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Business Breakfast RECAP: Barratt boss cashes in £3.3m of shares
The BusinessLive team's blog bringing you the morning's most important business and financial news
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Jonathon ManningMultimedia journalist
Barratt Developments chief executive David Thomas (Image: handout)
Good morning and welcome to the BusinessLive Breakfast blog on Thursday, 1 August.
I'm Jonathon Manning and I'll be here with you every morning to give you a round-up of the most important events taking place in the commercial world.
The boss of house builder Barratt Developments has pocketed around £3.3m after cashing in more than a third of his shares in the company.
David Thomas, the company's CEO, sold more than 500,000 shares on Tuesday at 6597.8p per share. The move leaves his with just 823,188.
Investors often watch for directors selling shares, as some believe it to be a sign the share price has peaked. However, Barratt has said the move was to balance Mr Thomas' personal investments.
Elsewhere, Barclays has reported its best set of half year results in nearly a decade, but warned it still needs to cut costs.
Pre-tax profits rose to £3.01bn.
If you'd like to contribute to the blog, you can contact Jonathon Manning via Twitter at @JonnyAManning or drop me a line at jonathon.manning@reachplc.com. You can also keep in touch with the BusinessLive team on Twitter at @businesslive.
Barclays sees half-year profits surge 82% but warns it will still cut costs 08:46
Alton Towers owner Merlin hit by poor weather 08:36
Barratt Developments boss cashes in £3.3m of shares 08:10
That's all for the Business Breakfast Blog this morning. I'll be back tomorrow with the last blog of the week.
Until our next update make sure you check out some of our top stories:
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Humber firms in 'significant' financial difficulty passes 1,300 mark
More than 1,300 businesses across the Humber were in "significant" financial difficulty in June, worrying new figures have revealed.
Insolvency firm Begbies Traynor's latest quarterly Red Flag Alert, which monitors the health of UK companies, found that 1,304 firms across both banks of the estuary were experiencing distress last month.
It comes as new UK-wide figures also showed the average debt of an insolvent company had more than doubled to £66,226 a year, up from £29,872 in 2016.
Andrew Mackenzie, partner at Begbies Traynor in Hull, said:
The unfortunate cocktail of a consumer spending slowdown combined with the political and economic paralysis of an uncertain Brexit outcome is hitting local businesses hard.
SMEs are the backbone of our economy in the Humber region and especially in the beleaguered real estate and property services sector.
It is good news that Hull's City of Culture legacy appears to be continuing to be felt in the tourism sector, however for already hard-pressed smaller businesses, increasing debt levels can often be the final straw that leads to very serious problems indeed.
Andrew Mackenzie, partner at Begbies Traynor in Hull (Image: Neil Holmes)
London Stock Exchange confirms £22bn Refinitiv merger
The London Stock Exchange Group has signed a deal to acquire data provider Refinitiv for $27bn (£22.3bn).
The LSEG confirmed it was in talks to acquire the firm earlier this week, which caused the company's share price to spike.
In a statement confirming the acquisition, LSEG said the combined business would offer "significant customer benefits" by increasing its global footprint and range of customer offerings. It will also allow the group to eye up more opportunities for innovation and future growth.
LSEG chief executive David Schwimmer, who will lead the enlarged group, said:
This transformational acquisition creates a multi-asset class capital markets business and brings world class data content, management and distribution capabilities to LSEG, accelerating our strategy and expanding our global footprint.
This positions us in key areas of future growth as a global financial markets infrastructure leader.
Refinitiv CEO David Craig will remain in his job and join LSEG's executive committee.
London Stock Exchange (Image: PA)
8:46KEY EVENT
Barclays sees half-year profits surge 82% but warns it will still cut costs
Banking giant Barclays has cheered its highest half-year profits for nearly a decade, but warned costs will need to be slashed over 2019.
The lender reported an 82% surge in statutory pre-tax profits to £3.01bn for the six months to June 30 as it put hefty mis-selling charges and settlements behind it.
This compares with £1.7bn a year earlier, when it was hit by costs of the payment protection insurance (PPI) scandal and a £1.4bn settlement with US authorities over its sale of mortgage-backed securities in the lead up to the financial crisis.
On an underlying basis, interim pre-tax profits fell 15% to £3.1bn.
The lender reiterated warnings that keeping a tight lid on costs is a "priority" and said they will need to be reduced over the year to below £13.6bn as it battles against a "challenging income environment".
It did not put any further money aside for PPI mis-selling claims, in contrast to its rival Lloyds Banking Group on Wednesday, which revealed another £550m hit.
Barclays said it still had £360m left in PPI cash set aside, but admitted there was increased "uncertainty associated with future claims levels" amid a late surge ahead of the August 29 deadline.
Jes Staley, group chief executive of Barclays, said it was "another resilient quarter of performance".
Management focus on cost control remains a priority, and we expect to reduce expenses to below £13.6bn for 2019.
This all puts us in a position to continue to increase the return of capital to shareholders by declaring a half-year dividend of 3p.
Its statutory results showed £114m in litigation and conduct costs, down from £2bn a year earlier.
Barclays said the branch had seen a fall in transactions (Image: PA)
West Midlands: Aston Martin posts £79m half-yearly loss
Aston Martin has posted a loss of almost £79m for the first half of 2019.
The loss comes days after the Warwickshire car maker issued a sales warning over falling demand from dealers.
