MyTravel, the tour operator formerly known as Airtours, delayed the announcement of its annual results this week until refinancing talks with its banks had finished. It duly announced the extension of a £250m credit facility, and the cancellation of its final dividend. It also revealed a £73m loss after a move to more conservative accounting practises, which also caused last year’s profits to be revised downwards. The company’s finance director has resigned, following its chief executive who left prior to the previous profit warning. A strategic review is underway and the group is expected to sell certain businesses.
British Energy the nuclear power generator that’s been teetering on the brink of bankruptcy has disclosed the terms of the government bail-out. Its shares more than halved because the price of survival is giving shares of the business to its creditors in return for them cancelling debts – a debt-for-equity swap, in the vein of Marconi and Telewest. Beside providing various guarantees, the tax payer will stump up a £150m-£200m annual bill for the next ten years, to cover the cost of turning-off unwanted power stations. Creditors are being asked to suspend interest charges and their support is still needed if the deal is to proceed.
No one appears to have told New Look that high-street sales are slowing. Sales are up a remarkable 11.4 per cent since the end of September. The company says it has bucked the weather-inspired downturn being felt by its rivals by deliberately selling “interim” products, instead of trying to second-guess the weather. Suede jackets and crochet tops have been the most popular products. New Look shares have beaten the market by more than 100 per cent over the past year, which can’t go on forever, but such a quality retailer is hard to find. A forward rating of 10 looks as dirt cheap as a natty £35 New Look fur- trim coat.
Cable & Wireless chief executive, Graham Wallace, may have been everybody’s favourite for the chop, but chairman-in-waiting David Nash has sacrificed himself first. Mr Nash, currently non-executive deputy chairman, was instrumental in the group’s badly-received strategic review, and his exit came in response to shareholder pressure. His departure might have raised the possibility of a strategic rethink, were it not for the continued presence of Mr Wallace, who believes he can still turn the business around. The new chairman is expected to set about finding his replacement. Mr Nash may have done the decent thing, that doesn’t help shareholders.
Jarvis has lifted the gloom in the support services sector, surprising the City with stronger-than-predicted results. The company has shrugged off the bad press surrounding the rail crash at Potters Bar, where it was responsible for track maintenance, and has sealed and extended more road and rail infrastructure contracts. We recommended buying Jarvis shares at 194p in September. On a forward PE of 9, and yielding over 4 per cent, they still look good value at 281p
Microchip designer Arc International is returning just under half of its £108m cash pile to shareholders. The decision to hand back £50m – equivalent to around 17p a share – follows a strategic review which found the company had more funding than it needs to reach profitability. This decision dampens the group’s attraction as a possible takeover play. With the prospects for the business itself looking uncertain, the shares aren’t compelling either way.
Brambles’ demerger from auto parts supplier GKN last year was supposed to give the Anglo-Australian support services conglomerate the chance to shine. Three profits warnings later, that aim has proved hopelessly misguided. Last week, Brambles revealed that its Chep Europe pallet distribution business had hit the rocks. Collection has not kept up with the number of pallets issued and expanding the number of small drop points for pallets has made recovering them more costly. Management’s credibility is in tatters so the shares are best avoided.
GlaxoSmithKline has backed away from plans to increase the pay package of chief executive JP Garnier. The drugs giant was forced into a climbdown after chairman Sir Christopher Hogg received fierce opposition from key UK institutional investors. Mr Garnier was looking forward to an annual package of $18m, up from $10m. But the argument that such inflated terms are necessary to prevent executives from jumping ship did not wash with UK investors, who constitute 70 per cent of the shareholder base. A victory for shareholders over individual greed – if only it happened more often.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements