Tullow Oil (TLW) has warned that it expects to book a $1.5 billion write-down due to lower prices and exploration failures. The group was plunged into turmoil last month when it fired its chief executive and suspended its dividend following repeated exploration and production disappointments. Tullow said yesterday that it would delay publication of its full-year results by a month to give it more time to conduct a sweeping review of the business to cut costs and improve efficiency. It said the pre-tax impairment charge primarily reflected its decision to reduce its long-term oil price assumption to $65 a barrel, from $75, as well as a reduction in the estimated reserves of its Ten field off Ghana. It had also written off the costs of drilling wells off Guyana, where it struck oil last year. It initially described the find as a “transformational opportunity” but later admitted it would be hard to produce and may not be commercially viable.
Quiz (QUIZ) announced another drop in sales. The fashion chain, which has 73 shops and 170 concessions, revealed a 9.3% fall in sales over the seven weeks to January 4. That, in turn, pushed the shares down to 15½p, meaning that the company has lost more than 90% of its value since being floated on the stock market two and a half years ago. The retailer, which issued three profit warnings last year, said that trading had “softened” since Black Friday. Sales at its shops fell by 7% during the period, while online sales were down by 14.8% after Quiz severed ties with third-party websites, having decided that they were unprofitable. The group reassured investors that it had a “strong” balance sheet with a £10.7 million net cash position.
Vistry Group PLC (VTY) said yesterday that it was set to report record annual profits. Vistry said that it expected to deliver annual profit slightly ahead of a previous forecast of £186.1 million after selling more homes and benefiting from lower costs. In a year-end trading update, the company said that home sales in 2019 had risen by 3% on 2018’s total to 3,867. Building cost savings and a lack of cost inflation helped to improve its operating margin. The average selling price of its homes was £279,000, up from £273,200 a year earlier. “We have a strong forward sales position and trading has been very positive, with consumer confidence returning and industry fundamentals remaining strong,” Vistry said. It expects to report a net cash balance of £362 million, up from £126.8 million a year earlier. That includes the proceeds of a £150 million placing in November to raise funds for the acquisition of Galliford’s housing division.
Persimmon (PSN) said yesterday that it was about to break the £1bn profit again, despite additional spending on building quality and customer service. The company, which became the first housebuilder to break the billion-pound profit barrier in February 2019, said that it expected to report pre-tax profits in line with the market consensus of £1.04 billion, down from £1.09 billion a year earier. The new-build housing market remained buoyant last year, with cheap mortgages and the government’s Help to Buy scheme supporting purchases. Taylor Wimpey, a rival housebuilder, said on Tuesday that it had sold a record number of homes last year and at higher prices, with consumer sentiment “surprisingly robust”. Persimmon said that it was selling homes at a later stage of construction to improve quality and customer service. A £1.5 million review of its operations, commissioned by the company last year, criticised a corporate culture that had resulted in “poor workmanship” and “potentially unsafe” homes.
Aston Martin Holdings (AML) needs a cash injection of “at least” £400 million and even that may not be enough to ensure its sustained profitability according to analysts at Jefferies, who claimed yesterday that potential investors should be looking for the British carmaker to complete a “transformational deal” rather than a mere fundraising. Bosses have already confirmed that they are in talks with possible backers, amid speculation that Lawrence Stroll, the Formula One motor racing billionaire, Geely, which owns the Lotus and Volvo car brands, and CATL, the Chinese battery manufacturer, are all considering an investment. As for other potential investors or buyers, analysts reckon there’s little chance of any of the industry giants getting involved, apart from — possibly — Daimler, which supplies engines to Aston Martin.
Royal Bank of Scotland Group (RBS) shares slid after Barclays warned that the stock could nearly halve in value this year. Analysts there think that pressure on net interest margins has been “underappreciated” by investors, particularly if the Bank of England goes ahead and cuts interest rates this month. There is also Brexit. The number-crunchers think that the risk of no-deal is yet to be eliminated and could lead to a “material de-rating” of RBS’s shares.
was hammered after it raised £12 million by selling shares at a 49% discount to Tuesday’s closing price. Its shares fell 42½p to 46½p. At the beginning of the year they were changing hands for 115½p.
Clipper Logistics (CLG) drops plan to go private. The decision to abandon plans by its founder to take a delivery group private led to a fall of more than 5% in its shares yesterday. Sun Capital confirmed yesterday that it would not make a formal bid after it had failed to agree a price with Clipper’s board. Clipper, which makes deliveries for retailers such as Asos and John Lewis, said that it had spoken to several shareholders about a valuation, but that Sun could not match their price. “Consequently, both sides agreed to terminate discussions,” Clipper said in a stock exchange statement. Under UK takeover rules, Sun and Mr Parkin cannot reopen talks for six months unless another suitor comes forward. Mr Parkin, 59, owns a third of the company after its flotation in London five years ago, from which he made £30 million.
Tempus – Hikma Pharmaceuticals (HIK): Avoid. Outlook is uncertain but growth likely to be muted and yield is not justified by price
Tempus – Spectris (SXS): Hold. It has been prepared for growth and needs to deliver
