Ashley starts Debenhams (DEB) power grab. Plan to quit and run troubled chain. Mike Ashley, the retail tycoon, last night set in motion a plan to leave Sports Direct and take charge of Debenhams in a surprise attack on the struggling department store chain. Mr Ashley, 54, who owns 29.7% of Debenhams and is its largest shareholder, wants to install himself on the board and has called for the removal of all but one of its directors. He said he will step down from running Sports Direct, a role he has held since 1982, if successful. City commentators speculated that the move was a bid by Mr Ashley to avoid having his holding wiped out as it looked increasingly likely that Debenhams could agree a rescue with its lenders. It is on the brink of a restructuring, which could involve a debt-for-equity swap that would seriously dilute Mr Ashley’s stake.
It’s back: eurozone slowdown forces ECB to revive stimulus. Europe’s banks are to be flooded with another round of state-subsidised loans this year after the European Central Bank scrapped plans to tighten monetary policy in the face of collapsing eurozone growth. Interest rates will be left unchanged in the bloc until at least 2020, the bank said as it abandoned plans for a rise after the summer. It will also relaunch a cheap funding scheme that is likely to deliver commercial banks hundreds of billions of euros in subsidised loans. The decision to reverse policy just months after the bank ended its €2.6 trillion quantitative easing programme underscored the fragile state of the eurozone, which enjoyed a resurgence for about 20 months from 2016.
City regulator warns lender over plans for shake-up at Provident Financial. The City regulator has fired a warning shot at Non-Standard Finance (NSF), the doorstep lender, over its plans to shake up Provident Financial (PFG) if it succeeds with its £1.3 billion hostile bid. The Financial Conduct Authority has written to NSF to advise the subprime lender that it will act “immediately” if there are changes at Provident that result in “unaffordable lending”. The authority’s move is a blow to NSF and its founder John van Kuffeler, 70, who led Provident for 22 years as its chief executive and then chairman before departing in 2013. NSF has previously said that its takeover would “bring best-in-class regulatory practices” to troubled Provident and “restore the confidence of regulators” in its bigger rival.
Countrywide feels the squeeze. Britain’s biggest estate agency group warned that a slowdown in the housing market would continue to put pressure on earnings. Countrywide (CWD), whose brands include Bairstow Eves, Bridgfords and Hamptons International, said that its losses last year rose by 5.3% compared with 2017 to £218.2 million. Revenues fell 6.5% to £619.1 million. It expected earnings this year to be flat. Peter Long, 66, executive chairman of Countrywide, said that it encountered “market weakness” in the fourth quarter due to Brexit uncertainties. “These headwinds have continued into 2019. As a result, we are experiencing further slowdown in residential and commercial property transactions, particularly in London and the south,” he said.
Melrose Industries (MRO) sets aside £630m to cover sales woes at GKN. The industrial turnaround specialist that bought GKN in a bitter £8 billion takeover battle has set aside £629 million after discovering that contracts accounting for about 10 per cent of the engineer’s net sales were loss-making. Melrose Industries said that it had made the provision after finding a “significant number of poorly performing contracts” at GKN, the British aerospace and car parts engineer it bought last year after a hostile bid. Christopher Miller, a co-founder of Melrose who is an executive vice-chairman, said the discovery meant that the scope for improvement at GKN was bigger than expected.
In-flight wifi keeps Inmarsat (ISAT) looking up. The rising use of broadband during flights has given a boost to Britain’s largest satellite operator. Inmarsat, which sells phone and internet services, said that revenues grew 5% to $1.47 billion last year. Underlying earnings rose 4% to $770 million, although pre-tax profit fell from $234 million to $168 million after a rise in its depreciation charge. The company has carved out a niche in the lucrative market for wifi on commercial passenger aircraft, and sales rose 41% at its aviation division. This helped to offset weakness in its maritime division, which sells satellite phones and internet services to cargo ships and other vessels. The annual results were stronger than expected, sending its shares up 32p to 431½p.
We need to simplify and speed up, says Aviva (AV.) chief. The new chief executive of Aviva has pledged to speed up the pace of change and cut complexity at the insurer as it announced a rise in annual profit. Maurice Tulloch, appointed on Monday after a five-month search, said that the insurer was “far too complex and this is holding us back”. Sir Adrian Montague, 71, Aviva’s chairman, embarked on the search after ousting Mark Wilson, 52, in October, due to frustration that his plans for the insurer had ground to a halt. Mr Tulloch said: “I plan to leave no stone unturned to drive better underlying operational performance,” he said. There will be a “relentless focus on the fundamentals”. He added that he would meet the big shareholders and would “come back later in the year” with a fuller plan. That could include retrenching from some overseas markets.
Losses increase by 40% at Funding Circle (FCH). Funding Circle, the business lending broker, saw its annual losses widen by 40% last year despite strong revenue growth. The company, which launched as a “peer-to-peer” lender, made a pre-tax loss of £50.7 million in the year to December 31, compared with a loss of £36.3 million the previous year. Annual revenues grew by 55%, from £94.5 million to £141.9 million. Significant costs included £58 million spent on marketing and investment related to its flotation last year. It floated at 440p in September but fell as low as 254p in December.
Quiz loses half its value after profit alert. Shares in the fashion retailer Quiz (QUIZ) fell by almost 50% yesterday after it issued its third profit warning in six months. It said that its high street shops continued to struggle and that it had needed to discount items more heavily than expected this year. The shares have lost 90% of their value since floating in 2017. Quiz floated on the junior Aim market with shares priced at 161p. The stock initially performed well and reached more than 200p in July. However, the shares fell sharply in October after a profit warning, with another large decline in January after a further downgrade in profit forecasts.
