The government pressured Royal Bank of Scotland Group (RBS) to foreclose on business customers and acquire their properties, according to the executive who ran the bank’s disgraced restructuring unit. Derek Sach, former head of RBS’s Global Restructuring Group, told the High Court yesterday that a Treasury agency had tried to influence many of the decisions taken by the division. In his first public appearance in five years, Mr Sach, 71, said that the government’s asset protection agency, which insured RBS’s toxic loans after the financial crisis struck, had no interest in customers and would have preferred the bank to have “flogged” businesses to secure the government’s objectives.
Unresolved issues have prevented the clearance of the £4 billion takeover of Cobham (COB) by an American private equity firm. On the day that parliament was dissolved, Andrea Leadsom, the business secretary, indicated that she had been unable to make up her mind whether to intervene in Advent International’s takeover of Cobham in a deal already agreed by the British company’s shareholders. The minister is sitting on a report from the Competition and Markets Authority into the proposed takeover that was filed a week ago. She has yet to divulge the contents of that report.
has said it will not rescue any more distressed retailers until politicians introduce better protection for shareholders facing losses from collapsed companies. A spokesman for Sports Direct said: “While there continue to be retailers in distress — with the latest example being Mothercare — Sports Direct currently has no intention of looking at saving any of these retailers while there is a lack of protection for shareholders/owners, because unscrupulous politicians are more interested in their own PR than doing what is right.” The comment was issued as part of a spat with Rachel Reeves, chairwoman of the Commons’ business, energy and industrial strategy committee.
Dixons Carphone (DC.) has been rebuked by the competition watchdog after mystery shoppers said that the electrical retailer had misled them on product warranties. Alex Baldock, Dixons Carphone’s chief executive, has made boosting the retailer’s financial division by increasing its customer credit offer a key part of his revival efforts. “Paying by instalment also facilitates the add-on sale of other services. We see higher warranty, insurance, protection and repair product penetration going along with credit customers than we do with cash,” the company said in June. However, Dixons Carphone has been reprimanded by the Competition and Markets Authority, which said that a quarter of staff at Currys could not provide accurate information on its warranties.
More than 2,800 jobs are under threat and 79 shops will close after Mothercare (MTC) finally called in administrators for its British business yesterday. PWC was appointed to wind down the maternity and baby goods retailer’s loss-making UK retail and online operations. Its profitable international business, comprising 1,010 franchised stores in 40 countries, will be unscathed. The administrator said that all of Mothercare’s 79 UK stores “will be wound down over the coming weeks and months”. It is expected to lead to the loss of 2,485 retail jobs, of which 500 are full-time, and a further 384 roles in head office and distribution.
The £2.6 billion takeover of Inmarsat (ISAT) has been cast into doubt after a trio of hedge funds staged a late attempt to squeeze more cash from the buyer. Oaktree Capital, a Los Angeles-based fund with 2.8% of the satellite operator, said that the deal should be delayed by a month so that the board could renegotiate. Its demand won the backing of Rubric Capital and Kite Lake, with respective holdings of 2.2% and 3.8%. Inmarsat agreed in March to be bought by a consortium of investors including Warburg Pincus and Apax Partners. The acquisition has been approved by shareholders and regulators and is scheduled to be rubber-stamped in the High Court next week.
Strong sales at its store in Brooklyn, New York, have given Associated British Foods (ABF) the confidence to press ahead with an expansion programme for its Primark fashion chain in the United States. Primark’s sales rose by 4.2% to £7.9 billion in the year to September 14, while operating profits increased by 8%. “The positive reception by US consumers to Primark, combined with our profitable store model, gives us confidence for further expansion,” George Weston, 55, ABF’s chief executive, said. He added that rather than claiming to have cracked the notoriously difficult American market, the retailer had “earned the right to keep going in the US.”
The impact of America’s crackdown on vaping was laid bare yesterday when Imperial Brands (IMB) announced a 26.5% slide in annual US revenues from next-generation products. The decline in the United States in the year to September to £111 million — amid bans by some American states and by Walmart, the giant retailer — was in stark contrast with an increase in sales of vaping products of more than 100% to £131 million in Europe. Worldwide growth in next-generation products slowed to 52.4%, worse than had been expected.
Racking up more than £70 million of exceptional costs during its recent stock market listing has sent Trainline Plc (TRN) deeper into the red. The initial public offering in June unlocked a £65 million share payout for executives and senior managers, which resulted in a £50 million charge in Trainline’s accounts. The company also incurred £21 million in float fees and a further charge relating to stock awards for minority investors. All that pushed Trainline to an £89 million pre-tax loss in the six months to the end of August, compared with an £11 million deficit last year. Revenues rose 29% to £129 million, while adjusted underlying profits doubled to £42 million.
Weakening conditions in the North American shale market could hit profit from the oil and gas division of Weir Group (WEIR) by more than 40%, analysts have warned. The engineer said that orders in its third quarter were up by 4% as a result of a strong performance from its minerals division, but oil and gas orders were down 32% year-on-year as capacity in US shale basins is cut back. Weir is making £30 million of cost savings in oil and gas, with 450 jobs going across the division in America. Oil and gas was only “moderately profitable” in July to September and that is not expected to improve in the final three months of 2019, it said.
Fisher (James) & Sons (FSJ) has become the latest to suffer a data breach, adding its name to a list that includes Talktalk, British Airways and the NHS. There were few details about the incident, with the company refusing to divulge any more than it had to, including what data might have been stolen and how much it could cost. All that the management was willing to confirm was that hackers had gained access to some of its computer systems and that “forensic cybersecurity experts” had been brought in to figure out what had happened and how.
Dixons Carphone (DC.) shares slid after analysts at RBC downgraded the electronics retailer. They reckoned that “very warm weather” over the August bank holiday weekend had knocked sales during a key period for retailers, while they also expected margins to have come under pressure amid price cuts in computing. As a result, trading in the second quarter, which ran until the end of October, probably would have been “softer” than expected, giving the executives “more work to do” if they are to hit their annual profit target of £210 million. RBC doesn’t think Dixons will make any changes to that guidance in next month’s half-year results. “[The] valuation is less compelling following a recent move up in the shares; hence, our downgrade to ‘sector perform’,” its analysts said in a note to clients.
GAN (GAN) — a gaming software provider that works with companies such as Flutter Entertainment, — rose 11p to 126p. The company, listed on Aim, expects revenue to more than double this year, boosted by soaring demand in the United States as more states move to legalise sports betting.
Investors in Filta Group Holdings (FLTA) had their fingers burnt as its shares fell 43p to 150p. Filta is taking longer than expected to bed-in one of last year’s acquisitions, while it has had to push back some work and hire staff to help it to catch up with an order backlog. As a result, its underlying earnings for the second half of 2019 will be similar to those delivered in the opening six months of the year.
Tempus – Essentra (ESNT): Hold. Well placed to benefit from improvements since 2017 and this should gradually push the share price higher
Tempus – Future (FUTR): Avoid. Impressive and efficient but shares don’t come cheap
