Persimmon pledges to improve quality as profits hit £1.1bn. Persimmon’s new chief executive will be one of the lowest paid bosses in the FTSE 100 this year as part of reforms announced by the housebuilder to tackle allegations of poor standards and controversy over its bonus scheme. The news comes as the company became the first UK housebuilder to report an annual profit of more than £1 billion. It sold 16,449 homes last year, a 3% increase on 2017. Its average selling price increased by 1% to £215,563. Revenues rose 4% to £3.7 billion. Dave Jenkinson, the interim chief executive, has been appointed the permanent head of the business. The previous chief executive, Jeff Fairburn, was sacked last year following a backlash over his £75 million bonus. Mr Jenkinson was in line for a £40 million bonus under the same flawed pay structure, which was set up in 2012 without a cap. In his new job he will be paid £515,000 and has agreed not to receive a bonus. He also will not receive an award under the group’s 2017 share performance plan. Persimmon (PSN) said that it expected to implement a new pay package for the chief executive next January after consulting with major shareholders in the autumn.
Regulator intervenes over £1.4bn hostile bid for Provident Financial (PFG). The competition regulator has intervened in Non-Standard Finance (NSF) £1.4 billion hostile bid for Provident Financial, its bigger rival, amid concerns about the impact of such a deal. The Competition and Markets Authority said that it was launching an investigation and had served an initial enforcement order that blocked integration of the two companies. There are concerns that a combination of the two doorstep lenders might harm competition.
Standard Chartered to slash costs by $700m. Standard Chartered (STAN) has pledged to improve its returns dramatically in the next three years by slashing costs by $700 million and focusing on underperforming countries. The emerging markets bank will focus on India, Korea, the United Arab Emirates and Indonesia and several other countries as it attempts to remove a “drag” on its revenues and profits. Standard Chartered also set out a new target to achieve a return on tangible equity of at least 10% by 2021, up from 5.1% last year, driven by targeted income growth of between 5% and 7%.
A report that Marks & Spencer Group (MKS) and Ocado Group (OCDO) are close to announcing a joint venture boosted shares in the companies but failed to lift Britain’s main share index this morning. Shares in Ocado jumped 89p to 981p, while M&S added 10p to 304p. The Evening Standard reported that M&S would pay Ocado about £900 million for a 50% stake in a venture. The companies confirmed that they were in talks about a joint venture but said that there was no certainty of an agreement. A deal would give M&S a food delivery service and allow Ocado to focus on its technology.
Hiscox weathers storms to deliver improved profits. Hiscox Limited (DI) (HSX), whose insurance business spans the Lloyd’s of London market as well as retail customers, has pleased its investors with strong profits in a year marked by a string of natural disasters. Pre-tax profits for 2018 were $137.4 million, a jump from $39.7 million the previous year, when the number of natural catastrophes was even greater. Hiscox is based in Bermuda and is listed on the London Stock Exchange. It is one of three remaining independently owned British insurers operating in the Lloyd’s market, along with Beazley and Lancashire. Gross written premiums increased from $3.29 billion to $3.78 billion for the year. Hiscox’s combined ratio, an insurance industry measure that has to be below 100 to indicate profitability, improved to 94.9%, from 99.9% a year earlier.
The world’s largest goldminer has launched a hostile bid to take over its biggest rival in an $18 billion all-share deal. Barrick Gold, which is based in Canada, unveiled the offer for Newmont, of the United States, yesterday, less than two months after completing the $6 billion takeover of the London-listed Randgold Resources. The proposed deal, which would turn Barrick into a mining giant valued at more than $40 billion, hinges on first persuading Newmont’s shareholders to jettison its own planned $10 billion takeover of Goldcorp, a smaller rival. Barrick shares fell 3%, or C$0.52, to C$16.61 in Toronto.
