Former bosses of Thomas Cook Group (TCG), its auditors and financial regulators are to face public questions from MPs about its collapse. The Commons business, energy and industrial strategy committee will investigate Thomas Cook as concerns grow over its executives’ pay, accounting practices and the role of its auditors. The committee, chaired by the Labour MP Rachel Reeves, said its inquiry would seek to question executives including the chief executive, the finance director and the chairman, its auditors, PWC and EY, the Financial Reporting Council and the Insolvency Service.
Big Tobacco bosses met senior public health officials and politicians in Washington this week to discuss the future of the industry amid turmoil in the crucial vaping growth market. There was one absentee. Alison Cooper, chief executive of Imperial Brands (IMB), pulled out of a keynote speech at the annual Global Tobacco & Nicotine Forum to remain in Britain to issue a profit warning to the City yesterday. Ms Cooper, 53, warned in a downbeat trading update that increased regulatory uncertainty had led to a “marked slowdown” in the US vaping market and that a growing number of wholesalers and retailers were not ordering or allowing promotion of vaping products. With a number of US states, India and the retail giant Walmart moving ahead with vaping sales bans, the Trump administration threatening to outlaw flavoured e-cigarettes and health officials recommending people stop vaping amid an investigation into lung illnesses and deaths, the future of e-cigarettes in the American market has been thrown into doubt. Jack Bowles, the new boss of British American Tobacco (BATS), which owns the Vype e-cigarette, announced plans this month to cut about 2,300 jobs as it focuses on its vaping business. The growth of the market is potentially critical to the long-term future of tobacco companies, who have faced years of pressure on core cigarette sales from tighter regulation and criticism from public health campaigners.
Industrial action by pilots at British Airways will knock €137 million off the operating profits of its owner, International Consolidated Airlines Group SA (CDI) (IAG). This month’s strike over pay, the first by British Airways pilots, led to the cancellation of 2,325 flights and disrupted travel plans for tens of thousands of passengers. Shares fell to 461p after it estimated the net hit from the action at €137 million, plus a further €33 million due to other disruption that affected British Airways in the quarter, including threatened strikes by Heathrow staff.
Pearson (PSON) has warned that sales of its US university textbooks will fall by a fifth this year, wiping more than £1 billion off its stock market value. The publisher, which is in the midst of a prolonged overhaul designed to boost sales of digital learning tools, warned that trading at its American higher level business had been much weaker than forecast. US students had bought far fewer textbooks than expected when they returned to their universities and colleges after the summer break, it said. The warning rekindled fears over a transformation plan that, as recently as July, appeared to be bearing fruit. “This is a disappointment and painful and we’re in no doubt that it’s a difficult day for shareholders,” John Fallon, chief executive, said. “However, it does help us get to the future state more quickly.”
The higher cost of fuel and tensions in the Gulf after this month’s drone attacks on Saudi Arabian oil facilities have taken their toll on Carnival (CCL) as the cruise operator lowered its full-year profit forecast. In June the leisure company’s business with Cuba came to a halt after the US imposed a ban on trips to the island.
Neil Woodford has suffered a further setback after the investment trust he manages cut the value of its stakes in three private companies by £28 million. Woodford Patient Capital Trust (WPCT) blamed a “challenging fundraising environment” for the writedown on the trio of investments, which it declined to name. It said the downgrades would wipe 3.1p from its net assets per share, which last night stood at 67.93p. The admission comes a fortnight after it cut £36 million from the value of its holding in Benevolent AI, a developer of artificial intelligence software, whose valuation halved in a recent funding round.
OnTheMarket plc (OTMP) issued a surprise warning on revenue, blaming the Brexit-driven slowdown in the housing market. In an unscheduled trading update, the company said that it has converted “fewer” agents than planned to long-term contracts. “Agents are facing well-documented difficulties with lower than usual transaction volumes, reduced letting fee income, the possible onset of recession, the prospect of a no-deal Brexit and a strong sense of uncertainty and a ‘wait and see’ approach among buyers and sellers,” the company said. “These circumstances have given rise to a much more challenging backdrop against which to convert agents on to full-tariff paying contracts.” The company said that revenue and profit for the next two years would be below market expectations.
