Aston Martin Lagonda crashes into the red after flawed market debut. A £61 million bonanza for Aston Martin Holdings (AML) management and other costs involved in its over-priced stock market debut has steered the British luxury carmaker into the red. A total of £136 million in payments to lock in executives, pay-off shareholders and fund advisers to its flotation last autumn reversed what would have been a £68 million profit for the UK’s only quoted motor manufacturer into a £68 million loss. With news that Aston Martin is also setting aside £30 million for expected Brexit-related supply chain disruption — the equivalent of about one fifth of its 2018 operating profits — shares in the Warwickshire carmaker, not for the first time in its short listed life, plunged.
Rolls-Royce engine problems send it diving into the red. Rolls-Royce Holdings (RR.) failure to shrug off its engine problems has led it to book charges for losses on the grounding of dozens of Boeing 787 Dreamliners that increased by nearly 50% to £790 million, sending the company plunging once more into the red. Chastened by its failings on the Trent 1000 for the Dreamliner, Rolls also announced its unexpected withdrawal from the competition to provide next-generation, ultra-efficient engines for Boeing’s new mid-sized aircraft made from composites planned for the next decade. Rolls admitted that it did not believe that it could have a new product ready in time. The new Boeing programme had been expected to be a potential long-term money-spinner for the company.
Sharp drop in NHS revenues hits Spire Healthcare profits. Profits fell sharply at one of Britain’s biggest private hospital chains last year as it suffered an “unprecedented” drop in revenues from the NHS and invested in an overhaul of the business. Spire Healthcare Group (SPI) said pre-tax profits fell 63.9% to £8.2 million and revenue was broadly flat, down 0.1% to £931.1 million, in the year to the end of December. Stripping out exceptional costs, such as £17.9 million of hospital costs, including the closure of a clinic in Windsor, operating profit was down 41.2% to £54.2 million.
M&S chief defends ‘extravagant’ online delivery deal with Ocado. The boss of Marks & Spencer Group (MKS) has defended the decision to spend £750 million on a food delivery tie-up with Ocado Group (OCDO), the online grocer, in a deal that it will fund by slashing its dividend and asking its shareholders for cash. Shares in M&S tumbled by 37¾p, or 12.5%, to 265½p after the company said that it planned to raise as much as £600 million through a rights issue and to cut its dividend by 40% to pay for a 50% stake in Ocado’s UK retail division, which is valued at £1.5 billion by the deal.
Investors were not misled, says Metro Bank (MTRO) chief. Investors who bought shares in Metro Bank’s £303 million placing last July were not intentionally misled, the embattled bank’s chief executive suggested yesterday as an investigation began into whether there had been a false market in the stock. Shares in the once-lauded small bank slumped by a further 26.5% yesterday as traders dumped them over worries about its business model, its ability to raise a planned £350 million in fresh capital and twin track investigations by the Prudential Regulation Authority and the Financial Conduct Authority. The FCA is thought to be examining whether shareholders were kept properly informed in the months before the discovery in January that Metro had been miscategorising £900 million of loans as much less risky than they were.
Brexit factor blamed by ITV (ITV) for advertising revenues drop. Uncertainties around Britain’s chaotic withdrawal from the European Union have put a dent in ITV’s advertising revenues, the broadcaster warned yesterday. It said that companies had trimmed their marketing budgets as they began to implement contingency plans for a no-deal Brexit. Dame Carolyn McCall, ITV’s chief executive, said that most advertisers had thought that there would be a withdrawal agreement by now. “They expected to have certainty,” she said. Instead, ITV’s clients had begun to stockpile goods and had been taking other measures to soften the blow of no-deal. That, in turn, meant that they had they had become more cautious about buying advertising slots as they protected their profit margins, she said.
Interserve rescue fees hit £90m. Turnaround plan will wipe out 95% of shareholders’ stakes. Interserve (IRV) is to pay out more than three times its stock market valuation in fees to City advisers as part of a proposed emergency refinancing. The contractor’s £90 million in fees will go to the Rothschild investment bank, Numis, the broker, Ashurst and Slaughter and May, the legal firms, Grant Thornton, the accountant, and Tulchan, a public relations firm. The amount is equivalent to the cash the company will be left with if its £895 million restructuring is successful. It also has emerged that Interserve’s directors are not planning to share in investors’ pain. The directors — led by Glyn Barker, 65, the chairman, and Debbie White, 56, the chief executive — confirmed that they would not be subscribing to new shares in a £435 million fundraising, a move described by City experts as “very rare”.
