The total bill for Prudential (PRU) plan to split itself in two has been put at more than £430 million in the first year, Paul Manduca, the Prudential’s chairman, said in a letter to shareholders that he expected the total cost to the Prudential to hit £350 million, while its demerged M&G business would incur at least an extra £80 million a year of head office costs. Mr Manduca also warned shareholders that the post-deal Prudential would receive “a materially lower quantum of tax recoverable” because its interest and head office costs would be lower going forward.
Sainsbury (J) (SBRY) is to close about 125 supermarkets and Argos stores, stop selling mortgages and cut costs as it sets for the future after its failed tie-up with Asda. Up to 70 high street Argos stores will be shut as the company relocates 80 into its supermarkets over the next five years. It will also close ten to 15 supermarkets and 30 to 40 convenience stores, but will open about ten supermarkets and 110 convenience stores. Mike Coupe, 58, chief executive, yesterday played down speculation that his departure was imminent, saying that he was “committed to the business . . . there is plenty to be doing”.
BAE Systems (BA.) has won a multibillion-dollar American government defence contract for production of the Advanced Precision Kill Weapon System. The $2.7 billion deal will support US military and foreign military sales of an upgrade to the 2.75in Hydra 70 unguided rocket system to make it a semi-active laser-guided precision weapon. This will include sales to the governments of Iraq, Lebanon, Netherlands, Jordan, Afghanistan, the United Kingdom, Tunisia, the Philippines and Australia, the Pentagon said last night.
Aston Martin Holdings (AML) revealed a need to raise up to $250 million on the bond market with interest rates of up to 15% including controversial payment-in-kind notes. The latest fundraising by the struggling luxury sports carmaker sent up “red flags” in the equity market over its future. Standard & Poor’s downgraded Aston Martin to CCC+ in the league of companies deemed vulnerable and investments which should be regarded as speculative.
Boohoo.com (BOO) has spent £90 million on marketing campaigns over the past year, including a music video featuring the Noughties R&B singer Ashanti. That investment, which is the equivalent of 9% of annual sales, appears to be paying off. The group reported revenues of £564.9 million for the six months to the end of August, up 43% compared with the year before, while pre-tax profit increased 83% to £45.2 million. Spending on influencers was “a decent portion” of the marketing budget, John Lyttle, 51, the chief executive, said. This total spend included the music video for the group’s Pretty Little Thing brand, founded by Mr Kamani’s son. Boohoo passed the £1 billion mark in annual sales this year but “there is fuel left in the tank” for further expansion, Mr Lyttle said yesterday.
Babcock International Group (BAB) enjoyed one of its best days on the stock market after a trading update revealed that the operator does not expect to let down its investors this year. Fresh from winning a £1.25 billion contract to build five cut-price Type 31e frigates for the Royal Navy at its shipyard at Rosyth near Edinburgh, Babcock said it expected to hit its targets for revenues, operating profits and cashflow for the year to the end of March. As the financial year started, it guided analysts to expect revenues of £4.9 million, down from £5.1 million, operating profits at between £515 million and £535 million, down from £588 million, and cashflow above £250 million but down from £323 million.
has sounded out the boss of a rival mining group as a potential replacement for Andrew Mackenzie, its chief executive. The group approached Mark Cutifani, head of Anglo American, earlier this year, according to Bloomberg. Mr Cutifani, 60, rebuffed its advances. Anglo declined to comment. Mr Mackenzie, 62, has run BHP since 2013 and is rumoured to be standing down next year. His fate was the subject of speculation in the mining industry two years ago when the group appointed Ken MacKenzie, 55, who is no relation, as chairman. BHP is expected to appoint an insider as its new chief executive. The front runners are Peter Beaven, chief financial officer, and Mike Henry, head of its Australian business.
Rising bills and lower spending on infrastructure of reservoirs and mains pipes will help United Utilities Group (UU.) to produce higher revenues and profits this year, the company has said in an upbeat trading statement. It said that current trading was in line with expectations and that it would invest an extra £350 million in the business. Shares in the company, drifting down because of Labour commitments to return the sector to public ownership, were unmoved.
TUI AG Reg Shs (DI) (TUI) shares had added more than 10% on Monday and Tuesday in the expectation that many of Thomas Cook’s customers would use its services. But the stock dropped to close at 927p yesterday, as analysts at Jefferies reiterated their “underperform” rating, claiming that Tui was unlikely to be as big a beneficiary as predicted. “Given the UK backdrop, we think pricing will be a key focus in determining market share winners,” the US investment bank said in a research note. “We think On the Beach and [Jet2 owner] Dart Group will benefit most from Thomas Cook’s price-sensitive package customers. Given its fixed cost base, Tui has the lowest earnings before interest and tax margins and we do not think it will lower prices to capture share.” The analysts didn’t stop there: they believe hotels that have been left out of pocket by Thomas Cook’s failure might start to tighten up their payment terms. Tui would be the most exposed to any changes, as it averages 63 days to pay its invoices, whereas Dart Group (DTG) takes 24 days and On The Beach Group (OTB) only seven.
Sophos Group (SOPH) was among the biggest mid-cap losers as over a third of shareholders voted against bosses’ remuneration packages at the annual meeting. The motion passed as 65.3% of investors backed it but Sophos said it was “disappointed” by the outcome, adding that it would “reflect carefully” on the feedback from investors.
Safestay (SSTY) shareholders will have enjoyed a good night’s sleep after the hostels operator reported a 24% increase in sales for the first six months of the year. Revenue jumped to £8.1 million in the first half.
Trainline Plc (TRN) shares hit the skids as fresh fears over renationalisation shook the rail ticket website’s investors. Its shares slipped as the market reacted to a speech by Jeremy Corbyn at his party’s conference in Brighton, where he insisted a Labour government would take back control of Britain’s railways. “We’ll bring rail, mail, water and the national grid into public ownership so the essential services that we all rely on are run by and for the public, not for profit,” Mr Corbyn said. City broker Peel Hunt said investors should be worried by any moves to re-nationalise the industry. Ahead of the initial public offering in June, its bosses said nationalisation could have a “material adverse effect”. “With Trainline’s success over the past 22 years driving its current £2.1 billion market cap, through its existing business model of a 5% commission fee from the rail carriers that generates a 57% contribution margin in the UK, the ‘not for profit’ part will likely be very concerning,” said Peel Hunt, which cut its price target to 430p and repeated its “hold” recommendation.
Tempus – 4Imprint Group (FOUR): Buy on weakness. Market leader and growing in the US, with the added prospect of special dividend payments
Tempus – Biffa (BIFF): Hold. Plenty of growth potential but shares are volatile
