The City regulator has forced Hiscox Limited (DI) (HSX) to issue a clarification about its financial performance after a fall in the specialist insurer’s share price provoked concerns that a select group of analysts had been given price-sensitive information. The Financial Conduct Authority made a rare intervention into corporate reporting yesterday by instructing Hiscox to issue more details because of the danger of a false market. The company told the analysts that it would take longer to improve the retail division’s combined ratio — a key measure of performance — than it had expected. The tone of the meeting also seems to have been more bearish than the moderately upbeat trading statement released on Monday. After the FCA’s intervention Hiscox published a statement yesterday afternoon clarifying its estimates for the combined ratio. This showed an improvement from between 97% and 99% this year to between 90% and 95% in 2022. The company said it did not believe that its comments at the private briefing constituted “inside information” and that it had been “responding to questions requesting clarification over the meaning of medium term”.
The boss of Standard Chartered (STAN) has bowed to investor pressure and agreed to cut his pension in response to a shareholder revolt over his retirement benefits. It is understood that the bank will announce that Bill Winters, chief executive, will have his pension allowance reduced so that his retirement benefit as a percentage of his salary is in line with the rest of the company’s British workforce. The change could be announced as soon as today and will also apply to Andy Halford, the lender’s finance chief, according to City sources.
The problems facing Rolls-Royce Holdings (RR.) over its Trent 1000 engine have deepened after the company warned that the cost of replacing faulty turbine blades and compensating airlines has grown by 50% to £2.4 billion. The additional costs increase the pressure on Warren East, the aerospace engineer’s chief executive, over his handling of the issue. In a further setback for Rolls yesterday, it warned that falling sales of power generation systems for facilities such as data centres would lead to operating profits coming in at the lower end of a £600 million to £800 million range.
The head of Sainsbury (J) (SBRY) has urged the government to overhaul planning rules to help revive the high street as the grocer’s profits tumbled after a hefty writedown of its shop estate. Sainsbury’s has had a dramatic year after a transformative £10 billion merger with Asda was torpedoed by the competition regulator in April. Since then the supermarket group, which employs 128,000 people, has come under pressure from the City to find a “plan B” to restore growth. Mike Coupe, 59, chief executive, said in September that it would shut 125 shops, including 70 Argos outlets, as part of its bid to generate £500 million of cost savings over the next five years. Mr Coupe called for a “more liberal planning policy that allows the high street to regenerate more quickly, whether that’s for leisure businesses, more housing, maybe less retail”. “At the moment there are very tight restrictions on the type of retail you can do on high streets,” he said. “If they liberalise it, the market would very quickly respond [with] more regeneration.”
Cutting back on its addiction to discounting has heavily weakened Superdry (SDRY) sales. It is attempting a turnaround under the leadership of its founder Julian Dunkerton, who returned this year to an executive role. Mr Dunkerton secured his position as permanent chief executive of the fashion brand last month after a bitter campaign to be reinstated to the board. He wants to overhaul Superdry by returning to its “design-led roots” and claimed that it had lost its “cool” under Euan Sutherland, 50, its former boss. “We are moving the business away from a reliance on constant promotions, and while this focus on full price sales has affected revenue in the first half, this is being partially offset by a better gross margin performance”, Mr Dunkerton, 54, said.
TheWorks.co.uk plc (WRKS) issued its second profit warning in a year and partly blamed the Rugby World Cup final for disrupting its sales, sending shares down by more than 40%. The company said that it was suffering from tough comparisons against last year, when it had enjoyed a boom from “mega trend” squishy toys, and that sales had not improved as expected. It predicted that profits before tax would be “significantly below current market expectations”. Consensus had been for profits of £7.3 million. Like-for-like sales fell by 3.6% over the six months to October 27. The company claimed, though, that when excluding sales from squishy toys, like-for-like sales were down by 1.9%.
Shareholders in Halfords Group (HFD) are being asked to bet on the chief executive’s turnaround after the bicycle and car parts retailer cut its dividend and sealed two acquisitions to boost its services and repairs business. The group has been plagued by profit warnings recently as most of what it sells is highly vulnerable to the weather. It dodged another one yesterday, having lowered forecasts in September, as it announced a 2.5% dip in pre-tax profits to £27.5 million for the six months to September 27. Halfords’ final dividend has been reduced to 8p, giving a full-year payment of 14.2p compared with 18.6p last year. The retailer has said it will rebase its annual dividend to 12p a share from 2021. The City was braced for the cut while investors were relieved there was not another profit warning.
A bet on the US market by Flutter Entertainment (FLTR), the owner of Paddy Power and Betfair is paying dividends, offsetting the impact of responsible gambling measures on its big-spending customers. Flutter Entertainment reported a 10% increase in third-quarter revenues to £533 million after a 67% jump in US revenues. The group, which 18 months ago bought a controlling stake in Fanduel, the American fantasy sports business, said it was raising the guidance on its US business due to better revenue growth than expected. It now expected to report underlying losses of £40 million to £45 million, down from previous guidance of £55 million.
has finalised the terms of its proposed £1.1 billion takeover of Galliford Try (GFRD) housebuilding divisions in which the chief executive of Galliford will switch sides to join his former boss. Graham Prothero, 58, will become chief operating officer of the merged group, reporting to Greg Fitzgerald, 55, who runs Bovis but was formerly chief executive of Galliford. Bovis will be able to increase its annual output to more than 10,000 homes, becoming Britain’s fourth biggest housebuilder, if shareholders approve the merger at the annual meeting on December 2. The deal does not include Galliford’s ailing construction business but it will give Galliford a 29% stake in the expanded Bovis group. Bill Hocking, 56, will become chief executive at Galliford, where he is currently construction chief.