Ted Baker feels the squeeze as profit warning hits shares. The woes of Ted Baker (TED) deepened yesterday when the fashion chain at the centre of the “hugging” row issued a warning that profits would be £10 million short of market forecasts. The company was already reeling after Ray Kelvin, 63, its founder and chief executive, agreed in December to “take a voluntary leave of absence from his role” while allegations of inappropriate behaviour towards members of staff were investigated. Shares of the company tumbled 186p to £18.14 yesterday after it said that its pre-tax profits in the year that ended on January 26 would be “in the region of £63 million”, down from previous expectations of about £73 million. It cited three reasons, two of which were related to systems upgrades. It had found £2.5 million of additional product costs and an “unanticipated writedown in the value of inventory of approximately £5 million” relating to the simplifiction of warehousing in Asia and America. On top of that there was a £2.5 million foreign currency hit on inter-company loans. The profit warning came only seven weeks after a trading update that indicated that its results would be “in line with its expectations”.
Rebels force new menu on Premier Foods (PFD). The maker of Oxo cubes and Mr Kipling cakes has caved in to activist pressure and agreed to another strategic review and a shake-up of its board. Premier Foods said that it would review options to boost shareholder value as two shareholding rebels pushing for change at the group got three nominees appointed to the board and as two long-servers agreed to step down. Daniel Wosner, 36, of the Hong Kong-based Oasis Management Company, and Orkun Kilic, 38, of Paulson & Co, an American investment management firm, will join as non-executive directors. Oasis is the second biggest shareholder, with 12.05% of the company, while Paulson is the third biggest, with 12.04%. The rebels also succeeded in getting Simon Bentley, 62, appointed to the board. Mr Bentley is a former chairman of Blacks Leisure and a former senior independent director at Sports Direct International, the listed business of Mike Ashley, 54.
IAG shareholders land €700m. The owner of British Airways whet the appetite of investors last night by raising its final dividend and declaring a special payout before its full-year results today. In an announcement after the market had closed in London, International Consolidated Airlines Group SA (CDI) (IAG) declared a final dividend of 16.5 cents, up from 14.5 cents in 2018, for a full-year total of 31 cents. The special dividend is 35 cents, which will cost approximately €700 million. IAG, the holding company for BA, Iberia, Vueling and Aer Lingus, operates 575 aircraft and employs more than 64,000 people. When IAG reports its annual figures today, the City expects operating profits before exceptionals for 2018 to be €3.15 billion, about €100 million higher than the previous year.
St James’s in a good place after profits and assets rise. St James’s Place (STJ), the wealth manager for two thirds of a million well-heeled Britons, lifted its pre-tax profits by 14% to £186 million last year, despite its clients having lost money on paper. The company lifted its final dividend to 27.45p, making a total of 48.22p, up 12.5%, after reporting net inflows for the year of £10.3 billion and continuing inflows in the first two months of 2019. Because of falling share markets in most parts of the world, clients saw their investment pots shrink by about 5% last year, according to Andrew Croft, 54, chief executive, who added that they had since clawed back losses thanks of the bounce in markets. Shares in the company fell 35½p to 941¼p as investors reacted to news that the costs of a back-office IT upgrade had risen by 65% to £35.8 million. St James’s is also spending heavily on training new advisers.
Value of Earls Court site falls like a stone. The slowdown in the London market for luxury, newly built homes has forced Capital & Counties Properties (CAPC) to take a £100 million hit on the value of its Earls Court redevelopment. The property company’s interest in the 70-acre west London regeneration project fell by 15.6% to £658 million last year, it said yesterday. The scheme, which involved demolishing the renowned Earls Court Exhibition Centre, which was opened in 1937, was valued at £1.4 billion at the end of 2015. However, its worth has been falling since. Capital & Counties put the further decline down to economic and uncertainty around Brexit, which have hit the market for luxury properties in London. The plans include 7,500 new homes, as well as extensive office and retail space. It has started to develop more than 800 homes at Lillie Square, which it jointly owns with the Kwok family from Hong Kong. It said that more than 80 per cent of the units had been pre-sold.
Taylor Wimpey’s record year illustrates the power of Help to Buy. The importance of the Help to Buy scheme to Britain’s construction groups was underlined yet again yesterday when Taylor Wimpey (TW.) became the latest to announce a record profit. The Buckinghamshire-based housebuilder reported a 5.5% rise in pre-tax profit to £856.8 million in the year to December 31. The average selling price of the 14,933 homes it sold, excluding joint ventures, was flat at £264,000, but the operating margin improved from 21.3% to 21.6%. Revenue increased by 2.9% to £4.1 billion. Performance was boosted by Help to Buy, which accounted for 36% of the homes sold. The government scheme, introduced in 2013, offers buyers with a deposit of 5% an interest-free loan of up to 40% of the price in London, or 20% outside the capital.
