East coast mainline is set to be renationalised
East coast mainline is set to be back under public control instead of its current operators Virgin and Stagecoach, who had failed to meet its payments.
According to a statement, Stagecoach said it has been told that an “operator of last resort” would be appointed to run its London to Edinburgh service.
Stagecoach has been operating the East Coast line alongside Virgin Trains since 2015.
The East Coast mainline franchise is a joint venture of Stagecoach, which owns 90%, and Virgin, which holds 10%.
The temporary denationalisation of the service is contrary to much of the stances adopted by the conservatives, who are most associated with privatisation, since its mass occurrence under the Thatcher government.
The government transport secretary Chris Grayling confirmed the news in comments to Parliament on Wednesday.
Amid speculation of the decision last week, general secretary of Aslef, the train drivers’ union, Mick Whelan commented:
“This is the third time in 10 years that a private company has mucked up the east coast main line. In contrast, when it was run in the public sector, it returned £1bn to the Treasury.
“That shows what we have been saying all along – that Britain’s railways should be run, successfully, as a public service, not for private profit. Because they can’t do it. Virgin and Stagecoach have managed reverse alchemy – by turning gold into base metal, and profits into losses on the east coast.”
This is a developing story.
Crest Nicholson share price plunges 13 percent
Crest Nicholson (LON:CRST) shares took a hit on Wednesday morning, after the company issued a profit warning.
The housebuilder said that full-year profits would be at the lower end of its forecasts.
This was attributed to a flat pricing environment alongside inflationary pressures.
Specifically, operating margins for the year are expected to be at 18 percent, towards the latter end of the group’s previous forecasted range of 18 percent to 20 percent.
The group added that whilst most of its sales locations had performed well, sales at higher price points had proved more subdued.
Consequently, Crest Nicholson expects margins for the next financial year to be within a similar range.
Nevertheless, forward sales for the year-to-date are currently 11 percent higher than the same period a year previously. This has meant has led to an anticipated growth in revenue of 15 percent growth for the year to October-end.
For the six months to the end of April, forward sales came in at £441.7 million, an increase of 6.3 percent from £415.6 million, with 1,251 unit completions.
“The group has delivered a good sales performance in the first half of the year. The business continues to increase the number of homes built and carries positive momentum into the second half of 2018, with steady outlet growth and higher forward sales,” said Chief Executive Patrick Bergin.
“Flat pricing has had a negative impact on margins, but volumes in the new build housing market continue to be robust and Crest Nicholson remains well positioned to grow volumes and deliver the homes that the UK needs, while continuing to focus on delivering strong returns for shareholders,” Bergin added.
Shares in the house builder are currently trading -14.22 percent as of 10.37AM (GMT).
National Express boosted by strong performance in North America
National Express (LON:NEX) shares rose over 2 percent on Wednesday morning, after the travel operator recorded a 6.2 percent revenue boost in the first quarter.
The UK-based bus and train service operator was boosted by an impressive performance at its North American bus business, with revenue from the operations growing 9 percent on a constant currency basis.
For the whole company, revenue grew by 1.7 percent. It was boosted by some recent acquisitions and ‘robust’ underlying trading, despite the impact of severe snow over the period, and a ‘sizeable proportion’ of the lost schools days were expected to be made up within the first half of the year.
The UK bus and coach businesses grew sales by 0.7 percent and 2.3 percent.
“Our diversified international portfolio continues to deliver broad-based growth and open additional opportunities for further expansion”, said chief executive Dean Finch said.
“We continue to focus on operational excellence to drive growing shareholder value by both delivering high quality services for our customers and generating cash to invest in future expansion.
“These opportunities will continue to be sought in a disciplined manner and we will only pursue them if they meet our strict financial criteria. We remain on track to meet our full year profit and cash flow expectations”.
Shares in National Express (LON:NEX) are currently up 2.51 percent at 416.40 (0942GMT).
Speedy Hire boosted by strong UK construction market
Speedy Hire (LON:SDY) reported an increase in both profit and revenue for the full year, after a strong performance in the UK construction markets.
Pre-tax profit rose 25 percent to £18 million, as revenue rose 2.2 percent to £377.4 million. Adjusted pre-tax profit rose 60 percent to £25.9 million, with the company boosting its dividend for the year by 65 percent to 1.65p per share.
The specialist equipment hire firm cautioned that the market remains “competitive”, but said the start was “encouraging”.
“We are delighted with these results which reflect a strong operational performance, robust capital management, the benefits of the strategy which was launched in September 2015, the impact of our recovery initiatives and some earlier-than-expected acquisition synergies,” chief executive Russell Down said.
Shares in Speedy Hire are currently up 0.72 percent at 59.42 (0934GMT).
Marston’s swing into loss in H1
Pub owner and brewer Marston’s (LON:MARS) saw shares sink nearly 5 percent on Wednesday morning, after swinging into a loss for the first half.
Pre-tax losses amounted to £13.4 million, compared to a profit of £36.7 million the previous year. Underlying pre-tax profit rose 8 percent to £36.3 million, while revenue was up 20 percent to £528.1 million.
Accounting adjustments relating to the estate valuation and changes in the fair value of interest rate swaps were responsible for the loss.
The group kept its dividend steady, maintained at 2.7p per share.
Marston’s remained confident about its prospects heading into 2018, hoping to deliver growth in both revenue and underlying pre-tax profit in 2018.
“We are pleased to report another period of good growth in revenue and underlying profit before tax,” chief executive Ralph Findlay said.