The highly-rated chief financial officer at Debenhams (DEB) has been poached by the fashion brand Ted Baker (TED). Rachel Osborne was the only board member of Debenhams that Mike Ashley, the founder of Sports Direct, wanted to keep as he tried to oust directors. Ms Osborne, 54, has a degree in veterinary medicine from the University of Cambridge. She joined Debenhams just over a year ago, having worked as finance chief for Domino’s Pizza for two years.
Barclays (BARC) has recruited the former boss of Pimco and a senior executive in George Soros’s investment empire as non-executive directors. Mohamed El-Erian, chief economic adviser at Allianz, owner of Pimco, will join Barclays in January. Mr El-Erian, 61, served as chief executive of Pimco, the world’s second largest bond fund manager, between 2007 and 2014. The bank has also hired Dawn Fitzpatrick, 49, who oversees $25 billion worth of assets as chief investment officer at Soros Fund Management. The appointments follow pressure from Edward Bramson, the New York-based activist investor, for a shake-up.
Xaar (XAR) lost more than a third of its value yesterday after revealing a management exodus and poor results. Doug Edwards, chief executive, and three other senior board members are to leave the company. Xaar said that Mr Edwards, 58, would step down at the end of the year to “explore opportunities back in the USA where his home and family are located”. He will be replaced by John Mills, 50, head of the firm’s printhead business unit. Robin Williams, 62, Xaar’s chairman, and the chief financial officer, Shomit Kenkare, 48, are also leaving. Margaret Rice-Jones, 58, the senior independent director, said that she would not seek re-election at the company’s 2020 annual meeting and so will leave the board at that time.
Alfa Financial Software Holdings (ALFA) has blamed political uncertainties for a sharp fall in profits. The figures were in line with a profit warning last week that prompted a share price fall. Andrew Denton, chief executive, said customers had less “discretionary spending” due to the uncertain political and economic backdrop, with the company hit by delays to projects. Profit margins were further squeezed by the rising cost of hiring skilled workers.
The chief executive of Mitchells & Butlers (MAB) said the pubs takeover frenzy was good for the sector but shrugged off speculation that the All Bar One operator could be the next target. Phil Urban, 56, said the bids for Ei Group and Greene King had highlighted the value in pub businesses, adding: “It’s good that the wider world is looking at the sector again.” Asked whether M&B could become the next target, he said: “Who knows? We’ve got a strong shareholder base and supportive board.”
Shore Capital Group Ltd. (SGR), one of the bastions of Aim, has revealed plans to delist its shares from the junior market. Shore was founded in 1985, since when it has established itself as one of the top players on Aim, advising smaller firms that are looking raise money, make acquisitions or go public. Bosses feel the shares have been undervalued by investors, while the costs and distraction associated with being a public company outweigh any benefit, especially when it has no need to tap the market for extra cash. Members of the board and senior management now own two-thirds of the business, having taken advantage of the “undervaluation” to add to their stakes. The shares are due to be cancelled on November 1, although this will require the approval of 75% of shareholders at a general meeting in Guernsey next month. Investors will still be able to trade Shore’s shares on the Bermuda Stock Exchange, where it will retain its listing.
Marks & Spencer Group (MKS) chairman, Archie Norman, took advantage of the retailer’s recent fall in value to buy £100,000 of shares, although that wasn’t enough to prevent the stock from falling to 180¼p. M&S fell in its first week as a FTSE 250 company, after the departure of the chief financial officer Humphrey Singer on Monday left it looking for its fourth finance boss in five years.
Barclays (BARC) is telling its clients to switch out of stocks and invest in bonds — at least for the next few months. The bank’s analysts have been bullish on riskier investments, such as equities this year, with American and European indices enjoying double-digit gains over the past nine months. But they are now advising a more defensive approach and favour fixed income investments such as bonds over stocks and shares. The analysts expect the global economy to grow 50 basis points slower in 2019 than it did last year. Things are unlikely to pick up in 2020 either, they argue, although they envisage a slowdown rather than an outright recession. As for where to put your money, Barclays points to emerging market dollar debt and US corporate bonds rather than German and Japanese bonds, which have negative yields.
Tempus – CRH (CRH): Hold. Resilient and diversified business well placed to benefit from US construction boom
Tempus – Coats Group (COA): Avoid. Interesting company but the shares seem stuck with little catalyst for change
