 transport group shed more than 5% of its value, dropping 8p to 139½p, after Jefferies raised questions about the sustainability of Stagecoach’s regional growth; rising costs and market capacity; and the financial health of London bus routes. As it cut its recommendation from “hold” to “underperform” and pushed its price target down to 125p from 145p, the broker also said that political pressure on the future of UK rail franchises was a risk to the company.
Entertainment One sings the praises of China and Peppa Pig. Entertainment One Limited (ETO), which owns the rights to Peppa Pig, said its revenues had risen by 50% in China, predominantly driven by demand for the cartoon character. The independent film distributor said that the theatrical release of Peppa Pig Celebrates Chinese New Year in January generated “social media buzz globally and drove strong brand awareness across the territory”. It recorded another strong year of trading driven by strong momentum in television and its move into film production.
Grey day for Saga leaves its brand at crossroads. Saga (SAGA) lost more than a third of its value yesterday after reporting a full-year loss, halving its dividend and warning that profits in the current financial year would be hit by the cost of stemming the decline in its insurance business. The insurer and travel group slumped from a pre-tax profit of £180.9 million to a loss of £134.6 million on the back of a £310 million writedown in the value of its insurance arm. Although underlying pre-tax profits met expectations, falling by 5.4% to £180.3 million, Saga cut its guidance on underlying profits from £179 million to between £105 million and £120 million. This forced it to cut its final dividend from 6p to 1p, making a total of 4p for the year, down 55.6%.
British American Tobacco coughs up £7.5m for outgoing chief Nicandro Durante. The former boss of British American Tobacco (BATS) is in line for at least £7.5 million as part of his departure from the company, having earned more than £50 million while in the job. Nicandro Durante, 62, chief executive from 2011 until his retirement on Monday, has received a package including a £3.6 million deferred share bonus and shares worth £3 million under a 2016 long-term incentive plan, which vest in 2021.
AO absorbs extra costs as it seeks to broaden horizons. AO World (AO.) has been hit by exceptional costs after its founder returned to the chief executive’s role and started changes to “create a mindset shift” at the internet retailer. The online seller of white goods said that it had incurred £2.5 million of extra costs linked to restructuring part of its management team as well as a loss-making contract in its German business. The costs are in addition to those that followed AO’s recent acquisition of Mobile Phones Direct. AO provided the update in a pre-close trading statement in which it said that its full-year performance would be in line with forecasts, albeit with its adjusted profits coming in at the lower end of market expectations.
Electrocomponents still has ‘cash to spare’. A positive trading update from Electrocomponents (ECM) led the City to speculate that the company had scope for a windfall return to shareholders. The FTSE 250 electronics distributor said yesterday that it was on course to hit annual profit forecasts of £210 million, up from £173 million the year before, boosted by revenue growth and a savings drive. The upbeat statement, before full-year results next month, led analysts at Jefferies, the US broker, to suggest Electrocomponents had £500 million of surplus capital to play with over the next two years. Jefferies said that “any remaining surplus is likely to be deployed on further bolt-on acquisitions and a special dividend/share buyback”.
Unicredit has eyes for Commerzbank. Unicredit, the Italian bank, has emerged as a possible rival bidder for Commerzbank amid signs that a merger with Deutsche Bank, its German rival, faces mounting difficulties. Last month Deutsche and Commerzbank confirmed they were in talks about a multibillion-euro merger to create one of the biggest banking tie-ups in history. The deal has come under scrutiny from politicians, trade unions and regulators. This week German MPs warned that they could block possible plans by Deutsche Bank to raise more capital as part of a potential merger with Commerzbank.
Mothercare sales fall 9% amid closures. Sales at Mothercare (MTC) continued to fall as the maternity and children’s retailer shut shops and sold stock at a discount but said its turnaround was on track. The chain, which has been fighting for survival, said UK like-for-like sales dropped by 8.8% in the three months to March 30. It was an improvement on its second and third quarters, when comparable sales fell by 17% and 11.4% respectively. The quarter’s figures were driven by the clearance of stock in stores that have closed. Mothercare has shut 40 outlets during the past three months to reduce its UK estate from 137 last year to 80 outlets. While sales were up, discounting meant that Mothercare’s profits would have taken a hit, but the group has maintained its guidance for the full year.
Pretty Green rescued by JD Sports. JD Sports Fashion (JD.) has swooped on Liam Gallagher’s luxury fashion retailer, buying it out of administration for an undisclosed sum. The chain will keep just one of 12 Pretty Green stores open, its Manchester site, and shut 33 concessions in House of Fraser shops. While its decision to preserve the brand, as well as its online and wholesale business, protects the role of 67 staff, the deal means the loss of 97 jobs. Moorfields Advisory, the administrators, said in a statement it was “working to assist all those involved”.
ASOS (ASC) shares dropped yesterday at the same time as the online fashion retailer warned it was toughening up its returns policy, prompting a flurry of negative comments on social media. It said it could deactivate accounts of people it suspected were wearing their purchases and then returning them. “We need to make sure our returns remain sustainable for us and for the environment, so if we notice an unusual pattern, we might investigate and take action,” Asos said. A survey by Barclaycard of about 2,000 people in 2018 found that shoppers in Britain return about £7 billion of purchases every year. Asos, which is due to publish its interim results on Wednesday, has been struggling with falling profits. It surprised the market last month after reporting a slowdown in its US business and lacklustre growth in Germany and France in the three months to February 28.
Micro Focus International (MCRO) was downgraded by Citigroup, which said its stock price had “run ahead of fundamentals”, and that investors were ignoring the risk to earnings and mispricing the potential in its cashflow. The move hit the company’s share price as it fell by 6% to £19.44. Life was fairly smooth for the group until its $8.8 billion acquisition of the software business of Hewlett Packard Enterprises, leading to an unexpected revenue alert in early 2018 after staff defections and hiccups with a new IT system. Citigroup raised its target price to £17 from £12.30 yesterday.
Tempus – Bunzl (BNZL): Buy. Delivers consistent growth in revenues, profits and the dividend without relying on deals
Tempus – Johnson Service Group (JSG): Hold. Reasonably priced company generating consistent organic growth