Fraud office failed to get key documents for Barclays (BARC) trial. The Serious Fraud Office failed to take “reasonable and appropriate” steps to get key documents from a US law firm representing Qatar before a fraud trial of four former Barclays executives, a court was told yesterday. The jury at Southwark crown court was told that Judge Robert Jay had ruled in January on the SFO’s failure to obtain the documents from Latham & Watkins, before the case began. The four men are charged with conspiracy to commit fraud by false representation over how Barclays raised more than £11 billion from investors, including Qatar, in 2008 during the financial crisis. Barclays wanted to raise funds from investors so it could avoid being bailed out by the government like rivals Royal Bank of Scotland and Lloyds.
Schroders (SDR) retains its family values. A FTSE 100 asset management group has appointed two more women to its board, including a member of the founding family, and posted a 15% fall in annual profit. Leonie Schroder, 44, will join Schroders as a non-executive director, replacing her father, Bruno, who died last month aged 86. It has two members of the family on its board, who control 48% of the voting shares. The other, Philip Mallinckrodt, was Mr Schroder’s nephew. Schroders also appointed Deborah Waterhouse, 51, as an independent non-executive director. She is a pharmaceuticals specialist and leads ViiV Healthcare, majority owned by Glaxosmithkline, which focuses on HIV treatment.
National Grid (NG.) has made its first foray into wind power with plans to acquire an American renewable energy developer and projects in the Midwest. The FTSE 100 utility group said that it had agreed to pay $100 million for Geronimo Energy, which develops onshore wind and solar farms. It is also working on a $125 million deal to acquire 378 megawatts of projects developed by the company. National Grid is best known for managing Britain’s electricity and gas transmission networks. It also has a substantial regulated business in the northeast of the United States, comprising networks, generation and supply, which accounts for about half of its group operating profits. About 16,000 of the group’s 22,000 employees are in America. National Grid is barred from owning power generation in the UK but is expanding in the field in America and has made small-scale investments in solar farms.
Premier Oil (PMO) back in flow after profits boost. Record production and lower costs helped Premier Oil to achieve a better-than-expected return to profitability last year. The oil explorer and producer reported pre-tax profits of $158 million, compared with a loss of $366 million in 2017. Production averaged 80,500 barrels a day, up 7%, boosted by strong output from the Catcher field in the North Sea. The field started production at the end of 2017 and yields about 66,000 barrels a day, the maximum the infrastructure can handle. Tony Durrant, Premier’s chief executive, reiterated that a reserves upgrade was likely.
Dividend set for return, says Cobham. Cobham (COB) has said that it intends to resume paying a dividend after settling a damaging dispute with Boeing. The British aerospace group has not paid a dividend since 2016, having suspended shareholder payouts as a string of profit warnings forced it into two rights issues. A £1 billion contract with Boeing, the American aerospace giant, for Cobham’s air-to-air refuelling technology went badly wrong and resulted in a series of provisions.
Shares in Alfa Financial Software Holdings (ALFA) surged after the software business said a big contract that was delayed last year was expected to close within three months. The delay had prompted a profit warning last June when the small-cap stock revealed a large customer had paused its rollout of an Alfa Financial technology platform while it resolved data migration issues with its legacy systems. Alfa also warned investors that two other contracts were taking longer than expected to get over the finish line. Yesterday’s announcement, which came as the group released its annual financial results, provided some relief.
NMC Health (NMC) dived despite the Middle East private healthcare group reporting record annual profits. It said that revenue was up 28% and profits rose 20%, in line with forecasts in December.
JP Morgan upgraded Ultra Electronics Holdings (ULE) to “overweight” with an £18.20 price target a day after the struggling defence contractor posted a positive set of results. Its share price gained 11%, or 159p, to £16 after double-digit improvements the day before. The broker said it was reassured by a “convincing” defence of its long-term contract accounting and that it would benefit from an improving US defence market.
Indivior (INDV) rose almost 4%, or 4p to 116p, on the back of encouraging results from its trial of Sublocade, its new opioid addiction treatment. Patients had fewer hospital days, were more likely to be employed and were more satisfied with treatment. Indivior has been battling generic competition for its addiction treatment, Suboxone film, in the US.
Vietnam Enterprise Investments (DI) (VEIL), a £1 billion fund that invests in Vietnamese companies, fell almost 6% to 437p after one of its largest shareholders dumped its stake. APG Asset Management, a Dutch firm, sold its 17% holding at a value of £154 million.
Vodafone fights Huawei ban. Investors dialled into Vodafone Group (VOD) yesterday after it stepped up pressure on the government to prevent a ban on equipment supplied by Huawei. The FTSE 100 telecoms group said that any decision by ministers to bar equipment made by the Chinese infrastructure group from all parts of its next generation (5G) networks would cost it hundreds of millions of pounds and “very significantly” delay the deployment of the new technology. Mobile operators and western governments are under pressure from the US not to use Huawei’s kit because Washington fears that it could be a “backdoor” for Beijing spying, an accusation strenuously denied by Huawei. Vodafone has called for a “fact-based” discussion on the potential risks from using Huawei kit.
Tempus – Informa (INF): Hold long term. Stable, well thought-out and high-margin business with steady long-term growth opportunities
Tempus – Spirax-Sarco Engineering (SPX): Hold. Shares are expensive but price growth has been strong