No-deal ‘could lead to food shortages’. The company behind Primark and Twinings tea has stepped up its warnings over a no-deal Brexit, saying that it is unbelievable that the UK is considering a move that would have “terrible consequences”. Associated British Foods (ABF), which also makes Kingsmill bread and Ryvita crackers, said that Britain leaving the European Union without a deal could hit the nation’s food supplies. John Bason, 61, ABF’s finance director, warned that a no-deal conclusion to talks would result in “severe disruption and terrible consequences” with a “real possibility of food shortages”.
New chief for Persimmon (PSN) as it breaks the £1bn barrier. Persimmon is set to confirm today that its acting chief executive has been handed the role full-time as the housebuilder reports what are predicted to be bumper annual results. Dave Jenkinson, 51, the former finance director, stepped up to the top job after Jeff Fairburn, 52, the previous chief executive, was removed from his post last November. Britain’s second biggest housebuilder is expected to report that annual profit has breached the £1 billion mark for the first time, according to Sky News. Nevertheless, the formal announcement of Mr Jenkinson’s appointment and the potential profit watershed come at a difficult time for the group. There are fears that the government could strip Persimmon of its right to sell Help to Buy homes because of allegations of poor standards.
Telecoms companies need to move more quickly to address regulatory concerns if Europe is to catch up with other parts of the world in embracing the opportunities arising from new technologies, Vodafone Group (VOD) chief executive has warned. Nick Read, who was appointed to the top job at the FTSE 100 company last October, said that the “pivotal” role that telecoms companies could play was understood in the United States, Asia and Africa because there was the “right balance between regulation, investment and innovation. I think we haven’t quite got there in Europe.”
Hammerson and activist investor ‘in this together’ amid asset sales. Pressure from an activist investor and a higher vacancy rate in its shopping centres have prompted Hammerson (HMSO) to step up sales of its retail parks and other assets. The shopping centre landlord, which owns the Bullring in Birmingham and Brent Cross in north London, said yesterday that it was in talks to sell £900 million of assets, having disposed of sites for £570 million last year. The sales are part of a strategy to close the gap between the group’s stock market value and the valuation of its portfolio, under pressure from Elliott Advisors, the American activist investor that owns more than 5% of the company.
Primark performance sweetens Associated British Foods (ABF) pill. Profits at Primark are likely to be “well ahead” of last year despite a fall in underlying sales in its shops, the discount fashion retailer’s parent company said yesterday. Like-for-like sales in Primark stores are expected to be down 2% year-on-year in the 24 weeks to March 2. However, profits will rise on the back of an improvement in margins and the opening of new shops, which has driven overall sales up 4%. Associated British Foods brought the market news of Primark’s performance in a trading update yesterday.
Provident slams door on offer from former chief. Provident Financial (PFG) has rejected a £1.4 billion hostile bid from its former chief executive and has said that it will look for other potential deals. Provident, which is trying to recover from problems in its sub-prime lending business, said that the surprise bid from Non-Standard Finance (NSF), a smaller rival, was “an irresponsible approach in the context of a financially regulated business which is recovering from a period of substantial instability”. On Friday Non-Standard Finance tabled an all-share offer that had the backing of investors with more than half the shares. NSF is led by John van Kuffeler, who ran Provident for 22 years until 2013.
Lower margins and demand hit Bunzl. The plunge in confidence in the industrial, manufacturing and infrastructure sectors has proved a drag at Bunzl (BNZL), the FTSE 100 goods supplier that prides itself on outperforming GDP economic growth in its markets. That, as well as issues with its big contract with Walmart in the United States, marred Bunzl’s otherwise solid results and prompted a wobble on the stock market. Bunzl is Britain’s unlikely global champion in distributing till rolls, plastic bags, paper cups and other workplace consumables. It grew from roots in the paper and haberdashery industries, employs 16,000 people worldwide and is valued at £8.2 billion.