Persimmon (PSN), Britain’s most profitable housebuilder, said the property market remains resilient as it blamed a dip in sales on its increased focus on improving customer satisfaction with its homes. Sales at Persimmon fell 6% to 7,584 in the first half of the year as it attempted to please customers by taking additional time to finish its properties before handing them over. The group has responded to fierce criticism of its build quality and a warning from the government in February that it should improve or it could lose the right to sell homes linked to Help to Buy.
Aston Martin Holdings (AML) has reported a deeper dive into the red because of a 16% plunge in sales. The sports car manufacturer admitted that trading conditions with its rich customers were tough and debts and interest charges were climbing. Sales this year are expected to be even lower than the 6,300 to 6,500 suggested in a previous downward revision. The shares initially rose as much as 9% as the company reassured the City that it would meet expectations for annual profits this year, but the stock later fell back to close up 7½p at 425p. In the Asia-Pacific region, which accounts for nearly a quarter of its business and where the burgeoning super-rich were supposed to fire growth, Aston Martin admitted that in summer trading, its third quarter, sales had crashed by 34%. In its home market, which accounts for another quarter of its sales, deliveries were down by more than 20%.
Losses on large commercial policies have taken their toll on RSA Insurance Group (RSA), which suffered an £8 million hit for restructuring its British business. The insurer has reduced its presence in areas such as international shipping and other complex risks. That led to a 3% fall in UK premium income in the first nine months of the year. Stephen Hester, chief executive, said that the past three months had been significant in the context that “some of our London market competitors have had some disappointing results and our results were actually rather good”.
Hotel Chocolat Group (HOTC) chief exec Angus Thirlwell, and Peter Harris, the development director, the two founders of the business in 2004, sold a chunk of shares in the chocolate maker. Each pocketed £5 million after selling a total of 2.4 million shares at 420p. Their fellow board member Sophie Tomkins also cashed in some of her stock, albeit just over £20,000 worth. Normally such sales are to cover tax bills or to buy a new house, but Hotel Chocolat was adamant that Messrs Thirlwell and Harris were selling in “response to investor demand”. The company was also at pains to point out that both men still own 63.2% of the business, which is worth about £320 million.
Paul Daccus, a non-executive director at the sofa and carpets retailer SCS Group (SCS). Mr Daccus is managing director of Sun Capital Partners, the private equity group that bought SCS out of administration in 2008 and remains its largest shareholder. It was confirmed yesterday that Sun Capital’s affiliate Parlour Product Holdings had sold 6.25 million shares for 220p each, bringing in a total of £13.75 million.
Haris Chaudhry, who until yesterday was the executive chairman of InnovaDerma (IDP), the company behind the popular Skinny Tan range of tanning lotions. Mr Chaudhry had owned almost a third of the business, but he sold nearly all of it after informing the board of his intention to step down with immediate effect. Innovaderma’s share price fell earlier in the week after a seemingly positive trading update ahead of the annual meeting. The shares were flat yesterday at 63½p, after a double-digit fall in the previous session.
Hikma Pharmaceuticals (HIK) shares slipped 83p to £19.42 as investors took profits after a storming run for the stock. The share price has more than doubled since Siggi Olafsson became chief executive in February, enough to propel it back into the FTSE 100 for the fourth time.
IMI (IMI) was one of those pulling the index higher, despite the engineer reporting a drop in third-quarter revenues in two of its three divisions. Investors were enthusiastic about the plans laid out by its new chief executive, Roy Twite, as he looks to cut costs and boost profit margins
BGEO Group (BGEO) found itself towards the top of the leaderboard as it rose 120p to £14.72 after underlying profit at the Tbilisi-based bank, which has invested heavily in its digital capabilities, jumped 30% to about £41.3 million.
Announcing the departure of its chief financial officer Sound Energy (SOU) said it would not look for a replacement for JJ Traynor. Instead it will divide his duties and assign them to other employees. It put its assets in eastern Morocco up for sale this year after two new wells failed to reach commercial rates of gas production, and said on Wednesday that it had agreed a heads of terms deal with an unnamed UK group that would mean it gave up “a substantial proportion” of its interest in the region. Sound owns a majority stake in Sidi Mokhtar in the west of Morocco, where it is looking to make good on its promise of “delivering dreams in the desert”. Simon Davies, the chairman and a City veteran, was reappointed in May, after two stints in the same role from 2014 to 2016 and from 2005 to 2010.
Tempus – Auto Trader Group (AUTO): Hold. Autotrader is a well managed company with a dominant position. But its shares are richly valued
Tempus – Wood Group (John) (WG.): Hold. Solid dividend and less reliance on oil and gas
