Patisserie Valerie owner on brink of collapse. The future of Patisserie Holdings (CAKE) was hanging by a thread last night after the café chain warned investors that it would not be able to continue “without an immediate injection of capital”. Luke Johnson, the chairman and 37% shareholder, is understood to be considering making a significant cash injection into the Aim-listed operator of Patisserie Valerie in a desperate attempt to save the company from going bust. In the event of a failure to secure funding, the company is believed to have put PWC’s Birmingham office on standby to step in as administrator, casting a cloud over 2,500 jobs. PWC is already tax adviser to the business and in recent days its forensic accounting investigators have been helping to assess its true financial position.
Sir Martin Sorrell set to seal second deal since leaving WPP. Sir Martin Sorrell is closing in on another acquisition at his newly listed advertising venture, potentially placing further strain on his relationship with WPP (WPP). The tycoon told the Festival of Marketing in London yesterday that he was “in the midst of doing a second thing” after his €300 million cash-and-shares acquisition of Media Monks, a Dutch agency that creates advertising campaigns for large companies. S4 Capital (SFOR), his new vehicle, floated at the end of last month via a reverse takeover of Derriston Capital, a cash shell, marking a speedy return to the stock market after Sir Martin had resigned as chief executive of WPP in April. His three decades in charge of the world’s largest advertising group ended after an investigation into allegations of personal misconduct and abuse of company assets. He denies the accusations.
Plus-size specialist Brown (N.) Group (BWNG) tightens belt after putting online first. The group behind the clothing labels Jacamo, Simply Be and JD Williams has cut its interim dividend and warned that revenue will be lower as it prioritises its online business over shop sales. N Brown’s share price fell by almost 20% yesterday after it said that it expected lower shop sales to hold back revenue in the short term. It also said that it intended to reduce its dividend by 50% to 2.83p to bring it back to a “more sustainable level”. The retailer disclosed the dividend cut when it reported a 5% fall in adjusted pre-tax profit to £30.6 million on group revenue of £457.8 million in the six months to September 1.
Newspapers up for sale as Johnston presses exit. The chief executive of Johnston Press (JPR) has said that the company will consider bids for individual newspaper titles after putting itself up for sale. David King said that the plan was to sell the heavily indebted group as one entity, but acknowledged that it may be difficult. In a brief stock market statement, Johnston Press said “it has decided to seek offers for the company”. The media group has its headquarters in Edinburgh and employs more than 2,000 people. It publishes the i, the Yorkshire Post and The Scotsman, as well as hundreds of local newspapers, and owns online businesses and printing plants.
Costs take gloss off rise in profit at WH Smith. Underlying profits and the dividend at WH Smith (SMWH) may have risen, but revelations about the extent of restructuring costs in its high street retail business sent its share price down sharply yesterday. The high street newsagent’s slumped by more than 11.5% to close at £18 yesterday, despite the company reporting a 4% rise in full-year headline profits to £145 million in the year to August 31. Smiths also announced a £50 million share buyback and increased its annual dividend by 12% to 54.1p a year, the 12th consecutive year it has increased. The City took a dim view, however, of the £9 million that WH Smith had spent reorganising its high street business after a review. The chain said that it expected to incur a further £5 million of costs in this financial year as it closed half-a-dozen shops, wound down its 25 Cardmarket outlets and froze any further expansion of its WH Smith Local convenience store franchised operation.
Hopes fading for BA-Norwegian deal amid transatlantic inquiry. The competition regulator appears to have warned the owner of British Airways against attempting a takeover of Norwegian by launching an investigation into the conglomerate’s power in the transatlantic market. Six months after International Consolidated Airlines Group SA (CDI) (IAG) launched an abortive takeover of the Oslo-listed Norwegian Air Shuttle, the Competition and Markets Authority said that it wanted to look at BA’s dominance on five key routes out of London alongside the operations of Iberia, its sister airline, and American Airlines and Finnair, its transatlantic alliance partners. IAG also owns Aer Lingus, another leading transatlantic operator.
A series of winding-up petitions had been issued against Patisserie Holdings (CAKE) long before the company revealed its financial crisis this week, The Times has learnt. The subsidiaries Patisserie Valerie Holdings and Stonebeach have faced three other winding-up petitions in the High Court, as well as the one filed by HM Revenue & Customs last month, according to court filings. They include a petition from HMRC, filed in November 2010, that remains “open”, the filings show. They raise questions over the board’s awareness of the petitions, the company’s handling of payments owed to suppliers and the potential financial strains under which Patisserie Holdings has been operating. It also raises questions about whether investors were informed of them.
Britain’s biggest investment platform has warned of an “industry-wide slowdown” amid weak sentiment and an uncertain market environment. Hargreaves Lansdown (HL.) yesterday posted a robust set of figures for the third quarter of the year, with its assets under administration growing by 3% to £94.1 billion and the addition of £1.3 billion of net new business. However, shares in the FTSE 100 company fell by 5%, or 97½p, to £18.50½ on the back of its comments about the market and the fact the net new business added during the quarter was 13% lower than the same period a year.
Shares in Aston Martin Holdings (AML) hit the skids after analysts at Jefferies started coverage of the luxury carmaker with an “underperform” rating. The stock has had a bumpy start to public life, but the broker thinks that it should fall still further from its £19 float price, setting a target of £14. The analysts said that their valuation remained pitched at the top of the luxury sector, above Ferrari and Hermès. However, while the group has put forward a credible growth plan, they do not think it has priced in execution risk as the carmaker goes into areas where it says the brand’s legitimacy is unproven and where its competitors differ and are well funded. Jefferies also cited risks from a balance sheet that “does not quite . . . balance” without a liquidity buffer “one might expect from a company that is effectively using customer deposits to fund working capital”.
Complacent investors began buying into the dip yesterday, buying beaten-up growth names such as Ocado Group (OCDO), the online grocery retailer, and Fevertree Drinks (FEVR), the posh tonic drinks maker, which had fallen by 15% and 28%, respectively, from the start of the month to Wednesday’s close. Ocado rallied 17p to 779½p, while Fevertree rebounded 124p to £27.45.
A rally in safe-haven gold, silver and copper prices boosted precious metals miners. Fresnillo (FRES) rose to the top of the premier index, closing up 66¾p at 839p. Randgold Resources Ltd. (RRS) added 440p to £57.06 and Centamin (DI) (CEY) climbed 7¼p to 98¼p.
Oil stocks were among the biggest fallers as Brent crude fell 2.8% to $80.76 a barrel after an industry report showed that US crude inventories had risen more than expected. BP (BP.) fell 14¾p to 554½p and Royal Dutch Shell ‘B’ (RDSB) shares tumbled 79p to £25.20.
Ebiquity (EBQ), a marketing consultancy, rose 9p to 69½p, after the Competition and Markets Authority provisionally cleared the sale of its advertising intelligence business to Nielsen, the data analytics group. Completion of the deal is expected to allow Ebiquity to focus investment on its fast-growing consultancy practices, reduce debt and fund acquisitions.
Investors flee seeking safety. Keller Group (KLR) lost almost a third of its market value after it issued an unexpected profit warning, citing deterioration in southeast Asian markets. The FTSE 250 company said that it expected its Asia Pacific division to make a pre-tax loss of between £12 million and £15 million as a result of a sharp downturn in its Malaysian activities, as well as a reassessment of project valuations across the region.
Tempus – Mondi (MNDI): Buy. It is exceptionally well positioned to capitalise on rising demand for packaging and the shares are good value
Tempus – Moneysupermarket.com Group (MONY): Hold. It is making clear progress in its reinvention, which should bring rewards