Weir increases flow of dividend cash. A promise of improving conditions in its core markets was a further boost for investors in Weir Group (WEIR) yesterday after the company increased its full-year dividend by 5%. The engineer recorded a 23% rise in revenue to almost £2.5 billion in 2018 and a 22% rise in pre-tax profit from continuing operations to £310 million. It lifted its annual dividend of 46.2p a share. Last year Weir made its largest single acquisition, buying Esco, a maker of heavy machinery ground tools for the mining industry, for more than £900 million. Weir’s oil and gas business started 2018 strongly but stuttered towards the end of the year amid slowing activity in shale basins in the United States. However, the company said that it was confident the long-term fundamentals of the Permian basin in Texas, where it is building a new customer service base.
Rio Tinto investors set for $4bn payout after mines sales. Rio Tinto (RIO) has cheered investors with a $4 billion special dividend, but also has warned of further problems developing its giant copper mine in the Gobi desert. The FTSE 100 miner announced the bumper payout to return the cash proceeds from a string of deals last year, including the sale of its last remaining coal assets in Australia and of the Grasberg copper mine in Indonesia. The special dividend, which was bigger than analysts had expected, came alongside a $3.1 billion final dividend and takes the group’s total cash returns to shareholders for the year to $13.5 billion. Yet the good news was tempered by a warning that its underground copper mine at Oyu Tolgoi in Mongolia was facing further delays and construction problems, threatening to push up its $5.3 billion cost.
Bluejay changes its tune on Greenland project. An IT blunder at an Aim-listed mining company led to it erroneously suggesting that it had struck a deal with Rio Tinto to work on its prized project in Greenland. Bluejay Mining (JAY) was forced to clarify yesterday that it was in discussions with the mining giant, but that “nothing had been finalised”, after the shares leapt in the wake of an “unfortunate technical issue” on Tuesday. The shares promptly reversed previous gains, closing more than 8% down, or 1¼p, at just below 13p.
Experian deal scrapped amid fears over competition. Experian (EXPN) has scrapped its planned £275 million takeover of Clearscore after concluding that competition regulators would not approve the deal between Britain’s biggest credit scorers “on satisfactory terms”. The Competition and Markets Authority expressed concern in November that the acquisition would hinder rivalry in the credit-checking sector, warning that the “only effective remedy” would be to block it unless changes were made. The two companies have denied that their proposed tie-up, first announced in March last year, would hinder competition.
A warning from the German maker of Nivea skin cream hurt rival European — and for that, read London-listed — consumer goods groups yesterday. Beiersdorf’s shares fell sharply after it said that margins would fall this year as it invests more to keep up with upstart, niche brands. The read-across to the City was clear. According to analysts at Jefferies: “This is bound to up the ante for Unilever, who compete . . . in big categories like skincare, haircare, dentifrice and laundry. We therefore expect the credibility of Unilever’s 2020 margin target to be the subject of even greater debate.” Shares in Unilever (ULVR), the maker of Dove soaps, Sure deodorants and Vaseline skincare, closed down 129p at £39.88 last night. Those of Reckitt Benckiser Group (RB.), the FTSE 100’s other consumer goods heavyweight, making Clearsil skin cleanser, were also in the red, off 63p at £57.72.
Playtech lands winner at GVC. Playtech (PTEC) halted its losing streak yesterday, announcing the signing of a new commercial contract with GVC Holdings (GVC). The contract to supply key products and services runs to 2025, replacing an existing deal that would have expired in 2025. The original deal was signed with Ladbrokes Coral Group, which has since been taken over by GVC. Roberta Ciaccia, an analyst at Berenberg, estimates the value of the present deal to Playtech at about £40 million a year. The new deal will be extended beyond the British market to include GVC’s American sports betting joint venture with MGM, the casino giant. Ms Ciaccia described the agreement as a “win-win deal for both companies”, with Playtech extending a relationship with a key customer and GVC benefiting from faster cost synergies by giving GVC the ability to migrate Ladbrokes Coral to its in-house technology platform earlier than planned.
Tempus – Relx plc (REL): Buy. Unlikely to shoot the lights out in any given year but should generate consistent and stable growth
Tempus – Centamin (DI) (CEY): Hold. The fall in the shares feels overdone
