Bid to derail Interserve rescue. The largest investor in Interserve (IRV) wants to sack the ailing public services contractor’s chairman, finance director and most of the rest of the board in an effort to derail a £905 million rescue of the company. Interserve presented a restructuring of the business yesterday that would all but wipe out existing shareholders and hand the company to its lenders. However, within minutes of it presenting its plans to the London Stock Exchange, it emerged that Coltrane Asset Management, a New York-based hedge fund that has amassed a 17% stake in Interserve, had requisitioned an extraordinary general meeting of the company. The requisition calls for the removal of most of the Interserve board, led by Glyn Barker, its chairman and a former senior partner at PWC, the accountancy group, except for Debbie White, the chief executive.
Bob Diamond steps down but not out at Atlas Mara. Bob Diamond has insisted that he is not preparing to leave Atlas Mara Limited (DI) (ATMA) after his decision to step down as chairman of the African banking business he co-founded. The former Barclays boss has been chairman for more than two years, despite having originally taken the role on a temporary basis. He will return to his previous role as a non-executive director and will be replaced as head of the board by Michael Wilkerson, chief executive of Fairfax Africa, Atlas Mara’s biggest shareholder.
There’s more where that came from, says Glaxo after £3.2bn Merck deal. GlaxoSmithKline (GSK) is looking for more multibillion-pound deals as it tries to accelerate the revival of its pipeline of drugs. Britain’s biggest pharmaceuticals company has caught the City by surprise by launching a flurry of acquisitions and tie-ups since last year as part of the restructuring of its core business. Emma Walmsley, 49, chief executive, said yesterday that buying access this week to a cancer drug being developed by Merck, of Germany, in a deal worth up to £3.2 billion was the “perfect example of the kind of thing that we shall continue to look for”. She said that Glaxo was considering “asset collaborations or technology platforms”, developing new assets and “out-licencing” products.
More cost savings to be made from Virgin Money deal. The banking group that bought Virgin Money last October has promised to squeeze another £30 million of annual cost savings from the combined group. Shares in CYBG (CYBG) surged yesterday after it said that it expected the £1.6 billion acquisition to yield £150 million a year of cost savings by the end of 2021, not £120 million, as had been suggested previously. CYBG, which also owns the Clydesdale and Yorkshire banks, is expected to extract the additional savings by cutting duplicated services and reducing third-party contracts in areas such as IT. It made no change to its target of cutting 1,500 jobs from its combined workforce of 9,500. It also eased fears about margins this year, saying that it expected its net interest margin to drop from 1.78 percentage points last year to between 1.65 and 1.7 percentage points. Previously it had warned that it could shrink to as little as 1.6 percentage points.
Barratt results boost building sector. Britain’s biggest housebuilder has lifted its first-half, pre-tax profit by 19.1%, in the process offering hope that the sector is proving to be more resilient than many had thought. Barratt Developments (BDEV) said that pre-tax profit for the six months of its financial year to the end of December was £408 million, with its gross margin up two percentage points to 22.6%. It completed 7,622 homes in the period. The average selling price was £282,000, slightly higher than the previous year. Worries about Brexit uncertainty hitting consumers’ willingness to buy new homes pushed shares in the leading housebuilders down by about 25% at the end of last year, though they have rallied since the start of 2019.
Founder of Redrow will bow out with record first-half profit. Redrow (RDW) reported a record first-half profit in its last results before the departure of its founder. The housebuilder said that profit before tax was up 5% at £185 million, on the back of a 9% rise in revenue to £970 million. It completed 2,970 homes in the six months to the end of December, a rise of 12%. The average selling price of its private homes was up 4% to £391,000, while that of its affordable homes rose by 15% to £141,000. Steve Morgan, who founded the company in 1974 when he was 21, said that the market before Christmas had been subdued because of economic and political uncertainty. However, sales in the past three weeks had bounced back. He said that this was down to buyers wanting to “get on” with life. “I think there’s an element of everyone saying we are sick to death of Brexit and uncertainty,” he said.
On the Beach director takes a walk. The fallout from the collapse of Patisserie Holdings continued yesterday when Lee Ginsberg, the former chairman of its audit committee, abruptly resigned as a non-executive director of On The Beach Group (OTB). Mr Ginsberg’s exit from the board “to focus on other time commitments” comes less than three months after he stepped down as chairman of the online travel agent. At the time, On the Beach said that he would remain a non-executive director. The South African-born accountant has come under pressure since the discovery at Patisserie Holdings in October of a £40 million gap in its books and the launch of an investigation into “significant and potentially fraudulent accounting irregularities” by the Serious Fraud Office.
A double downgrade from RBC Capital Markets yesterday put pressure on the shares of Centrica (CNA). Centrica, which owns British Gas, was lowered to “underperform” from “outperform” in an unusually abrupt about-turn from an analyst. John Musk, utilities research analyst at RBC, said that a dividend cut at Centrica was inevitable as cashflow metrics were squeezed. He said that despite the stock’s recent underperformance, it was still expensive relative to its peers. Yet his primary concern was a lack of visible growth prospects for Centrica. He remains unconvinced that areas such as its connected home or distributed energy and power divisions will ever be significant earners. He also said that Centrica needed to stop customer losses in its core retail operations.
TUI AG Reg Shs (DI) (TUI) fell 27p to £11.84 after HSBC downgraded the travel company to “hold” from “buy”. The bank said that Tui’s tour operations would face a tough first half as sales for the summer season had slowed. Thomas Cook Group (TCG), hit badly last year by late booking patterns caused by the summer heatwave and the football World Cup, rose 2p to 31p as investors hoped for some positive catalysts ahead of its trading update today.
Electrocomponents (ECM) added 36¼p to 589¾p after the FTSE 250 electronic parts distributor reported a 6 per cent rise in like-for-like quarterly revenue and said that it was on track to make £4 million in cost savings for the full year.
Hargreaves Lansdown (HL.) edged higher after the Lindsell Train UK Equity Fund was revealed to have doubled its stake in the investment platform from 5% to 10.1%. The fund overtook Blackrock and Baillie Gifford to become the largest shareholder, after Peter Hargreaves and Stephen Lansdown, its founders. Citywire, the financial publishing group, first reported the shares acquisition. The shares fell sharply last month after the investment platform warned that market conditions and changing investor confidence were driving “industry-wide net outflows”.
W H Ireland Group (WHI) tumbled 7p to 65p, after the company said that market conditions “continue to be challenging”, affecting both divisions of the company. It also said that exceptional costs were expected to be higher for the year to the end of March owing to “significant one off expenses” related to its transformation company.
Sysgroup (SYS), an Aim-listed IT services and cloud-hosting provider, said that it had agreed to buy Certus IT, a Welsh rival. The company will pay an initial cash consideration of £8 million for Certus IT, as part of a strategy to expand its customer base.
Tempus – Intertek Group (ITRK): Buy. High-quality business with stable, long-term structural growth potential linked with higher regulation
Tempus – Softcat (SCT): Hold. High-growth, sales-driven business, but facing Brexit uncertainty