‘No-deal could knock us off the newsstands’. The owner of the Daily Mirror and Daily Express newspapers has warned that a no-deal Brexit could lead to shortages of its titles at newsstands. Reach Plc (RCH), the publisher formerly known as Trinity Mirror, said that imports of paper could be disrupted. “We buy from Canada and Scandinavia and if ports get clogged up, then it would be harder to get the newsprint to the printing presses,” Simon Fox, 57, chief executive, said. His warning came as Reach blamed Brexit uncertainties and turmoil in the local advertising market for a £200 million non-cash financial charge. The writedown pushed the company into a £120 million pre-tax loss last year, compared with a £81.9 million profit in 2017. Reach said that revenues had risen by 16.2% to £724 million in 2018 after the takeover of the Express and Star titles in February. Adjusted operating profit increased by 16.8% to £146 million, ahead of market expectations.
Vet supplier gives cash injection. A veterinary drugs supplier that specialises in treatments such as vaccines and antibiotic sprays for pets and horses has raised its dividend. In the six months to December 31, pre-tax profits at Dechra Pharmaceuticals (DPH) rose by 22% to £54.2 million. The company, based in Northwich, Cheshire, said that it would pay an interim dividend of 9½p per share, up 30% on the same period last year. Its North American pharmaceuticals business boosted revenues by 19%, helped by the withdrawal of a rival endocrinology drug.
Shares in Pearson (PSON) fell more than 5% yesterday after analysts at Berenberg read between the lines of the textbook company’s upbeat outlook, pointing to lower margins and profits propped up by cost savings. “While management continues to highlight all the good bits of Pearson, the reality is that most of the higher-growth businesses are lower-margin today and profits are being supported by cost savings,” the broker said. Pearson reiterated its 2019 guidance with its results last week. However, Berenberg cut its estimates and said that it expected the publisher’s earnings to decline next year and in 2021. “Cyclical and structural challenges” in Pearson’s main American education business, with competitors introducing “new, lower-cost business models that answer students’ requirements for cheaper, quality materials”, were among its reasons. “We believe that Pearson will lose market share to these models,” its analysts said. Berenberg’s team issued a “sell” recommendation and a price target of 600p.
AstraZeneca (AZN) rose 131p to £62.90 after the pharmaceuticals group said that the third phase of studies into its Brilinta cardiovascular drug had shown a significant reduction in heart attack or stroke among patients with coronary artery disease and type two diabetes, when taken with aspirin.
Centrica (CNA) received a boost after its chief executive went on a share-buying spree — this after a sharp fall in the share price on the back of a profit warning last week. Iain Conn spent just over £123,000 buying 100,000 shares. The confidence boost lifted the shares 2½p to 125p.
Metro Bank (MTRO) jumped 113p to £15.43 before its full-year results tomorrow. Traders said that the jump was thanks to short-sellers covering their positions in case the results are better than expected.
Taptica International (DI) (TAP), which helps brands to reach potential customers through online advertising, tumbled 11½p to 167p after it said that trading at the start of the financial year had been “varied”. The company “cited industry-wide headwinds in the supply chain”, which it expected to affect its performance this year.
Tekcapital (TEK), which helps to commercialise university research, rose 1½p to 7¼p after it reported a 51% increase in net assets to $16.1 million, as its portfolio valuation almost doubled to $13.7 million.
Euromoney Institutional Investor (ERM) shares fell yesterday after the owner of the Daily Mail said that it was considering offloading its 49% stake in the financial information provider. Daily Mail and General Trust A (Non.V) (DMGT) said that it was “reviewing options” for the holding after The Sunday Times reported that the company was considering handing the proceeds of a sale back to shareholders. Euromoney shares dipped 16p to close at £12.84, valuing DMGT’s stake at less than £700 million. The trust said in a stock market statement yesterday that it was “considering strategic options” in respect of its holding in Euromoney. However, it added that it had “not received any proposal, nor is it in discussions with any party”.
Tempus – Glencore (GLEN): Avoid. Fully diverse with loads of growth potential but carries too many risks
Tempus – Edinburgh Dragon Trust (EFM): Hold long term. It has recovered well after bad underperformance
