Unilever (ULVR) overhaul could be ditched after backlash. Anglo-Dutch group can carry on as before, top executive says. One of Unilever’s most senior directors has conceded that the consumer goods group could ditch plans to overhaul its corporate structure as it struggles to solve its Anglo-Dutch status. Speaking for the first time publicly since Unilever this month shelved plans to move to the Netherlands, Graeme Pitkethly, finance director, said it was grappling with “trying to solve a complicated algorithm” and he could not put a deadline on when it would make a decision. The Anglo-Dutch group, which was formed through the merger of Lever Brothers, the British soap manufacturer, and Margarine Unie, a Dutch spreads maker, in 1930, unveiled plans to relocate to Rotterdam in March and to move from two share classes to one, ending its dual governance structure.
Vote of confidence from Terry Leahy as Dave Lewis puts Tesco (TSCO) ‘back on track’. Sir Terry Leahy has endorsed Dave Lewis, Tesco’s chief executive, saying that he has rebuilt confidence and financial strength at the supermarket chain after years of decline. In a rare public assessment of Mr Lewis, Sir Terry, the former boss of Tesco, said that his successor had put the company “on the right track” since he was appointed in 2014. Sir Terry was chief executive of Tesco between 1997 and 2011, a period of rapid growth for Britain’s biggest grocer. His praise for Mr Lewis is in stark contrast with his criticism of Philip Clarke, his immediate successor, who he blamed for a “failure of leadership”. Mr Clarke was appointed in 2011 and departed in 2014 as sales tumbled. In April 2015 Tesco reported a pre-tax loss of £6.4 billion, one of the largest losses in British corporate history.
Investors in Domino’s Pizza Group (DOM) breathed a sigh of relief yesterday as fears that it might report a decline in like-for-like sales proved unfounded. Shares of the pizza delivery company, which also announced a £25 million share buyback, rose by 16½p to 277¼p as it reported third-quarter growth in Britain of 2.2% and reaffirmed its recently reduced full-year opening target of 60 new stores. Given the tough comparative trading in the same quarter last year, when like-for-like sales grew by 8.1%, some investors had been braced for a decline this time around. In the event, total sales, including franchisee turnover, grew by 6% to £303.3 million. The company also forecast that underlying pre-tax profit for the full year would be be “in the middle of the range of market expectations” of £93 million to £99.6 million, implying it will deliver a profit broadly in line with the £96.2 million of last year.
A London-listed medicinal cannabis company has lined up a 7.5-acre Wiltshire site as it tries to become the first to grow the plants and sell the subsequent products in Britain. Sativa Investments plc (SATI) plans to spend about £10 million building an industrial greenhouse after the government confirmed that cannabis products would be available on prescription within weeks. The business, which listed on the Nex equity market in March, is hoping to grow cannabis, extract medicinal compounds and test them before branding and selling retail products via its George Botanicals unit.
A dose of realism was not what investors in Games Workshop Group (GAW) were expecting yesterday when the maker of Warhammer games issued an unscheduled trading update that warned of market “uncertainties”. Despite better than expected sales in the first few weeks of its financial year, Games Workshop, which is known for its miniature figures and fantasy games that include The Lord of the Rings and The Hobbit, said that it was aware of “uncertainties in the trading periods ahead for the rest of the 2018-19 financial year”, but declined to give further details. Though it said that sales in the early part of the year were ahead of expectations and that profits were in line with the same period last year, shares in Games Workshop fell by 160p, or almost 5%, to £31.70.
The turnaround strategy promised by the new chief executive of Rank Group (RNK) cannot come soon enough for investors after the losing streak of the past year continued yesterday. Shares in the gambling operator fell 7p to 156¼p as the hot summer weighed on trading at its Grosvenor Casinos and Mecca Bingo halls, while casino margins were below par. In the 16 weeks to October 14, it had a 4.9% decline in like-for-like sales, with a 1.7% rise in online revenues only partially offsetting the 6.1% fall in its venues. Rank runs 150 bingo halls and casinos and a growing web business. It employs more than 10,000 people. Its top shareholder, with 56%, is Quek Leng Chan, a Malaysian tycoon.
China trade worries not a problem, claims Renishaw. Britain’s champion in the world of precision engineering has shrugged of the prospect of disruption from Brexit at home and regulatory and world trade wars in China, its key market. Despite reporting a drop in profits in the past trading quarter, Renishaw (RSW), which is based in Gloucestershire, indicated that its investors — led by Sir David McMurtry, its 78-year-old founder and executive chairman — should not be unduly worried. Reporting a 9% drop in comparable pre-tax profits to £32.6 million in the three months to the end of September, the company said: “Despite the potential impacts of Brexit and economic uncertainties in Asia, the board remains confident in the group’s prospects and of growth in both revenue and profit in this financial year.”
