Companies
Euromoney jumps on takeover approach
Shares in business and financial information company Euromoney Institutional Investor (ERM) rose by nearly 25 per cent after a takeover approach by Astorg Asset Management of £14.61 a share, potentially valuing the company at approximately £1.6bn. The latest approach updates a series of possible offers, all of which had been rejected by the board. Shareholders will need to wait for developments to see if the approach turns into a formal offer. If the process continues through to sale, then Euromoney will be the latest listed UK firm to be bought by a private equity company. Astorg is a Brussels-based private equity firm with €17bn (£14.6bn) of assets under management that has an eclectic portfolio of investments. One of these, research-provider Third Bridge, would be a natural fit with Euromoney. JH
Primark sales boost for ABF
Primark sales at Associated British Foods (ABF) outstripped pre-pandemic figures as the company confirmed in an update covering its third quarter that trading is in line with expectations and the full-year outlook has not budged.
For the quarter to 28 May, ABF’s total sales were up by a third to over £4bn. The standout figure was Primark sales growth of 81 per cent, aided by all stores being open in the period, with a top-line posting of £1.7bn representing a 4 per cent uplift on the 2019 comparative. A click and collect service will be launched later this year, management said.
On the food side of the business, which took 57 per cent of the revenue pie, growth in the ingredients division was a highlight. Sales were up by a quarter to £489mn, with price and volume increases driving progress.
Margin pressures continue to be felt. A full-year adjusted operating profit margin of 10 per cent is expected for Primark, while higher costs continue to hit divisions across the business – management highlighted cost pressures in the grocery and ingredients divisions in this update. ABF’s shares are up by under 1 per cent. CA
SThree poised to beat expectations
A booming labour market is still fuelling growth at SThree (STEM), which expects its full-year profits to be at least 5 per cent higher than market estimates.
The recruiter, which focuses on technology, life sciences, engineering and finance, said its net fees for the first half of 2022 are up 25 per cent year-on-year. Tech vacancies are proving particularly lucrative, with fees up 47 per cent compared with 2021.
In a trading update published this morning, management said it expects profit before tax for the year to 30 November 2022 to be at least 5 per cent ahead of market consensus, which currently stands at £66.2mn.
Data released by the Office for National Statistics last week showed that UK job vacancies rose to a record 1.3mn between February to April 2022. JS
Hibernia take-private deal completes
The private equity takeover of Hibernia Reit (HBRN) has completed with the company ceasing to trade on both the London Stock Exchange and the Irish Stock Exchange as of this morning. Benedict Real Estate Bidco, a subsidiary of one of Brookfield's real estate private funds, completed the £1bn all-share acquisition of Hibernia on Friday evening.
The completion of the deal comes alongside a director-level shake-up at Hibernia. Roisin Brennan, Margaret Fleming, Stewart Harrington, Grainne Hollywood, Fergal O'Dwyer, Conall O'Halloran and Terence O'Rourke have all stepped down as directors, with Andrew O’Shea taking their place.
Brookfield’s offer to buy Hibernia in March represented a 36 per cent premium to net asset value (NAV) at the time the deal was announced. ML
A rank update from Rank
Rank’s (RNK) shares plummeted by 14 per cent after it downgraded its full-year profit forecast and revealed that trading at its Grosvenor casinos “has been considerably weaker than expected”.
The gambling company, which also runs the Mecca bingo clubs, said that Grosvenor’s performance had suffered from low numbers of big-spending overseas customers in London, struggling visitor numbers in locations across the UK, and a “lower-than-average casino win margin in the quarter to date”.
While other segments are trading in line with management expectations, Rank said that it now expects underlying operating profit for the year to 30 June to come in at around £40mn, down from the previously forecast £47mn-£55mn.
Peel Hunt analysts, “reflecting the current uncertainty”, cut their financial year 2023 earnings before interest and taxes forecast from £91mn to £77mn. CA
easyJet cuts flights as airport turnaround times lengthen
easyJet (EZJ) has been forced to cancel more flights due to shortages in ground handling staff and air traffic control delays at the airports in which it operates, leading to the introduction of flight caps at two of the carrier’s biggest airports, London Gatwick and Amsterdam Schiphol.
Overall, easyJet now expects its third quarter capacity to be around 87 per cent of 2019 levels, rising to 90 per cent during the final quarter of the year. It had previously anticipated delivering 90 per cent of 2019 capacity in the three months to June, rising to 97 per cent over July, August and September.
The airline anticipates increased costs for every single available seat kilometre (ex-fuel) due to increased leasing, airport charging and crew costs, although it believes these will be one-off issues.
On a brighter note for investors, the airline is seeing a resurgence in post-pandemic bookings, with fourth quarter bookings roughly on par with 2019. MR
Ofgem to insist suppliers carry more capital
Energy market regulator Ofgem set out a series of new policy proposals aimed at preventing a recurrence of the turmoil experienced through supplier failures in recent months.
The regulator’s proposals include requirements for companies to maintain minimum capital buffers, with potential additional measures introduced for suppliers who fail to hedge against price movements.
A hike in energy prices that began in the second half of last year caught some companies unaware, leading to a wave of collapses of energy companies who couldn’t raise prices above the cap set by the regulator.
Some 28 energy suppliers have failed since September last year, with customers of failed firms largely being transferred to other operators under Ofgem’s Supplier of Last Resort system. Bulb, which was the UK’s seventh-biggest energy supplier, has been operated under a Special Administration Regime since last November.
Ofgem also said it would introduce rules to ringfence customer payments to prevent them being used for other purposes, which lead to higher prices being levied on consumers if suppliers fail.
“By ensuring that suppliers are operating well-financed, sustainable, and have more resilient business models, we can avoid the supplier failures we saw last year which caused huge stress and worry and added costs to everyone’s bills,” Ofgem chief executive Jonathan Brearley said. MF
