One of Britain’s biggest infrastructure projects is set to be rescued after Anglo American (AAL) made a £386 million proposal to buy Sirius Minerals (SXX), the North Yorkshire fertiliser mine developer. The mining group yesterday revealed that it was “in advanced discussions with Sirius” over a possible all-cash offer at 5.5p a share. It said that the company’s Woodsmith polyhalite mine, under construction near Whitby, “has the potential to become a world-class, low-cost and long-life asset”. The potential deal is a lifeline for the project and hundreds of workers, but would crystallise heavy losses for many shareholders in Sirius, including about 85,000 retail investors who have seen shares change hands for as much as 37p only two years ago as it struggled to secure funding.
The telecoms regulator has called on BT Group (BT.A) to commit to accelerating the introduction of faster broadband networks after it issued long-awaited proposals to increase competition in the industry. Ofcom yesterday launched a consultation on plans to encourage investment in full-fibre broadband infrastructure as it seeks to meet Boris Johnson’s election pledge to connect all the country’s homes “to gigabit speeds” by 2025. The consultation, which ends in April, will regulate BT’s Openreach broadband infrastructure network for the five years from April next year. The plans include loosening the regulation of wholesale charges to reduce the costs of building new fibre networks in rural areas and measures to manage the switch from the slower, old copper networks to full fibre. The measures were welcomed by BT, the government and rival networks, such as Virgin Media, and alternative networks, the so-called altnets, such as CityFibre Infrastructure Holdings (CITY), which is backed by Goldman Sachs.
The founder of NMC Health (NMC) has seen about £900 million knocked off his fortune after shares in the private hospitals company and in Finablr PLC (FIN), the owner of Travelex, extended falls yesterday. Bavaguthu Raghuram Shetty, an Indian pharmacist-turned-tycoon who has built a business empire over four decades spanning healthcare and foreign exchange, has been hit by blows to both companies. In particular, NMC’s stock has been damaged by a report from Muddy Waters, an American investor and short-seller, which last month said that it had “serious doubts” about financial statements from NMC, including information about its asset values, cash balance and reported profits and debts. NMC has called the report “false and misleading”, but nevertheless has launched a review. Shares in Finablr have fallen by 40% since the Muddy Waters report and are at their lowest since they were floated at 175p in May last year. It means that the slump in both companies has wiped about £900 million from Dr Shetty’s stakes.
The boss of Shoe Zone (SHOE) has lambasted the prime minister’s efforts to cut business rates for small companies as “shameful” and “total rubbish” and has warned of more shop closures unless the system is properly overhauled. Anthony Smith claimed that despite Shoe Zone having 300 fewer stores than a decade ago, its business rates bill had jumped by £700,000 to £11.1 million as the retailer pays more than half its total rent bill in rates.
A slump in demand for toys and video games knocked Sainsbury (J) (SBRY) sales over Christmas and overshadowed a strong performance in its clothing and online divisions. The supermarket chain reported a 0.7% decline in total like-for-like sales for the 15 weeks to January 4. Analysts expect Britain’s second largest grocer to be the Christmas winner of the “Big Four” and its performance trumps Morrisons’ 1.7% drop in the 22 weeks to January 5. Grocery sales increased by 0.4% and online sales rose by 7.3%, with a record 385,000 customers ordering in the week before Christmas. Mike Coupe, chief executive, acknowledged that Sainsbury’s had done more “headline stunts and fuel and wine” promotions than in previous years, but said that overall discounting had been similar to previous Christmases. It has been claimed that grocers were slashing prices to boost their defences against Aldi and Lidl, the German discounters.
Retailers have defied the gloom on the high street to report a rise in sales before Christmas. Sales rose by 1.9% in the five weeks to December 28, compared with the same period last year, according to KPMG and the British Retail Consortium. Although sales growth improved, the 2019 figures were boosted by the timing of Black Friday, which fell on November 29 this year. Taking November and December together, to iron out Black Friday distortions, total sales were said to have declined by 0.9% compared with the same period in 2018. The BRC said that total sales had fallen by a monthly average of 0.1% in 2019 compared with 2018.
Greggs (GRG) raised its profit forecasts for the fifth time as the high street bakery chain continues to “defy gravity”. Roger Whiteside, 61, chief executive, has focused on shifting Greggs away from its baked goods and on capturing the food-to-go market, as well as appealing to customers with healthier options and breakfast products to encourage more store visits. Mr Whiteside said that the launch of its vegan sausage rolls had resulted in a “phenomenal year” for the business. Greggs toasted a 13.5% jump in total sales for the year and a 9.2% rise in like-for-like sales. Last week it launched a vegan steak bake and doughnut to cater to growing demand from customers wanting to cut down on meat. Greggs said that the stellar sales meant it that its full-year pre-tax profits should be higher than the £111 million that analysts have been forecasting. Greggs cautioned that it was facing higher costs next year from the increases to the national living wage and a rise in global pork prices, caused by swine flu in Asia. Mr Whiteside said that Greggs was trying to use its benefits of scale and efficiencies to limit the increases and added that it had invested in more automation at its manufacturing sites.
Lenders to Ted Baker (TED) have drafted in advisers to examine the health of the fashion retailer after a torrid year. Barclays, Royal Bank of Scotland, HSBC and Santander have appointed restructuring experts from FTI Consulting to undertake a review that could lead them to tighten the terms of the debt they provide, Sky News reported. The move comes six months after Santander helped to refinance Ted Baker’s working capital facility, which had been due to expire in September. Fashion businesses require significant cash buffers as they must put in manufacturing orders months before they receive any money from clothes sales. Analysts have said that Ted Baker could be forced to raise cash after its profits fell by 90%. Disappointing trading over the festive period could mean that the retailer comes close to reaching the ceiling on its borrowing arrangements of £120 million.
British Land Company (BLND) miserable start to the year continued yesterday when Westminster city council rejected its application to build an 18-storey “terracotta” office block in Paddington, west London. British Land bought the 11-acre Paddington central plot back in 2013, since when it has built a mix of homes, offices, leisure and retail space, all within a stone’s throw of Paddington railway station. The developer had hoped to win approval to start building what it described as the “final piece of the masterplan”. Instead, it said it was “disappointed” with the council’s decision and would look at its options.
Elementis (ELM) looked worse for wear after Jefferies did away with its “buy” rating, cutting it to “hold”. Analysts cut their forecasts for the company, which makes ingredients used in make-up and skincare products, after “softer-than-expected trading” in its chromium and energy businesses.
Ramsdens Holdings (RFX) said that pre-tax profits for the year to the end of March would be “comfortably ahead” of forecasts. Punters rushed to snap up its second-hand Rolexes, while the company has taken advantage of the soaring gold price to scrap jewellery that has been sitting in its stores. The news sent the share price climbing to a record high of 247p.
MPAC Group (MPAC) lifted its forecasts, the second time it has done so in the past four months. The shares rose to 244½p, their highest level for 15 years.
Tempus – Ocado Group (OCDO): Buy. The profit opportunity from its present partnerships alone is huge and earnings will begin this year
Tempus – Polypipe Group (PLP): Avoid. Good-quality company but its rating is full one
