Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
“Global markets were fairly static on Wednesday as investors took stock of recent geopolitical and economic events.
“On the FTSE 100, natural resources groups Evraz and Royal Dutch Shell saw small gains. Insurers and banks were also in demand. These gains were offset by weakness in the utilities sector,” says Russ Mould, Investment Director at AJ Bell.
Stagecoach
“Pretending that you didn’t want something anyway is a classic response when you’ve been ditched and that is reflected in the commentary which accompanies transport operator Stagecoach’s annual results.
“Having been disqualified from renewing its key railway franchises by the regulator over pensions concerns, the company now says it has no intention of bidding for new UK rail contracts.
“The loss of these franchises could blow a hole in Stagecoach’s revenue and will involve a one-off £100m hit but the fact minimal profit is expected from its rail arm in the current financial year helps explain management’s ambivalence towards this space.
“With the US bus and coach operations sold off to private equity in April, all the focus is now on the UK bus arm which may actually be no bad thing.
“Arguably its regional bus operations are the star of the show, certainly they generate the highest margins, and the company appears to acknowledge the need to boost profitability on its London bus routes, vowing to improve its performance on bidding for TfL contracts.
“There are likely to be bumps in the road, but ultimately the company could come out the other side a more streamlined and efficient business.”
Bonmarche
“Talk about an embarrassing situation. Trading is so bad at clothing retailer Bonmarche that its directors have gone with their tails between their legs and changed their mind on a previously-rejected takeover offer.
“They are still grumbling that the offer is too low as it doesn’t reflect the potential longer term value of the business. Yet the directors say they have no choice but to cave in and recommend the bid from Philip Day’s Spectre vehicle due to financial pressures on the business.
“The quantum of its problems are such that auditor PwC has implied there are uncertainties with regards to Bonmarche’s future without an improvement in trading.
“Spectre believes it can help save Bonmarche by cutting its cost base and potentially improving its supply chain, marketing, supplier terms and more. Its plan isn’t merely about short-term support to squeeze the final drops out of Bonmarche and the company ultimately dying another day; it’s about securing the long-term future of the business.
“Shareholders will be hugely disappointed by the retailer having to be bailed out at a cheap price, but it is perhaps better to get something back than nothing at all which is the alternative if Bonmarche can’t be saved.”
These articles are for information purposes only and are not a personal recommendation or advice.