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FirstGroup talks extended | ECB lifts interest rates

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4.30pm: London edges higher

The FTSE 100 managed to edge into positive territory at the close, up 6.2 points at 7,270.51.

3i Group was among the top blue-chip risers, up 4.1% to 1247p as the investment company reported a rise in net asset value in the first quarter of the 2023 financial year.

Ocado Group was off 2.79% after the online supermarket’s interim losses grew to £211m from £28m a year earlier.

Perth-based SSE was 2.41% weaker even after it said its first-quarter performance slightly exceeded its expectations, with continued progress on key energy infrastructure projects.

JD Sports Fashion rose 1.97% following reports it was looking to sell the Footasylum chain to Aurelius Group.

Frasers Group soared 26.6% after lifting its full-year profit outlook despite a “challenging” backdrop.

The company said it now expected adjusted pre-tax profit for the full year to be between £450m and £500m, up from previous guidance of £300m to £350m.

Moneysupermarket advanced 12.86% after it said its first-half performance was ahead of expectations, 

Extension to First Group deadline

Takeover talks between transport company FirstGroup and I Squared Capital Advisors will be extended for a second time. The Takeover Panel has given the parties a new deadline of 5pm on 18 August.

I Squared, which has bid £1.2bn for FirstGroup, had been required to make its takeover intentions clear by 5pm today.

The board of FirstGroup last month declared that the cash component of 118p per share “significantly undervalues” its continuing operations and its future prospects, while the additional 45.6p per share “does not provide shareholders with sufficient certainty”.

ECB raises rates

The European Central Bank (ECB) has raised interest rates by 50 basis points, its first hike in over a decade.

The higher than expected move followed months of guiding the market towards a 25 basis points rise. The announcement was triggered by inflation running at 8.6%, more than four times the ECB’s 2% target, among the 19 countries that use the euro, raising fears the bloc could tip into recession.

Ending an eight-year experiment with negative interest rates, the ECB also increased its main refinancing rate to 0.5% and promised further rate hikes possibly as soon as its next meeting on 8 September.

M&S acquires Gist

Marks and Spencer is acquiring logistics firm Gist from Storeshield, a subsidiary of The BOC Group in a deal worth up to £255m.

Eoin Tonge, who joined M&S as chief financial officer just over two years ago, will be leaving to take up a new role as finance director at Primark owner ABF.

M&S is now seeking a successor to Mr Tonge who will remain in post in line with his notice period, which will include supporting the business through its interim results in November.

Full story here

Starling in profit

Starling Bank has reported its first full year of profitability. The digital bank swung to a pre-tax profit of £32.1 million for the financial year ending 31 March 2022 from a pre-tax loss of £31.5m for the period to 31 March 2021. Revenue for the same period was £188m.

Starling’s previous financial year covered a 16 month period to reflect a change in the timing of the bank’s financial reporting.

Butlin’s sale

Daily Business has been told by a source that the Issa brothers will acquire holiday park business Butlin’s in a leaseback deal.

Clear run for Go-Ahead offer

Kelsian Group said it does not intend to make an offer for Go-Ahead, leaving the road clear for Gerrard Investment, a company indirectly owned by Kinetic and Globalvia Inversiones to seal its recommended cash acquisition of the transport operator.

Go-Ahead shareholders will receive 1,500p for each share, comprising 1,450p in cash and a special dividend of 50p in lieu of a final dividend for the year ending 2 July 2022. The Go-Ahead directors continue to recommend the consortium offer unanimously to Go-Ahead shareholders.

SSE ahead of forecast

Energy company SSE said Q1 performance has slightly exceeded expectations.

First power from the Seagreen offshore wind farm expected by the end of this month and construction on Viking onshore wind farm and Dogger Bank A, B & C offshore wind farms progressing well.

Correspondingly, as previously stated on 25 May 2022, SSE expects to report full year adjusted earnings per share of at least 120p and anticipates adjusted capital expenditure and investment to total in excess of £2.5bn this financial year.

Progress continues to be made on the disposal of a 25% minority stake in SSEN Transmission with the formal process now under way. The group has targeted an agreed sale by the end of the calendar year, with completion following receipt of regulatory approvals.

Frasers back in profit

Frasers Group, which includes Sports Direct and Evans Cycles, has seen a return to bumper profits for the past year despite economic headwinds.

Adjusted pre-tax profits leaped to £344.8m for the year to April, compared with a £39.9m loss in the previous year, it said in a full-year trading update.

Michael Murray, chief executive, said: “I am really proud of the record performance we’ve announced today.

“It’s clear that our elevation strategy is working and we are building incredible momentum with new store openings, digital capabilities and deeper brand partnerships across all of our divisions. We’ve got the right strategy, team and determination to keep driving our business from strength to strength.

“Although the backdrop remains challenging, this momentum gives us the confidence of achieving adjusted profit before tax of between £450m and £500m for the next financial year.”

Ocado loss

Online grocer Ocado Group made a loss before interest, tax, depreciation and amortisation (EBITDA) of £14 million in the six months to 29 May against £61m in the same period last year.

Group revenue was down 4% to £1.3bn and 8% at its Ocado Retail joint venture with Marks & Spencer.

Mitchells & Butlers

Pub management group Mitchells & Butlers, whose brands include All Bar One, Toby Carvery and O’Neill’s, said inflationary cost pressures continue to present a major challenge to the business and to the hospitality sector as a whole. 

Like-for-like sales started the third quarter strongly, up 2.2% for the first five weeks compared with the same comparative period in 2019, before falling back slightly across a period including the Jubilee weekend, industrial action and the recent very hot weather, to end up 0.9% across the full quarter, with food continuing to be the main driver.

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