Political uncertainty keeps Premier Inn bosses awake at night. The post-Costa era at Whitbread (WTB) got off to a disappointing start as the Premier Inn operator blamed “an acute period of political and economic uncertainty” for weakness in both business and leisure demand. Shares of the FTSE 100 leisure group, which had been buoyed by the £3.9 billion sale of Costa Coffee to Coca-Cola in January, fell by 177p to £45.77 in morning trading after it revealed that poor fourth-quarter trading had continued into March and April amid Brexit uncertainty. Although its results for the year to February 28 were broadly in line with market consensus, the company dropped its previous guidance for the current financial year for flat pre-tax profits, instead noting that it expected the UK market to suffer weak revenue per available room (revpar) — a key industry metric.
BP profits fall — but by less than feared. BP (BP.) has reported a smaller than expected fall in first-quarter profits as higher production and stronger trading were offset by a lower average oil price and weaker refining margins. While the price of Brent crude has risen by more than 30% since the start of the year, the average price over the quarter was $63 a barrel, down from $67 in the first quarter of last year and $69 in the final quarter. Underlying replacement cost profit — the oil industry’s favoured measure — was $2.4 billion in the first quarter, down from $2.6 billion in the same quarter last year but better than the $2.3 billion the City had expected.
Standard Chartered (STAN) rose to the top of the FTSE 100 in morning trading after the emerging markets-focused lender announced a $1 billion buyback. The lender said that its first buyback since 2002 was a result of its improved profitability and low share price. The news came as the company reported a 5% rise in quarterly pre-tax profit to $1.2 billion and a 2% rise in operating income, excluding the impact of currency fluctuations, to $3.8 billion. Andy Halford, chief financial officer, said: “Given the discount to book value we currently trade at and coupled with our confidence at the improved profitability of the group, buying back our own shares is the most natural best use of surplus capital currently.”
Ferrexpo delayed charity inquiry for three months. Investigation launched only when Deloitte threatened to quit. Ferrexpo (FXPO) is facing fresh questions over tens of millions of pounds of payments it made to a charity that may have been misappropriated. Ferrexpo refused to launch an independent investigation into financial irregularities at the charity until three months after its auditors had asked it to do so, according to a letter from Deloitte, the accountancy firm, confirming its resignation as auditor, which was published yesterday. It has also emerged that Chris Mawe, Ferrexpo’s chief financial officer, sold shares worth £400,000 last Thursday, the day before the announcement that Deloitte had resigned, which prompted the company’s share price to fall by 28%. Mr Mawe, 57, said that he was “not in possession of inside information” and did not know that Deloitte was intending to quit. “I was horrified and surprised and shocked,” he said of Deloitte’s decision. Deloitte quit only days after issuing a qualified opinion on Ferrexpo’s annual results in which the miner admitted that funds donated to the Blooming Land charity may have been misappropriated.
Provident bid battle extended for a week. Shareholders in Provident Financial (PFG) have been given more time to decide whether to accept Non-Standard Finance’s £1.1 billion hostile offer. Non-Standard Finance (NSF) said that they had until May 15 to back or reject its bid, giving them an extra week to make up their minds. Provident immediately hit back, declaring that Non-Standard Finance had “panicked” as a result of its falling share price and criticisms of the bid. Provident also said that the dealine was denying its shareholders the chance to assess the findings of a review into the potential deal by the Competition and Markets Authority.
Metro chief got bonus before joining. The finance chief of Metro Bank (MTRO) was given a £61,500 bonus for a period before he had joined the bank, according to a proxy voting service that has recommended that shareholders reject the company’s pay report. Glass Lewis, which is particularly influential among some American investors, said that the payment to David Arden for “an unworked period” was a significant concern and undermined the basic principle of pay for performance. Mr Arden, 50, received a £288,000 bonus for 2018, but this was not prorated to account for the fact that he had served only for nine and a half months of the year, having joined the bank on March 19. His total pay was £1.1 million, which included a “golden hello” payment of £460,000 to compensate him for rewards he gave up by leaving his previous post as finance director at Sainsbury’s Bank.
AA (AA.) finance director quits to support Change UK. The outgoing finance director of the AA intends to spend time supporting the Change UK party after resigning with immediate effect yesterday. Martin Clarke said in a stock market statement that he had resigned as the roadside assistance group’s chief financial officer “to return to my twin passions of private investing and politics”. Mr Clarke, 61, is known to be close to Chuka Umunna, the former Labour MP and co-architect of the pro-remain Change UK party, which will campaign at the European elections for a second referendum on EU membership.
Auto Trader chief vacates the driving seat for his deputy. The chief executive of Auto Trader Group (AUTO) is handing over the keys after making millions of pounds from the flotation of the online car marketplace. Trevor Mather, 51, is to step down as chief executive of Auto Trader by March 31 next year. He will be replaced by his deputy, Nathan Coe, 40, at present the company’s chief operating officer and finance director. Mr Mather has a shareholding in Auto Trader worth almost £70 million, making him one of the 20 biggest shareholders, and last year received a pay package worth £2.6 billion, including his salary and bonuses. The company described his departure as a retirement.
We pay our bills quickly, protests Rolls. Rolls-Royce Holdings (RR.) has blamed government number crunchers for having its membership of the club of speedy corporate billpayers suspended. The engineering group is one of the government’s most important contractors, supplying engines and support to the armed forces. However, in a review of the government’s prompt payment code, Rolls-Royce was one of 17 companies that were thrown out or had their membership suspended. The code states that a business must pay 95 per cent of all supplier invoices in 60 days. Rolls-Royce has been put on the suspended list pending remedial action. The company said that it had fallen foul of how its numbers were counted. It said that administrators of the code had failed to take into account how payments on long-term contracts to its largest suppliers operated on mutually agreed standardised 75-day terms. Nor, Rolls said, had they taken account the 30-day terms on which its smaller suppliers operate. It said that 90% of its suppliers were paid in 60 days or less.
Homeserve (HSV) shares came under pressure yesterday after HSBC’s analysts claimed that the emergency repairs company’s accounting methods “distort profitability, returns and cashflow”. The bank raised concerns about Homeserve’s high level of “intangible assets”, which account for 140% of the size of its balance sheet. It cited the practice of buying existing customer books from future utility partners. On the balance sheet they look the same as internal agreements, but because amortisation and capital expenditure costs are treated as non-operational merger and acquisitions items, they are stripped out of adjusted earnings and free cashflow, HSBC analysts said. HSBC cut its rating to “reduce” from “hold” and issued a £10 target price. Homeserve did not respond to a request for comment.
International Consolidated Airlines Group SA (CDI) (IAG), the British Airways owner, rose 10½p to 546p after UBS upgraded the company to “buy” from “neutral”, with a 705p price target. The bank’s analysts pointed to a potentially healthy summer demand for flights if there is less political uncertainty in the UK and a positive outlook for North American and European pricing. “We continue to believe IAG is the best-of-breed operator among the network operators,” they said.
The travel sector was buoyed by a report by Thomas Cook Group (TCG), the travel company, which said that uncertainty around Brexit had driven an increase in bookings outside the European Union and a small rise in all-inclusive package holidays. Thomas Cook closed up 1p at 28p; TUI AG Reg Shs (DI) (TUI), its rival, rose 22¾p to 866½p.
WPP (WPP) rose after Barclays upgraded the advertising group to “overweight”, citing valuation grounds and “some confidence” in the management’s strategy to turnaround the business. The shares added 10p to 965p.
Lok’n Store Group (LOK) slipped 75p to 487½p despite reporting a 10.2% interim dividend increase to a little over 3½p per share on the back of cashflow growth. In the first half of the year it opened a new store, acquired an existing operation and added two more sites to its pipeline.
More than £25 million was wiped off the market value of a small-cap engineering services business yesterday after it issued a profit warning. Nexus Infrastructre (NEXS) said that delays and changes to its customer programmes in its Tamdown civil engineering business would result in a “material” reduction in full-year profit. It also cited customer pricing pressure and higher cost inflation than had been expected, which had resulted in “increased pressure” on revenues and margins. It blamed an “uncertain political backdrop” in part for the challenging market conditions, which it expects to continue over the second half of the year.
Tempus – Genesis Emerging Markets Fund Ltd Ptg NPV (GSS): Avoid for now. Increasingly successful but it is too early to say if it has reversed its medium-term underperformance
Tempus – Card Factory (CARD): Buy. Remarkably resilient model and attractive valuation
