Metro Bank (MTRO) was under intense pressure after its shares fell as it ditched an attempt to raise £250 million of debt required by regulators. Analysts said that the bank faced risks over regulatory investigations into a £900 million accounting error, potential litigation by shareholders and the difficult economic environment. It has struggled since it admitted to wrongly assessing the risk of loans to companies and landlords. The Financial Conduct Authority and Prudential Regulation Authority are monitoring the situation.
Thomas Cook Group (TCG) finances before its collapse have been laid bare in court documents showing a balance sheet deficit of over £3 billion. In a High Court witness statement, Peter Fankhauser, its now former chief executive, lists liabilities including £1.9 billion of debt and guarantees to organisations such as the Civil Aviation Authority, bonding providers and payment service providers. He concludes that “accordingly the company has a balance sheet deficiency of in excess of £3.1 billion” and predicts that after the failure of talks over a restructuring “in simple terms the company will run out of cash by October 4”. He confirms that “the absence of funding” was one of the main reasons the board opted for liquidation rather than administration.
Thomas Cook Group (TCG) biggest rival is preparing to add extra capacity to fill the hole left by the travel group’s collapse. TUI AG Reg Shs (DI) (TUI) said that it was assessing its capacity needs for next summer and was talking to Thomas Cook’s hotel partners with a view to signing up some of them. Fritz Joussen, chief executive, said: “Everybody is racing to replace part of the capacity. Not all, as there was too much, but a good part of the capacity will be restored and part of it will be us.”
The head of the Hong Kong stock exchange group has tried to soothe concerns about Beijing’s influence on the proposed merger with London Stock Exchange Group (LSE), saying that the board of the combined business could be altered. “We are completely open to having a discussion on governance,” Charles Li, chief executive of Hong Kong Exchanges and Clearing, said as he tried to defrost the so-far chilly response to his £32 billion merger proposal. Mr Li, 58, conceded that the timing of his offer had not been good and that it was “disruptive and unusual”, but he claimed that it was a case of “now or never”. He was “thinking big”, he said at the Sibos banking conference in London’s Docklands. “Together, we can unlock the last frontier.” He also admited that if he were running the London Stock Exchange Group he would have rejected his own bid.
AA (AA.) is to pin its hopes of attracting new customers on the science fiction sitcom Red Dwarf, predicting that membership growth will lift off next year. The breakdown service is drawing a line under its “kinda naff” car repair adverts, which for years featured yellow vans coming to the rescue of drivers stuck on roadsides. Simon Breakwell, chief executive, said that the days of “fuddy duddy” promotions were over as the AA attempts to stem a decline in customers. Its base of personal members stabilised last year, falling marginally from 3.25 million to 3.19 million.
Card Factory (CARD) decision to stockpile Christmas cards in spring ahead of the original Brexit date in March has contributed to a fall in profits. The greeting card retailer said yesterday that pre-tax profits had declined by 14.4% to £24.3 million in the six months to the end of July, a slide that the company blamed on the additional cost of holding extra stock, along with investment in new lines and increases in the national living wage.
A promise that it was getting back on track after a profit warning in July was enough to reassure investors in Barr (A.G.) (BAG) yesterday. Shares in AG Barr rose despite the Scottish soft drinks maker announcing declines in both half-year revenue and pre-tax profit, setbacks that it had flagged up in the summer. After revealing that revenue was down by 10.5% to £122.5 million during the six months to the end of July and that profit was down 26% to £13.5 million, the company blamed tough comparisons with the long, hot summer of 2018 and patchy performance this year in Scotland and northern England.
Moss Bros Group (MOSB) said yesterday that it was in “active” talks with landlords to cut rents, despite reporting rising sales. The company credited its improved sales numbers to its new Tailor Me personalised suits and to broadening its range to include gilets and chinos, reflecting the trend towards more casual garments. The retailer also said that it would launch a new eco suit made from up to 45 recycled plastic bottles for £169, with the fabric and suits made in India.
The search for a new chief executive has begun at Close Brothers Group (CBG) after Preben Prebensen announced that he was standing down after ten years. The banking group revealed the planned change of leader yesterday as it reported a slight fall in operating profit before tax because of adverse market conditions hitting its asset management division and weak trading at its Winterflood securities unit.
M&C Saatchi (SAA) warned yesterday that its profits would fall short of expectations, sending shares lower. The advertising and public relations agency is embroiled in an accounting controversy. Full-year earnings would be between 5 and 10% below forecasts owing to losses at some of the start-up agencies in its network, the company said. The grim update piles further pressure on M&C Saatchi, whose market value has more than halved since it disclosed irregularities in its accounts last month. The company said that an independent review by PWC, which is due to be completed by November, would result in a net charge of £5.1 million.
Auto Trader Group (AUTO) went into reverse yesterday after UBS warned that the car sales website could be forced to slash its guidance when it updates the market in November. Analysts at the Swiss investment bank believe that second-hand car dealers are clearing their forecourts amid a fall in the value of pre-owned vehicles. “If dealers do not begin to restock for the rest of the fiscal year, we estimate a 3% headwind to average revenue per retailer [in the 2020 year],” they said. As well as trimming earnings-per-share forecasts for the next three years, UBS lowered its price target on Auto Trader to 510p from 540p and maintained its “sell” recommendation on the stock.
Pets at Home Group (PETS) shares dropped after Morgan Stanley downgraded the retailer to “underweight”. Short-sellers have been closing out their positions given the “runaway” share price in recent months, but the bank believes that investors have overlooked the challenges facing the business.
Primary Health Properties (PHP) squeezed £100 million from investors to take advantage of some “very attractive” opportunities to develop new healthcare centres in Britain and Ireland. The real estate investment trust has agreed to fund the acquisition and development of eight medical centres at a cost of £60 million and has agreed terms on four more, which will require another £50 million.
InnovaDerma (IDP) reported a doubling of annual profits and predicted further growth. Innova Derma makes Skinny Tan — a coconut-scented tanning lotion worn by reality TV stars that claims to help hide cellulite. Two years ago it had to withdraw claims that its product could “tone” after a ruling from the Advertising Standards Authority. Innova Derma was rapped on the knuckles for wrongly marketing the lotion as 100% natural. Despite having been stripped of one of its key selling points, sales of Skinny Tan have surged over the past year, with Boots now stocking the range, as well as Superdrug. Innova Derma said that it had made a “very positive start” to its financial year, during which it planned to bring a new product to market. It would not ay what the launch involved, although management expects it to “disrupt a large new category”.
Tempus – Travis Perkins (TPK): Buy. Improving core supply business with prospect of special return and share in company spin-off
Tempus – Stanley Gibbons Group (SGI): Hold. After a prolonged crisis there are signs of turnaround