The £78.8m loss saw Aston Martin's already beleaguered share price plunge further.
The stock fell another 14%, having been more than a fifth lower at one stage.
It represents a marked slide for the prestige car maker, which made a profit of £20.8m for the same period in 2018.
The company saw sales volumes to dealers in the UK slump by 17% in the first half and fall 19% in the rest of the Europe, Middle East and Africa region.
Daniel Craig in James Bond mode - one of the series filmed at Pinewood
Alton Towers owner Merlin hit by poor weather
Merlin Entertainments, the owner of Madame Tussauds and Alton Towers, has posted a 22% fall in profits and has blamed bad weather.
The company saw its underlying pre-tax profits fall to £34m for the six months ending June 29.
However, the company did enjoy healthy visitor numbers, which increased 3% to 30.8 million.
Nick Varney, chief executive of Merlin, said:
Group performance year to date has been broadly in line with our expectations in the seasonally quieter first half of the year.
But he added:
Trading in Legoland Parks has however been more disappointing.
Although we enjoyed a strong Easter and spring break performance, trading since then has been affected by poor weather in May and June, difficult market conditions in a number of countries and limited momentum from The Lego Movie 2.
The figures come after Merlin agreed a £5.9 billion takeover bid in June from Lego's owners, a private equity giant and a Canadian pension fund.
Merlin, which also owns Legoland, has accepted the bid from Kirkbi, the investment vehicle of Lego's Danish founding family, Blackstone and the Canadian Pension Plan Investment Board (CPPIB).
A ride at Alton Towers (Image: Joe Giddens/PA Wire)
Bank of England to hold rates steady
The Bank of England is set to hold interest rates at 0.75% as the UK prepares for a no-deal Brexit.
The nine-strong Monetary Policy Committee (MPC) is seen unanimously keeping rates at 0.75% in its noon decision, which will be accompanied by the Bank's quarterly inflation report and growth forecasts - its last before the October 31 Brexit deadline.
It comes as the pound has been sent tumbling to two-year lows this week on worries that new Prime Minister Boris Johnson's hardline stance on EU negotiations is heading the UK towards a no deal.
And it follows the US Federal Reserve on Wednesday cutting its key interest rate for the first time in a decade, by a quarter-point to a range of 2% to 2.25%.
The pound's recent falls may see the Bank increase its inflation forecasts, as weak sterling makes it more expensive to import goods and services, pushing up prices for consumers.
It is also odds-on to cut its growth forecasts after a run of disappointing recent economic indicators pointed to a potential contraction in the UK economy between April and June.
Bank of England in London (Image: PA)
Growing Newcastle fashion firm Hire Street snaps up Manchester rival
A fast growing Newcastle firm which aims to transform the fashion retail sector has made its first major acquisition.
Online venture Hire Street was launched just over a year ago by former investment banker Isabella West, 26, to disrupt the fast fashion market by encouraging shoppers to rent clothes rather than buy them.
The company emerged from Ms West's mission to stop unwanted outfits ending up at landfill, and follows research which shows that more than 50m summer outfits, sold at a cost of almost £3bn, will be worn once and binned weeks later.
Customers can book out outfits in advance and hire them for four to 16 days before they are returned, to a growing warehouse of dresses at Hirestreet's logistics and distribution centre in Scotland.
Now, fresh from securing six-figure syndicated funding, primarily from London-based retail experts, the firm has acquired Manchester-based Hire That Look, which was launched at the end of 2016 for an undisclosed sum that sees the two brands consolidate its operations under the Hirestreet brand.
Read more about the acquisition here.
FTSE and pound update
The FTSE-100 index opened at 7586.78.
The pound at 8am was 1.2126 dollars compared to 1.2220 dollars at the previous close.
The euro at 8am was 0.9104 pounds compared to 0.9110 pounds at the previous close.
Barratt Developments boss cashes in £3.3m of shares
The boss of house builder Barratt Developments has cashed in £3.3m worth of shares in the company.
David Thomas, the company's CEO, sold 500,000 shares at 6,597.8p per share. It leaves his with 823,188 shares in the company.
Investors often watch for directors selling shares in the businesses they run, with many seeing it as a sign that the price has reached its peak.
Barratt's share price fell 1.26% after the deal was revealed to the market.
But the company has said that the deal was a personal decision by Mr Thomas.
A spokesman for the company said:
This transaction is purely to balance personal investments, and David Thomas retains 800,000 shares in the company.
Barratt's recent trading update demonstrated strong momentum within the business, and there has been no change to guidance.
The sale of the shares was carried out a month after Mr Thomas told the market he expected profits to be higher than expected.
The shares have recently been trading at 12-year highs - levels not seen since just before the 2008 financial crisis - as Barratt, and its rivals, benefited from the Government's Help To Buy schemes and low interest rates.
But at Barratt, strong results earlier in July, despite saying it expected record profits of around £910m, with strong profit margins and extra homes being built, investor reaction was muted.
Russ Mould, at AJ Bell, said at the time:
Housebuilders look to be enjoying a last hurrah.
The muted market reaction... suggests some scepticism over the company's ability to build on this achievement and could also reflect the fact that the better than expected performance is seemingly flattered by a large one-off sale to a joint venture partner.
For now, the party goes on for the industry to a soundtrack of cheap mortgages, strong market dynamics and Help to Buy support.
However, companies need to ensure they have the buffer of a strong balance sheet for when the music stops and the lights come back on.
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