“Strong trading in brewing and taverns and leased pubs offsets the adverse impact of poor weather on ‘drive-to’ pubs in our destination estate, further validating the resilience of our model.”
Shares in Marston’s (LON:MARS) are currently trading down 4.38 percent at 107.10 (0924GMT).
Coats Group shares down despite 5pc sales jump in Q1
Thread maker Coats (LON:COA) reported a 5 percent jump in sales in the first quarter of the year, after a strong performance in its industrial division.
Strong industrial sales boosted the results, rising 6 percent on a constant currency basis, with a 3 percent increase in its footwear business driven by improved performance in the Asian markets. Its performance materials business grew by 19 percent year-on-year.
Tough market conditions in North America spurred weaker performance in the crafts division, however, which saw sales decline by 4 percent on a constant currency basis.
“The group continues to perform well, and anticipates delivering 2018 full year results in line with management’s expectations,” the firm said.
In February the group said it would be starting 2018 in a “strong position”, adding that a “refocused strategy” would boost the North American crafts business.
Shares in Coats Group (LON:COA) are currently trading down 2.07 percent at 81.78 (0906GMT).
Burberry shares up as cost savings boost annual figures
Shares in luxury fashion retailer Burberry (LON:BRBY) edged up on Wednesday morning, after posting a 5 percent increase in annual profit to £467 million.
Retail growth, improved beauty profitability and cost savings supported the group’s earnings in the year to March, despite total revenue falling 1 percent.
Sales from Burberry’s own stores increased 3 percent, with same-store sales also up 3 percent on improved performance in the US. After stripping out the benefit of currency movements, adjusted profit before tax rose 2 percent.
The firm also announced it would launch a £150 million share buyback programme expected to be completed in 2019. It confirmed that cost-cutting plans were ahead of schedule, with £64 million of annualised savings achieved in the past year.
“In a year of transition, we are pleased with our performance as we began to execute our strategy. While the task of transforming Burberry is still before us, the first steps we implemented to re-energise our brand are showing promising early signs,” said Marco Gobbetti, Chief Executive Officer.
Shares in Burberry (LON:BRBY) are currently trading up 1.91 percent at 1,838.00 (0952GMT).
Moss Bros shares soar 10pc despite “disappointing performance”
Men’s retailer Moss Bros Group (LON:MOSB) reported a 2.4 percent fall in sales in the first 15 weeks of the year, with CEO Brian Brick calling it a “disappointing performance”.
Like-for-like sales for the period slipped 5.2 percent, a slight improvement on the 6.5 percent ran rate seen in March, at which time reported sales had fallen by 4.4 percent.
The results follow a profit warning issued in March that wiped a third off the value of its shares.
“Following a disappointing start to the year, our trading performance has, as anticipated, begun to improve, as a result of our improving stock availability,” chief executive Brian Brick said.
“The wider trading environment, however, remains tough with a fragile consumer environment.”
“We remain conscious of the economic headwinds which we face but will, as described in March, continue to invest in the areas that ensure we leverage our distinct position on the high street.”
Shares in Moss Bros (LON:MOSB) are currently up over 10 percent on the news, at 52.53 (0845GMT).
Cineworld record 10pc revenue boost after strong box office figures
Cineworld (LON:CINE) shares sunk slightly on Wednesday morning, despite recording a 10 percent revenue boost for the full year.
The group confirmed that it expects performance to be in line with expectations, with the group seeing admissions rising by 1.1 percent for the period from 1 Jan to 13 May. Black Panther and Avengers: Infinity War were the biggest drivers of sales throughout the period, with box office revenue growing 9.6 percent on a pro-forma basis.
The group also announced a deal with Casual Dining Group on Wednesday, the leading UK-based mid-market restaurant company that includes the Bella Italia, Café Rouge, Las Iguanas, Belgo and La Tasca restaurant chains. The partnership deal will last for three years.
This follows on from another strategic move by Cineworld earlier this year, the $3.6 billion reverse takeover of US rival Regal Entertainments. The deal created one of the world’s largest cinema chains with hundreds of movie theatres across the United States, Europe and Israel.
Shares in Cineworld (LON:CINE) are currently trading up 0.29 percent at 271.40 (0935GMT).
CYBG report loss after £350m PPI hit
Clydesdale and Yorkshire Banking Group (LON: CYBG) have swung into the red following large fines for payment protection complaints.
CYBG posted a loss of £95 million from last year’s profit of £46 million after putting aside £350 million for misselling PPI.
The FTSE 250 lender has estimated that 110,000 of its customers will complain in the run-up to the August 2019 deadline. City regulators are planning to step up a campaign to ensure customers who are eligible will complain and receive compensation.
The bank is currently in talks with Virgin Money (LON: VM) for a potential £1.6 billion takeover.
The approach was revealed last week, where CYGB plan to give investors 1.13 of its shares for each Virgin Money share. This will give them a 36.5 percent share of the total group.
In a bid to win approval from Virgin Money, CYBG will continue the Virgin Money brand. The lender has until June 4 to formally propose or withdraw its proposal.
Despite the poor results, City analysts believe a takeover of Virgin Money will make strategic sense.
“The absence of inorganic growth” for CYBG means that a deal with Virgin Money looked sensible for the bank and shows “management confidence”.
The group’s chief executive David Duffy said: “While the economic outlook remains uncertain, CYBG is well-positioned to continue executing our existing strategy and to capture future growth opportunities.”