National Express on right track amid rail disruption. Well-publicised problems on Britain’s railway network have delivered a big boost to the coach operations of National Express Group (NEX). The company, which at one stage in its history was Britain’s largest train operator, said that revenues from its British coaches had risen by 10% in the third quarter as the number of passengers grew by 6%. Dean Finch, its chief executive, said: “We had a good summer’s trading, with our coach business in particular delivering outstanding growth.” It is understood that along the Thames Valley and into the West Country, where FirstGroup (FGP) operates the GWR train franchise operating out of London Paddington, National Express added nearly 100,000 coach passengers in July, August and September, a year-on-year rise of 13%
GVC finance boss gambles on move to private equity. The chief financial officer of GVC Holdings (GVC) is to leave the gambling operator after less than seven months in the role. Paul Bowtell, who was finance chief of Ladbrokes Coral before its takeover by GVC in March, is handing the baton to Rob Wood, chief financial officer of Ladbrokes Coral’s UK retail betting business. Mr Wood has been promoted to deputy chief finance officer until the handover in March. The company said that Mr Bowtell, who was appointed over Paul Miles, the GVC finance director, was leaving to join Alchemy Partners, the private equity firm. He was the head of finance of Gala Coral Group, Ladbrokes Coral and GVC for a total of seven years.
Rentokil cleans up after heatwave brings out pests. The long, hot summer was a boon for Rentokil Initial (RTO). The pest control group benefited after prolonged heatwaves in Britain and the United States brought out the bugs and lifted the number of one-off emergency callouts it received during the three months to the end of September. Rentokil told investors yesterday that its third-quarter revenues had grown by 11.8% during the period, also boosted by a frenetic global acquisitions drive over the past five years. Rentokil, formally Rentokil Initial, bought 16 businesses in the past quarter alone, taking its acquisitions since the beginning of the year to 39, most of them in pest control. It employs 36,000 people and operates in 70 countries, generating about 10 per cent of its £2.4 billion a year of revenues in Britain.
Short-sellers are raising the pressure on recent London floats with combined bets of £140 million being made on a fall in the share prices of Aston Martin Holdings (AML) and Funding Circle (FCH). Short interests in Aston Martin, the maker of luxury cars commonly featured in Bond films, have risen significantly in the past week to total £106.7 million, data from IHS Markit shows. Both Aston Martin and Funding Circle have had bumpy starts to public life. Last Friday Carmignac, a French asset manager, became the first investor to disclose a significant short position in Aston Martin, according to data from the Financial Conduct Authority, which records positions over 0.5%. Research from IHS Markit, which also records short positions below the 0.5% threshold, shows that the total percentage of shares on loan has reached just over 3%. Similar analysis of Funding Circle shows that 1.8%, or £31.7 million, of the peer-to-peer lender’s shares are now out on loan as investors bet against the stock.
Construction and materials was the worst-performing British sector, falling 2.7% after Heidelberg Cement, of Germany, the world’s second largest cement maker, issued a profit warning, citing energy costs and bad weather in the United States. CRH (CRH), the London-listed building materials company, closed down 95p at £22.22.
Miners were out of favour amid fears of a slowdown in China, the world’s biggest metals consumer. Official data showing China’s GDP in the three months to the end of September is expected to show that growth slowed marginally in the second quarter. Antofagasta (ANTO) tracked copper prices lower to close down 27¾p at 767½p. However, demand for “safe haven” gold pushed the precious metal higher and in turn helped to drive Randgold Resources Ltd. (RRS) up 194p to £62.58.
WPP (WPP) edged up 4½p to £10.33 after Publicis, the advertising group’s Paris-listed peer, reported decent results for the third quarter, having surprised the market earlier in the year when it missed revenue expectations for the second quarter.
Discoverie Group (DSCV) which designs, makes and supplies components for electronic applications, rose 7.7% after it announced the £19 million acquisition of Cursor Controls, a specialist designer and manufacturer of human-to-machine interfaces, such as touchpads used in medical, industrial and transport sectors. Numis issued an “add” rating and upgraded its pre- tax profit and earnings per share forecasts for 2020 to 2021 by 4%, saying that the deal was “highly complementary to Discoverie’s existing design and manufacturing operations.” Discoverie shares rose 29p to 406p.
Oil group gushes after well tests. A successful well test programme at the “Gatwick Gusher” oil site south of London sent UK Oil & Gas Investments (UKOG) up by 3.9% to almost 2p yesterday. The fracking company, which is listed on Aim, said that its Horse Hill Developments subsidiary, operator of the find near Gatwick airport, had said that oil was “commercially viable” after well tests. The company said that the tests had demonstrated the potential for the site to deliver oil production rates of between 720 and 1,080 barrels per day, above expectations.
Tempus – Avast Software (AVST): Buy. The shares are cheap, the dividends will come and the growth potential is enormous
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